As filed with the Securities and Exchange Commission on April 28, 2014
Registration No. 333-195109
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
F
ORM
F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GasLog Partners LP
(Exact name of Registrant as specified in its charter)
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Republic of the Marshall Islands
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4400
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98-1160877
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Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco, + 377 97 97 51 15
(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
CT Corporation System
111 Eighth Avenue
New York, New York 10011
(212) 590-9338
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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William P. Rogers, Jr.
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Sean T. Wheeler
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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. £
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
CALCULATION OF REGISTRATION FEE
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Title of Each Class of
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Amount to be
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Proposed
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Proposed
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Amount of
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Common units representing limited partner interests |
9,660,000 |
$21.00 |
$202,860,000 |
$26,129 |
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(1) |
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Includes common units issuable upon exercise of the underwriters option to purchase additional common units. |
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(2) |
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Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) based on a bona fide estimate of the maximum aggregate offering price. |
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(3) |
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$19,320 of the registration fee was paid on April 7, 2014.
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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED APRIL 28, 2014
PRELIMINARY PROSPECTUS
GasLog Partners LP
8,400,000 Common Units
Representing Limited Partner Interests
$
per common unit
This is the initial public offering of our common units. We are selling 8,400,000 common units. We currently expect the initial public offering price to be between $19.00 and $21.00 per common unit.
We have granted the underwriters an option to purchase up to 1,260,000 additional common units.
Certain significant investors in GasLog Ltd., including members of the Radziwill family, the Onassis Foundation and members of the Livanos family, have indicated that they currently intend to purchase up to an aggregate of approximately $60 million, or up to an aggregate of approximately 3 million common units (based on the midpoint of the price range set forth above), of our common units in the offering at the public offering price. In addition, at our request, the underwriters have reserved up to 5% of the common units offered hereby for sale in the offering at the public offering price to officers, directors and employees and related persons, as described herein. The number of common units available for sale to the general public will be reduced to the extent of these sales.
We have applied to list the common units on the New York Stock Exchange under the symbol GLOP.
We are an emerging growth company, and we are eligible for reduced reporting requirements. See SummaryImplications of Being an Emerging Growth Company.
Investing in our common units involves risks. See Risk Factors beginning on page 27.
These risks include the following:
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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 subordinated units. |
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We will be required to make substantial capital expenditures to maintain and expand our fleet, which will reduce cash available for distribution. |
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Our ability to acquire additional LNG carriers from GasLog or third parties will depend upon our ability to raise additional equity and debt financing to fund all or a portion of the acquisition costs of these vessels and may be dependent on the consent of existing lenders to GasLog. |
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Our debt levels may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions to unitholders. |
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We depend on GasLog Ltd. and certain of its subsidiaries to assist us in operating and expanding our business and competing in our markets. |
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Our future performance depends on continued growth in LNG production and an increase in demand for LNG and LNG shipping; LNG trade declined by 1.6% in 2012 and is estimated to have improved marginally by only 0.5% in 2013, and we cannot guarantee that LNG trade will not decline in the future. |
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Unitholders have limited voting rights, and our partnership agreement restricts the voting rights of unitholders owning more than 4.9% of our common units. |
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Upon completion of this offering, GasLog and our general partner will own a 58.10% interest in us and will have conflicts of interest and limited fiduciary and contractual duties to us and our common unitholders, which may permit them to favor their own interests to your detriment. |
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Even if public unitholders are dissatisfied, they cannot initially remove our general partner without GasLog Ltd.s consent. |
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You will experience immediate and substantial dilution of $6.84 per common unit. |
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We will initially derive all of our revenues from a single customer. |
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Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price. |
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U.S. tax authorities could treat us as a passive foreign investment company under certain circumstances, which would have adverse U.S. federal income tax consequences to U.S. unitholders.
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Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Common
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Total |
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Public Offering Price |
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$ |
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$ |
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Underwriting Discount (1) |
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$ |
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Proceeds, before expenses, to GasLog Partners LP (1)(2) |
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$ |
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$ |
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(1) |
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Excludes an aggregate structuring fee of % of the offering proceeds before discounts and expenses payable to Citigroup Global Markets Inc. and Evercore Group L.L.C. We will also pay up to $25,000 of reasonable fees and expenses of counsel related to the review by the Financial Industry Regulatory Authority, Inc. of the terms of sale of the common units offered hereby. See Underwriting (Conflicts of Interest). |
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(2) |
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Excludes offering expenses payable by us as described in Expenses Related to This Offering.
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The underwriters expect to deliver the common units to purchasers on or about, 2014 through the book-entry facilities of The Depository Trust Company.
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Citigroup |
Credit Suisse |
Wells Fargo Securities |
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Barclays |
Evercore |
UBS Investment Bank |
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Deutsche Bank Securities |
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DNB Markets |
, 2014
We are responsible for the information contained in this prospectus and in any free writing prospectus we prepare or authorize. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. We are not, and
the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date of this prospectus.
TABLE OF CONTENTS
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Distributions and Payments to our General Partner and GasLog
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Notice to Prospective Investors in the European Economic Area
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F-1
APPENDIXForm of First Amended and Restated Agreement of Limited Partnership of GasLog Partners LP
A-i
iii
This summary highlights information contained elsewhere in this prospectus. Unless we otherwise specify, all references to information and data in this prospectus about our business and fleet refer to our business and fleet to be contributed to the Partnership upon the closing of this offering. Prior to the
closing of this offering, the Partnership will not own any vessels. You should read the entire prospectus carefully, including the historical financial statements of GasLog Partners LP Predecessor, which includes the subsidiaries of GasLog Ltd. that own the vessels in our initial fleet, and the notes to those
financial statements. The information presented in this prospectus assumes, unless otherwise noted, (1) an initial public offering price of $20.00 per common unit (the midpoint of the price range set forth on the cover of this prospectus) and (2) that the underwriters do not exercise their option to purchase
additional common units. You should read Risk Factors for more information about important risks that you should consider carefully before buying our common units. Unless otherwise indicated, all references to dollars and $ in this prospectus are to, and amounts are presented in, U.S. dollars.
References in this prospectus to GasLog Partners, we, our, us and the Partnership or similar terms when used in a historical context refer to GAS-three Ltd., GAS-four Ltd. and GAS-five Ltd., the subsidiaries of GasLog Ltd. that hold interests in the vessels in our initial fleet. When used in the
present tense or prospectively, those terms refer to GasLog Partners LP or any one or more of its subsidiaries, or to all such entities unless the context otherwise indicates. Please read Summary Financial and Operating Data beginning on page 18 for an overview of our predecessors operating results and
financial position.
References in this prospectus to our general partner refer to GasLog Partners GP LLC, the general partner of GasLog Partners. References in this prospectus to GasLog LNG Services refer to GasLog LNG Services Ltd., a wholly owned subsidiary of GasLog Ltd. References in this prospectus to
GasLog refer, depending on the context, to GasLog Ltd. and to any one or more of its direct and indirect subsidiaries, other than us. References in this prospectus to GasLog Carriers refer to GasLog Carriers Ltd. References in this prospectus to Ceres Shipping refer to Ceres Shipping Ltd. References in
this prospectus to BG Group refer to BG Group plc; references to Samsung refer to Samsung Heavy Industries Co. Ltd.; and references to Shell refer to Royal Dutch Shell plc, or, in each case, any one or more of their subsidiaries or to such entities collectively.
We are a growth-oriented limited partnership formed to own, operate and acquire liquefied natural gas, or LNG, carriers engaged in LNG transportation under long-term charters, which we define as charters of five full years or more. Our initial fleet of three LNG carriers, which will have charter
terms expiring in 2018 and 2019, will be contributed to us by GasLog, which will control us through its ownership of our general partner. GasLog was founded and is effectively controlled by its chairman, Peter G. Livanos, whose familys shipping activities commenced more than 100 years ago.
Upon the closing of this offering, we will own three LNG carriers, built in 2013, with modern tri-fuel diesel electric propulsion technology that operate under long-term charters with subsidiaries of BG Group. We will also have options and other rights under which we may acquire additional LNG
carriers from GasLog, as described below. We believe that such options and rights will provide us with significant built-in growth opportunities and allow us to diversify our fleet specification potentially to include steam-powered ships. We may also acquire vessels from shipyards or other owners. We
intend to operate our vessels under long-term charters with predictable cash flows and to grow our position in the LNG market through further acquisitions of LNG carriers from GasLog and third parties. We believe we can grow our distributions per unit organically by providing reliable customer service
to our charterers and leveraging GasLogs relationships, expertise and reputation. We intend to make further acquisitions of LNG carriers from GasLog and third parties to grow our fleet. However, we cannot assure you that we will make any particular acquisition or that as a consequence we will
successfully grow the amount of our per unit distributions. Among other things,
our ability to acquire additional LNG carriers will be dependent upon our ability to raise additional equity and debt financing.
GasLog is, we believe, a leading independent international owner, operator and manager of LNG carriers and provides support to international energy companies as part of their LNG logistics chain. On April 4, 2012, GasLog completed its initial public offering, and its common shares began trading
on the New York Stock Exchange on March 30, 2012, under the symbol GLOG. At the time of its initial public offering, GasLogs owned fleet consisted of ten LNG carriers, including eight newbuildings on order. Since its initial public offering, GasLog has increased by approximately 111% the total
carrying capacity of vessels in its fleet, which includes vessels on the water, newbuildings on order and secondhand vessels under contract to be purchased. This increase includes two LNG newbuilding orders announced in February 2013 and two LNG newbuilding orders announced in August 2013, all of
which are expected to be delivered in 2016, the acquisition of one 2010 built LNG carrier announced in September 2013, three secondhand steam-powered ships that were acquired from BG Group in April 2014 and the three additional secondhand steam-powered ships that are under contract to be
purchased from BG Group. Each of the four newbuildings is under a long-term charter, which will commence upon delivery. Since January 1, 2013, GasLog has taken delivery of five LNG carriers, acquired one on-the-water vessel, entered into contracts to purchase six secondhand vessels (three of which
have been delivered and three of which are under contract) and secured additional LNG newbuilding options. GasLog currently has a fully-owned twenty-one-ship fleet, including fourteen ships on the water (two ships delivered in 2010, five ships delivered in 2013, one on-the-water ship acquired in 2013,
three secondhand ships that were acquired from BG Group in April 2014 and three additional secondhand ships being acquired from BG Group), and seven LNG carriers on order from Samsung.
Initial Fleet
Upon the closing of this offering, our initial fleet will consist of:
LNG Carrier
Date of
Cargo
Charterer
(1)
Charter
Optional
GasLog Shanghai
January 28, 2013
155,000
BG Group
January 2018
2021-2026
GasLog Santiago
March 25, 2013
155,000
BG Group
March 2018
2021-2026
GasLog Sydney
May 30, 2013
155,000
BG Group
May 2019
2022-2027
(1)
Vessels are chartered to a subsidiary of BG Group.
(2)
The charters may be extended for up to two extension periods of three or four years, and each charter requires that the charterer provides us with advance notice of its exercise of any extension option.
Option Vessels
We will have the option to purchase the following twelve LNG carriers from GasLog within 36 months after each such vessels acceptance by its charterer (or, in the case of the
GasLog Seattle,
the three vessels recently acquired from BG Group and the three additional vessels under contract to be
purchased from BG Group, 36 months after the closing of this offering), in each case at fair market value as determined pursuant to the omnibus agreement.
As of the date of this prospectus, we have not secured any financing in connection with the twelve optional vessels. Our ability to purchase these twelve optional vessels, should we exercise our right to purchase such vessels, is dependent on our ability to obtain financing to fund all or a portion of
the acquisition costs of these vessels and may be dependent on the consent of existing lenders to GasLog with respect to these optional vessels. See Risk FactorsRisk Inherent in Our
2
Delivery
Capacity
(cbm)
Expiration
period
(2)
BusinessWe may have difficulty obtaining consents that are necessary to acquire vessels with an existing charter or financing agreement.
LNG Carrier
Date of
Cargo
Charterer
(2)
Charter
GasLog Seattle
December 9, 2013
155,000
Shell
December 2020
Hull No. 2042
Q2 2014
155,000
Shell
2021
Hull No. 2072
Q1 2016
174,000
BG Group
2026
Hull No. 2073
Q2 2016
174,000
BG Group
2026
Hull No. 2102
Q3 2016
174,000
BG Group
2023
Hull No. 2103
Q4 2016
174,000
BG Group
2023
Methane Rita Andrea
Q2 2014
145,000
BG Group
2020
Methane Jane Elizabeth
Q2 2014
145,000
BG Group
2019
Methane Lydon Volney
Q2 2014
145,000
BG Group
2020
Methane Shirley Elisabeth*
2014
145,000
BG Group
2020
(4)
Methane Heather Sally*
2014
145,000
BG Group
2020
(4)
Methane Allison Victoria*
2014
145,000
BG Group
2020
(4)
*
Denotes vessels under contract to be purchased by GasLog from BG Group. Currently, these vessels are managed by GasLog.
(1)
For newbuildings, expected delivery quarters are presented.
(2)
Vessels are chartered to a subsidiary of BG Group or a subsidiary of Shell, as applicable.
(3)
Indicates the duration of the initial term. For the pending vessels under contract to be purchased from BG Group and the three vessels recently acquired from BG Group, the charterer will have unilateral options to extend the term of the time charters for two of the pending vessels and two of the
vessels recently acquired from BG Group for a period of either three or five years at its election. For the other vessels in the above table, the charterers have unilateral options to extend the term of the time charters for periods ranging from 5 to 10 years, provided that the charterer provides us with
advance notice of declaration of any option in accordance with the terms of the applicable charter.
(4)
Indicates the average duration of the initial term for the pending vessels under contract to be purchased from BG Group. The time charters for these vessels will be staggered with terms of 5.5 years, 6 years and 6.5 years from the closing of the acquisition of the vessels, so that the vessels do not
redeliver at the same time.
GasLog also has the following six additional carriers in its fleet, which it will be required to offer to us for purchase at fair market value as determined pursuant to the omnibus agreement if charters are secured with committed terms of five full years or more:
LNG Carrier
Date of
Cargo
Charterer
(2)
Charter
GasLog Savannah
May 31, 2010
155,000
BG Group
September 2015
(3)
GasLog Singapore
July 28, 2010
155,000
BG Group
September 2016
(3)
GasLog Skagen
July 25, 2013
155,000
BG Group
April 2021(4)
GasLog Chelsea
October 4, 2013
153,600
Spot Market
N/A
Hull No. 2043
Q4 2014
155,000
N/A
N/A
Hull No. 2044
Q1 2015
155,000
N/A
N/A
(1)
For newbuildings, expected delivery quarters are presented.
(2)
Vessels are chartered to a subsidiary of BG Group or a spot market counterparty, as indicated.
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Delivery
(1)
Capacity
(cbm)
Expiration
(3)
Delivery
(1)
Capacity
(cbm)
Expiration
(3)
Indicates the duration of the initial term. The charterers have unilateral options to extend the term of the time charters for periods ranging from 30 to 90 months, provided that the charterer provides us with advance notice of declaration of any option in accordance with the terms of the applicable
charter.
(4)
Time charter provides for full employment for three years and a subsequent five year seasonal charter under which the ship is employed for seven months and available to accept other charters for five months.
In addition to the LNG carriers described in the preceding paragraphs, we intend to leverage our relationship with GasLog to make accretive acquisitions of LNG carriers with long-term charters from GasLog and third parties to increase our distributions per unit. Pursuant to the omnibus agreement,
GasLog will be required to offer to us for purchase any other LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation that GasLog owns or acquires if charters are secured with committed terms of five full years or more. GasLog has also entered into a
letter of intent with Samsung for the purchase of two additional 174,000 cbm newbuildings from Samsung with delivery dates in 2017. The letter of intent is subject to final GasLog board approval and execution of definitive agreements. If definitive agreements for the purchase of these two newbuild
vessels are signed, Samsung has agreed to grant GasLog options with a four month option term on two further 174,000 cbm newbuildings with delivery dates in 2017 and 2018. Except as discussed elsewhere in this prospectus, this right will continue throughout the entire term of the omnibus agreement. In
addition, we will have a right of first offer with regard to any proposed sale, transfer or other disposition of any LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation under a charter of five full years or more that GasLog owns, as discussed elsewhere in
this prospectus. Our ability to acquire additional LNG carriers from GasLog is subject to obtaining any applicable consents of governmental authorities and other non-affiliated third parties, including the relevant lenders and charterers. Under the omnibus agreement, GasLog will be obligated to use
reasonable efforts to obtain any such consents and, with respect to the initial fleet only, to indemnify us if such consents are not obtained. Our ability to exercise any right to acquire additional LNG carriers will also be subject to our ability to obtain additional equity and debt financing. We cannot assure
you that in any particular case the necessary consent will be obtained. See Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus Agreement.
Our Relationship with GasLog Ltd.
We believe that one of our principal strengths is our relationship with GasLog. We believe our relationship with GasLog will give us access to GasLogs relationships with leading energy companies, shipbuilders, financing sources and suppliers and to its technical, commercial and managerial expertise,
which we believe will allow us to compete more effectively when seeking additional customers. As of April 18, 2014, GasLog owned 21 LNG carriers (including the vessels in our initial fleet), which includes seven newbuildings on order, the three vessels recently acquired from BG Group and three vessels
under contract to be purchased from BG Group. Since its initial public offering in April 2012, GasLog has increased by approximately 111% the total carrying capacity of vessels in its fleet, which includes vessels on the water, newbuildings on order and secondhand vessels under contract to be purchased.
In addition, GasLog, through its wholly owned subsidiary GasLog LNG Services, will provide ship management services to the LNG carriers in our initial fleet and, subject to any alternative arrangements with the applicable charterer, additional ships we may acquire from GasLog. GasLog will also
provide certain administrative and commercial management services to the Partnership.
GasLog was incorporated in 2003 and is effectively controlled by its chairman, Peter G. Livanos, who beneficially owns approximately 39.0% of GasLogs common shares. Mr. Livanos familys shipping activities commenced more than 100 years ago. On April 4, 2012, GasLog completed its initial
public offering and its common shares began trading on the New York Stock Exchange on March 30, 2012 under the symbol GLOG. GasLog completed a $199 million follow-on public
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offering and concurrent private placement on January 22, 2014 to fund a portion of the cost of the acquisition of the three vessels recently purchased from BG Group, and on April 16, 2014, GasLog completed a $110 million follow-on public offering to fund a portion of the cost of the acquisition of the
three vessels under contract to be purchased from BG Group.
Upon completion of this offering, GasLog will own our 2.0% general partner interest, all of our incentive distribution rights and a 57.24% limited partner interest in us, which consists of 1,422,358 common units and all of our subordinated units. As a result, GasLog will hold a majority of our total
equity interests. Our general partner, by virtue of its general partner interest, will also initially control the appointment of three of our five directors (subject to its right to transfer the power to elect one director to the common unitholders, so that they will thereafter elect a majority of our directors).
GasLog intends to utilize us as its primary growth vehicle to pursue the acquisition of LNG carriers that are expected to generate long-term, stable cash flows.
With the global demand for natural gas increasing and LNGs share of the international natural gas trade expanding within the sector, we believe that this is a favorable time to grow the Partnership through the addition of modern vessels. While LNG trade is cyclical and there is no guarantee that
we will be able to take advantage of opportunities to grow, we believe the following attributes of the LNG industry create an attractive environment in which to expand our business:
Natural gas and LNG are strong and growing components of global energy supply.
Natural gas accounted for 24% of the worlds energy consumption in 2012. Over the last two decades natural gas has been one of the worlds fastest increasing energy sources, growing at approximately twice the
rate of oil consumption over the same period. We believe LNG, which accounted for 32% of overall cross-border trade of natural gas in 2012, will continue to increase its share at least over the next several years. Because of the cost and environmental advantages of natural gas relative to other
energy sources, together with the increased availability of natural gas supply, we believe that demand for natural gas and LNG in particular will continue to grow in the future.
The demand for LNG shipping is expected to grow.
Disparities in the pricing of natural gas between producing regions with natural gas reserves and consuming regions, such as the Far East, have created arbitrage opportunities for LNG producers and traders. These arbitrage opportunities, the
growing distance between the producing regions and end buyers and the cost advantages of LNG shipping as compared to transporting natural gas by pipeline, have led to an increase in the transportation of natural gas in the form of LNG of 21.3% in 2010 and 11.3% in 2011. Although LNG trade
declined by 1.6% in 2012 and is estimated to have improved marginally by only 0.5% in 2013, we believe that planned capacity increases in liquefaction and regasification terminals will support increasing LNG trade in the future. Based on the current pipeline of liquefaction projects that are
planned or under construction, Clarkson Research Services Limited (Clarkson Research) currently estimates that liquefaction capacity will increase approximately 35% by 2016. For more details about these liquefaction projects and the current global order book and other factors affecting demand
for LNG shipping, see The LNG Shipping Industry.
High barriers to entry should restrict the supply of new LNG carriers.
The existing order book of LNG carriers represents only 31% of current LNG carrier fleet carrying capacity. Fleet growth was limited in 2013 but is expected to accelerate in 2014 and 2015. We believe that significant barriers to
entry exist in the LNG shipping sector due to the large capital requirements, the limited availability of financing, the limited availability of qualified ship personnel and the need for a high degree of technical management capabilities. The industry also serves a demanding customer base that requires
the highest quality operating standards. Finally, we believe the limited construction capacity at high-quality shipyards and the long lead-time required for the construction of LNG carriers should also restrict the supply of new LNG carriers in the near-term.
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Stringent customer certification standards favor experienced, high-quality operators.
Energy companies have established increasingly high operational, safety and financial standards that independent owners of LNG carriers generally must meet in order to qualify for employment in their programs.
Through our relationship with GasLog, which has managed LNG carriers for BG Group for over 12 years and had its technical management operations vetted by other major energy companies, we believe that these rigorous and comprehensive certification standards will enhance our ability to
compete for new customers and charters relative to less qualified and less experienced ship operators.
Increasing ownership of the global LNG carrier fleet by independent owners.
Independent owners have increased their share of the global LNG carrier fleet from approximately 23% in April 2004 to approximately 36% in April 2014. Orders by independent owners represent 56% of the current
global order book. We believe private and state-owned energy companies will continue to seek high-quality independent owners for their growing LNG shipping requirements in the future, driven in part by large capital requirements and a recognition that owning and operating LNG ships are
outside of their core areas of expertise.
We believe that our future business prospects are well supported by the following factors:
Significant built-in growth opportunities.
In addition to our initial fleet of three LNG carriers, we will have the option to purchase from GasLog the twelve additional LNG carriers delivered or expected to be delivered to GasLog between 2013 and 2016 that are or will be subject to long-term
charters. Six of these twelve vessels are steam-powered ships, the acquisition of which will allow us to diversify our fleet specification. GasLog will also be required to offer to us for purchase at fair market value (as determined pursuant to the omnibus agreement) any other LNG carriers with cargo
capacities greater than 75,000 cbm engaged in oceangoing LNG transportation that GasLog owns or acquires if they are placed under charters of five full years or more, including the four existing LNG carriers currently on short-term or seasonal contracts and two newbuildings on order that have
not yet been chartered. We believe these acquisition opportunities, as well as other future acquisition opportunities from GasLog or third parties, will facilitate the growth of our distributions per unit.
Enhanced growth opportunities through our relationship with GasLog, an established owner, operator and manager of LNG carriers.
We believe our relationship with GasLog will provide us with many benefits that we believe will drive growth in our distributions per unit. We believe charterers
award new business to established participants in the LNG carriers market because of their demonstrated technical, commercial and managerial expertise. GasLog is an experienced operator with an in-house technical manager, GasLog LNG Services, which provides a highly competent technical and
operational platform to GasLogs owned and managed vessels. We believe that GasLog LNG Services 12-year history of providing management services to BG Group has enabled GasLog to develop a track record and reputation for providing highly competent, safe and reliable operations. We
believe this track record and reputation will continue to enable GasLog to attract additional long-term charters for LNG carriers. Further, we believe GasLogs strong relationships with customers, shipyards and established financing providers, and its large pool of experienced and qualified global
seafarers, enhance its operational and financial efficiency.
Predictable cash flow profile through charter contracts with leading energy companies
.
Our initial fleet operates under charters with initial terms that expire in 2018 or 2019, and the twelve LNG carriers for which we have options to purchase from GasLog have or will have charter durations
ranging from 5.5 to 10 years with BG Group and Shell. The charters on the three vessels in our initial fleet contain hire rate provisions that provide for an automatic periodic adjustment, which is designed to reflect the actual costs of operating the ship and related expenses, although existing
charters on certain of the vessels subject to the purchase
6
options do not have similar provisions. We believe that such provisions can reduce our potential exposure to foreign exchange rates and operating costs and expenses. By contracting with companies that we believe are financially strong, such as BG Group and Shell, we believe that we have
minimized our counterparty risk. Our current charters do not provide the charterers with options to purchase our ships during or upon expiration of the charter term.
Newly constructed and high specification LNG carriers.
Our initial fleet will be among the youngest of any LNG shipping operator, with an average ship age of less than one year. The 155,000 cbm size of each of our initial fleet vessels is compatible with most of the existing LNG terminals around
the globe. Our initial fleet and six of the twelve additional vessels that we will have the option to purchase from GasLog are, or when delivered will be, high-specification LNG carriers equipped with modern tri-fuel diesel electric propulsion technology.
Financial flexibility to support our growth.
We believe that, as a public company, we will have access to public debt and equity markets in order to pursue expansion opportunities. We expect to have a moderate level of indebtedness after expected debt repayment at the time of our initial public
offering.
We can provide no assurance, however, that we will be able to utilize our strengths described above. For further discussion of the risks that we face, see Risk Factors.
Our primary business objective is to grow our business profitably and increase quarterly distributions per unit over time by executing the following strategies:
Pursue strategic and accretive acquisitions of LNG carriers on long-term, fixed-rate charters.
We will seek to leverage our relationship with GasLog to make strategic acquisitions that are accretive to our distributions per unit. Under the omnibus agreement, we will have the option to purchase
twelve
additional LNG carriers, delivered or expected to be delivered to GasLog between 2013 and 2016, each of which has been or will be under long-term charter upon its delivery. Additionally, during the term of the omnibus agreement, we will have the right to purchase from GasLog any
newbuilding LNG carrier or existing LNG carrier in the GasLog fleet, in either case with a cargo capacity greater than 75,000 cbm engaged in oceangoing LNG transportation that enters into a long-term charter agreement of five full years or more.
Capitalize on growing global demand for LNG shipping.
Natural gas is one of the fastest growing primary energy sources globally. Moreover, between 1990 and 2012, the volume of LNG traded increased at a rate 38% higher than natural gas pipeline trade and almost three times the increase in
the rate of consumption of natural gas. Although LNG trade declined in 2012 and only improved marginally in 2013, we believe the global demand for LNG shipping will continue to increase, due to currently planned construction projects that, if they proceed on schedule, are expected to increase
LNG supply. As we acquire additional LNG carriers from GasLog over the next few years, our expanded fleet will help position us financially to meet the growing demand for LNG shipping. We believe our relationship with GasLog and its industry reputation and relationships position us well to
further expand our owned fleet to the extent that such additional capacity is accretive to returns.
Manage our fleet and deepen our customer relationships to provide a stable base of cash flows and superior operating performance.
Through our relationship with GasLog, we intend to maintain and grow our cash flows by focusing on strong customer relationships and actively seeking the extension
and renewal of existing charters in addition to new opportunities to serve our customers. GasLog charters its current fleet to BG Group and Shell. GasLog does not, however, have exclusive agreements in place with either BG Group or Shell that require BG Group or Shell to charter additional
current or future unchartered vessels from GasLog. We believe that GasLog will be able to maintain and develop customer relationships beyond its current customer base in order to support its growth programs and capitalize on attractive
7
opportunities. We believe the close relationships that GasLog has with these companies will provide attractive opportunities to participate in the expected long-term growth of the LNG trade. We will continue to incorporate safety, health, security and environmental stewardship into all aspects of
vessel design and operation in order to satisfy our customers and comply with national and international rules and regulations.
We can provide no assurance, however, that we will be able to implement our business strategies described above. For further discussion of the risks that we face, see Risk Factors.
An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of our common units. Please read carefully the risks described under Risk Factors beginning on page 27 of this prospectus.
These risks include, among others, the following:
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 subordinated units.
We will be required to make substantial capital expenditures to maintain and expand our fleet, which will reduce cash available for distribution.
Our ability to acquire additional LNG carriers from GasLog or third parties will depend upon our ability to raise additional equity and debt financing to fund all or a portion of the acquisition costs of these vessels and may be dependent on the consent of existing lenders to GasLog.
Our debt levels may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions to unitholders.
We depend on GasLog Ltd. and certain of its subsidiaries to assist us in operating and expanding our business and competing in our markets.
We will initially derive all of our revenues from a single customer.
Our future performance depends on continued growth in LNG production and an increase in demand for LNG and LNG shipping; LNG trade declined by 1.6% in 2012 and is estimated to have improved marginally by only 0.5% in 2013, and we cannot guarantee that LNG trade will not decline in
the future.
Unitholders have limited voting rights, and our partnership agreement restricts the voting rights of unitholders owning more than 4.9% of our common units.
GasLog and our general partner will own a 58.10% interest in us and will have conflicts of interest and limited fiduciary and contractual duties to us and our common unitholders, which may permit them to favor their own interests to your detriment.
Even if public unitholders are dissatisfied, they cannot initially remove our general partner without GasLog Ltd.s consent.
You will experience immediate and substantial dilution of $6.84 per common unit.
Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.
U.S. tax authorities could treat us as a passive foreign investment company under certain circumstances, which would have adverse U.S. federal income tax consequences to U.S. unitholders.
This is not a comprehensive list of risks to which we are subject, and you should carefully consider all the information in this prospectus prior to investing in our common units.
8
Implications of Being an Emerging Growth Company
Our Predecessor had less than $1.0 billion in revenue during our last fiscal year, which means that we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. An emerging growth company may take advantage of specified reduced
reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
the ability to present only two years of audited financial statements and only two years of related Managements Discussion and Analysis of Financial Condition and Results of Operations in the registration statement of its initial public offering;
exemption from the auditor attestation requirement in the assessment of the emerging growth companys internal control over financial reporting; and
exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditors report in which the auditor would be required to provide additional information about
the audit and financial statements.
We may take advantage of these provisions until the end of the fiscal year following the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company as of the earliest to occur of: (i) the last
day of the fiscal year during which we had $1 billion or more in annual gross revenues; (ii) the date of our issuance, in a three-year period, of more than $1 billion in non-convertible debt; or (iii) the date on which we are deemed to be a large accelerated filer as defined for purposes of the Securities
Exchange Act of 1934, or the Exchange Act, which will occur if the market value of our common units held by non-affiliates exceeds $700 million on the last business day of our second fiscal quarter. We may choose to take advantage of some, but not all, of these reduced burdens. For as long as we
take advantage of the reduced reporting obligations, the information that we provide unitholders may be different than information provided by other public companies.
General
We were formed on January 23, 2014 as a Marshall Islands limited partnership. We intend to own, operate and acquire LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation under long-term charters with terms of five full years or more, although the
vessels in our initial fleet will have charters with remaining terms ranging from 3.8 years to 5.2 years as of March 31, 2014. Prior to the closing of this offering, our partnership will not own any vessels. At the closing of this offering, GasLog will contribute to us a 100% interest in its subsidiaries which
own a 100% interest in the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
. Prior to this offering, we have been a wholly owned subsidiary of GasLog, and our vessels have operated as part of GasLogs larger fleet.
At or prior to the closing of this offering, the following transactions will occur:
we will issue to GasLog 1,422,358 common units and all 9,822,358 of our subordinated units, representing a 57.24% limited partner interest in us, and all of our incentive distribution rights, which will entitle GasLog to increasing percentages of the cash we distribute in excess of $0.43125 per unit per
quarter;
we will issue to GasLog Partners GP LLC, a wholly owned subsidiary of GasLog, 400,913 general partner units, representing a 2.0% general partner interest in us;
we will sell 8,400,000 common units to the public in this offering, representing a 42.76% limited partner interest in us;
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we will use the net proceeds from this offering to prepay $82.63 million of outstanding borrowings under the vessel financing agreements related to the
GasLog Sydney
and we will retain $35.00 million for general partnership purposes; and
we will make a payment of the remaining proceeds of approximately $36.03 million to GasLog as partial consideration for the interest described above.
In addition, at or prior to the closing of this offering:
we will amend certain of our existing vessel financing agreements to, among other things, permit the transactions pursuant to which GasLog will contribute our initial fleet to us;
we will enter into an omnibus agreement with GasLog, our general partner and other affiliates of GasLog governing, among other things:
the extent to which we and GasLog may compete with each other;
our right to require GasLog to offer to us for purchase LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation and charters having committed terms of five full years or more;
our options to purchase any of the
GasLog Seattle
, the three vessels recently acquired from BG Group, the three additional vessels under contract to be purchased from BG Group,
and Hull Nos. 2042, 2072, 2073, 2102 and 2103 from GasLog, within 36 months following their acceptances by their
respective charterers (or, in the case of the
GasLog Seattle
, the three vessels recently acquired from BG Group and the three additional vessels under contract to be purchased from BG Group, within 36 months following the closing of this offering) at their respective fair market values, as described
under Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus Agreement;
certain rights of first offer on LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation under charters of five full years or more that GasLog proposes to sell, as described under Certain Relationships and Related Party TransactionsAgreements
Governing the TransactionsOmnibus Agreement; and
GasLogs provision of certain indemnities to us;
we will enter into an administrative services agreement with GasLog, pursuant to which GasLog will agree to provide us administrative services;
our operating subsidiaries will enter into amended commercial management agreements with GasLog, pursuant to which GasLog will provide commercial management services to us;
our operating subsidiaries will enter into amended ship management agreements with GasLog LNG Services that govern the crew and technical management of the vessels in our fleet; and
we will enter into a $30.0 million revolving credit agreement with GasLog Ltd.
For further details on our agreements with GasLog and its affiliates, including amounts involved, see Certain Relationships and Related Party Transactions.
The consideration for the 100% interests in the subsidiaries which own a 100% interest in the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
that will be contributed to us will be determined based on fair values; however, since GasLog and the Partnership are entities under common
control, the consideration will be accounted for at historical carrying values. The amount of cash consideration will be calculated after deducting from the net proceeds of this offering the amount that will be used for the debt prepayment and the amount that will remain as cash for general corporate
purposes for the Partnership. The non-cash consideration to GasLog will be equal to the fair value of the net assets as adjusted for the fair value of the vessels that will be contributed to the Partnership less the cash consideration. The difference between the fair value of consideration issued to GasLog
and the net assets to be received will be accounted for as an equity transaction in the financial statements of the Partnership.
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Holding Company Structure
We are a holding entity and will conduct our operations and business through subsidiaries, as is common with publicly traded limited partnerships, to maximize operational flexibility. We believe that conducting our operations through a publicly traded limited partnership will offer us the following
advantages:
access to the public equity and debt capital markets;
a lower cost of capital for expansion and acquisitions; and
an enhanced ability to use equity securities as consideration in future acquisitions.
Simplified Organizational and Ownership Structure After this Offering
The following table and diagram depict our simplified organizational and ownership structure after giving effect to the offering and related transactions described above, assuming no exercise of the underwriters option to purchase additional common units:
Number of
Percentage
Public Common Units
(1)(2)
8,400,000
41.90%
GasLog Ltd. Common Units
(1)
1,422,358
7.10%
GasLog Ltd. Subordinated Units
9,822,358
49.00%
General Partner Units
400,913
2.00%
20,045,629
100.00%
(1)
Assumes the underwriters do not exercise their option to purchase additional common units. If the underwriters do not exercise their option to purchase additional common units in full, we will issue up to an additional 1,260,000 common units to GasLog at the expiration of the option. Any such units
issued to GasLog will be issued for no additional consideration. If the underwriters exercise their option to purchase up to 1,260,000 additional common units, the number of common units purchased by the underwriters pursuant to such exercise will be sold to the public instead of being issued to
GasLog.
Accordingly, the exercise of the underwriters option will not affect the total number of common units outstanding. If the underwriters option is exercised in full, then GasLog would own common units representing a 0.81% ownership interest in us and the public would own common units representing
a 48.19% ownership interest in us.
(2)
Includes up to 420,000 common units that may be purchased by certain of our directors, officers, employees and related persons pursuant to a directed unit program, as described in more detail in Underwriting (Conflicts of Interest)Directed Unit Program. Also includes up to an aggregate of
approximately $60 million, or up to an aggregate of approximately 3 million common units (based on the midpoint of the price range set forth on the cover of this prospectus), of our common units that certain significant investors in GasLog have indicated that they currently intend to purchase in the
offering at the public offering price.
11
Units
Ownership
12
Our partnership agreement provides that our general partner will delegate to our board of directors the authority to oversee and direct our operations, management and policies on an exclusive basis. Certain of our directors and officers also currently serve as directors and officers of GasLog or its
affiliates. For more information about these individuals, see ManagementDirectors and Executive Officers.
Pursuant to the administrative services agreement, we will pay a fixed fee to GasLog for the reasonable costs and expenses incurred in connection with providing administrative services to us. For the three vessels in our initial fleet, we expect that we will pay approximately $1.8 million under the
administrative services agreement for the twelve months ending March 31, 2015. For a more detailed description of this arrangement, see Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsAdministrative Services Agreement.
Our operating subsidiaries are party to commercial management agreements, which will be amended in connection with this offering, pursuant to which we will reimburse GasLog for the reasonable costs and expenses incurred in connection with providing commercial management services to us. For
the three vessels in our initial fleet, we expect that we will pay approximately $1.1 million under the amended commercial management agreements for the twelve months ending March 31, 2015. For a more detailed description of this arrangement, see Certain Relationships and Related Party
TransactionsAgreements Governing the TransactionsCommercial Management Agreements.
In addition, our operating subsidiaries are party to ship management agreements, which will be amended in connection with this offering, with GasLog LNG Services that govern the crew and technical management of the vessels in our fleet. For the three vessels in our initial fleet, we expect that our
operating subsidiaries will pay GasLog LNG Services approximately $1.7 million in total under the amended ship management agreements for the twelve months ending March 31, 2015. For a more detailed description of this arrangement, see Certain Relationships and Related Party
TransactionsAgreements Governing the TransactionsShip Management Agreements.
Principal Executive Offices and Internet Address; SEC Filing Requirements
Our registered and principal executive offices are located at Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco, and our phone number is + 377 97 97 51 15. We expect to make our periodic reports and other information filed with or furnished to the United States Securities and Exchange
Commission, or the SEC, available, free of charge, through our website at www.gaslogmlp.com, which will be operational after this offering, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. See Where You Can Find More
Information for an explanation of our reporting requirements as a foreign private issuer.
Summary of Conflicts of Interest and Fiduciary Duties
Our general partner and our directors will have a legal duty to manage us in a manner beneficial to our unitholders, subject to the limitations described under Conflicts of Interest and Fiduciary Duties. This legal duty is commonly referred to as a fiduciary duty. Our directors also will have
fiduciary duties to manage us in a manner beneficial to us, our general partner and our limited partners. Our executive officers are employed by GasLog or its applicable affiliate and have fiduciary duties to that entity and not to us. As a result of these relationships, conflicts of interest may arise between
us and our unaffiliated limited partners on the one hand, and GasLog 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. In particular:
certain of our directors and officers also serve as directors and officers of GasLog or its affiliates and as such will have fiduciary duties to GasLog or its affiliates that may cause them
13
to pursue business strategies that disproportionately benefit GasLog or its affiliates or which otherwise are not in the best interests of us or our unitholders;
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, which 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; when acting in its individual capacity, our general partner may act without any fiduciary obligation to us or our unitholders whatsoever;
GasLog 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 five full years or more that may compete with our vessels if the Partnership does not exercise its rights to acquire such vessels;
any agreement between us, on the one hand, and our general partner and its affiliates, on the other, will not grant to our unitholders, separate and apart from us, the right to enforce the obligations of our general partner and its affiliates in our favor;
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: (i) enabling our general partner or its affiliates to receive distributions on any subordinated units held
by them or our incentive distribution rights or (ii) hastening the expiration of the subordination period;
GasLog, as the holder of our incentive distribution rights, has the right to reset the minimum quarterly distribution and the cash target distribution levels upon which the incentive distributions payable to GasLog are based without the approval of our unitholders or the conflicts committee of our
board of directors at any time when there are not subordinated units outstanding and we have made cash distributions to the holders of our incentive distribution rights at the highest level of incentive distribution for each of the prior four consecutive fiscal quarters; in connection with such resetting
and the corresponding relinquishment by GasLog of incentive distribution payments based on the cash target distribution levels prior to the reset, GasLog will be entitled to receive a number of newly issued common units and general partner units based on a predetermined formula described under
How We Make Cash DistributionsGasLogs Right to Reset Incentive Distribution Levels;
in connection with this offering, we will enter into agreements, and may enter into additional agreements, with GasLog and certain of its subsidiaries, relating to the purchase of additional vessels, the provision of certain services to us by GasLog, GasLog LNG Services and their affiliates and other
matters. In the performance of their obligations under these agreements, GasLog and its subsidiaries, other than our general partner, are not held to a fiduciary duty standard of care to us, our general partner or our limited partners, but rather to the standard of care specified in these agreements.
For a more detailed description of our management structure, see ManagementDirectors and Executive Officers and Certain Relationships and Related Party Transactions.
Initially, our general partner, which is wholly owned by GasLog, will have the right to appoint three of five, or a majority of our directors. Our board of directors will have a conflicts committee composed of directors who meet both NYSE and SEC independence requirements and are not any of the
following: (a) officers or employees of our general partner, (b) officers, directors or employees of any affiliate of our general partner (other than the Partnership and its subsidiaries) or (c) holders of any ownership interest in the general partner, its affiliates or the Partnership and its subsidiaries (other
than (x) common units or (y) awards granted pursuant to any long-term incentive plan, equity compensation plan or similar plan of the Partnership or its subsidiaries). 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 GasLog and its affiliates,
14
on the one hand, and us and our unaffiliated limited partners, on the other. There can be no assurance that a conflict of interest will be resolved in favor of the Partnership.
Our partnership agreement contains provisions that reduce the standards to which our general partner and our directors would otherwise be held under Marshall Islands law. For example, our partnership agreement limits the liability and reduces the fiduciary duties of our general partner and our
directors to our unitholders. Our partnership agreement also restricts the remedies available to our unitholders. By purchasing a common unit, you are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by our general partner, its affiliates or our
directors, all as set forth in our partnership agreement. See Conflicts of Interest and Fiduciary Duties for a description of the fiduciary duties that would otherwise be imposed on our general partner, its affiliates and our directors under Marshall Islands law, the material modifications of those duties
contained in our partnership agreement and certain legal rights and remedies available to our unitholders under Marshall Islands law.
For a more detailed description of the conflicts of interest and fiduciary duties of our general partner and its affiliates, see Conflicts of Interest and Fiduciary Duties. For a description of our other relationships with our affiliates, see Certain Relationships and Related Party Transactions.
15
Common units offered to the
public
9,660,000 common units if the underwriters exercise in full their option to purchase additional common units.
Units outstanding after this
offering
Use of proceeds
We intend to use the net proceeds from this offering (approximately $153.7 million, after deducting underwriting discounts and commissions and structuring fees and estimated offering expenses payable by us) to prepay $82.63 million of debt and to make a payment of
$36.0 million to GasLog as partial consideration for the interest in the subsidiaries that own the vessels in our initial fleet. The remaining $35.0 million of net proceeds will be available for general partnership purposes.
The net proceeds from any exercise of the underwriters option to purchase additional common units (approximately $23.5 million, if exercised in full, after deducting the underwriting discounts and commissions) will be used to make a payment to GasLog. If the
underwriters do not exercise their option to purchase additional common units, we will issue an additional 1,260,000 common units to GasLog at the expiration of the option for no additional consideration.
Cash distributions
We intend to make minimum quarterly distributions of $0.375 per common unit ($1.50 per unit on an annualized basis) to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to
our general partner. In general, we will pay any cash distributions we make each quarter in the following manner:
first
, 98.0% to the holders of common units and 2.0% to our general partner, until each common unit has received a minimum quarterly distribution of $0.375 plus any arrearages from prior quarters;
second
, 98.0% to the holders of subordinated units and 2.0% to our general partner, until each subordinated unit has received a minimum quarterly distribution of $0.375; and
third
, 98.0% to all unitholders, pro rata, and 2.0% to our general partner, until each unit has received an aggregate distribution of $0.43125.
16
8,400,000 common units.
9,822,358 common units and 9,822,358 subordinated units, representing a 49.0% and 49.0% interest in us, respectively. If the underwriters do not exercise their option to purchase additional common units, we will issue common units to GasLog upon the options
expiration for no additional consideration. Accordingly, the exercise of the underwriters option will not affect the total number of common units outstanding. In addition, our general partner will own a 2.0% general partner interest in us.
17
18
distribution, liquidation and voting, on the terms and conditions determined by our board of directors, without the consent of our unitholders. See
Units Eligible for Future Sale and The Partnership AgreementIssuance of Additional Interests.
Board of directors
We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Our general partner has appointed each of our five initial directors,
three of whom meet the independence standards of the New York Stock Exchange and also qualify as independent of GasLog under our partnership agreement, so as to be eligible for membership on our conflicts committee. Our general partner will initially retain the
right to appoint three of our directors. At our 2015 annual meeting, which will be the first annual meeting we will hold after this offering, the common unitholders will elect two of our directors. The two directors elected by our common unitholders at our 2015 annual
meeting will be divided into classes to be elected by our common unitholders annually on a staggered basis. If our general partner exercises its right to transfer the power to elect a majority of our directors to the common unitholders, an additional director will
thereafter be elected by our common unitholders. That director would be added to the class that does not at such time have a director. Our general partner may exercise this right in order to permit us to claim, or continue to claim, an exemption from U.S. federal
income tax under Section 883 of the Internal Revenue Code of 1986, as amended, or the Code. See BusinessTaxation of the Partnership. The majority of our directors will be non-United States citizens or residents. Initially, three of our directors will meet the
above independence standards. We expect that following our first annual meeting in 2015, each of the elected directors and one of the appointed directors will meet the independence standards established by the New York Stock Exchange, and that, at a minimum,
each of the elected directors will also qualify as independent of GasLog under our partnership agreement so as to be eligible for membership on our conflicts committee.
Voting rights
Except as otherwise described herein, each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, 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 of directors), determining the presence of a quorum or for other similar purposes under our partnership agreement, unless otherwise required by law. Effectively, this means that the voting rights of any such unitholders in excess of 4.9% will be
redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of
19
20
Non-U.S. tax considerations
We have been organized under the laws of the Republic of the Marshall Islands. Our vessel-owning subsidiaries have been organized under the laws of Bermuda and we, GasLog LNG Services and our general partner are expected to be treated as managed and
controlled in Monaco. For a discussion of material Marshall Islands, Bermuda and Monaco income tax considerations that may be relevant to prospective unitholders and for a discussion of the risk that unitholders may be attributed the activities we undertake in
various jurisdictions for taxation purposes, see Non-United States Tax Considerations and Risk FactorsTax Risks.
Directed unit program; purchases
by significant shareholders
Exchange listing
We have applied to list the common units on the New York Stock Exchange under the symbol GLOP.
Conflicts of Interest
An affiliate of Citigroup Global Markets Inc. is a lender under the senior secured loan facility related to the
GasLog Sydney
and, accordingly, will receive a portion of the net proceeds of this offering. Because an affiliate of Citigroup Global Markets Inc. will receive
more than 5% of the net proceeds in this offering, it will be deemed to have a conflict of interest under Rule 5121(f)(5) of the Financial Industry Regulatory Authority, Inc., or FINRA. Accordingly, this offering will be made in compliance with the applicable
provisions of Rule 5121. Rule 5121 requires that a qualified independent underwriter, or QIU, participate in the preparation of this prospectus and exercise the usual standards of due diligence with respect thereto. Credit Suisse Securities (USA) LLC has agreed to act
as qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 of the Securities Act. Credit Suisse Securities (USA) LLC will
not receive any additional fees for serving as qualified independent
At our request, the underwriters have reserved up to 5% of the common units offered hereby for sale at the initial public offering price for officers, directors, employees and certain other persons associated with us and our general partner. For further information
regarding our directed unit program, please read Underwriting (Conflicts of Interest). In addition, certain significant investors in GasLog have indicated that they currently intend to purchase up to an aggregate of $60 million, or up to an aggregate of approximately
3 million common units (based on the midpoint of the price range set forth on the cover of this prospectus), of our common units in the offering at the public offering price.
21
underwriter in connection with this offering. We have agreed, subject to certain terms and conditions, to indemnify Credit Suisse Securities (USA) LLC against certain liabilities incurred in connection
with it acting as QIU in this offering, including liabilities under the Securities Act of 1933, as amended, or the Securities Act. See Use of Proceeds and Underwriting (Conflicts of Interest).
22
Summary Financial and Operating Data
The following table presents, in each case for the periods and as of the dates indicated, summary historical financial and operating data of GasLog Partners LP Predecessor, which includes the subsidiaries of GasLog that have interests in the vessels in our initial fleet. This acquisition will be accounted
for as a reorganization of entities under common control. The summary historical financial data of GasLog Partners LP Predecessor as of and for the years ended December 31, 2012 and 2013 has been derived from the audited combined carve-out financial statements of GasLog Partners LP Predecessor,
prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB, which are included elsewhere in this prospectus.
The following financial data should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations, the historical combined carve-out financial statements of GasLog Partners LP Predecessor and the notes thereto included elsewhere in this
prospectus.
The results of operations for the year ended December 31, 2013 reflect operations of the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
, which commenced operations under their respective charters from January 2013, March 2013 and May 2013, respectively.
Our results of operations, cash flows and financial conditions could differ from those that would have resulted if we operated autonomously or as an entity independent of GasLog in the periods for which historical financial data is presented below, and such data may not be indicative of our future
operating results or financial performance.
23
Year Ended December 31,
2012
2013
(dollars in thousands)
Statement of Profit or Loss:
Revenues
$
$
64,143
Vessel operating costs
(13,097
)
Depreciation
(12,238
)
General and administrative expenses
(30
)
(1,525
)
(Loss)/profit from operations
(30
)
37,283
Financial costs including gain/(loss) on interest rate swaps
(941
)
(11,097
)
Financial income
110
32
Total other expense
(831
)
(11,065
)
(Loss)/profit for the year
$
(861
)
$
26,218
(Loss)/earnings per share, basic and diluted (based on 36,000 historical outstanding shares, representing the combined share capitalization of the three subsidiaries that own the vessels in our initial fleet)
$
(23.92
)
$
728.28
As of December 31,
2012
2013
(dollars in thousands)
Statement of Financial Position Data:
Cash and cash equivalents
$
2
$
14,404
Vessels
(1)
562,531
Vessels under construction
118,482
Total assets
128,765
581,770
Loanscurrent portion
22,075
Loansnon-current portion
363,917
Equity attributable to owners of GasLog Partners LP Predecessor
106,629
156,169
Total equity
106,629
156,169
Year Ended December 31,
2012
2013
(dollars in thousands)
Cash Flow Data:
Net cash (used in)/from operating activities
$
(110
)
$
32,159
Net cash from/(used in) investing activities
110
(454,263
)
Net cash from financing activities
436,506
Year Ended December 31,
2012
2013
(dollars in thousands)
Fleet Data:
Number of LNG carriers at end of period
3
Average number of LNG carriers during period
2.3
Average age of LNG carriers (years)
0.76
Total calendar days for fleet
833
Total operating days for fleet
(2)
833
Year Ended December 31,
2012
2013
(dollars in thousands)
Other Financial Data:
EBITDA
(3)
$
(970
)
$
52,458
Adjusted EBITDA
(3)
(42
)
49,559
Capital expenditures:
Payment for vessels under construction
452,792
24
(1)
Represents vessels in our initial fleet less accumulated depreciation. See Note 3 to our audited combined carve-out financial statements included elsewhere in this prospectus.
(2)
The operating days for our fleet is the total number of days in a given period that the vessels were in our possession less the total number of days off-hire. We define days off-hire as days lost to, among other things, operational deficiencies, drydocking for repairs, maintenance or inspection, equipment
breakdowns, special surveys and vessel upgrades, delays due to accidents, crew strikes, certain vessel detentions or similar problems, our failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew, or periods of commercial waiting time
during which we do not earn charter hire.
(3)
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
. We define EBITDA as earnings before interest income and expense, realized loss on interest rate swaps held for trading, depreciation and amortization and taxes. Adjusted EBITDA is defined as EBITDA before unrealized gain/(loss) on interest rate swaps and
foreign exchange gains/(losses). EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as our lenders, to assess our operating performance and ability to generate cash for debt service and capital expenditures, as well as our compliance
with the financial covenants and restrictions contained in our financing agreements. 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 and ability to generate cash for debt
service and capital expenditures. We believe that adjusted EBITDA assists our management and investors by increasing the comparability of our performance from period to period. This increased comparability is achieved by excluding the potentially disparate effects between periods of interest,
unrealized gain/(loss) on interest rate swaps, foreign exchange gains/(losses), 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 profit/(loss) from
operations between periods. We believe that including adjusted EBITDA as an operating measure benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing operational strength and cash generation ability in assessing whether to continue
to hold common units.
EBITDA and adjusted EBITDA should not be considered alternatives to profit/(loss), profit/(loss) from operations, cash flow (used in)/from operating activities or any other measure of operating performance or liquidity presented in accordance with IFRS. EBITDA and adjusted EBITDA exclude
some, but not all, items that affect profit/(loss) and net cash from operating activities, and these measures may vary among other companies. Therefore, EBITDA and adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies. The following tables
reconcile EBITDA and adjusted EBITDA to profit/(loss) and net cash from operating activities, the most directly comparable IFRS financial measures, for the periods presented:
Year Ended December 31,
2012
2013
(dollars in thousands)
Reconciliation to profit/(loss):
(Loss)/profit
$
(861
)
$
26,218
Financial income
(110
)
(32
)
Financial costs excluding unrealized gain/(loss) on interest rate swaps
1
14,034
Depreciation
12,238
EBITDA
$
(970
)
$
52,458
Unrealized loss/(gain) on interest rate swaps
940
(2,937
)
Foreign exchange (gains)/losses
(12
)
38
Adjusted EBITDA
$
(42
)
$
49,559
25
Year Ended December 31,
2012
2013
(dollars in thousands)
Reconciliation to net cash from operating activities:
Net cash (used in)/from operating activities
$
(110
)
$
32,159
Net increase in operating assets
960
1,543
Net increase in operating liabilities
(408
)
(8,324
)
Net change in related parties
(472
)
13,646
Unrealized gain/(loss) on interest rate swaps
(940
)
2,937
Interest paid
9,223
Non-cash contributed services
(627
)
Realized loss on interest rate swaps held for trading
1,901
EBITDA
$
(970
)
$
52,458
Unrealized loss/(gain) on interest rate swaps
940
(2,937
)
Foreign exchange (gains)/losses
(12
)
38
Adjusted EBITDA
$
(42
)
$
49,559
26
Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should carefully consider the following risk factors together
with all of the other information included in this prospectus in evaluating an investment in our common units.
If any of the following risks were actually to occur, our business, financial condition, results of operations and ability to make cash distributions to our unitholders could be materially adversely affected. In that case, we might not be able to make distributions on our common units, the trading price of our
common units could decline and you could lose all or part of your investment.
Risks Inherent in 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 subordinated units.
We may not have sufficient cash from operations to pay the minimum quarterly distribution of $0.375 per unit on our common units and subordinated units. The amount of cash we can distribute on our 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 continued availability of natural gas production, liquefaction and regasification facilities;
the price and demand for natural gas;
the level of our operating costs, such as the cost of crews, vessel maintenance and insurance;
the number of off-hire days for our fleet and the timing of, and number of days required for, drydocking of vessels;
the supply of LNG carriers;
prevailing global and regional economic and political conditions;
changes in local income tax rates;
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 we will have available for distribution will depend on other factors, including:
the level of capital expenditures we make, including for maintaining or replacing vessels and complying with regulations;
our debt service requirements, including fluctuations in interest rates, and restrictions on distributions contained in our debt instruments;
the level of debt we will incur if we exercise our option to purchase from GasLog any of the
GasLog Seattle
, the three vessels recently acquired from BG Group, the three vessels under contract to be purchased from BG Group, and Hull Nos. 2042, 2072, 2073, 2102 and 2103;
fluctuations in our working capital needs;
our ability to make, and the level of, working capital borrowings; and
the amount of any cash reserves, including reserves for future maintenance and replacement capital expenditures, working capital and other matters, established by our board of directors, which cash reserves are not subject to any specified maximum dollar amount.
27
The amount of cash we generate from our operations may differ materially from our profit or loss for a specified period, which will be affected by non-cash items. 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.
The assumptions underlying our forecast of cash available for distribution are inherently uncertain and are subject to risks and uncertainties that could cause actual results to differ materially from those forecasted.
The forecast of cash available for distribution set forth in Our Cash Distribution Policy and Restrictions on Distributions includes our forecast of operating results and cash flows for the twelve months ending March 31, 2015. The financial forecast has been prepared by management and we have
not received an opinion or report on it from our or any other independent auditor. The assumptions underlying the forecast are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from
those forecasted. If we do not achieve the forecasted results, we may not be able to pay the full minimum quarterly distribution or any amount on our common units or subordinated units, in which event the market price of the common units may decline materially.
Our ability to grow and to meet our financial needs 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. 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.
We must make substantial capital expenditures to maintain and expand our fleet, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash
available to unitholders than if actual maintenance and replacement capital expenditures were deducted.
We must make substantial capital expenditures to maintain and replace, over the long-term, the operating capacity of our fleet. We estimate that maintenance and replacement capital expenditures will average approximately $13.57 million per year, including potential costs related to replacing current
vessels at the end of their useful lives. Maintenance and replacement capital expenditures include capital expenditures associated with the removal of a vessel from the water for inspection, maintenance and/or repair of submerged parts (or drydocking) and modifying an existing vessel or acquiring a new
vessel to the extent these expenditures are incurred to maintain or replace the operating capacity of our fleet. These expenditures could vary significantly from quarter to quarter and could increase as a result of changes in:
the cost of labor and materials;
customer requirements;
the size of our fleet;
the cost of replacement vessels;
length of charters;
28
governmental regulations and maritime self-regulatory organization standards relating to safety, security or the environment;
competitive standards; and
the age of our ships.
Our partnership agreement requires our board of directors to deduct estimated, rather than actual, maintenance and replacement capital expenditures from operating surplus each quarter in an effort to reduce fluctuations in operating surplus (as defined in our partnership agreement). The amount of
estimated maintenance and replacement capital expenditures deducted from operating surplus is subject to review and change by our conflicts committee at least once a year. 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 from operating surplus. If our board of directors underestimates the appropriate level of estimated maintenance and replacement
capital expenditures, we may have less cash available for distribution in future periods when actual capital expenditures exceed our previous estimates.
If capital expenditures are financed through cash from operations or by issuing debt or equity securities, our ability to make cash distributions may be diminished, our financial leverage could increase or our unitholders may be diluted.
Use of cash from operations to expand or maintain our fleet will reduce cash available for distribution to unitholders. Our ability to obtain bank financing or to access the capital markets for future offerings 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 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, financial condition,
results of operations and ability to make cash distributions to our unitholders. Even if we are successful in obtaining necessary funds, the terms of such 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 maintain our current level of quarterly distributions to unitholders, both of which could have a material adverse effect on our
ability to make cash distributions.
Any limitation in the availability or operation of our ships could have a material adverse effect on our business, financial condition, results of operations and cash flows, which effect would be amplified by the small size of our initial fleet.
Our initial fleet consists of three LNG carriers that are in operation. If any of our ships is unable to generate revenues for any significant period of time for any reason, including unexpected periods of off-hire or early charter termination (which could result from damage to our ships), our business,
financial condition, results of operations and cash flows, including cash available for distribution to unitholders, could be materially and adversely affected. The impact of any limitation in the operation of our ships or any early charter termination would be amplified during the period prior to acquisition
of additional vessels from GasLog, as a substantial portion of our cash flows and income are dependent on the revenues earned by the chartering of our three LNG carriers in operation. 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 for such repair costs, which would decrease our earnings and cash flows.
Any charter termination could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our charterers have the right to terminate a ships time charter in certain circumstances, such as:
29
loss of the ship or damage to it beyond repair;
if the ship is off-hire for any reason other than scheduled drydocking for a period exceeding 90 consecutive days, or for more than 90 days in any one-year period;
defaults by us in our obligations under the charter; or
the outbreak of war or hostilities involving two or more major nations, such as the United States or the Peoples Republic of China, that would materially and adversely affect the trading of the ship for a period of at least 30 days.
A termination right under one ships time charter would not automatically give the charterer the right to terminate its other charter contracts with us. However, a charter termination could materially affect our relationship with the customer and our reputation in the LNG shipping industry, and in
some circumstances the event giving rise to the termination right could potentially impact multiple charters. Accordingly, the existence of any right of termination could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for
distribution to unitholders.
If we lose a charter, we may be unable to obtain a new time charter on terms as favorable to us or with a charterer of comparable standing, particularly if we are seeking new time charters at a time when charter rates in the LNG industry are depressed. Consequently, we may have an increased
exposure to the volatile spot market, which is highly competitive and subject to significant price fluctuations. In the event that we are unable to re-deploy a ship for which a charter has been terminated, we will not receive any revenues from that ship, and we may be required to pay expenses necessary to
maintain the ship in proper operating condition.
Due to our lack of diversification, adverse developments in the LNG transportation industry could adversely affect our business, particularly if such developments occur at a time when we are seeking a new charter.
Due to our lack of diversification, an adverse development in the LNG transportation industry could have a significantly greater impact on our business, particularly if such developments occur at a time when our ships are not under charter or nearing the end of their charters, than if we maintained
more diverse assets or lines of businesses.
We will initially derive all of our revenues from a single customer and will depend on two customers for nearly all of our revenues after our expected acquisition of additional vessels from GasLog. The loss of either of these customers would result in a significant loss of revenues and could have a
material adverse effect on our business, financial condition, results of operations and cash flows.
We currently derive all of our revenues from one customer, BG Group. Following the expected acquisition of additional vessels from GasLog, BG Group will continue to be a key customer, as at least ten of the vessels, which we will have options to acquire from GasLog, will be chartered to a
subsidiary of BG Group. In addition, two of the vessels that we will have options to acquire from GasLog, have been or will be chartered to a subsidiary of Shell. We could lose a customer or the benefits of our time charter arrangements for many different reasons including if the customer is unable or
unwilling to make charter hire or other payments to us because of a deterioration in its financial condition, disagreements with us or otherwise. If any of these customers terminates its charters, chooses not to re-charter our ships after the initial charter terms or is unable to perform under its charters and
we are not able to find replacement charters, we will suffer a loss of revenues that could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distribution to unitholders.
30
Our future performance depends on continued growth in LNG production and demand for LNG and LNG shipping.
Our future performance, including our ability to profitably expand our fleet will depend on continued growth in LNG production and the 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. The rate of
growth of the LNG industry 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 or LNG shipping, or any reduction or limitation in LNG production capacity, could have a material adverse effect on our ability to secure future time charters upon expiration or early termination of our current charter arrangements, for any ships for which we have not yet
secured charters, or for any new ships we acquire beyond our contracted newbuildings, which could harm our business, financial condition, results of operations and cash flows, including cash available for distribution to unitholders.
31
Demand for LNG shipping could be significantly affected by volatile natural gas prices and the overall demand for natural gas.
Natural 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.
Natural gas prices have historically varied substantially between regions. This price disparity between producing and consuming regions supports demand for LNG shipping and any convergence of natural gas prices would adversely affect demand for LNG shipping.
Fluctuations in overall LNG demand growth could adversely affect our ability to secure future time charters.
Over the past three years, global LNG demand has continued to rise, but at a slower pace than previously predicted. Clarkson Research estimates that LNG trade decreased by 1.6% in 2012 primarily due to lower production as a result of planned and unplanned outages at various liquefaction sites
and the weakness in the world economy. Clarkson Research further estimates that LNG trade improved marginally by only 0.5% in 2013. Continued economic uncertainty and the continued acceleration of unconventional natural gas production could have an adverse effect on our ability to secure future
term charters.
We may have difficulty further expanding our fleet in the future.
We may expand our fleet beyond the vessels we may acquire from GasLog by ordering additional newbuildings or by making selective acquisitions of high-quality secondhand ships to the extent that they are available. Our future growth will depend on numerous factors, some of which are beyond
our control, including our ability to:
obtain consents from lenders and charterers with respect to the vessels that we may acquire from GasLog;
identify attractive ship acquisition opportunities and consummate such acquisitions;
obtain newbuilding contracts at acceptable prices;
obtain required equity and debt financing on acceptable terms;
secure charter arrangements on terms acceptable to our lenders;
expand our relationships with existing customers and establish new customer relationships;
recruit and retain additional suitably qualified and experienced seafarers and shore-based employees through GasLog pursuant to the services agreements we will enter into with GasLog;
continue to meet technical and safety performance standards;
manage joint ventures; and
manage the expansion of our operations to integrate the new ships into our fleet.
32
During periods in which charter rates are high, ship values are generally high as well, and it may be difficult to consummate ship acquisitions or enter into shipbuilding contracts at favorable prices. In addition, any ship acquisition we complete may not be profitable at or after the time of acquisition
and may not generate cash flows sufficient to justify the investment. We may not be successful in executing any future growth plans, and we cannot give any assurances that we will not incur significant expenses and losses in connection with such growth efforts.
We may have difficulty obtaining consents that are necessary to acquire vessels with an existing charter or a financing agreement.
Under the omnibus agreement, we will have certain options and other rights to acquire vessels with existing charters from GasLog. The omnibus agreement provides that our ability to consummate the acquisition of any such vessels from GasLog will be subject to obtaining any consents of
governmental authorities and other non-affiliated third parties and to all agreements existing with respect to such vessel. In particular, with respect to GasLogs existing vessels, we would need the consent of the existing charterers and lenders. While GasLog will be obligated to use reasonable efforts to
obtain any such consents and, in the case of our initial fleet, to indemnify us if they are not obtained, we cannot assure you that in any particular case the necessary consent will be obtained from the governmental entity, charterer, lender or other entity.
Our future growth depends on our ability to expand relationships with existing customers, establish relationships with new customers and obtain new time charter contracts, for which we will face substantial competition from established companies with significant resources and potential new entrants.
One of our principal objectives is to enter into additional long-term, fixed-rate charters. The process of obtaining 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 do we or GasLog. A number of marine transportation companiesincluding companies with strong reputations and extensive
resources and experiencehave 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
33
existing customers or to obtain new customers 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 distribution to unitholders.
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 charter or re-charter our ships 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 ships are currently chartered. If hire rates are lower when we are seeking a new charter, our revenues and cash flows, including cash available for distribution to unitholders, may decline, as we may only be able to enter into new charters at reduced or unprofitable rates or may not be able to
re-charter our ship, 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.
Ship values may fluctuate substantially, which could impact our compliance with the covenants in our loan agreements and, if the values are lower at a time when we are attempting to dispose of ships, could cause us to incur a loss.
Values for ships can fluctuate substantially over time due to a number of different factors, including:
prevailing economic conditions in the natural gas and energy markets;
a substantial or extended decline in demand for LNG;
the level of worldwide LNG production and exports;
changes in the supply-demand balance of the global LNG carrier fleet;
changes in prevailing charter hire rates;
the physical condition of the ship;
the size, age and technical specifications of the ship;
demand for LNG carriers; and
the cost of retrofitting or modifying existing ships, as a result of technological advances in ship design or equipment, changes in applicable environmental or other regulations or standards, customer requirements or otherwise.
If the market value of our ships declines, we may breach some of the covenants contained in our credit facilities. If we do breach such covenants and we are unable to remedy the relevant breach, our lenders could accelerate our indebtedness and seek to foreclose on the ships in our fleet securing
those credit facilities. In addition, if a charter contract expires or is terminated by the customer, we may be unable to re-deploy the affected ships at attractive rates and, rather than continue to incur costs to maintain and finance them, we may seek to dispose of them. Any foreclosure on our ships, or
any disposal by us of a ship at a time when ship prices have fallen, could result in a loss and could materially and adversely affect our business, financial condition, results of operations and cash flows, including cash available for distribution to unitholders.
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Our ability to obtain additional debt financing for future acquisitions of ships or to refinance our existing debt may depend on the creditworthiness of our charterers and the terms of our future charters.
Our ability to borrow against the ships in our existing fleet and any ships we may acquire in the future largely depends on the value of the ships, which in turn depends in part on charter hire rates and the ability of our charterers to comply with the terms of their charters. The actual or perceived
credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional ships and to refinance our existing debt as balloon payments come due, or may significantly increase our costs of obtaining such
capital. Our inability to obtain additional financing or committing to financing on unattractive terms 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.
Our future capital needs are uncertain and we may need to raise additional funds in the future.
We believe that our existing cash and cash equivalents, including the funds raised in this offering, will be sufficient to meet our anticipated cash requirements for at least the next 12 months. However, we may need to raise additional capital to maintain, replace and expand the operating capacity of
our fleet and fund our operations. Among other things, we hold options to acquire twelve LNG carriers from GasLog and we do not currently have financing sources in place to fund the acquisition of these vessels. Our future funding requirements will depend on many factors, including the cost and
timing of vessel acquisitions, and the cost of retrofitting or modifying existing ships as a result of technological advances in ship design or equipment, changes in applicable environmental or other regulations or standards, customer requirements or otherwise.
We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our unitholders may experience dilution or reduced distributions per unit. Debt financing, if available, may involve covenants
restricting our operations or our ability to incur additional debt or pay distributions. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our unitholders. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or
delay, reduce the scope of or eliminate some or all of our fleet expansion plans. Any of these factors 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.
Fluctuations in exchange rates and interest rates could result in financial losses for us.
Fluctuations in currency exchange rates and interest rates may have a material impact on our financial performance. We receive virtually all of our revenues in dollars, while some of our operating expenses, including employee costs and certain crew costs, are denominated in euros. As a result, we
are exposed to foreign exchange risk. Although we monitor exchange rate fluctuations on a continuous basis, we do not currently hedge movements in currency exchange rates. As a result, there is a risk that currency fluctuations will have a negative effect on our cash flows and results of operations.
In addition, we may be exposed to a market risk relating to fluctuations in interest rates to the extent our credit facilities bear interest costs at a floating rate based on a prevailing market interest rate. Significant increases in the interest rates could adversely affect our cash flows, results of operations
and ability to service our debt. Although we use interest rate swaps from time to time to reduce our exposure to interest rate risk, we hedge only a portion of our outstanding indebtedness. There is no assurance that our derivative contracts will provide adequate protection against adverse changes in
interest rates or that our bank counterparties will be able to perform their obligations.
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The derivative contracts used to hedge our exposure to fluctuations in interest rates could result in reductions in our owners equity as well as charges against our profit.
We enter into interest rate swaps from time to time for purposes of managing our exposure to fluctuations in interest rates applicable to floating rate indebtedness. As of December 31, 2013, we had four interest rate swaps in place with a notional amount of $311.5 million. For the two interest rate
swaps that have been designated as cash flow hedging instruments, the changes in the fair value of the contracts are recognized in our statement of other comprehensive income as cash flow hedge gains or losses for the period, and could affect compliance with the market value adjusted net worth
covenants in our credit facilities. In addition, the changes in the fair value of the two derivative contracts that have not been designated as cash flow hedging instruments are recognized in our statement of profit or loss. Changes in the fair value of any derivative contracts that do not qualify for treatment
as cash flow hedges for financial reporting purposes would affect, among other things, our profit and earnings per share and would affect compliance with the market value adjusted net worth covenants in our credit facilities.
There is no assurance that our derivative contracts will provide adequate protection against adverse changes in interest rates or that our bank counterparties will be able to perform their obligations. In addition, as a result of the implementation of new regulation of the swaps markets in the United
States, the European Union and elsewhere over the next few years, the cost and availability of interest rate and currency hedges may increase or suitable hedges may not be available.
Our earnings and business are subject to the credit risk associated with our contractual counterparties.
We will enter into, among other things, time charters and other contracts with our customers, shipbuilding contracts and refund guarantees relating to newbuildings, credit facilities and commitment letters with banks, insurance contracts and interest rate swaps. Such agreements subject us to
counterparty credit risk. The ability and willingness of each of our counterparties to perform its obligations under a contract with us will depend upon a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the natural gas and
LNG markets and charter hire rates. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses which in turn could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for
distribution to unitholders.
Our debt levels may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions to unitholders.
Upon completion of this offering and the related transactions, we estimate that our consolidated debt will be approximately $297.3 million. Following this offering, we will continue to have the ability to incur additional debt, including by borrowing under our $30.0 million revolving credit facility with
GasLog (or the sponsor credit facility). See Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources. Our level of debt could have important consequences to us, including the following:
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, ship acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
we will need a substantial portion of our cash flow to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities and distributions to unitholders;
our debt level may make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our industry or the economy generally;
our debt level may limit our flexibility in responding to changing business and economic conditions; and
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if we are unable to satisfy the restrictions included in any of our financing agreements or are otherwise in default under any of those agreements, as a result of our debt levels or otherwise, we will not be able to make cash distributions to you, notwithstanding our stated cash distribution policy.
Our ability to service our debt depends 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 distributions, 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.
Financing agreements containing operating and financial restrictions may restrict our business and financing activities.
We have amended and obtained waivers and confirmations under certain of our existing vessel financing agreements to permit the transactions pursuant to which we will acquire our initial fleet. The operating and financial restrictions and covenants in such amended agreements and any future
financing agreements could adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities. For example, the financing agreements may restrict the ability of us and our subsidiaries to:
incur or guarantee indebtedness;
change ownership or structure, including mergers, consolidations, liquidations and dissolutions;
make dividends or distributions;
make certain negative pledges and grant certain liens;
sell, transfer, assign or convey assets;
make certain investments; and
enter into a new line of business.
In addition, such financing agreements may require us or, in the case of our financing agreements that are guaranteed by GasLog or its affiliates, GasLog or such affiliates to comply with certain financial ratios and tests, including, among others, maintaining a minimum liquidity, maintaining positive
working capital, ensuring that EBITDA exceeds interest payable, any amounts payable for interest rate swap and debt installments calculated on a four quarter rolling average basis, maintaining a minimum collateral value, and maintaining a minimum book equity ratio. Our or GasLogs ability to comply
with the restrictions and covenants, including financial ratios and tests, contained in such financing agreements is dependent on future performance and may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions
deteriorate, our or GasLogs ability to comply with these covenants may be impaired. In addition, we do not have direct control over GasLogs ability to comply with these covenants. Further, the lenders under our debt financing agreements could declare a default under our debt financing agreements
that are guaranteed by GasLog if GasLog defaults on other debt agreements to which we are not a party.
If we or GasLog are unable to comply with the restrictions and covenants in the agreements governing our indebtedness or in current or future debt financing agreements, there could be a default under the terms of those agreements. If a default occurs under these agreements, or if GasLog is in
default under any of its debt agreements lenders could terminate their commitments to lend and/or accelerate the outstanding loans and declare all amounts borrowed due and payable. We have pledged our vessels as security for our outstanding indebtedness. If our lenders were to foreclose on our vessels
in the event of a default, this may adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities. If any of these events occur, we cannot guarantee that our assets will be sufficient to repay in full all of our
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outstanding indebtedness, and we may be unable to find alternative financing. Even if we could obtain alternative financing, that financing might not be on terms that are favorable or acceptable. Any of these events would adversely affect our ability to make distributions to our unitholders and cause a
decline in the market price of our common units. See Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources.
Restrictions in our debt agreements may prevent us or our subsidiaries from paying distributions.
The payment of principal and interest on our debt reduces cash available for distribution to us and on our units. In addition, our and our subsidiaries financing agreements prohibit the payment of distributions upon the occurrence of the following events, among others:
failure to pay any principal, interest, fees, expenses or other amounts when due;
breach or lapse of any insurance with respect to vessels securing the facilities;
breach of certain financial covenants;
failure to observe any other agreement, security instrument, obligation or covenant beyond specified cure periods in certain cases;
default under other indebtedness;
bankruptcy or insolvency events;
failure of any representation or warranty to be correct;
a change of control, as defined in the applicable agreement; and
a material adverse change, as defined in the applicable agreement.
Events of default under the sponsor credit facility include, among others, the following:
failure to pay any sum payable under the sponsor credit facility when due;
breach of certain covenants and obligations of the sponsor credit facility;
a material inaccuracy of any representation or warranty;
default under other indebtedness in excess of $10.0 million which results in the relevant creditor declaring such indebtedness prematurely due and payable;
a lien, arrest, distress or similar event is levied upon or against any substantial part of our assets which is not discharged or disputed in good faith within 10 business days after we become aware of such event;
a substantial part of our business or assets is destroyed, abandoned, seized, appropriated or forfeited for any reason;
bankruptcy or insolvency events;
suspension or cessation of our business;
GasLog Partners GP LLC ceases to be our general partner; and
an amendment to our limited partnership agreement that, in the reasonable opinion of the lender, is adverse to its interests in connection with the sponsor credit facility.
In connection with this offering, we have amended and obtained waivers and confirmations under certain of our existing vessel financing agreements to permit the transactions pursuant to which we will acquire our initial fleet. The amended agreements contain covenants and provisions relating to
events of default similar to those contained in our existing vessel financing agreements. Furthermore, we expect that our future financing agreements will contain similar provisions. For more information regarding these financing agreements, see Managements Discussion and Analysis of Financial
Conditions and Results of OperationsLiquidity and Capital Resources.
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The failure to consummate or integrate acquisitions in a timely and cost-effective manner could have an adverse effect on our financial condition and results of operations.
Acquisitions that expand our fleet are an important component of our strategy. Under the omnibus agreement, we will have the right to purchase for fair market value any of Hull Nos. 2042, 2072, 2073, 2102 and 2103 within 36 months after GasLog notifies our board of directors of their acceptances
by their charterer (or, in the case of the
GasLog Seattle
, the three vessels recently acquired from BG Group and the three vessels under contract to be purchased from BG Group, 36 months after the closing of this offering). We will not be obligated to purchase any of these vessels at the applicable
determined price, and, accordingly, we may not complete the purchase of any of such vessels. Furthermore, even if we are able to agree on a price with GasLog, there are no assurances that we will be able to obtain adequate financing on terms that are acceptable to us.
We believe that other acquisition opportunities may arise from time to time, and any such acquisition could be significant. Any acquisition of a vessel or business may not be profitable at or after the time of acquisition and may not generate cash flow sufficient to justify the investment. In addition,
our acquisition growth strategy exposes us to risks that may harm our business, financial condition, results of operations and ability to make cash distributions to our unitholders, including risks that we may:
fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;
be unable to attract, 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 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.
In addition, unlike newbuildings, existing vessels typically do not carry warranties as to their condition. While we generally inspect existing vessels prior to purchase, such an inspection would normally not provide us with as much knowledge of a vessels condition as we would possess if it had been
built for us and operated by us during its life. Repairs and maintenance costs for existing 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.
Certain acquisition and investment opportunities may not result in the consummation of a transaction. In addition, we may not be able to obtain acceptable terms for the required financing for any such acquisition or investment that arises. We cannot predict the effect, if any, that any announcement
or consummation of an acquisition would have on the trading price of our common units. Our future acquisitions could present a number of risks, including the risk of incorrect assumptions regarding the future results of acquired vessels or businesses or expected cost reductions or other synergies
expected to be realized as a result of acquiring vessels or businesses, the risk of failing to successfully and timely integrate the operations or management of any acquired vessels or businesses and the risk of diverting managements attention from existing operations or other priorities. We may also be
subject to additional costs related to compliance with various international laws in connection with such acquisition. If we fail to consummate and integrate our acquisitions in a timely and cost-effective manner, our business, financial condition, results of operations and cash available for distribution could
be adversely affected.
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We may experience operational problems with vessels that reduce revenue and increase costs.
LNG carriers are complex and their operations are 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.
We depend on GasLog and certain of its subsidiaries to assist us in operating and expanding our businesses and competing in our markets.
In connection with this offering, we and our operating subsidiaries will enter into various services agreements with GasLog and its subsidiaries, including GasLog LNG Services, pursuant to which GasLog and its subsidiaries will provide to us certain administrative, financial and other services and to
our operating subsidiaries substantially all of their crew, technical management services (including vessel maintenance, periodic drydocking, cleaning and painting, performing work required by regulations and human resources and financial services) and other advisory and commercial management services,
including the sourcing of new contracts and renewals of existing contracts. Our operational success and ability to execute our growth strategy depends significantly upon the satisfactory performance of these services by GasLog and its subsidiaries. Our business will be harmed if such subsidiaries fail to
perform these services satisfactorily or if they stop providing these services to us or our operating subsidiaries.
Our ability to compete for new charters and expand our customer relationships depends largely on our ability to leverage our relationship with GasLog and its reputation and relationships in the shipping industry. If GasLog suffers material damage to its reputation or relationships, it may harm the
ability of us or our subsidiaries 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.
If our ability to do any of the things described above is impaired, it could have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions to our unitholders.
The required drydocking of our ships could be more expensive and time consuming than we anticipate, which could adversely affect our results of operations and cash flows.
Drydockings of our ships require significant capital expenditures and result in loss of revenue while our ships are off-hire. Any significant increase in either the number of off-hire days due to such drydockings or in the costs of any repairs carried out during the drydockings could have a material
adverse effect on our profitability and our cash flows. We may not be able to accurately predict the time required to drydock any of our ships or any unanticipated problems that may arise. If more than one of our ships is required to be out of service at the same time, or if a ship is drydocked longer
than expected or if the cost of repairs during the drydocking is greater than budgeted, our results of operations and our cash flows, including cash available for distribution to unitholders, could be adversely affected.
Delays in deliveries of newbuilding vessels could harm our operating results.
The delivery of any newbuildings we may order could be delayed, which would delay our receipt of revenues under the charters or other contracts related to the vessels. In addition, under some charters we may enter into that are related to a newbuilding, if our delivery of the
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newbuilding to our customer is delayed, we may be required to pay liquidated damages during the delay. For prolonged delays, the customer may terminate the charter and, in addition to the resulting loss of revenues, we may be responsible for additional, substantial liquidated damages.
The completion and delivery of newbuildings could be delayed because of:
quality or engineering problems;
changes in governmental regulations or maritime self-regulatory organization standards;
work stoppages or other labor disturbances at the shipyard;
bankruptcy or other financial crisis of the shipbuilder;
a backlog of orders at the shipyard;
political or economic disturbances;
weather interference or a catastrophic event, such as a major earthquake or fire;
requests for changes to the original vessel specifications;
shortages of or delays in the receipt of necessary construction materials, such as steel;
the inability to finance the construction or conversion of the vessels; or
the inability to obtain requisite permits or approvals.
If delivery of a vessel is materially delayed, it could adversely affect our results of operations and financial condition and our ability to make cash distributions.
An oversupply of LNG carriers may lead to a reduction in the charter hire rates we are able to obtain when seeking charters in the future.
Driven in part by an increase in LNG production capacity, the market supply of LNG carriers has been increasing as a result of the construction of new ships. According to Clarkson Research, during the period from 1996 to 2011, the global fleet of LNG carriers grew from 90 ships (9.4 million cbm)
to 361 ships (51.7 million cbm), due to the construction and delivery of new LNG carriers. Although the global newbuilding order book dropped steeply in 2009 and 2010, orders for 136 newbuilding LNG carriers were placed in the period from the start of 2011 to the start of April 2014, compared to a
total of just eleven newbuilding LNG carriers between 2008 and 2010. As of April 1, 2014, the LNG carrier order book totaled 113 ships with an aggregate capacity of 17.4 million cbm and represented 31% of the carrying capacity of the current fleet. At 31% of the fleet (in terms of carrying capacity),
the current order book is notably smaller than the record highs recorded in mid-2006 when it was almost 100% of the existing fleet. Nevertheless, it is substantially larger than it was at the start of 2011 (6% of the existing fleet). This and any future expansion of the global LNG carrier fleet may have a
negative impact on charter hire rates, ship utilization and ship values, which impact could be amplified if the expansion of LNG production capacity does not keep pace with fleet growth.
If charter hire rates are lower when we are seeking new time charters, our revenues and cash flows, including cash available for distribution to unitholders, may decline.
If an active short-term or spot LNG carrier charter market continues to develop, our revenues and cash flows may become more volatile and may decline following expiration or early termination of our current charter arrangements.
Most shipping requirements for new LNG projects continue to be provided on a multi-year basis, though the level of spot voyages and short-term time charters of less than twelve months in duration has grown in the past few years. If an active short-term or spot charter market continues to develop,
we may enter into short-term time charters upon expiration or early termination of our current charters, for any ships for which we have not secured charters, or for any ships we acquire from GasLog. As a result, our revenues and cash flows may become more volatile. In addition, an active short-term
or spot charter market may require us to enter into charters based on changing market prices, as opposed to contracts based on fixed rates, which could result in a decrease in our
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revenues and cash flows, including cash available for distribution to unitholders, if we enter into charters during periods when the market price for shipping LNG is depressed.
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 ships 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. Ship and engine designs are continually evolving. At such time as newer designs are developed and accepted in the
market, these newer vessels may be found to be more efficient or more flexible or have longer physical lives than ours. As a result, competition from these more technologically advanced LNG carriers could adversely affect our ability to charter or re-charter our ships and the charter hire rates we will be
able to secure when we seek to charter or re-charter our ships, and could also reduce the resale value of our ships. This could adversely affect our revenues and cash flows, including cash available for distribution to unitholders.
Risks associated with operating ocean-going ships could affect our business and reputation.
The operation of ocean-going ships carries inherent risks. These risks include the possibility of:
marine disaster;
piracy;
environmental accidents;
adverse weather conditions;
grounding, fire, explosions and collisions;
cargo and property loss or damage;
business interruptions caused by mechanical failure, human error, war, terrorism, disease and quarantine, or political action in various countries; and
work stoppages or other labor problems with crew members serving on our ships.
An accident involving any of our owned ships could result in any of the following:
death or injury to persons, loss of property or environmental damage;
delays in the delivery of cargo;
loss of revenues from termination of charter contracts;
governmental fines, penalties or restrictions on conducting business;
litigation with our employees, customers or third parties;
higher insurance rates; and
damage to our reputation and customer relationships generally.
Any of these results could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distribution to unitholders.
Changes in global and regional economic conditions could adversely impact our business, financial condition, results of operations and cash flows.
Weak global or regional economic conditions may negatively impact our business, financial condition, results of operations and cash flows in ways that we cannot predict. Our ability to expand our fleet will be dependent on our ability to obtain financing to fund the acquisition of additional ships. In
addition, uncertainty about current and future global economic conditions may cause our
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customers to defer projects in response to tighter credit, decreased capital availability and declining customer confidence, which may negatively impact the demand for our ships and services and could also result in defaults under our current charters. Global financial markets and economic conditions have
been volatile in recent years and remain subject to significant vulnerabilities. In particular, despite recent measures taken by the European Union, concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations and the overall stability of the
euro. Furthermore, a tightening of the credit markets may further negatively impact our operations by affecting the solvency of our suppliers or customers, 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. Similarly, such market conditions could affect lenders participating in our financing agreements, making them unable to fulfill their commitments and obligations to us. Any reductions in activity owing to such conditions or failure by our customers,
suppliers or lenders to meet their contractual obligations to us could adversely affect our business, financial position, results of operation and ability to make cash distributions to our unitholders.
Disruptions in world financial markets could limit our ability to obtain future debt financing or refinance existing debt.
Global financial markets and economic conditions have been disrupted and volatile in recent years. Credit markets as well as the debt and equity capital markets were exceedingly distressed and at certain times in recent years it was difficult to obtain financing and the cost of any available financing
increased significantly. If global financial markets and economic conditions significantly deteriorate in the future, we may experience difficulties obtaining financing commitments, including commitments to refinance our existing debt as substantial balloon payments come due under our credit facilities, in
the future if lenders are unwilling to extend financing to us or unable to meet their funding obligations due to their own liquidity, capital or solvency issues. As a result, financing may not be available on acceptable terms or at all. If financing is not available when needed, or is available only on
unfavorable terms, we may be unable to meet our future obligations as they come due. Our failure to obtain the funds for these capital expenditures could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distribution to
unitholders. In the absence of available financing, we also may be unable to take advantage of further business opportunities or respond to competitive pressures.
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 subsequently 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 ships 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 societys rules.
If any ship does not maintain its class, it will lose its insurance coverage and be unable to trade, and the ships owner will be in breach of relevant covenants under its financing arrangements. Failure to maintain the class of one or more of our ships could have a material adverse effect on our
business, financial condition, results of operations and cash flows, including cash available for distribution to 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 ships operate and in
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the countries in which our ships are registered. These requirements include those relating to equipping and operating ships, providing security and minimizing or addressing impacts on the environment from ship operations. We may incur substantial costs in complying with these requirements, including
costs 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 ships, 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 ships. 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 recently enacted ballast water management system 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 ships 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 ships to obtain and, possibly, recover from, 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 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 owners or operators intentional or reckless conduct. These
limitations are also subject to periodic updates and may otherwise be amended in the future.
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.
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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, or the MARPOL Convention. Compliance with future changes in
laws and regulations relating to climate change could increase the costs of operating and maintaining our ships 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 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 natural 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 industry could have significant financial and operational adverse impacts on our business that we cannot
predict with certainty at this time.
We operate our ships worldwide, which could expose us to political, governmental and economic instability that could harm our business.
Because we operate our ships in the geographic areas where our customers do business, our operations may be affected by political, governmental and economic conditions in the countries where our ships operate or where they are registered. Any disruption caused by these factors could harm our
business, financial condition, results of operations and cash flows. In particular, our ships 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. 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 distribution to 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 or elsewhere as a result of terrorist attacks, hostilities or diplomatic or political pressures that limit trading activities with those countries.
Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.
The operation of any ship includes risks such as mechanical failure, personal injury, collision, fire, contact with floating objects, property loss or damage, cargo loss or damage and business interruption due to a number of reasons, including political circumstances in foreign countries, hostilities and
labor strikes. In addition, there is always an inherent possibility of a marine disaster, including explosion, spills and other environmental mishaps, and other liabilities arising from owning, operating or managing ships in international trade.
Although we carry protection and indemnity, hull and machinery and loss of hire insurance covering our ships consistent with industry standards, we can give no assurance that we are adequately insured against all risks or that our insurers will pay a particular claim. We also may be unable to
procure adequate insurance coverage at commercially reasonable rates in the future. Even
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if our insurance coverage is adequate to cover our losses, we may not be able to obtain a timely replacement ship in the event of a loss of a ship. Any uninsured or underinsured loss could harm our business, financial condition, results of operations and cash flows, including cash available for distribution
to unitholders.
In addition, some 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.
Terrorist attacks, international hostilities and piracy could adversely affect our business, financial condition, results of operations and cash flows.
Terrorist attacks, piracy and the current conflicts in the Middle East, and other current and future conflicts, may adversely affect our business, financial condition, results of operations and cash flows, including cash available for distribution to unitholders. The continuing hostilities in the Middle East
may lead to additional acts of terrorism, further regional conflicts, other armed actions around the world and civil disturbance in the United States or elsewhere, 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.
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 ships trading in regions such as the South China Sea and the Gulf of
Aden. Since 2008, the frequency of piracy incidents against commercial shipping vessels has increased significantly, particularly in the Gulf of Aden and off the coast of Somalia. Any terrorist attacks targeted at ships may in the future negatively materially affect our business, financial condition, results of
operations and cash flows and could directly impact our ships or our customers.
We currently employ armed guards on board certain vessels operating in areas that may be prone to hijacking or terrorist attacks. The presence of armed guards may increase the risk of damage, injury or loss of life in connection with any attacks on our vessels, in addition to increasing crew costs.
We may not be adequately insured to cover losses from acts of terrorism, piracy, regional conflicts and other armed actions, including losses relating to the employment of armed guards.
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 customers 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.
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GasLog may on our behalf be unable to attract and retain qualified, skilled employees or crew necessary to operate our business or may pay substantially increased costs for its employees and crew.
Our success will depend in large part on GasLogs ability to attract, hire, train and retain highly skilled and qualified personnel. In crewing our vessels, we require technically skilled employees with specialized training who can perform physically demanding work. Competition to attract, hire, train and
retain qualified crew members is intense, and crew manning costs continue to increase. If we are not able to increase our hire rates to compensate for any crew cost increases, our business, financial condition, results of operations and ability to make cash distributions to our unitholders may be adversely
affected. Any inability we experience in the future to attract, hire, train and retain a sufficient number of qualified employees could impair our ability to manage, maintain and grow our business.
In the future, the ships we own could be required to call on ports located in countries that are subject to restrictions imposed by the United States and other governments.
The United States and other governments and their agencies impose sanctions and embargoes on certain countries and maintain lists of countries they consider to be state sponsors of terrorism. For example, in 2010, the United States enacted the Comprehensive Iran Sanctions Accountability and
Divestment Act, or CISADA, which expanded the scope of the former Iran Sanctions Act. Among other things, CISADA expanded the application of the prohibitions imposed by the U.S. government to non-U.S. companies, such as us, and limits 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, as well as LNG.
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. The Secretary
of the Treasury may prohibit any transactions or dealings, including any U.S. capital markets financing, involving any person found to be in violation of Executive Order 13608. Also in 2012, the U.S. enacted the Iran Threat Reduction and Syria Human Rights Act of 2012, or the ITRA, which created
new sanctions and strengthened existing sanctions. Among other things, the ITRA intensifies existing sanctions regarding the provision of goods, services, infrastructure or technology to Irans petroleum or petrochemical sector. The ITRA 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 such persons vessels from U.S. ports for up to two years. The ITRA also includes a requirement that issuers of securities must disclose to the SEC in their annual
and quarterly reports filed after February 6, 2013 whether the issuer or any affiliate has knowingly engaged in certain sanctioned activities involving Iran during the timeframe covered by the report. Finally, in January 2013, the U.S. enacted the Iran Freedom and Counter-Proliferation Act of 2012
which expanded the scope of U.S. sanctions on any person that is part of Irans energy, shipping or shipbuilding sector and operators of ports in Iran, and imposes penalties on any person who facilitates or otherwise knowingly provides significant financial, material or other support to these entities.
Although the ships we own have not called on ports in countries subject to sanctions or embargoes or in countries identified as state sponsors of terrorism, including Iran, North Korea and Syria, we cannot assure you that these ships will not call on ports in these countries in the future. While we
intend to maintain compliance with all sanctions and embargoes applicable to us, U.S. and international sanctions and embargo laws and regulations do not necessarily apply to the same
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countries or proscribe the same activities, which may make compliance difficult. Additionally, the scope of certain laws may be unclear, and these laws may be subject to changing interpretations and application and may be amended or strengthened from time to time, including by adding or removing
countries from the proscribed lists. Violations of sanctions and embargo laws and regulations could result in fines or other penalties and could result in some investors deciding, or being required, to divest their investment, or not to invest, in us.
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 through 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, or the FCPA. 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
FCPA. 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.
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 of ships. 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, although the impact of significant cost increases may be mitigated to some extent with respect to the vessels that are employed under charter contracts with automatic
periodic adjustment provisions or cost review provisions.
Governments could requisition our ships during a period of war or emergency, resulting in loss of earnings.
The government of a jurisdiction where one or more of our ships are registered could requisition for title or seize our ships. Requisition for title occurs when a government takes control of a ship and becomes its owner. Also, a government could requisition our ships 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 ships, the amount and timing of payments, if any, would be uncertain. A government requisition of one or more of our ships would result in off-hire days under our time charters and may cause us to breach covenants in certain
of our credit facilities, and could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distribution to unitholders.
Maritime claimants could arrest our ships, which could interrupt our cash flows.
Crew members, suppliers of goods and services to a ship, shippers or receivers of cargo and other parties may be entitled to a maritime lien against a ship for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a ship. The arrest or
attachment of one or more of our ships which is not timely discharged could cause us to
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default on a charter or breach covenants in certain of our credit facilities and, to the extent such arrest or attachment is not covered by our protection and indemnity insurance, could require us to pay large sums of money to have the arrest or attachment lifted. Any of these occurrences could have a
material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distribution to unitholders.
Additionally, in some jurisdictions, such as the Republic of South Africa, under the sister ship theory of liability, a claimant may arrest both the ship that is subject to the claimants maritime lien and any associated ship, which is any ship owned or controlled by the same owner. Claimants could
try to assert sister ship liability against one ship in our fleet for claims relating to another of our ships.
Because the Public Company Accounting Oversight Board is not currently permitted to inspect our independent accounting firm, you may not benefit from such inspections.
Auditors of U.S. public companies are required by law to undergo periodic PCAOB inspections that assess their compliance with U.S. law and professional standards in connection with performance of audits of financial statements filed with the SEC. Certain European Union countries, including
Greece, do not currently permit the PCAOB to conduct inspections of accounting firms established and operating in such European Union countries, even if they are part of major international firms. The PCAOB conducted inspections in Greece in 2008 and evaluated our auditors performance of audits
of SEC registrants and our auditors quality controls. Currently, however, the PCAOB is unable to conduct inspections in Greece until a cooperation agreement between the PCAOB and the Greek Accounting & Auditing Standards Oversight Board is reached. Accordingly, unlike for most U.S. public
companies, should the PCAOB again wish to conduct an inspection, it is currently prevented from evaluating our auditors performance of audits and its quality control procedures, and, unlike shareholders of most U.S. public companies, our unitholders would be deprived of the possible benefits of such
inspections.
We are a holding company and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to make distributions to unitholders.
We are a holding company. Our subsidiaries conduct all of our operations and own all of our operating assets, including our ships. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to pay our obligations and to make distributions to unitholders
depends entirely on our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by a claim or other action by a third party, including a creditor, or by the law of its jurisdiction of incorporation which regulates the payment of
distributions. If we are unable to obtain funds from our subsidiaries, our board of directors may exercise its discretion not to make distributions to unitholders.
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
managements 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 certain of our credit facilities.
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Risks Inherent in an Investment in Us
GasLog and its affiliates may compete with us.
Pursuant to the omnibus agreement that we and GasLog will enter into in connection with the closing of this offering, GasLog and its controlled affiliates (other than us, our general partner and our subsidiaries) generally will agree not to acquire, own, operate or charter certain LNG carriers
operating under charters of five full years or more. The omnibus agreement, however, contains significant exceptions that may allow GasLog or any of its controlled affiliates to compete with us, which could harm our business. For example, these exceptions will result in GasLog not being restricted from:
acquiring, owning, operating or chartering Non-Five-Year Vessels; acquiring a non-controlling equity ownership, voting or profit participation interest in any company, business or pool of assets; acquiring, owning, operating or chartering a Five-Year Vessel that GasLog would otherwise be restricted from
owning if we are not willing or able to acquire such vessel from GasLog within the periods set forth in the omnibus agreement; or owning or operating any Five-Year Vessel that GasLog owns on the closing date of this offering and that is not part of our initial fleet as of such date. See Certain
Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus AgreementNoncompetition for a detailed description of those exceptions and the definitions of Five-Year Vessel and Non-Five-Year Vessel.
Unitholders have limited voting rights, and our partnership agreement restricts the voting rights of unitholders owning 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 and to vote on any other matters that
are properly brought before the meeting. Our general partner has appointed each of our five initial directors, three of whom meet the independence standards of the New York Stock Exchange and also qualify as independent of GasLog under our partnership agreement, so as to be eligible for
membership on our conflicts committee. Our general partner will initially retain the right to appoint three of our directors. At our 2015 annual meeting, which will be the first annual meeting we will hold after this offering, the common unitholders will elect two of our directors. The two directors elected
by our common unitholders at our 2015 annual meeting will be divided into classes to be elected by our common unitholders annually on a staggered basis. If our general partner exercises its right to transfer the power to elect a majority of our directors to the common unitholders, an additional director
will thereafter be elected by our common unitholders. That director would be added to the class that does not at such time have a director. Our general partner may exercise this right in order to permit us to claim, or continue to claim, an exemption from U.S. federal income tax under Section 883 of
the Code. See BusinessTaxation of the Partnership. The majority of our directors will be non-United States citizens or residents. Initially, three of our directors will meet the above independence standards. We expect that following our first annual meeting in 2015, each of the elected directors and one
of the appointed directors will meet the independence standards established by the New York Stock Exchange, and that, at a minimum, each of the elected directors will also qualify as independent of GasLog under our partnership agreement so as to be eligible for membership on our conflicts
committee.
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 will 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 and subordinated units, including any units owned by our general partner and its 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 of directors),
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determining the presence of a quorum or for other similar purposes, unless required by law. Effectively, this means that the voting rights of any unitholders not entitled to vote on a specific matter will be redistributed pro rata among the other common unitholders. 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 the 4.9% limitation, except with respect to voting their common units in the election of the elected directors.
GasLog and our general partner own a 57.24% limited partner interest and a 2.0% general partner interest in us, control the election of a majority of our directors and have conflicts of interest and limited fiduciary and contractual duties to us and our common unitholders, which may permit them to
favor their own interests to your detriment.
Following this offering, GasLog will own a 57.24% limited partner interest and a 2.0% general partner interest in us, assuming no exercise of the underwriters option to purchase additional common units, and will own and control our general partner. In addition, our general partner will initially have
the right to appoint three of five, or a majority, of our directors. Certain of our directors and officers are directors and officers of GasLog or its affiliates, and, as such, they have fiduciary duties to GasLog or its affiliates that may cause them to pursue business strategies that disproportionately benefit
GasLog or its affiliates or which otherwise are not in the best interests of us or our unitholders. Conflicts of interest may arise between GasLog and its affiliates (including our general partner), on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, our general
partner and its affiliates may favor their own interests over the interests of our unitholders. See Our partnership agreement limits our general partners and our directors fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner or our
directors. These conflicts include, among others, the following situations:
neither our partnership agreement nor any other agreement requires our general partner or GasLog or its affiliates to pursue a business strategy that favors us or utilizes our assets, and GasLogs officers and directors have a fiduciary duty to make decisions in the best interests of the shareholders
of GasLog, which may be contrary to our interests;
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. Specifically, our general partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights
or registration 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 or general partner interest or votes upon the dissolution of the partnership;
under our partnership agreement, as permitted under Marshall Islands law, our general partner and our directors have limited fiduciary duties. The partnership agreement also restricts the remedies available to our unitholders, 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 our general partner and our directors, all as set forth in the partnership agreement;
our general partner is entitled to reimbursement of all reasonable costs incurred by it and its affiliates for our benefit;
our partnership agreement does not restrict us from paying our general partner or its 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 80.0% of our common units; and
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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 its limited call right.
Even if our general partner relinquishes the power to elect one director to the common unitholders, so that they will elect a majority of our directors, our general partner will have substantial influence on decisions made by our board of directors. See Certain Relationships and Related Party
Transactions, Conflicts of Interest and Fiduciary Duties and The Partnership Agreement.
Our officers face conflicts in the allocation of their time to our business.
Our officers are all employed by GasLog or its applicable affiliate and are or will be performing executive officer functions for us pursuant to the administrative services agreement. Our officers, with the exception of Andrew J. Orekar who will be our chief executive officer following the closing of
this offering, are not required to work full-time on our affairs and also perform services for affiliates of our general partner, including GasLog. As a result, there could be material competition for the time and effort of our officers who also provide services to our general partners affiliates, which could
have a material adverse effect on our business, results of operations and financial condition. See Our Management.
Our partnership agreement limits our general partners and our directors fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner or our directors.
Our partnership agreement provides that our general partner will delegate 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
partnership agreement also contains provisions that reduce the standards to which our general partner and directors would otherwise be held by Marshall Islands 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. Where our partnership agreement permits, our general partner may consider only the interests and factors that it desires, and in such cases it has no fiduciary
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 in its individual capacity will be made by its sole owner, GasLog. Specifically, pursuant to our partnership agreement, our general partner
will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration 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 or general partner interest or votes upon the dissolution of
the partnership;
provides that our general partner and our directors are entitled to make other decisions in good faith if they reasonably believe that the decision is in our best interests;
generally provides that transactions with our affiliates and resolutions of conflicts of interest not approved by the 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 directors will be liable for monetary damages to us, our limited partners or assignees for any acts or omissions, unless
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there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or our officers or directors or those other persons engaged in actual fraud or willful misconduct.
In order to become a limited partner 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. See Conflicts of Interest and Fiduciary DutiesFiduciary Duties.
Fees and cost reimbursements, which GasLog or its applicable affiliate will determine for services provided to us and our subsidiaries, will be substantial, will likely be higher for future periods than reflected in our results of operations for the year ended December 31, 2013, will be payable regardless
of our profitability and will reduce our cash available for distribution to you.
Pursuant to the amended ship management agreements, our subsidiaries will pay fees for services provided to them by GasLog LNG Services, and will reimburse GasLog LNG Services for all expenses incurred on their behalf. These fees and expenses will include all costs and expenses incurred in
providing the crew and technical management of the vessels in our fleet to our subsidiaries. In addition, our operating subsidiaries will pay GasLog LNG Services a fixed management fee for costs and expenses incurred in connection with providing these services to our operating subsidiaries. For the three
vessels in our initial fleet, we expect the amount of these fees and expenses to be approximately $1.7 million for the twelve months ending March 31, 2015.
In addition, pursuant to an administrative services agreement, GasLog will provide us with certain administrative services. We will pay a fixed fee to GasLog for its reasonable costs and expenses incurred in connection with the provision of the services under the administrative services agreement. For
the three vessels in our initial fleet, we expect to pay GasLog approximately $1.8 million in total for the services under the administrative services agreement for the twelve months ending March 31, 2015.
In addition, pursuant to the amended commercial management agreements, GasLog will provide us with commercial management services. For the three vessels in our initial fleet, we will pay to GasLog a fixed commercial management fee in U.S. dollars for costs and expenses incurred in connection
with providing services. We expect to pay GasLog approximately $1.1 million in total for the services under the amended commercial management agreements for the twelve months ending March 31, 2015.
For a description of the amended ship management agreements, amended commercial management agreements and the administrative services agreement, see Certain Relationships and Related Party Transactions. The fees and expenses payable pursuant to the amended ship management
agreements, amended commercial management agreements and the administrative services agreement will likely be higher for future periods than reflected in our results of operations for the year ended December 31, 2013. Additionally, these fees and expenses will be payable without regard to our
business, results of operation and financial condition. The payment of fees to and the reimbursement of expenses of GasLog or its applicable affiliate, including GasLog LNG Services, could adversely affect our ability to pay cash distributions to you.
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 GasLogs
consent, unless GasLogs 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 will be unable initially to remove our general partner without its consent because our general partner and GasLog will own sufficient units upon completion of this offering 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
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remove the general partner. Following the closing of this offering, GasLog will own 57.24% of the outstanding common and subordinated units, assuming no exercise of the underwriters option to purchase additional common units.
If our general partner is removed without cause during the subordination period and units held by our general partner and GasLog 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 general partner interest and the holders of the incentive distribution rights will have the right to convert such 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 the general partner 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 in its capacity as our general partner. 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. Therefore, the removal of our general partner because of the unitholders dissatisfaction with the general partners decisions in this regard would most likely result in the termination of the subordination period.
Common unitholders will be entitled to elect only two of the five members of our board of directors. Our general partner, by virtue of its general partner interest, in its sole discretion will appoint the remaining directors (subject to its right to transfer the power to elect a majority of our directors
to the common unitholders).
The election of the directors by common unitholders is staggered, meaning that the members of only one of three classes of our elected directors will be selected each year. Prior to the exercise by our general partner of its right to transfer the power to elect a majority of our directors to the
common unitholders, one of the three classes will not have a director. Therefore, no director will be up for election by the common unitholders in the year that the empty class is up for election. In addition, the directors appointed by our general partner will 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 of directors), determining the presence of a quorum or for other similar purposes, unless required by law.
Effectively, this means that the voting rights of any such unitholders in excess of 4.9% will 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.
There are no restrictions in our partnership agreement on our ability to issue equity securities.
The effect of these provisions may be to diminish the price at which the common units will trade.
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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.
Substantial future sales of our common units in the public market could cause the price of our common units to fall.
We have granted registration rights to GasLog and certain of its affiliates. These unitholders have the right, subject to some conditions, to require us to file registration statements covering any of our common, subordinated or other equity securities owned by them or to include those securities in
registration statements that we may file for ourselves or other unitholders. Upon the closing of this offering and assuming no exercise of the underwriters option to purchase additional common units, GasLog will own 1,422,358 common units and 9,822,358 subordinated units and all of the incentive
distribution rights. Following their registration and sale under the applicable registration statement, those securities will become freely tradable. By exercising their registration rights and selling a large number of common units or other securities, these unitholders could cause the price of our common
units to decline.
In addition, certain significant investors in GasLog have indicated that they currently intend to purchase up to an aggregate of $60 million, or up to an aggregate of approximately 3 million common units (based on the midpoint of the price range set forth on the cover of this prospectus), of our
common units in the offering at the public offering price. Further, our directors or officers may purchase up to 420,000 common units through the directed unit program. Assuming the significant investors in GasLog purchase 3 million common units and all of the common units reserved for issuance under
the directed unit program are sold to participants in the program, these 3,420,000 common units will be held by persons who have contractually agreed not to sell such units for 180 days following the date of this prospectus. However, following the expiration of the 180 day lockup period, sales of a large
number of these units could cause the price of our common units to decline.
You will experience immediate and substantial dilution of $6.84 per common unit.
The assumed initial public offering price of $20.00 per common unit (the midpoint of the range set forth on the cover of this prospectus) exceeds pro forma net tangible book value of $13.16 per common unit. Based on the assumed initial public offering price, you will incur immediate and substantial
dilution of $6.84 per common unit. This dilution results primarily because the assets contributed by our general partner and its affiliates are recorded at their historical cost, and not their fair value, in accordance with the Partnerships accounting policy decision under IFRS. See Dilution.
GasLog, as the initial holder of all of the incentive distribution rights, may elect to cause us to issue additional common units to it in connection with a resetting of the target distribution levels related to its incentive distribution rights without the approval of the conflicts committee of our board of
directors or holders of our common units and subordinated units. This may result in lower distributions to holders of our common units in certain situations.
GasLog, as the initial holder of all of the incentive distribution rights, has the right, at a time when there are no subordinated units outstanding and it has received incentive distributions at the highest level to which it is entitled (48.0%) for each of the prior four consecutive fiscal quarters, to reset
the initial cash target distribution levels at higher levels based on the distribution at the time of the exercise of the reset election. Following a reset election by GasLog, the minimum quarterly distribution amount will be reset to an amount equal to the average cash distribution amount per common unit
for the two fiscal quarters immediately preceding the reset election (such amount is referred to as the reset minimum quarterly distribution), and the target distribution levels will be
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reset to correspondingly higher levels based on the same percentage increases above the reset minimum quarterly distribution amount.
In connection with resetting these target distribution levels, GasLog will be entitled to receive a number of common units equal to that number of common units whose aggregate quarterly cash distributions equaled the average of the distributions to it on the incentive distribution rights in the prior
two quarters. We anticipate that GasLog would exercise this reset right in order to facilitate acquisitions or internal growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion; however, it is possible that GasLog could exercise this reset election
at a time when it is experiencing, or may be expected to experience, declines in the cash distributions it receives related to its incentive distribution rights and may therefore desire to be issued our common units, rather than retain the right to receive incentive distributions based on the initial target
distribution levels. As a result, a reset election may cause our common unitholders to experience dilution in the amount of cash distributions that they would have otherwise received had we not issued additional common units to GasLog in connection with resetting the target distribution levels related to
GasLogs incentive distribution rights. See How We Make Cash DistributionsIncentive Distribution Rights and How We Make Cash DistributionsGasLogs Right to Reset Incentive Distribution Levels.
We may issue additional equity securities, including securities senior to the common units, without your approval, which would dilute your ownership interests.
We may, without the approval of our unitholders, issue an unlimited number of additional units or other equity securities. In addition, we may issue an unlimited number of units that are senior to the common units in right of distribution, liquidation and voting. The issuance by us of additional
common units or other equity securities of equal or senior rank will have the following effects:
our unitholders proportionate ownership interest in us will decrease;
the amount of cash available for distribution on each unit may decrease;
because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase;
the relative voting strength of each previously outstanding unit may be diminished; and
the market price of the common units may decline.
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 prospectus, 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 $0.375 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 How We Make Cash DistributionsSubordination Period, Distributions of Available Cash From Operating Surplus During the Subordination Period and Distributions of Available Cash From Operating Surplus After the Subordination Period.
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In establishing cash reserves, our board of directors may reduce the amount of cash available for distribution to you.
Our partnership agreement requires our board of directors to deduct from operating surplus cash reserves that it determines are necessary to fund our future operating expenditures. These reserves also will affect the amount of cash available for distribution to our unitholders and they are not subject
to any specified maximum dollar amount. Our board of directors may establish reserves for distributions on the subordinated units, but only if those reserves will not prevent us from distributing the full minimum quarterly distribution, plus any arrearages, on the common units for the following four
quarters. As described above in Risks Inherent in Our BusinessWe must make substantial capital expenditures to maintain and replace the operating capacity of our fleet, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and
replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted, our partnership agreement requires our board of directors each quarter to deduct from operating surplus
estimated maintenance and replacement capital expenditures, as opposed to actual maintenance and replacement capital expenditures, which could reduce the amount of available cash for distribution. The amount of estimated maintenance and replacement capital expenditures deducted from operating
surplus is subject to review and change by our board of directors at least once a year, provided that any change must be approved by the conflicts committee of our board of directors.
Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.
If at any time our general partner and its affiliates own more than 80.0% of the common units, our general partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a
price not less than the then-current market price of our common units. 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, you may be required to sell your common units
at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability upon a sale of your units. For additional information about the limited call right, see The Partnership AgreementLimited Call Right.
At the completion of this offering and assuming no exercise of the underwriters option to purchase additional common units, GasLog, which owns and controls our general partner, will own 14.48% of our common units. At the end of the subordination period, assuming no additional issuances of
common units, no exercise of the underwriters option to purchase additional common units and the conversion of our subordinated units into common units, GasLog will own 57.24% of our common units.
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. See The Partnership AgreementLimited Liability for a discussion of the implications of the limitations on liability of a unitholder.
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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 Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources.
The price of our common units after this offering may be volatile.
The price of our common units after this offering 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 organizations 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 after this offering, or analysts making changes in their financial estimates;
general economic conditions;
terrorist acts;
future sales of our units or other securities;
investors perceptions of us and the LNG shipping industry;
the general state of the securities markets; 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 despite of our
operating performance. Consequently, you may not be able to sell our common units at prices equal to or greater than those that you pay in this offering.
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, and in particular for yield-based equity investments such as our common units. 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.
There is no existing market for our common units, and a trading market that will provide you with adequate liquidity may not develop. The price of our common units may fluctuate significantly, and you could lose all or part of your investment.
Prior to this offering, there has been no public market for the common units. After this offering, there will be only 8,400,000 publicly traded common units, assuming no exercise of the underwriters option to purchase additional common units, which includes up to approximately 3.4
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million common units that are expected to be held by significant shareholders of GasLog, as well as directors and officers of the Company. We do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be. You may not be able to
resell your common units at or above the initial public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common units and limit the number of investors who are able to buy the common units.
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 you 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 no history operating as a separate publicly traded entity and will incur increased costs as a result of being a publicly traded limited partnership.
We have no history operating as a separate publicly traded entity. As a publicly traded limited partnership, we will be required to comply with the SECs reporting requirements and with corporate governance and related requirements of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act,
the SEC and the securities exchange on which our common units will be listed. We will incur significant legal, accounting and other expenses in complying with these and other applicable regulations. We anticipate that our incremental general and administrative expenses as a publicly traded limited
partnership will be approximately $2.4 million annually and will include costs associated with annual reports to unitholders, tax return preparation, investor relations, registrar and transfer agents fees, incremental director and officer liability insurance costs and officer and director compensation. In
addition, we expect to incur approximately $1.8 million per annum of costs and fees for the three vessels in our initial fleet pursuant to the administrative services agreement that we will enter into with GasLog. These expenses may increase further after we are no longer an emerging growth company
and are required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
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, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies as described under SummaryImplications of Being an
Emerging Growth Company. We have elected to opt out of the extended transition period for complying with new or revised accounting standards under Section 107(b) of the JOBS Act, which election is irrevocable. We cannot predict if investors will find our common units less attractive because we
may rely on these exemptions. If some investors find our common units less attractive as a result, there may be a less active trading market for our common units and our unit price may be more volatile.
In addition, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company. For as
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long as we take advantage of the reduced reporting obligations, the information that we provide unitholders may be different than information provided by other public companies.
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 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 provisions of 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 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 the Partnership, there may be a delay of bankruptcy proceedings and the ability of unitholders and creditors to receive recovery after a bankruptcy proceeding. See Service of Process and Enforcement of Civil Liabilities.
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 general partner is a Marshall Islands limited liability company, and 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 you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under
securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or the assets of our general partner or our directors or officers. For more
information regarding the relevant laws of the Marshall Islands, see Service of Process and Enforcement of Civil Liabilities.
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 our general partner.
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);
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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 Marshall Islands 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 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.
In addition to the following risk factors, you should read BusinessTaxation of the Partnership, Material U.S. Federal Income Tax Considerations and Non-United States Tax Considerations for a more complete discussion of the expected material U.S. federal and non-U.S. income tax
considerations relating to us and the ownership and disposition of our common units.
We may be subject to taxes, which may reduce our cash available for distribution to you.
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. See BusinessTaxation of the Partnership.
U.S. tax authorities could treat us as a passive foreign investment company under certain circumstances, which would have adverse U.S. federal income tax consequences to U.S. unitholders.
A non-U.S. entity treated as a corporation for U.S. 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 75.0% of its gross income for any taxable year consists of passive income or at least 50.0% 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. unitholders of a PFIC are subject to a disadvantageous U.S. 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 an opinion of our U.S. counsel, Cravath, Swaine & Moore LLP, we believe that we will not be a PFIC for our current taxable year, and we expect that we will not be treated as a PFIC for any future taxable year. We have received an
opinion of our U.S. counsel in support of this position that concludes that the income our subsidiaries earn from certain of our present time-chartering activities should not constitute passive income for purposes of determining whether we are a PFIC. In addition, we have represented to our U.S. counsel
that we expect that more than 25.0% of our gross income for our current taxable year
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and each future year will arise from such time-chartering activities or other income our U.S. counsel has opined does not constitute passive income, and more than 50.0% of the average value of our assets for each such year will be held for the production of such nonpassive 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 U.S. counsel for purposes of their opinion, our U.S. counsel is of the opinion that we should not be a PFIC for our current taxable 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 U.S. 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.
Moreover, there are legal uncertainties involved in determining whether the income derived from time-chartering activities constitutes rental income or income derived from the performance of services. In
Tidewater Inc. v. United States
, 565 F.3d 299 (5th Cir. 2009), the Fifth Circuit held that income
derived from certain time-chartering activities should be treated as rental income rather than services income for purposes of a provision of the Code relating to foreign sales corporations. In that case, the Fifth Circuit did not address the definition of passive income or the PFIC rules; however, the
reasoning of the case could have implications as to how the income from a time charter would be classified under such rules. If the reasoning of this case were extended to the PFIC context, the gross income we derive or are deemed to derive from our time-chartering activities may be treated as rental
income, and we would likely be treated as a PFIC. In published guidance, the Internal Revenue Service, or IRS, stated that it disagreed with the holding in
Tidewater
, and specified that time charters similar to those at issue in the case should be treated as service contracts. We have not sought, and we
do not expect to seek, an IRS ruling on the treatment of income generated from our time-chartering activities, and the opinion of our counsel is not binding on the IRS or any court. As a result, the IRS or a court could disagree with our position. No assurance can be given that this result will not occur.
In addition, although we intend to conduct our affairs in a manner to avoid, to the extent possible, being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future, or that we will not be a PFIC in the future. 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 any subsequent taxable year), our U.S. unitholders would face adverse U.S. federal income tax consequences. See Material U.S. Federal Income Tax ConsiderationsU.S. Federal Income
Taxation of U.S. HoldersPFIC Status and Significant Tax Consequences for a more detailed discussion of the U.S. federal income tax consequences to U.S. unitholders if we are treated as a PFIC.
We may have to pay tax on U.S.-source income, which will reduce our cash flow.
Under the Code, the U.S. source gross transportation income of a ship-owning or chartering corporation, such as ourselves, is subject to a 4% U.S. 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. For 2013, GasLog did not have any U.S.
source gross transportation income.
We may not qualify for the exemption from U.S. federal income tax under Section 883. Even if we do not qualify, we do not currently expect any resulting U.S. federal income tax liability to be material or materially reduce the earnings available for distribution to our unitholders. For a more
detailed discussion, see the section entitled BusinessTaxation of the PartnershipUnited States.
You may be subject to income tax in one or more non-U.S. jurisdictions as a result of owning our common units if, under the laws of any such jurisdiction, we are considered to be carrying on
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business there. Such laws may require you to file a tax return with, and pay taxes to, those jurisdictions.
We intend to conduct our affairs and cause each of our subsidiaries to operate its business in a manner that minimizes income taxes imposed upon us and our subsidiaries. Furthermore, we intend to conduct our affairs and cause each of our subsidiaries to operate its business in a manner that
minimizes the risk that unitholders may be treated as having a permanent establishment or taxable presence in a jurisdiction where we or our subsidiaries conduct activities simply by virtue of their ownership of our common units. However, because we are organized as a partnership, there is a risk in
some jurisdictions that our activities or the activities of our subsidiaries may rise to the level of a taxable presence that is attributed to our unitholders for tax purposes. If you are attributed such a taxable presence in a jurisdiction, you may be required to file a tax return with, and to pay tax in, that
jurisdiction based on your allocable share of our income. In addition, we may be required to obtain information from you in the event a tax authority requires such information to submit a tax return. We may be required to reduce distributions to you on account of any tax withholding obligations
imposed upon us by that jurisdiction in respect of such allocation to you. The United States may not allow a tax credit for any foreign income taxes that you directly or indirectly incur by virtue of an investment in us.
The ratio of dividend income to distributions on our common units is subject to business, economic and other uncertainties as well as tax reporting positions with which the IRS may disagree, which could result in a higher ratio of dividend income to distributions and adversely affect the value of our
common units.
We estimate that approximately 70% of the total cash distributions made to a purchaser of common units in this offering who owns those units from the date of this offering through the period ending December 31, 2017 will constitute dividend income for U.S. tax purposes. The remaining portion of
the distributions will be treated first as a nontaxable return of capital to the extent of the purchasers tax basis in its common units and thereafter as capital gain. These estimates are based on certain assumptions that are subject to business, economic, regulatory, competitive and political uncertainties
beyond our control. In addition, these estimates are based on current U.S. federal income tax law and tax reporting positions that we will adopt and with which the IRS could disagree. As a result of these uncertainties, these estimates may be incorrect and the actual percentage of total cash distributions
that will constitute dividend income could be higher, and any difference could adversely affect the value of the common units. See Material U.S. Federal Income Tax ConsiderationsU.S. Federal Income Taxation of U.S. HoldersRatio of Dividend Income to Distributions.
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Statements included in this prospectus concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto, including our financial forecast, contain forward-looking statements. In addition, we and our representatives may from time to time
make other oral or written statements that are also forward-looking statements. The disclosure and analysis set forth in this prospectus includes assumptions, expectations, projections, intentions and beliefs about future events in a number of places, particularly in relation to our operations, cash flows,
financial position, plans, strategies, business prospects, changes and trends in our business and the markets in which we operate. These statements are intended as forward-looking statements. In some cases, predictive, future-tense or forward-looking words such as believe, intend, anticipate,
estimate, project, forecast, plan, potential, may, should, could and expect and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. In addition, we and our representatives may from time to time make
other oral or written statements which are forward-looking statements, including in our periodic reports that we will file with the SEC, other information sent to our unitholders, and other written materials.
Forward-looking statements include, but are not limited to, such matters as:
forecasts of our ability to make cash distributions on the units and the amount of any borrowings that may be necessary to make such distributions;
the ability to borrow under the sponsor credit facility;
general LNG and LNG shipping market conditions and trends, including charter rates, ship values, factors affecting supply and demand, technological advancements and opportunities for the profitable operations of LNG carriers;
future supply of, and demand for, natural gas;
our ability to leverage GasLogs relationships and reputation in the shipping industry;
our ability to enter into time charters with our existing customers as well as new customers;
our contracted charter revenue;
our customers performance of their obligations under our time charters and other contracts;
the effect of the worldwide economic slowdown;
future operating or financial results and future revenues and expenses;
our future financial condition and liquidity;
our ability to purchase vessels from GasLog in the future, including the
GasLog Seattle
, the three vessels recently acquired from BG Group, the three additional vessels under contract to be purchased from BG Group, and Hull Nos. 2042, 2072, 2073, 2102 and 2103;
our ability to obtain financing to fund capital expenditures, acquisitions and other corporate activities, funding by banks of their financial commitments, and our ability to meet our obligations under our credit facilities;
future, pending or recent acquisitions of ships or other assets, business strategy, areas of possible expansion and expected capital spending or operating expenses;
our expectations relating to making distributions and our ability to make such distributions;
our ability to enter into shipbuilding contracts for newbuildings and our expectations about the availability of existing LNG carriers to purchase, as well as our ability to consummate any such acquisitions;
our expectations about the time that it may take to construct and deliver newbuildings and the useful lives of our ships;
acceptance of a vessel by its charterer;
number of off-hire days, drydocking requirements and insurance costs;
our anticipated general and administrative expenses;
64
fluctuations in currencies and interest rates;
our ability to maintain long-term relationships with major energy companies;
expiration dates and extensions of charters;
our anticipated incremental general and administrative expenses as a publicly traded limited partnership and our fees and expenses payable under the amended ship management agreements, the administrative services agreement and the amended commercial management agreements;
the anticipated taxation of our partnership and distributions to our unitholders;
estimated future maintenance and replacement capital expenditures;
GasLogs ability to retain key employees and provide services to us;
future sales of our common units in the public market;
our ability to maximize the use of our ships, including the re-employment or disposal of ships no longer under time charter commitments;
environmental and regulatory conditions, including changes in laws and regulations or actions taken by regulatory authorities;
the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business;
requirements imposed by classification societies;
risks inherent in ship operation, including the discharge of pollutants;
availability of skilled labor, ship crews and management;
potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists;
potential liability from future litigation;
our business strategy and other plans and objectives for future operations; and
other factors discussed in the Risk Factors section of this prospectus.
Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict and are subject to risks and uncertainties that are described more fully in the Risk Factors section of this prospectus. Any of these factors or a combination of these factors could
materially affect future results of operations and the ultimate accuracy of the forward-looking statements. Factors that might cause future results to differ include, but are not limited to, the following:
changes in law, governmental rules and regulations, or actions taken by regulatory authorities;
changes in economic and competitive conditions affecting our business;
potential liability from future litigation;
length and number of off-hire periods and dependence on affiliated managers; and
other factors discussed in the Risk Factors section of this prospectus.
We caution that these and other forward-looking statements included in this prospectus represent our estimates and assumptions only as of the date of this prospectus and are not intended to give any assurance as to future results. Many of the forward-looking statements included in this prospectus
are based on our assumptions about factors that are beyond our ability to control or predict. Assumptions, expectations, projections, intentions and beliefs about future events may, and often do, vary from actual results and these differences can be material. The reasons for this include the risks,
uncertainties and factors described in the Risk Factors section of this prospectus. As a result, the forward-looking events discussed in this prospectus might not occur and our actual results may differ materially from those anticipated in the forward-looking statements. Accordingly, you should not unduly
rely on any forward-looking statements.
65
We undertake no obligation to update or revise any forward-looking statements contained in this prospectus, whether as a result of new information, future events, a change in our views or expectations or otherwise. 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 impact 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.
66
We expect to receive net proceeds of approximately $153.7 million from the sale of 8,400,000 common units offered by this prospectus, assuming an initial public offering price of $20.00 per unit (the midpoint of the range set forth on the cover of this prospectus) and after deducting underwriting
discounts and commissions, structuring fees and estimated offering expenses payable by us. We will use the net proceeds from this offering to:
prepay approximately $82.6 million of borrowings under the $277 million senior secured loan facility related to the
GasLog Sydney
;
retain approximately $35.0 million for general partnership purposes; and
make a payment of $36.0 million to GasLog as partial consideration for the interest in the subsidiaries that own the vessels in our initial fleet.
The $277 million senior secured loan facility bears interest at a rate of LIBOR plus a margin and the applicable tranche matures in May 2019. At December 31, 2013, the three-month LIBOR plus applicable spread on the senior secured loan facility was 2.50%. GAS-five Ltd. and GAS-six Ltd. (a
subsidiary of GasLog but an entity which will not be contributed to the Partnership), jointly and severally entered into the $277 million senior secured credit facility to fund the installment payments on the construction of the
GasLog Sydney
and the
GasLog Skagen
(the vessel owned by GAS-six Ltd.),
which we refer to as the GasLog Sydney facility. We have entered into amended facility agreements dividing the GasLog Sydney facility into two separate facilities on substantially the same terms as the current facility, with one facility executed by GAS-five Ltd. for the portion allocated to the
GasLog
Sydney
and one facility executed by GAS-six Ltd. for the portion allocated to the
GasLog Skagen
. See Managements Discussion and Analysis of Financial Condition and Results of OperationsBorrowing ActivitiesVessel Financing Agreements for a description of these credit facilities. Borrowings under
these facilities were used to finance the construction of the vessels in our initial fleet.
An affiliate of Citigroup Global Markets Inc. is a lender under the senior secured loan facility related to the
GasLog Sydney
and will receive a portion of the proceeds of this offering. Accordingly, this offering is being made in compliance with Rule 5121 of FINRA. See Underwriting (Conflicts of
Interest).
We have granted the underwriters a 30-day option to purchase up to 1,260,000 additional common units. If the underwriters exercise their option to purchase additional common units, we will use the net proceeds (approximately $23.5 million, if exercised in full, after deducting underwriting discounts
and commissions) to make a payment to GasLog. If the underwriters do not exercise their option to purchase additional common units, we will issue common units to GasLog at the expiration of the option period. If and to the extent the underwriters exercise their option to purchase additional common
units, the number of units purchased by the underwriters pursuant to such exercise will be issued to the public and the remainder, if any, will be issued to GasLog. Accordingly, the exercise of the underwriters option will not affect the total number of units outstanding or the amount of cash needed to
pay the minimum quarterly distribution on all units. See Underwriting (Conflicts of Interest).
A $1.00 increase or decrease in the assumed initial public offering price of $20.00 per common unit would cause the net proceeds from this offering, after deducting the estimated underwriting discounts, commissions and structuring fees and estimated offering expenses payable by us, to increase or
decrease, respectively, by approximately $7.8 million. In addition, we may also increase or decrease the number of common units we are offering. Each increase of 1.0 million common units offered by us, at the assumed initial public offering price to $20.00 per common unit, would increase net proceeds
from this offering by approximately $18.7 million. Similarly, each decrease of 1.0 million common units offered by us, at the assumed initial public offering price to $20.00 per common unit, would decrease the net proceeds from this offering by approximately $18.7 million. We expect that any such
increase or decrease will correspondingly increase or decrease the $36.0 million distribution to be made to GasLog from the net proceeds of this offering.
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The following table shows (a) cash and cash equivalents and (b) capitalization as of December 31, 2013 on an:
actual basis;
as adjusted basis, giving effect to scheduled principal amortization payments totaling $6.05 million during the period January 1, 2014 to April 25, 2014;
as further adjusted basis, giving effect to the following transactions:
we will issue to GasLog 1,422,358 common units and all 9,822,358 of our subordinated units, representing a 57.24% limited partner interest in us, and all of our incentive distribution rights, which will entitle GasLog to increasing percentages of the cash we distribute in excess of $0.43125 per unit
per quarter;
we will issue to GasLog Partners GP LLC, a wholly owned subsidiary of GasLog, 400,913 general partner units, representing a 2.0% general partner interest in us;
we will sell 8,400,000 common units to the public in this offering (assuming the underwriters option to purchase additional units is not exercised), at a public offering price of $20.00 per unit (assuming the midpoint of the price range set forth on the cover of this prospectus), resulting in net
proceeds of approximately $153.66 million (after deducting underwriting discounts and commissions and structuring fees of $11.34 million and estimated offering expenses of $3.0 million) and representing a 42.76% limited partner interest in us;
we will use the net proceeds from this offering to prepay $82.63 million of outstanding borrowings under the vessel financing agreements related to the
GasLog Sydney
and we will retain $35.00 million for general partnership purposes; and
we will make a payment of the remaining proceeds of approximately $36.03 million to GasLog as partial consideration for the interest described above.
This table is derived from and should be read together with the historical combined carve-out financial statements of GasLog Partners LP Predecessor and the accompanying notes contained elsewhere in this prospectus. You should also read this table in conjunction with Managements Discussion
and Analysis of Financial Condition and Results of Operations.
68
As of December 31, 2013
Historical
As Adjusted
As Further
(dollars in thousands)
CASH
Cash and cash equivalents
$
14,404
$
8,357
$
43,357
CAPITALIZATION
Debt:
(1)
GasLog Shanghai and GasLog Santiago facility
260,469
256,458
256,458
GasLog Sydney facility
(4)
134,426
132,390
49,756
Borrowing under the sponsor credit facility
(3)
Unamortized deferred loan issuance costs
(8,903
)
(8,903
)
(8,903
)
Total debt
385,992
379,945
297,311
Equity:
Owners capital
$
156,169
$
156,169
$
Partners capital
Held by public:
Common units (8,400,000 units on an as further adjusted basis)
(5)
153,660
Held by general partner and its affiliates:
Common units (1,422,358 units on an as further adjusted basis)
(6)
14,674
Subordinated units (9,822,358 units on an as further adjusted basis)
(6)
101,333
General partner interest (400,913 units on an as further adjusted basis)
(6)
4,136
Equity attributable to GasLog Partners
156,169
156,169
273,803
Total capitalization
(2)
$
542,161
$
536,114
$
571,114
Adjusted
|
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|
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(1) |
|
|
All of our outstanding debt has been incurred by our vessel owning subsidiaries. It is secured by our vessels and guaranteed by GasLog and GasLog Carriers Ltd., an intermediate holding company for GasLog. See Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources. The capitalization table does not give effect to a scheduled payment of $2.01 million to be made by GasLog on April 28, 2014. |
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|
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|
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(2) |
|
A $1.00 increase or decrease in the assumed initial public offering price of $20.00 per common unit would cause the net proceeds from this offering, after deducting the estimated underwriting discounts and commissions and structuring fees and estimated offering expenses payable by us, to increase or decrease, respectively, by approximately $7.8 million. In addition, we may also increase or decrease the number of common units we are offering. Each increase of 1.0 million common units offered by us, together with a concomitant $1.00 increase in the assumed initial public offering price to $21.00 per common unit, would increase net proceeds from this offering by approximately $27.4 million. Similarly, each decrease of 1.0 million common units offered by us, together with a concomitant $1.00 decrease in the assumed initial public offering price to $19.00 per common unit, would decrease the net proceeds from this offering by approximately $25.6 million. We expect that any such increase or decrease will correspondingly increase or decrease the $36.0 million distribution to be made to GasLog from the net proceeds of this offering. |
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|
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(3) |
|
At or prior to the closing of this offering, we expect to enter into a $30.0 million revolving credit facility (or the sponsor credit facility) with GasLog, to be available for general partnership purposes. We do not expect to make a draw on this facility in connection with the closing of this offering. For a description of this credit facility, please read Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesBorrowing ActivitiesRevolving Credit Facility with GasLog.
|
69
(4)
GAS-five Ltd. and GAS-six Ltd. (a subsidiary of GasLog but not contributed to the Partnership), jointly and severally entered into a $277 million senior secured credit facility to fund the installment payments on the construction of the
GasLog Sydney
and the
GasLog Skagen
(the vessel owned by
GAS-six Ltd.), which we refer to as the GasLog Sydney
facility. The historical and as adjusted amounts in the table above represent the portion of the GasLog Sydney facility allocated to the
GasLog Sydney
. Prior to the closing of this offering, we will enter into amended facility agreements, to
become effective upon the closing of this offering, dividing the GasLog Sydney facility into two separate facilities, one facility executed by GAS-five Ltd. for the portion allocated to the
GasLog Sydney
and one facility executed by GAS-six Ltd. for the portion allocated to the
GasLog Skagen
. For
more information, please read Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesBorrowing ActivitiesGasLog Sydney Facility.
(5)
Represents the estimated net proceeds from this offering based on the midpoint of the price range set forth on the cover of this prospectus.
(6)
Represents equity attributable to GasLog Partners before the completion of this offering of $156,168,950, less the cash payment of $36,026,000 to GasLog, allocated pro rata among the units to be held by GasLog and its affiliates immediately following the offering on the basis of 1,422,358 common
units, 9,822,358 subordinated units and 400,913 general partner units.
70
Dilution is the amount by which the offering price will exceed the net tangible book value per common unit after this offering. Based on the assumed initial public offering price of $20.00 per common unit, on a pro forma basis as of December 31, 2013, after giving effect to this offering of common
units, the application of the net proceeds in the manner described under Use of Proceeds and the formation transactions related to this offering, our pro forma net tangible book value would have been $263.83 million, or $13.16 per common unit. Purchasers of common units in this offering will
experience substantial and immediate dilution in net tangible book value per common unit for financial accounting purposes, as illustrated in the following table.
Assumed initial public offering price per common unit
$
20.00
Pro forma net tangible book value per common unit before this offering
(1)
$
12.55
Increase in net tangible book value per common unit attributable to purchasers in this offering
$
0.61
Less: Pro forma net tangible book value per common unit after this offering
(2)
$
13.16
Immediate dilution in net tangible book value per common unit to purchasers in this offering
(3)
$
6.84
(1)
Determined by dividing the net tangible book value of the contributed assets and liabilities of $146.2 million by the total number of units (1,422,358 common units, 9,822,358 subordinated units and the 2.0% general partner interest represented by 400,913 general partner units) to be issued to our
general partner and its affiliates for their contribution of assets and liabilities to us.
(2)
Determined by dividing our pro forma net tangible book value, after giving effect to the application of the net proceeds of this offering, by the total number of units (9,822,358 common units, 9,822,358 subordinated units and the 2.0% general partner interest represented by 400,913 general partner
units) to be outstanding after this offering.
(3)
Because the total number of common units outstanding following this offering will not be impacted by any exercise of the underwriters option to purchase additional common units and any net proceeds from such exercise will not be retained by us, there will be no change to the dilution in net
tangible book value per common unit to purchasers in the offering due to any exercise of the option.
The following table sets out the calculation of our historical and pro forma net tangible book value and pro forma net tangible book value per unit before and after the offering.
As of December 31, 2013
Pro forma
Adjustments
Pro forma
(dollars in thousands except units and per unit data)
Total equity
$
156,169
$
117,634
(1)
$
273,803
Less:
Accrued revenue from straight-line revenue recognition
(2)
(1,068
)
(1,068
)
Unamortized deferred loan issuance costs
(3)
(8,903
)
(8,903
)
Net tangible book value
$
146,198
$
117,634
$
263,832
Pro forma number of units
11,645,629
20,045,629
Pro forma net tangible book value per unit before and after offering
$
12.55
$
13.16
(1)
This amount represents the net proceeds from this offering after deducting the payment of $36.03 million to GasLog as partial consideration for the interest in the subsidiaries that own the vessels in our initial fleet.
(2)
See Note 6 to our audited combined carve-out financial statements included elsewhere in this prospectus.
(3)
See Note 9 to our audited combined carve-out financial statements included elsewhere in this prospectus.
71
before this offering
after this offering
The following table sets forth the number of units that we will issue and the total consideration contributed to us by our general partner and its affiliates and by the purchasers of common units in this offering upon consummation of the transactions contemplated by this prospectus.
Units Acquired
Total Consideration
Number
Percent
Amount
Percent
General partner and its affiliates
(1)(2)
11,645,629
58.10%
$
120,142,950
43.88%
New investors
8,400,000
41.90%
$
153,660,000
56.12%
Total
20,045,629
100.00%
$
273,802,950
100.00%
(1)
Upon consummation of the transactions contemplated by this prospectus, our general partner and GasLog will own an aggregate of 1,422,358 common units, 9,822,358 subordinated units and the 2.0% general partner interest represented by 400,913 general partner units.
(2)
The assets contributed by our general partner and its affiliates were recorded at historical book value, rather than fair value, as permitted under IFRS.
72
OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS
You should read the following discussion of our cash distribution policy and restrictions on distributions in conjunction with specific assumptions included in this section. In addition, you should read Forward-Looking Statements and Risk Factors for information regarding statements that do not
relate strictly to historical or current facts and certain risks inherent in our business.
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 (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves) rather than retaining it. Because we believe we will generally
finance any expansion capital expenditures from external financing sources, we believe that our investors are best served by our distributing all of our available cash. Our cash distribution policy is consistent with the terms of our partnership agreement, which requires that we distribute all of our available
cash quarterly (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves).
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 distribution policy is subject to certain restrictions and may be changed at any time, including:
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 will be subject to restrictions on distributions under our financing agreements. Our financing agreements contain material financial tests and covenants that must be satisfied in order to pay distributions. If we are unable to satisfy the restrictions included in any of our financing agreements or are
otherwise in default under any of those agreements, as a result of our debt levels or otherwise, we will not be able to make cash distributions to you, notwithstanding our stated cash distribution policy. These financial tests and covenants are described in this prospectus in Managements Discussion
and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources.
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 can be amended with the approval of a majority of the outstanding common units. GasLog will own common units representing a 7.10% ownership
interest in us and all of our subordinated units outstanding immediately after the closing of this offering. See The Partnership AgreementAmendment of the Partnership Agreement.
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
73
determined by our board of directors, taking into consideration the terms of our partnership agreement.
Under Section 51 of the Marshall Islands Act, we may not make a distribution to you 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, 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 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.
Our Ability to Grow Depends on Our Ability to Access External Expansion Capital
Because we distribute all of our available cash, we may not grow as quickly as businesses that reinvest their available cash to expand ongoing operations. 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 expansion and investment capital expenditures. As a result, to the extent we are unable to finance growth externally, our cash distribution policy will significantly impair our ability to grow. To the extent we issue additional units in connection with any acquisitions or other capital
expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level, which in turn may affect the available cash that we have to distribute on each unit. There are no limitations in our partnership agreement
on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional borrowings or other debt by us to finance our growth would result in increased interest expense, which in turn may affect the available cash that we have to distribute to our
unitholders.
Initial Distribution Rate
Upon completion of this offering, our board of directors will adopt a policy pursuant to which we will declare an initial quarterly distribution of $0.375 per unit for each complete quarter, or $1.50 per unit on an annualized basis, to be paid no later than 45 days after the end of each fiscal quarter
(beginning with the quarter ending June 30, 2014). This equates to an aggregate cash distribution of $7.5 million per quarter, or $30.1 million per year, in each case based on the number of common units, subordinated units and general partner units outstanding immediately after completion of this
offering. Our ability to make cash distributions at the initial distribution rate pursuant to this policy will be subject to the factors described above under GeneralLimitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy.
The table below sets forth the number of outstanding common units, subordinated units and general partner units upon the closing of this offering and the aggregate distribution amounts payable on such units during the year following the closing of this offering at our initial distribution rate of $0.375
per unit per quarter ($1.50 per unit on an annualized basis).
Number of
Distributions
One Quarter
Four Quarters
Common units
9,822,358
$
3,683,384
$
14,733,537
Subordinated units
9,822,358
3,683,384
14,733,537
General partner units
(1)
400,913
150,343
601,370
Total
20,045,629
$
7,517,111
(2)
$
30,068,444
(1)
The number of general partner units is determined by multiplying the total number of units deemed to be outstanding (
i.e.
, the total number of common and subordinated units outstanding divided by 98.0%) by the general partners 2.0% general partner interest.
74
Units
(2)
Actual payments of distributions on the common units, subordinated units and the general partner units are expected to be approximately $
million for the period between the estimated closing date of this offering (May , 2014) and the end of the fiscal quarter in which the closing date of this
offering occurs.
If the underwriters do not exercise their option to purchase additional common units, we will issue common units to GasLog at the expiration of the option period. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased
by the underwriters pursuant to such exercise will be issued to the underwriters and the remainder, if any, will be issued to GasLog. Any such units issued to GasLog will be issued for no additional consideration. Accordingly, the exercise of the underwriters option will not affect the total number of
units outstanding or the amount of cash needed to pay the minimum quarterly distribution on all units.
During the subordination period, before we make any quarterly distributions to subordinated unitholders, our common unitholders are entitled to receive payment of the full minimum quarterly distribution plus any arrearages in distributions from prior quarters. See How We Make Cash
DistributionsSubordination Period. We cannot guarantee, however, that we will pay the minimum quarterly distribution or any amount on the common units in any quarter.
As of the closing date of this offering, our general partner will be entitled to 2.0% of all distributions that we make prior to our liquidation. Our general partners initial 2.0% interest in these distributions may be reduced if we issue additional units in the future and our general partner does not
contribute a proportionate amount of capital to us to maintain its initial 2.0% general partner interest. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest.
Forecasted Results of Operations for the Twelve Months Ending March 31, 2015
In this section, we present in detail the basis for our belief that we will be able to pay our minimum quarterly distribution on all of our outstanding units for the twelve months ending March 31, 2015. We present two tables, consisting of:
Forecasted Results of Operations for the twelve months ending March 31, 2015; and
Forecasted Cash Available for Distribution for the twelve months ending March 31, 2015, as well as the significant assumptions upon which the forecast is based.
We do not as a matter of course make public projections as to future sales, earnings, or other results. However, management has prepared the prospective financial information set forth below to present forecasted results of operations and forecasted cash available for distribution. The accompanying
prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of management, was
prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of managements knowledge and belief, the expected course of action and our expected future financial performance. However, this information is not fact and should not be relied upon
as being necessarily indicative of future results, and readers of this Registration Statement are cautioned not to place undue reliance on the prospective financial information.
Neither our independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its
achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
We present below a forecast of our expected results of operations for the twelve months ending March 31, 2015. Our forecast presents, to the best of our knowledge and belief, our expected results of operations for the forecast period. Although we anticipate exercising some or all of our options to
purchase from GasLog the
GasLog Seattle
, the three vessels recently acquired from BG Group, the three additional vessels under contract to be purchased from BG Group, and Hull Nos. 2042, 2072, 2073, 2102 and 2103, the timing of such purchases is uncertain and each such purchase is subject to
75
reaching an agreement with GasLog regarding the fair market value of the vessel and the availability of financing, which we anticipate would be from external sources. As a result, our forecast does not reflect the expected results of operations or related financing of any of such vessels.
Our financial forecast reflects our judgment, as of the date of this prospectus, of conditions we expect to exist and the course of action we expect to take during the twelve months ending March 31, 2015. Our financial forecast is based on assumptions that we believe to be reasonable with respect to
the forecast period as a whole. The assumptions and estimates used in the financial forecast are inherently uncertain and represent those that we believe are significant to our financial forecast. We believe that we have a reasonable objective basis for those assumptions. To the extent that there is a
shortfall during any quarter in the forecast period, we believe we would be able to make working capital borrowings to pay distributions in such quarter and would be able to repay such borrowings in a subsequent quarter, because we believe the total cash available for distribution for the forecast period
will be more than sufficient to pay the aggregate minimum quarterly distribution to all unitholders. We believe our actual results of operations will approximate those reflected in our financial forecast, but we can give no assurance that our forecasted results will be achieved. There will likely be
differences between our financial forecast and the actual results and those differences could be material. Our operations are subject to numerous risks that are beyond our control. If the financial forecast is not achieved, we may not be able to pay cash distributions on our units at the initial distribution
rate stated in our cash distribution policy or at all.
Our forecast of our results of operations is a forward-looking statement and should be read together with the historical combined carve-out financial statements of GasLog Partners LP Predecessor and Managements Discussion and Analysis of Financial Condition and Results of Operations. The
financial forecast has been prepared by and is the responsibility of our management. However, our management has prepared the financial forecast set forth below in support of our belief that we will have sufficient cash available to allow us to pay the minimum quarterly distribution on all of our
outstanding units during the forecast period. In addition, in the view of our management, the accompanying financial forecast was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of our knowledge and belief, the expected course of
action and our expected future financial performance. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this prospectus are cautioned not to place undue reliance on the financial forecast.
When considering our financial forecast, you should keep in mind the risk factors and other cautionary statements included under the heading Risk Factors elsewhere in this prospectus. Any of the risks discussed in this prospectus or unanticipated events could cause our actual results of operations,
cash flows and financial condition to vary significantly from the financial forecast and such variations may be material. Prospective investors are cautioned to not place undue reliance on the financial forecast and should make their own independent assessment of our future results of operations, cash flows
and financial condition.
We are providing the financial forecast in support of our belief that we will have sufficient cash available to allow us to pay cash distributions on all of our units for each quarter in the twelve-month period ending March 31, 2015 at our stated initial distribution rate. See Forecast Assumptions and
ConsiderationsSummary of Significant Forecast Assumptions for further information as to the assumptions we have made for the financial forecast.
We do not undertake any obligation to release publicly the results of any future revisions we may make to the financial forecast or to update the financial forecast to reflect events or circumstances after the date of this prospectus, even in the event that any or all of the underlying assumptions are
shown to be in error. Therefore, we caution you not to place undue reliance on this information.
For comparison purposes, we have included the historical results of operations for the year ended December 31, 2013 adjacent to our forecast for the twelve months ended March 31, 2015 in the table below.
76
GASLOG PARTNERS LP
Historical
Forecast
(unaudited)
(dollars in thousands
Revenues
$
64,143
$
83,664
Vessel operating costs
(13,097
)
(18,419
)
Depreciation
(12,238
)
(16,064
)
General and administrative expenses
(1,525
)
(5,335
)
Profit from operations
37,283
43,846
Financial costs including gain/(loss) on interest rate swaps
(11,097
)
(18,103
)
Financial income
32
Profit for the twelve-month period
$
26,218
$
25,743
Attributable to:
524
515
General partners interest
25,694
25,228
Limited partners interest
$
26,218
$
25,743
Earnings per:
Common unit (basic and diluted)
1.31
1.28
Subordinated unit (basic and diluted)
1.31
1.28
General partner unit (basic and diluted)
1.31
1.28
Profit for the twelve-month period
26,218
25,743
Effective portion of changes in fair value of cash flow hedges
3,777
Net change in fair value of cash flow hedges reclassified to profit or loss
655
777
Total comprehensive income for the twelve month period
$
30,650
$
26,520
Attributable to:
General partners interest
613
530
Limited partners interest
30,037
25,990
$
30,650
$
26,520
Please read the accompanying summary of significant accounting policies and forecast assumptions.
Forecast Assumptions and Considerations
Basis of Presentation
The accompanying financial forecast and related notes present our forecasted results of operations for the twelve months ending March 31, 2015, based on the assumption that:
we will issue to GasLog 1,422,358 common units and 9,822,358 subordinated units, representing a 57.24% limited partner interest in us, and all of our incentive distribution rights, which will entitle GasLog to increasing percentages of the cash we distribute in excess of $0.43125 per unit per quarter;
we will issue to our general partner, a wholly owned subsidiary of GasLog, 400,913 general partner units, representing a 2.0% general partner interest in us;
we will sell 8,400,000 common units to the public in this offering, representing a 42.76% limited partner interest in us;
we will make a payment of $36.03 million to GasLog as partial consideration for the interest in the subsidiaries that own the vessels in our initial fleet;
77
FORECASTED RESULTS OF OPERATIONS
Year Ended
December 31,
2013
Twelve Months
Ending March 31,
2015
except per unit data)
we will use approximately $82.63 million of the net proceeds from this offering to prepay borrowings outstanding under certain of our vessel financing agreements related to the
GasLog Sydney
;
we will use approximately $14.34 million of the proceeds from this offering to pay underwriting discounts and commissions, structuring fees and offering expenses, and will retain approximately $35.0 million of cash for working capital; and
the vessels will be accounted for at their historical carrying values.
Summary of Significant Accounting Policies and Sources of Estimation Uncertainty
A summary of significant accounting policies is set out in Note 2 to the annual combined carve-out financial statements included elsewhere in this prospectus.
Summary of Significant Forecast Assumptions
Vessels.
The forecast reflects or assumes the following about our fleet:
363 days of operation under a time charter for the
GasLog Shanghai
;
363 days of operation under a time charter for the
GasLog Santiago
; and
363 days of operation under a time charter for the
GasLog Sydney
.
We have assumed that we will not make any acquisitions during the forecast period.
Voyage revenues.
Our forecasted voyage revenues are based on an average daily charter rate of $76,826 per vessel per day for a total of 1,089 revenue earning days per year (363 days per vessel). This amount has been determined based on the contracted daily hire rates for the vessels multiplied by
the total number of days our vessels are expected to be on-hire during the twelve months ending March 31, 2015 adjusted to record revenue on a straight line basis for charter agreements that provide for varying charter rates during their fixed term. We have assumed 2 days of off-hire for each of the
vessels in our fleet. The amount of actual off-hire time depends upon, among other things, the time a vessel spends in drydocking for repairs, maintenance or inspection, equipment breakdowns or delays due to accidents, crew strikes, certain vessel detentions or similar problems, as well as failure to
maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew.
The hire rate payable under the time charters in our initial fleet is fixed and payable monthly in advance, in U.S. dollars, and increases annually based on a fixed schedule to enable us to offset expected increases in operating costs. For more information on the components of the hire rate payable
under our charters, see BusinessShip Time ChartersHire Rate Provisions.
Vessel operating expenses
. Our forecasted vessel operating cost assumes that all of our vessels are operational during the twelve months ending March 31, 2015. Vessel operating expenses primarily relate to our vessels operating under time charters. The forecast takes into account (a) historical
operating expenses for crew wages, technical and maintenance expenses, provisions and stores, insurance expenses, brokers commission and other expenses, (b) the estimated operating days, (c) the estimated inflation effect, (d) fluctuations in foreign exchange currencies and (e) scheduled repairs and
maintenances. In addition, in our calculation of forecasted vessel operating expenses, we have assumed that our operating subsidiaries will incur approximately $1.7 million of costs and fees for the three vessels in our initial fleet pursuant to the ship management agreements between our operating
subsidiaries and GasLog LNG Services. These costs were determined based on the estimated operating days multiplied with the agreed daily fee per vessel. The daily fee is provided in the amended ship management agreements that will be entered into at the closing of this offering based on which our
subsidiaries will pay fees for services provided to them by GasLog LNG Services, and will reimburse GasLog LNG Services for all expenses incurred on their behalf. These fees and expenses will include all costs and expenses incurred in providing the crew and technical management of the vessels in our
fleet to our subsidiaries. In addition, our operating subsidiaries will pay GasLog LNG Services a fixed management fee in connection with providing
78
these services to our operating subsidiaries. See Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsShip Management Agreements.
Depreciation.
Our forecasted depreciation includes only the vessels in our initial fleet and has two components: a vessel component and a drydocking component. Vessels are stated at cost less accumulated depreciation and as of December 31, 2013 the historical carrying value amounts to $562.53
million. The vessel cost component is depreciated on a straight-line basis over the remaining economic useful lives of the vessels, which we estimate to be 34 years for each of the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
after deducting the residual values. The residual value is
estimated to be 10% of the initial vessel cost, which represents our estimate of the market value of the vessels at the end of their useful lives. The drydocking component is depreciated over the next drydockings that are scheduled in four years.
General and administrative expenses.
Forecasted general and administrative expenses for the twelve months ending March 31, 2015 are based on the assumption that we will incur approximately $2.4 million per annum in incremental expenses as a result of being a publicly traded limited partnership.
These expenses will include costs associated with annual reports to unitholders, tax return preparation, investor relations, registrar and transfer agents fees, incremental director and officer liability insurance costs and officer and director compensation. The forecasted incremental expenses of being a public
company are estimated to include $1.21 million for executive officers and directors salaries, $0.86 million for audit, legal and consulting fees and director and officer insurance, $0.04 million for listing fees and miscellaneous expenses of $0.29 million and were compared with the expenses paid by other
public companies for similar services, as reported in such companies public filings. In addition, we expect to incur approximately $1.8 million per annum of costs and fees for the three vessels in our initial fleet pursuant to the administrative services agreement that we will enter into with GasLog. See
Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsAdministrative Services Agreement.
Foreign currency.
We receive all of our revenue in U.S. dollars. However, a portion of our expenses are denominated in euros. For purposes of this financial forecast, we have assumed an exchange rate of 1 euro to $1.3 U.S. dollars for the twelve months ending March 31, 2015.
Financial costs and interest rate swaps, net.
Our financial forecast for the twelve months ending March 31, 2015 assumes we will have an average outstanding loan balance of approximately $303.97 million assuming a payment of $82.63 million from the net proceeds of this offering on May 1, 2014
and a proportional decrease in the future scheduled payments with an estimated weighted average interest rate of 4.06% per annum (and assumes no borrowings under the sponsor credit facility). The derivative instruments entered into by GasLog and its subsidiaries will be transferred to us upon the
closing of this offering. We have assumed that the fair value of the derivative financial intruments will not fluctuate and that we will not enter into any other interest rate swap transactions or foreign currency swap contracts during the twelve months ending March 31, 2015. We have also assumed that the
margin on our debt will be the same as applied to the debt prior to this offering and that the LIBOR will be in the range of 0.75% to 1.75%. Financial costs consist of (a) interest expense of $12.51 million calculated based on the average outstanding loan balance and the weighted average interest rate
mentioned above, (b) write-off of the estimated unamortized loan fees of $3.29 million relating to the estimated loan prepayment of $82.63 million on the GasLog Sydney Facility determined based on the related portion of unamortized deferred loan fees on January 1, 2014, less the amortization expense
until the prepayment date, (c) $1.44 million of amortization of deferred financing costs for the outstanding facilities as of January 1, 2014 and $0.09 million of amortization of deferred financing costs for the amended facility (we have assumed the loan will be amended on May 1, 2014, and financing costs
will amount to $0.50 million representing 1.0% of the new loan; the 1% has been based on our past experience and the initial communication with the relevant banks), and (d) $0.78 million recycling of the cumulative loss from other comprehensive income to profit or loss for the two swaps for which
hedge accounting was discontinued in 2013, calculated based on the relevant amortization schedules, which amortize the cumulative loss from the period from which the hedges were effective until the maturity of the hedging transactions.
79
Financial income.
We have assumed that any cash surplus balance will not earn any interest during the forecast period.
Taxes.
We have assumed that we will not incur any income tax expense for the twelve months ending March 31, 2015.
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 drydocking and vessel replacement. 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 our existing unitholders. See Risk FactorsRisks Inherent in Our BusinessWe must make substantial
capital expenditures to maintain the operating capacity of our fleet, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to
unitholders than if actual maintenance and replacement capital expenditures were deducted.
Drydocking Capital Expenditures
. No drydocking cost was assumed for the twelve months ending March 31, 2015 because the vessels are expected to be drydocked in 2018. Our initial annual estimated drydocking capital expenditure reserve will be $2.87 million, including the estimated drydocking cost
and foregone revenue due to the vessels being off-hire during the drydocking period.
Replacement Capital Expenditures
. Because of the substantial capital expenditures we are required to make to maintain our fleet over time, our initial annual estimated replacement capital expenditures for estimating maintenance and replacement capital expenditures will be $10.70
million per year,
including financing costs, for replacing our LNG carriers at the end of their useful lives. The future vessel replacement is based on assumptions and estimates regarding the remaining useful lives of the 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.
Regulatory, Industry and Economic Factors
. Our financial forecast for the twelve months ending March 31, 2015 is based on the following assumptions related to regulatory, industry and economic factors:
no material nonperformance or credit-related defaults by suppliers, customers or vendors;
no new regulation or interpretation of existing regulations or governmental action that, in either case, would be materially adverse to our business;
no material accidents, environmental incidents, releases, weather-related incidents, unscheduled downtime or similar unanticipated events;
no major adverse change in the markets in which we operate resulting from LNG production disruptions, reduced demand for natural gas or significant changes in the market price for natural gas; and
no material changes to market, regulatory and overall economic conditions or in prevailing interest rates.
Forecasted Cash Available for Distribution
The table below sets forth our calculation of forecasted cash available for distribution to our unitholders and general partner based on the Forecasted Results of Operations set forth above.
80
Based on the financial forecast and related assumptions, we forecast that our cash available for distribution generated during the twelve months ending March 31, 2015 will be approximately $33.827 million. This amount would be sufficient to pay 100% of the minimum quarterly distribution of $0.375 per
unit on all of our common units and subordinated units for the four quarters ending March 31, 2015.
Actual payments of distributions on the common units, subordinated units and the general partner units are expected to be $
million for the period between the estimated closing date of this offering (May
, 2014) and the end of the fiscal quarter in which the closing date of this offering
occurs.
You should read Forecast Assumptions and ConsiderationsSummary of Significant Forecast Assumptions included as part of the financial forecast for a discussion of the material assumptions underlying our forecast of adjusted EBITDA that is included in the table below. Our forecast is based on
those material assumptions and reflects our judgment of conditions we expect to exist and the course of action we expect to take. The assumptions disclosed in our financial forecast are those that we believe are significant to generate the forecasted adjusted EBITDA. If our estimate is not achieved, we
may not be able to pay distributions on the common units at the initial distribution rate of $0.375 per unit per quarter ($1.50 per unit on an annualized basis). Our financial forecast and the forecast of cash available for distribution set forth below have been prepared by our management. This calculation
represents available cash from operating surplus generated during the period and excludes any cash from working capital borrowings, capital expenditures and cash on hand on the closing date.
Adjusted EBITDA should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance calculated in accordance with IFRS.
When considering our forecast of cash available for distribution for the twelve months ending March 31, 2015, you should keep in mind the risk factors and other cautionary statements under the headings Forward-Looking Statements and Risk Factors elsewhere in this prospectus. Any of these
factors or the other risks discussed in this prospectus could cause our results of operations to vary significantly from those set forth in the financial forecast and the forecast of cash available for distribution set forth below.
For comparison purposes, we have included the historical results of operations for the year ended December 31, 2013 adjacent to our forecast for the twelve months ended March 31, 2015 in the table below.
81
GASLOG PARTNERS LP
Historical
Forecast
(unaudited)
(dollars in thousands,
Adjusted EBITDA
(2)
$
49,559
$
59,910
Adjustments for cash items, estimated maintenance and replacement capital expenditures:
Cash interest expense
(12,279)
(12,506)
Drydocking capital expenditure reserves
(3)
(2,874)
(2,874)
Replacement capital expenditure reserves
(3)
(10,703)
(10,703)
Cash available for distribution
$
23,703
$
33,827
Expected distributions:
Distributions per unit
$
1.50
Distributions to our public common unitholders
(4)
12,600
Distributions to GasLogcommon units
(4)
2,134
Distributions to GasLogsubordinated units
(4)
14,734
Distributions to general partner units
601
Total distributions
(5)
$
30,069
Excess (shortfall)
$
1.50
Annualized minimum quarterly distribution per unit
$
30,068
Aggregate distributions based on annualized minimum quarterly distribution
100%
Percent of minimum quarterly distributions payable to common unitholders
100%
Percent of minimum quarterly distributions payable to subordinated unitholder
(1)
The forecast is based on the assumptions set forth in Forecast Assumptions and ConsiderationsSummary of Significant Forecast Assumptions.
(2)
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA means earnings before interest, realized loss on interest rate swaps for trading, other financial items, depreciation and amortization and taxes, and is used as a supplemental financial measure by management and external users of
financial statements, such as investors, to assess our operating performance and ability to generate cash for debt service and capital expenditures, as well as our compliance with the financial covenants and restrictions contained in our financing agreements. We believe that adjusted EBITDA assists our
management and investors by increasing the comparability of our performance from period to period and against the 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 an operating measure and liquidity measure benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing operational strength and cash generation ability in assessing whether to continue to hold
common units.
Adjusted EBITDA should not be considered an alternative to profit, profit from operations, cash flow from operating activities or any other measure of financial performance presented in accordance with IFRS. Adjusted EBITDA excludes some, but not all, items that affect profit, 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
82
FORECASTED CASH AVAILABLE FOR DISTRIBUTION
Year Ended
December 31, 2013
Twelve Months Ending
March 31, 2015
(1)
except per unit amounts)
table reconciles adjusted EBITDA to profit/(loss), the most directly comparable IFRS financial measure, for the period presented:
Historical
Forecast
(unaudited)
(dollars in thousands)
Profit attributable to GasLog Partners LP owners
$
26,218
$
25,743
Financial income
(32
)
Financial costs including gain/(loss) on interest rate swaps
11,097
18,103
Depreciation
12,238
16,064
Foreign exchange losses
38
Adjusted EBITDA
$
49,559
$
59,910
(3)
Our partnership agreement requires that an estimate of the maintenance and replacement capital expenditures necessary to maintain our asset base be subtracted from operating surplus each quarter, as opposed to amounts actually spent. See How We Make Cash DistributionsOperating Surplus and
Capital SurplusCapital Expenditures.
(4)
Assumes the underwriters option to purchase additional common units is not exercised.
(5)
Represents the amount required to fund distributions to our unitholders and our general partner for four quarters based upon our minimum quarterly distribution rate of $0.375 per unit.
Forecast of Compliance with Debt Covenants.
Our ability to make distributions could be affected if we do not remain in compliance with the restrictions and covenants of our financing agreements. Our fleet is subject to financing agreements, which we anticipate will be amended in connection with
this offering. We have assumed that we will be in compliance with all of the covenants in such financing agreements during the forecast period. See Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources for a further description of our
financing agreements, including these financial covenants.
83
Year Ended
December 31, 2013
Twelve Months Ending
March 31, 2015
HOW WE MAKE CASH DISTRIBUTIONS
Distributions of Available Cash
General
Within 45 days after the end of each quarter, beginning with the quarter ending June 30, 2014, we will distribute all of our available cash (defined below) to unitholders of record on the applicable record date. We will adjust the minimum quarterly distribution for the period from the closing of this
offering through June 30, 2014, based on the actual length of the period.
Definition of Available Cash
Available cash generally means, for each fiscal quarter, all cash on hand at the end of the quarter (including our proportionate share of cash on hand of any subsidiaries we do not wholly own):
less
, the amount of cash reserves (including our proportionate share of cash reserves of any subsidiaries we do not wholly own) established by our board of directors and our subsidiaries to:
provide for the proper conduct of our business (including reserves for future capital expenditures and for our anticipated credit needs);
comply with applicable law, any of our debt instruments or other agreements; and/or
provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters (except to the extent establishing such reserves would cause us to not be able to distribute the minimum quarterly distribution (plus any arrearage) for such quarter);
plus
, all cash on hand (including our proportionate share of cash on hand of any subsidiaries we do not wholly own) on the date of determination of available cash for the quarter resulting from (1) working capital borrowings made after the end of the quarter and (2) cash distributions received
after the end of the quarter from any equity interest in any person (other than a subsidiary of us), which distributions are paid by such person in respect of operations conducted by such person during such quarter. Working capital borrowings are generally borrowings that are made under a
revolving credit facility and in all cases are used solely for working capital purposes or to pay distributions to partners.
Intent to Distribute the Minimum Quarterly Distribution
We intend to distribute to the holders of common units and subordinated units on a quarterly basis at least the minimum quarterly distribution of $0.375 per unit, or $1.50 per unit per year, to the extent we have sufficient cash on hand to pay the distribution after we establish cash reserves and pay
fees and expenses. The amount of available cash from operating surplus needed to pay the minimum quarterly distribution for one quarter on all units outstanding immediately after this offering and the related distribution on the 2.0% general partner interest is approximately $7.5 million.
There is no guarantee that we will pay the minimum quarterly distribution on the common units and subordinated 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 effectively 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 agreements. See
Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources for a discussion of the restrictions contained in our financing agreements that may restrict our ability to make distributions.
84
Operating Surplus and Capital Surplus
General
All cash distributed to unitholders will be characterized as either operating surplus or capital surplus. We treat distributions of available cash from operating surplus differently than distributions of available cash from capital surplus.
Definition of Operating Surplus
Operating surplus for any period generally means:
$19.0 million;
plus
all of our cash receipts (including our proportionate share of cash receipts of any subsidiaries we do not wholly own) after the closing of this offering (provided that cash receipts from the termination of an interest rate, currency or commodity hedge contract prior to its specified termination date
will be included in operating surplus in equal quarterly installments over the remaining scheduled life of such hedge contract), excluding cash from (1) borrowings, other than working capital borrowings, (2) sales of equity and debt securities, (3) sales or other dispositions of assets outside the
ordinary course of business, (4) capital contributions or (5) corporate reorganizations or restructurings;
plus
working capital borrowings (including our proportionate share of working capital borrowings for any subsidiaries we do not wholly own) made after the end of a quarter but before the date of determination of operating surplus for the quarter;
plus
interest paid on debt incurred (including periodic net payments under related hedge contracts) and cash distributions paid on equity securities issued (including the amount of any incremental distributions made to the holders of our incentive distribution rights and our proportionate share of such
interest and cash distributions paid by any subsidiaries we do not wholly own), in each case, to finance all or any portion of the construction, replacement or improvement of a capital asset (such as a vessel) in respect of the period from such financing until the earlier to occur of the date the capital
asset is put into service or the date that it is abandoned or disposed of;
plus
interest paid on debt incurred (including periodic net payments under related hedge contracts) and cash distributions paid on equity securities issued (including the amount of any incremental distributions made to the holders of our incentive distribution rights and our proportionate share of such
interest and cash distributions paid by any subsidiaries we do not wholly own), in each case, to pay the construction period interest on debt incurred (including periodic net payments under related interest rate swap agreements), or to pay construction period distributions on equity issued, to finance
the construction projects described in the immediately preceding bullet;
less
all of our operating expenditures (which includes estimated maintenance and replacement capital expenditures and is further described below) (including our proportionate share of operating expenditures by any subsidiaries we do not wholly own) immediately after the closing of this offering;
less
the amount of cash reserves (including our proportionate share of cash reserves for any subsidiaries we do not wholly own) established by our board of directors to provide funds for future operating expenditures;
less
any cash loss realized on dispositions of assets acquired using investment capital expenditures;
less
all working capital borrowings (including our proportionate share of working capital borrowings by any subsidiaries we do not wholly own) not repaid within twelve months after having been incurred.
If a working capital borrowing, which increases operating surplus, is not repaid during the twelve-month period following the borrowing, it will be deemed repaid at the end of such period,
85
thus decreasing operating surplus at such time. When such working capital borrowing is in fact repaid, it will not be treated as a reduction in operating surplus because operating surplus will have been previously reduced by the deemed repayment.
As described above, operating surplus includes a provision that will enable us, if we choose, to distribute as operating surplus up to $19.0 million of cash we receive in the future from non-operating sources, such as asset sales, issuances of securities and long-term borrowings, that would otherwise be
distributed as capital surplus. In addition, the effect of including, as described above, certain cash distributions on equity securities or interest payments on debt in operating surplus would be to increase operating surplus by the amount of any such cash distributions or interest payments. As a result, we
may also distribute as operating surplus up to the amount of any such cash distributions or interest payments we receive from non-operating sources.
Operating expenditures generally means all of our cash expenditures, including but not limited to taxes, employee and director compensation, reimbursement of expenses to our general partner, repayment of working capital borrowings, debt service payments and payments made under any interest
rate, currency or commodity hedge contracts (provided that payments made in connection with the termination of any hedge contract prior to the expiration of its specified termination date be included in operating expenditures in equal quarterly installments over the remaining scheduled life of such
hedge contract), provided that operating expenditures will not include:
deemed repayments of working capital borrowings deducted from operating surplus pursuant to the last bullet point of the definition of operating surplus above when such repayment actually occurs;
payments (including prepayments and payment penalties) of principal of and premium on indebtedness, other than working capital borrowings;
expansion capital expenditures, investment capital expenditures or actual maintenance and replacement capital expenditures (which are discussed in further detail under Capital Expenditures below);
payment of transaction expenses (including taxes) relating to interim capital transactions; or
distributions to partners.
Capital Expenditures
For purposes of determining operating surplus, capital expenditures are classified as either maintenance and replacement capital expenditures, expansion capital expenditures or investment capital expenditures. Maintenance and replacement capital expenditures are those capital expenditures required to
maintain, over the long-term, the operating capacity of or the revenue generated by our capital assets.
Expansion capital expenditures are those capital expenditures that increase the operating capacity of or the revenue generated by our capital assets. To the extent, however, that capital expenditures associated with acquiring a new vessel or improving an existing vessel increase the revenues or the
operating capacity of our fleet, those capital expenditures would be classified as expansion capital expenditures.
Investment capital expenditures are those capital expenditures that are neither maintenance and replacement capital expenditures nor expansion capital expenditures. Investment capital expenditures largely will consist of capital expenditures made for investment purposes. Examples of investment
capital expenditures include traditional capital expenditures for investment purposes, such as purchases of equity securities, as well as other capital expenditures that might be made in lieu of such traditional investment capital expenditures, such as the acquisition of a capital asset for investment purposes.
Examples of maintenance and replacement capital expenditures include capital expenditures associated with drydocking, modifying an existing vessel or acquiring a new vessel, to the extent such expenditures are incurred to maintain the operating capacity of or the revenue generated by our fleet.
Maintenance and replacement capital expenditures will also include interest (and related fees)
86
on debt incurred and distributions on equity issued (including the amount of any incremental distributions made to the holders of our incentive distribution rights) to finance the acquisition or construction of a replacement vessel and paid in respect of the construction period. We define construction
period as the period beginning on the date that we enter into a binding acquisition or construction contract and ending on the earlier of the date that the replacement vessel commences commercial service or the date that the replacement vessel is abandoned or disposed of. Debt incurred to pay or equity
issued to fund construction period interest payments, and distributions on such equity (including the amount of any incremental distributions made to the holders of our incentive distribution rights) will also be considered maintenance and replacement capital expenditures.
Because our maintenance and replacement capital expenditures can be very large and vary significantly in timing, the amount of our actual maintenance and replacement capital expenditures may differ substantially from period to period. In order to avoid these fluctuations having a similar effect on
operating surplus, adjusted operating surplus and available cash for distribution to our unitholders, our partnership agreement will require that an amount equal to an estimate of the average quarterly maintenance and replacement capital expenditures necessary to maintain the operating capacity of or the
revenue generated by our capital assets over the long term be subtracted from operating surplus each quarter, as opposed to the actual amounts spent. In our partnership agreement, we refer to these estimated maintenance and replacement capital expenditures to be subtracted from operating surplus as
estimated maintenance capital expenditures. The amount of estimated maintenance and replacement capital expenditures deducted from operating surplus is subject to review and change by our board of directors at least once a year, provided that any change must be approved by our conflicts
committee. The estimate will be made at least annually and whenever an event occurs that is likely to result in a material adjustment to the amount of our maintenance and replacement capital expenditures, such as a major acquisition or the introduction of new governmental regulations that will affect
our fleet. For purposes of calculating operating surplus, any adjustment to this estimate will be prospective only. For a discussion of the amounts we have allocated toward estimated maintenance and replacement capital expenditures, see Our Cash Distribution Policy and Restrictions on Distributions.
The use of estimated maintenance and replacement capital expenditures in calculating operating surplus will have the following effects:
it will reduce the risk that actual maintenance and replacement capital expenditures in any one quarter will be large enough to make operating surplus less than the minimum quarterly distribution to be paid on all the units for that quarter and subsequent quarters;
it may reduce the need for us to borrow to pay distributions;
it will be more difficult for us to raise our distribution above the minimum quarterly distribution and pay incentive distributions to GasLog; and
it will reduce the likelihood that a large maintenance and replacement capital expenditure in a period will prevent GasLog from being able to convert some or all of its subordinated units into common units since the effect of an estimate is to spread the expected expense over several periods,
mitigating the effect of the actual payment of the expenditure on any single period.
Definition of Capital Surplus
Capital surplus generally will be generated only by:
borrowings other than working capital borrowings;
sales of debt and equity securities; and
sales or other dispositions of assets for cash, other than inventory, accounts receivable and other current assets sold in the ordinary course of business or non-current assets sold as part of normal retirements or replacements of assets.
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Characterization of Cash Distributions
We will treat all available cash distributed as coming from operating surplus until the sum of all available cash distributed since we began operations equals the operating surplus as of the most recent date of determination of available cash. We will treat any amount distributed in excess of operating
surplus, regardless of its source, as capital surplus. As described above, operating surplus does not reflect actual cash on hand that is available for distribution to our unitholders. For example, it includes a provision that will enable us, if we choose, to distribute as operating surplus up to $19.0 million of
cash we receive in the future from non-operating sources, such as asset sales, issuances of securities and long-term borrowings, that would otherwise be distributed as capital surplus. We do not anticipate that we will make any distributions from capital surplus.
General
During the subordination period, which we define below, 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 $0.375 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.
Definition of Subordination Period
The subordination period will extend until the second business day following the distribution of available cash from operating surplus in respect of any quarter, ending on or after March 31, 2017, that each of the following tests are met:
distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the sum of the minimum quarterly distribution for each of the three consecutive four-quarter periods immediately preceding that date;
the adjusted operating surplus (as defined below) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated
units during those periods on a fully diluted weighted average basis and the related distribution on the 2.0% general partner interest during those periods; and
there are no outstanding arrearages in payment of the minimum quarterly distribution on the common units.
If the unitholders remove our general partner without cause, the subordination period will end before March 31, 2017.
For purposes of determining whether the tests in the bullets above have been met, the three consecutive, non-overlapping four-quarter periods for which the determination is being made may include one or more quarters with respect to which arrearages in the payment of the minimum quarterly
distribution on the common units have accrued, provided that all such arrearages have been repaid prior to the end of each such four-quarter period.
If the expiration of the subordination period occurs as a result of us having met the tests described above, each outstanding subordinated unit will convert into one common unit and will then participate pro rata with the other common units in distributions of available cash.
88
Definition of Adjusted Operating Surplus
Adjusted operating surplus for any period generally means:
operating surplus generated with respect to that period (excluding any amounts attributable to the item described in the first bullet point under Operating Surplus and Capital SurplusDefinition of Operating Surplus above);
less
the amount of any net increase in working capital borrowings (including our proportionate share of any changes in working capital borrowings of any subsidiaries we do not wholly own) with respect to that period;
less
the amount of any net reduction in cash reserves for operating expenditures (including our proportionate share of cash reserves of any subsidiaries we do not wholly own) over that period not relating to an operating expenditure made during that period;
plus
the amount of any net decrease in working capital borrowings (including our proportionate share of any changes in working capital borrowings of any subsidiaries we do not wholly own) with respect to that period;
plus
the amount of any net increase in cash reserves for operating expenditures (including our proportionate share of cash reserves of any subsidiaries we do not wholly own) over that period required by any debt instrument for the repayment of principal, interest or premium;
plus
the amount of any net decrease made in subsequent periods to cash reserves for operating expenditures initially established with respect to such period to the extent such decrease results in a reduction in adjusted operating surplus in subsequent periods.
Adjusted operating surplus is intended to reflect the cash generated from operations during a particular period and therefore excludes net increases in working capital borrowings and net drawdowns of reserves of cash generated in prior periods.
Effect of Removal of Our General Partner on the Subordination Period
If the unitholders remove our general partner other than for cause and units held by our general partner and its affiliates are not voted in favor of such removal:
the subordination period will end and each subordinated unit will immediately convert into one common unit and will then participate pro rata with the other common units in distributions of available cash;
any existing arrearages in payment of the minimum quarterly distribution on the common units will be extinguished; and
our general partner will have the right to convert its general partner interest into common units or to receive cash in exchange for that interest.
Distributions of Available Cash From Operating Surplus During the Subordination Period
We will make distributions of available cash from operating surplus for any quarter during the subordination period in the following manner:
first
, 98.0% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter;
second
, 98.0% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding common unit an amount equal to any arrearages in payment of the minimum quarterly distribution on the common units for any prior quarters during the subordination
period;
third
, 98.0% to the subordinated unitholders, pro rata, and 2.0% to our general partner, until we distribute for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter; and
89
thereafter
, in the manner described in General Partner Interest and Incentive Distribution Rights below.
The preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional classes of equity securities.
Distributions of Available Cash From Operating Surplus After the Subordination Period
We will make distributions of available cash from operating surplus for any quarter after the subordination period in the following manner:
first
, 98.0% to all unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding unit an amount equal to the minimum quarterly distribution for that quarter; and
thereafter
, in the manner described in General Partner Interest and Incentive Distribution Rights below.
The preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional classes of equity securities.
Our partnership agreement provides that our general partner initially will be entitled to 2.0% of all distributions that we make prior to our liquidation. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its 2.0% general partner
interest if we issue additional units. Our general partners 2.0% interest, and the percentage of our cash distributions to which it is entitled, will be proportionately reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us in order
to maintain its 2.0% general partner interest. Our general partner will be entitled to make a capital contribution in order to maintain its 2.0% general partner interest in the form of the contribution to us of common units based on the current market value of the contributed common units.
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. GasLog will hold the incentive distribution rights
following completion of this offering. The incentive distribution rights may be transferred separately from any other interests, subject to restrictions in the partnership agreement. Except for transfers of incentive distribution rights to an affiliate or another entity as part of a merger or consolidation with or
into, or sale of substantially all of the 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
March 31, 2019. See The Partnership AgreementTransfer of Incentive Distribution Rights. Any transfer by GasLog of the incentive distribution rights would not change the percentage allocations of quarterly distributions with respect to such rights.
If for any quarter:
we have distributed available cash from operating surplus to the common and subordinated unitholders in an amount equal to the minimum quarterly distribution; and
we have distributed available cash from operating surplus on outstanding common units in an amount necessary to eliminate any cumulative arrearages in payment of the minimum quarterly distribution;
then, we will distribute any additional available cash from operating surplus for that quarter among the unitholders and our general partner in the following manner:
90
first
, 98.0% to all unitholders, pro rata, and 2.0% to our general partner, until each unitholder receives a total of $0.43125 per unit for that quarter (the first target distribution);
second
, 85.0% to all unitholders, pro rata, 2.0% to our general partner and 13.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of $0.46875 per unit for that quarter (the second target distribution);
third
, 75.0% to all unitholders, pro rata, 2.0% to our general partner and 23.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of $0.5625 per unit for that quarter (the third target distribution); and
thereafter
, 50.0% to all unitholders, pro rata, 2.0% to our general partner and 48.0% to the holders of the incentive distribution rights, pro rata.
In each case, the amount of the target distribution set forth above is exclusive of any distributions to common unitholders to eliminate any cumulative arrearages in payment of the minimum quarterly distribution. The percentage interests set forth above assume that our general partner maintains its
2.0% general partner interest and that we do not issue additional classes of equity securities.
Percentage Allocations of Available Cash From Operating Surplus
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 2.0% general partner interest only and assume that our general partner has contributed any capital necessary to maintain its 2.0% general partner
interest.
Marginal Percentage Interest in Distributions
Total Quarterly
Unitholders
General
Holders of
Minimum Quarterly Distribution
$0.375
98.0
%
2.0
%
0
%
First Target Distribution
up to
$0.43125
98.0
%
2.0
%
0
%
above
$0.43125
Second Target Distribution
up to
$0.46875
85.0
%
2.0
%
13.0
%
above
$0.46875
Third Target Distribution
up to
$0.5625
75.0
%
2.0
%
23.0
%
Thereafter
above
$0.5625
50.0
%
2.0
%
48.0
%
GasLogs Right to Reset Incentive Distribution Levels
GasLog, as the initial holder of our incentive distribution rights, has the right under our partnership agreement to elect to relinquish the right of the holders of our incentive distribution rights to receive incentive distribution payments based on the initial cash target distribution levels and to reset, at
higher levels, the minimum quarterly distribution amount and cash target distribution levels upon which the incentive distribution payments to GasLog would be set. GasLogs right to reset the minimum quarterly distribution amount and the cash target distribution levels upon which the incentive
distributions payable to GasLog are based may be exercised, without approval of our unitholders or the conflicts committee of our board of directors, at any time when there are no subordinated units outstanding and we have made cash distributions to the holders of the incentive
91
Distribution
Target Amount
Partner
IDRs
distribution rights at the highest level of incentive distribution for each of the prior four consecutive fiscal quarters. If at the time of any election to reset the minimum quarterly distribution amount and the cash target distribution levels GasLog and its affiliates are not the holders of a majority of the
incentive distribution rights, then any such election to reset shall be subject to the prior written concurrence of our board of directors that the conditions described in the immediately preceding sentence have been satisfied. The reset minimum quarterly distribution amount and cash target distribution
levels will be higher than the minimum quarterly distribution amount and the cash target distribution levels prior to the reset such that there will be no incentive distributions paid under the reset cash target distribution levels until cash distributions per unit following this event increase as described
below. We anticipate that GasLog would exercise this reset right in order to facilitate acquisitions or internal growth projects that would otherwise not be sufficiently accretive to cash distributions per common unit, taking into account the existing levels of incentive distribution payments being made to
GasLog.
In connection with the resetting of the minimum quarterly distribution amount and the cash target distribution levels and the corresponding relinquishment by GasLog of incentive distribution payments based on the cash target distribution levels prior to the reset, GasLog will be entitled to receive a
number of newly issued common units based on a predetermined formula described below that takes into account the cash parity value of the average cash distributions related to the incentive distribution rights received by GasLog for the two quarters prior to the reset event as compared to the
average cash distributions per common unit during this period. We will also issue an additional amount of general partner units in order to maintain the general partners ownership interest in us relative to the issuance of the additional common units.
The number of common units that GasLog would be entitled to receive from us in connection with a resetting of the minimum quarterly distribution amount and the cash target distribution levels then in effect would be equal to (x) the average amount of cash distributions received by GasLog in
respect of its incentive distribution rights during the two consecutive fiscal quarters ended immediately prior to the date of such reset election divided by (y) the average of the amount of cash distributed per common unit during each of these two quarters. The issuance of the additional common units will
be conditioned upon approval of the listing or admission for trading of such common units by the national securities exchange on which the common units are then listed or admitted for trading.
Following a reset election, the minimum quarterly distribution amount will be reset to an amount equal to the average cash distribution amount per unit for the two fiscal quarters immediately preceding the reset election (such amount is referred to as the reset minimum quarterly distribution) and
the cash target distribution levels will be reset to be correspondingly higher such that we would distribute all of our available cash from operating surplus for each quarter thereafter as follows:
first
, 98.0% to all unitholders, pro rata, and 2.0% to our general partner, until each unitholder receives an amount equal to 115.0% of the reset minimum quarterly distribution for that quarter;
second
, 85.0% to all unitholders, pro rata, 2.0% to our general partner and 13.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives an amount per unit equal to 125.0% of the reset minimum quarterly distribution for that quarter;
third
, 75.0% to all unitholders, pro rata, 2.0% to our general partner and 23.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives an amount per unit equal to 150.0% of the reset minimum quarterly distribution for that quarter; and
thereafter
, 50.0% to all unitholders, pro rata, 2.0% to our general partner and 48.0% to the holders of the incentive distribution rights, pro rata.
The following table illustrates the percentage allocation of available cash from operating surplus between the unitholders, our general partner and the holders of the incentive distribution rights at various levels of cash distribution levels pursuant to the cash distribution provision of our partnership
agreement in effect at the closing of this offering as well as following a hypothetical
92
reset of the minimum quarterly distribution and cash target distribution levels based on the assumption that the average quarterly cash distribution amount per common unit during the two fiscal quarters immediately preceding the reset election was $0.70.
Quarterly
Marginal Percentage
Holders of
Quarterly
Unitholders
General
Minimum Quarterly Distribution
$0.37500
98.0
%
2.0
%
0
%
$
0.70
First Target Distribution
up to
$0.43125
98.0
%
2.0
%
0
%
up to
$
0.805
(1)
Second Target Distribution
above
$0.43125
above
$
0.805
up to
$0.46875
85.0
%
2.0
%
13.0
%
up to
$
0.875
(2)
Third Target Distribution
above
$0.46875
above
$
0.875
up to
$0.56250
75.0
%
2.0
%
23.0
%
up to
$
1.05
(3)
Thereafter
above
$0.56250
50.0
%
2.0
%
48.0
%
above
$
1.05
(1)
This amount is 115.0% of the hypothetical reset minimum quarterly distribution.
(2)
This amount is 125.0% of the hypothetical reset minimum quarterly distribution.
(3)
This amount is 150.0% of the hypothetical reset minimum quarterly distribution.
The following table illustrates the total amount of available cash from operating surplus that would be distributed to the unitholders, the general partner and the holders of the incentive distribution rights based on an average of the amounts distributed per quarter for the two quarters immediately
prior to the reset. The table assumes that there are 19,644,716 common units and 400,913 general partner units outstanding, representing a 2.0% general partner interest, and that the average distribution to each common unit is $0.70 for the two quarters prior to the reset. The assumed number of
outstanding units assumes the conversion of all subordinated units into common units and no additional unit issuances.
Quarterly
Common
Additional
General Partner and
Total
2.0%
IDRs
Total
Minimum Quarterly Distribution
$
0.37500
$
7,366,769
0
$
150,342
$
$
150,342
$
7,517,111
First Target Distribution
$
0.43125
1,105,015
0
22,551
22,551
1,127,566
Second Target Distribution
$
0.46875
736,677
0
17,334
112,668
130,002
866,679
Third Target Distribution
$
0.56250
1,841,692
0
49,112
564,785
613,897
2,455,589
Thereafter
$
0.56250
2,701,148
0
108,046
2,593,102
2,701,148
5,402,296
$
13,751,301
0
$
347,385
$
3,270,555
$
3,617,940
$
17,369,241
The following table illustrates the total amount of available cash from operating surplus that would be distributed to the unitholders, the general partner and the holders of the incentive distribution rights with respect to the quarter in which the reset occurs. The table reflects that as a result of the
reset there are 24,316,939 common units and 496,265 general partner units outstanding, and that the average distribution to each common unit is $0.70. The number of additional common units was calculated by dividing (x) $3,270,557 as the average of the amounts received by GasLog in respect of its
incentive distribution rights for the two quarters prior to the reset as shown in the table above by (y) the $0.70 of available cash from operating surplus distributed to each common unit as the average distributed per common unit for the two quarters prior to the reset.
93
Distribution
per Unit
Prior to Reset
Interest in
Distribution
IDRs
Distribution per
Unit following
Hypothetical
Reset
Partner
Distribution
per Unit
Prior to
Reset
Unitholders
Cash
Distributions
Prior to
Reset
Common
Units
IDR Holders Cash
Distribution Prior
to Reset
Distributions
General
Partner
Interest
Quarterly
Common
Additional
General Partner and IDR
Holders Cash Distributions
After Reset
Total
2.0%
IDRs
Total
Minimum Quarterly Distribution
$
0.700
$
13,751,301
3,270,555
$
347,385
$
$
347,385
$
17,369,241
First Target Distribution
$
0.805
0
0
0
0
0
0
Second Target Distribution
$
0.875
0
0
0
0
0
0
Third Target Distribution
$
1.050
0
0
0
0
0
0
Thereafter
$
1.050
0
0
0
0
0
0
$
13,751,301
3,270,555
$
347,385
$
$
347,385
$
17,369,241
Distribution
per Unit
After Reset
Unitholders
Cash
Distributions
After Reset
Common
Units
Distributions
General
Partner
Interest
Assuming that it continues to hold a majority of our incentive distribution rights, GasLog will be entitled to cause the minimum quarterly distribution amount and the cash target distribution levels to be reset on more than one occasion, provided that it may not make a reset election except at a time when the holders of the incentive distribution rights have received incentive distributions for the prior four consecutive fiscal quarters based on the highest level of incentive distributions that the holders of incentive distribution rights are entitled to receive under our partnership agreement.
Distributions From Capital Surplus
How Distributions From Capital Surplus Will Be Made
We will make distributions of available cash from capital surplus, if any, in the following manner:
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|
|
|
first , 98.0% to all unitholders, pro rata, and 2.0% to our general partner, until the minimum quarterly distribution is reduced to zero, as described below; |
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|
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|
|
second , 98.0% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each common unit an amount of available cash from capital surplus equal to any unpaid arrearages in payment of the minimum quarterly distribution on the common units; and |
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|
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thereafter , we will make all distributions of available cash from capital surplus as if they were from operating surplus.
|
The preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional classes of equity securities.
Effect of a Distribution from Capital Surplus
The partnership agreement treats a distribution of capital surplus as the repayment of the consideration for the issuance of the units, which is a return of capital. Each time a distribution of capital surplus is made, the minimum quarterly distribution and the cash target distribution levels will be reduced in the same proportion as the distribution had to the fair market value of the common units prior to the announcement of the distribution. Because distributions of capital surplus will reduce the minimum quarterly distribution, after any of these distributions are made, it may be easier for GasLog to receive incentive distributions and for the subordinated units to convert into common units. However, any distribution of capital surplus before the minimum quarterly distribution is reduced to zero cannot be applied to the payment of the minimum quarterly distribution or any arrearages.
Once we reduce the minimum quarterly distribution and the cash target distribution levels to zero, we will then make all future distributions 50.0% to the holders of units, 2.0% to our general partner and 48.0% to the holders of the incentive distribution rights (initially, GasLog). The 2.0% interests shown for our general partner assumes that our general partner maintains its 2.0% general partner interest.
94
Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels
In addition to adjusting the minimum quarterly distribution and cash target distribution levels to reflect a distribution of capital surplus, if we combine our units into fewer units or subdivide our units into a greater number of units, we will proportionately adjust:
the minimum quarterly distribution;
the cash target distribution levels; and
the initial unit price.
For example, if a two-for-one split of the common and subordinated units should occur, the minimum quarterly distribution, the cash target distribution levels and the initial unit price would each be reduced to 50.0% of its initial level. If we combine our common units into a lesser number of units or
subdivide our common units into a greater number of units, we will combine our subordinated units or subdivide our subordinated units, using the same ratio applied to the common units. We will not make any adjustment by reason of the issuance of additional units for cash or property.
Distributions of Cash Upon Liquidation
If we dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We will apply the proceeds of liquidation in the manner set forth below.
If, as of the date three trading days prior to the announcement of the proposed liquidation, the average closing price for our common units for the preceding 20 trading days (or the current market price) is greater than the sum of:
any arrearages in payment of the minimum quarterly distribution on the common units for any prior quarters during the subordination period;
plus
the initial unit price (less any prior capital surplus distributions and any prior cash distributions made in connection with a partial liquidation);
then the proceeds of the liquidation will be applied as follows:
first
, 98.0% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding common unit an amount equal to the current market price of our common units;
second
, 98.0% to the subordinated unitholders, pro rata, and 2.0% to our general partner, until we distribute for each subordinated unit an amount equal to the current market price of our common units; and
thereafter
, 50.0% to all unitholders, pro rata, 48.0% to holders of incentive distribution rights and 2.0% to our general partner.
If, as of the date three trading days prior to the announcement of the proposed liquidation, the current market price of our common units is equal to or less than the sum of:
any arrearages in payment of the minimum quarterly distribution on the common units for any prior quarters during the subordination period;
plus
the initial unit price (less any prior capital surplus distributions and any prior cash distributions made in connection with a partial liquidation);
then the proceeds of the liquidation will be applied as follows:
first
, 98.0% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding common unit an amount equal to the initial unit price (less any prior capital surplus distributions and any prior cash distributions made in connection with a partial
liquidation);
second
, 98.0% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding common unit an amount equal to any arrearages in payment
95
of the minimum quarterly distribution on the common units for any prior quarters during the subordination period;
third
, 98.0% to the subordinated unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding subordinated unit an amount equal to the initial unit price (less any prior capital surplus distributions and any prior cash distributions made in connection with a partial
liquidation); and
thereafter
, 50.0% to all unitholders, pro rata, 48.0% to holders of incentive distribution rights and 2.0% to our general partner.
The immediately preceding paragraph is based on the assumption that our general partner maintains its 2.0% general partner interest and that we do not issue additional classes of equity securities.
96
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
The following table presents, in each case for the periods and as of the dates indicated, selected historical financial and operating data of GasLog Partners LP Predecessor. This acquisition will be accounted for as a reorganization of entities under common control. The selected historical combined
financial data of GasLog Partners LP Predecessor as of and for the years ended December 31, 2012 and 2013 have been derived from the audited combined carve-out financial statements of GasLog Partners LP Predecessor, prepared in accordance with IFRS, as issued by the IASB, which are included
elsewhere in this prospectus.
The following financial data should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations, the historical combined carve-out financial statements of GasLog Partners LP Predecessor and the notes thereto included elsewhere in this
prospectus.
The results of operations for the year ended December 31, 2013 reflect operations of the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
, which commenced operations under their respective charters from January 2013, March 2013 and May 2013, respectively.
Our financial position, results of operations and cash flows and financial conditions could differ from those that would have resulted if we operated autonomously or as an entity independent of GasLog in the periods 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
2012
2013
(dollars in thousands)
Statement of Profit or Loss
:
Revenues
$
$
64,143
Vessel operating costs
(13,097
)
Depreciation
(12,238
)
General and administrative expenses
(30
)
(1,525
)
(Loss)/profit from operations
(30
)
37,283
Financial costs including gain/(loss) on interest rate swaps
(941
)
(11,097
)
Financial income
110
32
Total other expense
(831
)
(11,065
)
(Loss)/profit for the year
$
(861
)
$
26,218
(Loss)/earnings per share, basic and diluted (based on 36,000 historical outstanding shares, representing the combined share capitalization of the three subsidiaries that own the vessels in our initial fleet)
$
(23.92
)
$
728.28
As of
2012
2013
(dollars in thousands)
Statement of Financial Position Data
:
Cash and cash equivalents
$
2
$
14,404
Vessels
(1)
562,531
Vessels under construction
118,482
Total assets
128,765
581,770
Loanscurrent portion
22,075
Loansnon-current portion
363,917
Equity attributable to owners of GasLog Partners LP Predecessor
106,629
156,169
Total equity
106,629
156,169
97
December 31,
December 31,
Year Ended
2012
2013
(dollars in thousands)
Cash Flow Data
:
Net cash (used in)/from operating activities
$
(110
)
$
32,159
Net cash from/(used in) investing activities
110
(454,263
)
Net cash from financing activities
436,506
Year Ended
2012
2013
(dollars in thousands)
Fleet Data
:
Number of LNG carriers at end of period
3
Average number of LNG carriers during period
2.3
Average age of LNG carriers (years)
0.76
Total calendar days for fleet
833
Total operating days for fleet
(2)
833
Year Ended
2012
2013
(dollars in thousands)
Other Financial Data
:
EBITDA
(3)
$
(970
)
$
52,458
Adjusted EBITDA
(3)
(42
)
49,559
Capital expenditures:
Payment for vessels under construction
452,792
December 31,
December 31,
December 31,
|
||||||||||||||||||||
(1) |
|
|
Represents vessels in our initial fleet less accumulated depreciation. See Note 3 to our audited combined carve-out financial statements included elsewhere in this prospectus. |
|||||||||||||||||
|
||||||||||||||||||||
(2) |
|
The operating days for our fleet is the total number of days in a given period that the vessels were in our possession less the total number of days off-hire. We define days off-hire as days lost to, among other things, operational deficiencies, drydocking for repairs, maintenance or inspection, equipment breakdowns, special surveys and vessel upgrades, delays due to accidents, crew strikes, certain vessel detentions or similar problems, our failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew, or periods of commercial waiting time during which we do not earn charter hire. |
||||||||||||||||||
|
||||||||||||||||||||
(3) |
|
Non-GAAP Financial Measures |
||||||||||||||||||
|
||||||||||||||||||||
|
|
EBITDA and Adjusted EBITDA . We define EBITDA as earnings before interest income and expense, realized loss on interest rate swaps held for trading depreciation and amortization and taxes. Adjusted EBITDA is defined as EBITDA before unrealized gain/ (loss) on interest rate swaps and foreign exchange gains/(losses). EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as our lenders, to assess our operating performance and ability to generate cash for debt service and capital expenditures, as well as our compliance with the financial covenants and restrictions contained in our financing agreements. 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 and ability to generate cash for debt service and capital expenditures. We believe that adjusted EBITDA assists our management and investors by increasing the comparability of our performance from period to period. This increased comparability is achieved by excluding the potentially disparate effects between periods of interest, unrealized gain/(loss) on interest rate swaps, foreign exchange gains/(losses), 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 profit/(loss) from operations between periods. We |
98
believe that including adjusted EBITDA as an operating measure benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing operational strength and cash generation ability in assessing whether to continue to hold common units.
EBITDA and adjusted EBITDA should not be considered alternatives to profit/(loss), profit/(loss) from operations, cash flow (used in)/from operating activities or any other measure of operating performance or liquidity presented in accordance with IFRS. EBITDA and adjusted EBITDA exclude
some, but not all, items that affect profit/(loss) and net cash from operating activities, and these measures may vary among other companies. Therefore, EBITDA and adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies. The following tables
reconcile EBITDA and adjusted EBITDA to profit/(loss) and net cash from operating activities, the most directly comparable IFRS financial measures, for the periods presented:
Year Ended
2012
2013
(dollars in thousands)
Reconciliation to profit/(loss)
:
(Loss)/profit
$
(861
)
$
26,218
Financial income
(110
)
(32
)
Financial costs excluding unrealized gain/(loss) on interest rate swaps
1
14,034
Depreciation
12,238
EBITDA
$
(970
)
52,458
Unrealized loss/(gain) on interest rate swaps
940
(2,937
)
Foreign exchange (gains)/losses
(12
)
38
Adjusted EBITDA
$
(42
)
$
49,559
Year Ended
2012
2013
(dollars in thousands)
Reconciliation to net cash from operating activities
:
Net cash (used in)/from operating activities
$
(110
)
$
32,159
Net increase in operating assets
960
1,543
Net increase in operating liabilities
(408
)
(8,324
)
Net change in related parties
(472
)
13,646
Unrealized gain/(loss) on interest rate swaps
(940
)
2,937
Interest paid
9,223
Non-cash contributed services
(627
)
Realized loss on interest rate swaps held for trading
1,901
EBITDA
$
(970
)
$
52,458
Unrealized loss/(gain) on interest rate swaps
940
(2,937
)
Foreign exchange (gains)/losses
(12
)
38
Adjusted EBITDA
$
(42
)
$
49,559
99
December 31,
December 31,
MANAGEMENTS DISCUSSION AND ANALYSIS OF
The following discussion of our financial condition and results of operations should be read in conjunction with the historical combined carve-out financial statements and the related notes of GasLog Partners LP Predecessor, the entities that own the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
and all of their related assets, liabilities, revenues, expenses and cash flows (collectively, the Predecessor), included elsewhere in this prospectus. Among other things, those financial statements include more detailed information regarding the basis of presentation for the following
information. The combined carve-out financial statements of the Predecessor have been prepared in accordance with IFRS, as issued by the IASB, and are presented in U.S. dollars. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as
those set forth under Risk Factors and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements. Please see the section Forward-Looking Statements at the beginning of this prospectus.
Prior to the closing of this offering, our partnership will not own any vessels. The following discussion assumes that our business was operated as a separate entity prior to its inception. The Predecessor will be accounted for as a reorganization of entities under common control. The consideration for
the 100% interests in the subsidiaries which own a 100% interest in the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
that will be contributed to us will be determined based on fair values; however, since GasLog and the Partnership are entities under common control, the consideration
will be accounted for at historical carrying values. The amount of cash consideration will be calculated after deducting from the net proceeds of this offering the amount that will be used for the debt prepayment and the amount that will remain as cash for general corporate purposes for the Partnership.
The non-cash consideration to GasLog will be equal to the fair value of the net assets as adjusted for the fair value of the vessels that will be contributed to the Partnership less the cash consideration. The difference between the fair value of consideration issued to GasLog and the net assets to be
received will be accounted for as an equity transaction in the financial statements of the Partnership.
The combined carve-out financial statements, the results of which are discussed below, have been carved out of the consolidated financial statements of GasLog, which operated the vessels in our fleet during the years presented. GasLogs vessels and other assets, liabilities, revenues, expenses and cash
flows that do not relate to the vessels or time charter contracts to be acquired by us are not included in our combined carve-out financial statements. Our financial position, results of operations and cash flows reflected in our combined carve-out financial statements include all expenses allocable to our
business, but may not be indicative of those that would have been incurred had we operated as a separate public entity for all years presented or of future results. Other than as discussed below under Items You Should Consider When Evaluating Our Historical Financial Performance and Assessing Our
Future Prospects, the vessels and all of their related assets, liabilities, revenues, expenses and cash flows contributed to us in connection with this offering reflect all of the net assets included in the combined carve-out financial statements in the years discussed below. We manage our business and analyze
and report our results of operations in a single segment.
We are a growth-oriented limited partnership formed to own, operate and acquire LNG carriers engaged in LNG transportation under long-term charters, which we define as charters of five full years or more. Our initial fleet of three LNG carriers, which will have charter terms expiring in 2018 and
2019, will be contributed to us by GasLog, which will control us through its ownership of our general partner. GasLog was founded and is effectively controlled by its chairman, Peter G. Livanos, whose familys shipping activities commenced more than 100 years ago.
Upon the closing of this offering, we will own three LNG carriers, built in 2013, with modern tri-fuel diesel electric propulsion technology that operate under long-term charters with subsidiaries of BG Group. We will also have options and other rights under which we may acquire additional
100
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LNG carriers from GasLog, as described below. We believe that such options and rights will provide us with significant built-in growth opportunities and allow us to diversify our fleet specification potentially to include steam-powered ships. We may also acquire vessels from shipyards or other owners. We
intend to operate our vessels under long-term charters with predictable cash flows and to grow our position in the LNG market through further acquisitions of LNG carriers from GasLog and third parties. We believe we can grow our distributions per unit organically by providing reliable customer service
to our charterers and leveraging GasLogs relationships, expertise and reputation. We intend to make further acquisitions of LNG carriers from GasLog and third parties to grow our fleet. However, we cannot assure you that we will make any particular acquisition or that as a consequence we will
successfully grow the amount of our per unit distributions. Among other things, our ability to acquire additional LNG carriers will be dependent upon our ability to raise additional equity and debt financing.
GasLog is, we believe, a leading independent international owner, operator and manager of LNG carriers and provides support to international energy companies as part of their LNG logistics chain. On April 4, 2012, GasLog completed its initial public offering, and its common shares began trading
on the New York Stock Exchange on March 30, 2012, under the symbol GLOG. At the time of its initial public offering, GasLogs owned fleet consisted of ten LNG carriers, including eight newbuildings on order. Since its initial public offering, GasLog has increased by approximately 111% the total
carrying capacity of vessels in its fleet, which includes vessels on the water, newbuildings on order and secondhand vessels under contract to be purchased. This increase includes two LNG newbuilding orders announced in February 2013 and two LNG newbuilding orders announced in August 2013, all of
which are expected to be delivered in 2016, the acquisition of one 2010 built LNG carrier announced in September 2013, the three secondhand steam-powered ships that were acquired from BG Group in April 2014 and the three additional secondhand steam-powered ships that are under contract to be
purchased from BG Group. Each of the four newbuildings is under a long-term charter, which will commence upon delivery. Since January 1, 2013, GasLog has taken delivery of five LNG carriers, acquired one on-the-water vessel, entered into contracts to purchase six secondhand vessels (three of which
have been delivered and three of which are under contract) and secured additional LNG newbuilding options. GasLog currently has a fully owned twenty-one-ship fleet, including fourteen ships on the water (two ships delivered in 2010, five ships delivered in 2013, one on-the-water ship acquired in 2013,
three secondhand ships that were acquired from BG Group in April 2014 and three additional secondhand ships being acquired from BG Group), and seven LNG carriers on order from Samsung.
Our Fleet
Initial Fleet
Upon the closing of this offering, our initial fleet will consist of the following vessels:
LNG Carrier
Date of
Cargo
Charterer
(1)
Charter
Optional
GasLog Shanghai
January 28, 2013
155,000
BG Group
January 2018
20212026
GasLog Santiago
March 25, 2013
155,000
BG Group
March 2018
20212026
GasLog Sydney
May 30, 2013
155,000
BG Group
May 2019
20222027
(1)
Vessels are chartered to a subsidiary of BG Group.
(2)
The charters may be extended for up to two extension periods of three or four years, and each charter requires that the charterer provides us with advance notice of its exercise of any extension option.
101
Delivery
Capacity
(cbm)
Expiration
Period
(2)
Option Vessels
We will have the option to purchase the following twelve LNG carriers from GasLog within 36 months after each such vessels acceptance by its charterer (or, in the case of the
GasLog Seattle,
the three vessels that were recently acquired from BG Group and the three additional vessels under
contract to be purchased from BG Group, 36 months after the closing of this offering), in each case at fair market value as determined pursuant to the omnibus agreement.
As of the date of this prospectus, we have not secured any financing in connection with the twelve optional vessels. Our ability to purchase these twelve optional vessels, should we exercise our right to purchase such vessels, is dependent on our ability to obtain financing to fund all or a portion of
the acquisition costs of these vessels and may be dependent on the consent of existing lenders to GasLog with respect to these optional vessels. See Risk FactorsRisk Inherent in Our BusinessWe may have difficulty obtaining consents that are necessary to acquire vessels with an existing charter or
financing agreement.
LNG Carrier
Date of
Cargo
Charterer
(2)
Charter
GasLog Seattle
December 9, 2013
155,000
Shell
December 2020
Hull No. 2042
Q2 2014
155,000
Shell
2021
Hull No. 2072
Q1 2016
174,000
BG Group
2026
Hull No. 2073
Q2 2016
174,000
BG Group
2026
Hull No. 2102
Q3 2016
174,000
BG Group
2023
Hull No. 2103
Q4 2016
174,000
BG Group
2023
Methane Rita Andrea
Q2 2014
145,000
BG Group
2020
Methane Jane Elizabeth
Q2 2014
145,000
BG Group
2019
Methane Lydon Volney
Q2 2014
145,000
BG Group
2020
Methane Shirley Elisabeth
*
2014
145,000
BG Group
2020
(4)
Methane Heather Sally
*
2014
145,000
BG Group
2020
(4)
Methane Allison Victoria
*
2014
145,000
BG Group
2020
(4)
*
Denotes vessels under contract to be purchased by GasLog from BG Group. Currently, these vessels are managed by GasLog.
For newbuildings expected delivery quarters are presented.
(2)
Vessels are chartered to a subsidiary of BG Group or a subsidiary of Shell, as applicable.
(3)
Indicates the expiration of the initial term. For the pending vessels under contract to be purchased from BG Group and the three vessels recently acquired from BG Group, the charterer will have unilateral options to extend the term of the time charters for two of the pending vessels and two of the
vessels recently acquired from BG Group for a period of either three or five years at its election. For the other vessels in the above table, the charterers have unilateral options to extend the term of the time charters for periods ranging from 5 to 10 years, provided that the charterer provides us with
advance notice of declaration of any option in accordance with the terms of the applicable charter.
(4)
Indicates the average duration of the initial term for the pending vessels under contract to be purchased from BG Group. The time charters for these vessels will be staggered with terms of 5.5 years, 6 years and 6.5 years from the closing of the acquisition of the vessels, so that the vessels do not
redeliver at the same time.
102
Delivery
(1)
Capacity
(cbm)
Expiration
(3)
(1)
GasLog also has the following six additional carriers in its fleet, which it will be required to offer to us for purchase at fair market value as determined pursuant to the omnibus agreement if charters are secured with committed terms of five full years or more:
LNG Carrier
Date of
Cargo
Charterer
(2)
Charter
GasLog Savannah
May 31, 2010
155,000
BG Group
September 2015
(3)
GasLog Singapore
July 28, 2010
155,000
BG Group
September 2016
(3)
GasLog Skagen
July 25, 2013
155,000
BG Group
April 2021
(4)
GasLog Chelsea
October 4, 2013
153,600
Spot Market
N/A
Hull No. 2043
Q4 2014
155,000
N/A
N/A
Hull No. 2044
Q1 2015
155,000
N/A
N/A
(1)
For newbuildings, expected delivery quarters are presented.
(2)
Vessels are chartered to a subsidiary of BG Group or a spot market counterparty, as indicated.
(3)
Indicates the expiration of the initial term. The charterers have unilateral options to extend the term of the time charters for periods ranging from 30 to 90 months, provided that the charterer provides us with advance notice of declaration of any option in accordance with the terms of the applicable
charter.
(4)
Time charter provides for full employment for three years and a subsequent five-year seasonal charter under which the ship is employed for seven months and available to accept other charters for five months.
In addition to the LNG carriers described in the preceding paragraphs, we intend to leverage our relationship with GasLog to make accretive acquisitions of LNG carriers with long-term charters from GasLog and third parties to increase our distributions per unit. Pursuant to the omnibus agreement,
GasLog will be required to offer to us for purchase any other LNG carriers with cargo capacity greater than 75,000 cbm engaged in oceangoing LNG transportation that GasLog owns or acquires if charters are secured with committed terms of five full years or more. GasLog has also entered into a letter
of intent with Samsung for the purchase of two additional 174,000 cbm newbuildings from Samsung with delivery dates in 2017. The letter of intent is subject to final GasLog board approval and execution of definitive agreements. If definitive agreements for the purchase of these two newbuild vessels are
signed, Samsung has agreed to grant GasLog options with a four month option term on two further 174,000 cbm newbuildings with delivery dates in 2017 and 2018. Except as discussed elsewhere in this prospectus, this right will continue throughout the entire term of the omnibus agreement. In addition,
we will have a right of first offer with regard to any proposed sale, transfer or other disposition of any LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation under a charter of five full years or more that GasLog owns, as discussed elsewhere in this
prospectus. Our ability to acquire additional LNG carriers from GasLog is subject to obtaining any applicable consents of governmental authorities and other non-affiliated third parties, including the relevant lenders and charterers. Under the omnibus agreement, GasLog will be obligated to use
reasonable efforts to obtain any such consents and, with respect to the initial fleet only, to indemnify us if such consents are not obtained. Our ability to exercise any right to acquire additional LNG carriers will also be subject to our ability to obtain additional equity and debt financing. We cannot assure
you that in any particular case the necessary consent will be obtained. See Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus Agreement.
Our Charters
We generate revenues by charging customers for the transportation of their LNG using our LNG carriers. These services are provided under time charters, whereby the vessels that we operate, and for which we are responsible for providing crews, are chartered to customers for a fixed period of time
at hire rates that are generally fixed. In the case of our initial fleet, such hire rates increase annually based on a fixed percentage, although existing charters on certain of the vessels subject to
103
Delivery
(1)
Capacity
(cbm)
Expiration
the purchase options do not have similar provisions. Where included, such adjustment provisions may enable us to offset expected increases in operating costs to the extent that such provisions are included in our charter contracts. Under our time charters, hire payments may be reduced if the vessel does
not perform to certain of its specifications, such as if the average vessel speed falls below a guaranteed speed or the amount of fuel consumed to power the vessel under normal circumstances exceeds a guaranteed amount and the customer is responsible for substantially all voyage expenses incurred.
When the vessel is off-hire, as described below, the customer generally is not required to pay the hire rate and we are responsible for all costs. Prolonged off-hire may lead to vessel substitution or termination of the time charter. A vessel generally will be deemed off-hire if there is a loss of time
due to, among other things:
operational deficiencies; scheduled and unscheduled drydocking for repairs, maintenance or inspection; equipment breakdowns; or delays due to accidents, crew 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.
For more information on our charters, see BusinessShip Time Charters.
Historical Employment of Our Fleet
All vessels in our initial fleet have operated under a time charter with a subsidiary of BG Group, which commenced upon each vessels delivery date.
Our result of operations, cash flows and financial conditions could differ from those that would have resulted if we operated autonomously or as an entity independent of GasLog in the years for which historical financial data is presented below, and such data may not be indicative of our future
operating results or financial performance.
You should consider the following facts when evaluating our historical results of operations and assessing our future prospects:
The size of our fleet continues to change.
Our historical results of operations reflect changes in the size and composition of our fleet due to certain vessel deliveries. For example, each of the
GasLog Shanghai,
the
GasLog Santiago
and the
GasLog Sydney
were delivered from the shipyard during
2013 and did not have any historical operations prior to that time. In addition, pursuant to the omnibus agreement, (i) we will have the option to purchase from GasLog twelve additional LNG carriers, the
GasLog Seattle
, the three vessels recently acquired from BG Group, the three additional
vessels under contract to be purchased from BG Group, and Hull Nos. 2042, 2072, 2073, 2102 and 2103, at fair market value as determined in accordance with the provisions of the omnibus agreement, and (ii) GasLog will be required to offer to us for purchase at fair market value any LNG carrier
with a cargo capacity greater than 75,000 cbm engaged in oceangoing LNG transportation that GasLog owns or acquires (including the newbuildings covered under option contracts with Samsung if GasLog exercises such options) if charters are secured with committed terms of five full years or
more. Furthermore, we may grow through the acquisition in the future of other vessels as part of our growth strategy.
Upon completion of this offering, our leverage and associated finance expenses will be reduced.
We have amended and obtained waivers and confirmations under certain of our existing financing agreements in connection with this offering to permit the transactions pursuant to which we will acquire
our initial fleet, prepay certain outstanding balances with the proceeds of this offering, and, we therefore, expect to have less debt outstanding and
104
lower interest expense upon completion of this offering. For descriptions of our existing financing agreements, see Liquidity and Capital ResourcesBorrowing Activities.
Our future results of operations may be affected by fluctuations in currency exchange rates.
All of the revenue generated from our initial fleet is denominated in U.S. dollars, and the majority of our expenses, including debt repayment obligations under our credit facilities and a portion of our
administrative expenses, are denominated in U.S. dollars. However, a portion of the ship operating expenses, primarily crew wages of officers, and a large portion of our administrative expenses are denominated in euros. The composition of our vessel operating expenses may vary over time
depending upon the location of future charters and/or the composition of our crews. All of our financing and interest expenses are also denominated in U.S. dollars. We anticipate that all of our future financing agreements will also be denominated in U.S. dollars.
Our historical results of operations reflect administrative costs that are not necessarily indicative of future administrative costs.
The administrative costs included in our historical results of operations are the actual administrative costs of the Predecessor and are not necessarily indicative of our
future administrative costs or the costs that we would have incurred as a stand-alone business. In connection with this offering, we will enter into an administrative services agreement with GasLog, pursuant to which we will pay a fixed fee to GasLog in exchange for GasLogs providing
administrative services to us. For the three vessels in our initial fleet, we expect that we will pay approximately $1.8 million under the administrative services agreement for the twelve months ending March 31, 2015. For a more detailed description of this arrangement, see Certain Relationships and
Related Party TransactionsAgreements Governing the TransactionsAdministrative Services Agreement.
Our commercial management agreements and ship management agreements will be amended in connection with this offering.
Our operating subsidiaries are party to commercial management agreements, which will be amended in connection with this offering, pursuant to which we will reimburse
GasLog for the reasonable costs and expenses incurred in connection with providing commercial management services to us. For the three vessels in our initial fleet, we expect that we will pay approximately $1.1 million under the amended commercial management agreements for the twelve months
ending March 31, 2015. For a more detailed description of this arrangement, see Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsCommercial Management Agreements. In addition, our operating subsidiaries are party to ship management agreements,
which will be amended in connection with this offering, with GasLog LNG Services that govern the crew and technical management of the vessels in our fleet. For the three vessels in our initial fleet, we expect that our operating subsidiaries will pay GasLog LNG Services approximately $1.7
million in total under the amended ship management agreements for the twelve months ending March 31, 2015. For a more detailed description of this arrangement, see Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsShip Management Agreements.
While we currently expect that the aggregate annualized payments under the amended commercial management agreements and ship management agreements for the twelve months ended March 31, 2015 will be generally consistent with the aggregate annualized expenses we incurred for commercial
management and ship management for the twelve months ended December 31, 2013 (however, because our initial vessels were delivered from the shipyard during 2013, the expenses during the 2013 period reflect only a portion of the year) and reflected in our historical results of operations, we may
incur higher expenses for commercial management and ship management under these agreements in future periods.
We will incur additional general and administrative expense as a publicly traded partnership
. After the completion of this offering, we expect to incur approximately $2.4 million in additional general and administrative expenses as a publicly traded limited partnership that we have not previously
incurred, including costs associated with the preparation of disclosure documents, increased legal and accounting costs, investor relations costs, incremental director and officer liability insurance costs, as well as costs related to compliance with the Sarbanes-
105
Oxley Act and the Dodd Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act.
Factors Affecting Our Results of Operations
We believe the principal factors that will affect our future results of operations include:
the number and availability of our LNG carriers, including our ability to exercise the options to purchase from GasLog the twelve LNG carriers that will be subject to charters with committed terms of five full years or more upon delivery and our ability to acquire any of GasLog s other existing or
future LNG carriers with cargo capacities greater than 75,000 cbm, engaged in oceangoing LNG transportation including the newbuildings covered under option contracts with Samsung, to the extent that charters are secured on these vessels with committed terms of five full years or more;
our ability to maintain good working relationships with our existing customers and our ability to increase the number of our customers through the development of new working relationships;
the performance of our charterers;
the supply and demand relationship for LNG shipping services;
our ability to successfully re-employ our ships at economically attractive rates;
the effective and efficient technical management of our ships;
our ability to obtain acceptable debt financing in respect of our capital commitments;
our ability to obtain and maintain regulatory approvals and to satisfy technical, health, safety and compliance standards that meet our customers requirements; and
economic, regulatory, political and governmental conditions that affect shipping and the LNG industry, which include 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.
In addition to the general factors discussed above, we believe certain specific factors have impacted, and will continue to impact, our results of operations. These factors include:
the hire rate earned by our ships;
unscheduled off-hire days;
the level of our ship operating expenses, including crewing costs, insurance and maintenance costs;
our level of debt, the related interest expense and the timing of required payments of principal;
mark-to-market changes in any interest rate swaps and foreign currency fluctuations; and
the level of our general and administrative expenses, including salaries and costs of consultants.
See Risk Factors for a discussion of certain risks inherent in our business.
Principal Components of Revenues and Expenses
Revenues
Our revenues are driven primarily by the number of LNG carriers in our fleet, the amount of daily charter hire that they earn under time charters and the number of operating days during which they generate revenues. These factors, in turn, are affected by our decisions relating to ship acquisitions
and disposals, the amount of time that our ships spend in drydock undergoing repairs, maintenance and upgrade work, the age, condition and technical specifications of our ships, as well as the relative levels of supply and demand in the LNG carrier charter market. Under the terms of
106
our time charter arrangements for our initial fleet, the operating cost component of the daily hire rate is intended to correspond to the costs of operating the ship. Accordingly, we will receive additional revenue under such time charters through an annual escalation of the operating cost component of the
daily hire rate. To the extent that such provisions are included in charters for any additional vessels we acquire, we believe these adjustment provisions can provide substantial protection against significant cost increases. See BusinessShip Time ChartersHire Rate Provisions for a more detailed discussion
of the hire rate provisions of our charter contracts.
Our LNG carriers are employed through time charter contracts. Revenues under our time charters are recognized when services are performed, revenue is earned and the collection of the revenue is reasonably assured. The charter hire revenue is recognized on a straight-line basis over the term of
the relevant time charter. We do not recognize revenue during days when the ship is off-hire. Advance payments under time charter contracts are classified as liabilities until such time as the criteria for recognizing the revenue are met.
Vessel Operating Costs
Vessel operating costs of our initial fleet consist of two components: voyage expenses and ship operating expenses. Under our time charter arrangements, charterers bear substantially all voyage expenses, including bunker fuel, port charges and canal tolls, but not commissions. Commissions are
recognized as expenses on a pro rata basis over the duration of the period of the time charter.
We are generally responsible for ship operating expenses, which include costs for crewing, insurance, repairs, modifications and maintenance, including drydocking, lubricants, spare parts and consumable stores and other miscellaneous expenses, as well as the associated cost of providing these items
and services. However, as described above, the hire rate provisions of our time charters are intended to reflect the operating costs borne by us. The charters on the three vessels in our initial fleet contain hire rate provisions that provide for an automatic periodic adjustment, which is designed to reduce
our exposure to increases in operating costs. Ship operating expenses are recognized as expenses when incurred.
Depreciation
We depreciate the cost of our ships on the basis of two components: a vessel component and a drydocking component. The vessel component is depreciated on a straight-line basis over the expected useful life of each ship, based on the cost of the ship less its estimated residual value. We estimate
the useful lives of our ships to be 35 years from the date of delivery from the shipyard. Furthermore, we estimate the residual values of our ships to be 10% of the initial ship cost, which represents our estimate of the market value of the ship at the end of its useful life.
We must periodically drydock each of our ships for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. All our ships are required to be drydocked for these inspections at least once every five years. At the time of delivery of
a ship, we estimate the drydocking component of the cost of the ship, which represents the estimated cost of the ships first drydocking based on our historical experience with similar types of ships. The drydocking component of the ships cost is depreciated over a five-year period.
General and Administrative Expenses
Historically, general and administrative expenses have principally consisted of travel and accommodation expenses, legal and professional expenses, consultancy services, naming ceremony expenses, commercial management fees and other advisor costs.
After the completion of this offering, we expect to incur additional general and administrative expenses going forward as a public company, including costs associated with the preparation of disclosure documents, increased legal and accounting costs, investor relations costs, incremental director and
officer liability insurance costs, as well as costs related to compliance with Sarbanes-Oxley Act and Dodd-Frank Act. We will also incur personnel costs for administrative and support staff pursuant to the administrative services agreement with GasLog.
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Financial Costs
We incur interest expense on the outstanding indebtedness under our credit facilities and our swap arrangements that qualify for treatment as cash flow hedges for financial reporting purposes, which we include in our financial costs. Financial costs also include amortization of other loan issuance costs
incurred in connection with establishing our credit facilities. While our total debt will be reduced in connection with this offering, we will incur additional interest expense and other borrowing costs in the future to the extent we incur additional debt to acquire additional ships.
Interest expense and amortization of loan issuance costs are expensed as incurred.
Financial Income
Financial income consists of interest income, which will depend on the level of our cash deposits, investments and prevailing interest rates. Interest income is recognized on an accrual basis.
Gain/(Loss) on Interest Rate Swaps
Any gain or loss derived from the fair value of the interest rate swaps at their inception, the ineffective portion of changes in the fair value of the interest rate swaps that meet hedge accounting criteria and net interest on interest rate swaps held for trading, the movement in the fair value of the
interest rate swaps that have not been designated as hedges and the amortization of the cumulative unrealized loss for the interest rate swaps that hedge accounting was discontinued are presented as gain or loss on interest rate swaps in our combined statements of profit or loss.
Year ended December 31, 2013 compared to the year ended December 31, 2012
The below table presents our operating results for the year ended December 31, 2013 and for the year ended December 31, 2012. Our three LNG carriers, the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
were delivered and immediately commenced their time charter with BG
Group in January, March and May 2013, respectively; therefore, our results for the two years are not comparable because prior to the delivery of our vessels, we only incurred general and administrative expenses and financial costs.
Year ended December 31,
2012
2013
Change
Statement of profit or loss
(in thousands of U.S. dollars)
Revenues
$
$
64,143
$
64,143
Vessel operating costs
(13,097)
(13,097)
Depreciation
(12,238)
(12,238)
General and administrative expenses
(30)
(1,525)
(1,495)
(Loss)/profit from operations
(30)
37,283
37,313
Financial costs
(1)
(12,133)
(12,132)
Financial income
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32
(78)
(Loss)/gain on interest rate swaps
(940)
1,036
1,976
(Loss)/profit for the year
$
(861)
$
26,218
$
27,079
Revenues
Revenues for the year ended December 31, 2013 amounted to $64.14 million and represent time charter hire earned by the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
from January 28, 2013, March 25, 2013 and May 30, 2013, the respective vessels delivery date, to December 31,
2013, which were all related to current time charters with the BG Group.
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Vessel operating costs
Vessel operating costs for the year ended December 31, 2013 amounted to $13.10 million mainly due to the daily costs associated with running the vessels from their delivery dates until December 31, 2013.
Depreciation
Depreciation for the year ended December 31, 2013 amounted to $12.24 million and represents the depreciation charge of the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
for the period from each vessels delivery date to December 31, 2013.
General and Administrative Expenses
General and administrative expenses increased by $1.50 million, to $1.53 million during the year ended December 31, 2013, from $0.03 million during the year ended December 31, 2012. The increase was mainly attributable to $1.24 million of commercial management services provided by GasLog, an
increase of $0.20 million in naming ceremony expenses, an increase of $0.01 million in legal and professional fees for the three vessels delivered in the first half of 2013 and an increase in foreign exchange loss of $0.05 million.
Financial Costs
Financial costs for the year ended December 31, 2013 amounted to $12.13 million mainly representing interest costs on our bank financing received on delivery of our vessels and net interest paid on our interest rate swaps that are hedge accounted. Prior to the delivery of our vessels, we had no
outstanding indebtedness. During the year ended December 31, 2013, we had an average of $315.51 million of outstanding indebtedness with a weighted average interest rate of 3.24% and amortization of deferred financing fees of $1.70 million.
Financial Income
Financial income decreased by 72.73% or $0.08 million to $0.03 million for the year ended December 31, 2013 from $0.11 million for the year ended December 31, 2012 due to the decrease in time deposits placed during the year ended December 31, 2013.
Gain/(Loss) on Interest Rate Swaps
Gain/(loss) on interest rate swaps increased by $1.98 million to a $1.04 million gain during the year ended December 31, 2013 from a $0.94 million loss during the year ended December 31, 2012. The increase is mainly attributable to an increase of $3.88 million in unrealized gain on interest rate
swaps, partially offset by the $1.90 million realized loss on interest rate swaps held for trading.
Unrealized gain on interest rate swaps, increased by $3.88 million to a $2.94 million gain during the year ended December 31, 2013 from a $0.94 million loss during the year ended December 31, 2012. The increase is mainly attributable to (i) a $3.58 million gain from the mark-to-market valuation of
our two interest rate swaps for which hedge accounting was discontinued during 2013 and (ii) a loss recognized of $0.93 million in 2012, relating to a loss at inception of two interest rate swaps signed in the first half of 2012 (no interest rate swaps were entered into in 2013), partially offset by $0.65
million that was reclassified from equity to the statement of profit or loss relating to the interest rate swaps for which hedge accounting was discontinued.
(Loss)/Profit for the Year
Profit for the year ended December 31, 2013 increased by $27.08 million to $26.22 million, from a loss of $0.86 million during the year ended December 31, 2012 as a result of the aforementioned factors.
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We currently derive all of our revenues from one customer, BG Group.
Since our ships are employed under multi-year, fixed-rate charter arrangements, seasonal trends do not impact the revenues during the year.
Liquidity and Capital Resources
Liquidity and Capital Resources
We operate in a capital-intensive industry, and we expect to finance the purchase of additional vessels and other capital expenditures through a combination of borrowings from commercial banks, cash generated from operations and debt and equity financings. In addition to paying distributions, our
other liquidity requirements relate to servicing our debt, funding investments (including the equity portion of investments in vessels and maintenance capital expenditures during drydockings), funding working capital and maintaining cash reserves against fluctuations in operating cash flows. In connection
with this offering, we expect to amend one or more of our existing vessel financing agreements to permit the transactions pursuant to which we will acquire our initial fleet. In connection with this offering, we expect to enter into a $30.0 million revolving
credit facility with GasLog (which we refer to as
the sponsor credit facility). We believe our current resources, including the sponsor credit facility, are sufficient to meet our working capital requirements for our current business. Generally, our sources of funds will be cash from operations, long-term bank borrowings and other debt and equity financings.
Because we will 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.
Our funding and treasury activities are intended to maximize investment returns while maintaining appropriate liquidity. We have not made use of derivative instruments other than for interest rate risk management purposes, and we expect to economically hedge our exposure to interest rate
fluctuations in the future by entering into new interest rate swap contracts. The existing interest rate swaps will be transferred to us in connection with this offering.
We estimate that we will spend in total approximately $7.50 million for drydocking and classification surveys for the three vessels in our initial fleet towards the end of the five-year period following their delivery. As our fleet matures and expands, our drydocking expenses will likely increase.
Ongoing costs for compliance with environmental regulations are primarily a component of our vessel operating expenses. We are not aware of any regulatory changes or environmental liabilities that we anticipate will have a material impact on our current or future operations. See
BusinessEnvironmental and Other Regulation.
Capital Structure and Cash Distributions
Following this offering, 9,822,358 common units and 9,822,358 subordinated units, representing a 49.0% and 49.0% limited partner interest in us, respectively, will be outstanding. Following this offering and assuming no exercise of the underwriters option to purchase additional common units, GasLog
will own 1,422,358 of our common units. GasLog will initially own all of our subordinated units. In addition, GasLog will own all of our incentive distribution rights, which will entitle GasLog to increasing percentages of the cash we distribute in excess of $0.43125 per unit per quarter, and GasLog
Partners GP LLC, a wholly owned subsidiary of GasLog, will own a 2.0% general partner interest in us. For a description of the relative rights and privileges of holders of common units and subordinated units, and of holders of general partner units and incentive distribution rights, in and to partnership
distributions, see this section and How We Make Cash Distributions. For a description of the rights and privileges of the partners under our partnership agreement, including voting rights, see The Partnership Agreement.
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The principal difference between our common units and subordinated units is that in any quarter during the subordination period, the subordinated units are entitled to receive the minimum quarterly distribution of $0.375 per unit only after the common units have received the minimum quarterly
distribution and arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units will not accrue arrearages. The subordination period generally will end if we have earned and paid at least $0.375 on each outstanding common and subordinated unit and the
corresponding distribution on our general partners 2.0% interest for any three consecutive four-quarter periods ending on or after March 31, 2017. If the subordination period ends as a result of us having met the tests described above, all subordinated units will convert into common units on a one-for-
one basis, and the common units will no longer be entitled to arrearages. See How We Make Cash DistributionsSubordination Period.
If at any time our general partner and its affiliates own more than 80.0% of the outstanding common units, our general partner has the right, but not the obligation, to purchase all, but not less than all, of the remaining common units at a price equal to the greater of (x) the average of the daily
closing prices of the common units over the 20 trading days preceding the date three days before the notice of exercise of the call right is first mailed and (y) the highest price paid by our general partner or any of its affiliates for common units during the 90-day period preceding the date such notice is
first mailed. 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.
We can issue an unlimited number of additional units, including units that are senior to the common units in rights of distribution, liquidation and voting, on the terms and conditions determined by our board of directors, without the consent of our unitholders. See Units Eligible for Future Sale
and The Partnership AgreementIssuance of Additional Interests.
GasLog, as the initial holder of all of our incentive distribution rights, has the right, at a time when there are no subordinated units outstanding and it has received incentive distributions at the highest level to which it is entitled (48.0%) for each of the prior four consecutive fiscal quarters, to reset
the initial cash target distribution levels at higher levels based on the distribution at the time of the exercise of the reset election. If GasLog transfers all or a portion of the incentive distribution rights it holds in the future, then the holder or holders of a majority of our incentive distribution rights will be
entitled to exercise this right. Following a reset election by GasLog, the minimum quarterly distribution amount will be reset to an amount equal to the average cash distribution amount per common unit for the two fiscal quarters immediately preceding the reset election (we refer to such amount as the
reset minimum quarterly distribution amount), and the target distribution levels will be reset to correspondingly higher levels based on the same percentage increases above the reset minimum quarterly distribution amount as our current target distribution levels. In connection with resetting these target
distribution levels, GasLog will be entitled to receive a number of common units equal to that number of common units whose aggregate quarterly cash distributions equaled the average of the distributions to it on the incentive distribution rights in the prior two quarters. The general partner will also
receive additional general partner units in order to maintain its ownership interest relative to the common units. For a more detailed description of GasLogs right to reset the target distribution levels upon which the incentive distribution payments are based, see How We Make Cash
DistributionsGasLogs Right to Reset Incentive Distribution Levels.
Following this offering, we intend to make minimum quarterly distributions of $0.375 per common unit ($1.50 per unit on an annualized basis) to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to our
general partner. In general, we will pay any cash distributions we make each quarter in the following manner:
first, 98.0% to the holders of common units and 2.0% to our general partner, until each common unit has received a minimum quarterly distribution of $0.375 plus any arrearages from prior quarters;
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second, 98.0% to the holders of subordinated units and 2.0% to our general partner, until each subordinated unit has received a minimum quarterly distribution of $0.375; and
third, 98.0% to all unitholders, pro rata, and 2.0% to our general partner, until each unit has received an aggregate distribution of $0.43125.
Within 45 days after the end of each fiscal quarter (beginning with the quarter ending June 30, 2014), we will distribute all of our available cash to unitholders of record on the applicable record date. We will adjust the minimum quarterly distribution for the period from the closing of this offering
through June 30, 2014 based on the actual length of the period. Our ability to pay our minimum quarterly distribution is subject to various restrictions and other factors described in more detail under the caption Our Cash Distribution Policy and Restrictions on Distributions. If cash distributions to our
unitholders exceed $0.43125 per unit in a quarter, holders of our incentive distribution rights (initially, GasLog) will receive increasing percentages, up to 48.0%, of the cash we distribute in excess of that amount. We refer to these distributions as incentive distributions. We must distribute all of our cash
on hand at the end of each quarter, less reserves established by our board of directors to provide for the proper conduct of our business, to comply with any applicable debt instruments or to provide funds for future distributions. We refer to this cash as available cash, and we define its meaning in our
partnership agreement. The amount of available cash may be greater than or less than the aggregate amount of the minimum quarterly distribution to be distributed on all units. See Description of the Common Units and The Partnership Agreement.
Working Capital Position
As of December 31, 2013 and December 31, 2012, our total current liabilities exceeded total current assets by $43.86 million and $13.74 million, respectively. The working capital deficit in 2012 is principally due to the fact that the vessels were not in operation. The working capital deficit for the year
ended December 31, 2013 resulted primarily from the fact that the vessels were not in operation for the entire year and there were balances due to related parties. Such balances mainly represented the amounts paid by GasLog to provide the Predecessor with funding to cover expenses during the
construction period. In addition, we expect to amend certain of our existing financing agreements in connection with this offering, to permit the transactions pursuant to which we will acquire our initial fleet, and expect to have less debt outstanding upon completion of this offering.
We anticipate that cash flow generated from operations will be sufficient to fund our operations, including our working capital requirements, and to make the required principal and interest payments on our indebtedness during the next 12 months.
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 drydocking and vessel replacement. Because of the substantial capital expenditures we are required to make to maintain our fleet, our initial annual estimated maintenance and replacement capital expenditures for purposes of
estimating maintenance and replacement capital expenditures will be $13.57 million per year, which is composed of $2.87 million for drydocking and $10.70 million, including financing costs, for replacing our vessels at the end of their useful lives.
The $10.70 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. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, time charter 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
112
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. See Risk FactorsRisks
Inherent in Our BusinessWe must make substantial capital expenditures to maintain the operating capacity of our fleet, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus,
which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted.
Year ended December 31, 2013 compared to the year ended December 31, 2012
The following table summarizes our net cash flows from operating, investing and financing activities for the years indicated:
Year Ended
2012
2013
(in thousands of
Net cash (used in)/from operating activities
$
(110
)
$
32,159
Net cash from/(used in) investing activities
110
(454,263
)
Net cash from financing activities
436,506
Net increase in cash and cash equivalents
14,402
Cash and cash equivalents at beginning of year
2
2
Cash and cash equivalents at end of year
2
14,404
Net Cash (Used in)/from Operating Activities
Net cash (used in)/from operating activities increased by $32.27 million to a $32.16 million inflow in the year ended December 31, 2013, from a $0.11 million outflow in the year ended December 31, 2012. The increase of $32.27 million was due to an increase of $70.14 million in revenue collections,
partially offset by an increase of $9.22 million in cash paid for interest and an increase of $26.75 million in payments for general and administrative expenses, operating expenses and inventories and $1.9 million net interest settlement payments relating to interest rate swaps held for trading.
Net Cash from/(Used in) Investing Activities
Net cash from/(used in) investing activities increased by $454.37 million, to a $454.26 million outflow in the year ended December 31, 2013, from a $0.11 million inflow in the year ended December 31, 2012. The increase is mainly attributable to payments of $452.79 million for the construction costs of
newbuildings, a decrease of $0.08 million in interest income received and $1.50 million increase in short-term investments.
Net Cash from Financing Activities
Net cash from financing activities increased to $436.51 million in the year ended December 31, 2013, compared to nil during the year ended December 31, 2012. The increase is mainly attributable to $411.00 million drawn from loan facilities, partially offset by an increase of $0.18 million in payment
of loan issuance costs and an increase of $16.1 million in bank loan repayments. The increase was further affected by capital contributions and advances received from shareholders of $41.79 million.
Vessel Financing Agreements.
GasLog and its subsidiaries entered into the following financing agreements in connection with the acquisition of the vessels in our initial fleet. Terms of the vessel
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December 31,
U.S. dollars)
financing agreements include covenants applicable to the GasLog subsidiaries that will not be our subsidiaries following completion of this offering. We have amended and obtained waivers and confirmations under these financing agreements in connection with this offering to permit the transactions
pursuant to which we will acquire our initial fleet and, in the case of the GasLog Sydney Facility, to prepay a portion of the amounts outstanding under the GasLog Sydney Facility. The covenants in these facilities will apply to us as well as to GasLog and GasLog subsidiaries will not be our subsidiaries
following completion of this offering. In addition, GasLog and, in the case of the GasLog Shanghai and GasLog Santiago Facility, one of its subsidiaries will continue to guarantee these facilities following completion of this offering. We will not pay GasLog any fees for providing these guarantees. GasLog
Partners Holdings LLC will also guarantee these facilities following completion of this offering.
Lender(s)
Subsidiary Party
Outstanding
Interest
Rate
Maturity
Remaining Payment
DNB Bank ASA,
London Branch,
and the Export-
Import Bank of
Korea
GAS-three Ltd.
(GasLog Shanghai)
and GAS-four Ltd.
(GasLog Santiago)
$260.47
million
LIBOR +
applicable
margin
2025
45 consecutive quarterly installments of $2.01 million under each tranche, with two balloon payments of up to $40 million each due under each tranche 12 years from delivery of the collateral ships; the lenders will have a put option giving them the right to
request full repayment in 2018
Nordea Bank
Finland Plc,
London Branch,
ABN AMRO
Bank N.V. and
Citibank
International Plc,
Greece Branch
First Tranche:
GAS-five Ltd.
(GasLog Sydney)
$134.43
million
(1)
LIBOR +
applicable
margin
2019
22 consecutive quarterly installments of $2.04 million, with a balloon payment of up to $89.62 million due in May 2019
(1)
Represents only the portion allocated to the
GasLog Sydney
.
GasLog Shanghai and GasLog Santiago Facility
. In March 2012, GAS-three Ltd. and GAS-four Ltd., as borrowers, entered into a $272.5 million senior secured credit facility with DNB Bank ASA, London Branch, and the Export-Import Bank of Korea to fund the installment payments on the
construction of the
GasLog Shanghai
and the
GasLog Santiago
, which we refer to as the GasLog Shanghai and GasLog Santiago Facility. This credit facility is secured by a first priority mortgage over the ships owned by the respective borrowers, guarantees from GasLog and its subsidiary, GasLog
Carriers, a pledge of the share capital of the respective borrower and a first priority assignment of all earnings and insurance related to the ship owned by the respective borrower.
The GasLog Shanghai and GasLog Santiago Facility includes two tranches. Each tranche is repayable in quarterly installments over 12 years with final balloon payments due at maturity of up to $40 million each in January 2025 and March 2025, subject to a put option that gives the lenders the right
to request repayment of the facility in full on the fifth anniversary of the delivery of the first vessel which was delivered in January 2013. The GasLog Shanghai and GasLog Santiago Facility bears interest at floating LIBOR, plus a margin. We have amended the GasLog Shanghai and GasLog Santiago
Facility in connection with this offering to, among other things, permit the transactions pursuant to which GasLog will contribute the
GasLog Shanghai
and
GasLog Santiago
to us, and to add GasLog Partners Holdings LLC as a guarantor.
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(Collateral Ship)
Principal
Amount as of
December 31,
2013
Installments as of
December 31, 2013
GasLog Sydney Facility
. In October 2011, GAS-five Ltd. and GAS-six Ltd. (a subsidiary of GasLog but not contributed to the Partnership), jointly and severally entered into a $277 million senior secured credit facility with Nordea Bank Finland PLC, ABN Amro Bank N.V. and Citibank
International PLC to fund the installment payments on the construction of the
GasLog Sydney
and the
GasLog Skagen
(the vessel owned by GAS-six Ltd.), which we refer to as the GasLog Sydney Facility. This credit facility is secured by a first priority mortgage over the
GasLog Sydney
and the
GasLog Skagen
, guarantees from GasLog and its subsidiary GasLog Carriers, a pledge of the share capital of the respective borrower and a first priority assignment of all earnings and insurance related to the ship owned by the respective borrower. The GasLog Sydney Facility includes two tranches. The
tranche applicable to the
GasLog Sydney
is repayable in quarterly installments over six years with a balloon payment of $89.62 million due at maturity in May 2019. The $277 million senior secured facility bears interest at LIBOR, plus a margin. In connection with this offering, we have entered into
amended facility agreements, which will become effective upon the closing of this offering, dividing the GasLog Sydney Facility into two separate facilities on substantially the same terms as the current facility, with one facility executed by GAS-five Ltd. for the portion allocated to the
GasLog Sydney
and one facility executed by GAS-six Ltd. for the portion allocated to the
GasLog Skagen
. These amendments also permit the transactions pursuant to which GasLog will contribute the
GasLog Sydney
to us, and will add GasLog Partners Holdings LLC as a guarantor and remove GasLog Carriers as a
guarantor. In connection with these amendments, we have committed to prepay at least $25 million of the new GAS-five Ltd. facility with proceeds of this offering. As discussed in Use of Proceeds, we expect to use $82.63 million of the proceeds of this offering to prepay this facility. We will not be an
obligor under the facility executed by GAS-six Ltd., related to the
GasLog Skagen
.
The primary financial covenants for all facilities as of December 31, 2013 are applicable to GasLog, as guarantor and are set out below:
market value adjusted net worth must at all times exceed $350 million;
net working capital (excluding the current portion of long-term debt) must be positive;
beginning on December 31, 2013, the ratio of EBITDA over debt service obligations (including interest and debt repayments) on a trailing twelve months basis must be no less than 110%;
total indebtedness divided by total capitalization must not exceed 75%; and
beginning on December 31, 2013, the aggregate amount of all unencumbered cash and cash equivalents must exceed the higher of 3% of total indebtedness or $20 million.
GasLog is permitted to pay dividends, provided that GasLog Group holds unencumbered cash equal to at least 4% of its total indebtedness, subject to no event of default having occurred or occurring as a consequence of the payment of such dividend.
The covenants under the above facilities are and, after this offering will continue to be, measured at the GasLog Group level.
The facilities include a fair market value covenant pursuant to which an event of default could occur under the facilities if the aggregate fair market value of the collateral vessels (without taking into account any charter arrangements) were to fall below 120% of the aggregate outstanding principal
balance under the facilities and any negative mark-to-market value arising under any hedging transaction.
The borrowers and the guarantors were in compliance with the above covenants as of December 31, 2013. As of December 31, 2013, the fair market value of our fleet, as defined in the relevant loan agreements, was approximately 167% of the aggregate outstanding debt. A decrease of 10% of the
aggregate fair market values of our vessels would not cause any violation of the covenants contained in our credit facilities.
Revolving Credit Facility with GasLog.
At or prior to the closing of this offering, we expect to enter into a $30.0 million revolving
credit facility with GasLog, to be used for general partnership purposes. We anticipate that the facility will be for a term of 36 months, unsecured, and will bear
115
interest at a rate of 5% per annum, with no commitment fee for the first year. After the first year, the interest will increase to a rate of 6% per annum, with an annual 2.4% commitment fee on the undrawn balance. We expect that the sponsor credit facility will contain covenants that require us to,
among other things:
notify GasLog of any event which constitutes or may constitute an event of default or which may adversely affect our ability to perform our obligations under the credit facility; and
provide GasLog with information in respect of our business and financial status as GasLog may reasonably require including, but not limited to, copies of our unaudited quarterly financial statements and our audited annual financial statements.
Events of default under the sponsor credit facility include, among others, the following:
failure to pay any sum payable under the sponsor credit facility when due;
breach of certain covenants and obligations of the sponsor credit facility;
a material inaccuracy of any representation or warranty;
default under other indebtedness in excess of $10.0 million which results in the relevant creditor declaring such indebtedness prematurely due and payable;
a lien, arrest, distress or similar event is levied upon or against any substantial part of our assets which is not discharged or disputed in good faith within 10 business days after we become aware of such event;
a substantial part of our business or assets is destroyed, abandoned, seized, appropriated or forfeited for any reason;
bankruptcy or insolvency events;
suspension or cessation of our business;
GasLog Partners GP LLC ceases to be our general partner; and
an amendment to our limited partnership agreement that, in the reasonable opinion of the lender, is adverse to its interests in connection with the sponsor credit facility.
Derivative Instruments and Hedging Activities
We intend to use derivative financial instruments to reduce the risks associated with fluctuations in interest rates. The existing derivative instruments entered into by GasLog in connection with the vessel financing agreements described above will be transferred to us upon the closing of this offering.
Our contractual obligations as of December 31, 2013 were:
Payments Due by Period
Total
Less than
Between
Between
More than
(in thousands of U.S. dollars)
Long-term debt obligations
(1)
$
394,895
$
24,189
$
48,377
$
228,638
$
93,691
Interest on long-term debt obligations
(2)
59,524
13,815
27,451
17,095
1,163
Amounts due to related parties
24,674
24,674
Amounts due for management fees and commercial management fees
(3)
1,920
1,920
Total
$
481,013
$
64,598
$
75,828
$
245,733
$
94,854
(1)
For the GasLog Shanghai and GasLog Santiago Facility, the lenders have a put option giving them the right to request full repayment in 2018. In the above table, we have assumed that the aforementioned facility will be fully repaid in 2018. The put option can be exercised provided that there is
timely notification to the Predecessor. There are no prepayment charges. The put
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1 year
13 years
35 years
5 years
option is closely related to the loan agreement because the option exercise price approximates the outstanding amount of the debt on the exercise date and hence no embedded derivative was recognized. For the GasLog Sydney Facility, the above table reflects only the portion allocated to the
GasLog
Sydney
.
(2)
Our interest commitment on long-term debt is calculated based on an assumed average applicable interest rate ranging from 2.50% to 4.29% which represents LIBOR of 0.25% as of December 31, 2013 and our various applicable margin rates and fixed-rate interest rate swaps associated with each debt.
For the GasLog Sydney Facility, the above table reflects only the portion allocated to the
GasLog Sydney
.
(3)
This includes the amounts due under our contractual obligations under our existing ship management agreements and our existing commercial management agreements signed with GasLog LNG Services Ltd. and GasLog Ltd., respectively, for their non-terminable periods. The ship management
agreements provide for a monthly management fee of $30,000 per vessel and an additional monthly lump sum amounting to 11.25% of the management fee. The ship management agreements are effective from each vessels delivery until the vessel is sold or becomes a total loss. In addition, they may
also be terminated by the owners by giving the managers at least three months notice. The commercial management agreements provide for a fixed annual fee of $540,000 per vessel and may be terminated by either party at any time giving the other party not less than twelve months written notice.
After giving effect to this offering and the related transactions, on an as adjusted basis, our contractual obligations as of December 31, 2013 would have been:
Payments Due by Period
Total
Less than
13 years
35 years
More than
(in thousands of U.S. dollars)
Long-term debt obligations
(1)
$
306,214
$
14,385
$
38,361
$
218,622
$
34,846
Interest on long-term debt obligations
(2)
41,625
8,382
21,030
11,781
432
Amounts due to related parties
(3)
24,674
24,674
Amounts due for management fees, administrative services fees and commercial management fees
(4)
1,551
1,551
Total
$
374,064
$
48,992
$
59,391
$
230,403
$
35,278
(1)
For the GasLog Shanghai and GasLog Santiago Facility, the lenders have a put option giving them the right to request full repayment in 2018. In the pro forma contractual obligations table, we have assumed that the facility will be fully repaid in 2018. The put option can be exercised provided that
there is timely notification to the borrowers. There are no prepayment charges. The put option is closely related to the loan agreement because the put option exercise price approximates the outstanding amount of the debt on the exercise date and hence no embedded derivative was recognized.
The pro forma contractual obligations table gives effect to the scheduled principal amortization payments totalling $6.05 million during the period January 1, 2014 to April 25, 2014 as if they had occurred on December 31, 2013. In addition, for the GasLog Sydney Facility, the pro forma contractual
obligations table gives effect to a prepayment of $82.63 million from the proceeds of this offering as if it had occurred on December 31, 2013 with the scheduled payments proportionally decreased.
(2)
Our interest commitment on long-term debt is calculated based on an assumed average applicable interest rate from 2.50% to 4.29%, which represents LIBOR of 0.25% as of December 31, 2013 and the various applicable margins over the LIBOR rate specified in our debt agreements and the fixed
rate interest rate swaps associated with our debt.
(3)
Amounts due to related parties represent mainly payments made by GasLog LNG Services Ltd. and GasLog Ltd. to cover expenses during the construction period and unpaid dividends declared
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1 year
5 years
in 2013. See Note 14 to the audited combined carve-out financial statements of GasLog Partners LP Predecessor included elsewhere in this prospectus.
(4)
This includes the amounts due under our contractual obligations under our existing ship management agreements and our existing commercial management agreements signed with GasLog LNG Services Ltd. and GasLog Ltd., respectively, for their non-terminable periods for the period January 1, 2014
to April 30, 2014. In addition as from May 1, 2014 (the assumed closing date of this offering), it includes the effect of the amended ship management agreement, amended commercial management agreements and the administrative services agreement, as discussed below. The amended ship
management agreements provide for a monthly management fee of $46,000 per vessel. However, considering that the non-terminable period of the existing agreement is three months, the above table reflects only the amounts due under the existing management agreement as of December 31, 2013
($30,000 monthly management fee per vessel plus an additional lump sum amount of 11.25% of the management fee). The amended commercial management agreements provide for a fixed annual fee of $360,000 per vessel and may be terminated by either party giving a three months notice,
compared to the fixed annual fee of $540,000 per vessel of the existing commercial management and the twelve months non-terminable period. The pro forma contractual obligations table includes a proportion of the amounts due under the existing agreements for four months and commercial
management fees for three months under the amended agreements. The administrative services agreement will provide for a fixed annual fee of $588,000 per vessel and may be terminated by either party at any time giving the other party not less than three months written notice. The pro forma
contractual obligations table include administrative services fees for 3 months.
As of December 31, 2013, there are no commitments for capital expenditures related to the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
. In the event we decide to exercise our options to purchase twelve additional ships from GasLog, we expect to finance the costs with cash from
operations and a combination of debt and equity financing.
Off-Balance Sheet Arrangements
Currently, we do not have any off-balance sheet arrangements.
The discussion and analysis of our financial condition and results of operations is based upon our combined carve-out financial statements, which have been prepared in accordance with IFRS as issued by the IASB. The preparation of those financial statements requires us to make estimates and
judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the combined carve-out financial statements and expenses during the reporting periods. GasLog Groups management evaluates whether estimates should be made on an
ongoing basis, utilizing historical experience, consultation with experts and other methods management considers reasonable in the particular circumstances. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying
amount of the asset or liability in the future. Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting
policies, because they generally involve a comparatively higher degree of judgment in their application. For a description of all our principal accounting policies, see Note 2 to our annual combined carve-out financial statements included elsewhere in this prospectus.
Vessel Cost, Lives and Residual Value
When determining vessel cost, we recognize both the installment payments paid to the shipyard along with any directly attributable costs of bringing the vessels to their working condition incurred
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during the construction periods as vessel costs. Directly attributable costs incurred during the vessel construction periods consist of commissions, on-site supervision costs, costs for sea trials, certain spare parts and equipment, costs directly incurred for negotiating the construction contracts, lubricants and
other vessel delivery expenses. Any vendor discounts are deducted from the vessel cost. Subsequent expenditures for conversions and major improvements are also capitalized when the recognition criteria are met.
The vessel cost component is depreciated on a straight-line basis over the expected useful life of each ship, based on the cost of the vessel less its estimated residual value. We estimate the useful lives of our ships to be 35 years from the date of delivery from the shipyard, which we believe is within
industry standards and represents the most reasonable useful life for each of our ships. Furthermore, we estimate the residual values of our ships to be 10% of the initial ship cost, which represents our estimate of the current market value of the ships as if they were at the end of their useful lives at the
time we make such estimate. The estimated residual value of our ships may not represent the fair market value at any one time, in part because there has historically been very little scrapping of LNG carriers and because market prices of scrap values tend to fluctuate. We might revise our estimate of
the residual values of our ships in the future in response to changing market conditions.
An increase in the estimated useful lives of our ships or in their residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of our ships or their residual value would have the effect of increasing the annual
depreciation charge and possibly resulting in an impairment charge.
When we are faced with regulations that place significant limitations on the ability of one of our ships to trade on a worldwide basis, we adjust the ships useful life to end at the date such regulations become effective.
We must periodically drydock each of our ships for inspection, repairs and any modifications. At the time of delivery of a ship from the shipyard, we estimate the drydocking component of the cost of the ship, representing estimated costs to be incurred during the first drydocking at the drydock yard
for a special survey and parts and supplies used in making required major repairs that meet the recognition criteria, based on our historical experience with similar types of ships.
We use judgment when estimating the period between drydockings performed, which can result in adjustments to the estimated amortization of the drydocking expense. If a ship is disposed of before its next drydocking, the remaining balance of the deferred drydock is written off and forms part of
the gain or loss recognized upon disposal of ships in the period when contracted. We expect that our ships will be required to be drydocked approximately 60 months after their delivery from the shipyard and thereafter every 60 months our ships will be required to undergo special or intermediate surveys
and be drydocked for major repairs and maintenance that cannot be performed while the ships are operating. We amortize our estimated drydocking expenses for the first special survey over five years, but this estimate might be revised in the future.
Costs that will be capitalized as part of the future drydockings will include a variety of costs incurred directly attributable to the drydocking and costs incurred to meet classification and regulatory requirements, as well as expenses related to the dock preparation and port expenses at the drydock
shipyard, general shipyard expenses, expenses related to hull, external surfaces and decks, expenses related to machinery and engines of the vessel, as well as expenses related to the testing and correction of findings related to safety equipment on board. Drydocking costs do not include vessel operating
expenses such as replacement parts, crew expenses, provisions, lubricants consumption, insurance, management fees or management costs during the drydocking period. Expenses related to regular maintenance and repairs of our vessels are expensed as incurred, even if such maintenance and repair occurs
during the same time period as our drydocking.
Ordinary maintenance and repairs that do not extend the useful life of the asset are expensed as incurred. Major renovation costs and modifications are capitalized and depreciated over the estimated remaining useful life.
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Impairment of Vessels
At the end of each reporting period we perform an assessment of whether there is any indication that our vessels may be impaired by considering both internal and external sources of information as provided by IAS 36 paragraph 12.
If any such indication exists, the recoverable amount of the vessel is determined based on the higher of a vessels net selling price and value in use. The net selling price is the amount obtainable from the sale of a vessel in an arms-length transaction less the costs of disposal, which is estimated
based on independent broker valuations, while value in use is the present value of estimated future cash flows expected to arise from the continuing use of a vessel. The assumptions to be used in the estimated future cash flows require estimates for future charter hires, increases in future operating
costs, future drydocking costs and days, off-hire days and discount rate applied.
As of December 31, 2013, our assessment of impairment indicators reflected there was no indication that our vessels may be impaired. As a result, the value in use calculation was not required to be performed. In addition, the fair market value of the Predecessors vessels as estimated by two
independent brokers was higher than their carrying amounts.
Fair value of derivative financial instruments
Our risk management policies permit the use of derivative financial instruments to manage interest rate risk. Changes in fair value of derivative financial instruments that are not designated as cash flow hedges for accounting purposes are recognized in earnings.
A substantial majority of the fair value of our derivative instruments and the change in fair value of our derivative instruments from period to period result from our use of interest rate swap agreements. The fair value of our interest rate swap agreements is the estimated amount that we would
receive or pay to terminate the agreements at the reporting date, taking into account current interest rates and the current creditworthiness of both us and the swap counterparties. The estimated amount is the present value of estimated future cash flows, being equal to the difference between the
benchmark interest rate and the fixed rate in the interest rate swap agreement, multiplied by the notional principal amount of the interest rate swap agreement at each interest reset date.
The fair value of our interest swap agreements at the end of each period are most significantly affected by the interest rate implied by market-observable data such as LIBOR yield curve. While the fair value of our interest swap agreements are typically more sensitive to changes in short-term rates,
significant changes in the long-term benchmark interest also materially impact our interest swap agreements.
The fair value of our interest swap agreements are also affected by changes in our specific credit risk included in the discount factor. Following the implementation of IFRS 13 Fair Value Measurement on January 1, 2013, the Predecessor adjusts its derivative liabilities fair value to reflect its own
credit risk and the counterparties risk. The estimate of the Predecessors credit risk is based on the credit rating of other companies in the LNG industry where publicly available, the rating of the global transportation industry where the shipping industry is included and the feedback that the Predecessor
receives from its lenders as part of the margin setting for the new loan agreements. The counterparties credit risk is estimated either by using the credit default swap rates obtained from public information or, if not available, by using the credit rating of the counterparties.
The LIBOR yield curve and our specific credit risk are expected to vary over the life of the interest rate swap agreements. The larger the notional amount of the interest rate swap agreements outstanding and the longer the remaining duration of the interest rate swap agreements, the larger the
impact of any variability in these factors will be on the fair value of our interest rate swaps. We economically hedge the interest rate exposure on a significant amount of our long-term debt and for long durations. As such, we have historically experienced, and we expect to continue to experience,
material variations in the period-to-period fair value of our derivative instruments.
Although we measure the fair value of our derivative instruments utilizing the inputs and assumptions described above, if we were to terminate the agreements at the reporting date, the amount we would pay or receive to terminate the derivative instruments may differ from our
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estimate of fair value. If the estimated fair value differs from the actual termination amount, an adjustment to the carrying amount of the applicable derivative asset or liability would be recognized in earnings for the current period. Such adjustments could be material. See Note 17 to our annual combined
carve-out financial statements for the effects on the change in fair value of our derivative instruments on our combined statements of profit or loss.
JOBS Act Status
We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies as described under Summary-Implications of Being
an Emerging Growth Company. We have elected to opt out of the extended transition period for complying with new or revised accounting standards under Section 107(b) of the JOBS Act, which election is irrevocable.
In addition, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company.
Recent Accounting Pronouncements
See Note 2 to our annual combined carve-out financial statements included elsewhere in this prospectus.
Quantitative and Qualitative Information About Market Risk
We are exposed to various market risks, including interest rate and foreign currency exchange risks. From time to time, we may make use of derivative financial instruments such as interest rate swaps to maintain the desired level of exposure arising from these risks.
A discussion of our accounting policies for derivative financial instruments is included in Note 2 to our annual combined carve-out financial statements included elsewhere in this prospectus. Further information on our exposure to market risk is included in Note 16 to our annual combined carve-out
financial statements included elsewhere in this prospectus.
The following analysis provides quantitative information regarding our exposure to market risks.
Interest Rate Risk
We are subject to market risks relating to changes in interest rates because we have floating rate debt outstanding. Significant increases in interest rates could adversely affect our operating margins, results of operations and our ability to service our debt. We have used interest rate swaps to reduce
our exposure to market risk from changes in interest rates. The principal objective of these contracts is to minimize economic risks and costs associated with our floating rate debt and not for speculative or trading purposes. The principal terms of the interest rate swaps are disclosed in Note 17 to our
annual combined carve-out financial statements included elsewhere in this prospectus. As of December 31, 2013 and December 31, 2012, the notional amount of the swaps designated as cash flow hedging instruments was $131.03 million and $327.50 million, respectively, and the notional amount of the
swaps accounted as held for trading was $180.47 million and nil, respectively. Under these swap transactions, the bank counterparty effects quarterly floating-rate payments to the Partnership for the relevant amount based on the three-month U.S. dollar LIBOR, and the Partnership effects quarterly
payments to the bank on the relevant amount at the respective fixed rates. We expect to continue to use interest rate swaps in the future as we deem appropriate to manage our exposure to interest rate risk.
The aggregate principal amount of our outstanding floating rate debt which was not economically hedged as of December 31, 2013 was $83.40 million. As an indication of the extent of our sensitivity to interest rate changes, an increase in LIBOR by 10 basis points would have
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decreased our profit during the year ended December 31, 2013 by approximately 0.27% or $0.07 million, based upon our debt level during the year (December 31, 2012: nil).
We expect our sensitivity to interest rate changes to increase in the future as a result of increased future borrowings under new loan agreements to finance acquisitions of additional ships.
Foreign Currency Exchange Risk
We generate all of our revenue in U.S. dollars, and the majority of our expenses, including debt repayment obligations under our credit facilities and a portion of our administrative expenses, are denominated in U.S. dollars. However, a portion of the ship operating expenses, primarily crew wages of
officers, and a large portion of our administrative expenses are denominated in euros. Specifically, for the years ended December 31, 2013 and December 31, 2012, approximately $6.68 million and nil, respectively, of the operating and administrative expenses were denominated in euros. As of December
31, 2013 and December 31, 2012, approximately $1.36 million and $0.30 million, respectively, of our outstanding trade payables and accruals were denominated in euros.
Depreciation in the value of the U.S. dollar relative to the euro will increase the U.S. dollar cost of us paying expenses denominated in euros. Accordingly, there is a risk that currency fluctuations will have a negative effect on our cash flows. As an indication of the extent of our sensitivity to
changes in exchange rate, a 10% increase in the average euro/dollar exchange rate would have decreased our profit during the year ended December 31, 2013 by approximately $0.67 million, based upon our expenses recognized during the year (December 31, 2012: nil). We do not currently hedge
movements in currency exchange rates, but our management monitors exchange rate fluctuations on a continuous basis. We may seek to hedge this currency fluctuation risk in the future.
Inflation and Cost Increases
In the current economic environment, inflation has not had a significant impact on us. In the near term, assuming the continuation of current economic conditions, crewing costs are the most likely expense to be affected by inflation. LNG transportation is a specialized area and the number of LNG
carriers has increased rapidly in recent years. As a result, there has been an increased demand for qualified crews, which has and will continue to put inflationary pressure on crew costs. The impact of cost increases would be mitigated to some extent by certain provisions in our time charters, including
automatic periodic adjustment provisions and cost review provisions.
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The information and data contained in this prospectus relating to the global shipping industry has been provided by Clarkson Research Services Limited, or Clarkson Research, and is taken from Clarkson Researchs database and other sources. Clarkson Research has advised that: (i) some information in
Clarkson Researchs database is derived from estimates or subjective judgments; (ii) the information in the databases of other maritime data collection agencies may differ from the information in Clarkson Researchs database; and (iii) while Clarkson Research 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.
Unless otherwise indicated, the following information relating to the global shipping industry reflects information and data available as of April 1, 2014.
Natural gas is one of the fastest growing primary energy sources globally. It is supported by significant reserves, competitive pricing and relatively cleaner air emissions from combustion compared with other hydrocarbons. Within the natural gas industry, the volume of LNG traded increased at a rate
38% higher than pipeline trade and at almost three times the rate of overall natural gas consumption between 1990 and 2012. A continuing disparity between the prices of gas in various geographies compared to the relatively low cost of LNG shipping has enhanced the economics of LNG trade.
Significant expansion of LNG liquefaction and regasification facilities has taken place in recent years and a large number of additional facilities have been planned. Including all of the projects currently under construction and at Final Investment Decisions (FID) or Front End Engineering and Design
(FEED) stages, liquefaction capacity is expected to increase by 35% by the end of 2016. Taking into consideration projects scheduled to start-up between 2017 and 2020, a further 79% increase of current liquefaction capacity is implied over this period. These plans are potentially subject to delays,
postponements and cancellations. However, if they proceed on schedule, the demand for LNG shipping capacity is expected to increase significantly. There have also been significant increases in the number of LNG exporting and importing nations, the number of individual trading routes and the average
trading distance. Overall, the world seaborne trade in LNG has grown strongly over the past two decades, with a compound annual growth rate of 7.1% between 1990 and 2011, before declining by 1.6% in 2012. However, seaborne LNG trade marginally improved in 2013, increasing by 0.5%. An
improvement in trade is expected in 2014.
The current order book of LNG carriers, which having grown in size since the start of 2011, is still relatively small in historic terms at 31% of the global LNG carrier fleet capacity, while tonnage equivalent to only 9% of the current global LNG carrier fleet capacity is due for delivery in the last
nine months of 2014. The fleet grew at a moderate 4.0% in 2013, but growth is expected to accelerate in 2014 and 2015, and will depend on the level of newbuilding orders and their successful delivery thereafter. In recent years, newbuildings sized between 145,000 cbm and 175,000 cbm with diesel
electric propulsion have been the most popular, given the trading flexibility and fuel cost savings. Although there have been a number of new entrants over the past 10 years, the LNG shipping sector is characterized by relatively high barriers to entry compared to other shipping sectors. These barriers
include stringent customer standards requiring a strong safety track record and strong technical management capabilities, limited supply of highly qualified personnel and significant capital requirements for new ships. The charter rates paid in the LNG charter market are governed by the supply of and
demand for carrying capacity and as such they have fluctuated and may continue to further fluctuate in the future.
Overview of the Natural Gas Market
Over the last two decades, natural gas has been one of the worlds fastest growing energy sources. Natural gas is the third largest global energy source, after oil and coal respectively, and accounted for 24% of the worlds energy consumption in 2012. Natural gas is used primarily to generate
electricity and as a heating source. Between 1990 and 2012, consumption grew at an
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average rate of 2.4% per year, approximately twice the growth rate of oil consumption over the same period.
A number of forecasting agencies expect consumption of natural gas to continue to rise, with the Energy Information Administration, or EIA, projecting a 58% growth in demand between 2013 and 2040. This equates to a compound annual growth rate of 1.7% during this period, with demand for
oil and coal both expected to grow by lower volumes over the same period. Natural gas consumption is expected to grow for a number of reasons, including:
diversification from oil, coal and nuclear energy;
global economic growth that
is expected to lead to additional energy demand, particularly from non-Organisation for Economic Development (OECD) economies such as China and India;
replacement demand from the shutdown of nuclear electricity generators in Japan;
the combustion of natural gas being viewed as more environmentally friendly than other fossil fuels;
the wide applicability of natural gas as a fuel source;
known natural gas reserves that totaled 187 trillion cbm at the end of 2012, a reserves to production ratio of 56 years; and
further market deregulation that may have a beneficial impact by increasing trading opportunities.
Given concerns about the impact of fossil fuels on global warming, there is a widespread desire to limit carbon emissions wherever possible in many countries. Natural gas is well-placed to take advantage of this as it is considered to be the cleanest burning of the most typical fossil fuels. For example,
the burning of natural gas emits approximately 30% less carbon dioxide than oil and approximately 45% less carbon dioxide than coal. Furthermore, natural gas emits relatively few particulates and relatively low levels of nitrogen oxide compared to coal and oil. Increasing opposition to nuclear energy
around the world, particularly in countries such as Japan and Germany, is expected to further increase the demand for natural gas.
Between 2005 and 2012, natural gas consumption in non-OECD Asia increased by 70%, and most forecasting agencies expect this growth to continue, albeit under an assumption of continued economic growth. The EIA forecast that growth in non-OECD Asia will increase at a compound annual
growth rate of 3.4% between 2013 and 2040, which is twice the global average.
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By the end of 2012, natural gas reserves totaled 187 trillion cbm. This represents a reserve to production ratio of 56 years, some 5% higher than oil. Natural gas reserves, like crude oil reserves, are unevenly distributed and an imbalance exists between the location of reserves and both current and
expected demand. The largest reserves are located in the Middle East (43%) and the territories of the former Soviet Union (29%), followed by the lesser developed countries in Asia and sub-Saharan Africa, at significant distances from the major locations of demand in North America and Europe, which
generally have the lowest reserves.
In the past, the production and consumption of natural gas was relatively geographically aligned, limiting the need for long-distance trading. However, in 2012, 31% of natural gas was traded between countries, up from 16% in 1990. As natural gas has become commoditized, a progressively larger
amount is being traded globally, either via pipelines or increasingly as LNG.
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In recent years, there has been an increase in the production of unconventional natural gas, including tight gas, shale gas and coalbed methane. In particular, there has been a significant increase in United States shale gas reserves, with improvements in technology helping United States domestic
natural gas reserves to increase by 69% between the end of 2000 and the end of 2012. The advent of considerable shale gas production in the United States has led to a decline in United States LNG imports, which made up only 0.8% of global LNG imports in 2013 (including re-exports), and, looking
ahead, the United States has the potential to become a major exporter of LNG. In January 2014, the EIA estimated that overall global resources of known technically recoverable shale gas resources totaled 207 trillion cbm (7,299 trillion cubic feet). These resources are located in a diverse range of
geographic locations, with China, Argentina and Algeria all having larger estimated resources than the United States However, although these resources are technically recoverable, there are significant obstacles to this shale gas becoming economically recoverable at present. These include both geological
factors, as well as a range of other issues, such as the difficult terrain, the limited availability of water, the fact that many of these areas are already densely populated, uncertainty regarding property rights and other legal considerations, public concerns regarding extraction activities and that the necessary
infrastructure to extract the gas is not in place.
Liquefied Natural Gas
Overview
There are two methods of transporting natural gas if not consumed in the producing region: pipelines, which accounted for 68% of the natural gas traded cross-border in 2012, and LNG shipping, in which natural gas is liquefied and transported in specialized seaborne carriers. LNG shipping has been
increasing in importance and accounted for 32% of all natural gas trade in 2012, up from 31% in 2010, 26% in 2000 and 24% in 1990. Between 1990 and 2012, gas traded as LNG trade increased by a compound annual growth rate of 7.1% compared to 5.2% per annum for gas transported by pipeline
over the same period.
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The challenge of moving gas as LNG to points of demand is that traditionally it has been highly capital intensive, technologically sophisticated and expensive. The first shipment of LNG was made in 1959 from Lake Charles in the United States to Canvey Island in the UK. LNG trade was
subsequently developed in the 1960s with shipments from Arzew in Algeria to the UK, Spain, Italy and France, and in the 1970s with the expansion of the trade to Japan. Relatively few LNG carriers were ordered during the 1980s, while the 1990s saw limited activity in terms of infrastructure and trade
development, with relatively few projects coming online during this period. By contrast, over the course of the last decade, a number of new projects in a range of countries, including some with no prior history of LNG production such as Trinidad and Tobago and Equatorial Guinea, have started
producing LNG for export.
The LNG supply chain involves a number of different stages:
Liquefaction
: Following the initial production of gas, natural gas is cooled to a temperature of -162
°
C (-260
°
F), which transforms it into a liquid. This reduces its volume to approximately 1/600th of its volume in a gaseous state and allows economical storage and transportation.
Shipping
: LNG is transported overseas from the liquefaction facility to the receiving terminal in specially designed LNG carriers.
Terminalling and Regasification
: LNG is stored in specially designed facilities until regasified. LNG is returned to its gaseous state at a regasification facility, which can be located either onshore or aboard specialized LNG carriers.
Distribution
: Upon return to its gaseous state, the natural gas is transported to consumers through pipelines.
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Source: Clarkson Research, April 2014.
Although the costs associated with the LNG supply chain have declined over the past two decades, it can be less expensive to transport natural gas via pipeline than LNG carriers. However, due to the growing distances between remote sources of supply and the location of demand, capital costs
associated with constructing pipelines, which become prohibitively expensive over long distances, security issues relating to the existence of unattended energy pipelines and the potential for geopolitical factors disrupting the use of pipelines that run between countries, LNG carriers are expected to remain
the predominant means of transportation for a significant portion of global natural gas demand.
Furthermore, LNG carriers offer greater flexibility in the transportation of natural gas than pipelines and enable a swifter response to market developments, including new sources of demand and supply or significant changes in the price of LNG in certain markets. The fixed infrastructure nature of
pipelines does not allow for this flexibility.
LNG Supply
With the increased interest in natural gas, there has been an associated increase in investment in LNG infrastructure that will support an increase in the volume of trade over the next few years. As the demand for natural gas continues to expand, the pace of the build-out of infrastructure to export
and import LNG as well as the geographic location of such infrastructure will have a direct impact on the demand for LNG shipping.
There were 17 countries (with 89 liquefaction trains) with LNG liquefaction infrastructure at the start of April 2014, compared to 10 exporting countries at the end of 2004. The total production capability of these existing units is estimated at approximately 286 million tonnes per annum of LNG,
while the average utilization rate of this global capacity is estimated to have reached approximately 80% in 2013. Idle liquefaction capacity can be a result of either underutilization, short interruptions of liquefaction trains due to maintenance activities or gas supply shortfalls. Qatar continues to be the
largest exporter of LNG, with Qatari exports having reached 78 million tonnes in 2013, which constituted one-third of global exports. Malaysia, Indonesia, Nigeria and Australia represented a second tier of exporters in 2013, having exported an aggregate total of 82 million tonnes of LNG.
There are 17 new LNG liquefaction projects with a total estimated annual capacity of 115 million tonnes of LNG under construction as at the start of April 2014. A sizeable tranche of this capacity is based in Australia. Thirteen of these projects are scheduled to be completed by 2016 or earlier, and
will add a further 84.5 million tonnes per annum of capacity over this period, an increase of 30% on current liquefaction capacity. There are 26 additional projects with an estimated annual capacity of 210.5 million tonnes of LNG that have received FID, or are at the FEED stage, with start-up dates
ranging from 2014 to the start of 2020. Four of these projects are targeting start dates prior to the end of 2016. If these four projects are completed on schedule, it is estimated that they will result in a further 16.1 million tonnes per annum of additional export capacity by 2016 (following full ramp up).
Combining the projects under construction and at FID or FEED stages implies an increase of 35% in liquefaction capacity by 2016 and a requirement for approximately 88 additional LNG carriers. Projects with start-up dates beyond 2016 are also expected to generate significant further requirements for
LNG carriers. Four projects currently under construction and 22
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projects at FID or FEED stages are due to start up between 2017 and 2020. Although subject to delays, postponements and cancellations, these 26 projects would add a further 79% on current liquefaction capacity (following full ramp up) and a requirement for approximately 211 additional LNG carriers
if they proceed on schedule. This ship requirement is calculated based on various assumptions, including the completion of liquefaction projects on time and utilization at current global averages.
Due to the complex and capital intensive nature of LNG projects, new installations have experienced regular delays. The Angola LNG project shipped its first cargo in June 2013, but was originally scheduled to begin shipping LNG cargoes in 2011. However, there have also been instances where
infrastructure has come online much more smoothly, or in advance of original start-up dates. For instance, exports of LNG from Oman began in May 2000, despite the fact that gas was only discovered in the country as late as 1991. The projects in Equatorial Guinea and Egypt are other examples of
liquefaction capacity which came online swiftly.
LNG Demand
At the start of April 2014, the import side of the LNG business consisted of 107 import facilities at locations in 30 countries. Asian nations accounted for three-quarters of global LNG imports in 2013, with Japan, South Korea, India, China and Taiwan being the top five LNG import destinations
during this period. The largest importer of LNG is Japan, which imported 88.0 million tonnes of LNG in 2013 (excluding re-exports), equivalent to 37% of the total global imports in 2013. Annual Japanese imports marginally softened by 0.1% in 2013, reflecting the relatively limited growth in power
generation, with what little growth being supplied by a slight increase in coal
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imports. However, the underlying demand for LNG in power stations remains significant, owing to the continued absence of nuclear capacity following the earthquake and tsunami in 2011.
As the preceding graph illustrates, while Japan remains the largest importer of LNG, activity in other areas has expanded. In 2011, new re-gasification terminals were opened in China, Thailand, the Netherlands, the United States, Mexico and Argentina. In 2012, the first Indonesian import facility,
Nusantara Regas, began operations, while additional terminals started up in China and Japan. Furthermore, in 2013, Malaysia, Singapore and Israel began importing LNG, and additional regasification terminals began operation in Japan, India, China, Italy and Brazil. This trend is expected to continue in
the near term, with import terminals under construction in countries without a prior history of importing LNG, such as Poland and Ukraine. Other countries planning to receive their first cargoes, either from new plants, FSRUs or land-based sources include: Croatia, Egypt, Finland, Ireland, Lithuania and
Sweden in Europe and the Mediterranean; Bahrain, Jordan, the Philippines, Sri Lanka and Vietnam in the East and Colombia and Uruguay in the western hemisphere. If all of the import proposals are realized, the number of importing nations could potentially reach approximately 50 by the end of 2016.
A notable trend in recent years has been the growth in the volume of re-exports being traded globally. Import terminals, particularly in the U.S. Gulf of Mexico, Belgium and Spain have installed loading facilities, which give them the ability to move LNG out of storage so that it can be re-exported
when the market prices make it profitable. Furthermore, as demonstrated by new import facilities having been established in Malaysia and Indonesia, certain key existing gas exporters have been establishing an LNG import infrastructure in order to try to meet growing domestic demand for natural gas
without having to curb LNG exports. There has also been a growth in the popularity of floating storage and regasification units (FSRUs), given the large expense of providing land-based import facilities. Three FSRUs have been built since the start of 2012 and a further three are scheduled to enter
service by the end of 2014.
Increased demand is expected from Japan in the short-term. Following the events at the Fukushima nuclear power plant in March 2011, the vast majority of the countrys nuclear reactors were taken off-line and in September 2013, the last functioning nuclear reactor was shut down, with no planned
timetable for a restart. Since 2011, the replacement demand from electricity generators has resulted in a rapid year-on-year growth in LNG imports (12.7% in 2011 and 11.4% in 2012). Although Japanese LNG imports did decline marginally in 2013, projections released by the Institute of Energy
Economics Japan suggest that LNG imports will continue to rise in the next few years, even if a limited number of nuclear reactors are gradually brought back online. Moreover, Japanese importers are also actively attempting to limit the cost of their LNG imports, which may increase demand. The price
of LNG in Japan has traditionally been indexed to the oil import price on long-term contracts, but importers are now attempting to diversify their LNG sources to capitalize on cheaper prices elsewhere, primarily North America. In July 2013, Osaka Gas Co and Chubu Electric Power Co announced
twenty year contracts with Freeport LNG in the U.S. However, downside risks
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to increased Japanese demand remain, most notably the ruling Liberal Democratic Partys enthusiasm for restarting nuclear reactors.
Demand for LNG is likely to continue to increase elsewhere in Asia, with particular scope for increased imports in both China and India for use in power generation, domestic heating and other industrial uses. Chinese imports of LNG, boosted by rising energy use and its desire to diversify its energy
mix, have increased rapidly since 2006 when Chinas first regasification plant opened. Chinese imports increased from 0.7 million tonnes of LNG in 2006 to 18.6 million tonnes of LNG in 2013 (excluding re-exports). As of April 2014, China had 11 LNG receiving terminals in operation with a total
capacity of 36.9 million tonnes per annum. Prospects for further growth in Chinas LNG import demand appear to be largely positive: six new regasification plants and the expansion of an existing facility with a total import capacity of 16.6 million tonnes are under construction, with approximately 5.6
million tonnes scheduled to come online by the end of 2014, and seven additional plants have been proposed. Elsewhere, Indian imports of LNG marginally declined by 1.7% in 2013 to 13.1 million tonnes, largely as a result of a weaker rupee and an increase in hydro generation. However, the outlook
for Indian seaborne LNG demand moving forward remains positive. At the start of April 2014, there were four LNG regasification terminals operating in India, with a total capacity of 22.4 million tonnes. India also has one regasification terminal currently under construction, with the Andhra Pradesh
FSRU scheduled to start operation in 2015. A further eleven new terminals and one terminal expansion are currently proposed or have been approved, most of which have estimated start-up dates of 2016 or earlier and would increase demand for seaborne LNG.
A significant recent driver of LNG demand has been high regional price differentials caused by varying supply of natural gas, differing price formation mechanisms and regulations, regional gas infrastructures and demand dynamics. General economic activity is also a driver of LNG demand.
Significant pricing differentials in varying regions of the world, as well as the relatively low cost of LNG transport have created arbitrage opportunities for LNG producers and traders, leading to additional demand for LNG sea transport. In 2011, natural gas prices in Japan were almost three times the
levels of prices in the United States. This price differential increased in 2012, with the Japanese price averaging almost four times the levels of those in the United States. Over the course of 2013, this multiple averaged over four times. With shipping costs significantly below these differentials, this has
encouraged trading to take advantage of arbitrage opportunities.
LNG: Trade and Shipping
The LNG trade can be considered as two main trading blocs, one covering the Asia/Pacific and the other the Atlantic (including the Mediterranean). Historically, there was little movement between the two blocs, although over the last three years there has been an increase in activity from the new
Atlantic exporters (Norway, Equatorial Guinea and Trinidad) to the Pacific. The Middle East sits between these two blocs, but the balance of its trade to the East and the West has changed little in recent years. Demand for LNG shipping has increased in recent years as natural gas demand has
continued to exceed production in mature gas producing regions, and as the cost of liquefaction and regasification has declined due to improved technology, efficiency gains and more competition.
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Moreover, high natural gas and LNG price differentials across varying regions have contributed to the proliferation of LNG trade. World seaborne LNG trade has grown strongly over the past two decades, with a compound annual growth rate of 7.1% between 1990 and 2011.
In 2008 and 2009, global economic conditions reduced demand for LNG and the rate of growth in trade stalled, partly due to limited volumes being made available for trading. Following this, there was a 21.3% increase in trade volume in 2010 and an 11.3% increase in trade volume in 2011 as LNG
demand increased and new and existing facilities were able to commence production. However, overall trade volumes declined by 1.6% in 2012, as a result of postponement of further liquefaction capacity and several terminals undergoing periods of downtime. Based on preliminary trade statistics, world
seaborne trade in LNG is estimated to have remained at a similar level in 2013, increasing by just 0.5% (including re-exports). This is a result of limited liquefaction capacity growth over the course of the year, coupled with import declines in both the United States and Europe only being marginally
offset by growth in non-OECD Asia. Growth in 2014 is expected.
There has also been a general increase in the complexity and distance of trading patterns. As shown in the graph below, the number of LNG trade routes between countries has increased from 45 in 2003 to 93 in 2008 and 168 in 2013. In the period between 1997 and 2011, there was also a
considerable increase in the average distance of LNG trade routes, increasing from 2,338 nautical miles to 3,755 nautical miles, a 61% increase over the period. These increases in distance and complexity of trading routes have also increased the relative requirement for LNG shipping capacity.
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Types of LNG Carriers
LNG carriers transport LNG internationally between liquefaction facilities and import terminals. These double-hulled ships include a sophisticated containment system that holds and insulates the LNG so it maintains its liquid form. There are two main types of containment system in use on LNG
carriers. The Moss system, developed by Kvaerner in the 1970s, uses free standing insulated spherical tanks supported at the equator by a continuous cylindrical skirt, i.e., the tank and the hull are two separate entities. The Membrane technique uses insulation built directly into the hull of the ship, with a
membrane covering inside the tanks to maintain integrity, i.e., the ships double hull directly takes the pressure of the cargo. The membrane technique is the most used system. As of April 1, 2014, this system had been supplied to 266 ships in service (69% of the current fleet in terms of numbers), or 261
ships (72% of the current fleet) if vessels below 35,000 cbm are excluded. The system is also the preferred choice for 79% of the ships on the current global order book, or 86% if vessels below 35,000 cbm are excluded.
Ship Technology
The traditional propulsion unit for an LNG carrier has been the steam turbine and this remains the most widely used technology in the current fleet. As at April 1, 2014, the global LNG carrier fleet included 259 ships (67% of the fleet by number) with this technology, with a further 13 on order
(12% of the orderbook by number). Traditionally, this technology was the only practical way of utilizing the boil-off gas characteristic of LNG transport. Boil-off gas represents approximately 0.15% of cargo per day. In recent years however, the high value of LNG has given rise to arguments over the
merits of burning valuable cargo versus the cost of investment in improved insulation and/or alternative engines.
In 2002, Gaz de France became the first owner to commit to gas-fired diesel electric engines, ordering from Chantiers de lAtlantique in St. Nazaire, France (now owned by STX Europe) a 74,000 cbm ship delivered in 2006. This engine type features the following advantages: (i) higher efficiency,
when compared to steam turbine installations, resulting in significant cost savings in todays fuel price environment; (ii) more compact which allows for a bigger cargo space; and (iii) allows greater freedom in the hiring of engineering staff. Dual fuel diesel electric engines are capable of using LNG boil-
off with either marine diesel oil or heavy fuel oil, and are able to reach approximately 45% efficiency, compared to under 30% for steam turbine engines. Although total fuel costs of a ship will depend on the relative cost of bunkers and LNG and trading patterns, these engines can benefit from over
30% fuel cost savings a day when running on heavy fuel oil. As at April 1, 2014, the global LNG carrier fleet included 68 ships (18% of the fleet by number) with this technology, almost all of which are within the 145,000 to 175,000 cbm size range. In addition, 80 ships (71% of the orderbook by
number) with this technology were on order. Wartsila, the original supplier of diesel electric engines, has now been joined by MAN Diesel & Turbo SE with similar offerings.
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Slow-speed diesel engines have been promoted for larger ships and were specified for the approximately 210,000 to 217,000 cbm Q-Flex and the approximately 260,000 cbm Q-Max orders for the Qatar projects. The slow-speed engines feature twin slow-speed diesel engines with twin screws and a
re-liquefaction plant used to return boil-off gas to the cargo. As of April 1, 2014, 31 Q-Flexes and 14 Q-Maxes have been delivered with this technology, comprising 12% of the current fleet in terms of numbers. However, no LNG carriers above 200,000 cbm with slow-speed diesel engines have been
ordered since 2007.
Global LNG Carrier Fleet and Orderbook
The effective supply of LNG carrier capacity is primarily determined by three main factors: (i) the size of the existing fleet; (ii) the rate of deliveries of newbuildings; and (iii) scrapping. At the start of 1996, the LNG carrier fleet stood at 90 ships (9.4 million cbm) before increasing to 174 ships (20.4
million cbm) by the start of 2005 and 361 ships (51.7 million cbm) by the start of 2011. However, the fleet has grown more slowly in the last few years as the delivery schedule has been relatively limited. As of April 1, 2014, the LNG carrier fleet totaled 388 ships with an aggregate capacity of 55.8
million cbm. The average age of the fleet was 10.8 years. Please note that this total includes small LNG tankers of less than 35,000 cbm, which are identified separately in the following table.
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World LNG Carrier Fleet and Order Book By Size
Size (cbm)
Fleet
Order Book
Number
000 cbm
% share of
Average Age
No.
000 cbm
% of
210,000 & above
45
10,335
19%
5.3
180-209,999
3
542
150-179,999
81
12,953
23%
3.5
100
16,511
127%
120-149,999
226
31,366
56%
14.0
1
147
0%
90,000-119,999
60,000-89,999
12
911
2%
24.6
35,000-59,999
Less than 35,000
24
231
0%
9.3
9
218
94%
Total
388
55,796
100%
10.8
113
17,418
31%
Source: Clarkson Research, April 2014
Historically, ships built between the early 1960s and 2000, could be grouped into one of three size ranges. The first category was the small carriers of between 25,000 and 50,000 cbm which were used for short range trades, especially in the Mediterranean. Ships between 60,000 and 90,000 cbm were
termed mid-sized carriers and utilized on medium haul voyages, and ships between 120,000 and 138,000 cbm were in the larger sized class. In 2002, the first 140,000 cbm ship was delivered as the LNG supply chain looked to take advantage of economies of scale. However, it was not until the fourth
quarter of 2006 that a 150,000 cbm ship entered the fleet. From 2007 to 2010, there were a significant number of so called Q-Flex (210,000 to 217,000 cbm) and Q-Max (260,000 cbm to 270,000 cbm) ships delivered into the fleet. With the exception of a limited number of small LNG carriers no larger
than 35,000 cbm, all of the ships ordered since the first half of 2007 have been between 145,000 cbm and 185,000 cbm in size. This reflects the current interest in designs that are able to trade flexibly and can move average sized cargo stems.
There has been a notable increase in newbuilding ordering of LNG carriers in recent years. Improved charter market conditions and a shortage of LNG carriers led to 136 newbuilding contracts being placed in the period from the start of 2011 to the start of April 2014, compared to a total of just
eleven between 2008 and 2010. As of April 1, 2014, the LNG carrier order book totaled 113 ships with an aggregate capacity of 17.4 million cbm. At 31% of the fleet (in terms of carrying capacity), the current order book is notably smaller than the record highs recorded in mid-2006
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cbm
(Years)
fleet
when it was almost 100% of the existing fleet. Nevertheless, it is substantially larger than it was at the start of 2011 (6% of the existing fleet).
Over the remaining nine months of 2014, 4.9 million cbm of new tonnage (8.9% of the current fleet by capacity) is scheduled to be delivered, with a further 4.8 million cbm expected to be delivered in full year 2015. As of April 1, 2014, available berth capacity is relatively limited through to the end
of 2015. It is therefore expected that the capacity of the global fleet will grow by approximately 8.6% in 2014 and by 7.7% in 2015. Exact levels will depend on the level of contracting activity in the coming years.
World LNG Carrier Order Book By Year of Delivery
Capacity Range
2014
2015
2016
2017
Total
cbm
No.
000 cbm
No.
000 cbm
No.
000 cbm
No.
000 cbm
No.
000 cbm
210,000+
180,000-209,999
1
182
2
360
3
542
150,000-179,999
30
4,802
28
4,594
27
4,597
15
2,518
100
16,511
120,000-149,999
1
147
1
147
90,000-119,999
60,000-89,999
35,000-59,999
Less than 35,000
9
218
9
218
Total
31
4,949
37
4,812
28
4,779
17
2,878
113
17,418
Source: Clarkson Research, April 2014
Note: The order book as a % of the fleet is in cubic capacity terms.
LNG carriers are typically engineered to a very high standard and when they enter the fleet, they are rigorously maintained. Therefore, their operational life extends well beyond that of other bulk carrier types and most trade beyond the age of 30 to 40 years. Consequently, there has historically been
very little scrapping: between 1996 and the start of April 2014, only 23 have been demolished, of which only ten have been larger than 60,000 cbm. Moving forward, however, commercial considerations may well alter this. A growing proportion of the current fleet (10% in terms of the number of ships as
of April 1, 2014) is now over 25 years old, while the order book
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Note: The order book is as of 1 April 2014. Going forward, the orderbook is subject to new orders, particularly for delivery in 2016 onwards.
contains ships which are larger, more fuel efficient and more suited to charterers requirements than those currently trading. As a result, commercial imperatives may dictate fleet replacement programs sooner rather than later. Although some older ships may be sold into conversion projects (for example,
FSRUs), this may result in a large proportion of the overage tonnage being scrapped in the near-term.
A relatively small number of shipyards worldwide are capable of building LNG carriers. Only 16 yards are currently building LNG carriers or have them on order, all of which are located in the Far East. Of these 16, only 10 are building vessels above 35,000 cbm. South Korean yards have the largest
portion of the order book above 35,000 cbm (76% in terms of the number of ships), and the remainder is accounted for by yards in China and Japan, which have 10% and 14% of the order book respectively. Nearly all LNG carriers are built at established shipyards, and ships are currently being
delivered broadly as per the order book schedule. LNG carriers are relatively complex to build, with typical lead times in recent years of between 26 and 48 months. As a result, this prevents large numbers of new shipyard entrants. However, additional LNG shipbuilding capacity may be available at the
existing capable yards if demand for other ship types declines.
LNG carrier asset values fluctuate over time. Given that historically most ships are built to fulfill the requirements of a specific project, sales of LNG carriers are infrequent and only 38 sales were reported between the start of 2006 and the start of April 2014 (17 of which were sold in 2011). There is
substantially more activity in the newbuilding market. In general, shipbuilding prices are governed by the supply of and demand for shipbuilding berths, the cost of building ships, and exchange rates. Although it is important to note that prices can vary greatly according to the individual specifications of
the ship being built, a multitude of other factors affect the benchmark newbuilding price of LNG carriers. These include changes to the size and technological sophistication of LNG carriers, the cost of steel and competition for yard space from both other LNG owners and other sectors of the shipbuilding
market. Recent trends in newbuilding prices are shown in the following graph.
Market Participants and Competition
Competition in the LNG shipping market is principally for employment of ships whose charters are expiring and ships that are under construction. Competition for these charters is based on price, ship availability, size, age, propulsion technology and condition, relationships with LNG carrier
charterers and the LNG safety record, experience and reputation of the operator. Due to the nature of competition and long-term charters, the LNG business provides operators with less volatile, more predictable revenue flows than some other sectors of the shipping industry.
The two main types of LNG fleet operators that provide international LNG transportation services are private and state-controlled energy and utility companies that generally operate captive fleets, and independent owners and operators. Given the complex, long-term nature of LNG projects, major
energy companies have historically transported LNG through their captive fleets.
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However, independent fleet owners and operators have in recent times been winning an increasing share of charters for new or expanded LNG projects as major energy companies continue to divest non-core businesses. It appears that the increasing ownership of the world LNG fleet by independent
owners is attributable in part to the desire of some major energy companies to limit their commitment to the transportation business, which is non-core to their operations, and to the cost of financing of new LNG carriers in addition to the high construction costs of liquefaction and regasification facilities.
The share of the fleet owned by independent owners (excluding Japanese and South Korean owners, who typically have very strong relationships with national utility companies) has increased from 23% in terms of numbers at the start of April 2004 to 36% at the start of April 2014. The current order
book is further dominated by independent owners, who account for a total 56% of the tonnage on order.
The major owners of LNG carriers are shown in the following charts. The major independent owners, excluding the Japanese and South Korean owners and those who are majority owned by oil and gas majors or nation-states, are also shown in the following charts.
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Please note that a number of the owners detailed in the above charts only have partial equity shares in the ships in their fleet.
Barriers to Entry
Although there have been a number of new entrants over the past 10 years, the LNG shipping sector is characterized by relatively high barriers to entry compared to other shipping sectors. Barriers to entry include:
the high cost of building LNG carriers;
the limited number of qualified shipyards that can build LNG carriers;
the requirements of both charterers and financiers, such as experience in the operation of LNG carriers;
the necessary history of quality operations, including very high safety and performance standards and low downtime;
the required financial strength;
the need for highly qualified personnel; and
the illiquid sale and purchase markets.
Contract Structure
Given the specialized nature of LNG carriers and the substantial investments required for the construction of the ships and the associated export and import terminals, most agreements in the LNG sector (both gas sale agreements and charters) have historically been entered into for a long-term of 20
to 25 years. In recent years, there has been a movement towards shorter shipping contracts, with the conclusion of a number of contracts of between five to ten years in duration, as well as short-term contracts of less than four years. This reflects an increased level of liquidity in the market. However, a
significant proportion of LNG carriers continue to be built for longer-term contracts tied to new LNG projects, although some newbuilding contracts have been placed without a firm charter in place.
The majority of LNG carriers remain under long-term contracts. A spot market in traded LNG has developed that covers short-term charters of one year or less, as well as voyage charters. In 2011
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and 2012, this short-term trade accounted for approximately one-quarter of total seaborne LNG trade volumes, increasing to 27% in 2013. This compares to a 19% share of global trade in 2010 and a 3.4% share in 2000.
The charter rates paid in the charter market are governed by the supply of and demand for LNG carrying capacity. For example, oversupply in the LNG carrier market in 2009 and 2010 led to depressed rates. While the global LNG carrier fleet grew by 17.2% in 2009 as a result of strong
newbuilding deliveries, seaborne LNG trade grew by only 5.7% and short-term charter rates were concluded at below US$40,000/day. Conversely, trade growth of 21.3% in 2010 and 11.3% in 2011 on the back of higher demand and greater availability of new liquefaction supply, combined with few
deliveries into the fleet and caused short- and medium-term charter rates to improve significantly. Figures in excess of US$125,000/day were regularly recorded for modern vessels on short- to medium-term charters during 2012, compared to figures ranging between US$75,000/day and US$90,000/day for
vessels on longer-term charters. Since these peaks, charter rates have softened as fleet growth has begun to pick up. In the second half of 2013, shorter-term rates were in the region of between US$90,000/day and US$110,000/day, compared to between US$75,000/day and US$85,000/day for vessels on
longer-term charters. In the first three months of 2014, rates for longer-term charters have softened to levels closer to the bottom of the previously stated range. Due to limited market liquidity, shorter-term rates have also softened in this period, falling to figures in the region between US$60,000/day and
US$70,000/day.
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We are a growth-oriented limited partnership formed to own, operate and acquire LNG carriers engaged in LNG transportation under long-term charters, which we define as charters of five full years or more. Our initial fleet of three LNG carriers, which will have charter terms expiring in 2018 and
2019, will be contributed to us by GasLog, which will control us through its ownership of our general partner. GasLog was founded and is effectively controlled by its chairman, Peter G. Livanos, whose familys shipping activities commenced more than 100 years ago.
Upon the closing of this offering, we will own three LNG carriers, built in 2013, with modern tri-fuel diesel electric propulsion technology that operate under long-term charters with subsidiaries of BG Group. We will also have options and other rights under which we may acquire additional LNG
carriers from GasLog, as described below. We believe that such options and rights will provide us with significant built-in growth opportunities and allow us to diversify our fleet specification potentially to include steam-powered ships. We may also acquire vessels from shipyards or other owners. We
intend to operate our vessels under long-term charters with predictable cash flows and to grow our position in the LNG market through further acquisitions of LNG carriers from GasLog and third parties. We believe we can grow our distributions per unit organically by providing reliable customer service
to our charterers and leveraging GasLogs relationships, expertise and reputation. We intend to make further acquisitions of LNG carriers from GasLog and third parties to grow our fleet. However, we cannot assure you that we will make any particular acquisition or that as a consequence we will
successfully grow the amount of our per unit distributions. Among other things, our ability to acquire additional LNG carriers will be dependent upon our ability to raise additional equity and debt financing.
GasLog is, we believe, a leading independent international owner, operator and manager of LNG carriers and provides support to international energy companies as part of their LNG logistics chain. On April 4, 2012, GasLog completed its initial public offering, and its common shares began trading
on the New York Stock Exchange on March 30, 2012, under the symbol GLOG. At the time of its initial public offering, GasLogs owned fleet consisted of ten LNG carriers, including eight newbuildings on order. Since its initial public offering, GasLog has increased by approximately 111% the total
carrying capacity of vessels in its fleet, which includes vessels on the water, newbuildings on order and secondhand vessels under contract to be purchased. This increase includes two LNG newbuilding orders announced in February 2013 and two LNG newbuilding orders announced in August 2013, all of
which are expected to be delivered in 2016, the acquisition of one 2010 built LNG carrier announced in September 2013, three secondhand steam-powered ships were acquired from BG Group in April 2014 and the three secondhand steam-powered ships that are under contract to be purchased from BG
Group. Each of the four newbuildings is under a long-term charter, which will commence upon delivery. Since January 1, 2013, GasLog has taken delivery of five LNG carriers, acquired one on-the-water vessel, entered into contracts to purchase six secondhand vessels (three of which have been delivered
and three of which are under contract) and secured additional LNG newbuilding options. GasLog currently has a fully-owned twenty-one-ship fleet, including fourteen ships on the water (two ships delivered in 2010, five ships delivered in 2013, one on-the-water ship acquired in 2013, three secondhand
ships were acquired from BG Group in April 2014 and three additional secondhand ships being acquired from BG Group), and seven LNG carriers on order from Samsung.
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Initial Fleet
Upon the closing of this offering, our initial fleet will consist of:
LNG Carrier
Date of
Cargo
Charterer
(1)
Charter
Optional
GasLog Shanghai
January 28, 2013
155,000
BG Group
January 2018
20212026
GasLog Santiago
March 25, 2013
155,000
BG Group
March 2018
20212026
GasLog Sydney
May 30, 2013
155,000
BG Group
May 2019
20222027
(1)
Vessels are chartered to a subsidiary of BG Group.
(2)
The charters may be extended for up to two extension periods of three or four years, and each charter requires that the charterer provides us with advance notice of its exercise of any extension option.
Option Vessels
We will have the option to purchase the following twelve LNG carriers from GasLog within 36 months after each such vessels acceptance by its charterer (or, in the case of the
GasLog Seattle,
the three vessels recently acquired from BG Group and the three additional vessels under contract to be
purchased from BG Group, 36 months after the closing of this offering), in each case at fair market value as determined pursuant to the omnibus agreement.
As of the date of this prospectus, we have not secured any financing in connection with the twelve optional vessels. Our ability to purchase these twelve optional vessels, should we exercise our right to purchase such vessels, is dependent on our ability to obtain financing to fund all or a portion of
the acquisition costs of these vessels and may be dependent on the consent of existing lenders to GasLog with respect to these optional vessels. See Risk FactorsRisk Inherent in Our BusinessWe may have difficulty obtaining consents that are necessary to acquire vessels with an existing charter or
financing agreement.
LNG Carrier
Date of
Cargo
Charterer
(2)
Charter
GasLog Seattle
December 9, 2013
155,000
Shell
December 2020
Hull No. 2042
Q2 2014
155,000
Shell
2021
Hull No. 2072
Q1 2016
174,000
BG Group
2026
Hull No. 2073
Q2 2016
174,000
BG Group
2026
Hull No. 2102
Q3 2016
174,000
BG Group
2023
Hull No. 2103
Q4 2016
174,000
BG Group
2023
Methane Rita Andrea
Q2 2014
145,000
BG Group
2020
Methane Jane Elizabeth
Q2 2014
145,000
BG Group
2019
Methane Lydon Volney
Q2 2014
145,000
BG Group
2020
Methane Shirley Elisabeth*
2014
145,000
BG Group
2020
(4)
Methane Heather Sally*
2014
145,000
BG Group
2020
(4)
Methane Allison Victoria*
2014
145,000
BG Group
2020
(4)
*
Denotes vessels under contract to be purchased by GasLog from BG Group. Currently, these vessels are managed by GasLog.
(1)
For newbuildings, expected delivery quarters are presented.
(2)
Vessels are chartered to a subsidiary of BG Group or a subsidiary of Shell, as applicable.
(3)
Indicates the duration of the initial term. For the pending vessels under contract to be purchased from BG Group and the three vessels recently acquired from BG Group, the charterer will have unilateral options to extend the term of the time charters for two of the pending vessels and two of the
vessels recently acquired from BG Group for a period of either three or five years at its election. For the other vessels in the above table, the charterers have unilateral options to extend
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Delivery
Capacity
(cbm)
Expiration
period
(2)
Delivery
(1)
Capacity
(cbm)
Expiration
(3)
the term of the time charters for periods ranging from 5 to 10 years, provided that the charterer provides us with advance notice of declaration of any option in accordance with the terms of the applicable charter.
(4)
Indicates the average duration of the initial term for the pending vessels under contract to be purchased from BG Group. The time charters for these vessels will be staggered with terms of 5.5 years, 6 years and 6.5 years from the closing of the acquisition of the vessels, so that the vessels do not
redeliver at the same time.
GasLog also has the following six additional carriers in its fleet, which it will be required to offer to us for purchase at fair market value as determined pursuant to the omnibus agreement if charters are secured with committed terms of five full years or more:
LNG Carrier
Date of
Cargo
Charterer
(2)
Charter
GasLog Savannah
May 31, 2010
155,000
BG Group
September 2015
(3)
GasLog Singapore
July 28, 2010
155,000
BG Group
September 2016
(3)
GasLog Skagen
July 25, 2013
155,000
BG Group
April 2021
(4)
GasLog Chelsea
October 4, 2013
153,600
Spot Market
N/A
Hull No. 2043
Q4 2014
155,000
N/A
N/A
Hull No. 2044
Q1 2015
155,000
N/A
N/A
(1)
For newbuildings, expected delivery quarters are presented.
(2)
Vessels are chartered to a subsidiary of BG Group or a spot market counterparty, as indicated.
(3)
Indicates the duration of the initial term. The charterers have unilateral options to extend the term of the time charters for periods ranging from 30 to 90 months, provided that the charterer provides us with advance notice of declaration of any option in accordance with the terms of the applicable
charter.
(4)
Time charter provides for full employment for three years and a subsequent five year seasonal charter under which the ship is employed for seven months and available to accept other charters for five months.
In addition to the LNG carriers described in the preceding paragraphs, we intend to leverage our relationship with GasLog to make accretive acquisitions of LNG carriers with long-term charters from GasLog and third parties to increase our distributions per unit. Pursuant to the omnibus agreement,
GasLog will be required to offer to us for purchase any other LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation that GasLog owns or acquires if charters are secured with committed terms of five full years or more. GasLog has also entered into a
letter of intent with Samsung for the purchase of two additional 174,000 cbm newbuildings from Samsung with delivery dates in 2017. The letter of intent is subject to final GasLog board approval and execution of definitive agreements. If definitive agreements for the purchase of these two newbuild
vessels are signed, Samsung has agreed to grant GasLog options with a four month option term on two further 174,000 cbm newbuildings with delivery dates in 2017 and 2018. Except as discussed elsewhere in this prospectus, this right will continue throughout the entire term of the omnibus agreement. In
addition, we will have a right of first offer with regard to any proposed sale, transfer or other disposition of any LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation under a charter of five full years or more that GasLog owns, as discussed elsewhere in
this prospectus. Our ability to acquire additional LNG carriers from GasLog is subject to obtaining any applicable consents of governmental authorities and other non-affiliated third parties, including the relevant lenders and charterers. Under the omnibus agreement, GasLog will be obligated to use
reasonable efforts to obtain any such consents and, with respect to the initial fleet only, to indemnify us if such consents are not obtained. Our ability to exercise any right to acquire additional LNG carriers will also be subject to our ability to obtain additional equity and debt financing. We cannot assure
you that in any particular case the necessary consent will be obtained. See Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus Agreement.
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Delivery
(1)
Capacity
(cbm)
Expiration
Our Relationship with GasLog Ltd.
We believe that one of our principal strengths is our relationship with GasLog. We believe our relationship with GasLog will give us access to GasLogs relationships with leading energy companies, shipbuilders, financing sources and suppliers and to its technical, commercial and managerial expertise,
which we believe will allow us to compete more effectively when seeking additional customers. As of April 18, 2014, GasLog owned 21 LNG carriers (including the vessels in our initial fleet), which includes seven newbuildings on order, three vessels recently acquired from BG Group and three vessels
under contract to be purchased from BG Group. Since its initial public offering in April 2012, GasLog has increased by approximately 111% the total carrying capacity of vessels in its fleet, which includes vessels on the water, newbuildings on order and secondhand vessels under contract to be purchased.
In addition, GasLog, through its wholly owned subsidiary GasLog LNG Services, will provide ship management services to the LNG carriers in our initial fleet and, subject to any alternative arrangements with the applicable charterer, additional ships we may acquire from GasLog. GasLog will also
provide certain administrative and commercial management services to the Partnership.
GasLog was incorporated in 2003 and is effectively controlled by its chairman, Peter G. Livanos, who beneficially owns approximately 39.0% of GasLogs common shares. Mr. Livanos familys shipping activities commenced more than 100 years ago. On April 4, 2012, GasLog completed its initial
public offering and its common shares began trading on the New York Stock Exchange on March 30, 2012 under the symbol GLOG. GasLog completed a $199 million follow-on public offering and concurrent private placement on January 22, 2014 to fund a portion of the cost of the acquisition of the
three vessels recently purchased from BG Group, and on April 16, 2014, GasLog completed a $110 million follow-on public offering to fund a portion of the cost of the acquisition of the three vessels under contract to be purchased from BG Group.
Upon completion of this offering, GasLog will own our 2.0% general partner interest, all of our incentive distribution rights and a 57.24% limited partner interest in us, which consists of 1,422,358 common units and all of our subordinated units. As a result, GasLog will hold a majority of our total
equity interests. Our general partner, by virtue of its general partner interest, will also initially control the appointment of three of our five directors (subject to its right to transfer the power to elect one director to the common unitholders, so that they will thereafter elect a majority of our directors).
GasLog intends to utilize us as its primary growth vehicle to pursue the acquisition of LNG carriers that are expected to generate long-term, stable cash flows.
With the global demand for natural gas increasing and LNGs share of the international natural gas trade expanding within the sector, we believe that this is a favorable time to grow the Partnership through the addition of modern vessels. While LNG trade is cyclical and there is no guarantee that
we will be able to take advantage of opportunities to grow, we believe the following attributes of the LNG industry create an attractive environment in which to expand our business:
Natural gas and LNG are strong and growing components of global energy supply.
Natural gas accounted for 24% of the worlds energy consumption in 2012. Over the last two decades natural gas has been one of the worlds fastest increasing energy sources, growing at approximately twice the
rate of oil consumption over the same period. We believe LNG, which accounted for 32% of overall cross-border trade of natural gas in 2012, will continue to increase its share at least over the next several years. Because of the cost and environmental advantages of natural gas relative to other
energy sources, together with the increased availability of natural gas supply, we believe that demand for natural gas and LNG in particular will continue to grow in the future.
The demand for LNG shipping is expected to grow.
Disparities in the pricing of natural gas between producing regions with natural gas reserves and consuming regions, such as the Far East, have created arbitrage opportunities for LNG producers and traders. These arbitrage opportunities, the
growing distance between the producing regions and end buyers and the cost advantages of LNG shipping as compared to transporting natural gas by pipeline, have
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led to an increase in the transportation of natural gas in the form of LNG of 21.3% in 2010 and 11.3% in 2011. Although LNG trade declined by 1.6% in 2012 and is estimated to have improved marginally by only 0.5% in 2013, we believe that planned capacity increases in liquefaction and
regasification terminals will support increasing LNG trade in the future. Based on the current pipeline of liquefaction projects that are planned or under construction, Clarkson Research currently estimates that liquefaction capacity will increase approximately 35% by 2016. For more details about
these liquefaction projects and the current global order book and other factors affecting demand for LNG shipping, see The LNG Shipping Industry.
High barriers to entry should restrict the supply of new LNG carriers.
The existing order book of LNG carriers represents only 31% of current LNG carrier fleet carrying capacity. Fleet growth was limited in 2013 but is expected to accelerate in 2014 and 2015. We believe that significant barriers to
entry exist in the LNG shipping sector due to the large capital requirements, the limited availability of financing, the limited availability of qualified ship personnel and the need for a high degree of technical management capabilities. The industry also serves a demanding customer base that requires
the highest quality operating standards. Finally, we believe the limited construction capacity at high-quality shipyards and the long lead-time required for the construction of LNG carriers should also restrict the supply of new LNG carriers in the near-term.
Stringent customer certification standards favor experienced, high-quality operators.
Energy companies have established increasingly high operational, safety and financial standards that independent owners of LNG carriers generally must meet in order to qualify for employment in their programs.
Through our relationship with GasLog, which has managed LNG carriers for BG Group for over 12 years and had its technical management operations vetted by other major energy companies, we believe that these rigorous and comprehensive certification standards will enhance our ability to
compete for new customers and charters relative to less qualified and less experienced ship operators.
Increasing ownership of the global LNG carrier fleet by independent owners.
Independent owners have increased their share of the global LNG carrier fleet from approximately 23% in April 2004 to approximately 36% in April 2014. Orders by independent owners represent 56% of the current
global order book. We believe private and state-owned energy companies will continue to seek high-quality independent owners for their growing LNG shipping requirements in the future, driven in part by large capital requirements and a recognition that owning and operating LNG ships are
outside of their core areas of expertise.
We believe that our future business prospects are well supported by the following factors:
Significant built-in growth opportunities.
In addition to our initial fleet of three LNG carriers, we will have the option to purchase from GasLog the twelve additional LNG carriers delivered or expected to be delivered to GasLog between 2013 and 2016 that are or will be subject to long-term
charters. Six of these twelve vessels are steam-powered ships, the acquisition of which will allow us to diversify our fleet specification. GasLog will also be required to offer to us for purchase at fair market value (as determined pursuant to the omnibus agreement) any other LNG carriers with cargo
capacities greater than 75,000 cbm engaged in oceangoing LNG transportation that GasLog owns or acquires if they are placed under charters of five full years or more, including the four existing LNG carriers currently on short-term or seasonal contracts and two newbuildings on order that have
not yet been chartered. We believe these acquisition opportunities, as well as other future acquisition opportunities from GasLog or third parties, will facilitate the growth of our distributions per unit.
Enhanced growth opportunities through our relationship with GasLog, an established owner, operator and manager of LNG carriers.
We believe our relationship with GasLog will provide us with many benefits that we believe will drive growth in our distributions per unit. We
145
believe charterers award new business to established participants in the LNG carriers market because of their demonstrated technical, commercial and managerial expertise. GasLog is an experienced operator with an in-house technical manager, GasLog LNG Services, which provides a highly
competent technical and operational platform to GasLogs owned and managed vessels. We believe that GasLog LNG Services 12-year history of providing management services to BG Group has enabled GasLog to develop a track record and reputation for providing highly competent, safe and
reliable operations. We believe this track record and reputation will continue to enable GasLog to attract additional long-term charters for LNG carriers. Further, we believe GasLogs strong relationships with customers, shipyards and established financing providers, and its large pool of experienced
and qualified global seafarers, enhance its operational and financial efficiency.
Predictable cash flow profile through charter contracts with leading energy companies
.
Our initial fleet operates under charters with initial terms that expire in 2018 or 2019, and the twelve LNG carriers for which we have options to purchase from GasLog have or will have charter durations
ranging from 5.5 to 10 years with BG Group and Shell. The charters on the three vessels in our initial fleet contain hire rate provisions that provide for an automatic periodic adjustment, which is designed to reflect the actual costs of operating the ship and related expenses, although existing
charters on certain of the vessels subject to the purchase options do not have similar provisions. We believe that such provisions can reduce our potential exposure to foreign exchange rates and operating costs and expenses. By contracting with companies that we believe are financially strong, such
as BG Group and Shell, we believe that we have minimized our counterparty risk. Our current charters do not provide the charterers with options to purchase our ships during or upon expiration of the charter term.
Newly constructed and high specification LNG carriers.
Our initial fleet will be among the youngest of any LNG shipping operator, with an average ship age of less than one year. The 155,000 cbm size of each of our initial fleet vessels is compatible with most of the existing LNG terminals around
the globe. Our initial fleet and six of the twelve additional vessels that we will have the option to purchase from GasLog are, or when delivered will be, high-specification LNG carriers equipped with modern tri-fuel diesel electric propulsion technology.
Financial flexibility to support our growth.
We believe that, as a public company, we will have access to public debt and equity markets in order to pursue expansion opportunities. We expect to have a moderate level of indebtedness after expected debt repayment at the time of our initial public
offering.
We can provide no assurance, however, that we will be able to utilize our strengths described above. For further discussion of the risks that we face, see Risk Factors.
Our primary business objective is to grow our business profitably and increase quarterly distributions per unit over time by executing the following strategies:
Pursue strategic and accretive acquisitions of LNG carriers on long-term, fixed-rate charters.
We will seek to leverage our relationship with GasLog to make strategic acquisitions that are accretive to our distributions per unit. Under the omnibus agreement, we will have the option to purchase
twelve
additional LNG carriers, delivered or expected to be delivered to GasLog between 2013 and 2016, each of which has been or will be under long-term charter upon its delivery. Additionally, during the term of the omnibus agreement, we will have the right to purchase from GasLog any
newbuilding LNG carrier or existing LNG carrier in the GasLog fleet, in either case with a cargo capacity greater than 75,000 cbm engaged in oceangoing LNG transportation that enters into a long-term charter agreement of five full years or more.
Capitalize on growing global demand for LNG shipping.
Natural gas is one of the fastest growing primary energy sources globally. Moreover, between 1990 and 2012, the volume of LNG traded increased at a rate 38% higher than natural gas pipeline trade and almost three
146
times the increase in the rate of consumption of natural gas. Although LNG trade declined in 2012 and only improved marginally in 2013, we believe the global demand for LNG shipping will continue to increase, due to currently planned construction projects that, if they proceed on schedule, are
expected to increase LNG supply. As we acquire additional LNG carriers from GasLog over the next few years, our expanded fleet will help position us financially to meet the growing demand for LNG shipping. We believe our relationship with GasLog and its industry reputation and relationships
position us well to further expand our owned fleet to the extent that such additional capacity is accretive to returns.
Manage our fleet and deepen our customer relationships to provide a stable base of cash flows and superior operating performance.
Through our relationship with GasLog, we intend to maintain and grow our cash flows by focusing on strong customer relationships and actively seeking the extension
and renewal of existing charters in addition to new opportunities to serve our customers. GasLog charters its current fleet to BG Group and Shell. GasLog does not, however, have exclusive agreements in place with either BG Group or Shell that require BG Group or Shell to charter additional
current or future unchartered vessels from GasLog. We believe that GasLog will be able to maintain and develop customer relationships beyond its current customer base in order to support its growth programs and capitalize on attractive opportunities. We believe the close relationships that
GasLog has with these companies will provide attractive opportunities to participate in the expected long-term growth of the LNG trade. We will continue to incorporate safety, health, security and environmental stewardship into all aspects of vessel design and operation in order to satisfy our
customers and comply with national and international rules and regulations.
We can provide no assurance, however, that we will be able to implement our business strategies described above. For further discussion of the risks that we face, see Risk Factors.
Initial Fleet
Prior to the closing of this offering, our partnership will not own any vessels. Upon the closing of this offering, our initial fleet will consist of three LNG carriers. Our LNG carriers are equipped with tri-fuel diesel electric propulsion technology. All of the LNG carriers in our initial fleet are subject
to a fixed-rate time charter. As of December 31, 2013, the average remaining contract term on our charters was approximately 4.58 years. The following table provides information about the three LNG carriers in our initial fleet:
LNG Carrier
Date of
Cargo
Propulsion
Charterer
(1)
Charter
Optional
GasLog Shanghai
January 28, 2013
155,000
TFDE
BG Group
January 2018
20212026
GasLog Santiago
March 25, 2013
155,000
TFDE
BG Group
March 2018
20212026
GasLog Sydney
May 30, 2013
155,000
TFDE
BG Group
May 2019
20222027
(1)
Vessels are chartered to a subsidiary of BG Group.
(2)
The charters may be extended for up to two extension periods of three or four years, and each charter requires that the charterer provides us with advance notice of its exercise of any extension option.
Option Vessels
We will have the option to purchase the following twelve LNG carriers from GasLog within 36 months after each such vessels acceptance by its charterer (or, in the case of the
GasLog Seattle,
the three vessels recently acquired from BG Group and the three additional vessels under contract to be
purchased from BG Group, 36 months after the closing of this offering), in each case at fair market value as determined pursuant to the omnibus agreement.
147
Delivery
Capacity
(cbm)
Expiration
period
(2)
As of the date of this prospectus, we have not secured any financing in connection with the twelve optional vessels. Our ability to purchase these twelve optional vessels, should we exercise our right to purchase such vessels, is dependent on our ability to obtain financing to fund all or a portion of
the acquisition costs of these vessels and may be dependent on the consent of existing lenders to GasLog with respect to these optional vessels. See Risk FactorsRisk Inherent in Our BusinessWe may have difficulty obtaining consents that are necessary to acquire vessels with an existing charter or
financing agreement.
LNG Carrier
Date of
Cargo
Propulsion
Charterer
(2)
Charter
GasLog Seattle
December 9, 2013
155,000
TFDE
Shell
December 2020
Hull No. 2042
Q2 2014
155,000
TFDE
Shell
2021
Hull No. 2072
Q1 2016
174,000
TFDE
BG Group
2026
Hull No. 2073
Q2 2016
174,000
TFDE
BG Group
2026
Hull No. 2102
Q3 2016
174,000
TFDE
BG Group
2023
Hull No. 2103
Q4 2016
174,000
TFDE
BG Group
2023
Methane Rita Andrea
Q2 2014
145,000
Steam
BG Group
2020
Methane Jane Elizabeth
Q2 2014
145,000
Steam
BG Group
2019
Methane Lydon Volney
Q2 2014
145,000
Steam
BG Group
2020
Methane Shirley Elisabeth*
2014
145,000
Steam
BG Group
2020
(4)
Methane Heather Sally*
2014
145,000
Steam
BG Group
2020
(4)
Methane Allison Victoria*
2014
145,000
Steam
BG Group
2020
(4)
*
Denotes vessels under contract to be purchased by GasLog from BG Group. Currently, these vessels are managed by GasLog.
(1)
For newbuildings, expected delivery quarters are presented.
(2)
Vessels are chartered to a subsidiary of BG Group or a subsidiary of Shell, as applicable.
(3)
Indicates the expiration of the initial term. For the pending vessels under contract to be purchased from BG Group and the three vessels recently acquired from BG Group, the charterer will have unilateral options to extend the term of the time charters for two of the pending vessels and two of the
vessels recently acquired from BG Group for a period of either three or five years at its election. For the other vessels in the above table, the charterers have unilateral options to extend the term of the time charters for periods ranging from 5 to 10 years, provided that the charterer provides us with
advance notice of declaration of any option in accordance with the terms of the applicable charter.
(4)
Indicates the average duration of the initial term for the pending vessels under contract to be purchased from BG Group. The time charters for these vessels will be staggered with terms of 5.5 years, 6 years and 6.5 years from the closing of the acquisition of the vessels, so that the vessels do not
redeliver at the same time.
We believe these vessels will be well suited for our business strategy and expect to purchase each of these vessels from GasLog within 36 months after each such vessels acceptance by its charterer (or, in the case of the
GasLog Seattle,
the three vessels recently acquired from BG Group and the
three vessels under contract to be purchased from BG Group, 36 months after the closing of this offering), in each case at a price determined pursuant to the omnibus agreement. There are no assurances that we will purchase any of such vessels.
Additionally, GasLog has the following six additional carriers in its fleet, which GasLog will be required to offer to us for purchase at fair market value as determined pursuant to the omnibus agreement if charters are secured with committed terms of five full years or more. The following table
provides information about these LNG carriers:
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Delivery
(1)
Capacity
(cbm)
Expiration
(3)
LNG Carrier
Date of
Cargo
Propulsion
Charterer
(2)
Charter
GasLog Savannah
May 31, 2010
155,000
TFDE
BG Group
September 2015
(3)
GasLog Singapore
July 28, 2010
155,000
TFDE
BG Group
September 2016
(3)
GasLog Skagen
July 25, 2013
155,000
TFDE
BG Group
April 2021
(4)
GasLog Chelsea
October 4, 2013
153,600
TFDE
Spot Market
N/A
Hull No. 2043
Q4 2014
155,000
TFDE
N/A
N/A
Hull No. 2044
Q1 2015
155,000
TFDE
N/A
N/A
Delivery
(1)
Capacity
(cbm)
Expiration
|
||||||||||||||||||||
(1) |
|
|
For newbuildings, expected delivery quarters are presented. |
|||||||||||||||||
|
||||||||||||||||||||
(2) |
|
Vessels are chartered to a subsidiary of BG Group or a spot market counterparty, as indicated. |
||||||||||||||||||
|
||||||||||||||||||||
(3) |
|
Indicates the expiration of the initial term. The charterers have unilateral options to extend the term of the time charters for periods ranging from 30 to 90 months, provided that the charterer provides us with advance notice of declaration of any option in accordance with the terms of the applicable charter. |
||||||||||||||||||
|
||||||||||||||||||||
(4) |
|
Time charter provides for full employment for three years and a subsequent five year seasonal charter under which the ship is employed for seven months and available to accept other charters for five months.
|
In addition to the LNG carriers described in the preceding paragraphs, we intend to leverage our relationship with GasLog to make accretive acquisitions of LNG carriers with long-term charters from GasLog and third parties to increase our distributions per unit. Pursuant to the omnibus agreement, GasLog will be required to offer to us for purchase any other LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportaion that GasLog owns or acquires if charters are secured with committed terms of five full years or more. GasLog has also entered into a letter of intent with Samsung for the purchase of two additional 174,000 cbm newbuildings from Samsung with delivery dates in 2017. The letter of intent is subject to final GasLog board approval and execution of definitive agreements. If definitive agreements for the purchase of these two newbuild vessels are signed, Samsung has agreed to grant GasLog options with a four month option term on two further 174,000 cbm newbuildings with delivery dates in 2017 and 2018. Except as discussed elsewhere in this prospectus, this right will continue throughout the entire term of the omnibus agreement. In addition, we will have a right of first offer with regard to any proposed sale, transfer or other disposition of any LNG carriers with cargo capacities greater than 75,000 cbm engaged in oceangoing LNG transportation under a charter of five full years or more that GasLog owns, as discussed elsewhere in this prospectus. Our ability to acquire additional LNG carriers from GasLog is subject to obtaining any applicable consents of governmental authorities and other non-affiliated third parties, including the relevant lenders and charterers. Under the omnibus agreement, GasLog will be obligated to use reasonable efforts to obtain any such consents and, with respect to the initial fleet only, to indemnify us if such consents are not obtained. Our ability to exercise any right to acquire additional LNG carriers will also be subject to our ability to obtain additional equity and debt financing. We cannot assure you that in any particular case the necessary consent will be obtained. See Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus Agreement.
Our customer, BG Group, accounted for all of our total revenues for the year ended December 31, 2013. If we exercise our option to purchase the GasLog Seattle and Hull No. 2042 from GasLog, our customers would include Shell, which is another large, well-capitalized energy company.
We provide the services of our ships under time charters. A time charter is a contract for the use of the ship for a specified term at a daily hire rate. Under a time charter, the ship owner
149
provides crewing and other services related to the ships operation, the cost of which is covered by the hire rate, and the customer is responsible for substantially all of the ship voyage costs (including bunker fuel, port charges and canal fees and LNG boil-off). If we exercise our option to purchase the
three vessels under contract to be purchased from BG Group, the three vessels recently acquired from BG Group and Hull Nos. 2072, 2073, 2102 and 2103, such LNG carriers will be chartered to a subsidiary of BG Group. If we exercise our option to purchase
GasLog Seattle
and Hull No. 2042, such
LNG carriers will be chartered to a subsidiary of Shell.
Each of our subsidiaries has entered into a master time charter with a subsidiary of BG Group that establishes the general terms under which the three vessels in our initial fleet are chartered to BG Group. The subsidiaries have entered into a separate confirmation memorandum for each ship in
order to supplement the master time charter and specify the charter term, extension options (if any), hire rate and other provisions applicable to each ships charter.
The following discussion describes the material terms of the time charters for our ships.
Initial Term, Extensions and Redelivery
The initial terms of the time charters for
the
GasLog Shanghai,
the
GasLog Santiago
and the
GasLog Sydney
began upon delivery of the ships in January 2013, March 2013 and May 2013, respectively, and will terminate in 2018 and 2019, as applicable. BG Group has options to extend the terms of
each of the charters for up to 8 years at specified hire rates. Our time charters provide for redelivery of the ship to us at the expiration of the term, as such term may be extended upon the charterers exercise of its extension options, or upon earlier termination of the charter (as described below), plus or
minus 30 days. Under all of our charters, the charterer has the right to extend the term for most periods in which the ship is off-hire, as described below. Our charter contracts do not provide the charterers with options to purchase our ships during or upon expiration of the charter term.
Hire Rate Provisions
Hire rate refers to the basic payment from the customer for use of the ship. Under all of our time charters, the hire rate is payable to us monthly in advance in U.S. dollars and includes two componentsa capital cost component and an operating cost component. The capital cost component relates
to the cost of the ships purchase and is a fixed daily amount that is structured to provide a return on our invested capital. The charters provide for the capital cost component to increase by a specified amount during any option period. The operating cost component is a fixed daily amount that increases
at periodic intervals at a fixed percentage or is calculated based on a periodic budget agreed upon by the parties. Although the daily amount of the operating cost component is fixed (subject to a specified periodic increase or adjustment if a given charter contains such provision), it is intended to
correspond to the costs of operating the ship and related expenses. In the event of a material increase in the actual costs we incur in operating the ship, a clause in the charter provides us the right in certain circumstances to seek a review and potential adjustment of the operating cost component.
The hire rates for each of our ships may be reduced if the ship does not perform to certain of its specifications or if we are in breach of our obligations under the charter.
Off-Hire
When a ship is off-hireor not available for servicea time charterer generally is not required to pay the hire rate, and we remain responsible for all costs, including the cost of any LNG cargo lost as boil-off during such off-hire periods. Our time charters provide an annual allowance period for us to
schedule preventative maintenance work on the ship. A ship generally will be deemed off-hire under our time charters if there is a specified time outside of the annual allowance period when the ship is not available for the charterers use due to, among other things, operational deficiencies (including the
failure to maintain a certain guaranteed speed), drydocking for repairs, maintenance or inspection, equipment breakdowns, deficiency of personnel or neglect of duty by the
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ships officers or crew, deviation from course, or delays due to accidents, quarantines, ship detentions or similar problems.
All ships are drydocked at least once every five years as required by the ships classification society for a special survey. Our ships are considered to be off-hire under our time charters during such periods.
Ship Management and Maintenance
Under our time charters, we are responsible for the technical management of our ships, including engagement and provision of qualified crews, employment of armed guards for transport in certain high-risk areas, maintaining the ship, arranging supply of stores and equipment, cleaning and painting
and ensuring compliance with applicable regulations, including licensing and certification requirements, as well as for drydocking expenses. We provide these management services through technical management agreement with GasLog LNG Services, a wholly owned subsidiary of GasLog. See Certain
Relationships and Related Party TransactionsAgreements Governing the TransactionsShip Management Agreements.
Termination and Cancellation
Under our time charters, each party has certain termination rights which include, among other things, the automatic termination of a charter upon loss of the relevant ship. Either party may elect to terminate a charter upon the occurrence of specified defaults or upon the outbreak of war or
hostilities involving two or more major nations, such as the United States or the Peoples Republic of China, if such war or hostilities materially and adversely affect the trading of the ship for a period of at least 30 days. In addition, our charterers have the option to terminate a charter if the relevant ship
is off-hire for any reason other than scheduled drydocking for a period exceeding 90 consecutive days, or for more than 90 days, in any one-year period.
Technical and Operational Management
Pursuant to amended ship management agreements, through GasLog LNG Services we manage the day-to-day aspects of ship operations, including crewing, training, insurance, maintenance and repair, procurement of supplies, regulatory and classification compliance and HSSE management and
reporting, for our initial fleet. We utilize third-party sub-contractors and suppliers in carrying out certain of our technical management responsibilities.
We operate in markets that are highly competitive and based primarily on supply and demand. Generally, competition for LNG time charters is based primarily on price, ship availability, size, age, technical specifications and condition, LNG shipping experience, quality and efficiency of ship
operations, shipping industry relationships and reputation for customer service, and technical ability and reputation for operation of highly specialized ships. In addition, in the future our ships may operate in the more volatile emerging spot market that covers short-term charters of one year or less.
Although we believe that we are one of the few independent owners that focus primarily on newly-built, technically advanced LNG carriers, other independent shipping companies also own and operate, and in some cases manage, LNG carriers and have new ships under construction. There are other
ship owners and managers who may also attempt to participate in the LNG market in the future. We believe that our strategy of focusing on charter contracts with initial terms of five full years or more differentiates us to some extent from other independent owners.
In addition to independent owners, some of the major oil and gas producers own LNG carriers, and in the recent past they have contracted for the construction of new LNG carriers. National gas and shipping companies also have large fleets of LNG carriers that have expanded and may continue
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to expand. Some of these companies may compete with independent owners by using their fleets to carry LNG for third parties.
Classification, Inspection and Maintenance
Every large, commercial seagoing ship must be classed by a classification society. The classification society certifies that the ship is in class, signifying that the ship has been built and subsequently maintained in accordance with the rules of the classification society and complies with applicable
rules and regulations of the ships 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. The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case and/or to
the regulations of the country concerned.
To ensure each ship is maintained in accordance with classification society standards and for maintenance of the class certificate, regular and extraordinary surveys of hull and machinery, including the electrical plant, and any special equipment classed are required to be performed periodically. Surveys
are based on a five-year cycle that consists of annual surveys, intermediate surveys that are typically completed between the second and third years of every five-year cycle, and comprehensive special surveys (also known as class renewal surveys) that are completed at each fifth anniversary of the ships
delivery.
All areas subject to surveys as defined by the classification society are required to be surveyed at least once per five-year class cycle, unless shorter intervals between surveys are otherwise prescribed. All ships are also required to be drydocked at least once during every five-year class cycle for
inspection of their underwater parts and for repairs related to inspections. If any defects are found, the classification surveyor will issue a recommendation which must be rectified by the ship owner within prescribed time limits. We intend to drydock our ships at five-year intervals that coincide with the
completion of the ships special survey. We expect that the dry docking schedule for the vessels for which we have options to acquire under the omnibus agreement will, for the foreseeable future, be the same as the schedule for our initial fleet.
Most insurance underwriters make it a condition for insurance coverage that a ship be certified as in class by a classification society that is a member of the International Association of Classification Societies. The
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
are each certified
by the American Bureau of Shipping, or ABS. Each ship has been awarded ISM certification and is currently in class.
The following table lists the dates by which we expect to carry out the initial drydockings and special surveys for our initial fleet:
Ship Name
Drydocking and
GasLog Shanghai
2018
GasLog Santiago
2018
GasLog Sydney
2018
We will not directly employ any on-shore employees or seagoing employees. As of December 31, 2012, GasLog employed (directly and through ship managers) approximately 965 seafaring staff who serve on its vessels. GasLog and its affiliates may employ additional seagoing staff to assist us as we
grow. GasLog, through certain of its subsidiaries, will provide onshore advisory, commercial, technical and operational support to our operating subsidiaries pursuant to the amended ship management agreements, subject to any alternative arrangements made with the applicable charterer. See Certain
Relationships and Related Party TransactionsAgreements Governing the TransactionsShip Management Agreements.
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Special Survey
LNG marine transportation is a specialized area requiring technically skilled officers and crew with specialized training. We and GasLog regard attracting and retaining motivated, well-qualified seagoing personnel as a top priority, and GasLog offers its crew competitive compensation packages. In
addition, GasLog provides intensive onboard training for its officers and crews to instill a culture of the highest operational and safety standards. As a result, GasLog has historically enjoyed a high retention rate among its officers and other seafarers. In 2012, GasLogs retention rate was 96% for senior
officers and 93% for other officers.
Although GasLog has historically experienced a high retention rate for our seafarers, the demand for technically skilled officers and crews to serve on LNG carriers has been increasing as the global fleet of LNG carriers continues to grow. This increased demand has and may continue to put
inflationary pressure on crew costs. However, we and GasLog expect that the impact of cost increases would be mitigated to some extent by certain provisions in our time charters, including automatic periodic adjustment provisions and cost review provisions.
Risk of Loss, Insurance and Risk Management
The operation of any ship has inherent risks. These risks include mechanical failure, personal injury, collision, property loss or damage, ship or cargo loss or damage and business interruption due to a number of reasons, including mechanical failure, political circumstances in foreign countries,
hostilities and labor strikes. 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 ships in international trade.
We maintain hull and machinery insurance on all our ships against marine and war risks in amounts that we believe to be prudent to cover such risks. In addition, we maintain protection and indemnity insurance on all our ships up to the maximum insurable limit available at any given time. While
we believe that our insurance coverage will be adequate, not all risks can be insured, and there can be no guarantee that we will always be able to obtain adequate insurance coverage at reasonable rates or at all, or that any specific claim we may make under our insurance coverage will be paid.
Hull & Machinery Marine Risks Insurance and Hull & Machinery War Risks Insurance
We maintain hull and machinery marine risks insurance and hull and machinery war risks insurance on our ships, which cover loss of or damage to a ship due to marine perils such as collisions, fire or lightning, and the loss of or damage to a ship due to war perils such as acts of war, terrorism or
piracy. Each of our ships is insured under these policies for a total amount that exceeds what we believe to be its fair market value. We also maintain hull disbursements and increased value insurance policies covering each of our ships, which provide additional coverage in the event of the total or
constructive loss of a ship. Our marine risks insurance policies contain deductible amounts for which we will be responsible, but there are no deductible amounts under our war risks policies or our total loss policies.
Loss of Hire Insurance
We have obtained loss of hire insurance to protect us against loss of income as a result of the ship being off-hire or otherwise suffering a loss of operational time for events falling under the terms of our hull and machinery/war insurance. Under our loss of hire policy, our insurer will pay us the hire
rate agreed in respect of each ship for each day, in excess of a certain number of deductible days, for the time that the ship is out of service as a result of damage, for a maximum of 180 days. The number of deductible days for the ships in our fleet is 14 days per ship.
Additionally, we buy piracy loss of hire and kidnap and ransom insurance when our ships are ordered to sail through the Indian Ocean to insure against potential losses relating to the hijacking of a ship and its crew by pirates.
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Protection and Indemnity Insurance
Protection and indemnity insurance is typically provided by a protection and indemnity association, or P&I association, and covers third-party liability, crew liability and other related expenses resulting from injury to or death of crew, passengers and other third parties, loss of or damage to cargo,
third-party claims arising from collisions with other ships (to the extent not recovered by the hull and machinery policies), damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal.
Our protection and indemnity insurance covering our ships is provided by a P&I association that is a member of the International Group of Protection and Indemnity Clubs, or International Group. The thirteen P&I associations that comprise the International Group insure approximately 90% of the
worlds commercial tonnage and have entered into a pooling agreement to reinsure each associations liabilities. Insurance provided by a P&I association is a form of mutual indemnity insurance.
Our protection and indemnity insurance is currently subject to limits of $3 billion per ship per event in respect of liability to passengers and seamen, $2 billion per ship per event in respect of liability to passengers, and $1 billion per ship per event in respect of liability for oil pollution.
As a member of a P&I association, we will be subject to calls payable to the P&I association based on the International Groups claim records as well as the claim records of all other members of the P&I association of which we are a member.
We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, financial assurances and certificates with respect to our ships. The kinds of permits, licenses, financial assurances and certificates required will depend upon several factors, including the
waters in which the ship operates, the nationality of the ships crew and the age of the ship. We have obtained all permits, licenses, financial assurances and certificates currently required to operate our ships. Additional laws and regulations, environmental or otherwise, may be adopted which could limit
our ability to do business or increase the cost of our doing business.
Environmental and Other Regulation
The carriage, handling, storage and regasification of LNG are subject to extensive laws and regulations relating to the protection of the environment, health and safety and other matters. These laws and regulations include international conventions and national, state and local laws and regulations in
the countries where our ships now or in the future will operate, or where our ships are registered. Compliance with these laws and regulations may entail significant expense and may impact the resale value or useful lives of our ships. Our ships may be subject to both scheduled and unscheduled
inspections by a variety of governmental, quasi-governmental and private organizations, including the local port authorities, national authorities, harbor masters or equivalent, classification societies, flag state administrations (countries of registry) and charterers. Our failure to maintain permits, licenses,
certificates or other authorizations required by some of these entities could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our ships or lead to the invalidation or reduction of our insurance coverage.
We believe that our ships are operated in material compliance with applicable environmental laws and regulations and that our ships in operation have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. In fact, the
GasLog Shanghai,
the
GasLog Santiago
and the
GasLog Sydney
received an ENVIRO+ notation from our classification society, which denotes compliance with its published guidelines concerning the most stringent criteria for environmental protection related to design characteristics, management and support systems, sea
discharges and air emissions. Because environmental laws and regulations are frequently changed and may impose increasingly stricter requirements, however, it is difficult to accurately predict the ultimate cost of complying with these requirements or the impact of these
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requirements on the resale value or useful lives of our ships. Moreover, additional legislation or regulation applicable to the operation of our ships that may be implemented in the future, such as in response to a serious marine incident like the 2010 Deepwater Horizon oil spill in the Gulf of Mexico,
could negatively affect our profitability.
International Maritime Regulations
The IMO, the United Nations agency for maritime safety and the prevention of pollution by ships, has adopted several international conventions that regulate the international shipping industry, including the International Convention on Civil Liability for Oil Pollution Damage, the International
Convention on Civil Liability for Bunker Oil Pollution Damage, and the MARPOL Convention. 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. The International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, promulgated by the IMO, requires, among other things, that the party with operational control of a ship develop an extensive safety
management system, including the adoption of a policy for safety and environmental protection setting forth instructions and procedures for operating its ships safely and also describing procedures for responding to emergencies. We rely on GasLog LNG Services for developing a safety management
system for our ships that meets these requirements.
Ships that transport gas, including LNG carriers, are also subject to regulation under the International Gas Carrier Code, or IGC Code, published by the IMO. The IGC Code prescribes design and construction standards for ships involved in the transport of gas. Compliance with the IGC Code
must be evidenced by a Certificate of Fitness for the Carriage of Liquefied Gases of Bulk. Each of our ships is in compliance with the IGC Code. Non- compliance with the IGC Code or other applicable IMO regulations may subject a ship owner or a bareboat charterer to increased liability, may lead to
decreases in available insurance coverage for affected ships and may result in the denial of access to, or detention in, some ports.
In September 1997, the IMO adopted Annex VI to MARPOL to address air pollution from ships. Annex VI came into force on May 19, 2005. It sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as
chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. Annex VI has been ratified by some, but not all, IMO member states. In October 2008, the Marine Environment
Protection Committee, or MEPC, of the IMO approved amendments to Annex VI regarding particulate matter, nitrogen oxide and sulfur oxide emissions standards. These amendments became effective in July 2010. These requirements establish a series of progressive standards to further limit the sulfur
content in fuel oil, which are being phased in between 2012 and 2020, and by establishing new tiers of nitrogen oxide emission standards for new marine diesel engines, depending on their date of installation. Additionally, more stringent emission standards could apply in coastal areas designated as
Emission Control Areas, or ECAs. The European Union Directive 2005/EC/33, which became effective on January 1, 2010, parallels Annex VI and requires ships to use reduced sulfur content fuel for their main and auxiliary engines. Our ships currently in operation comply with the relevant legislation
and have the relevant certificates, including certificates evidencing compliance with Annex VI of the MARPOL Convention.
Although the United States is not a party, many countries have ratified the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended, or the CLC. Under this convention and depending on whether the country in which the damage results is a party to the 1992
Protocol to the CLC, a ships registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject under certain circumstances to certain defenses and limitations. Ships trading to states that are parties to these conventions must
provide evidence of insurance covering the liability of the owner. In jurisdictions where the CLC has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to the CLC. P&I Clubs in the
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International Group issue the required Bunkers Convention Blue Cards to provide evidence that there is in place insurance meeting the liability requirements. Where applicable, all of our vessels have received Blue Cards from their P&I Club and are in possession of a CLC State-issued certificate
attesting that the required insurance coverage is in force.
The IMO also has adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, which imposes liability on ship owners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel and requires registered
owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime. We maintain insurance in respect of our ships that satisfies these requirements.
Noncompliance with the ISM Code or with other IMO regulations may subject a ship owner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected ships and may result in the denial of access to, or detention in, some ports, including United
States and European Union ports.
United States
Oil Pollution Act and CERCLA
Because our ships could trade with the United States or its territories or possessions and/or operate in U.S. waters, our operations could be impacted by the U.S. Oil Pollution Act of 1990, or OPA, which establishes an extensive regulatory and liability regime for environmental protection and
cleanup of oil spills, and the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, which imposes liability for cleanup and natural resource damage from the release of hazardous substances (other than oil). Under OPA, ship owners, operators and bareboat charterers
are responsible parties who are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from oil spills from their ships. OPA currently limits the liability of
responsible parties with respect to ships over 3,000 gross tons to the greater of $2,000 per gross ton or $17,088,000 per double hull ship and permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries. Some states have enacted
legislation providing for unlimited liability for discharge of pollutants within their waters. CERCLA applies to owners and operators of ships and contains a similar liability regime. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for ships carrying a hazardous
substance as cargo and the greater of $300 per gross ton or $0.5 million for any other ship.
These limits of liability do not apply under certain circumstances, however, such as where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible partys gross negligence or willful misconduct. In addition, a marine incident that
results in significant damage to the environment, such as the Deepwater Horizon oil spill, could result in amendments to these limitations or other regulatory changes in the future. We maintain the maximum pollution liability coverage amount of $1 billion per incident for our ships. We also believe that
we will be in substantial compliance with OPA, CERCLA and all applicable state regulations in the ports where our ships will call.
OPA also requires owners and operators of ships to establish and maintain with the National Pollution Fund Center of the U.S. Coast Guard evidence of financial responsibility sufficient to meet the limit of their potential strict liability under the act. Such financial responsibility can be demonstrated
by providing a guarantee from an appropriate guarantor, who can release the required guarantee to the National Pollution Fund Center against payment of the requested premium. We have purchased such a guarantee in order to provide evidence of financial responsibility and have received the
mandatory certificates of financial responsibility from the U.S. Coast Guard in respect of each of the vessels included in our initial fleet. We intend to obtain such certificates in the future for each of our vessels if required to have them.
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Clean Water Act
The U.S. Clean Water Act of 1972, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any 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. Furthermore, most 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 than U.S. federal law.
The United States Environmental Protection Agency, or EPA, has enacted rules requiring ballast water discharges and other discharges incidental to the normal operation of certain ships within United States waters to be authorized under the Ship General Permit for Discharges Incidental to the
Normal Operation of Ships, or the VGP. To be covered by the VGP, owners of certain ships must submit a Notice of Intent, or NOI, at least 30 days before the ship operates in United States waters. Compliance with the VGP could require the installation of equipment on our ships to treat ballast
water before it is discharged or the implementation of other disposal arrangements, and/or otherwise restrict our ships from entering United States waters. In March 2013, the EPA published a new VGP to replace the existing VGP when it expires in December 2013. The new VGP includes numeric
effluent limits for ballast water expressed as the maximum concentration of living organisms in ballast water. The new VGP also imposes a variety of changes for non-ballast water discharges including more stringent Best Management Practices for discharges of oil-to-sea interfaces in an effort to reduce
the toxicity of oil leaked into U.S. waters. We have submitted NOIs for the
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
and intend to submit NOIs for our ships in the future where required and do not believe that the costs associated with obtaining and complying with the VGP will
have a material impact on our operations.
Clean Air Act
The U.S. Clean Air Act of 1970, as amended by the Clean Air Act Amendments of 1977 and 1990, or the CAA, requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our ships may be 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 adopted final emission standards for Category 3 marine diesel engines equivalent to those adopted in the amendments to Annex VI to MARPOL, which will apply in two stages, beginning in 2011 and 2016. However, our tri-fuel
diesel electric LNG carriers have the ability to burn natural gas as fuel to power the ship, which can significantly reduce relevant emissions compared with steam-powered ships.
The CAA also requires states to adopt State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in primarily major metropolitan and/or industrial areas. Several SIPs regulate emissions resulting from ship loading and unloading operations by requiring the
installation of vapor control equipment. The MEPC has designated as an ECA the area extending 200 miles from the territorial sea baseline adjacent to the Atlantic/Gulf and Pacific coasts and the eight main Hawaiian Islands and the Baltic Sea, North Sea and Caribbean Sea, under the Annex VI
amendments. Fuel used by vessels operating in the ECA cannot exceed 1.0% sulfur, dropping to 0.1% sulfur in 2015. From 2016, NOx after-treatment requirements will also apply. Our vessels can store and burn low-sulfur fuel oil or alternatively burn natural gas which contains no sulfur. Additionally,
burning natural gas will ensure compliance with IMO tier III NOx emission limitations without the need for after-treatment. Charterers must supply compliant fuel for the vessels before ordering vessels to trade in areas where restrictions apply. As a result, we do not expect such restrictions to have a
materially adverse impact on our operations or costs.
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Other Environmental Initiatives
U.S. Coast Guard regulations adopted under the U.S. National Invasive Species Act, or NISA, impose mandatory ballast water management practices for all ships equipped with ballast water tanks entering U.S. waters, which could require the installation of equipment on our ships to treat ballast
water before it is discharged or the implementation of other port facility disposal arrangements or procedures, and/or otherwise restrict our ships from entering U.S. waters. In June 2012, the U.S. Coast Guard rule establishing standards for the allowable concentration of living organisms in ballast water
discharged in U.S. waters and requiring the phase-in of Coast Guard approved ballast water management systems, or BWMS, became effective. The Coast Guard will review the practicability of implementing a more stringent ballast water discharge standard and publish the results no later than January
1, 2016. The rule requires installation of Coast Guard approved BWMS by new vessels constructed on or after December 1, 2013 and existing vessels as of their first drydocking after January 1, 2016. Several states have adopted legislation and regulations relating to the permitting and management of
ballast water discharges.
At the international level, the IMO adopted an International Convention for the Control and Management of Ships Ballast Water and Sediments in February 2004, or the BWM Convention. The Conventions implementing regulations call for a phased introduction of mandatory ballast water
exchange requirements, to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until twelve 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 worlds merchant
shipping. To date, a sufficient number of countries have not adopted this convention for it to enter into force. However, the IMOs Marine Environment Protection Committee passed a resolution in March 2010 encouraging the ratification of the Convention and calling upon those countries that have
already ratified to encourage the installation of ballast water management systems. While we believe that the vessels in our initial fleet comply with existing requirements, if new ballast water treatment requirements are instituted, the cost of compliance could increase for ocean carriers. It is difficult to
accurately predict the overall impact of such a requirement on our operations.
Our vessels may also become subject to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 as amended by the Protocol to the HNS Convention, adopted in April 2010, or HNS Convention, if
it is entered into force. The HNS Convention creates a regime of liability and compensation for damage from hazardous and noxious substances, or HNS, including 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. To date, the HNS Convention has not been ratified by a sufficient number of countries to enter into force.
Greenhouse Gas Regulations
The MEPC of IMO adopted two new sets of mandatory requirements to address greenhouse gas emissions from ships at its July 2011 meeting. The Energy Efficiency Design Index requires a minimum energy efficiency level per capacity mile and is applicable to new vessels, and the Ship Energy
Efficiency Management Plan is applicable to currently operating vessels. The requirements, which entered into force in January 2013, were fully implemented by GasLog as of December 2012. The IMO is also considering the development of a market-based mechanism for greenhouse gas emissions from
ships, but it is impossible to predict the likelihood that such a standard might be adopted or its potential impact on our operations at this time.
The European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from marine ships. In the United States, the EPA has issued a finding that greenhouse gases endanger the public health and
safety and has adopted regulations under the CAA to limit greenhouse gas emissions from certain mobile sources and large stationary sources. Although the mobile source emissions do not apply to greenhouse gas emissions from ships, the EPA is considering a petition from the
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California Attorney General and environmental groups to regulate greenhouse gas emissions from ocean-going ships. 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 that we cannot predict with certainty at this time.
We believe that LNG carriers, which have the inherent ability to burn natural gas to power the ship, and in particular LNG carriers like ours that utilize fuel-efficient diesel electric propulsion, can be considered among the cleanest of large ships in terms of emissions.
Ship Security Regulations
A number of initiatives have been introduced in recent years intended to enhance ship security. On November 25, 2002, the Maritime Transportation Security Act of 2002, or MTSA, was signed into law. To implement certain portions of the MTSA, the U.S. Coast Guard issued regulations in July
2003 requiring the implementation of certain security requirements aboard ships operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. This new chapter
came into effect in July 2004 and imposes various detailed security obligations on ships and port authorities, most of which are contained in the newly created International Ship and Port Facilities Security Code, or ISPS Code. Among the various requirements are:
on-board installation of automatic information systems to enhance ship-to-ship and ship-to-shore communications;
on-board installation of ship security alert systems;
the development of ship security plans; 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. ships from MTSA ship security measures, provided such ships have on board a valid International Ship Security Certificate that attests to the ships compliance with SOLAS security
requirements and the ISPS Code. We have implemented the various security measures required by the IMO, SOLAS and the ISPS Code and have approved ISPS certificates and plans certified by the applicable flag state on board all our ships.
Other than our vessels, we do not own any material property.
We have not been involved in any legal proceedings that we believe may have a significant effect on our business, financial position, results of operations or liquidity, and we are not aware of any proceedings that are pending or threatened that may have a material effect on our business, financial
position, results of operations or liquidity. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally property damage and personal injury claims. We expect that these claims would be covered by insurance, subject to customary deductibles.
However, those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.
Marshall Islands
The following discussion represents the opinion of Cozen OConnor, our counsel as to matters of the laws of the Republic of the Marshall Islands. Because we and our subsidiaries do not and will not conduct business or operations in the Republic of the Marshall Islands, neither we nor our
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subsidiaries will be subject to income, capital gains, profits or other taxation under current Marshall Islands law, and we do not expect this to change in the future. As a result, distributions we receive from the operating subsidiaries are not expected to be subject to Marshall Islands taxation.
United States
The following discussion represents the opinion of Cravath, Swaine & Moore LLP, our U.S. counsel, regarding the material U.S. federal income tax consequences to us of our activities. It is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations
issued by the U.S. Department of the Treasury, all of which are subject to change, possibly with retroactive effect. In addition, the opinion of our U.S. counsel is not binding on the IRS or any court. This discussion does not address any U.S. state or local taxes. You are encouraged to consult your own
tax advisor regarding the particular U.S. federal, state and local and foreign income and other tax consequences of acquiring, owning and disposing of our common units that may be applicable to you.
In General
We have elected to be treated as a corporation for U.S. federal income tax purposes. As such, except as provided below, we will be subject to U.S. federal income tax on our income to the extent such income is from U.S. sources or is otherwise effectively connected with the conduct of a trade or
business in the United States.
U.S. Taxation of Our Subsidiaries
Our subsidiaries have elected (or are in the process of electing) to be treated as disregarded entities for U.S. federal income tax purposes. As a result, for purposes of the discussion below, our subsidiaries are treated (or will be treated) as branches rather than as separate corporations.
U.S. Taxation of Shipping Income
We expect that substantially all of our gross income will be attributable to income derived from the transportation of LNG pursuant to the operation of our LNG carriers. Gross income attributable to transportation exclusively between non-U.S. ports is considered to be 100% derived from sources
outside the United States and generally not subject to any U.S. federal income tax. Gross income attributable to transportation that both begins and ends in the United States (U.S. Source Domestic Transportation Income) is considered to be 100% derived from sources within the United States and
generally will be subject to U.S. federal income tax. Although there can be no assurance, we do not expect to engage in transportation that gives rise to U.S. Source Domestic Transportation Income.
Gross income attributable to transportation, including shipping income, that either begins or ends, but that does not both begin and end, in the United States is considered to be 50% derived from sources within the United States (such 50% being U.S. Source International Transportation Income).
Subject to the discussion of effectively connected income below, Section 887 of the Code would impose on us a 4% U.S. income tax in respect of our U.S. Source International Transportation Income (without the allowance for deductions) unless we are exempt from U.S. federal income tax on such
income under the rules contained in Section 883 of the Code. The other 50% of the income described in the first sentence of this paragraph would not be subject to U.S. income tax.
For this purpose, shipping income means income that is derived from:
(i) the use of ships;
(ii) the hiring or leasing of ships for use on a time, operating or bareboat charter basis;
(iii) the participation in a pool, partnership, strategic alliance, joint operating agreement or other joint venture we directly or indirectly own or participate in that generates such income; or
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(iv) the performance of services directly related to those uses.
Under Section 883 of the Code and the regulations thereunder, we will be exempt from U.S. federal income tax on our U.S. Source International Transportation Income if:
(i) we are organized in a foreign country (the country of organization) that grants an equivalent exemption to corporations organized in the United States with respect to the types of U.S. Source International Transportation Income that we may earn (an Equivalent Exemption);
(ii) we satisfy the Publicly-Traded Test (as described below) or the 50% Ownership Test (as described below); and
(iii) we meet certain substantiation, reporting and other requirements.
In order for a foreign corporation to meet the Publicly-Traded Test, its equity interests must be primarily traded and regularly traded on an established securities market in the United States or in a foreign jurisdiction that grants an Equivalent Exemption. The Treasury regulations under Section
883 of the Code provide, in pertinent part, that equity of a foreign corporation will be considered to be primarily traded on an established securities market in a country if, with respect to the class or classes of equity relied upon to meet the regularly traded requirement described below, the number
of units of such class of equity that is traded during any taxable year on all established securities markets in that country exceeds the number of equity interests in each such class that is traded during that year on established securities markets in any other single country. We believe that our common
units will be the sole class of our equity that will be traded, and that such class will be primarily traded on the New York Stock Exchange, which is an established securities market for these purposes.
The Publicly-Traded Test also requires equity interests in a foreign corporation to be regularly traded on an established securities market. The Treasury regulations under Section 883 of the Code provide that equity interests in a foreign corporation are considered to be regularly traded on an
established securities market if one or more classes of such equity interests that, in the aggregate, represent more than 50% of the combined vote and value of all outstanding equity interests in the foreign corporation satisfy certain listing and trading volume requirements. These listing and trading volume
requirements will be satisfied with respect to a class of equity interests if (i) such equity interests are traded on the market, other than in minimal quantities, on at least 60 days during the taxable year (or 1/6 of the days in a short taxable year) and (ii) the aggregate number of equity interests in such
class traded on such market during the taxable year is at least 10% of the average number of equity interests outstanding in that class during such year (as appropriately adjusted in the case of a short taxable year), provided, that if a class of equity interests is traded on an established securities market in
the United States and is regularly quoted by dealers making a market in such equity interests then tests (i) and (ii) will be deemed satisfied.
Notwithstanding the foregoing, a class of equity interests may fail the regularly traded test if, for more than half the number of days during the taxable year, persons who each own, either actually or constructively under certain attribution rules, 5% or more of the vote and value of the outstanding
shares of the class of equity interests, or 5% Unitholders, own in the aggregate 50% or more of the vote and value of the class of equity interests (which is referred to as the Closely Held Block Exception). The Closely Held Block Exception does not apply, however, if the foreign corporation can
establish that a sufficient proportion of such 5% Unitholders are Qualified Shareholders (as defined below) so as to preclude the non-qualified 5% Unitholders from owning 50% or more of the total value of the class of equity interests for more than half the number of days during the taxable year. If
50% or more of the vote and value of a class of equity interests is owned, in the aggregate, by 5% Unitholders, then a sufficient number of 5% Unitholders must verify that they are Qualified Shareholders by providing certain information to the foreign corporation, including information about their
countries of residence for tax purposes and their actual and/or constructive ownership of such equity interests.
As an alternative to satisfying the Publicly-Traded Test, a foreign corporation may qualify for an exemption under Section 883 of the Code by satisfying the 50% Ownership Test. A corporation
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generally will satisfy the 50% Ownership Test if more than 50% of the value of its outstanding equity interests is owned, or treated as owned after applying certain attribution rules, for at least half the number of days in the taxable year by individual residents of jurisdictions that grant an Equivalent
Exemption, foreign corporations organized in jurisdictions that grant an Equivalent Exemption and that meet the Publicly-Traded Test, or certain other qualified persons described in the Treasury regulations under Section 883 (which are referred to collectively as Qualified Shareholders).
The Marshall Islands, the jurisdiction in which we are organized, grants an Equivalent Exemption with respect to the type of U.S. Source International Transportation Income we expect to earn. Therefore, we will be eligible for the exemption under Section 883 of the Code if we satisfy either the
Publicly-Traded Test or the 50% Ownership Test and we satisfy certain substantiation, reporting or other requirements.
Following consummation of the formation transactions (described above in the section Formation Transactions), our equity will consist of common units, subordinated units, a general partner interest and incentive distribution rights. At such time, we will not be eligible to satisfy the Publicly-Traded
Test because our common unitholders will have the right to elect only a minority of directors and therefore will not have more than 50% of the voting power of our equity. However, GasLog, which is organized in Bermuda, will then own more than 50% of the value of all of our equity, and its equity
will have the power to elect a majority of our directors. Therefore, if GasLog qualifies under Section 883 of the Code and provides appropriate certifications to us, we will qualify for Section 883 of the Code under the 50% Ownership Test. However, it has not yet been determined whether GasLog will
qualify under Section 883 of the Code and, as a result, it has not yet been determined whether GasLog will provide appropriate certifications to us to such effect.
Even if GasLog does qualify under Section 883 of the Code, we cannot assure you that GasLog will provide to us the certifications necessary to allow us to qualify under the 50% Ownership Test. If it does not do so, we will not be exempt under Section 883. Moreover, even if GasLog provides such
certification, we cannot assure you of our ability to continue to qualify under the 50% Ownership Test unless GasLog continues to satisfy the Publicly-Traded Test and to hold more than 50% of the value of our equity. If either of those conditions is not satisfied, we might no longer be able to satisfy the
50% Ownership Test.
As discussed below in the Section Board of Directors, our general partner, which is a wholly owned subsidiary of GasLog, by virtue of its general partner interest, has an option (the GasLog option), exercisable at its discretion, to cause our common unitholders to permanently have the right to
elect a majority of our directors. If that option is exercised, our common units would then be considered to have more than 50% of the voting power of all our equity. Our common units would then be considered to be regularly traded on an established securities market if they represented more than
50% of the value of all our equity and the listing and trading conditions described above are satisfied. Based upon our expected cash flow and distributions on our outstanding equity units, we expect that the common units will represent more than 50% of the value of our equity, and we expect that we
will also satisfy the listing and trading requirements. However, we cannot assure you this will be the case. If these conditions are satisfied, and except as provided below, we would satisfy the Publicly-Traded Test unless the Closely Held Block exception to that test was applicable. If GasLog at that time
satisfies the Publicly Traded Test, it would be a Qualified Shareholder of ours, to the extent it continued to own our common units, in determining whether the Closely Held Block Exception to the Publicly Traded Test applied.
In addition, our partnership agreement provides that any person or group (including GasLog) that beneficially owns more than 4.9% of any class of our units then outstanding generally will be treated as owning only 4.9% of such units for purposes of voting for directors. We cannot assure you that
this limitation will be effective to eliminate the possibility that we will have any 5% Unitholders for purposes of the Closely Held Block Exception.
However, assuming this limitation is effective, we anticipate that, in the event that GasLog exercises the GasLog option, we will be able to satisfy the Publicly-Traded Test if our common units represent more than half the value of our equity.
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However, we cannot assure you that we will be able to satisfy the Publicly-Traded Test in the future. There is no assurance that GasLog will exercise the GasLog option, which is necessary for us to satisfy the Publicly-Traded Test. Moreover, we cannot assure you that GasLogs exercise of the
GasLog option will be sufficient for us to satisfy the Publicly-Traded Test. For example, it is possible that we may not be able to satisfy the Publicly-Traded Test in the calendar year during which GasLog exercises the GasLog option, even if GasLogs ownership of less than a majority of the value of our
equity for part of that year also prevents us from satisfying the 50% Ownership Test for that year. In addition, if an increase in the value of our incentive distribution rights causes our common units to fail the 50% value test, we will fail to satisfy the Publicly-Traded Test even if the option is exercised.
Moreover, because we are in legal form a partnership, it is possible that the IRS would assert that our common units do not meet the regularly traded test. Furthermore, our board of directors could determine that it is in our best interests to take an action that would result in our not being able to
satisfy the Publicly-Traded Test in the future. Should any of the requirements described above fail to be satisfied, we may not be able to satisfy the Publicly-Traded Test.
If we are not entitled to the exemption under Section 883 for any taxable year, then we would be subject to the 4% U.S. federal income tax under Section 887 on our U.S. Source International Transportation Income (subject to the discussion of effectively connected income below) for those years.
However, for 2013, GasLog did not have any U.S. Source International Transportation Income, and we do not currently expect to incur any material U.S. federal income tax liability on such income.
In addition, our U.S. Source International Transportation Income that is considered to be effectively connected with the conduct of a U.S. trade or business is subject to the U.S. corporate income tax currently imposed at rates of up to 35% (net of applicable deductions). In addition, we may be
subject to the 30% U.S. branch profits tax on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our U.S. trade or business.
Our U.S. Source International Transportation Income would be considered effectively connected with the conduct of a U.S. trade or business only if:
(i) we had, or were considered to have, a fixed place of business in the United States involved in the earning of U.S. source gross transportation income; and
(ii) substantially all of our U.S. source gross transportation income was attributable to regularly scheduled transportation, such as the operation of a ship that followed a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the
United States.
We believe that we will not meet these conditions because we will not have, or permit circumstances that would result in having, such a fixed place of business in the United States or any ship sailing to or from the United States on a regularly scheduled basis.
Taxation of Gain on Sale of Shipping Assets
Regardless of whether we qualify for the exemption under Section 883 of the Code, we will not be subject to U.S. income taxation with respect to gain realized on a sale of a ship, provided the sale is considered to occur outside of the United States (as determined under U.S. tax principles). In
general, a sale of a ship will be considered to occur outside of the United States for this purpose if title to the ship (and risk of loss with respect to the ship) passes to the buyer outside of the United States. We expect that any sale of a ship will be so structured that it will be considered to occur outside
of the United States.
Other Jurisdictions and Additional Information
For additional information regarding the taxation of our subsidiaries, see Note 18 to our audited combined carve-out financial statements included elsewhere in this prospectus.
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Management of GasLog Partners LP
Our partnership agreement provides that our general partner will delegate 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, GasLog Partners GP LLC, is wholly-owned by GasLog. Our executive officers, all of whom are employed by GasLog or its applicable affiliate, will manage our day-to-day activities consistent with the policies and procedures adopted by our board of directors.
Following the closing of this offering, our board of directors will consist of five members, Curtis V. Anastasio, Daniel Bradshaw, Pamela Gibson, Donald J. Kintzer and Peter G. Livanos, appointed by our general partner. Beginning with our first annual meeting of unitholders, which will be held in
2015, our board of directors will consist of five members, three of whom will be appointed by our general partner in its sole discretion and two of whom will be elected by our common unitholders. We expect that following our first annual meeting in 2015, each of the elected directors and one of the
appointed directors will meet the independence standards established by the New York Stock Exchange, and that, at a minimum, each of the elected directors will also qualify as independent of GasLog under our partnership agreement so as to be eligible for membership on our conflicts committee.
Directors appointed by our general partner will serve as directors for terms determined by our general partner. Directors elected by our common unitholders will be divided into classes serving staggered three-year terms. Two of the directors initially appointed by our general partner will serve until our
annual meeting in 2015, at which time two directors will be elected by our common unitholders. One of the directors elected by our common unitholders at the 2015 annual meeting will be designated as the Class I elected director and will serve until our annual meeting of unitholders in 2016, and
another of the directors elected at the 2015 annual meeting will be designated as the Class II elected director and will serve until our annual meeting of unitholders in 2017. Prior to the exercise by our general partner of its right to transfer the power to elect a majority of our directors to the common
unitholders, Class III will not have a director. Therefore, no director will be up for election by the common unitholders in the year that Class III is up for election, which is expected to first occur in 2018. At each subsequent annual meeting of unitholders, directors will be elected to succeed the class of
director whose term has 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 10% of the outstanding common units.
If our general partner exercises its right to transfer the power to elect a majority of our directors to the common unitholders, an additional director will thereafter be elected by our common unitholders. That director would be added to the class that does not at such time have a director. Our general
partner may exercise this right in order to permit us to claim, or continue to claim, an exemption from U.S. federal income tax under Section 883 of the Code. See BusinessTaxation of the Partnership. The majority of our directors will be non-United States citizens or residents.
Each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, 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 of directors), determining the presence of a quorum or for other similar purposes under
our partnership agreement, unless otherwise required by law. Effectively, this means that the voting rights of any such common unitholders in excess of 4.9% will 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. This limitation will
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support our claim of an exemption from U.S. federal income tax under Section 883 of the Code in the event our general partner transfers the power to elect one director to the common unitholders.
Because we qualify as a foreign private issuer under SEC rules, we are permitted to follow the corporate governance practices of the Marshall Islands (the jurisdiction in which we are organized) in lieu of certain of the New York Stock Exchange corporate governance requirements that would
otherwise be applicable to us. The New York Stock Exchange rules do not require a listed company that is a foreign private issuer to have a board of directors that is comprised of a majority of independent directors. Under Marshall Islands law, we are not required to have a board of directors
comprised of a majority of directors meeting the independence standards described in the New York Stock Exchange rules. In addition, New York Stock Exchange rules do not require limited partnerships like us to have boards of directors comprised of a majority of independent directors. Accordingly,
after this offering, our board of directors will not be required to be comprised of a majority of independent directors.
We will have an audit committee that will, among other things, review our external financial reporting, engage our external auditors and oversee our internal audit activities and procedures and the adequacy of our internal accounting controls. Our audit committee will initially be comprised of three
directors, Donald J. Kintzer, Pamela Gibson and Daniel Bradshaw, with Donald J. Kintzer serving as the chair of the audit committee. Our board of directors has determined that each of Pamela Gibson and Daniel Bradshaw satisfies the independence standards established by the New York Stock
Exchange, and we expect that our board of directors will determine that Donald J. Kintzer satisfies the independence standards established by the New York Stock Exchange and qualifies as an audit committee expert for purposes of SEC rules and regulations.
We will also have a conflicts committee ultimately comprised of at least two or more members of our board of directors. The conflicts committee will be available at the board of directors discretion to review specific matters that the board of directors 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 must meet the independence standards established by the New York Stock Exchange and the SEC to serve on an audit committee of a board of directors, and
may not be any of the following: (a) officers or employees of our general partner, (b) officers, directors or employees of any affiliate of our general partner (other than the Partnership and its subsidiaries) or (c) holders of any ownership interest in the general partner, its affiliates or the Partnership and
its subsidiaries (other than (x) common units or (y) awards granted pursuant to any long-term incentive plan, equity compensation plan or similar plan of the Partnership or its subsidiaries). 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. Our initial conflicts committee will be comprised of Pamela Gibson, Donald J. Kintzer and Daniel Bradshaw, with Daniel Bradshaw serving as
chair of the conflicts committee. For additional information about the conflicts committee, see Conflicts of Interest and Fiduciary DutiesConflicts of Interest.
New York Stock Exchange rules do not require foreign private issuers or limited partnerships like us to establish a compensation committee or a nominating/corporate governance committee. Similarly, under Marshall Islands law, we are not required to have a compensation committee or a
nominating/corporate governance committee. Accordingly, we will not have a compensation committee or a nominating/corporate governance committee.
Employees of affiliates of GasLog will continue to provide services to us after the closing of this offering under the administrative services agreement. See Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsAdministrative Services Agreement.
Our officers and the other individuals providing services to us or our subsidiaries may face a conflict regarding the allocation of their time between our business and the other business interests of GasLog or its affiliates. Our officers and such other individuals providing services to us or our
subsidiaries intend to devote as much time to the management of our business and affairs as is necessary for the proper conduct of our business and affairs.
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Whenever our general partner makes a determination or takes or declines to take an action in its individual capacity rather than in its capacity as our general partner, it is entitled to make such determination or to take or decline to take such other action free of any fiduciary duty or obligation
whatsoever to us or any limited partner, and our general partner is not required to act in good faith or pursuant to any other standard imposed by our partnership agreement or under the Marshall Islands Act or any other law. 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 appointment 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 the incentive distribution rights it owns or votes upon the dissolution of the partnership. Actions of our general partner, which are made in its individual capacity, will be made by GasLog as sole member of our general partner.
Directors and Executive Officers
The following table provides information about our directors and executive officers. With the exception of Andrew J. Orekar, we will rely solely on the executive officers of GasLog or its applicable affiliate who will perform executive officer services for our benefit pursuant to the administrative
services agreement and who will be responsible for our day-to-day management subject to the direction of our board of directors. The business address for each of our directors and executive officers is Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco.
Name
Age
Position
Curtis V. Anastasio
57
Chairman of the Board of Directors
Daniel Bradshaw
(1)
67
Director
Pamela Gibson
(1)
60
Director
Donald J. Kintzer
(1)
66
Director
Peter G. Livanos
(1)
55
Director
Paul Wogan
51
Chief Executive Officer (through closing)
Andrew J. Orekar
37
Chief Executive Officer (from closing)
Simon Crowe
46
Chief Financial Officer
Graham Westgarth
59
Chief Operating Officer
(1)
Peter G. Livanos, Daniel Bradshaw, Pamela Gibson and Donald J. Kintzer have each agreed to serve on our board of directors effective at the closing of the initial public offering of the units of the Partnership.
Curtis V. Anastasio
has been the Chairman of our board of directors since our inception. From the time he led the initial public offering in April of 2001 to his retirement on December 31, 2013, Mr. Anastasio was the president and chief executive officer of NuStar Energy L. P., a publicly traded
master limited partnership based in San Antonio, Texas. Mr. Anastasio was also president and chief executive officer of NuStar GP Holdings, LLC, a position he held since the companys IPO in 2006. NuStar GP owns general and limited partner interests and the incentive distribution rights in NuStar
Energy and manages its business affairs. In addition, Mr. Anastasio is chairman of the board of trustees of the United Way of San Antonio and Bexar County and serves on the boards of the Federal Reserve Bank of Dallas, the San Antonio Economic Development Foundation, San Antonio Medical
Foundation, Southwest Research Institute and the Greater San Antonio Chamber of Commerce. He is chair emeritus of the National Association of Publicly Traded Partnerships (Washington, DC), and is trustee emeritus of the San Antonio Symphony, the McNay Art Museum, the Texas Biomedical
Research Institute and CHRISTUS Santa Rosa Childrens Hospital Foundation. Mr. Anastasio received a Juris Doctorate degree from Harvard Law School in 1981 and a Bachelor of Arts degree, Magna cum Laude, from Cornell University in 1978.
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Daniel Bradshaw
has agreed to serve as one of our directors. His term will commence upon the close of the offering. Since 1978, Mr. Bradshaw has worked at the law firm of Johnson Stokes & Master, now Mayer Brown JSM, in Hong Kong, from 1983 to 2003 as a partner and since 2003 as a senior
consultant. From 2003 until 2008 Mr. Bradshaw was a member of the Hong Kong Maritime Industry Council. Mr. Bradshaw was vice-chairman of the Hong Kong Shipowners Association from 1993 to 2001 and a member of the Hong Kong Port and Maritime Board from 1998 to 2003. In addition, Mr.
Bradshaw is an independent non executive director of Pacific Basin Shipping Company Limited, an independent non executive director of IRC Limited, an affiliate of Petropavlovsk PLC, an independent non executive director of Euronav NV, and a director of Greenship Offshore Manager Ptd. Ltd, a
company in the Bourbon group owning and demise chartering supply vessels. Mr. Bradshaw received a Master of Laws degree from the Victoria University of Wellington in 1971.
Pamela Gibson
has agreed to serve as one of our directors. Her term will commence upon the closing of the offering. Since 1984, Ms. Gibson has worked at the law firm of Shearman & Sterling LLP, from 1990 as a partner and since 2005 as of counsel, advising non-U.S. global companies on capital
markets transactions, governance, disclosure and compliance. Ms. Gibson was the managing partner of both the Toronto (1990 to 1995) and London (1995 to 2002) offices and the head of the European and Asian Capital Markets Group (2002 to 2004) at Shearman & Sterling LLP. In addition, Ms. Gibson
is a director of ATL Holdings Limited, a subsidiary of Amgen Inc. Ms. Gibson received a Bachelor of Arts degree, with distinction, from York University in 1974, a Bachelor of Laws degree from Osgoode Hall Law School in 1977 and a Master of Laws degree from New York University in 1984. From
1978 to 1979, Ms. Gibson served as a law clerk to the Honorable Justice Howland, Chief Justice of the Ontario Court of Appeal.
Donald J. Kintzer
has agreed to serve as one of our directors. His term will commence upon the closing of the offering. Since 2008, Mr. Kintzer has been active as a volunteer with various nonprofit entities, has been an executive coach and mentor (including an association with Korora Partners). Mr.
Kintzer is a retired partner with PricewaterhouseCoopers LLP (PwC), having retired in 2008, after an association of over 31 years. He was admitted to the partnership in 1988 and served in various roles and locations during his career, including serving as the leader of PwCs West Region Advisory
practice from 2005 to 2008. Mr. Kintzer is a Certified Public Accountant, licensed in California (inactive) and is a member of the American Institute of Certified Public Accountants (CPAs) and the California Society of CPAs. Mr. Kintzer is a member of the board of governors of Lawrence Livermore
National Security, LLC and Los Alamos National Security, LLC and is a member of the board of directors of California Bank of Commerce. Mr. Kintzer received an A.B. from Lafayette College and an M.B.A. from Pennsylvania State University. Prior to graduate school, Mr. Kintzer served as an officer
in the United States Air Force.
Peter G. Livanos
has agreed to serve as one of our directors. His term will commence upon the closing of the offering. Mr. Livanos is the Chairman of GasLog and a member of GasLogs board of directors. Mr. Livanos founded our affiliate GasLog LNG Services in 2001. He has served as the
Chairman since GasLog was incorporated in July 2003 and he held the role of Chief Executive Officer from January 2012 until January 2013. Mr. Livanos is the chairman and sole shareholder of Ceres Shipping, an international shipping group. He also serves as chairman of several of Ceres Shippings
subsidiaries, including DryLog Ltd., a company engaged in dry bulk shipping investments. In 1989 Mr. Livanos formed Seachem Tankers Ltd., which in 2000 combined with Odfjell ASA (later renamed Odfjell SE). He served on the board of directors of Odfjell SE until 2008. Mr. Livanos serves on the
board of directors of Euronav NV, an independent owner and operator of oil tankers. Mr. Livanos is a graduate of Columbia University. He is the first cousin of Philip Radziwill, GasLogs Vice Chairman and a member of GasLogs board of directors.
Paul Wogan
has served as our Chief Executive Officer since our inception. He has also served as chief executive officer of GasLog since February 2012. Upon the closing of this offering, Mr. Wogan will step down from his role as our Chief Executive Officer but will remain Chief Executive Officer
of GasLog and, in that capacity, will assist our management team in implementing our strategy. From 2008 until February 2012, Mr. Wogan served as senior independent director of Clarksons PLC. From 2000 to 2008, Mr. Wogan worked for Teekay Corporation, where from November 2003 to March
2008 he served as president of Teekay Tanker Services, with responsibility
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for the companys fleet of crude and product tankers. Prior to joining Teekay Corporation, Mr. Wogan served as chief executive officer of Seachem Tankers Ltd. Mr. Wogan is also a nonexecutive director of Sure Wind Marine Ltd., a company that owns and operates vessels that provide services to the
offshore wind industry. Mr. Wogan is a graduate of Exeter University and has an MBA from Cranfield School of Management.
Andrew J. Orekar
has been appointed to serve as our Chief Executive Officer, effective upon the closing of this offering. His term will commence upon the closing of the offering. During his 15-year career at Goldman, Sachs & Co., Mr. Orekar served as Managing Director and Global Head of
Chemicals and Agriculture Investment Banking, where he advised multinational companies on strategy and portfolio composition, mergers and acquisitions, corporate finance and capital markets transactions. Mr. Orekar joined Goldman Sachs in 1998 and held positions of increasing responsibility prior to
becoming a Managing Director in 2009. Mr. Orekar received B.S. (Wharton School, Finance) and B.A. (English) degrees from the University of Pennsylvania in 1998.
Simon Crowe
has served as our Chief Financial Officer since our inception. He has also served as chief financial officer of GasLog since April 2013. From 2009 until 2012, Mr. Crowe was chief financial officer of Subsea 7, an engineering, construction and services contractor to the offshore energy
industry. Subsea 7 is a global business, listed on the Norwegian Stock Exchange that employs 12,000 people and operates in over 15 countries. Prior to 2009, Mr. Crowe worked for Transocean Ltd., the worlds largest offshore drilling contractor, most recently as vice president, strategy and planning, and
prior to that as Finance Director for Transocean Ltd.s Europe and Africa operations. Mr. Crowe is a member of the Chartered Institute of Management Accountants. Mr. Crowe holds a degree in physics from the University of Liverpool.
Graham Westgarth
has served as our Chief Operating Officer since our inception. He was appointed chief executive vice president, operations and strategy, of GasLog in January 2013 and promoted to chief operating officer in June 2013. From 1999 through 2012, Mr. Westgarth was a member of the
Senior Leadership team of Teekay Shipping, most recently serving as executive vice president of innovation, technology and projects of Teekay Shipping, which included commercial and operational responsibility for a number of floating storage and offloading vessels. From 2001 to 2010, Mr. Westgarth
served as president of Teekay Marine Services with responsibility for 5,000 sea and shore staff and the technical management of 200 vessels. During this period he also served as chief executive officer of Teekay Petrojarl following its acquisition by Teekay Corporation. From 1987 to 1999, Mr. Westgarth
was employed by Maersk Company Limited, the last 5 years of which he served as General Manager of the Maersk UK flag fleet. Mr. Westgarth is the current chairman of INTERTANKO, an industry organization, which represents 80% of the worlds independent tanker owners and operators. He is an
ex-Master Mariner and graduate of the Columbia University Senior Executive Development Program.
Reimbursement of Expenses of Our General Partner
Our general partner will not receive compensation from us for any services it provides on our behalf, although it will be entitled to reimbursement for expenses incurred on our behalf. In addition, our operating subsidiaries will reimburse GasLog LNG Services for expenses incurred pursuant to the
amended ship management agreements that our operating subsidiaries are party to with GasLog LNG Services. See Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsShip Management Agreements.
In 2013, we have not paid any compensation to our directors or our officers nor accrued any obligations with respect to management incentive or retirement benefits for our directors and officers. We have entered into an employment agreement with Curtis V. Anastasio, the Chairman of our board of
directors, that provides for a management incentive plan and a long-term incentive plan. The services of our executive officers and other employees will be provided pursuant to the administrative services agreement, under which we will pay an annual fee. For the twelve months ending March 31, 2015,
we expect that fee to be $1.8 million. See Certain Relationships and
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Related Party TransactionsAgreements Governing the TransactionsAdministrative Services Agreement. Our officers and employees and officers and employees of our subsidiaries and affiliates of GasLog and our general partner may participate in employee benefit plans and arrangements sponsored by
GasLog, our general partner or their affiliates, including plans that may be established in the future.
Our officers who also serve as our directors will not receive additional compensation for their service as directors but may receive director fees in lieu of other compensation paid by GasLog. We anticipate that each non-management director will receive compensation for attending meetings of our
board of directors, as well as committee meetings. We expect non-management directors will each receive a director fee of $100,000 per year. Members of the audit and conflicts committees will each receive a committee fee of between $25,000 and $50,000 per year. Pursuant to the administrative services
agreement, we will pay directly to GasLog the director fees for any appointed directors who are also directors of GasLog. In addition, each director will be reimbursed for out-of-pocket expenses in connection with attending meetings of the board of directors or committees. Each director will be fully
indemnified by us for actions associated with being a director to the extent permitted under Marshall Islands law.
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SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of units of GasLog Partners LP that will be issued upon the consummation of this offering and the related transactions, beneficial owners of 5.0% or more of the units and all of our directors, director nominees and executive officers as a group.
The table does not reflect any common units that directors and executive officers may purchase in this offering through the directed unit program described under Underwriting (Conflicts of Interest)Directed Unit Program. The table also does not reflect up to an aggregate of $60 million, or up to an
aggregate of approximately 3 million common units (based on the midpoint of the price range set forth on the cover of this prospectus), of our common units that certain significant investors in GasLog have indicated that they currently intend to purchase in the offering at the public offering price.
Name of Beneficial Owner
Common Units to be
Subordinated
Percentage of
Number
Percent
Number
Percent
GasLog Ltd.
(1)
1,422,358
14.48
%
9,822,358
100.00
%
57.24
(2)
All directors, director nominees and executive officers as a group (9 persons)
(1)
GasLog Ltd. is effectively controlled by its chairman, Peter G. Livanos, who is deemed to beneficially own, directly or indirectly, 39.0% of the issued and outstanding common shares of GasLog Ltd. through his ownership of Ceres Shipping. Excludes the 2.0% general partner interest held by our
general partner, a wholly owned subsidiary of GasLog Ltd.
(2)
Assumes no exercise of the option to purchase additional common units. If the underwriters exercise their option to purchase additional common units in full, GasLogs percentage of common units to be beneficially owned after the offering will decrease to 1.65%, and its percentage of total common
and subordinated units to be beneficially owned will decrease to 50.83%.
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OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficially Owned
After the Offering
Units to be
Beneficially Owned
After the Offering
Total Common and
Subordinated Units
to be Beneficially
Owned After
the Offering
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
After this offering, GasLog will own our general partner and will own 11,244,716 common units and subordinated units, representing a 57.24% limited partner interest in us, assuming no exercise of the underwriters option to purchase additional common units, and all of our incentive distribution
rights. In addition, our general partner will own 400,913 general partner units representing a 2.0% general partner interest in us. GasLogs ability, as sole member of our general partner, to control the appointment of three of the five members of our board of directors and to approve certain significant
actions we may take, and GasLogs common and subordinated unit ownership and its right to vote the subordinated units as a separate class on certain matters, means that it, together with its affiliates, will have the ability to exercise influence regarding our management.
Distributions and Payments to our General Partner and GasLog
The following table summarizes the distributions and payments to be made by us to our general partner and its affiliates in connection with our formation, ongoing operation and any liquidation. These distributions and payments were determined by and among affiliated entities and, consequently, are
not the result of arms-length negotiations.
The consideration to be received by our general
partner and its affiliates in exchange for the
transfer to us of the vessels in our fleet
1,422,358 common units and 9,822,358
subordinated units to be issued to GasLog;
400,913 general partner units representing a
2.0% general partner interest in us; and
$36.03 million in cash.
See SummaryFormation Transactions for
further information about our formation and
assets contributed to us in connection with the
closing of this offering.
The common units and subordinated units to be
owned by GasLog after giving effect to this
offering represent a 57.24% limited partner
interest in us, assuming no exercise of the
underwriters option to purchase additional
common units. For more information, see The
Partnership AgreementVoting Rights and The
Partnership AgreementAmendment of the
Partnership Agreement.
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Assuming we have sufficient available cash to
pay the full minimum quarterly distribution on
all of our outstanding units for four quarters,
but no distributions in excess of the full
minimum quarterly distribution, our general
partner would receive an annual distribution of
approximately $0.60 million on its 2.0% general
partner interest, and GasLog would receive an
annual distribution of approximately $16.9
million on its common and subordinated units.
Payments to our general partner and its
affiliates
Our general partner will not receive
compensation from us for any services it
provides on our behalf. Our general partner and
its affiliates will be entitled to reimbursement
for all direct and indirect expenses they incur
on our behalf. In addition, our subsidiaries will
pay fees to GasLog LNG Services and GasLog
for technical and commercial management
services. In addition, we will pay fees to
GasLog for expenses related to its provision of
administrative services to us pursuant to the
administrative services agreement. See
Agreements Governing the TransactionsShip
Management Agreements, Agreements
Governing the TransactionsAdministrative
Services Agreement and Agreements
Governing the TransactionsCommercial
Management Agreements.
Withdrawal or removal of our general partner
If our general partner withdraws or is removed,
its general partner interest will either be sold to
the new general partner for cash or converted
into common units, in each case for an amount
equal to the fair market value of those interests.
See The Partnership AgreementWithdrawal or
Removal of our General Partner.
Liquidation
Upon our liquidation, the partners, including
our general partner, will be entitled to receive
liquidating distributions as described in The
Partnership AgreementLiquidation and
Distribution of Proceeds.
Agreements Governing the Transactions
We, our general partner, our subsidiaries and certain affiliates have entered into or will enter into various documents and agreements that will effect the transactions relating to our formation and this offering, including the vesting of assets in, and the assumption of liabilities by, us and our subsidiaries. These agreements will not be the result of arms-length negotiations and they, or any of the transactions that they provide for, may not be effected on terms at least as favorable to the parties to these agreements as they could have obtained from unaffiliated third parties. All of the transaction expenses incurred in connection with these transactions will be paid from the proceeds of this offering.
Omnibus Agreement
Upon completion of this offering, we will enter into an omnibus agreement with GasLog, our general partner and certain of our other subsidiaries. The following discussion describes certain provisions of the omnibus agreement.
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Noncompetition
Under the omnibus agreement, GasLog will agree, and will cause its controlled affiliates (other than us, our general partner and our subsidiaries) to agree, not to acquire, own, operate or charter any LNG carrier with a cargo capacity greater than 75,000 cbm engaged in oceangoing LNG
transportation under a charter for five full years or more. For purposes of this section, we refer to these vessels, together with any related charters, as Five-Year Vessels and to all other LNG carriers, together with any related charters, as Non-Five-Year Vessels. In the event that GasLog acquires,
operates or puts under charter a Five-Year Vessel, then GasLog will be required, within 30 calendar days after the consummation of the acquisition or the commencement of the operations or charter, to notify us and offer us the opportunity to purchase such Five-Year Vessel at fair market value. The
restrictions in this paragraph will not prevent GasLog or any of its controlled affiliates (other than us and our subsidiaries) from:
(1)
acquiring, owning, operating or chartering Non-Five-Year Vessels;
(2)
acquiring one or more Five-Year Vessels if GasLog promptly offers to sell the vessel to us for the acquisition price plus any administrative costs (including re-flagging and reasonable legal costs) associated with the transfer to us at the time of the acquisition;
(3)
putting a Non-Five-Year Vessel under charter for five full years or more if GasLog offers to sell the vessel to us for fair market value (x) promptly after the time it becomes a Five-Year Vessel and (y) at each renewal or extension of that charter for five full years or more;
(4)
acquiring one or more Five-Year Vessels as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or chartering those vessels; provided, however, that:
(a)
if less than a majority of the value of the business or assets acquired is attributable to Five-Year Vessels, as determined in good faith by GasLogs board of directors, GasLog must offer to sell such vessels to us for their fair market value plus any additional tax or other similar costs that
GasLog incurs in connection with the acquisition and the transfer of such vessels to us separate from the acquired business; and
(b)
if a majority or more of the value of the business or assets acquired is attributable to Five-Year Vessels, as determined in good faith by GasLogs board of directors, GasLog must notify us of the proposed acquisition in advance. Not later than 30 days following receipt of such notice, we will
notify GasLog if we wish to acquire such vessels in cooperation and simultaneously with GasLog acquiring the Non-Five-Year Vessels. If we do not notify GasLog of our intent to pursue the acquisition within 30 days, GasLog may proceed with the acquisition and then offer to sell such
vessels to us as provided in (a) above;
(5)
acquiring a non-controlling equity ownership, voting or profit participation interest in any company, business or pool of assets;
(6)
acquiring, owning, operating or chartering any Five-Year Vessel if we do not fulfill our obligation to purchase such vessel in accordance with the terms of any existing or future agreement;
(7)
acquiring, owning, operating or chartering a Five-Year Vessel 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 ship management services relating to any vessel;
(9)
owning or operating any Five-Year Vessel that GasLog owns on the closing date of this offering and that is not part of our initial fleet as of such date; or
(10)
acquiring, owning, operating or chartering a Five-Year Vessel if we have previously advised GasLog that we consent to such acquisition, ownership, operation or charter.
If GasLog or any of its controlled affiliates (other than us, our general partner or our subsidiaries) acquires, owns, operates or charters Five-Year Vessels pursuant to any of the
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exceptions described above, it may not subsequently expand that portion of its business other than pursuant to those exceptions. However, such Five-Year Vessels could eventually compete with our vessels upon their re-chartering.
In addition, under the omnibus agreement we will agree, and will cause our subsidiaries to agree, to acquire, own, operate or charter Five-Year Vessels only. The restrictions in this paragraph will not:
(1)
prevent us or any of our subsidiaries from owning, operating or chartering any Non-Five-Year Vessel that was previously a Five-Year Vessel while owned by us or any of our subsidiaries;
(2)
prevent us or any of our subsidiaries from acquiring Non-Five-Year Vessels as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or chartering those vessels; provided, however, that:
(a)
if less than a majority of the value of the business or assets acquired is attributable to Non-Five-Year Vessels, as determined in good faith by us, we must offer to sell such vessels to GasLog for their fair market value plus any additional tax or other similar costs that we incur in connection
with the acquisition and the transfer of such vessels to GasLog separate from the acquired business; and
(b)
if a majority or more of the value of the business or assets acquired is attributable to Non-Five-Year Vessels, as determined in good faith by us, we must notify GasLog of the proposed acquisition in advance. Not later than 30 days following receipt of such notice, GasLog must notify us if it
wishes to acquire the Non-Five-Year Vessels in cooperation and simultaneously with us acquiring the Five-Year Vessels. If GasLog does not notify us of its intent to pursue the acquisition within 30
days, we may proceed with the acquisition and then offer to sell such vessels to GasLog as
provided in (a) above;
(3)
prevent us or any of our subsidiaries from acquiring, owning, operating or chartering any Non-Five-Year Vessels subject to the offer to GasLog described in paragraph (2) above, pending its determination whether to accept such offer and pending the closing of any offer it accepts; or
(4)
prevent us or any of our subsidiaries from acquiring, owning, operating or chartering Non-Five-Year Vessels if GasLog has previously advised us that it consents to such acquisition, ownership, operation or charter.
If we or any of our subsidiaries acquires, owns, operates or charters Non-Five-Year Vessels pursuant to any of the exceptions described above, neither we nor such subsidiary may subsequently expand that portion of our business other than pursuant to those exceptions.
During the 30-day period after GasLogs notice and offer of an opportunity to purchase a Five-Year Vessel, we and GasLog will negotiate in good faith to reach an agreement on the fair market value (and any applicable break-up costs) of the relevant vessel. If we do not reach an agreement within
such 30-day period, a mutually-agreed upon investment banking firm, ship broker or other expert advisor will be engaged to determine the fair market value (and any applicable break-up costs) of the relevant vessel and other outstanding terms, and we will have the option, but not the obligation, to
purchase the relevant vessel on such terms. Our ability to consummate the acquisition of such Five-Year Vessel from GasLog will be subject to obtaining any consents of governmental authorities and other non-affiliated third parties and to all agreements existing with respect to such Five-Year Vessel.
See Risk FactorsRisks Inherent in Our BusinessWe may have difficulty obtaining consents that are necessary to acquire vessels with an existing charter or a financing agreement. Under the omnibus agreement, GasLog will indemnify the Partnership against losses arising from the failure to obtain any
consent or governmental permit necessary to own or operate the initial fleet in substantially the same manner that the vessels were owned and operated by GasLog immediately prior to the Partnerships acquisition of such vessels. See Indemnification.
Upon a change of control of us or our general partner, the noncompetition provisions of the omnibus agreement will terminate immediately. Upon a change of control of GasLog, the
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noncompetition provisions of the omnibus agreement applicable to GasLog 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 noncompetition provisions applicable to GasLog shall terminate immediately.
LNG Carrier Purchase Options
Under the omnibus agreement, we will have the right to purchase any of the
GasLog Seattle
, the three vessels recently acquired from BG Group, the three vessels under contract to be purchased from BG Group, and Hull Nos. 2042, 2072, 2073, 2102 and 2103 from GasLog within 36 months after
GasLog notifies our board of directors of their acceptances by their charterer (or, in the case of the
GasLog Seattle,
the three vessels recently acquired from BG Group and the three vessels under contract to be purchased from BG Group, 36 months after the closing of this offering) at fair market value
as determined in accordance with the provisions of the omnibus agreement. If we and GasLog are unable to agree upon the fair market value of any of the
GasLog Seattle
, the three vessels recently acquired from BG Group, the three vessels under contract to be purchased from BG Group, and Hull
Nos. 2042, 2072, 2073, 2102 and 2103, the respective fair market values will be determined by a mutually acceptable investment banking firm, ship broker or other expert advisor, and we will have the right, but not the obligation, to purchase the vessel at such price. Our ability to consummate the
acquisition of such vessels from GasLog will be subject to obtaining any consents of governmental authorities and other non-affiliated third parties and to all agreements existing as of the closing date in respect of such vessels. See Risk FactorsRisks Inherent in Our BusinessWe may have difficulty
obtaining consents that are necessary to acquire vessels with an existing charter or a financing agreement.
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 LNG carrier purchase options shall terminate
immediately.
Rights of First Offer
Under the omnibus agreement, we and our subsidiaries will grant to GasLog a right of first offer on any proposed sale, transfer or other disposition of any Five-Year Vessels or Non-Five-Year Vessels owned by us. Under the omnibus agreement, GasLog will agree (and will cause its subsidiaries to
agree) to grant a similar right of first offer to us for any Five-Year Vessels they might own. These rights of first offer will not apply to a (1) sale, transfer or other disposition of vessels between any affiliated subsidiaries or pursuant to the terms of any current or future charter or other agreement with a
charter party or (2) 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 vessel disposition with respect to a Five-Year Vessel with a unaffiliated third party or any Non-Five-Year Vessel, we or GasLog, 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 GasLog, as the case may be, 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 GasLog, as the case may be,
will be able within the next 180 calendar days to sell, transfer, dispose or re-charter the vessel 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 GasLog, as the case may be, than those offered pursuant to the written
notice. Our ability to consummate the acquisition of such Five-Year Vessel from GasLog will be subject to obtaining any consents of governmental authorities and other non-affiliated third parties and to all agreements existing in respect of such Five-Year Vessel. See Risk
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FactorsRisks Inherent in Our BusinessWe may have difficulty obtaining lenders or charterers consents that are necessary to acquire vessels with an existing charter or a financing agreement.
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 GasLog, the right of first offer provisions applicable to GasLog 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 GasLog 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 persons 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 GasLog 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, GasLog will indemnify us after the closing of this offering for a period of five years (and GasLog will indemnify us for a period of at least three years after our purchase of any of the twelve vessels subject to purchase options, if applicable) against certain
environmental and toxic tort liabilities with respect to the initial fleet and the twelve vessels subject to purchase options that are contributed or sold to us to the extent arising prior to the time they were contributed or sold to us. Liabilities resulting from a change in law after the closing of this offering
are excluded from the environmental indemnity. There is an aggregate cap of $5 million on the amount of indemnity coverage provided by GasLog 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 GasLog
is liable for claims only to the extent such aggregate amount exceeds $500,000.
GasLog will also indemnify us for liabilities related to:
certain defects in title to the initial fleet and any failure to obtain, prior to the time they were contributed to us, certain consents and permits necessary to conduct our business, which liabilities arise within three years after the closing of this offering; and
certain 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.
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Administrative Services Agreement
Upon completion of this offering, we will enter into an administrative services agreement with GasLog, pursuant to which GasLog will provide certain management and administrative services to us. The services provided under the administrative services agreement will be provided in a diligent
manner, as we may reasonably direct.
The administrative services agreement will continue indefinitely until terminated by us upon 90 days notice for any reason in the sole discretion of our board of directors. In addition, the administrative services agreement may be terminated by GasLog upon 90 days notice if:
there is a change of control of us or our general partner;
a receiver is appointed for all or substantially all of our property;
an order is made to wind up our partnership;
a final judgment or order that materially and adversely affects our ability to perform the agreement is obtained or entered and not vacated, discharged or stayed; or
we make a general assignment for the benefit of our creditors, file a petition in bankruptcy or liquidation or commence any reorganization proceedings.
Under the administrative services agreement, certain officers of GasLog will provide executive officer functions for our benefit. These officers will be responsible for our day-to-day management subject to the direction of our board of directors. Our board of directors will have the ability to terminate
the arrangement with GasLog regarding the provision of executive officer services to us at any time in its sole discretion.
The administrative services provided by GasLog will include:
bookkeeping, audit and accounting services
: assistance with the maintenance of our corporate books and records, assistance with the preparation of our tax returns and arranging for the provision of audit and accounting services;
legal and insurance services
: arranging for the provision of legal, insurance and other professional services and maintaining our existence and good standing in necessary jurisdictions;
administrative and clerical services
: assistance with office space, arranging meetings for our common unitholders pursuant to the partnership agreement, arranging the provision of IT services, providing all administrative services required for subsequent debt and equity financings and attending to all
other administrative matters necessary to ensure the professional management of our business;
banking and financial services
: providing cash management including assistance with preparation of budgets, overseeing banking services and bank accounts, arranging for the deposit of funds and monitoring and maintaining compliance therewith;
advisory services
: assistance in complying with United States and other relevant securities laws;
client and investor relations
: arranging for the provision of, advisory, clerical and investor relations services to assist and support us in our communications with our common unitholders; and
assistance with the integration of any acquired businesses.
GasLog will receive a service fee in U.S. dollars of approximately $0.6 million per vessel per year in connection with providing services under the administrative services agreement. Amounts payable by us under the administrative services agreement must be paid in advance on a monthly basis by the
first working day of each month. For the three vessels in our initial fleet, we expect that we will pay GasLog approximately $1.8 million in total for the services under the administrative services agreement for the twelve months ending March 31, 2015.
Under the administrative services agreement, we will indemnify GasLog against all actions which may be brought against them as a result of their performance of the administrative services
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including, without limitation, all actions brought under the environmental laws of any jurisdiction, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such actions; provided, however, that such indemnity excludes any or all losses to the extent that they
are caused by or due to the fraud, gross negligence or willful misconduct of GasLog or its officers, employees and agents.
Ship Management Agreements
After the closing of this offering, the agreements governing the crew and technical management of the vessels in our fleet will remain in place. Each vessel in our fleet is subject to amended ship management agreements pursuant to which certain crew and technical services are provided by GasLog
LNG Services. Under these amended ship management agreements, our operating subsidiaries pay fees to and reimburse the costs and expenses of the manager as described below. For the three vessels in our initial fleet, we expect that the aggregate amount of fees and expenses to be paid by our
operating subsidiaries under these management agreements for the twelve months ending March 31, 2015 will be approximately $1.7 million.
Management services.
Each amended ship management agreement requires that GasLog LNG Services and its subcontractors use their best endeavors to perform, among others, the following management services:
the provision of suitably and adequately qualified crew for the vessel in accordance with the requirements of the owner and the attendance to all matters pertaining to training, labor relations, insurance and amenities of the crew;
the provision of operational and technical management, including arrangement and supervision of drydockings, repairs, alternations and the upkeep of the vessel, arrangement for the victualling and storing of the vessels, appointment of surveyors and technical consultants and development,
implementation and maintenance of a Safety Management System in accordance with the ISM Code;
the provision of applicable documentation of compliance and safety management certificates;
the provision of an accounting system that meets the requirements of the owner, regular accounting services and regular reports and records, and the maintenance of records of costs and expenditures incurred, as well as data necessary or proper for the settlement of accounts between the parties;
the procurement of all stores, spares, equipment, provisions, oils, fuels and any other goods, material or services to be supplied to the vessel;
the handling and settlement of claims relating to the vessel, including any claims involving the charterers;
the navigation of the vessel, handling of all necessary communication, and management of cargo operations of the vessel; and
the arrangement, maintenance and preparation for suitable moorings for vessels for lay-up.
Management fee.
Pursuant to the amended ship management agreements, the vessel-owning subsidiaries, as owners, will pay a management fee of $46,000 per month to GasLog LNG Services, as manager, and will reimburse GasLog LNG Services for all expenses incurred on their behalf. For the three
vessels in our initial fleet, we expect the amount of these fees and expenses to be approximately $1.7 million for the twelve months ending March 31, 2015. The management fee is subject to an annual adjustment. The adjustment will be agreed to between the parties in good faith on the basis of general
inflation and proof of increases in actual costs incurred by GasLog LNG Services, as manager. Any dispute relating to the annual rate adjustment would be settled by dispute resolution provisions set forth in the applicable ship management agreement.
Term.
Each ship management agreement continues indefinitely until terminated by either party as described below.
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Automatic termination and termination by either party.
Each ship management agreement will be deemed to be terminated if:
the vessel is sold, becomes a total loss, declared as a constructive, compromised or arranged total loss or is requisitioned for hire; or
an order is made or a resolution is passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of a solvent reconstruction or amalgamation), a receiver or similar officer is appointed or the other party suspends payment, ceases to carry on
business or makes any special arrangement or composition with its creditors.
Termination by the manager.
Under each ship management agreement, the manager may terminate the ship management agreement with immediate effect by written notice if:
any money payable to the manager pursuant to the agreement has not been paid within 30 days of payment having been requested in writing by the manager;
the owner fails to cease employment of the vessel in an unlawful trade or on a voyage, which in the reasonable opinion of the manager, is unduly hazardous, within a reasonable time after receiving notice from the manager;
the relevant ship management agreement or any of the owners rights or obligations are assigned to any person or entity without the managers prior written agreement or approval; or
the owner elects to provide officers and, for any reason within their control, fails to (i) procure officers and ratings complying with the requirements of STCW 95 or (ii) instruct such officers and ratings to obey all reasonable orders of the managers in connection with the operating of the managers
safety management system.
Termination by the owner.
Under each ship management agreement, the owner may terminate the applicable agreement by giving 90 days written notice in the event that the manager, in the reasonable opinion of the owner, fails to manage the vessel in accordance with first class LNG ship
management practice. The owner may also terminate the applicable agreement by giving 90 days notice if the manager fails to meet any material obligation of the ship management agreement or fails to meet any obligation under the ship management agreement that has a material adverse effect upon
the owner, if such default is not capable of being remedied or the manager fails to remedy the default within a reasonable time to the satisfaction of the owner. Notwithstanding the foregoing, the owner may terminate the ship management agreement at any time for any reason by giving the manager not
less than three months written notice.
Additional fees and provisions.
Under each ship management agreement, the manager and its employees, agents and subcontractors will be indemnified by the owner against all actions that may be brought against them or incurred or suffered by them arising out of or in connection with their
performance under such agreement; provided, however, that such indemnity excludes any or all losses that may be caused by or due to the fraud, gross negligence or willful misconduct of the manager or its employees, agents and subcontractors.
Commercial Management Agreements
Upon completion of this offering, our operating subsidiaries will enter into amended commercial management agreements with GasLog, pursuant to which GasLog will provide certain commercial management services to us.
The amended commercial management agreements will require that GasLog use their best endeavors to perform, among others, the following management services:
the commercial operations, including providing chartering services in accordance with the vessel owners instructions (including seeking and negotiating employment for the vessels and the execution of charter parties or other contracts relating to the employment of the vessels), arranging payment to
the owners account of all hire and/or freight revenues, calculating hire,
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freight and other money due from or to the charterer, issuing voyage instructions, appointing agents and surveyors and arranging surveys associated with the commercial operations;
the administration of invoicing and collection of hire payables; and
the assessment of the market on specific issues and provision of such consultancy services as the owners may from time to time require.
For the three vessels in our initial fleet, we expect that we will pay approximately $1.1 million under the amended commercial management agreements for the twelve months ending March 31, 2015.
In connection with the closing of this offering, we will enter into a contribution agreement with GasLog and certain of its subsidiaries that will effect the transactions described under SummaryFormation Transactions, including the transfer of the ownership interests in the vessels, and the use of the
net proceeds of this offering. This agreement will not be the result of arms-length negotiations, and it, or any of the transactions that it provides for, may not be effected on terms at least as favorable to the parties to this agreement as could have been obtained from unaffiliated third parties. All of the
transaction expenses incurred in connection with these transactions will be paid from the proceeds of this offering.
Revolving Credit Facility with GasLog
At or prior to the closing of this offering, we expect to enter into a $30.0 million revolving credit facility with GasLog, to be used for general partnership purposes. We anticipate that the sponsor credit facility will be for a term of 36 months, unsecured, and will bear interest at a rate of 5% per
annum, with no commitment fee for the first year. After the first year, the interest will increase to a rate of 6% per annum, with an annual 2.4% commitment fee on the undrawn balance. For a more detailed description of this credit facility, please read Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital ResourcesBorrowing ActivitiesRevolving Credit Facility with GasLog.
Other Related Party Transactions
As a result of our relationships with GasLog and its affiliates, we, our general partner and our subsidiaries have entered into or will enter into various agreements that will not be the result of arms length negotiations. We generally refer to these agreements and the transactions that they provide for
as transactions with affiliates or related party transactions.
Our partnership agreement sets forth procedures by which future related party transactions may be approved or resolved by our board of directors. Pursuant to our partnership agreement, our board of directors may, but is not required to, seek the approval of a related party transaction from the
conflicts committee of our board of directors or from the common unitholders (excluding common units owned by our general partner and its affiliates). Neither our general partner nor our board of directors will be in breach of their obligations under the partnership agreement or their duties stated or
implied by law or equity if the transaction is approved by the conflicts committee or the requisite majority of the unitholders. If approval of the conflicts committee is sought, then the conflicts committee will be authorized to consider any and all factors as it determines to be relevant or appropriate under
the circumstances and it will be presumed that, in making its decision, the conflicts committee acted in good faith. In order for a determination or other action to be in good faith for purposes of the partnership agreement, the person or persons making such determination or taking or declining to take
such other action must reasonably believe that the determination or other action is in our best interests.
Our conflicts committee will be comprised of at least two or more members of our board of directors. The conflicts committee will be available at the board of directors discretion to review specific matters that the board of directors believes may involve conflicts of interest. The members
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of the conflicts committee must meet the independence standards established by the New York Stock Exchange and the SEC to serve on an audit committee of a board of directors, and may not be any of the following: (a) officers or employees of our general partner, (b) officers, directors or employees
of any affiliate of our general partner (other than the Partnership and its subsidiaries) or (c) holders of any ownership interest in the general partner, its affiliates or the Partnership and its subsidiaries (other than (x) common units or (y) awards granted pursuant to any long-term incentive plan of the
Partnership or its subsidiaries).
Transactions with our affiliates that are not approved by the conflicts committee and that do not involve a vote of unitholders must be on terms no less favorable to us than those generally provided to or available from unrelated third parties or be fair and reasonable to us. 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. If our board of directors does not seek approval by the conflicts
committee or the requisite majority of the unitholders and instead determines that the terms of a transaction with an affiliate are no less favorable to us than those generally provided to or available from unrelated third parties or are fair and reasonable to us, 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. See Conflicts of Interest and Fiduciary Duties.
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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 GasLog, 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. We expect that certain of our officers and directors will also be officers and directors
of GasLog or its affiliates and will have fiduciary duties to GasLog or its affiliates that may cause them to pursue business strategies that disproportionately benefit GasLog 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 GasLog 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 Marshall Islands Act. The provisions of the Marshall Islands 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 Marshall Islands Act and the Delaware Revised Uniform Limited Partnership Act. The Marshall Islands 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 Marshall Islands 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 Marshall Islands Act,
in contrast to Delaware, which has a 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.
Our partnership agreement provides that neither our general partner nor our board of directors will be in breach of their obligations under the partnership agreement or their duties stated or implied by law or equity if the resolution of the conflict is:
approved by the 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.
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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 ManagementManagement of GasLog Partners LP for information about the composition and formation of the conflicts committee
of our board of directors.
Conflicts of interest could arise in the situations described below, among others.
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. See How We Make Cash DistributionsSubordination Period.
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.
Neither our partnership agreement nor any other agreement requires GasLog to pursue a business strategy that favors us or utilizes our assets or dictates what markets to pursue or grow. GasLogs directors and executive officers have a fiduciary duty to make these decisions in the best interests of the
shareholders of GasLog, which may be contrary to our interests.
Because we expect that certain of our directors and officers will also be directors and officers of GasLog and its affiliates, such directors and officers have fiduciary duties to GasLog and its affiliates that may cause them to pursue business strategies that disproportionately benefit GasLog, or which
otherwise are not in the best interests of us or our unitholders.
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Our general partner is allowed to take into account the interests of parties other than us, such as GasLog.
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, GasLog. Specifically, our general partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration 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 or general partner interest or votes upon the dissolution of the partnership.
Our officers face conflicts in the allocation of their time to our business.
With the exception of Andrew J. Orekar, who will be our chief executive officer following the closing of this offering, all of our officers are employed by GasLog or its applicable affiliate and perform executive officer functions for us pursuant to the administrative services agreement, are not required
to work full-time on our affairs and also perform services for affiliates of our general partner, including GasLog. The affiliates of our general partner, including GasLog, conduct substantial businesses and activities of their own in which we have no economic interest. As a result, there could be material
competition for the time and effort of our officers who also provide services to our general partners affiliates, which could have a material adverse effect on our business, results of operations and financial condition. See Management.
We will reimburse our general partner and its affiliates for expenses.
We will 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. See Certain Relationships and Related Party Transactions
and ManagementReimbursement of Expenses of Our General Partner.
Our general partner intends to limit its liability regarding our obligations.
Our partnership agreement directs that liability of our general partner for the contractual arrangements of the partnership are limited so that the other party has recourse only to our assets and not against our general partner or its assets or any affiliate of our general partner or its assets. Our
partnership agreement provides that any action taken by our general partner or by our directors to limit the liability of our general partner or our directors, is not a breach of the fiduciary duties of our general partner or our directors, even if we could have obtained terms that are more favorable without
the limitation on liability.
Common unitholders will 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.
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Contracts between us, on the one hand, and our general partner and its affiliates, on the other, will not be the result of arms-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 arms-length negotiations. Our partnership agreement generally provides that any future transaction with our affiliates, 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).
GasLog LNG Services, which will provide certain technical management services to our subsidiaries, may also enter into additional contractual arrangements with any of its affiliates on our behalf; however, there is no obligation of any affiliate of GasLog LNG Services to enter into any contracts of
this kind.
Common units are subject to our general partners 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. See The
Partnership AgreementLimited Call Right.
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.
Our general partners affiliates, including GasLog, 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 not engage in, by acquisition or otherwise, the businesses described above under the caption Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus AgreementNoncompetition. Similarly, under the
omnibus agreement, GasLog will agree and will cause its controlled affiliates to agree, for so long as GasLog controls our partnership, not to engage in the businesses described above under the caption Certain Relationships and Related Party TransactionsAgreements Governing the TransactionsOmnibus
AgreementNoncompetition. Except as provided in our partnership agreement and the omnibus agreement, affiliates of our general partner are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with us.
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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 Marshall Islands Act provides that Marshall Islands limited partnerships
may, in their partnership agreements, expand or restrict the fiduciary duties otherwise 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 expanded or restricted by the partnership
agreement.
In addition, in connection with this offering, our subsidiaries will enter into services agreements, and may enter into additional agreements with GasLog and certain of its subsidiaries, including GasLog LNG Services. In the performance of their obligations under these agreements, GasLog and its
subsidiaries are not held to a fiduciary standard of care but rather to the standards of care specified in the relevant 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 GasLog, as well as to you. 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 Marshall Islands Act;
material modifications of these duties contained in our partnership agreement; and
certain rights and remedies of unitholders contained in the Marshall Islands Act.
Marshall Islands law fiduciary
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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 its own behalf and to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of law.
The duty of loyalty, in the absence of a provision in a partnership agreement providing otherwise, would generally require that a partner refrain from dealing with the partnership in the conduct or winding up of the partnership business or affairs as or on behalf of a
party having an interest adverse to the partnership, refrain from competing with the partnership in the conduct of the partnership business or affairs before the dissolution of the partnership, and to account to the partnership and hold as trustee for it any property, profit
or benefit derived by the partner in the conduct or winding up of the partnership business or affairs or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity. In addition, although not a fiduciary duty, a
partner shall discharge the duties to the partnership and exercise any rights consistently with the obligation of good faith and fair dealing.
Partnership agreement modified
standards
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).
If our board of directors obtains the approval of the conflicts committee or the requisite majority of the unitholders, then our partnership agreement provides that neither our general partner nor our board of directors will be in breach of their obligations under the
partnership agreement or their duties stated or implied by law or equity. In approving a transaction, the conflicts committee will be authorized to consider any and all factors as it determines to be relevant or appropriate under the circumstances and it will be presumed
that, in making its decision, the conflicts committee acted in good faith.
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.
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 to the
extent permitted by law. Such standards, such as the duty of care and duty of loyalty, are described in the immediately preceding paragraph under Marshall Islands law fiduciary duty standards. 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 transactions with our affiliates and resolutions of conflicts of interest not involving a vote of unitholders and that are not approved by the conflicts committee of our board of directors must be:
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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. In the absence of these specific provisions contained in our partnership agreement, our general partner and our directors would be subject to the fiduciary duty standards set forth under Marshall Islands law fiduciary duty standards.
Rights and remedies of
unitholders
As to remedies of unitholders, the Marshall Islands 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.
The provisions of the Marshall Islands Act resemble the provisions of the limited partnership act of Delaware. For example, like Delaware, the Marshall Islands 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 the ability of the partnership to issue additional units, are governed by the terms of our partnership agreement. See
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 SEC, such indemnification is contrary to public policy and therefore unenforceable. See The Partnership AgreementIndemnification.
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DESCRIPTION OF THE COMMON UNITS
The common units and the subordinated units represent limited partner interests in us. The holders of units are entitled to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. No certificates will be issued to the
unitholders in respect of the common units or subordinated units. For a description of the relative rights and privileges of holders of common units and subordinated units in and to partnership distributions, see this section and How We Make Cash Distributions. For a description of the rights and
privileges of limited partners under our partnership agreement, including voting rights, see The Partnership Agreement.
Duties
American Stock Transfer & Trust, LLC will serve as registrar and transfer agent for the common units. We pay all fees charged by the transfer agent for transfers of common units, except the following, which must be paid by unitholders:
surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges;
special charges for services requested by a holder of a common unit; and
other similar fees or charges.
There is no charge to unitholders for disbursements of our cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity,
except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity.
Resignation or Removal
The transfer agent may resign, by notice to us, or be removed by us. The resignation or removal of the transfer agent will become effective upon our appointment of a successor transfer agent and registrar and its acceptance of the appointment. If a successor has not been appointed or has not
accepted its appointment within 30 days after notice of the resignation or removal, our general partner may, at the direction of our board of directors, act as the transfer agent and registrar until a successor is appointed.
By transfer of common units in accordance with our partnership agreement, each transferee of common units will be admitted as a limited partner with respect to the common units transferred when such transfer and admission is reflected in our books and records. Each transferee:
represents that the transferee has the capacity, power and authority to become bound by our partnership agreement;
automatically agrees to be bound by the terms and conditions of, and is deemed to have executed, our partnership agreement; and
gives the consents and approvals contained in our partnership agreement, such as the approval of all transactions and agreements we are entering into in connection with our formation and this offering.
A transferee will become a substituted limited partner of our partnership for the transferred common units automatically upon the recording of the transfer on our books and records. Our
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general partner will cause any transfers to be recorded on our books and records no less frequently than quarterly.
We may, at our discretion, treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holders rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.
Common units are securities and are transferable according to the laws governing transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a limited partner in our partnership for the transferred common units.
Until a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.
See How We Make Cash Distributions for descriptions of the general partner interest and the incentive distribution rights.
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The following is a summary of the material provisions of our partnership agreement. The form of our partnership agreement is included in this prospectus as Appendix A. We will provide prospective investors with a copy of our partnership agreement upon request at no charge.
We summarize the following provisions of our partnership agreement elsewhere in this prospectus:
with regard to distributions of available cash, see How We Make Cash Distributions;
with regard to the fiduciary duties of our general partner and our directors, see Conflicts of Interest and Fiduciary Duties; and
with regard to the transfer of common units, see Description of the Common UnitsTransfer of Common Units.
We were organized on January 23, 2014 and have perpetual existence.
Our purpose under the partnership agreement is to engage in any business activities that may lawfully be engaged in by a limited partnership organized pursuant to the Marshall Islands Act.
Although our board of directors has the ability to cause us or our subsidiaries to engage in activities other than the provision of marine transportation services, it has no current plans to do so and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners,
including any duty to act in good faith or in the best interests of us or the limited partners. Our general partner will delegate to our board of directors the authority to oversee and direct our operations, management and policies on an exclusive basis.
Our partnership agreement specifies the manner in which we will make cash distributions to holders of our common units and other partnership interests, including to the holders of our incentive distribution rights, as well as to our general partner in respect of its general partner interest. For a
description of these cash distribution provisions, see How We Make Cash Distributions.
Unitholders are not obligated to make additional capital contributions, except as described below under Limited Liability. For a discussion of our general partners right to contribute capital to maintain its 2.0% general partner interest if we issue additional units, see Issuance of Additional
Interests.
The following is a summary of the unitholder vote required for the approval of the matters specified below. Matters that require the approval of a unit majority require:
during the subordination period, the approval of a majority of the outstanding common units, excluding those common units held by our general partner and its affiliates, voting as a single class and a majority of the subordinated units voting as a single class; and
after the subordination period, the approval of a majority of the outstanding common units voting as a single class.
In voting their common units and subordinated units our general partner and its affiliates will have no fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners.
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Each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to claim an exemption 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 units beneficially 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 of directors), determining the presence of a quorum or for other similar purposes under our partnership agreement, unless otherwise required by law. Effectively, this means that the voting rights of any such unitholders in excess of 4.9% will 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.
We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Our general partner has appointed each of our five initial directors, three of whom meet the
independence standards of the New York Stock Exchange and also qualify as independent of GasLog under our partnership agreement, so as to be eligible for membership on our conflicts committee. Our general partner will initially retain the right to appoint three of our directors. At our 2015 annual
meeting, which will be the first annual meeting we will hold after this offering, the common unitholders will elect two of our directors. The two directors elected by our common unitholders at our 2015 annual meeting will be divided into classes to be elected by our common unitholders annually on a
staggered basis. We expect that following our first annual meeting in 2015, each of the elected directors and one of the appointed directors will meet the independence standards established by the New York Stock Exchange, and that, at a minimum, each of the elected directors will also qualify as
independent of GasLog under our partnership agreement so as to be eligible for membership on our conflicts committee. If our general partner exercises its right to transfer the power to elect a majority of our directors to the common unitholders, an additional director will thereafter be elected by our
common unitholders. That director would be added to the class that does not at such time have a director. Subordinated units will not be voted in the election of the two directors.
Action
Unitholder Approval Required and Voting Rights
Issuance of additional units
No approval rights; general partner approval required for all issuances not reasonably expected to be accretive within twelve months of issuance or which would otherwise have a material adverse impact on the general partner or its interest in our partnership.
Amendment of the partnership
agreement
Merger of our partnership or
the sale of all or substantially
all of our assets
Dissolution of our partnership
Unit majority and approval of our general partner and our board of directors. See Termination and Dissolution.
Reconstitution of our
partnership upon dissolution
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Certain amendments may be made by our board of directors without the approval of the unitholders. Other amendments generally require the approval of a unit majority. See Amendment of the Partnership Agreement.
Unit majority and approval of our general partner and our board of directors. See Merger, Sale, Conversion or Other Disposition of Assets.
Unit majority. See Termination and Dissolution.
Action
Unitholder Approval Required and Voting Rights
Withdrawal of our general
partner
Removal of our general
Transfer of our general partner
interest in us
Transfer of incentive
distribution rights
Transfer of ownership interests
in our general partner
Under most circumstances, the approval of a majority of the common units, excluding common units held by our general partner and its affiliates, is required for the withdrawal of our general partner prior to March 31, 2024 in a manner that would cause a dissolution of
our partnership. See Withdrawal or Removal of our General Partner.
partner
Not less than 66
2
/
3
% of the outstanding units, including units held by our general partner and its affiliates, voting together as a single class. See Withdrawal or Removal of our General Partner.
Our general partner may transfer all, but not less than all, of its general partner interest in us without a vote of our unitholders to an affiliate or another person in connection with its merger or consolidation with or into, or sale of all or substantially all of its assets to,
such person. The approval of a majority of the common units, excluding common units held by our general partner and its affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to March 31, 2024. See Transfer of
General Partner Interest.
Except for transfers to an affiliate or another person as part of a merger or consolidation with or into, or sale of all or substantially all of the assets to, such person, the approval of a majority of the common units, excluding common units held by our general partner and
its affiliates, voting separately as a class, is required in most circumstances for a transfer of the incentive distribution rights to a third party prior to March 31, 2019. See Transfer of Incentive Distribution Rights.
No approval required at any time. See Transfer of Ownership Interests in General Partner.
Applicable Law; Forum, Venue and Jurisdiction
Our partnership agreement is governed by Marshall Islands law. Our partnership agreement requires that any claims, suits, actions or proceedings:
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arising out of or relating 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); |
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asserting 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; |
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asserting a claim arising pursuant to any provision of the Marshall Islands Act; and |
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asserting a claim governed by the internal affairs doctrine;
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shall be exclusively brought in the Court of Chancery of the State of Delaware, unless otherwise provided for by Marshall Islands law, regardless of whether such claims, suits, actions or proceedings
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arise under laws relating to contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims. By purchasing a common unit, a limited partner is irrevocably consenting to these limitations and provisions regarding claims, suits,
actions or proceedings and submitting to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, unless otherwise provided for by Marshall Islands law, in connection with any such claims, suits, actions or proceedings; however, a court could rule that such provisions are inapplicable
or unenforceable. 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.
Assuming that a limited partner does not participate in the control of our business within the meaning of the Marshall Islands Act and that he otherwise acts in conformity with the provisions of our partnership agreement, his liability under the Marshall Islands Act will be limited, subject to possible
exceptions, to the amount of capital he is obligated to contribute to us for his common units plus his share of any undistributed profits and assets. If it were determined, however, that the right, or exercise of the right, by the limited partners as a group:
to remove or replace our general partner;
to elect two (or, following the general partners exercise of its right to transfer the power to elect a majority of our directors to the common unitholders, three) of our five directors;
to approve some amendments to our partnership agreement; or
to take other action under our partnership agreement;
constituted participation in the control of our business for the purposes of the Marshall Islands Act, then the limited partners could be held personally liable for our obligations under the laws of the Marshall Islands, to the same extent as our general partner. This liability would extend to persons who
transact business with us who reasonably believe that the limited partner is a general partner. Neither our partnership agreement nor the Marshall Islands Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our
general partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for this type of a claim in Marshall Islands case law.
Under the Marshall Islands Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to
specific property of the partnership, would exceed the fair value of the assets of the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the Marshall Islands Act provides that the fair value of property subject to liability for which recourse of creditors is
limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the non-recourse liability. The Marshall Islands Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in
violation of the Marshall Islands Act shall be liable to the limited partnership for the amount of the distribution for three years. Under the Marshall Islands Act, a purchaser of units who becomes a limited partner of a limited partnership is liable for the obligations of the transferor to make contributions
to the partnership, except that the transferee is not obligated for liabilities unknown to him at the time he became a limited partner and that could not be ascertained from the partnership agreement.
Maintenance of our limited liability may require compliance with legal requirements in the jurisdictions in which our subsidiaries conduct business, which may include qualifying to do business in those jurisdictions. Limitations on the liability of limited partners for the obligations of a limited
partnership or limited liability company have not been clearly established in many jurisdictions. If, by virtue of our membership interest in an operating subsidiary or otherwise, it was determined that
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we were conducting business in any jurisdiction without compliance with the applicable limited partnership or limited liability company statute, or that the right or exercise of the right by the limited partners as a group to remove or replace the general partner, to approve some amendments to the
partnership agreement or to take other action under the partnership agreement constituted participation in the control of our business for purposes of the statutes of any relevant jurisdiction, then the limited partners could be held personally liable for our obligations under the law of that jurisdiction to
the same extent as our general partner under the circumstances. We will operate in a manner that our board of directors considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners.
Issuance of Additional Interests
The partnership agreement authorizes us to issue an unlimited amount of additional partnership interests and rights to buy partnership interests for the consideration and on the terms and conditions determined by our board of directors without the approval of the unitholders. However, our general
partner will be required to approve all issuances of additional partnership interests that are not reasonably expected to be accretive within twelve months of issuance or which would otherwise have a material adverse impact on the general partner or its interest in us.
We intend to fund acquisitions through borrowings and the issuance of additional common units or other equity securities and the issuance of debt securities. Holders of any additional common units we issue will be entitled to share equally with the then-existing holders of common units in our
distributions of available cash. In addition, the issuance of additional common units or other equity securities may dilute the value of the interests of the then-existing holders of common units in our net assets.
In accordance with Marshall Islands law and the provisions of our partnership agreement, we may also issue additional partnership interests that, as determined by our board of directors, have special voting rights to which the common units are not entitled.
Upon issuance of additional partnership interests (other than the issuance of common units upon exercise of the underwriters option to purchase additional common units, the issuance of common units in connection with a reset of the incentive distribution target levels or the issuance of partnership
interests upon conversion of outstanding partnership interests), our general partner will have the right, but not the obligation, to make additional capital contributions to the extent necessary to maintain its 2.0% general partner interest in us. Our general partners interest in us will thus be reduced if we
issue additional partnership interests in the future and our general partner does not elect to maintain its 2.0% general partner interest in us. Our general partner and its affiliates will have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common
units, subordinated units or other equity securities whenever, and on the same terms that, we issue those securities to persons other than our general partner and its affiliates, to the extent necessary to maintain its and its affiliates percentage interest, including its interest represented by common units and
subordinated units, that existed immediately prior to each issuance. Other holders of common units will not have similar pre-emptive rights to acquire additional common units or other partnership interests.
The partnership agreement provides that the partnership will elect to be treated as a corporation for U.S. federal income tax purposes.
Amendment of the Partnership Agreement
General
Amendments to our partnership agreement may be proposed only by or with the consent of our board of directors. However, our board of directors will have no duty or obligation to propose any amendment and may decline to do so free of any fiduciary duty or obligation whatsoever to us or
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the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. In order to adopt a proposed amendment, other than the amendments discussed below, approval of our board of directors is required, as well as written approval of the holders of the number
of units required to approve the amendment or call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as we describe below, an amendment must be approved by a unit majority.
Prohibited Amendments
No amendment may be made that would:
(1)
increase the obligations of any limited partner without its consent, unless approved by at least a majority of the type or class of limited partner interests so affected; or
(2)
increase the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without the consent of the general partner, which may be given or withheld at its option.
The provision of our partnership agreement preventing the amendments having the effects described in clauses (1) through (2) above can be amended upon the approval of the holders of at least 90% of the outstanding units voting together as a single class (including units owned by our general
partner and its affiliates). Upon completion of this offering, the owner of our general partner will own
% of our outstanding common and subordinated units, assuming no exercise of the underwriters option to purchase additional common units.
Additionally, except for as discussed in No Unitholder Approval and Merger, Sale, Conversion or Other Disposition of Assets below, any amendment that would have a material adverse effect on the rights or preferences of any class of partnership interests in relation to other classes must be
approved by the holders of a majority of the outstanding partnership interests of the class affected.
No Unitholder Approval
Our board of directors may generally make amendments to our partnership agreement without the approval of any limited partner to reflect:
(1)
a change in our name, the location of our principal place of business, our registered agent or our registered office;
(2)
the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;
(3)
a change that our board of directors determines to be necessary or appropriate for us to qualify or to continue our qualification as a limited partnership or a partnership in which the limited partners have limited liability under the Marshall Islands Act;
(4)
an amendment that is necessary, upon the advice of our counsel, to prevent us or our officers or directors or our general partner or their or its agents or trustees from in any manner being subjected to the provisions of the U.S. Investment Company Act of 1940, the U.S. Investment Advisors Act
of 1940, or plan asset regulations adopted under the U.S. Employee Retirement Income Security Act of 1974 whether or not substantially similar to plan asset regulations currently applied or proposed;
(5)
an amendment that our board of directors determines to be necessary or appropriate for the authorization of additional partnership interests or rights to acquire partnership interests, including any amendment that our board of directors determines is necessary or appropriate in connection with:
the adjustments of the minimum quarterly distribution, first target distribution, second target distribution and third target distribution in connection with the reset of our
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incentive distribution rights as described under How We Make Cash DistributionsGasLogs Right to Reset Incentive Distribution Levels;
the implementation of the provisions relating to GasLogs right to reset the incentive distribution rights in exchange for common units;
any modification of the incentive distribution rights made in connection with the issuance of additional partnership interests or rights to acquire partnership interests, provided that, any such modifications and related issuance of partnership interests have received approval by a majority of the
members of the conflicts committee of our board of directors; or
any amendment expressly permitted in the partnership agreement to be made by our board of directors acting alone;
(6)
an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of the partnership agreement;
(7)
any amendment that our board of directors determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership or other entity, as otherwise permitted by the partnership agreement;
(8)
a change in our fiscal year or taxable year and related changes;
(9)
certain mergers or conveyances as set forth in our partnership agreement;
(10)
an amendment to cure any ambiguity, defect or inconsistency; or
(11)
any other amendments substantially similar to any of the matters described in (1) through (10) above.
In addition, our board of directors may make amendments to the partnership agreement without the approval of any limited partner or our general partner if our board of directors determines that those amendments:
(1)
do not adversely affect the rights of our limited partners (or any particular class of limited partners) or our general partner in any material respect;
(2)
are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any Marshall Islands authority or statute;
(3)
are necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the limited partner interests are or will be listed for trading;
(4)
are necessary or appropriate for any action taken by our board of directors relating to splits or combinations of units under the provisions of the partnership agreement; or
(5)
are required to effect the intent expressed in this prospectus or the intent of the provisions of the partnership agreement or are otherwise contemplated by the partnership agreement.
Opinion of Counsel and Unitholder Approval
Our board of directors will not be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the limited partners if one of the amendments described above under Amendment of the Partnership AgreementNo Unitholder Approval should occur. No
other amendments to our partnership agreement will become effective without the approval of holders of at least 90% of the outstanding units voting as a single class unless we obtain an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any of
our limited partners.
In addition to the above restrictions, any amendment that would have a material adverse effect on the rights or privileges of any type or class of outstanding units in relation to other classes of units will require the approval of at least a majority of the type or class of units so affected. Any
amendment that reduces the voting percentage required to take any action must be approved by the
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affirmative vote of limited partners whose aggregate outstanding units constitute not less than the voting requirement sought to be reduced.
Merger, Sale, Conversion or Other Disposition of Assets
A merger or consolidation of us requires the approval of our board of directors and the prior consent of our general partner. However, to the fullest extent permitted by law, our board of directors and our general partner will have no duty or obligation to consent to any merger or consolidation and
may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. In addition, our partnership agreement generally prohibits our board of directors, without the prior approval
of our general partner and the holders of units representing a unit majority, from causing us to, among other things, sell, exchange or otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions, including by way of merger, consolidation or other
combination, or approving on our behalf the sale, exchange or other disposition of all or substantially all of the assets of our subsidiaries taken as a whole. Our board of directors may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without the
prior approval of the holders of units representing a unit majority. Our general partner and our board of directors may also determine to sell all or substantially all of our assets under a foreclosure or other realization upon those encumbrances without the approval of the holders of units representing a
unit majority.
If conditions specified in our partnership agreement are satisfied, our board of directors, with the consent of our general partner, may convert us or any of our subsidiaries into a new limited liability entity or merge us or any of our subsidiaries into, or convey some or all of our assets to, a newly
formed entity if the sole purpose of that merger or conveyance is to effect a mere change in our legal form into another limited liability entity. The unitholders are not entitled to dissenters rights of appraisal under our partnership agreement or applicable law in the event of a conversion, merger or
consolidation, sale of substantially all of our assets or any other transaction or event.
We will continue as a limited partnership until terminated or converted under our partnership agreement. We will dissolve upon:
(1)
the election of our general partner and our board of directors to dissolve us, if approved by the holders of units representing a unit majority;
(2)
at any time there are no limited partners, unless we continue without dissolution in accordance with the Marshall Islands Act;
(3)
the entry of a decree of judicial dissolution of us; or
(4)
the withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer of its general partner interest in accordance with the partnership agreement or withdrawal or removal following approval and admission of a
successor.
Upon a dissolution under clause (4), the holders of a unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions described in the partnership agreement by appointing as general partner an entity approved by the holders of units
representing a unit majority, subject to our receipt of an opinion of counsel to the effect that the action would not result in the loss of limited liability of any limited partner.
Liquidation and Distribution of Proceeds
Upon our dissolution, unless we are continued as a new limited partnership, the liquidator authorized to wind up our affairs will, acting with all of the powers of our board of directors that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as provided in
How We Make Cash DistributionsDistributions of Cash Upon Liquidation. The
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liquidator may defer liquidation or distribution of our assets for a reasonable period or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to our partners.
Withdrawal or Removal of our General Partner
Except as described below, our general partner has agreed not to withdraw voluntarily as our general partner prior to March 31, 2024 without obtaining the approval of the holders of at least a majority of the outstanding common units, excluding common units held by our general partner and its
affiliates, and furnishing an opinion of counsel regarding limited liability. On or after March 31, 2024, our general partner may withdraw as general partner without first obtaining approval of any unitholder by giving 90 days written notice, and that withdrawal will not constitute a violation of the
partnership agreement. Notwithstanding the above, our general partner may withdraw without unitholder approval upon 90 days written notice to the limited partners if at least 50% of the outstanding common units are held or controlled by one person and its affiliates other than our general partner and
its affiliates. In addition, the partnership agreement permits our general partner in some instances to sell or otherwise transfer all of its general partner interest in us without the approval of the unitholders. See Transfer of General Partner Interest and Transfer of Incentive Distribution Rights.
Upon withdrawal of our general partner under any circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the holders of a majority of the outstanding common units and subordinated units, voting as separate classes, may select a
successor to that withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period of time after that withdrawal, the holders of a unit majority
agree in writing to continue our business and to appoint a successor general partner. See Termination and Dissolution.
Our general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66
2
/
3
% of the outstanding common and subordinated units, including units held by our general partner and its affiliates, voting together as a single class, and we receive an opinion of
counsel regarding limited liability. The ownership of more than 33
1
/
3
% of the outstanding units by our general partner and its affiliates or the control of our board of directors by our general partner and its affiliates would provide the practical ability to prevent our general partners removal. At the
closing of this offering, our general partner and GasLog will own 57.24% of the outstanding common and subordinated units, assuming no exercise of the underwriters option to purchase additional common units. Any removal of our general partner is also subject to the successor general partner being
approved by the vote of the holders of a majority of the outstanding common units and subordinated units, voting as a single class.
Our partnership agreement also provides that if our general partner is removed as our general partner under circumstances where cause does not exist and units held by our general partner and its affiliates are not voted in favor of that removal:
the subordination period will end and all outstanding subordinated units will immediately convert into common units on a one-for-one basis;
any existing arrearages in payment of the minimum quarterly distribution on the common units will be extinguished; and
our general partner will have the right to convert its general partner interest and the holder of the incentive distribution rights will have the right to convert such 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.
In the event of removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that withdrawal violates the partnership agreement, a successor general partner will have the option to purchase the general partner interest owned by the departing
general partner for a cash payment equal to the fair market value of that interest. Under
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all other circumstances where our general partner withdraws or is removed by the limited partners, the departing general partner will have the option to require the successor general partner to purchase the general partner interest of the departing general partner for its fair market value. In each case,
this fair market value will be determined by agreement between the departing general partner and the successor general partner. If no agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner
will determine the fair market value. Or, if the departing general partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by each of them will determine the fair market value.
If the option described above is not exercised by either the departing general partner or the successor general partner, the departing general partners general partner interest and the incentive distribution rights of any holder thereof will automatically convert into common units equal to the fair
market value of those interests as determined by an independent investment banking firm or other independent expert selected in the manner described in the preceding paragraph.
In addition, we will be required to reimburse the departing general partner for all amounts due the departing general partner, including, without limitation, any employee-related liabilities, including severance liabilities, incurred for the termination of any employees employed by the departing general
partner or its affiliates for our benefit.
Transfer of General Partner Interest
Except for the transfer by our general partner of all, but not less than all, of its general partner interest in us to:
an affiliate of our general partner (other than an individual); or
another entity as part of the merger or consolidation of our general partner with or into another entity or the transfer by our general partner of all or substantially all of its assets to another entity,
our general partner may not transfer all or any part of its general partner interest in us to another person prior to March 31, 2024, without the approval of the holders of at least a majority of the outstanding common units, excluding common units held by our general partner and its affiliates. As a
condition of this transfer, the transferee must, among other things, assume the rights and duties of the general partner, agree to be bound by the provisions of the partnership agreement and furnish an opinion of counsel regarding limited liability.
Our general partner and its affiliates may at any time transfer units to one or more persons, without unitholder approval.
Transfer of Ownership Interests in General Partner
At any time, the members of our general partner may sell or transfer all or part of their respective membership interests in our general partner to an affiliate or a third party without the approval of our unitholders.
Transfer of Incentive Distribution Rights
GasLog or its affiliates, or a subsequent holder, may transfer its incentive distribution rights to an affiliate of the holder (other than an individual) or another entity as part of the merger or consolidation of such holder with or into another entity, or sale of all or substantially all of its assets to that
entity, without the prior approval of the unitholders. Prior to March 31, 2019, other transfers of the incentive distribution rights will require the affirmative vote of holders of a majority of the outstanding common units, excluding common units held by GasLog and its affiliates. On or after March 31,
2019, the incentive distribution rights will be freely transferable.
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Change of Management Provisions
The partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove GasLog Partners GP LLC as our general partner or otherwise change management. If any person or group acquires beneficial ownership of more than 4.9% of any
class of units then outstanding, that person or group loses voting rights on all of its units in excess of 4.9% of all such units. 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.
The partnership agreement also provides that if our general partner is removed under circumstances where cause does not exist and units held by our general partner and its affiliates are not voted in favor of that removal:
the subordination period will end and all outstanding subordinated units will immediately convert into common units on a one-for-one basis;
any existing arrearages in payment of the minimum quarterly distribution on the common units will be extinguished; and
our general partner will have the right to convert its general partner interest into common units or to receive cash in exchange for that interest.
If at any time our general partner and its affiliates hold more than 80% of the then-issued and outstanding partnership interests of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or to us, to acquire all, but not less than all, of the
remaining partnership interests of the class held by unaffiliated persons as of a record date to be selected by the general partner, on at least ten but not more than 60 days written notice at a price equal to the greater of (x) the average of the daily closing prices of the partnership interests of such class
over the 20 trading days preceding the date three days before the notice of exercise of the call right is first mailed and (y) the highest price paid by our general partner or any of its affiliates for partnership interests of such class during the 90-day period preceding the date such notice is first mailed. 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 and has no fiduciary duty in determining whether to exercise this limited call right.
As a result of the general partners right to purchase outstanding partnership interests, a holder of partnership interests may have the holders partnership interests purchased at an undesirable time or price. The tax consequences to a unitholder of the exercise of this call right are the same as a sale
by that unitholder of common units in the market. See Material U.S. Federal Income Tax ConsiderationsU.S. Federal Income Taxation of U.S. HoldersSale, Exchange or Other Disposition of Common Units and Material U.S. Federal Income Tax ConsiderationsU.S. Federal Income Taxation of Non-
U.S. HoldersDisposition of Units.
At the completion of this offering and assuming no exercise of the underwriters option to purchase additional common units, GasLog, the sole member of our general partner, will own 14.48% of our common units. At the end of the subordination period, assuming no additional issuances of common
units, no exercise of the underwriters option to purchase additional common units and conversion of all of our subordinated units into common units, GasLog will own 57.24% of our common units.
Under our partnership agreement, our general partner has delegated to our board of directors the authority to oversee and direct our operations, policies and management on an exclusive basis, and such delegation will be binding on any successor general partner of the partnership. Immediately
following this offering our board of directors will be comprised of five persons appointed by our general partner in its sole discretion. Following our first annual meeting of unitholders, our board of
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directors will consist of five members, three of whom will be appointed by our general partner, by virtue of its general partner interest, in its sole discretion (subject to its right to transfer the power to elect a majority of our directors to the common unitholders) and two of whom will be elected by our
common unitholders.
Our board of directors nominates individuals to stand for election as elected board members on a staggered basis at an annual meeting of our limited partners. In addition, any limited partner or group of limited partners that holds beneficially 10% or more of the outstanding common units is entitled
to nominate one or more individuals to stand for election as elected board members at the annual meeting by providing written notice to our board of directors not more than 120 days nor less than 90 days prior to the meeting. However, if the date of the annual meeting is not publicly announced by us
at least 100 days prior to the date of the meeting, the notice must be delivered to our board of directors not later than ten days following the public announcement of the meeting date. The notice must set forth:
the name and address of the limited partner or limited partners making the nomination or nominations;
the number of common units beneficially owned by the limited partner or limited partners;
the information regarding the nominee(s) proposed by the limited partner or limited partners as would be required to be included in a proxy statement relating to the solicitation of proxies for the election of directors filed pursuant to the proxy rules of the SEC;
the written consent of the nominee(s) to serve as a member of our board of directors if so elected; and
a certification that the nominee(s) qualify as elected board members.
At our 2015 annual meeting, which will be the first annual meeting we will hold after this offering, the common unitholders will elect two of our directors. The two directors elected by our common unitholders at our 2015 annual meeting will be divided into classes to be elected by our common
unitholders annually on a staggered basis. If our general partner exercises its right to transfer the power to elect a majority of our directors to the common unitholders, an additional director will thereafter be elected by our common unitholders. That director would be added to the class that does not at
such time have a director. Our general partner may exercise this right in order to permit us to claim, or continue to claim, an exemption from U.S. federal income tax under Section 883 of the Code. See BusinessTaxation of the Partnership. The majority of our directors will be non-United States
citizens or residents.
Our general partner may remove an appointed board member with or without cause at any time. Cause generally means a courts finding a person liable for actual fraud or willful misconduct in his or its capacity as a director. Any and all of the board members may be removed at any time for
cause by the affirmative vote of a majority of the other board members. Any and all of the board members appointed by our general partner may be removed for cause at a properly called meeting of the limited partners by a majority vote of the outstanding units, voting as a single class. If any
appointed board member is removed, resigns or is otherwise unable to serve as a board member, our general partner may fill the vacancy. Any and all of the board members elected by the common unitholders may be removed for cause at a properly called meeting of the limited partners by a majority
vote of the outstanding common units. If any elected board member is removed, resigns or is otherwise unable to serve as a board member, the vacancy may be filled by a majority of the other elected board members then serving.
Except as described below regarding a person or group owning more than 4.9% of any class of units then outstanding, unitholders who are record holders of units on the record date will be entitled to notice of, and to vote at, meetings of our limited partners and to act upon matters for which
approvals may be solicited.
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Starting in 2015, we will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Any action that is required or permitted to be taken by the unitholders may be taken
either at a meeting of the unitholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize or take that action at a meeting. Meetings of the unitholders may be called by our board of directors or by unitholders
owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote either in person or by proxy at meetings. The holders of 33
1
/
3
% of the outstanding units of the class or classes for which a meeting has been called, represented in person or by proxy, will
constitute a quorum unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the quorum will be the greater percentage.
Each record holder of a unit may vote according to the holders percentage interest in us, although additional limited partner interests having special voting rights could be issued. See Issuance of Additional Interests. However, 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 of directors), determining the presence of a quorum or for other similar purposes under our partnership agreement, unless otherwise required by law. Effectively, this means that the voting rights of any such unitholders in excess of 4.9% will 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. This limitation will help our ability to claim an exemption from U.S. federal income tax under Section 883 of the Code in the event our general partner, by virtue of its general partner interest, transfers the power to elect a majority of our
directors to the common unitholders. Units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise. Except as the partnership
agreement otherwise provides, subordinated units will vote together with common units as a single class.
Any notice, demand, request, report or proxy material required or permitted to be given or made to record holders of common units under the partnership agreement will be delivered to the record holder by us or by the transfer agent.
Status as Limited Partner or Assignee
Except as described above under Limited Liability, the common units will be fully paid, and unitholders will not be required to make additional contributions. By transfer of common units in accordance with our partnership agreement, each transferee of common units will be admitted as a limited
partner with respect to the common units transferred when such transfer and admission is reflected in our books and records.
Under the partnership agreement, in most circumstances, we will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:
(1)
our general partner;
(2)
any departing general partner;
(3)
any person who is or was an affiliate of our general partner or any departing general partner;
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(4)
any person who is or was an officer, director, member, fiduciary or trustee of any entity described in (1), (2) or (3) above;
(5)
any person who is or was serving as a director, officer, member, fiduciary or trustee of another person at the request of our board of directors, our general partner or any departing general partner;
(6)
our officers;
(7)
any person designated by our board of directors; and
(8)
the members of our board of directors.
Any indemnification under these provisions will only be out of our assets. We may purchase insurance against liabilities asserted against and expenses incurred by persons for our activities, regardless of whether we would have the power to indemnify the person against liabilities under the partnership
agreement.
Our partnership agreement requires us to reimburse the members of our board of directors for their out-of-pocket costs and expenses incurred in the course of their service to us. Our partnership agreement also requires us to reimburse our general partner for all expenses it incurs or payments it
makes on our behalf and all other expenses allocable to us or otherwise incurred by our general partner in connection with operating our business. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf, and expenses
allocated to us or our general partner by our board of directors.
Our general partner is required to keep appropriate books and records of our business at our principal offices. The books will be maintained for both tax and financial reporting purposes on an accrual basis. For tax and financial reporting purposes, our fiscal year is the calendar year.
We will furnish or make available to record holders of common units, within 120 days after the close of each fiscal year, an annual report containing audited financial statements and a report on those financial statements by our independent registered public accounting firm. Except for our fourth
quarter, we will also furnish or make available summary financial information within 90 days after the close of each quarter.
Right to Inspect Our Books and Records
The partnership agreement provides that a limited partner can, for a purpose reasonably related to his interest as a limited partner, upon reasonable written demand stating the purpose of such demand and at the limited partners own expense, have furnished to the limited partner:
(1)
a current list of the name and last known address of each partner;
(2)
information as to the amount of cash, and a description and statement of the agreed value of any other property or services, contributed or to be contributed by each partner and the date on which each became a partner;
(3)
copies of the partnership agreement, the certificate of limited partnership of the partnership and related amendments;
(4)
information regarding the status of our business and financial position; and
(5)
any other information regarding our affairs as is just and reasonable.
Our board of directors may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of which our board of directors believes in good faith is not in our best interests or that we are required by law or by agreements with third parties to keep
confidential.
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Under the partnership agreement, we have agreed to register for resale under the Securities Act and applicable state securities laws any common units, subordinated units or other partnership interests proposed to be sold by our general partner or any of its affiliates or their assignees if an exemption
from the registration requirements is not otherwise available or advisable. These registration rights continue for two years following any withdrawal or removal of GasLog Partners GP LLC as our general partner. We are obligated to pay all expenses incidental to the registration, excluding underwriting
discounts and commissions. In connection with these registration rights, we will not be required to pay any damages or penalties related to any delay or failure to file a registration statement or to cause a registration statement to become effective. See Units Eligible for Future Sale.
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UNITS ELIGIBLE FOR FUTURE SALE
After the sale of the common units offered by this prospectus, our general partner and GasLog will hold an aggregate of 1,422,358 common units and 9,822,358 subordinated units. All of the subordinated units will convert into common units at the end of the subordination period. The sale of these
common and subordinated units could have an adverse impact on the price of the common units or on any trading market that may develop.
The common units sold in this offering will generally be freely transferable without restriction or further registration under the Securities Act. None of the directors or officers of our general partner own any common units prior to this offering; however, they may purchase common units through the
directed unit program or otherwise. Please read Underwriting (Conflicts of Interest)Directed Unit Program. In addition, certain significant investors in GasLog have indicated that they currently intend to purchase up to an aggregate of $60 million, or up to an aggregate of approximately 3 million
common units (based on the midpoint of the price range set forth on the cover of this prospectus), of our common units in the offering at the public offering price. Assuming all of the units reserved for issuance under the directed unit program are sold to participants in the program and the significant
investors in GasLog purchase 3 million common units, 3,420,000 common units will be held by persons who have contractually agreed not to sell such units for 180 days following the date of this prospectus. Any additional common units held by an affiliate of ours may not be resold publicly except in
compliance with the registration requirements of the Securities Act or under an exemption from the registration requirements of the Securities Act pursuant to Rule 144 or otherwise. Rule 144 permits securities acquired by an affiliate of ours to be sold into the market in an amount that does not exceed,
during any three-month period, the greater of:
1% of the total number of the class of securities outstanding; or
the average weekly reported trading volume of the common units for the four calendar weeks prior to the sale.
Sales under Rule 144 are also subject to specific manner of sale provisions, holding period requirements, notice requirements and the availability of current public information about us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale,
and who has beneficially owned common units for at least six months (provided we are in compliance with the current public information requirement) or one year (regardless of whether we are in compliance with the current public information requirement), would be entitled to sell those common units
under Rule 144 without regard to the public information requirements, volume limitations, manner of sale provisions and notice requirements of Rule 144.
Our partnership agreement provides that we may issue an unlimited number of limited partner interests of any type without a vote of the unitholders. Any issuance of additional common units or other equity securities would result in a corresponding decrease in the proportionate ownership interest
in us represented by, and could adversely affect the cash distributions to and market price of, common units then outstanding. See The Partnership AgreementIssuance of Additional Interests.
Under our partnership agreement, our general partner and its affiliates have the right to cause us to register under the Securities Act and applicable state securities laws the offer and sale of any common units that they hold. Subject to the terms and conditions of the partnership agreement, these
registration rights allow our general partner and its affiliates or their assignees holding any common units to require registration of any of these common units and to include any of these common units in a registration by us of other common units, including common units offered by us or by any
unitholder. Our general partner and its affiliates will continue to have these registration rights for two years following its withdrawal or removal as our general partner. In connection with any registration of this kind, we will indemnify each unitholder participating in the registration and its officers,
directors and controlling persons from and against any liabilities under the Securities Act or any applicable state securities laws arising from the registration statement or prospectus. We will bear all costs and expenses incidental to any registration, excluding any underwriting discounts and
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commissions. Except as described below, our general partner and its affiliates may sell their common units in private transactions at any time, subject to compliance with applicable laws.
We, our directors and executive officers, our subsidiaries and our general partner and its affiliates, including GasLog, as well as all participants in the directed unit program and certain significant investors at GasLog who have indicated an intent to purchase our common units, have agreed not to sell
any common units for a period of 180 days from the date of this prospectus, subject to certain exceptions and extensions. See Underwriting (Conflicts of Interest) for a description of these lock-up provisions.
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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material U.S. federal income tax considerations that may be relevant to prospective unitholders and, unless otherwise noted in the following discussion, is the opinion of Cravath, Swaine & Moore LLP, our U.S. counsel, insofar as it contains legal conclusions with
respect to matters of U.S. federal income tax law. The opinion of our counsel is dependent on the accuracy of factual representations made by us to them, including descriptions of our operations contained herein.
This discussion is based upon provisions of the Code, Treasury Regulations and current administrative rulings and court decisions, all as in effect or existence on the date of this prospectus and all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause
the tax consequences of unit ownership to vary substantially from the consequences described below. Unless the context otherwise requires, references in this section to we, our or us are references to GasLog Partners LP.
The following discussion applies only to beneficial owners of common units that own the common units as capital assets within the meaning of Section 1221 of the Code (
i.e.
, generally, for investment purposes) and is not intended to be applicable to all categories of investors, such as unitholders
subject to special tax rules (
e.g.,
financial institutions, insurance companies, broker-dealers, tax-exempt organizations, retirement plans or individual retirement accounts or former citizens or long-term residents of the United States), persons who will hold the units as part of a straddle, hedge, conversion,
constructive sale or other integrated transaction for U.S. federal income tax purposes, or persons that have a functional currency other than the U.S. dollar, each of whom may be subject to tax rules that differ significantly from those summarized below. If a partnership or other entity classified as a
partnership for U.S. federal income tax purposes holds our common units, the tax treatment of its partners generally will depend upon the status of the partner and the activities of the partnership. If you are a partner in a partnership holding our common units, you are encouraged to consult your own
tax advisor regarding the tax consequences to you of the partnerships ownership of our common units.
No ruling has been or will be requested from the IRS regarding any matter affecting us or prospective unitholders. The opinions and statements made herein may be challenged by the IRS and, if so challenged, may not be sustained upon review in a court. This discussion does not contain information
regarding any U.S. state or local, estate, gift or alternative minimum tax considerations concerning the ownership or disposition of common units. This discussion does not comment on all aspects of U.S. federal income taxation that may be important to particular unitholders in light of their individual
circumstances, and each prospective unitholder is encouraged to consult its own tax advisor regarding the U.S. federal, state, local and other tax consequences of the ownership or disposition of common units.
Election to be Treated as a Corporation
We have elected to be treated as a corporation for U.S. federal income tax purposes. As a result, U.S. Holders (as defined below) will not be directly subject to U.S. federal income tax on our income, but rather will be subject to U.S. federal income tax on distributions received from us and
dispositions of units as described below.
U.S. Federal Income Taxation of U.S. Holders
As used herein, the term U.S. Holder means a beneficial owner of our common units that owns (actually or constructively) less than 10.0% of our equity and that is:
an individual U.S. citizen or resident (as determined for U.S. federal income tax purposes),
a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia,
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an estate the income of which is subject to U.S. federal income taxation regardless of its source, or
a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a U.S. person for
U.S. federal income tax purposes.
Distributions
Subject to the discussion below of the rules applicable to PFICs, any distributions to a U.S. Holder made by us with respect to our common units generally will constitute dividends to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax
principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holders tax basis in its common units and thereafter as capital gain. U.S. Holders that are corporations generally will not be entitled to claim a dividends received
deduction with respect to distributions they receive from us because we are not a U.S. corporation. Dividends received with respect to our common units generally will be treated as foreign source passive category income for purposes of computing allowable foreign tax credits for U.S. federal income
tax purposes.
Dividends received with respect to our common units by a U.S. Holder that is an individual, trust or estate, or a U.S. Individual Holder, generally will be treated as qualified dividend income, which is taxable to such U.S. Individual Holder at preferential tax rates provided that: (i) our common
units are readily tradable on an established securities market in the United States (such as the New York Stock Exchange on which we expect our common units to be traded); (ii) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which
we do not believe we are, have been or will be, as discussed below under PFIC Status and Significant Tax Consequences); (iii) the U.S. Individual Holder has owned the common units for more than 60 days during the 121-day period beginning 60 days before the date on which the common units
become ex-dividend (and has not entered into certain risk limiting transactions with respect to such common units); and (iv) the U.S. Individual Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. There is no assurance that any
dividends paid on our common units will be eligible for these preferential rates in the hands of a U.S. Individual Holder, and any dividends paid on our common units that are not eligible for these preferential rates will be taxed at ordinary income rates to a U.S. Individual Holder.
Special rules may apply to any amounts received in respect of our common units that are treated as extraordinary dividends. In general, an extraordinary dividend is a dividend with respect to a common unit that is equal to or in excess of 10.0% of a unitholders adjusted tax basis (or fair market
value upon the unitholders election) in such common unit. In addition, extraordinary dividends include dividends received within a one-year period that, in the aggregate, equal or exceed 20.0% of a unitholders adjusted tax basis (or fair market value). If we pay an extraordinary dividend on our
common units that is treated as qualified dividend income, then any loss recognized by a U.S. Individual Holder from the sale or exchange of such common units will be treated as long-term capital loss to the extent of the amount of such dividend.
Ratio of Dividend Income to Distributions
The amount of distributions we pay on our common units that is treated as dividend income will depend upon the amount of our current and accumulated earnings and profits. We will compute our earnings and profits for each taxable year in accordance with U.S. federal income tax principles. Based
upon various assumptions and estimates regarding our expected earnings and profits, we estimate that approximately 70% of the total cash distributions received by a purchaser of common units in this offering that holds such common units through December 31, 2017 will constitute dividend income. The
remaining portion of these distributions will be treated first as a nontaxable return of capital to the extent of the purchasers tax basis in its common units and thereafter as
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capital gain. These estimates are based upon the assumption that we will pay the minimum quarterly distribution of $0.375 per unit on our common units during the referenced period and on other assumptions with respect to our earnings, capital expenditures and cash flow for this period. These estimates
and assumptions are subject to, among other things, numerous business, economic, regulatory, competitive and political uncertainties that are beyond our control. Further, these estimates are based on current U.S. federal income tax law and tax reporting positions that we will adopt and with which the
IRS could disagree. Accordingly, we cannot assure you that these estimates will prove to be correct. The actual percentage of total cash distributions that will constitute dividend income could be higher or lower, and any differences could be material or could materially affect the value of the common
units.
Sale, Exchange or Other Disposition of Common Units
Subject to the discussion of PFIC status below, a U.S. Holder generally will recognize capital gain or loss upon a sale, exchange or other disposition of our units in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and
the U.S. Holders adjusted tax basis in such units. The U.S. Holders initial tax basis in its units generally will be the U.S. Holders purchase price for the units and that tax basis will be reduced (but not below zero) by the amount of any distributions on the units that are treated as non-taxable returns of
capital (as discussed above under Distributions and Ratio of Dividend Income to Distributions). Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holders holding period is greater than one year at the time of the sale, exchange or other disposition. Certain U.S. Holders
(including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. A U.S. Holders ability to deduct capital losses is subject to limitations. Such capital gain or loss generally will be treated as U.S. source income or loss, as applicable, for U.S.
foreign tax credit purposes.
Medicare Tax on Net Investment Income
Certain U.S. Holders, including individuals, estates and trusts, will be subject to an additional 3.8% Medicare tax on, among other things, dividends and capital gains from the sale or other disposition of equity interests. For individuals, the additional Medicare tax applies to the lesser of (i) net
investment income or (ii) the excess of modified adjusted gross income over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). Net investment income generally equals the taxpayers gross investment income reduced by deductions that are allocable to such
income. Unitholders are encouraged to consult their tax advisors regarding the implications of the additional Medicare tax resulting from their ownership and disposition of our common units.
PFIC Status and Significant Tax Consequences
Adverse U.S. federal income tax rules apply to a U.S. Holder that owns an equity interest in a non-U.S. corporation that is classified as a PFIC for U.S. federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which the holder
held our units, either:
at least 75.0% of our gross income (including the gross income of our vessel-owning subsidiaries) for such taxable year consists of passive income (
e.g.
, dividends, interest, capital gains from the sale or exchange of investment property and rents derived other than in the active conduct of a rental
business); or
at least 50.0% of the average value of the assets held by us (including the assets of our vessel-owning subsidiaries) during such taxable year produce, or are held for the production of, passive income.
Income earned, or treated as earned (for U.S. federal income tax purposes), by us in connection with the performance of services would not constitute passive income. By contrast, rental income
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generally would constitute passive income unless we were treated as deriving that rental income in the active conduct of a trade or business under the applicable rules.
Based on our current and projected methods of operation, and an opinion of counsel, we do not believe that we are or will be a PFIC for our current or any future taxable year. We have received an opinion of our U.S. counsel, Cravath, Swaine & Moore LLP, in support of this position that concludes
that the income our subsidiaries earn from certain of our present time-chartering activities should not constitute passive income for purposes of determining whether we are a PFIC. In addition, we have represented to our U.S. counsel that we expect that more than 25.0% of our gross income for our
current taxable year and each future year will arise from such time-chartering activities, and more than 50.0% of the average value of our assets for each such year will be held for the production of such nonpassive 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 U.S. counsel for purposes of their opinion, our U.S. counsel is of the opinion that we should not be a PFIC for our current taxable year or any future year.
Our counsel has indicated to us that the conclusions described above are not free from doubt. While there is legal authority supporting our conclusions, including IRS pronouncements concerning the characterization of income derived from time charters as services income, the United States Court of
Appeals for the Fifth Circuit (or the Fifth Circuit) held in
Tidewater Inc. v. United States
, 565 F.3d 299 (5th Cir. 2009) that income derived from certain marine time charter agreements should be treated as rental income rather than services income for purposes of a foreign sales corporation provision of
the Code. In that case, the Fifth Circuit did not address the definition of passive income or the PFIC rules; however, the reasoning of the case could have implications as to how the income from a time charter would be classified under such rules. If the reasoning of this case were extended to the PFIC
context, the gross income we derive or are deemed to derive from our time-chartering activities may be treated as rental income, and we would likely be treated as a PFIC. The IRS has announced its nonacquiescence with the courts holding in the
Tidewater
case and, at the same time, announced the
position of the IRS that the marine time charter agreements at issue in that case should be treated as service contracts.
Distinguishing between arrangements treated as generating rental income and those treated as generating services income involves weighing and balancing competing factual considerations, and there is no legal authority under the PFIC rules addressing our specific method of operation. Conclusions in
this area therefore remain matters of interpretation. We are not seeking a ruling from the IRS on the treatment of income generated from our time-chartering operations, and the opinion of our counsel is not binding on the IRS or any court. Thus, while we have received an opinion of counsel in support
of our position, it is possible that the IRS or a court could disagree with this position and the opinion of our counsel. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure unitholders that the nature of
our operations will not change in the future and that we will not become a PFIC in any future taxable year.
As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a Qualified Electing Fund, which we refer to as a QEF election. As an
alternative to making a QEF election, a U.S. Holder should be able to make a mark-to-market election with respect to our common units, as discussed below. In addition, if a U.S. Holder owns our common units during any taxable year that we are a PFIC, such units owned by such holder will be
treated as PFIC units even if we are not a PFIC in a subsequent year and, if the total value of all PFIC stock that such holder directly or indirectly owns exceeds certain thresholds, such holder must file an annual report with the IRS.
The PFIC rules are complex, and you are encouraged to consult your own tax advisor regarding the PFIC rules, including the annual PFIC reporting requirement.
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Taxation of U.S. Holders Making a Timely QEF Election
If we were to be treated as a PFIC for any taxable year, and a U.S. Holder makes a timely QEF election, such holder hereinafter an Electing Holder, then, for U.S. federal income tax purposes, that holder must report as income for its taxable year its pro rata share of our ordinary earnings and
net capital gain, if any, for our taxable years that end with or within the taxable year for which that holder is reporting, regardless of whether or not the Electing Holder received distributions from us in that year. The Electing Holders adjusted tax basis in the common units will be increased to reflect
taxed but undistributed earnings and profits. Distributions of earnings and profits that were previously taxed will result in a corresponding reduction in the Electing Holders adjusted tax basis in common units and will not be taxed again once distributed. An Electing Holder generally will recognize capital
gain or loss on the sale, exchange or other disposition of our common units. A U.S. Holder makes a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with its U.S. federal income tax return. If contrary to our expectations, we determine that we are treated as a PFIC for
any taxable year, we will provide each U.S. Holder with the information necessary to make the QEF election described above. Although the QEF election is available with respect to subsidiaries, in the event we acquire or own a subsidiary in the future that is treated as a PFIC, no assurances can be
made that we will be able to provide U.S. Holders with the necessary information to make the QEF election with respect to such subsidiary.
Taxation of U.S. Holders Making a Mark-to-Market Election
If we were to be treated as a PFIC for any taxable year and, as we anticipate, our units were treated as marketable stock, then, as an alternative to making a QEF election, a U.S. Holder would be allowed to make a mark-to-market election with respect to our common units, provided the U.S.
Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the U.S. Holders common
units at the end of the taxable year over the holders adjusted tax basis in the common units. The U.S. Holder also would be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holders adjusted tax basis in the common units over the fair market value thereof at the end of the taxable
year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holders tax basis in its common units would be adjusted to reflect any such income or loss recognized. Gain recognized on the sale, exchange or other disposition of our
common units would be treated as ordinary income, and any loss recognized on the sale, exchange or other disposition of the common units would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder. The
mark-to-market election generally will not be available with respect to subsidiaries. Accordingly, in the event we acquire or own a subsidiary in the future that is treated as a PFIC, the mark-to-market election generally will not be available with respect to such subsidiary.
Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election
If we were to be treated as a PFIC for any taxable year, a U.S. Holder that does not make either a QEF election or a mark-to-market election for that year, such holder hereinafter a Non-Electing Holder, would be subject to special rules resulting in increased tax liability with respect to (1) any
excess distribution (
i.e.
, the portion of any distributions received by the Non-Electing Holder on our common units in a taxable year in excess of 125.0% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the portion of the Non-
Electing Holders holding period for the common units before the taxable year) and (2) any gain realized on the sale, exchange or other disposition of the units. Under these special rules:
the excess distribution or gain would be allocated ratably over the Non-Electing Holders aggregate holding period for the common units;
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the amount allocated to the current taxable year and any taxable year prior to the taxable year we were first treated as a PFIC with respect to the Non-Electing Holder would be taxed as ordinary income; and
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayers for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such
other taxable year.
These penalties would not apply to a qualified pension, profit sharing or other retirement trust or other tax-exempt organization that did not borrow money or otherwise utilize leverage in connection with its acquisition of our common units. If we were treated as a PFIC for any taxable year and a
Non-Electing Holder who is an individual dies while owning our common units, such holders successor generally would not receive a step-up in tax basis with respect to such units.
U.S. Federal Income Taxation of Non-U.S. Holders
A beneficial owner of our common units (other than a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Holder is referred to as a Non-U.S. Holder. If you are a partner in a partnership (or an entity or arrangement treated as a
partnership for U.S. federal income tax purposes) holding our common units, you are encouraged to consult your own tax advisor regarding the tax consequences to you of the partnerships ownership of our common units.
Distributions
Distributions we pay to a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax if the Non-U.S. Holder is not engaged in a U.S. trade or business. If the Non-U.S. Holder is engaged in a U.S. trade or business, our distributions will be subject to U.S. federal income tax to
the extent they constitute income effectively connected with the Non-U.S. Holders U.S. trade or business. However, distributions paid to a Non-U.S. Holder that is engaged in a U.S. trade or business may be exempt from taxation under an income tax treaty if the income arising from the distribution is
not attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder.
Disposition of Units
In general, a Non-U.S. Holder is not subject to U.S. federal income tax or withholding tax on any gain resulting from the disposition of our common units provided the Non-U.S. Holder is not engaged in a U.S. trade or business. A Non-U.S. Holder that is engaged in a U.S. trade or business will be
subject to U.S. federal income tax in the event the gain from the disposition of units is effectively connected with the conduct of such U.S. trade or business (provided, in the case of a Non-U.S. Holder entitled to the benefits of an income tax treaty with the United States, such gain also is attributable to
a U.S. permanent establishment). However, even if not engaged in a U.S. trade or business, individual Non-U.S. Holders may be subject to tax on gain resulting from the disposition of our common units if they are present in the United States for 183 days or more during the taxable year in which those
units are disposed and meet certain other requirements.
Backup Withholding and Information Reporting
In general, payments to a U.S. Individual Holder of distributions or the proceeds of a disposition of common units will be subject to information reporting. These payments to a U.S. Individual Holder also may be subject to backup withholding if the U.S. Individual Holder:
fails to provide an accurate taxpayer identification number;
is notified by the IRS that it has failed to report all interest or corporate distributions required to be reported on its U.S. federal income tax returns; or
in certain circumstances, fails to comply with applicable certification requirements.
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Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable.
Backup withholding is not an additional tax. Rather, a unitholder generally may obtain a credit for any amount withheld against its liability for U.S. federal income tax (and obtain a refund of any amounts withheld in excess of such liability) by timely filing a U.S. federal income tax return with the
IRS.
U.S. Holders purchasing more than $100,000 of our common units in this offering generally will be required to file IRS Form 926 reporting such payment. For purposes of determining the total dollar value of common units purchased by a U.S. Holder in this offering, units purchased by certain
related parties (including family members) are included. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with this reporting obligation. Each U.S. Holder is encouraged to consult its own tax advisor as to the possible obligation to file IRS Form 926.
In addition, individual citizens or residents of the United States holding certain foreign financial assets (which generally includes stock and other securities issued by a foreign person unless held in an account maintained by a financial institution) that exceed certain thresholds (the lowest being
holding foreign financial assets with an aggregate value in excess of: (1) $50,000 on the last day of the tax year or (2) $75,000 at any time during the tax year) are required to report information relating to such assets. Significant penalties may apply for failure to satisfy the reporting obligations described
above. Unitholders are encouraged to consult their tax advisors regarding their reporting obligations, if any, that would result from their purchase, ownership or disposition of our units.
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NON-UNITED STATES TAX CONSIDERATIONS
Unless the context otherwise requires, references in this section to we, our or us are references to GasLog Partners LP.
Marshall Islands Tax Consequences
The following discussion is based upon the opinion of Cozen OConnor, our counsel as to matters of the laws of the Republic of the Marshall Islands, and the current laws of the Republic of the Marshall Islands applicable to persons who do not reside in, maintain offices in or engage in business in
the Republic of the Marshall Islands.
Because we and our subsidiaries do not and do not expect to conduct business or operations in the Republic of the Marshall Islands, and because all documentation related to this offering will be executed outside of the Republic of the Marshall Islands, under current Marshall Islands law you will not
be subject to Marshall Islands taxation or withholding on distributions, including upon distribution treated as a return of capital, we make to you as a unitholder. In addition, you will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of
common units, and you will not be required by the Republic of the Marshall Islands to file a tax return relating to your ownership of common units.
EACH PROSPECTIVE UNITHOLDER IS ENCOURAGED TO CONSULT ITS OWN TAX COUNSEL OR OTHER ADVISOR WITH REGARD TO THE LEGAL AND TAX CONSEQUENCES OF UNIT OWNERSHIP UNDER ITS PARTICULAR CIRCUMSTANCES.
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UNDERWRITING (CONFLICTS OF INTEREST)
Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Wells Fargo Securities, LLC are acting as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named
below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of common units set forth opposite the underwriters name.
Underwriter
Number of
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Wells Fargo Securities, LLC
Barclays Capital Inc.
Evercore Group L.L.C.
UBS Securities LLC
Deutsche Bank Securities Inc.
DNB Markets, Inc.
Total
8,400,000
The underwriting agreement provides that the obligations of the underwriters to purchase the common units included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the common units (other than those covered
by the underwriters option to purchase additional common units described below) if they purchase any of the common units.
Common units sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any common units sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price not to exceed $
per common unit. If all the common units are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. The representatives have advised us that the underwriters do not intend to make sales to discretionary accounts.
If the underwriters sell more common units than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 1,260,000 additional common units at the public offering price less the
underwriting discount. To the extent the option is exercised, each underwriter must purchase a number of additional common units approximately proportionate to that underwriters initial purchase commitment. Any common units issued or sold under the option will be issued and sold on the same terms
and conditions as the other common units that are the subject of this offering. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering.
We, our directors and executive officers, our subsidiaries and our general partner and its affiliates, including GasLog, have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of Citigroup, dispose of or hedge any common
units or any securities convertible into or exchangeable for our common units. Citigroup in its sole discretion may release any of the securities subject to these lock-up agreements at any time, which, in the case of officers and directors, shall be with notice.
As described below under Directed Unit Program, any participants in the directed unit program shall be subject to a 180-day lock-up with respect to any common units sold to them pursuant to that program. This lock-up will have similar restrictions as the lock-up agreement described above. Any
common units sold in the directed unit program to our directors or officers shall be subject to the lock-up agreement described above. Additionally, any of the common units purchased by certain significant investors in GasLog who have indicated that they currently intend to purchase in the offering at
the public offering price shall also be subject to the lock-up agreement described above.
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Common Units
Prior to this offering, there has been no public market for our common units. Consequently, the initial public offering price for the common units was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our
results of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, and currently prevailing general conditions in the equity securities markets, including current market valuations
of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the common units will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our common units will
develop and continue after this offering.
We have applied to list the common units on the New York Stock Exchange under the symbol GLOP.
The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters over-allotment option.
The following table shows the per common unit and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters option to purchase up to an additional 1,260,000
common units.
Per
Total
No Exercise
Full Exercise
Public offering price
$
$
$
Underwriting discounts and commissions to be paid by us
(1)
$
$
$
Proceeds, before expenses, to us
(1)
$
$
$
(1)
Excludes an aggregate structuring fee of % of the offering proceeds before discounts and expenses payable to Citigroup Global Markets Inc. and Evercore Group L.L.C. for providing advice regarding the capital structure of our partnership, the terms of the offering, the terms of our partnership
agreement and the terms of certain other agreements between us, our general partner, GasLog and its affiliates, as applicable. We will also pay up to $ 25,000 of reasonable fees and expenses of counsel related to the review by the Financial Industry Regulatory Authority, Inc. of the terms of sale of
the common units offered hereby.
The underwriting discounts and commissions to be paid by us represent
% of the total amount of this offering. The aggregate structuring fees to be paid by us to Citigroup Global Markets Inc. and Evercore Group L.L.C. represent
% of the total gross proceeds of this offering. We
estimate that our portion of the total expenses of this offering will be approximately $3.0 million (exclusive of underwriting discounts and the structuring fee).
In connection with the offering, the underwriters may purchase and sell common units in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the underwriters option to purchase additional
common units, and stabilizing purchases.
Short sales involve secondary market sales by the underwriters of a greater number of common units than they are required to purchase in the offering.
Covered short sales are sales of common units in an amount up to the number of common units represented by the underwriters option to purchase additional common units.
Naked short sales are sales of common units in an amount in excess of the number of common units represented by the underwriters option to purchase additional common units.
Covering transactions involve purchases of common units either pursuant to the underwriters option to purchase additional common units or in the open market in order to cover short positions.
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Common Unit
To close a naked short position, the underwriters must purchase common units in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common units in the open market after pricing that
could adversely affect investors who purchase in the offering.
To close a covered short position, the underwriters must purchase common units in the open market or must exercise the option to purchase additional common units. In determining the source of common units to close the covered short position, the underwriters will consider, among other
things, the price of common units available for purchase in the open market as compared to the price at which they may purchase common units through the underwriters option to purchase additional common units.
Stabilizing transactions involve bids to purchase common units so long as the stabilizing bids do not exceed a specified maximum.
Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the common units. They may also cause the price of the common units to be higher than
the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue
them at any time.
We intend to use at least five percent of the net proceeds of this offering to repay indebtedness owed by us, in part, to an affiliate of Citigroup Global Markets Inc. who is a lender under the senior secured loan facility related to the
GasLog Sydney
. See Use of Proceeds. As a result, Citigroup
Global Markets Inc. has a conflict of interest within the meaning of FINRA Rule 5121, or Rule 5121. Accordingly, this offering will be made in compliance with the applicable provisions of Rule 5121. Rule 5121 provides that if at least five percent of the net offering proceeds not including underwriting
compensation, are used to reduce or retire the balance of a loan or credit facility extended by any underwriter or its affiliates, a qualified independent underwriter, or QIU, meeting certain standards must participate in the preparation of the registration statement and the prospectus and exercise the usual
standards of due diligence with respect thereto. Credit Suisse Securities (USA) LLC has agreed to act as qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11
of the Securities Act. Credit Suisse Securities (USA) LLC will not receive any additional fees for serving as qualified independent underwriter in connection with this offering. We have agreed to indemnify Credit Suisse Securities (USA) LLC against certain liabilities incurred in connection with it acting
as a QIU for this offering, including liabilities under the Securities Act.
The underwriters are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The underwriters and their
respective affiliates have in the past performed commercial banking, investment banking and advisory services for us from time to time for which they have received customary fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for us in the
ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investments and
securities activities may involve securities and/or instruments of ours or our affiliates. In addition, affiliates of certain of the underwriters are lenders, and in some cases agents or managers for the lenders, under our credit facilities. Certain of the underwriters or
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their affiliates that have a lending relationship with us routinely hedge their credit exposure to us consistent with their customary risk management policies. A typical such hedging strategy would include these underwriters or their affiliates hedging such exposure by entering into transactions which consist
of either the purchase of credit default swaps or the creation of short positions in our securities. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or
recommend to clients that they acquire, long and/or short positions in such securities and instruments.
The address of Citigroup Global Markets Inc. is 388 Greenwich Street, New York, New York 10013. The address of Credit Suisse Securities (USA) LLC is Eleven Madison Avenue, New York, New York 10010. The address of Wells Fargo Securities, LLC is 375 Park Avenue, 9th Floor, New York,
New York 10152.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and liabilities incurred in connection with the directed unit program referred to below, or to contribute to payments the underwriters may be required to make because of any of those
liabilities.
At our request, the underwriters have reserved for sale at the initial public offering price up to 5% of the common units offered hereby for officers, directors, employees and certain other persons associated with us. The number of common units available for sale to the general public will be reduced
to the extent such persons purchase such reserved common units. Any reserved common units not so purchased will be offered by the underwriters to the general public on the same basis as the other common units offered hereby. Any participants in this program will be prohibited from selling, pledging
or assigning any common units sold to them pursuant to this program for a period of 180 days after the date of this prospectus.
Notice to Prospective Investors in the European Economic Area
In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation
date), an offer of common units described in this prospectus may not be made to the public in that relevant member state other than:
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
to fewer than 100 or, if the relevant member state has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the
prior consent of the relevant Dealer or Dealers nominated by us for any such offer; or
in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of common units shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive.
For purposes of this provision, the expression an offer of securities to the public in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the common units to be offered so as to enable an investor to decide to
purchase or subscribe for the common units, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive, to the extent implemented in the relevant member state) and includes any relevant implementing measure in the relevant member state. The expression 2010 PD Amending Directive means Directive 2010/73/EU.
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The sellers of the common units have not authorized and do not authorize the making of any offer of common units through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the common units as contemplated in this
prospectus. Accordingly, no purchaser of the common units, other than the underwriters, is authorized to make any further offer of the common units on behalf of the sellers or the underwriters.
Notice to Prospective Investors in the United Kingdom
This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, or the Order, or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a relevant person). This prospectus and its contents are
confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.
Notice to Prospective Investors in France
Neither this prospectus nor any other offering material relating to the common units described in this prospectus has been submitted to the clearance procedures of the
Autorité des Marchés Financiers
or of the competent authority of another member state of the European Economic Area and
notified to the
Autorité des Marchés Financiers.
The common units have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the common units has been or will be:
released, issued, distributed or caused to be released, issued or distributed to the public in France; or
used in connection with any offer for subscription or sale of the common units to the public in France.
Such offers, sales and distributions will be made in France only:
to qualified investors (
investisseurs qualifiés
) and/or to a restricted circle of investors (
cercle restreint dinvestisseurs
), in each case investing for their own account, all as defined in, and in accordance with articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French
Code
monétaire et financier
;
to investment services providers authorized to engage in portfolio management on behalf of third parties; or
in a transaction that, in accordance with article L.411-2-II-1
°
-or-2
°
-or 3
°
of the French
Code monétaire et financier
and article 211-2 of the General Regulations (
Règlement Général
) of the
Autorité des Marchés Financiers
, does not constitute a public offer (
appel public à lépargne
).
The common units may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French
Code monétaire et financier
.
Notice to Prospective Investors in Hong Kong
The common units may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to professional investors within the
meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a prospectus within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no
advertisement, invitation or document relating to the common units may be issued or may be in
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the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to
common units which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Notice to Prospective Investors in Japan
The common units offered in this prospectus have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. The common units have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident
of Japan (including any corporation or other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.
Notice to Prospective Investors in Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common units may not be circulated or
distributed, nor may the common units be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore,
or the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in
each case subject to compliance with conditions set forth in the SFA.
Where the common units are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,
common units, debentures and units of common units and debentures of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the common units pursuant to an offer made
under Section 275 of the SFA except:
to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such common units, debentures and units of common units and debentures of that corporation
or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with
the conditions specified in Section 275 of the SFA;
where no consideration is or will be given for the transfer; or
where the transfer is by operation of law.
Notice to Prospective Investors in Korea
The common units may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of
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Korea except pursuant to the applicable laws and regulations of Korea, including the Financial Investment Services and Capital Markets Act and the Foreign Exchange Transaction Law and the decrees and regulations thereunder. The common units have not been registered with the Financial Services
Commission of Korea for public offering in Korea. Furthermore, the common units may not be re-sold to Korean residents unless the purchaser of the common units complies with all applicable regulatory requirements (including but not limited to government approval requirements under the Foreign
Exchange Transaction Law and its subordinate decrees and regulations) in connection with their purchase.
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SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES
We are organized under the laws of the Marshall Islands as a limited partnership. Our general partner is organized under the laws of the Marshall Islands as a limited liability company. The Marshall Islands has a less developed body of securities laws as compared to the United States and provides
protections for investors to a significantly lesser extent.
Most of our directors and officers and those of our subsidiaries are residents of countries other than the United States. Substantially all of our and our subsidiaries assets and a substantial portion of the assets of our directors and officers are located outside the United States. As a result, it may be
difficult or impossible for United States investors to effect service of process within the United States upon us, our directors or officers, our general partner or our subsidiaries or to realize against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state in the United States. However, we have expressly submitted to the jurisdiction of the U.S. federal and New York state courts sitting in the City of New York for the purpose of any suit, action or proceeding arising under the securities laws
of the United States or any state in the United States, and we have appointed The Trust Company of the Marshall Islands, Inc., Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, our registered agent, to accept service of process on our behalf in any such
action.
Cozen OConnor, our counsel as to Marshall Islands law, has advised us that there is uncertainty as to whether the courts of the Marshall Islands would (1) recognize or enforce against us, our general partner or our directors or officers judgments of courts of the United States based on civil liability
provisions of applicable U.S. federal and state securities laws or (2) impose liabilities against us, our general partner or our directors and officers in original actions brought in the Marshall Islands, based on these laws.
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The validity of the common units and certain other legal matters, including tax matters, with respect to the laws of the Republic of the Marshall Islands will be passed upon for us by our counsel as to Marshall Islands law, Cozen OConnor, New York, New York. Certain other legal matters,
including tax matters with respect to U.S. law, will be passed upon for us by Cravath, Swaine & Moore LLP, New York, New York. Certain matters with respect to this offering will be passed upon for the underwriters by Latham & Watkins LLP.
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The combined carve-out financial statements of GasLog Partners LP Predecessor appearing in this prospectus have been audited by Deloitte Hadjipavlou, Sofianos & Cambanis S.A., an independent registered public accounting firm, as stated in their report appearing elsewhere herein. Such combined
carve-out financial statements are included in reliance upon the report of such firm, given upon their authority as experts in auditing and accounting.
The statement of financial position of GasLog Partners LP as of January 23, 2014 appearing in this prospectus has been audited by Deloitte Hadjipavlou, Sofianos & Cambanis S.A., an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein and is
included in reliance upon such report given on the authority of such firm as experts in auditing and accounting.
The offices of Deloitte Hadjipavlou, Sofianos & Cambanis S.A are located at Fragoklissias 3a & Granikou Street, Maroussi, Athens 151 25, Greece.
The discussion contained under the section of this prospectus entitled The LNG Shipping Industry has been reviewed by Clarkson Research, which has confirmed to us that it accurately describes the international LNG shipping market, as indicated in the consent of Clarkson Research included as
an exhibit to the registration statement on Form F-1 under the Securities Act of which this prospectus is a part.
Change in Certifying Accountant
Our management expects to recommend to our board of directors in May 2014 that it approve the engagement of Deloitte LLP to audit the financial statements of GasLog Partners LP for the fiscal year ending December 31, 2014.
Deloitte Hadjipavlou, Sofianos & Cambanis S.A.s reports on the combined carve-out financial statements of GasLog Partners LP Predecessor for the fiscal years ended December 31, 2013 and 2012 and the statement of financial position of GasLog Partners LP as of January 23, 2014, did not contain
an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty or audit scope.
We and GasLog Ltd. and Deloitte Hadjipavlou, Sofianos & Cambanis S.A. did not, during the two most recent fiscal years and the subsequent period through April 25, 2014 (or, to the extent shorter, the period of the engagement of Deloitte Hadjipavlou, Sofianos & Cambanis S.A. with respect to
GasLog Partners LP Predecessor and the statement of financial position of GasLog Partners LP), have any disagreements on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Deloitte Hadjipavlou,
Sofianos & Cambanis S.A., would have caused Deloitte Hadjipavlou, Sofianos & Cambanis S.A. to make reference to the matter in its reports on the combined carve-out financial statements of GasLog Partners LP Predecessor and the statement of financial position of GasLog Partners LP as of January 23,
2014 included elsewhere in this prospectus; and there were no reportable events as the term is described in Item 304(a)(1)(v) of Regulation S-K.
We have requested that Deloitte Hadjipavlou, Sofianos & Cambanis S.A. furnish a letter addressed to the Securities and Exchange Commission stating whether or not Deloitte Hadjipavlou, Sofianos & Cambanis S.A. agrees with the statements in this Registration Statement. A copy of such letter dated
April 25, 2014 is filed as Exhibit 16.1 to this Registration Statement.
At no time during the two most recent fiscal years or the subsequent period through April 25, 2014 (or, to the extent shorter, the period of the engagement of Deloitte Hadjipavlou, Sofianos & Cambanis S.A. with respect to GasLog Partners LP Predecessor and the statement of financial position of
GasLog Partners LP) did we or GasLog Ltd. consult with Deloitte LLP regarding the application of accounting principles to a specific completed or proposed transaction, or the type of audit opinion that might be rendered on the financial statements of GasLog Ltd. or the combined carve-out financial
statements of GasLog Partners LP Predecessor.
225
EXPENSES RELATED TO THIS OFFERING
The following table sets forth the main costs and expenses, other than the underwriting discounts and commissions and structuring fees, in connection with this offering, which we will be required to pay.
U.S. Securities and Exchange Commission registration fee
$
26,129
Financial Industry Regulatory Authority filing fee
30,929
The New York Stock Exchange listing fee
25,000
Legal fees and expenses
1,500,000
Accounting fees and expenses
500,000
Consultancy fees
500,000
Printing and engraving costs
310,000
Transfer agent fees and other
5,000
Miscellaneous
102,942
Total
$
3,000,000
All amounts are estimated, except the SEC registration fee, the Financial Industry Regulatory Authority filing fee and the New York Stock Exchange listing fee.
226
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form F-1 regarding the common units. For purposes of this section, the term registration statement means the original registration statement and any and all amendments, including the schedules and exhibits to the original registration
statement and any amendments. This prospectus does not contain all of the information found in the registration statement. For further information regarding us and the common units offered in this prospectus, you may wish to review the full registration statement, including the exhibits attached thereto.
The registration statement, including its exhibits and schedules, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of this material can also be obtained upon written request from the Public Reference Section of the
SEC at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or from the SECs website on the Internet at http://www.sec.gov free of charge. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our registration statement can also be inspected and
copied at the offices of the New York Stock Exchange.
Upon completion of this offering, we will be subject to the information requirements of the Exchange Act and, in accordance therewith, we will be required to file with the SEC annual reports on Form 20-F within four months of our fiscal year-end, and provide to the SEC other material information
on Form 6-K. These reports and other information may be inspected and copied at the public reference facilities maintained by the SEC or obtained from the SECs website as provided above. We expect to make our periodic reports and other information filed with or furnished to the SEC available,
free of charge, through our website, which will be operational after this offering, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC.
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, certain rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal unitholders are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, including the filing
of quarterly reports or current reports on Form 8-K. However, we intend to furnish or make available to our unitholders annual reports containing our audited consolidated financial statements prepared in accordance with IFRS and make available to our unitholders quarterly reports containing our
unaudited interim financial information for the first three fiscal quarters of each fiscal year. Our annual report will contain a Managements Discussion and Analysis of Financial Condition and Results of Operations section for the relevant periods.
227
Clarkson Research has provided us with statistical and graphical information contained in the sections of this prospectus entitled The LNG Shipping Industry relating to the international LNG shipping market. We believe that the information and data supplied by Clarkson Research is accurate in
all material respects and we have relied upon such information for purposes of this prospectus. Clarkson Research has advised us that this information is drawn from its databases and other sources and that:
certain information in Clarkson Researchs database is derived from estimates or subjective judgments;
the information in the databases of other maritime data collection agencies may differ from the information in Clarkson Researchs database; and
while Clarkson Research 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.
228
GASLOG PARTNERS LP PREDECESSOR
INDEX TO FINANCIAL STATEMENTS OF GASLOG PARTNERS LP
Page
F-31
F-32
F-33
F-1
INDEX TO COMBINED CARVE-OUT FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Partners of GasLog Partners LP
We have audited the accompanying combined carve-out statements of financial position of GasLog Partners LP Predecessor (the Predecessor) (see Note 1 to the combined carve-out financial statements) as of December 31, 2012 and 2013, and the related combined carve-out statements of profit or
loss, comprehensive income or loss, changes in equity, and cash flows for the years then ended. These combined carve-out financial statements are the responsibility of the GasLog Partners LPs management. Our responsibility is to express an opinion on the combined carve-out financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Predecessor is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Predecessors internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such combined carve-out financial statements present fairly, in all material respects, the combined financial position of GasLog Partners LP Predecessor as of December 31, 2012 and 2013, and the combined results of their operations and their combined cash flows for the years then
ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
/s/ Deloitte Hadjipavlou Sofianos & Cambanis S.A.
F-2
Majuro, Republic of the Marshall Islands
Athens, Greece
March 13, 2014
GasLog Partners LP Predecessor
Note
2012
2013
Assets
Non-current assets
Deferred financing costs
9,291,419
Derivative financial instruments
17
799,926
Other non-current assets
6
890,000
1,242,720
Vessels
3
562,530,808
Vessels under construction
3
118,481,930
Total non-current assets
128,663,349
564,573,454
Current assets
Trade and other receivables
5
33,869
153,967
Inventories
730,209
Due from related parties
14
18,151
18,151
Prepayments and other current assets
46,838
390,526
Short-term investments
1,500,000
Cash and cash equivalents
4
2,299
14,403,785
Total current assets
101,157
17,196,638
Total assets
128,764,506
581,770,092
Equity and liabilities
Equity
Owners capital
7
36,000
36,000
Contributed surplus
7
119,409,935
148,099,880
Reserves
(9,593,522
)
(5,161,682
)
(Accumulated deficit)/retained earnings
(3,223,490
)
13,194,752
Total equity
106,628,923
156,168,950
Current liabilities
Trade accounts payable
593,564
704,793
Amounts due to related parties
14
8,792,629
24,674,117
Derivative financial instruments
17
3,132,045
4,233,398
Other payables and accruals
10
1,321,514
9,371,625
Loans current portion
9
22,074,786
Total current liabilities
13,839,752
61,058,719
Non-current liabilities
Derivative financial instruments
17
8,295,831
625,425
Loans non-current portion
9
363,916,998
Total non-current liabilities
8,295,831
364,542,423
Total equity and liabilities
128,764,506
581,770,092
The accompanying notes are an integral part of these combined carve-out financial statements.
F-3
Combined carve-out statements of financial position
As of December 31, 2012 and 2013
(All amounts expressed in U.S. Dollars)
GasLog Partners LP Predecessor
Note
2012
2013
Revenues
64,142,588
Vessel operating costs
12
(13,096,716
)
Depreciation
3
(12,237,735
)
General and administrative expenses
11
(30,132
)
(1,524,625
)
(Loss)/profit from operations
(30,132
)
37,283,512
Financial costs
13
(606
)
(12,133,143
)
Financial income
13
110,109
31,686
(Loss)/gain on interest rate swaps
17
(940,432
)
1,036,187
Total other expenses, net
(830,929
)
(11,065,270
)
(Loss)/profit for the year
(861,061
)
26,218,242
(Loss)/earnings per share-basic and diluted
19
(23.92
)
728.28
The accompanying notes are an integral part of these combined carve-out financial statements.
F-4
Combined carve-out statements of profit or loss
For the years ended December 31, 2012 and 2013
(All amounts expressed in U.S. Dollars)
GasLog Partners LP Predecessor
Note
2012
2013
(Loss)/profit for the year
(861,061
)
26,218,242
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges
17
(8,687,198
)
3,776,876
Net change in fair value of cash flow hedges reclassified to profit or loss
17
654,964
Other comprehensive (loss)/income for the year
(8,687,198
)
4,431,840
Total comprehensive (loss)/income for the year
(9,548,259
)
30,650,082
The accompanying notes are an integral part of these combined carve-out financial statements.
F-5
Combined carve-out statements of comprehensive income or loss
For the years ended December 31, 2012 and 2013
(All amounts expressed in U.S. Dollars)
GasLog Partners LP Predecessor
Share
Contributed
Cash flow
(Accumulated
Total
Balance at January 1, 2012
36,000
59,696,500
(906,324
)
(2,362,429
)
56,463,747
Capital contributions
59,713,435
59,713,435
Loss for the year
(861,061
)
(861,061
)
Other comprehensive loss for the year
(8,687,198
)
(8,687,198
)
Total comprehensive loss for the year
(8,687,198
)
(861,061
)
(9,548,259
)
Balance at December 31, 2012
36,000
119,409,935
(9,593,522
)
(3,223,490
)
106,628,923
Capital contributions
28,062,945
28,062,945
Capital contributions contributed services
627,000
627,000
Dividend declared ($272.22 per share)
(9,800,000
)
(9,800,000
)
Profit for the year
26,218,242
26,218,242
Other comprehensive income for the year
4,431,840
4,431,840
Total comprehensive income for the year
4,431,840
26,218,242
30,650,082
Balance at December 31, 2013
36,000
148,099,880
(5,161,682
)
13,194,752
156,168,950
The accompanying notes are an integral part of these combined carve-out financial statements.
F-6
Combined carve-out statements of changes in equity
For the years ended December 31, 2012 and 2013
(All amounts expressed in U.S. Dollars)
capital
surplus
hedging
reserve
deficit)/retained
earnings
GasLog Partners LP Predecessor
2012
2013
Cash flows from operating activities:
(Loss)/profit for the year
(861,061
)
26,218,242
Adjustments for:
Depreciation
12,237,735
Unrealized loss/(gain) on interest rate swaps
940,432
(2,937,139
)
Financial income
(110,109
)
(31,686
)
Financial costs
12,133,143
Non-cash contributed services
627,000
(30,738
)
48,247,295
Movements in operating assets and liabilities
Increase in trade and other receivables
(33,869
)
(116,782
)
Increase in inventories
(730,209
)
Change in related parties, net
472,268
(13,645,871
)
Increase in prepayments and other current assets
(35,863
)
(343,688
)
Increase in other non-current assets
(890,000
)
(352,720
)
Decrease in other non-current liabilities
(1,520,000
)
Increase in trade accounts payable and other current liabilities
1,928,093
1,062,209
Increase in other payables and accruals
7,261,457
Cash (used in)/provided by operations
(110,109
)
41,381,691
Interest paid
(9,222,665
)
Net cash (used in)/from operating activities
(110,109
)
32,159,026
Cash flows from investing activities:
Payments for vessels under construction
(452,791,594
)
Financial income received
110,109
28,370
Purchase of short-term investments
(11,625,251
)
(1,500,000
)
Maturity of short-term investments
11,625,251
Net cash from /(used in) investing activities
110,109
(454,263,224
)
Cash flows from financing activities:
Bank loan drawdown
411,000,000
Bank loan repayments
(16,104,809
)
Payment of loan issuance costs
(181,101
)
Increase in due to shareholders
13,728,649
Capital contributions received
28,062,945
Net cash from financing activities
436,505,684
Increase in cash and cash equivalents
14,401,486
Cash and cash equivalents, beginning of the year
2,299
2,299
Cash and cash equivalents, end of the year
2,299
14,403,785
Non Cash Investing and Financing Activities
Payment for vessel under construction through capital contribution
56,307,435
Payment for vessel under construction through related parties
4,450,158
4,475,384
Financing costs included in liabilities at the end of the year
423,920
29,385
Financing costs paid through capital contributions
3,406,000
Financing costs paid through related parties
3,668,875
1,523,326
Capital expenditures included in liabilities at the end of the year
1,073,390
93,025
Dividend declared but not paid
9,800,000
Non-cash contributed services
627,000
The accompanying notes are an integral part of these combined carve-out financial statements.
F-7
Combined carve-out statements of cash flow
For the years ended December 31, 2012 and 2013
(All amounts expressed in U.S. Dollars)
GasLog Partners LP Predecessor
1. Organization and Operations
GasLog Partners LP (the Partnership) was formed as a limited partnership under the laws of Marshall Islands on January 23, 2014, being a wholly-owned subsidiary of GasLog Ltd. (GasLog) for the purpose of initially acquiring the interests in three liquefied natural gas (LNG) carriers that will
be contributed by GasLog in connection with the initial public offering of its common units (the IPO). Concurrently with the IPO, the Partnership will acquire 100% ownership interest in GAS-three Ltd., GAS-four Ltd. and GAS-five Ltd. (the Subsidiaries). Accordingly, the accompanying predecessor
combined carve-out financial statements of the Partnership have been presented as if the Subsidiaries were consolidated subsidiaries of the Partnership for all years presented and using the historical carrying costs of the assets and the liabilities of the ship-owning companies listed below from their dates of
incorporation. The Subsidiaries are referred to as the GasLog Partners LP Predecessor (the Predecessor) and are presented in the combined carve-out financial statements.
GasLog was incorporated in Bermuda on July 16, 2003. GasLog and its subsidiaries (GasLog Group) are controlled by Blenheim Holdings Ltd. (Blenheim Holdings), an entity registered in Bermuda. Blenheim Holdings is controlled by Ceres Shipping Ltd. (Ceres Shipping), an entity also
registered in Bermuda. The ultimate controlling party of GasLog Group at December 31, 2013 was Mr. Peter G. Livanos. GasLogs common shares began trading on the New York Stock Exchange (NYSE) on March 30, 2012 under the ticker symbol GLOG.
Following the completion of the IPO, GasLog is expected to hold a majority of the equity interests in the Partnership and have the ability to appoint a majority of the Partnerships directors. Also the Partnerships general partner, GasLog Partners GP LLC (the General Partner), is a wholly-owned
subsidiary of GasLog. Accordingly, GasLog will have the ability to control the Partnerships affairs and policies.
The accompanying combined carve-out financial statements include the combined carve-out financial statements of the Predecessor. As of December 31, 2012 and 2013, the Subsidiaries were 100% held by GasLog through its wholly-owned subsidiary GasLog Carriers Ltd. (the Parent):
Name
Place of
Date of
Principal activities
LNG Vessel
Cargo Capacity
Delivery date
GAS-three Ltd.
Bermuda
April 27, 2010
Vessel-owning
GasLog Shanghai
155,000
January 28, 2013
GAS-four Ltd.
Bermuda
April 27, 2010
Vessel-owning
GasLog Santiago
155,000
March 25, 2013
GAS-five Ltd.
Bermuda
February 14, 2011
Vessel-owning
GasLog Sydney
155,000
May 30, 2013
2. Significant Accounting Policies
Statement of compliance
The combined carve-out financial statements of the Predecessor have been prepared in accordance with International Financial Reporting Standards (the IFRS) as issued by the International Accounting Standards Board (the IASB).
Basis of preparation
The combined carve-out financial statements have been prepared on the historical cost basis, except for derivative financial instruments recorded at fair value at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
The principal accounting policies are set out below.
F-8
Notes to the combined carve-out financial statements
For the years ended December 31, 2012 and 2013
(All amounts expressed in U.S. Dollars)
incorporation
incorporation
(cbm)
The combined carve-out financial statements are expressed in U.S. dollars (USD), which is the functional currency of the Predecessor.
On March 11, 2014, the Partnerships board of directors authorized the combined carve-out financial statements for issuance and filing.
Basis of combination
The accompanying Predecessor combined carve-out financial statements include the accounts of the legal entities comprising the Predecessor as discussed in Note 1. All significant intra-group transactions and balances are eliminated on combination.
Accounting for revenues and related operating expenses
Revenues comprise revenues from time charters for the charter hire of the Predecessors vessels earned during the period in accordance with existing contracts.
A time charter represents a contract entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. Time charter revenue is recognized as earned on a straight-line basis over the term of the relevant time charter starting from the vessels delivery to the
charterer, except for the off-hire period, when a charter agreement exists, the vessel is made available and services are provided to the charterer and collection of the related revenue is reasonably assured. Unearned revenue includes: (i) revenue received prior to the balance sheet date relating to services
to be rendered after the balance sheet date and (ii) accrued revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates.
Time charter hires received in advance are classified as liabilities until such time as the criteria for recognizing the revenue as earned are met.
Under a time charter arrangement the vessel operating expenses and brokers commissions are paid by the vessel owner, whereas voyage expenses such as bunkers, port expenses, agents fees, and extra war risk insurance are paid by the charterer.
Vessel operating costs are expensed as incurred, with the exception of commissions, which are recognized on a pro-rata basis over the duration of the period of the time charter.
Financial income and costs
Interest income, interest expense and other borrowing costs are recognized on an accrual basis.
Deferred financing costs for undrawn facilities
Commitment, arrangement, structuring, legal and agency fees incurred for obtaining new loans or refinancing existing facilities are recorded as deferred loan issuance costs and classified contra to debt while the fees incurred for the undrawn facilities are classified under non-current assets in the
statement of financial position and are classified contra to debt on the drawdown dates.
Deferred financing costs are deferred and amortized to financial costs over the term of the relevant loan, using the effective interest method.
Foreign currencies
Transactions in currencies other than USD are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in other currencies are retranslated into USD at the rates prevailing at that date. All
resulting exchange differences are recognized in the combined carve-out statement of profit or loss in the period in which they arise.
F-9
Vessels under construction
Vessels under construction are presented at cost less identified impairment losses, if any. Cost includes shipyard installment payments and other vessel costs incurred during the construction period that are directly attributable to the acquisition or construction of the vessels, net of any commissions
received from the shipyard.
Vessels
Vessels are stated at cost less accumulated depreciation and any accumulated impairment loss. The initial cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition.
The cost of a LNG vessel is split into two components, a vessel component and a drydocking component. Depreciation for the vessel component is calculated on a straight-line basis, after taking into account the estimated residual values, over the estimated useful life of this major component of
the vessels. Residual value is estimated as 10% of the initial vessel cost and represents the Predecessors estimate of the current selling price assuming the vessel is already of age and condition expected at the end of its useful life.
The LNG vessels are required to undergo a drydocking overhaul every five years to restore their service potential and to meet their classification requirements. The drydocking component is estimated at the time of a new vessels delivery from the shipyard and is measured based on the estimated
cost of the first drydocking based on the Predecessors historical experience with similar types of vessels. For subsequent drydockings actual costs are capitalized when incurred. The drydocking component is depreciated over the period of five years until the next drydocking.
Costs that will be capitalized as part of the future drydockings will include a variety of costs incurred directly attributable to the drydock and costs incurred to meet classification and regulatory requirements, as well as expenses related to the dock preparation and port expenses at the drydock
shipyard, general shipyard expenses, expenses related to hull, external surfaces and decks, expenses related to machinery and engines of the vessel, as well as expenses related to the testing and correction of findings related to safety equipment on board. Drydocking costs do not include vessel operating
expenses such as replacement parts, crew expenses, provisions, lubricants consumption, insurance, management fees or management costs during the drydocking period. Expenses related to regular maintenance and repairs of our vessels are expensed as incurred, even if such maintenance and repair occurs
during the same time period as our drydocking.
The expected useful lives are as follows:
Vessel
LNG vessel component
35 years
Drydocking component
5 years
The useful lives and the depreciation method are reviewed annually to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from our vessels. The residual value is also reviewed at each financial period-end. If expectations differ from
previous estimates, the changes are accounted for prospectively in earnings in the period of the change and future periods.
Ordinary maintenance and repairs that do not extend the useful life of the asset are expensed as incurred. Major renovation costs and modifications are capitalized and depreciated over the estimated remaining useful life.
When assets are sold, they are derecognized and any gain or loss resulting from their disposals is included in earnings.
Impairment of vessels
All vessels are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of a vessel exceeds its recoverable amount, an impairment loss is recognized in the combined carve-out
F-10
statement of profit or loss. The recoverable amount is the higher of a vessels net selling price and value in use. The net selling price is the amount obtainable from the sale of a vessel in an arms length transaction less the costs of disposal, while value in use is the present value of estimated future
cash flows expected to arise from the continuing use of a vessel and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual vessels. Each vessel is considered to be a single cash-generating unit. The net selling price of the vessels is estimated from market-based
evidence by appraisal that is normally undertaken by professionally qualified brokers.
Provisions
Provisions are recognized when the Predecessor has a present obligation (legal or constructive) as a result of a past event, it is probable that the Predecessor will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a
provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably.
Inventories
Inventories represent lubricants and provisions on board the vessel and are stated at the lower of cost calculated on a first-in, first-out basis, and net realizable value.
Financial instruments
Financial assets and liabilities are recognized when the Predecessor has become a party to the contractual provisions of the instrument. All financial instruments are initially recognized at the fair value of the consideration given.
Cash and cash equivalents
Cash represents cash on hand and deposits with banks which are repayable on demand. Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash with original maturities of three months or less at the time of purchase that are subject to
an insignificant risk of change in value.
Short-term investments
Short-term investments represent short-term, highly liquid time deposits placed with financial institutions which are readily convertible into known amounts of cash with original maturities of more than three months but less than 12 months at the time of purchase that are subject to an insignificant
risk of change in value.
Derivative financial instruments
The Predecessor has both interest rate swap contracts that have been designated as cash flow hedges and interest rate swap contracts that have been classified as held for trading.
Derivative financial instruments, such as interest rate swaps, are used to economically hedge its exposure to interest rate risks. Derivative financial instruments are initially recognized at fair value and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is
recognized in profit or loss immediately, unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. Derivatives are presented as assets when their valuation is favorable to the
Predecessor and as liabilities when unfavorable to the Predecessor.
Criteria for classifying a derivative instrument as a hedge include: (1) the hedge transaction is expected to be highly effective in achieving offsetting changes in fair value or cash flows
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attributable to the hedged risk; (2) the effectiveness of the hedge can be reliably measured; (3) there is adequate documentation of the hedging relationships at the inception of the hedge; and (4) for cash flow hedges, the forecasted transaction that is the subject of the hedges must be highly probable.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the combined carve-out statement of profit or loss.
Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to the combined carve-out statement of profit or loss in the periods when the hedged item affects the combined carve-out statement of profit or loss. Hedge accounting is discontinued when the
Predecessor revokes the hedging relationship, when the hedging instrument expires or is sold, terminated or exercised, or when it no longer qualifies for hedge accounting.
Any gain or loss accumulated in equity at that time remains in equity and is recognized in the combined carve-out statement of profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized
immediately in the combined carve-out statement of profit or loss.
Segment information
The Subsidiaries each own one LNG carrier which will be operated under long term time charters which have similar operating and economic characteristics and as such management have determined that the Predecessor operates under a single reportable segment. Furthermore, when the Predecessor
charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of the combined carve-out financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses recognized in the combined carve-out financial statements. The
Predecessors management evaluates whether estimates should be made on an ongoing basis, utilizing historical experience, consultation with experts and other methods management considers reasonable in the particular circumstances. However, uncertainty about these assumptions and estimates could
result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future.
Judgments:
In the process of applying the Predecessors accounting policies, management has made the following judgments, apart from those involving estimations, that had the most significant effect on the amounts recognized in the combined carve-out financial statements.
Vessel construction cost capitalization:
The Predecessor recognized installments paid to the shipyard in accordance with the contracts and any directly attributable costs of bringing the vessels to their working condition incurred during the construction periods as vessel costs (Note 3). Directly
attributable costs incurred during the vessel construction periods consisted of commissions, on-site supervision costs, costs for sea trials, certain spare parts and equipment, costs directly incurred for negotiating the construction contracts, lubricants and other vessel delivery expenses. Any vendor discounts
were deducted from the cost of the vessels.
The key sources of estimation uncertainty are as follows:
Vessel lives and residual value:
Vessels are stated at cost, less accumulated depreciation. The estimates and assumptions that have the most significant effect on the vessel carrying amount relate to the estimation of the useful life of an LNG vessel of 35 years and the residual value which is estimated
as 10% of the initial vessel cost.
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An increase in the estimated useful life of a vessel or in its residual value would have the effect of decreasing the annual depreciation charge, and an increase in the estimated useful life of a vessel would also extend annual depreciation charge into later periods. A decrease in the useful life of a
vessel or its residual value would have the effect of increasing the annual depreciation charge.
When regulations place significant limitations over the ability of a vessel to trade on a worldwide basis, the vessels useful life is adjusted to end at the date such regulations become effective. The estimated residual value of a vessel may not represent the fair market value at any one time partly
because market prices of scrap rates tend to fluctuate.
Vessel cost:
The Predecessor recognizes drydocking costs as a separate component of the vessels carrying amounts and amortizes the drydocking cost on a straight-line basis over the estimated period until the next drydocking. If the vessel is disposed of before the next drydocking, the remaining
balance of the drydock component is written-off and forms part of the gain or loss recognized upon disposal of vessels in the period of disposal. The Predecessor expects that its vessels will be required to be drydocked in approximately 60 months after their delivery from the shipyard, and thereafter every
30 or 60 months will be required to undergo special or intermediate surveys and drydocked for major repairs and maintenance that cannot be performed while the vessels are operating. The Predecessor amortizes its estimated drydocking expenses for the first special survey over five years, but this
estimate might be revised in the future. Management estimates the drydocking component on acquisition of a vessel, as costs to be incurred during the first drydocking at the drydock yard for a special survey and parts and supplies used in making such repairs that meet the recognition criteria, based on
historical experience with similar types of vessels.
Impairment of Vessels:
The Predecessor evaluates the carrying amounts of its vessels to determine whether there is any indication that those vessels have suffered an impairment loss. If any such indication exists, the recoverable amount of vessels is estimated in order to determine the extent of the
impairment loss, if any.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not been adjusted. The projection of cash flows related to vessels is complex and requires management to make various estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been historically
volatile. In assessing the fair value less cost to sell of the vessel, the Predecessor obtains vessel valuations from independent and internationally recognized ship brokers on an annual basis or when there is an indication that an asset or assets may be impaired. If an indication of impairment is identified,
the need for recognizing an impairment loss is assessed by comparing the carrying amount of the vessels to the higher of the fair value less cost to sell and the value in use. As of December 31, 2013, there were no indications that the Predecessors vessels are impaired and in addition the carrying
amounts of the Predecessors vessels were lower than the independent broker valuations (after adjusting for estimated selling costs) for all of the owned vessels; therefore there were no indicators that the carrying amounts of the vessels may not be recoverable.
Fair value of derivative financial instruments:
Our risk management policies permit the use of derivative financial instruments to manage interest rate risk. Changes in fair value of derivative financial instruments that are not designated as cash flow hedges for accounting purposes are recognized in
earnings.
A substantial majority of the fair value of our derivative instruments and the change in fair value of our derivative instruments from period to period result from our use of interest rate swap agreements. The fair value of our interest rate swap agreements is the estimated amount that we would
receive or pay to terminate the agreements at the reporting date, taking into account current interest rates and the current credit worthiness of both us and the swap counterparties. The estimated amount is the present value of estimated future cash flows, being equal to the difference between the
benchmark interest rate and the fixed rate in the interest rate swap agreement,
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multiplied by the notional principal amount of the interest rate swap agreement at each interest reset date.
The fair value of our interest swap agreements at the end of each period are most significantly affected by the interest rate implied by market-observable data such as LIBOR yield curve. While the fair value of our interest swap agreements are typically more sensitive to changes in short-term rates,
significant changes in the long-term benchmark interest also materially impact our interest swap agreements.
The fair value of our interest swap agreements are also affected by changes in our specific credit risk included in the discount factor. Following the implementation of IFRS 13 Fair Value Measurement in January 1, 2013, the Predecessor adjusts its derivative liabilities fair value to reflect its own
credit risk and the counterparties risk. The estimate of the Predecessors credit risk is based on the credit rating of other companies in the LNG industry where publicly available, the rating of the global transportation industry where the shipping industry is included and the feedback that the Predecessor
receives from its lenders as part of the margin setting for the new loan agreements. The counterparties credit risk is estimated either by using the credit default swap rates obtained from public information or, if not available, by using the credit rating of the counterparties.
The LIBOR yield curve and our specific credit risk are expected to vary over the life of the interest rate swap agreements. The larger the notional amount of the interest rate swap agreements outstanding and the longer the remaining duration of the interest rate swap agreements, the larger the
impact of any variability in these factors will be on the fair value of our interest rate swaps. We economically hedge the interest rate exposure on a significant amount of our long-term debt and for long durations. As such, we have historically experienced, and we expect to continue to experience,
material variations in the period-to-period fair value of our derivative instruments.
Although we measure the fair value of our derivative instruments utilizing the inputs and assumptions described above, if we were to terminate the agreements at the reporting date, the amount we would pay or receive to terminate the derivative instruments may differ from our estimate of fair
value. If the estimated fair value differs from the actual termination amount, an adjustment to the carrying amount of the applicable derivative asset or liability would be recognized in earnings for the current period. Such adjustments could be material. See Note 17 for the effects on the change in fair
value of our derivative instruments on our combined statements of profit or loss.
Adoption of new and revised IFRS
(a) Standards and interpretations adopted in the current period
The following standards and amendments relevant to the Predecessor were effective in the current period:
In May 2011, the IASB issued IFRS 13
Fair Value Measurement
which establishes a single source of guidance for fair value measurements under IFRS standards. IFRS 13 defines fair value, provides guidance on its determination and introduces consistent requirements for disclosures on fair value
measurements. Following the adoption of this standard, the Predecessor adjusted its derivative liabilities fair values to reflect its own credit risk. The fair value as determined by the forecasted expected cash flows discounted with the risk-free interest rate was further adjusted to incorporate the
Predecessors own credit risk and the credit risk of the counterparties. The Predecessors own credit risk is estimated by taking into account the credit rating of other companies in the LNG industry where publicly available, the rating of the global transportation industry where the shipping industry
is included and the feedback that the Predecessor received from its lenders as part of the margin setting for the new loan agreements. For counterparties credit risk, either the credit default swap rates were obtained from public information or, if not available, the credit rating of the counterparties
was used. The new standard was effective for fiscal years beginning on or after January 1, 2013. As of December 31, 2013, due to the fact that the Predecessors rating was lower than the rating of its counterparties, the adoption of IFRS 13 has resulted in the
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Predecessors Derivative financial instruments liabilities being decreased by $124,319, Derivative financial instruments assets being increased by $41,300, Other comprehensive income being decreased by $124,319 and the Gain on interest rate swaps, net for the year ended December 31, 2013, being
increased by $41,300.
In May 2011 the IASB issued standards relating to consolidated financial statements, including IFRS 10
Consolidated Financial Statements
, IFRS 11
Joint Arrangements
, IFRS 12
Disclosure of Interests in Other Entities
, and amendments to IAS 27
Consolidated and Separate Financial Statements
, and
IAS 28
Investments in Associates and Joint Ventures
. These standards and amendments, among other things, update the definition of control under IFRS and consolidate the disclosure requirements for interests in other entities and were effective for fiscal years beginning on or after January 1, 2013,
with retrospective application required. These standards and amendments did not have any impact on the Predecessors financial results and position.
In June 2011, the IASB issued amendments to IAS 1
Presentation of Financial Statements
, which provides guidance on the presentation of items contained in other comprehensive income and their classification within other comprehensive income. The amendments to IAS 1 introduce new terminology
for the statement of comprehensive income and income statement. Under the amendments to IAS 1 that are effective for the annual periods beginning on or after July 1, 2012, the income statement was renamed as statement of profit or loss. In addition, the amendments to IAS 1 require additional
disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss and (b) items that will be reclassified subsequently to profit or loss when specific
conditions are met. The presentation of items of other comprehensive income has been modified accordingly. Other than the above mentioned presentation changes which were applied retrospectively, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other
comprehensive income and total comprehensive income.
In December 2011, the IASB issued amendments to IFRS 7
Financial Instruments: Disclosures
, which introduces disclosure requirements about rights of offset and related arrangements for financial instruments under an enforceable master netting agreement or similar arrangements, even if they are
not set off under IAS 32
Financial Instruments: Presentation
. The amendments of IFRS 7 that are effective for the fiscal year beginning on January 1, 2013 did not have any impact on the Predecessors combined carve-out financial statements.
In May 2012, the IASB issued the Annual Improvements to IFRSs2009-2011 Cycle, which contains amendments to its standards and the related Basis for Conclusions. It includes changes to IFRS 1
First Time Adoption of International Reporting Standards
, IAS 1
Presentation of Financial Statements
,
IAS 16
Property Plant and Equipment
, IAS 32
Financial Instruments: Presentation
and IAS 34
Interim Financial Reporting
. These amendments that are effective for the fiscal year beginning on January 1, 2013 did not have any impact on the Predecessors combined carve-out financial statements.
(b) Standards and amendments in issue not yet adopted
At the date of authorization of these combined carve-out financial statements, the following standards and amendments relevant to the Predecessor were in issue but not yet effective:
In October 2010, the IASB reissued IFRS 9
Financial Instruments
. IFRS 9 specifies how an entity should classify and measure financial assets and financial liabilities. The new standard requires all financial assets to be subsequently measured at amortized cost or fair value depending on the business
model of the legal entity in relation to the management of the financial assets and the contractual cash flows of the financial assets. The standard also requires a financial liability to be classified as either at fair value through profit and loss or at amortized cost.
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The release of IFRS 9 (2013) on November 19, 2013 contained consequential amendments which removed the mandatory effective date of IFRS 9 leaving the effective date open pending the finalization of the impairment and classification and measurement requirement and permitted an entity to
apply the requirements on the presentation of gains and losses on financial liabilities designated at fair value through profit or loss without applying the other requirements, meaning the portion of the change in fair value related to changes in the entitys own credit risk can be presented in other
comprehensive income rather than within profit or loss. In addition it introduced a new chapter to IFRS 9 on hedge accounting, putting in place a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial
and non-financial risk exposures. At its November 2013 meeting, the IASB tentatively decided that the mandatory effective date would be no earlier than annual periods beginning on or after January 1, 2017, with retrospective application required. At its February 2014 meeting, the IASB tentatively
selected an effective date of January 1, 2018 for mandatory application of IFRS 9. Management will evaluate the impact of this standard on the Predecessors combined carve-out financial statements once the mandatory effective date is set. Until such time as a detailed review has been completed it
is not practicable to provide a reasonable estimate of that effect.
In December 2011, the IASB issued amendments to IAS 32
Financial Instruments: Presentation
, which clarifies some of the requirements for offsetting financial assets and financial liabilities on the statement of financial position. The standard is effective for fiscal years beginning on or after January
1, 2014, with retrospective application required. Management anticipates that the implementation of this standard will not have a material impact on the combined carve-out financial statements as it relates to additional disclosures.
In May 2013, the IASB issued amendments to IAS 36
Impairment of Assets
on the impairment of non-financial assets. This amendment removes the requirement of disclosure of the recoverable amount of an asset or cash generated unit when there is no impairment loss and requires disclosure of
how the fair value less costs of disposal has been measured when an impairment loss has been recognized or reversed during the period. The amended standard is effective for annual periods beginning on or after January 1, 2014, with retrospective application required. Management anticipates that
the implementation of this standard will not have a material impact on the Predecessors combined carve-out financial statements.
In June 2013, the IASB published a limited scope amendment to IAS 39
Financial Instruments: Recognition and Measurement
and the forthcoming chapter on hedge accounting in IFRS 9
Financial Instruments
. This amendment provides some relief from the requirement to cease hedge accounting
when a derivative is required to be novated to a central counterparty or entity acting in a similar capacity, under certain circumstances. The amended standard is effective for annual periods beginning on or after January 1, 2014, with retrospective application required. Management anticipates that
the implementation of this standard will not have a material impact on the Predecessors combined carve-out financial statements.
In December 2013, the IASB issued the
Annual Improvements to IFRSs-2010-2012 Cycle
, which includes changes to IFRS 2
Share-based Payment
, IFRS 3
Business Combination
, IFRS 8
Operating Segments
, IFRS 13
Fair Value Measurement
, IAS 16
Property, Plant and Equipment
, IAS 38
Intangible
Assets
and IAS 24
Related Party Disclosures
. These amendments are effective for annual periods beginning on or after July 1, 2014. Management anticipates that these amendments will not have a material impact on the Predecessors combined carve-out financial statements.
In December 2013, the IASB issued the
Annual Improvements to IFRSs-2011-2013 Cycle
, which includes changes to IFRS 1
First-time Adoption of International Financial Standards
, IFRS 3
Business Combinations
, IFRS 13
Fair Value Measurement
and IAS 40
Investment Property.
These amendments
are effective for annual periods beginning on or after July 1,
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2014. Management anticipates that these amendments will not have any impact on the Predecessors combined carve-out financial statements.
The impact of all other IFRS standards and amendments issued but not yet adopted is not expected to be material.
3. Vessels and Vessels under Construction
The movements in vessels and vessels under construction are reported in the following table:
Vessels
Vessels under
Cost
At January 1, 2013
118,481,930
Additions
456,286,613
Transfer from vessels under construction to vessels
574,768,543
(574,768,543
)
At December 31, 2013
574,768,543
Accumulated depreciation
At January 1, 2013
Depreciation expense
12,237,735
At December 31, 2013
12,237,735
Net book value
At December 31, 2013
562,530,808
At December 31, 2012
118,481,930
Vessels with an aggregate carrying amount of $562,530,808 as of December 31, 2013 (December 31, 2012: $0) have been pledged as collateral under the terms of the Predecessors loan agreements.
Vessels under construction
In May 2010, GAS-three Ltd. and GAS-four Ltd. entered into shipbuilding contracts for the construction of two LNG carriers (155,000 cubic meters each) with Samsung Heavy Industries Co. Ltd. The first vessel,
GasLog Shanghai,
was delivered on January 28, 2013, and the second vessel,
GasLog
Santiago,
was delivered on March 25, 2013.
In March 2011, GAS-five Ltd. entered into shipbuilding contract with Samsung Heavy Industries Co. Ltd. for the construction of one LNG carrier (155,000 cubic meters). The vessel,
GasLog Sydney
, was delivered on May 30, 2013.
4. Cash and Cash Equivalents
At December 31,
2012
2013
Current accounts
2,299
10,075,785
Time deposits
4,328,000
Total
2,299
14,403,785
With respect to the next installment and interest due for the loan facility of GAS-three Ltd. (Note 9), an amount of $1,977,619 is kept in a retention account as of December 31, 2013.
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construction
5. Trade and Other Receivables
An analysis of the trade and other receivable is as follows:
At December 31,
2012
2013
VAT receivable
5,562
50,390
Due from charterer
66,699
Other receivables
28,307
36,878
Total
33,869
153,967
As of December 31, 2012 and December 31, 2013, no material receivable balances were past due or impaired, and therefore no allowance was necessary.
6. Other Non-current Assets
An analysis of other non-current assets is as follows:
At December 31,
2012
2013
Accrued revenue from straight-line revenue recognition
1,068,417
Guarantee claims
27,429
Other guarantees
146,874
Cash collaterals on swaps
890,000
Total
890,000
1,242,720
Other guarantees represent amounts due from a related party for advances made to our Manager in connection with security to a bank guarantee provided to the Greek government for the Subsidiaries.
7. Owners Capital and Contributed Surplus
Since their inception, the capital of each of the Subsidiaries consists of 12,000 authorized common shares with a par value of $1 per share, all of which have been issued and are outstanding, resulting in a total owners capital of $36,000. Each share is entitled to one vote.
Contributed surplus represents capital contributed by the owner of each Subsidiary in excess of par value to fund working capital and shipyard installments and capital contributed through contributed services. Capital contributions-contributed services for the year ended December 31, 2013 of $627,000
represent the fair value of commercial management services provided by GasLog to the Predecessor for the period from each vessels delivery date to the effective date of the commercial management agreements for which no fees were paid. The fair value of the contributed management services
represent the estimated value of $1,500 per vessel per day for the services received based on an annual fee of $540,000 for each vessel per year (refer to Note 14) as per the commercial management agreements contracted in July and August 2013 by the vessel owning companies, and has been recorded
within General and administrative expenses in the accompanying combined carve-out statements of profit or loss and as Capital contributions-contributed services in the accompanying combined carve-out statements of changes in equity.
8. Management of Capital
The Predecessors capital is comprised of ordinary share capital, contributed surplus, reserves and (accumulated deficit)/retained earnings.
The Predecessors objectives when managing capital are to provide an optimal return to shareholders over the short to medium term whilst ensuring the protection of its assets by minimizing risk. The Predecessor seeks to achieve its objectives by managing its financial risks. The Predecessor does not
have any externally imposed capital requirements.
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9. Bank Loans
At December 31,
2012
2013
Amounts due within one year
24,188,723
Less: unamortized deferred loan issuance costs
(2,113,937
)
Loans current portion
22,074,786
Amounts due after one year
370,706,468
Less: unamortized deferred loan issuance costs
(6,789,470
)
Loans non-current portion
363,916,998
Total
385,991,784
(a) DnB Bank ASA and Export-Import Bank of Korea
On March 14, 2012, GAS-three Ltd. and GAS-four Ltd. entered into a loan agreement of up to $272,500,000 with DnB Bank ASA and the Export-Import Bank of Korea, in order to partially finance the acquisition of two LNG vessels
.
On January 18, 2013 and March 19, 2013, GAS-three Ltd. and
GAS-four Ltd. drew down $272,500,000 in total from the loan facility for the financing of
the
GasLog Shanghai
and
the
GasLog Santiago.
The balance outstanding of both tranches as of December 31, 2013 was $260,468,720 and is repayable in 45 equal quarterly installments, as well as a balloon payment
of $40,000,000 due together with the final installment in the first quarter of 2025 for each tranche. The loan bears interest at LIBOR plus a margin.
Each of the borrowers is required to have a minimum liquidity of $1,500,000 following the loan drawdown date.
(b) Nordea Bank Finland PLC, ABN Amro Bank N.V. and Citibank International PLC syndicated loan
On October 3, 2011, GAS-five Ltd. and GAS-six Ltd. jointly and severally entered into a loan agreement of up to $277,000,000 with Nordea Bank Finland PlC, ABN Amro Bank N.V. and Citibank International PLC in order to partially finance the acquisition of two LNG vessels. On May 24, 2013,
GAS-five Ltd. drew down $138,500,000 from the loan facility for the financing of the
GasLog Sydney
. The balance outstanding of the respective tranche as of December 31, 2013 was $134,426,471 and is repayable in 22 equal quarterly installments and by a balloon installment equal to $89,617,647 payable
together with the last installment no later than May 2019. The loan bears interest at LIBOR plus a margin.
Each of the borrowers is required to have a minimum liquidity of $1,500,000 following the loan drawdown date.
(c) Securities covenants and guarantees
The obligations under the aforementioned facilities are secured by a first priority mortgage over the vessels, a pledge of the share capital of the respective vessel owning companies and a first priority assignment of earnings related to the vessels, including charter revenue, management revenue and
any insurance and requisition compensation. Obligations under the facilities are guaranteed by GasLog and GasLog Carriers Ltd. The facilities include customary respective covenants, and among other restrictions the facilities include a fair market value covenant pursuant to which an event of default
could occur under the facilities if the aggregate fair market value of the collateral vessels (without taking into account any charter arrangements) were to fall below 120% of the aggregate outstanding principal balance under the facilities and any negative marked-to-market value arising under any hedging
transaction. In the event that the value of a vessel falls below the threshold, we could be required to provide the lender with additional security or prepay a portion of the outstanding loan balance, which could negatively impact our liquidity.
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(d) Corporate guarantor financial covenants
GasLog, as corporate guarantor for the loan facilities listed above, is subject to specified financial covenants on a consolidated basis. These financial covenants include the following:
(i)
net working capital (excluding the current portion of long-term debt) must be positive;
(ii)
total indebtedness divided by total capitalization must not exceed 75%;
(iii)
beginning on December 31, 2013, the ratio of EBITDA over debt service obligations (including interest and debt repayments) on a trailing 12 months basis must be no less than 110%;
(iv)
beginning on December 31, 2013, the aggregate amount of all unencumbered cash and cash equivalents must exceed the higher of 3% of total indebtedness or $20,000,000 after the first drawdown;
(v)
GasLog is permitted to pay dividends, provided that GasLog Group holds unencumbered cash equal to at least 4% of its total indebtedness, subject no event of default having occurred or occurring as a consequence of the payment of such dividends; and
(vi)
GasLog Groups market value adjusted net worth must at all times exceed $350,000,000.
The credit facilities also impose certain restrictions relating to GasLog, including restrictions that limit its ability to make any substantial change in the nature of its business or to engage in transactions that would constitute a change of control, without repaying all of the GasLog Groups indebtedness
in full, or to allow the GasLog Groups largest shareholders to reduce their shareholding in GasLog below specified thresholds.
Compliance with the financial covenants is required on a semi-annual basis and GasLog Group was in compliance as of December 31, 2013.
Loan Repayment Schedule
The maturity table below reflects the principal repayments of the loans outstanding as of December 31, 2013 based on the repayment schedule of the respective loan facilities (as described above):
At December 31, 2013
Not later than one year
24,188,723
Later than one year and not later than three years
48,377,446
Later than three years and not later than five years
228,637,846
Later than five years
93,691,176
Total
394,895,191
The weighted average interest rate for both outstanding loan facilities as of December 31, 2013 was 3.90% (2012: n/ a).
The carrying amount of the Predecessors bank debt recognized in the combined carve-out financial statements approximates its fair value.
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10. Other Payables and Accruals
An analysis of other payables and accruals is as follows:
At December 31,
2012
2013
Accrued legal and professional fees
3,758
43,925
Unearned revenue
7,071,341
Accrued employee costs
97,394
Accrued financing cost
423,920
Other payables and accruals
57,836
599,378
Accrued interest
1,397,587
Accrued management fees (Note 14)
162,000
Accrued special bonus
836,000
Total
1,321,514
9,371,625
The unearned revenue of $7,071,341 represents charter hire received in December 2013 relating to January 2014.
11. General and Administrative Expenses
An analysis of general and administrative expenses is as follows:
For the year ended
2012
2013
Travel and accommodation
30,425
1,166
Legal and professional fees
42,321
Vessel naming ceremony expenses
199,846
Commercial management fees (Note 14)
1,243,500
Foreign exchange differences
(12,201
)
37,792
Other expenses
11,908
Total
30,132
1,524,625
12. Vessel Operating Costs
An analysis of vessel operating costs is as follows:
For the year ended
2012
2013
Management fees and other ship management expenses (Note 14)
1,118,738
Crew wages
7,292,871
Technical maintenance expenses
1,462,044
Provisions and stores
908,080
Insurance expenses
811,416
Brokers commissions
786,123
Other operating expenses
717,444
Total
13,096,716
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December 31,
December 31,
13. Financial Income and Costs
For the year ended
2012
2013
Financial income
Interest income
110,109
31,686
Total financial income
110,109
31,686
Financial costs
Amortization of deferred loan issuance costs
1,697,904
Interest expense on loans
8,993,313
Realized loss on cash flow hedges
1,384,731
Other financial costs
606
57,195
Total financial costs
606
12,133,143
14. Related Party Transactions
The Predecessor had the following balances with related parties which have been included in the combined carve-out statements of financial position:
Amounts due from related parties
At December 31,
2012
2013
Due from GasLog
18,151
18,151
Total
18,151
18,151
Amount due to related parties
As of December 31,
2012
2013
Due to GasLog LNG Services Ltd.
(a)
394,788
3,918,098
Due to GasLog Carriers Ltd.
(b)
8,397,841
20,756,019
Total
8,792,629
24,674,117
(a)
The balance of $3,918,098 represents payments made by the Manager to cover operating expenses of the Predecessor of $3,790,231 (2012: $0) as well as amounts owed for management services and construction supervision fees of $127,867 (2012: $394,788). The costs of construction supervision and
management services provided during the construction period were capitalized to vessel cost as directly attributable costs to bringing the vessels to the condition necessary for them to be capable of operating in the manner intended by management (refer to the table below that illustrates the
capitalized and expensed costs).
(b)
The balance of $20,756,019 consists of (a) $9,800,000 dividend declared to the Parent in December 2013 that has not yet been paid and (b) $10,956,019 paid by the Parent to provide the Predecessor with funding to cover expenses during the construction period (2012: $8,397,841). These costs that were
invoiced by third parties were either capitalized (Note 3) or expensed depending on their nature and timing of the services provided.
F-22
December 31,
The Predecessor had the following transactions with GasLog LNG Services and GasLog, related parties:
Details
For the year ended
December 31,
2012
2013
Costs capitalized to vessel cost
Construction supervision fees
(i)
2,479,988
876,789
Pre-delivery management fees
(ii)
90,000
171,000
Ship Management System (SMS fee)
(iv)
420,000
Costs expensed
Management fees (included in Vessel operating costs)
(iii)
1,118,738
Commercial management fee (included in General and administrative expenses)
(v)
1,243,500
Other vessel operating costs
40,320
(i)
The Manager charged the vessel-owning companies shipbuilding supervision fees pursuant to the shipbuilding supervision contracts that were signed on June 2, 2010 with respect to GAS-three Ltd. and GAS-four Ltd. and on March 31, 2011 with respect to GAS-five Ltd. In accordance with the
shipbuilding supervision contracts, the Manager was appointed as the supervisor of the construction of the vessels under the relevant shipbuilding contracts until the successful delivery of each vessel. Monthly charge rates for the site inspection team varied from $12,500 to $18,500 according to the
level of seniority of the inspectors.
(ii)
GasLog LNG Services charged the vessel owning companies pre-delivery management fees of a monthly charge of $22,500 for approximately four months prior to each vessels delivery date for management services relating to the vessels supervision provided during the same period.
(iii)
On August 16, 2010, GAS-three Ltd. and GAS-four Ltd. and on March 31, 2011, GAS-five Ltd. entered into ship management agreements (Ship Management Agreement) with GasLog LNG Services. These agreements are effective from each vessels delivery until the vessel is sold or becomes a
total loss. In addition, they may also be terminated by the owners by giving the managers at least three months notice and provide for the following:
Management Fees
A fixed monthly charge of $30,000 per vessel is payable by the Predecessor to GasLog LNG Services for the provision of management services such as crew, operational and technical management, procurement, accounting, budgeting and reporting, health, safety, security and
environmental protection, insurance arrangements, sale or purchase of vessels, general administration and quality assurance. The aforementioned fee will be adjusted annually on December 31st based on the US Consumer Price Index for All Urban Consumers (CPI-U).
Superintendent Fees
A fee of $1,000 per day is payable to GasLog LNG Services for each day in excess of 25 days per calendar year for which a superintendent performs visits to the vessels.
Share of General Expenses
A monthly lump sum amounting to 11.25% of the Management Fee is payable to GasLog LNG Services during the term of this agreement.
Annual Incentive Bonus
Annual Incentive Bonus may be payable to GasLog LNG Services, at the Predecessors discretion, for remittance to the crew of an amount of up to $72,000 based on Key Performance Indicators predetermined annually.
(iv)
Pursuant to the shipbuilding supervision contracts described above in (i), the vessel owning companies entered into a professional consulting services contract with the Manager. The professional consulting services contract provides that the Manager will be paid a one-off fee of $130,000 in exchange
for the development and installation of a Ship Management System for each vessel. In addition the Manager charged the vessel owning companies for an additional fee of $10,000 per vessel with respect of the preparation and verification of the aforementioned system.
F-23
(v)
On July 19, 2013, GAS-five Ltd., and on August 28, 2013, GAS-three Ltd. and GAS-four Ltd., entered into commercial management agreements with GasLog pursuant to which the Subsidiaries will receive commercial management services relating to the operation of the vessels, including and not
limited to negotiation of the vessels possible employment, assessing market conditions on specific issues, keeping proper accounting records and handling and advising on claims or disputes. The annual management fee will be $540,000 for each vessel payable quarterly in advance in lump sum
amounts. The agreements may be terminated by either party at any time giving the other party not less than twelve months written notice. The fair value of the services provided in the year ended December 31, 2013 amounted to $1,243,500 from which $627,000 related to the services provided for
the period from each vessels delivery date to the effective date of the commercial management agreements for which no fees were paid and have been recorded as Contributed capital-contributed services in the accompanying combined carve-out statement of changes in equity (Notes 7 and 11).
Construction, supervision fees, pre-delivery management fees, and SMS fees are capitalized to the cost of vessel. Fees paid pursuant to the Ship Management Agreements and the Commercial Management Agreements are included in Vessel operating costs and General and administrative expenses,
respectively. Pursuant to a commission agreement with Samsung Heavy Industries Co. Ltd. shipyard, commissions due from the shipyard in relation to the new building orders will be paid by Samsung Heavy Industries Co. Ltd. shipyard to DryLog Investments Ltd., an affiliate of Ceres Shipping. Upon
receipt of the commissions, DryLog Investments Ltd. will forward the payments to the vessel-owning subsidiaries through the Parent, after deducting handling fees for each payment.
15. Commitments and Contingencies
Future gross minimum revenues receivable upon collection of hire under non-cancellable time charter agreements for vessels in operation as of December 31, 2013 are as follows (vessel off-hires and drydocking days that could occur but are not currently known are not taken into consideration; in
addition early delivery of the vessels by the charterers is not accounted for):
Period
December 31, 2013
Not later than one year
83,259,344
Later than one year and not later than three years
168,551,290
Later than three years and not later than five years
122,722,889
More than five years
11,894,721
Total
386,428,244
On May 9, 2011, GAS-three Ltd., GAS-four Ltd. and GAS-five Ltd. signed time charter agreements with BG Group, for the employment of their vessels from the date of delivery of the vessels through January 2018, March 2018 and May 2019, respectively, with charter options to extend the
agreements for up to two extension periods of three or four years. The charter party agreements provide for daily hire rates that include two components a capital cost component that is fixed for the period of the agreement and an operating cost component that has a fixed annual escalation rate.
Various claims, suits and complaints, including those involving government regulations, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, environmental claims, agents and insurers and from claims with suppliers relating to the operations of
the Predecessors vessels. Currently, management is not aware of any such claims or contingent liabilities requiring disclosure in the combined carve-out financial statements.
16. Financial Risk Management
The Predecessors activities expose it to a variety of financial risks, including market price risk, liquidity risk and credit risk. The Predecessors overall risk management program focuses on the
F-24
unpredictability of financial markets and seeks to minimize potential adverse effects on the Predecessors financial performance. The Predecessor makes use of derivative financial instruments such as interest rate swaps to mitigate certain risk exposures.
Market risk
Interest rate risk:
Interest rate risk is the risk that interest costs will fluctuate due to changes in market interest rates. The Predecessors financial income and operating cash flows fluctuate based on changes in market interest rates as the Predecessor has loans that bear interest at floating rates. The
Predecessor uses interest rate swaps to manage its exposure to interest rate movements on bank borrowings. At December 31, 2013, the Predecessor has hedged 78.9% of its future variable rate interest exposure relating to its existing loan facilities by swapping the variable rate for a fixed rate (2012:
79.7%).
The fair value of the swaps at December 31, 2013 was estimated as a net loss of $4,058,897 (2012: $11,427,876). The effective portion of changes in the fair value of the interest rate swaps designated as cash flow hedging instruments (Note 17) amounting to $3,776,876 gain (2012: $8,687,198 loss) was
recognized directly in the combined carve-out statement of changes in equity.
Interest rate sensitivity analysis:
The interest rate swap agreements described below are subject to market risk as they are recorded at fair value in the combined carve-out statements of financial position at year end. The fair value of net interest rate swaps liabilities increases when interest rates
decrease and decreases when interest rates increase. At December 31, 2013, if interest rates had increased or decreased by 10 basis points with all other variables held constant, the positive/(negative) impact, respectively, on the fair value of the interest rate swaps would have amounted to approximately
$1,140,237 (2012: $1,344,672). This amount would have affected the other comprehensive income by $511,219 (2012: $1,344,672) and the (loss)/gain on interest rate swaps by $629,018 (2012: $0). During the year ended December 31, 2013, if interest rates had increased or decreased by 10 basis points with
all other variables held constant, the increase/ (decrease), respectively, in interest expense on the un-hedged portion of the Groups loans would have amounted to approximately $72,570.
Currency Risk:
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the Predecessors functional
currency. The Predecessor is exposed to foreign exchange risk arising from various currency exposures primarily with respect to general and crew costs denominated in Euros. The Predecessor does not hedge movements in exchange rates but management monitors the exchange rate fluctuations on a
continuous basis. As an indication of the extent of our sensitivity to changes in exchange rate, a 10% increase in the average euro/dollar exchange rate would have decreased our profit and cash flows during the year ended December 31, 2013 by $668,304, based upon our expenses during the year (2012:
$0).
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses.
The Predecessor manages its liquidity risk by having secured credit lines and by receiving capital contributions to fund its commitments and by maintaining cash and cash equivalents.
The following tables detail the Predecessors expected cash flows for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Predecessor can be required to pay. The table includes both
interest and principal cash flows. Variable future interest payments were determined based on an average LIBOR plus the margins applicable to the Predecessors loans at the end of each year presented.
F-25
Weighted-
Less than
1-3 months
3-12 months
1-5 years
5+ years
Total
December 31, 2013
Trade and other accounts payable
200,599
210,554
293,640
704,793
Due to related parties
3,918,098
20,756,019
24,674,117
Other payables and accruals
7,925,030
1,446, 595
9,371,625
Variable interest loans
2.76
%
7,770,520
26,201,643
309,103,747
94,854,134
437,930,044
Total
12,043,727
9,427,669
47,251,302
309,103,747
94,854,134
472,680,579
December 31, 2012
Trade and other accounts payable
519,565
73,999
593,564
Due to related parties
394,788
8,397,841
8,792,629
Other payables and accruals
343,039
142,475
836,000
1,321,514
Total
1,257,392
216,474
9,233,841
10,707,707
average
effective
interest
rate
1 month
The amounts included above for variable interest rate instruments is subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.
The following table details the Predecessors expected cash flows for its derivative financial liabilities. The table has been drawn up based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the end of the reporting period. The undiscounted contractual cash flows are based on the contractual maturities of the derivatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Less than
|
1-3 months |
3-12 months |
1-5 years |
5+ years |
Total |
||||||||||||||||||||||||||||||||||||
December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Interest rate swap |
|
|
279,036 |
|
|
867,283 |
|
|
3,161,047 |
|
|
173,016 |
|
|
|
|
|
4,480,382 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Total |
|
|
279,036 |
|
|
867,283 |
|
|
3,161,047 |
|
|
173,016 |
|
|
|
|
|
4,480,382 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Interest rate swap |
|
|
|
|
|
|
|
|
2,791,281 |
|
|
8,878,916 |
|
|
(152,293 |
) |
|
|
|
11,517,904 |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Total |
|
|
|
|
|
|
|
|
2,791,281 |
|
|
8,878,916 |
|
|
(152,293 |
) |
|
|
|
11,517,904 |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
The Predecessor expects to be able to meet its current obligations resulting from financing and operating its vessels using the liquidity existing at year end and the cash generated by operating activities. The Predecessor expects to be able to meet its long-term obligations resulting from financing its vessels through cash generated from operations.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge its obligations and cause a financial loss. The Predecessor is exposed to credit risk in the event of non-performance by any of the counterparties. To limit this risk, the Predecessor deals exclusively with creditworthy financial institutions and customers.
|
|
|
|
|
||||||||||
|
At December 31, |
|||||||||||||
2012 |
2013 |
|||||||||||||
Cash |
|
|
2,299 |
|
|
14,403,785 |
||||||||
Short-term investments |
|
|
|
|
|
1,500,000 |
||||||||
Trade and other receivables |
|
|
33,869 |
|
|
153,967 |
||||||||
|
|
|
|
|
For the year ended December 31, 2013, all of the Predecessors revenue was earned from one customer, a subsidiary of BG Group Plc. (BG Group) and accounts receivable were not collateralized; however, management believes that the credit risk is partially offset by the
F-26
creditworthiness of the Predecessors counterparty and the fact that the hire is being collected in advance. The Predecessor did not experience significant credit losses on its accounts receivable portfolio during the year ended December 31, 2013. The carrying amount of financial assets recorded in the
combined carve-out financial statements represents the Predecessors maximum exposure to credit risk. Management monitors exposure to credit risk, and they believe that there is no substantial credit risk arising from the Predecessors counterparty.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
17. Derivative Financial Instruments
Interest rate swap agreements
The fair value of the derivative assets is as follows:
At December 31,
2012
2013
Financial liabilities carried at fair value through profit or loss (FVTPL)
Interest rate swaps
799,926
Total
799,926
Derivative financial instruments, noncurrent asset
799,926
Total
799,926
The fair value of the derivative liabilities is as follows:
At December 31,
2012
2013
Derivatives designated and effective as hedging instruments carried at fair value
Interest rate swaps
11,427,876
2,816,370
Financial liabilities carried at fair value through profit or loss (FVTPL)
Interest rate swaps
2,042,453
Total
11,427,876
4,858,823
Derivative financial instruments, current liability
3,132,045
4,233,398
Derivative financial instruments, noncurrent liability
8,295,831
625,425
Total
11,427,876
4,858,823
Under these swap transactions, the bank counterparty effects quarterly floating-rate payments to the Predecessor for the notional amount based on the three-month U.S. dollar LIBOR, and the Predecessor effects quarterly payments to the bank on the notional amount at the respective fixed rates.
The decrease in net derivative liabilities as of December 31, 2013 compared to December 31, 2012 resulted mainly from the decrease in the notional amount of the interest rate swaps and the increase in LIBOR yield curve used to calculate the present value of the estimated future cash flows.
F-27
Interest rate swaps designated as cash flow hedging instruments
The principal terms of the interest rate swaps designated as cash flow hedging instruments were as follows:
Subsidiary
Counterparty
Trade
Effective
Termination
Fixed
Notional Amount at
December 31,
2012
2013
GAS-three Ltd.
(1)
DNB bank ASA
April 2012
Jan 2013
Jan 2018
1.45
%
96,250,000
GAS-four Ltd.
(1)
DNB bank ASA
April 2012
Mar 2013
Mar 2018
1.50
%
96,250,000
GAS-five Ltd.
Nordea Bank Finland
Nov 2011
May 2013
May 2018
2.04
%
60,000,000
58,235,293
GAS-five Ltd.
Nordea Bank Finland
Nov 2011
May 2013
May 2018
1.96
%
75,000,000
72,794,117
327,500,000
131,029,410
(1)
In 2013, hedge accounting for these interest rate swaps was discontinued because the effectiveness criteria were not met as the fair value of the relevant interest rate swaps when compared with the hypothetical swaps was outside the required range of effectiveness (80%-125%). The cumulative loss of $3,886,488 from the period that the hedges were effective will be recycled to
the profit or loss in the same manner as the hedged item will affect profit or loss (i.e., amortized until the maturity of the hedging transaction). The amount that was reclassified to profit or loss for the year ended December 31, 2013 is $654,964.
The fixed interest agreements converted the floating interest rate exposure into a fixed interest rate in order to hedge the Predecessors exposure to fluctuations in prevailing market interest rates. The derivative instruments listed above qualified as cash flow hedging instruments for accounting
purposes as of December 31, 2013 with the exception of the two agreements for which the effectiveness criteria were not met as mentioned above.
No new swap agreements entered into by the Predecessor during the year ended December 31, 2013. For the two swap agreements entered into by the Predecessor during the year ended December 31, 2012, there was a loss of $931,400 recognized at their inception in the combined carve-out
statement of profit or loss under (Loss)/gain on interest rate swaps, which included fees and evidence that the respective transaction prices exceeded the valuation based on observable market data.
For the year ended December 31, 2013, the effective portion of changes in the fair value of derivatives designated as cash flow hedging instruments, amounting to a profit of $3,776,876, was recognized in Other comprehensive income (December 31, 2012: $8,687,198 loss). The increase in profit
resulted from the decrease in the notional amount of the interest rate swaps designated as cash flow hedges and the increase in the LIBOR yield curve used to calculate the present value of the estimated future cash flows. The gain of $16,742 relating to the ineffective portion was recognized during the
year ended December 31, 2013, in the combined carve-out statement of profit or loss under (Loss)/gain on interest rate swaps (December 31, 2012: $9,032 loss).
Interest rate swaps held for trading
The principal terms of the interest rate swaps held for trading were as follows:
Subsidiary
Counterparty
Trade
Effective
Termination
Fixed
Notional
Amount at
December 31,
2012
2013
GAS-three Ltd.
DNB bank ASA
April 2012
Jan 2013
Jan 2018
1.45
%
90,234,360
GAS-four Ltd.
DNB bank ASA
April 2012
Mar 2013
Mar 2018
1.50
%
90,234,360
180,468,720
The change in the fair value of these contracts as of December 31, 2013 amounted to a net gain of $3,575,361 (which was recognized against earnings in the period incurred and is included in the combined carve-out statement of profit or loss under (Loss)/gain on interest rate swaps (December 31, 2012:
$0).
F-28
Date
Date
Date
Interest
Rate
Date
Date
Date
Interest
Rate
An analysis of (Loss)/gain on interest rate swaps is as follows:
At December 31,
2012
2013
Inception loss for cash flow hedges
(931,400
)
Unrealized gain on interest rate swaps held for trading
3,575,361
Realized loss on interest rate swaps held for trading
(1,900,952
)
Net change in fair value of cash flow hedges reclassified to profit or loss
(654,964
)
Ineffectiveness on cash flow hedges
(9,032
)
16,742
Total
(940,432
)
1,036,187
The realized loss on interest rate swaps for trading represents the realized loss for the two interest rate swaps for which hedge accounting was discontinued in 2013, from the dates that the effectiveness criteria were not met. The loss resulted from the fact that the fixed interest rates specified in the
interest rate swap agreements as payable by the Company were higher than the applicable floating rate (based on the 3-month LIBOR rate) specified in the interest rate swap agreements as payable by the bank counterparty.
Fair value measurements
The fair value of the interest rate swaps at the end of reporting period was determined by discounting the future cash flows using the interest rate yield curves at the end of the reporting period and the credit risk inherent in the contract. The Predecessor uses its judgment to make assumptions that
are mainly based on market conditions for the estimation of the counterparty risk and the Predecessors own risk that are considered for the calculation of the fair value of the interest rate swaps. The interest rate swaps meet Level 2 classification, according to the fair value hierarchy as defined by IFRS
7,
Financial Instruments Disclosure
. There were no financial instruments in Levels 1 and 3 and no transfers between Levels 1, 2 or 3 during the periods presented. The definitions of the Levels, provided by IFRS 7
Financial Instruments: Disclosures
, are based on the degree to which the fair value is
observable:
Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
18. Taxation
Under the laws of the country of the vessels registration, the Predecessor is not subject to tax on international shipping income. However, it is subject to registration and tonnage taxes, which are included in vessel operating and supervision costs in the combined carve-out statement of profit or loss.
Under the United States Internal Revenue Code of 1986, as amended (the Code), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Predecessor, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation
qualifies for exemption from tax under 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.
For the year ended December 31, 2013, the Predecessor has not made any U.S. port calls, and hence did not have U.S. source gross transportation income.
F-29
19. (Loss) / earnings per share
Basic earnings per share (EPS) was calculated by dividing the (loss)/profit for the year attributable to the owners of the common shares by the weighted average number of common shares issued and outstanding during the year.
For the year ended December
31,
2012
2013
Basic (loss)/earnings per share
(Loss)/profit for the year
(861,061
)
26,218,242
Weighted average number of shares outstanding, basic
36,000
36,000
Basic (loss)/earnings per share
(23.92
)
728.28
Diluted EPS is equal to basic EPS since there are no potential ordinary shares assumed to have been converted into common shares.
20. Subsequent Events
There are no material subsequent events.
F-30
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Partners of GasLog Partners LP
We have audited the accompanying statement of financial position of GasLog Partners LP (the Partnership) as of January 23, 2014 (date of incorporation). This statement of financial position is the responsibility of the Partnerships management. Our responsibility is to express an opinion on the
statement of financial position based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of financial position is free of material
misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Partnerships internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of financial
position, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement of financial position presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such statement of financial position presents fairly, in all material respects, the financial position of GasLog Partners LP as of January 23, 2014 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
/s/ Deloitte Hadjipavlou Sofianos & Cambanis S.A.
F-31
Majuro, Republic of the Marshall Islands
Athens, Greece
February 3, 2014
GasLog Partners LP
Assets
Current assets
Cash on hand
1,000
Total current assets
1,000
Total assets
1,000
Liabilities and partners equity
Total liabilities
Commitments and contingencies
Partners equity
Limited Partner
980
General Partner
20
Total partners equity
1,000
Total liabilities and partners equity
1,000
The accompanying notes are an integral part of this statement of financial position.
F-32
Statement of financial position
As of January 23, 2014 (date of incorporation)
(All amounts expressed in U.S. Dollars)
GasLog Partners LP
1. Basis of Presentation and Nature of Operations
GasLog Partners LP (the Partnership) was formed on January 23, 2014, under the laws of Marshall Islands, by GasLog Ltd. (GasLog or the Limited Partner), an exempted company incorporated under the laws of Bermuda and GasLog Partners GP LLC, the Partnerships general partner (the
General Partner), a Marshall Islands limited liability company, which is a wholly owned subsidiary of GasLog. The Partnership was established for the purpose of initially acquiring the interests in three liquefied natural gas (LNG) carriers that will be contributed by GasLog to a wholly owned
subsidiary of the Partnership, GasLog Partners Holdings LLC, to be incorporated. The Partnership has commenced preparation for an initial public offering of its common units (the IPO) in the United States and intends to list its common units on the New York Stock Exchange. Concurrently with the
IPO, the Partnership will acquire 100% ownership interests in GAS-three Ltd., GAS-four Ltd. and GAS-five Ltd. (the Subsidiaries) each of which is the owner of one LNG vessel. The shares of these three vessel-owning companies will be contributed by GasLog to the Partnership, which will become
their sole shareholder.
The Partnership has adopted a December 31 fiscal year end and reports in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The General Partner contributed $20 and GasLog contributed $980 to the Partnership on January 23,
2014. There have been no other transactions involving the Partnership as of January 23, 2014.
On February 3, 2014, the Partnerships Board of Directors authorized the financial statements for issuance and filing.
F-33
Notes to the statement of financial position
(All amounts expressed in U.S. Dollars)
FORM OF
A-i
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GASLOG PARTNERS LP
TABLE OF CONTENTS
DEFINITIONS AND CONSTRUCTION
1
Definitions
1
Construction
14
ORGANIZATION
14
Formation
14
Name
15
Registered Office; Registered Agent; Principal Office; Other Offices
15
Purpose and Business
15
Powers
15
Term
15
Title to Partnership Assets
15
RIGHTS OF LIMITED PARTNERS
16
Limitation of Liability
16
Management of Business
16
Outside Activities of the Limited Partners
16
Rights of Limited Partners
16
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS
17
Certificates
17
Mutilated, Destroyed, Lost or Stolen Certificates
17
Record Holders
18
Transfer Generally
18
Registration and Transfer of Limited Partner Interests
18
Transfer of the General Partners General Partner Interest
19
Transfer of Incentive Distribution Rights
19
Restrictions on Transfers
20
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
20
Contributions Prior to the Closing Date
20
Initial Unit Issuances; Tax Election; Initial Contributors and Redemption of Common Units
20
Interest and Withdrawal
20
Issuances of Additional Partnership Interests
21
Limitations on Issuance of Additional Partnership Interests
21
Conversion of Subordinated Units to Common Units
21
Limited Preemptive Right
22
Splits and Combinations
22
Fully Paid and Non-Assessable Nature of Limited Partner Interests
23
Issuance of Common Units in Connection with Reset of Incentive Distribution Rights
23
DISTRIBUTIONS
24
Allocations
24
Requirement and Characterization of Distributions; Distributions to Record Holders
24
Distributions of Available Cash from Operating Surplus
25
Distributions of Available Cash from Capital Surplus
26
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
26
Special Provisions Relating to the Holders of Subordinated Units
27
Special Provisions Relating to the Holders of Incentive Distribution Rights
27
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MANAGEMENT AND OPERATION OF BUSINESS
27
Management
27
The Board of Directors; Election and Appointment; Term; Manner of Acting
28
Nominations of Elected Directors
29
Removal of Members of Board of Directors
29
Resignations of Members of the Board of Directors
30
Vacancies on the Board of Directors
30
Meetings; Committees; Chairman
30
Officers
31
Compensation of Directors
31
Certificate of Limited Partnership
31
Restrictions on the Authority of the Board of Directors and the General Partner
32
Reimbursement of the General Partner
32
Outside Activities
33
Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
34
Indemnification
34
Liability of Indemnitees
35
Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
36
Other Matters Concerning the General Partner and the Board of Directors
38
Purchase or Sale of Partnership Interests
38
Registration Rights of the General Partner and its Affiliates
38
Reliance by Third Parties
40
BOOKS, RECORDS, ACCOUNTING AND REPORTS
41
Records and Accounting
41
Fiscal Year
41
Reports
41
TAX MATTERS
41
Tax Elections and Information
41
Tax Withholding
41
Conduct of Operations
42
ADMISSION OF PARTNERS
42
Admission of Initial Limited Partners
42
Admission of Additional Limited Partners
42
Admission of Successor General Partner
42
Amendment of Agreement and Certificate of Limited Partnership
43
WITHDRAWAL OR REMOVAL OF PARTNERS
43
Withdrawal of the General Partner
43
Removal of the General Partner
44
Interest of Departing General Partner and Successor General Partner
44
Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages
46
Withdrawal of Limited Partners
46
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DISSOLUTION AND LIQUIDATION
46
Dissolution
46
Continuation of the Business of the Partnership After Dissolution
47
Liquidating Trustee
47
Liquidation
47
Cancellation of Certificate of Limited Partnership
49
Return of Contributions
49
Waiver of Partition
49
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
49
Amendments to be Adopted Without Approval of the Limited Partners or the General Partner
49
Amendment Procedures
50
Amendment Requirements
51
Special Meetings
51
Notice of a Meeting
52
Record Date
52
Adjournment
52
Waiver of Notice; Approval of Meeting; Approval of Minutes
52
Quorum and Voting
52
Conduct of a Meeting
53
Action Without a Meeting
53
Right to Vote and Related Matters
53
MERGER, CONSOLIDATION OR CONVERSION
54
Authority
54
Procedure for Merger, Consolidation or Conversion
54
Approval by Limited Partners of Merger, Consolidation or Conversion
55
Certificate of Merger or Conversion
56
Amendment of Partnership Agreement
56
Effect of Merger, Consolidation or Conversion
56
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
57
Right to Acquire Limited Partner Interests
57
GENERAL PROVISIONS
58
Addresses and Notices
58
Further Action
59
Binding Effect
59
Integration
59
Creditors
59
Waiver
59
Counterparts
59
Applicable Law; Forum, Venue and Jurisdiction
59
Invalidity of Provisions
60
Consent of Partners
60
Facsimile Signatures
60
Third-Party Beneficiaries
60
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FIRST AMENDED AND RESTATED AGREEMENT
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF GASLOG PARTNERS LP, dated as of , 2014, is entered into by and between GasLog Partners GP LLC, a Marshall Islands limited liability company, as the General Partner and GasLog Ltd., an
exempted company incorporated under the laws of Bermuda, as the Organizational Limited Partner, together with any other Persons who become Partners in the Partnership or parties hereto as provided herein. In consideration of the covenants, conditions and agreements contained herein, the parties
agree as follows:
ARTICLE I
Section 1.1.
Definitions
. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.
Acquisition
means any transaction in which any Group Member acquires (through an asset acquisition, merger, stock acquisition or other form of investment) control over all or a portion of the assets, properties or business of another Person for the purpose of increasing the operating capacity
and/or asset base of the Partnership Group from the operating capacity and/or asset base of the Partnership Group existing immediately prior to such transaction;
provided
,
however
, that any acquisition of properties or assets of another Person that is made solely for investment purposes shall not
constitute an Acquisition under this Agreement.
Adjusted Operating Surplus
means, with respect to any period, Operating Surplus generated with respect to such period (a) less (i) the amount of any net increase in Working Capital Borrowings (or the Partnerships proportionate share of any net increase in Working Capital Borrowings in the
case of Subsidiaries that are not wholly-owned) with respect to such period and (ii) the amount of any net decrease in cash reserves for Operating Expenditures (or the Partnerships proportionate share of any net decrease in cash reserves for Operating Expenditures in the case of Subsidiaries that are not
wholly-owned) over such period to the extent such reduction does not relate to an Operating Expenditure made with respect to such period, and (b) plus (i) the amount of any net decrease in Working Capital Borrowings (or the Partnerships proportionate share of any net decrease in Working Capital
Borrowings in the case of Subsidiaries that are not wholly-owned) with respect to such period; (ii) the amount of any net increase in cash reserves (or the Partnerships proportionate share of any net increase in cash reserves in the case of Subsidiaries that are not wholly-owned) for Operating
Expenditures over such period to the extent such reserve is required by any debt instrument for the repayment of principal, interest or premium; and (iii) the amount of any net decrease made in subsequent periods in cash reserves for Operating Expenditures initially established with respect to such
period to the extent such decrease results in a reduction in Adjusted Operating Surplus in subsequent periods pursuant to
clause (a)(ii)
above. Adjusted Operating Surplus does not include that portion of Operating Surplus included in
clause (a)(i)
of the definition of Operating
Surplus. Adjusted Operating Surplus includes that portion of Operating Surplus in clause (a)(ii) of the definition of Operating Surplus only to the extent that cash is received by the Partnership Group.
Affiliate
means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term
control
means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
Aggregate Quantity of IDR Reset Common Units
has the meaning set forth in
Section 5.10(a)
.
Agreed Value
means the fair market value of the applicable property or other consideration at the time of contribution or distribution, as the case may be, as determined by the Board of Directors.
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OF LIMITED PARTNERSHIP OF GASLOG PARTNERS LP
DEFINITIONS AND CONSTRUCTION
Agreement
means this First Amended and Restated Agreement of Limited Partnership of GasLog Partners LP, as it may be amended, supplemented or restated from time to time.
Annual Meeting
means the meeting of Limited Partners to be held every year, commencing in 2015, to elect the Elected Directors as provided in
Section 7.2
and to vote on any other matters brought before the meeting in accordance with this Agreement.
Appointed Directors
means the members of the Board of Directors appointed by the General Partner in accordance with the provisions of
Article VII
.
Associate
means, when used to indicate a relationship with any Person: (a) any corporation or organization of which such Person is a director, officer, manager, general partner or managing member or is, directly or indirectly, the owner of 20% or more of any class of voting stock or other voting
interest; (b) any trust or other estate in which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of such Person, or any relative of such spouse, who has the same principal residence as such
Person.
Audit Committee
means a committee of the Board of Directors, which, within one year of the effective date of the Registration Statement, will be composed of a minimum of three members of the Board of Directors then serving who meet the independence standards required of directors who
serve on an audit committee of a board of directors established by the Exchange Act, and the rules and regulations of the Commission thereunder and meet the standards for audit committee composition established by the National Securities Exchange on which the Common Units are listed or admitted
to trading.
Available Cash
means, with respect to any Quarter ending prior to the Liquidation Date:
(a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the Partnerships proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly-owned) on hand at the end of such Quarter, (ii) all additional cash and cash equivalents of the Partnership
Group (or the Partnerships proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly-owned) on hand on the date of determination of Available Cash with respect to such Quarter resulting from Working Capital Borrowings made subsequent to the end of such
Quarter, and (iii) all cash and cash equivalents on hand on the date of determination of Available Cash resulting from cash distributions received after the end of such Quarter from any Group Members equity interest in any Person (other than a Subsidiary), which distributions are paid by such Person
in respect of operations conducted by such Person during such Quarter, less
(b) the amount of any cash reserves (or the Partnerships proportionate share of cash reserves in the case of Subsidiaries that are not wholly-owned) established by the Board of Directors to (i) provide for the proper conduct of the business of the Partnership Group (including reserves for future
capital expenditures and for anticipated future credit needs of the Partnership Group) subsequent to such Quarter, (ii) comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which any Group Member is a party or by which it
is bound or its assets are subject and/or (iii) provide funds for distributions under
Section 6.3
or
Section 6.4
in respect of any one or more of the next four Quarters;
provided, however
, that the Board of Directors may not establish cash reserves pursuant to
(iii)
above if the
effect of establishing such reserves would be that the Partnership is unable to distribute the Minimum Quarterly Distribution on all Common Units, plus any Cumulative Common Unit Arrearage on all Common Units, with respect to such Quarter; and,
provided, further
, that disbursements made by a
Group Member or cash reserves established, increased or reduced after the end of such Quarter but on or before the date of determination of Available Cash with respect to such Quarter shall be deemed to have been made, established, increased or reduced, for purposes of determining Available Cash,
within such Quarter if the Board of Directors so determines.
Notwithstanding the foregoing,
Available Cash
with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.
Board of Directors
means the board of directors of the Partnership, composed of Appointed Directors and Elected Directors appointed or elected, as the case may be, in accordance with the
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provisions of
Article VII
and a majority of whom are not United States citizens or residents, which, pursuant to
Section 7.1
, and subject to
Section 7.11
, oversees and directs the operations, management and policies of the Partnership. The Board of Directors shall constitute
a committee within the meaning of Section 30(2)(g) of the Marshall Islands Act.
Business Day
means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.
Capital Contribution
means (a) with respect to any Partner, any cash, cash equivalents or the Net Agreed Value of Contributed Property that a Partner contributes to the Partnership or that is contributed or deemed contributed to the Partnership on behalf of a Partner (including, in the case of an
underwritten offering of Units, the amount of any underwriting discounts or commissions) or (b) with respect to the General Partner only, (i) distributions of cash that the General Partner is entitled to receive but otherwise waives such that the Partnership retains such cash or (ii) Common Units that the
General Partner contributes to the Partnership.
Capital Improvement
means any (a) addition or improvement to the capital assets owned by any Group Member, (b) acquisition of existing, construction of new or improvement or replacement of existing, capital assets by any Group Member or (c) capital contribution by a Group Member to a
Person that is not a Subsidiary, in which a Group Member has, or after such capital contribution will have, an equity interest, to fund the Group Members pro rata share of the cost of the addition or improvement to or the acquisition of existing, or the construction of new, or the improvement or
replacement of existing, capital assets by such Person, in each case if such addition, improvement, replacement, acquisition or construction is made to increase the operating capacity and/or asset base of the Partnership Group from the operating capacity and/or asset base of the Partnership Group or such
Person, as the case may be, existing immediately prior to such addition, improvement, replacement, acquisition or construction;
provided, however
, that any such addition, improvement, acquisition or construction that is made solely for investment purposes shall not constitute a Capital Improvement.
Capital Surplus
has the meaning assigned to such term in
Section 6.2(a)
.
Cause
means a court of competent jurisdiction has entered a final, non-appealable judgment finding a Person liable to the Partnership or any Limited Partner for actual fraud or willful misconduct in its capacity as a general partner of the Partnership or as a member of the Board of Directors, as
the case may be.
Certificate
means a certificate (a) substantially in the form of
Exhibit A
to this Agreement, (b) issued in global or book entry form in accordance with the rules and regulations of the Depositary or (c) in such other form as may be adopted by the Board of Directors, issued by the
Partnership evidencing ownership of one or more Common Units or a certificate, in such form as may be adopted by the Board of Directors, issued by the Partnership evidencing ownership of one or more other Partnership Interests.
Certificate of Limited Partnership
means the Certificate of Limited Partnership of the Partnership filed with the Registrar of Corporations of The Marshall Islands as referenced in Section 7.10 as such Certificate of Limited Partnership may be amended, supplemented or restated from time to time.
claim
(as used in Section 7.20(c) ) has the meaning assigned to such term in
Section 7.20(c)
.
Closing Date
means the first date on which Common Units are sold by the Partnership to the Underwriters pursuant to the provisions of the Underwriting Agreement.
Closing Price
means, in respect of any class of Limited Partner Interests, as of the date of determination, the last sale price on such day, regular way, or in case no such sale takes place on such day, the average of the closing bid and asked prices on such day, regular way, as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the principal National Securities Exchange on which the respective Limited Partner Interests are listed or admitted to trading or, if such Limited Partner Interests are not listed or admitted to
trading on any National Securities Exchange, the last quoted price on such day or, if not
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so quoted, the average of the high bid and low asked prices on such day in the over-the-counter market, as reported by any quotation system then in use with respect to such Limited Partner Interests, or, if on any such day such Limited Partner Interests of such class are not quoted by any such system,
the average of the closing bid and asked prices on such day as furnished by a professional market maker making a market in such Limited Partner Interests of such class selected by the Board of Directors, or if on any such day no market maker is making a market in such Limited Partner Interests of
such class, the fair value of such Limited Partner Interests on such day as determined by the Board of Directors.
Code
means the United States Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.
Combined Interest
has the meaning assigned to such term in
Section 11.3(a)
.
Commences Commercial Service
and
Commenced Commercial Service
shall mean the date a Capital Improvement is first put into commercial service by a Group Member following, if applicable, completion of construction, acquisition, development and testing.
Commission
means the United States Securities and Exchange Commission.
Common Unit
means a Partnership Interest representing a fractional part of the Partnership Interests of all Limited Partners, and having the rights and obligations specified with respect to Common Units in this Agreement. The term
Common Unit
does not refer to a Subordinated Unit prior to
its conversion into a Common Unit pursuant to the terms hereof.
Common Unit Arrearage
means, with respect to any Common Unit, whenever issued, as to any Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all Available Cash
distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.3(a)(i)
.
Conflicts Committee
means a committee of the Board of Directors composed entirely of two or more directors who are not any of the following: (a) officers or employees of the General Partner, (b) officers, directors or employees of any Affiliate of the General Partner (other than any Group
Member) or (c) holders of any ownership interest in the General Partner, its Affiliates or the Partnership Group (other than (x) Common Units or (y) awards granted pursuant to any long-term incentive plan, equity compensation plan or similar plan of any Group Member) and who also have been
determined by the Board of Directors to meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Exchange Act, and the rules and regulations of the Commission thereunder and by the National Securities Exchange on which the
Common Units are listed or admitted to trading.
Contributed Property
means each property or other asset, in such form as may be permitted by the Marshall Islands Act, but excluding cash, contributed to the Partnership.
Contribution Agreement
means that certain Contribution Agreement, dated as of
, 2014, among the General Partner, the Partnership, the Operating Company, GasLog and the other parties named therein, together with the additional conveyance documents and instruments contemplated or
referenced thereunder or entered into in connection therewith.
Cumulative Common Unit Arrearage
means, with respect to any Common Unit, whenever issued, and as of the end of any Quarter, the excess, if any, of (a) the sum of the Common Unit Arrearage with respect to an Initial Common Unit for each of the Quarters within the Subordination Period
ending on or before the last day of such Quarter over (b) the sum of any distributions theretofore made pursuant to
Section 6.3(a)(ii)
and the second sentence of
Section 6.4
with respect to an Initial Common Unit (including any distributions to be made in respect of the last of such
Quarters).
Current Market Price
means, in respect of any class of Limited Partner Interests, as of the date of determination, the average of the daily Closing Prices per Limited Partner Interest of such class for the 20 consecutive Trading Days immediately prior to such date.
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Deferred Issuance and Distribution
means both (a) the issuance by the Partnership of additional Common Units that is equal to the excess, if any, of (x) 1,260,000 minus (y) the aggregate number, if any, of Common Units actually purchased by and issued to the Underwriters pursuant to the Over-
Allotment Option on the Option Closing Date(s), and (b) distributions of cash pursuant to the Contribution Agreement in an amount equal to the total amount of cash contributed by the Underwriters to the Partnership on or in connection with any Option Closing Date with respect to Common Units
issued by the Partnership upon the applicable exercise of the Over-Allotment Option in accordance with
Section 5.2
, if any.
Departing General Partner
means a former General Partner from and after the effective date of any withdrawal or removal of such former General Partner pursuant to
Section 11.1
or
Section 11.2
.
Depositary
means, with respect to any Units issued in global form, The Depository Trust Company and its successors and permitted assigns.
Elected Directors
means the members of the Board of Directors who are elected as such in accordance with the provisions of
Article VII
and at least two (and subject to Section 7.2(d)) of whom are not any of the following: (a) officers or employees of the General Partner, (b) officers or
employees of any Affiliate of the General Partner (other than any Group Member) or (c) holders of any ownership interest in the General Partner, its Affiliates or the Partnership Group (other than (x) Common Units or (y) awards granted pursuant to any long-term incentive plan, equity compensation
plan or similar plan of any Group Member) and who also have been determined by the Board of Directors to meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Exchange Act, and the rules and regulations of the
Commission thereunder and by the National Securities Exchange on which the Common Units are listed or admitted to trading or (d) United States citizens or residents.
Estimated Maintenance and Replacement Capital Expenditures
means an estimate made in good faith by the Board of Directors (with the concurrence of the Conflicts Committee) of the average quarterly Maintenance and Replacement Capital Expenditures that the Partnership will need to incur
to maintain over the long-term the operating capacity and asset base of the Partnership Group (including the Partnerships proportionate share of the average quarterly Maintenance and Replacement Capital Expenditures of its Subsidiaries that are not wholly-owned) existing at the time the estimate is
made. The Board of Directors (with the concurrence of the Conflicts Committee) will be permitted to make such estimate in any manner it determines reasonable. Beginning after the Closing Date, the estimate will be made at least annually and whenever an event occurs that is likely to result in a
material adjustment to the amount of Maintenance and Replacement Capital Expenditures on a long-term basis. The Partnership shall disclose to its Partners any change in the amount of Estimated Maintenance and Replacement Capital Expenditures in its reports made in accordance with
Section 8.3
to the extent not previously disclosed. Any adjustments to Estimated Maintenance and Replacement Capital Expenditures shall be prospective only.
Event of Withdrawal
has the meaning assigned to such term in
Section 11.1(a)
.
Exchange Act
means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time and any successor to such statute.
Expansion Capital Expenditures
means cash expenditures for Acquisitions or Capital Improvements. Expansion Capital Expenditures shall not include Maintenance and Replacement Capital Expenditures or Investment Capital Expenditures. Expansion Capital Expenditures shall include interest
payments (and related fees) on debt incurred and distributions on equity issued, in each case, to fund the construction of a Capital Improvement and paid in respect of the period beginning on the date that a Group Member enters into a binding obligation to commence construction of the Capital
Improvement and ending on the earlier to occur of the date that such Capital Improvement Commences Commercial Service or the date that such Capital Improvement is abandoned or disposed of. Debt incurred or equity issued to fund any such construction period interest payments, or such
construction period distributions on equity paid in respect of such period shall also be deemed to be debt incurred or equity issued, as the case may be, to fund the construction of a Capital Improvement, and the Incremental Incentive Distributions paid in respect
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of such newly issued equity shall be deemed to be distributions paid on equity issued to finance the construction of a Capital Improvement.
First Target Distribution
means $0.43125 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on June 30, 2014, it means the product of $0.43125 multiplied by a fraction of which the numerator is the number of days in such period, and of which the
denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with
Section 5.10
and
Section 6.5
.
Fully Diluted Weighted Average Basis
means, when calculating the number of Outstanding Units for any period, a basis that includes (a) the weighted average number of Outstanding Units plus (b) all Partnership Interests and options, rights, warrants and appreciation rights relating to an equity
interest in the Partnership (i) that are convertible into or exercisable or exchangeable for Units or for which Units are issuable, in each case, that are senior to or
pari passu
with the Subordinated Units, (ii) whose conversion, exercise or exchange price is less than the Current Market Price on the date of
such calculation, (iii) that may be converted into or exercised or exchanged for such Units prior to or during the Quarter immediately following the end of the period for which the calculation is being made without the satisfaction of any contingency beyond the control of the holder other than the
payment of consideration and the compliance with administrative mechanics applicable to such conversion, exercise or exchange and (iv) that were not converted into or exercised or exchanged for such Units during the period for which the calculation is being made;
provided, however
, that for purposes
of determining the number of Outstanding Units on a Fully Diluted Weighted Average Basis when calculating whether the Subordination Period has ended, such Partnership Interests, options, rights, warrants and appreciation rights shall be deemed to have been Outstanding Units only for the four
Quarters that comprise the last four Quarters of the measurement period; and
provided, further
, that if consideration will be paid to any Group Member in connection with such conversion, exercise or exchange, the number of Units to be included in such calculation shall be that number equal to the
difference between (y) the number of Units issuable upon such conversion, exercise or exchange and (z) the number of Units that such consideration would purchase at the Current Market Price.
GasLog
means GasLog Ltd.
General Partner
means GasLog Partners GP LLC, a Marshall Islands limited liability company, and its successors and permitted assigns that are admitted to the Partnership as general partner of the Partnership, in its capacity as general partner of the Partnership (except as the context otherwise
requires).
General Partner Interest
means the ownership interest of the General Partner in the Partnership (in its capacity as a general partner and without reference to any Limited Partner Interest held by it), which is evidenced by General Partner Units and includes any and all benefits to which the
General Partner is entitled as provided in this Agreement, together with all obligations of the General Partner to comply with the terms and provisions of this Agreement.
General Partner Unit
means a fractional part of the General Partner Interest having the rights and obligations specified with respect to the General Partner Interest. A General Partner Unit is not a Unit.
Group
means a Person that with or through any of its Affiliates or Associates has any agreement, arrangement, understanding or relationship for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or consent
solicitation made to 10 or more Persons), exercising investment power over or disposing of any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, Partnership Interests.
Group Member
means a member of the Partnership Group.
Group Member Agreement
means the partnership agreement of any Group Member, other than the Partnership, that is a limited or general partnership, the limited liability company agreement of any Group Member that is a limited liability company, the certificate of incorporation and bylaws (or
similar organizational documents) of any Group Member that is a corporation, the
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joint venture agreement or similar governing document of any Group Member that is a joint venture and the governing or organizational or similar documents of any other Group Member that is a Person other than a limited or general partnership, limited liability company, corporation or joint venture,
in each case as such may be amended, supplemented or restated from time to time.
Hedge Contract
means any exchange, swap, forward, future, cap, floor, collar or other similar agreement or arrangement entered into for the purpose of hedging the Partnership Groups exposure to fluctuations in the price of interest rates, currencies or commodities in their operations and not for
speculative purposes.
Holder
has the meaning assigned to such term in
Section 7.20(a)
.
IDR Reset Common Units
has the meaning set forth in
Section 5.10(a)
.
IDR Reset Election
has the meaning set forth in
Section 5.10(a)
.
IFRS
means the international financial reporting standards.
Incentive Distribution Right
means a non-voting Limited Partner Interest, which Partnership Interest will confer upon the holder thereof only the rights and obligations specifically provided in this Agreement with respect to Incentive Distribution Rights (and no other rights otherwise available to or
other obligations of a holder of a Partnership Interest). Notwithstanding anything in this Agreement to the contrary, the holder of an Incentive Distribution Right shall not be entitled to vote such Incentive Distribution Right on any Partnership matter except as may otherwise be required by law.
Incentive Distributions
means any amount of cash distributed to the holders of the Incentive Distribution Rights pursuant to
Section 6.3.
Incremental Incentive Distributions
means, with respect to any newly issued equity securities of the Partnership, the incremental amount of any Incentive Distributions payable under
Section 6.3
based solely upon the amount of distributions paid in respect of such newly issued equity
securities.
Indemnified Persons
has the meaning assigned to such term in Section 7.20(c).
Indemnitee
means (a) the General Partner, (b) any Departing General Partner, (c) any Person who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person who is or was a member, partner, director, officer, fiduciary or trustee of any Person which any of the
preceding clauses of this definition describes, (e) any Person who is or was serving at the request of the General Partner or any Departing General Partner or any Affiliate of the General Partner or any Departing General Partner as an officer, director, member, partner, fiduciary or trustee of another
Person (
provided, however
, that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services), (f) the members of the Board of Directors, (g) the Officers, and (h) any other Person the Board of Directors designates as an
Indemnitee
for
purposes of this Agreement.
Initial Common Units
means the Common Units sold in the Initial Offering.
Initial General Partner Interest
has the meaning set forth in
Section 5.1(a)
.
Initial Limited Partner Interest
has the meaning set forth in
Section 5.1(a)
.
Initial Limited Partners
means GasLog and the Underwriters, in each case upon being admitted as Partners to the Partnership in accordance with
Section 10.1
.
Initial Offering
means the initial public offering and sale of Common Units to the public, as described in the Registration Statement, including any Common Units sold pursuant to the exercise of the Over-Allotment Option.
Initial Unit Price
means (a) with respect to the Common Units and the Subordinated Units, the initial public offering price per Common Unit at which the Underwriters first offered the Common Units to the public for sale as set forth on the cover page of the prospectus included as part of the
Registration Statement and first issued at or after the time the Registration Statement first became effective or (b) with respect to any other class or series of Units, the price per Unit at which such class or series of Units is initially sold by the Partnership, as determined by the Board of
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Directors, in each case adjusted as the Board of Directors determines to be appropriate to give effect to any distribution, subdivision or combination of Units.
Interim Capital Transactions
means the following transactions if they occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working Capital Borrowings and other than for items purchased on open account in the ordinary course of business) by
any Group Member and sales of debt securities of any Group Member; (b) sales of equity interests of any Group Member (including the Common Units sold to the Underwriters in the Initial Offering or pursuant to the exercise of the Over-Allotment Option); (c) sales or other voluntary or involuntary
dispositions of any assets of any Group Member (including assets acquired using Investment Capital Expenditures) other than (i) sales or other dispositions of inventory, accounts receivable and other assets in the ordinary course of business and (ii) sales or other dispositions of assets as part of normal
retirements or replacements; (d) capital contributions received; and (e) corporate reorganizations or restructurings.
Investment Capital Expenditures
means capital expenditures other than Maintenance and Replacement Capital Expenditures and Expansion Capital Expenditures.
Limited Partner
means, unless the context otherwise requires, the Organizational Limited Partner, each Initial Limited Partner, each additional Person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing General Partner upon the change of its status from
General Partner to Limited Partner pursuant to
Section 11.3
, in each case, in such Persons capacity as a limited partner of the Partnership;
provided, however
, that when the term
Limited Partner
is used herein in the context of any vote or other approval, including
Articles XIII
and
XIV
, such term shall not, solely for such purpose, include any holder of an Incentive Distribution Right (solely with respect to its Incentive Distribution Rights and not with respect to any other Limited Partner Interest held by such Person) except as may otherwise be required by law. Limited
Partners may include custodians, nominees or any other individual or entity in its own or any representative capacity.
Limited Partner Interest
means the ownership interest of a Limited Partner in the Partnership, which may be evidenced by Common Units, Subordinated Units, Incentive Distribution Rights or other Partnership Interests or a combination thereof or interest therein, and includes any and all benefits
to which such Limited Partner is entitled as provided in this Agreement, together with all obligations of such Limited Partner to comply with the terms and provisions of this Agreement;
provided, however
, that when the term
Limited Partner Interest
is used herein in the context of any vote or other
approval, including
Articles XIII
and
XIV
, such term shall not, solely for such purpose, include any Incentive Distribution Right except as may otherwise be required by law.
Liquidation Date
means (a) in the case of an event giving rise to the dissolution of the Partnership of the type described in
clauses (a)
and
(b)
of the first sentence of
Section 12.2
, the date on which the applicable time period during which the holders of Outstanding
Units have the right to elect to continue the business of the Partnership has expired without such an election being made, and (b) in the case of any other event giving rise to the dissolution of the Partnership, the date on which such event occurs.
Liquidating Trustee
means one or more Persons selected by the Board of Directors to perform the functions described in
Section 12.4
.
Maintenance and Replacement Capital Expenditures
means cash expenditures (including expenditures for the addition or improvement to, or the replacement of, the capital assets owned by any Group Member or for the acquisition of existing, or the construction of new, capital assets) if such
expenditure is made to maintain, including over the long term, the operating capacity and/or asset base of the Partnership Group or the revenue generated by the vessels owned by the Partnership Group. Maintenance and Replacement Capital Expenditures shall not include Expansion Capital
Expenditures or Investment Capital Expenditures. Maintenance and Replacement Capital Expenditures shall include interest payments (and related fees) on debt incurred and distributions on equity issued, in each case, to finance the acquisition or the construction of a replacement asset and paid in
respect of the period beginning on the date that the Group Member enters into a binding obligation to acquire or construct a replacement asset and ending on the earlier to occur of the date
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that such replacement asset Commences Commercial Service or the date that such replacement asset is abandoned or disposed of. Debt incurred to pay or equity issued to fund the construction period interest payments, or such construction period distributions on equity shall also be deemed to be debt
incurred or equity issued, as the case may be, to finance the construction of a replacement asset, and the Incremental Incentive Distributions paid in respect of such newly issued equity shall be deemed to be distributions paid on equity issued to finance the construction of a replacement asset.
Marshall Islands Act
means the Limited Partnership Act of The Republic of the Marshall Islands, as amended, supplemented or restated from time to time, and any successor to such statute.
Merger Agreement
has the meaning assigned to such term in
Section 14.1
.
Minimum Quarterly Distribution
means $0.375 per Unit per Quarter (or with respect to the period commencing on the Closing Date and ending on June
30, 2014, it means the product of $0.375 multiplied by a fraction of which the numerator is the number of days in such period and of which the
denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with
Section 5.10
and
Section 6.5
.
National Securities Exchange
means an exchange registered with the Commission under Section 6(a) of the Exchange Act, supplemented or restated from time to time, and any successor to such statute.
Net Agreed Value
means, (a) in the case of any Contributed Property, the Agreed Value of such property reduced by any liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed, and (b) in the case of any property distributed to a
Partner by the Partnership, the Agreed Value of such property, reduced by any indebtedness either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution.
Notice of Election to Purchase
has the meaning assigned to such term in
Section 15.1(b)
.
Officers
has the meaning assigned to such term in
Section 7.8(a)
.
Omnibus Agreement
means that Omnibus Agreement, dated as of the Closing Date, among GasLog, the Partnership, the General Partner and the Operating Company.
Operating Company
means GasLog Partners Holdings LLC, a Marshall Islands limited liability company, and any successors thereto.
Operating Expenditures
means all Partnership Group cash expenditures (or the Partnerships proportionate share of expenditures in the case of Subsidiaries that are not wholly-owned), including taxes, employee and director compensation, reimbursements of expenses of the General Partner,
repayment of Working Capital Borrowings, debt service payments, capital expenditures, payments made in the ordinary course of business under any Hedge Contracts (
provided,
(i) with respect to amounts paid in connection with the initial purchase of any Hedge Contract, such amounts shall be
amortized over the life of the Hedge Contract and (ii) that payments made in connection with the termination of any Hedge Contract prior to the expiration of its stipulated settlement or termination date shall be included in Operating Expenditures in equal quarterly installments over the remaining
scheduled life of such Hedge Contract), subject to the following:
(a) deemed repayments of Working Capital Borrowings deducted from Operating Surplus pursuant to
clause (b)(iii)
of the definition of Operating Surplus shall not constitute Operating Expenditures when actually repaid;
(b) payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness other than Working Capital Borrowings shall not constitute Operating Expenditures; and
(c) Operating Expenditures shall not include (i) Expansion Capital Expenditures, Investment Capital Expenditures or actual Maintenance and Replacement Capital Expenditures, but shall include Estimated Maintenance and Replacement Capital Expenditures, (ii) payment of transaction expenses
(including taxes) relating to Interim Capital Transactions or (iii) distributions to Partners,
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where capital expenditures consist of both (y) Maintenance and Replacement Capital Expenditures and (z) Expansion Capital Expenditures and/or Investment Capital Expenditures, the Board of Directors (with the concurrence of the Conflicts Committee) shall determine the allocation between the
amounts paid for each.
Operating Surplus
means, with respect to any period ending prior to the Liquidation Date, on a cumulative basis and without duplication:
(a) the sum of (i) $19.0 million, (ii) all cash receipts of the Partnership Group (or the Partnerships proportionate share of cash receipts in the case of Subsidiaries that are not wholly-owned) for the period beginning on the Closing Date and ending on the last day of such period, other than cash
receipts from Interim Capital Transactions (excluding return on capital from Investment Capital Expenditures);
provided
, that cash receipts from the termination of a Hedge Contract prior to its specified termination date shall be included in Operating Surplus in equal quarterly installments over the
remaining scheduled life of such Hedge Contract, (iii) all cash receipts of the Partnership Group (or the Partnerships proportionate share of cash receipts in the case of Subsidiaries that are not wholly-owned) after the end of such period but on or before the date of determination of Operating
Surplus with respect to such period resulting from Working Capital Borrowings and (iv) the amount of cash distributions paid on equity issued (including Incremental Incentive Distributions) in connection with the construction of a Capital Improvement or replacement of a capital asset and paid in
respect of the period beginning on the date that the Group Member enters into a binding obligation to commence the construction of such Capital Improvement or replacement of such capital asset and ending on the earlier to occur of the date that such Capital Improvement or replacement capital
asset Commences Commercial Service or the date that it is abandoned or disposed of (equity issued to fund the construction period interest payments on debt incurred (including periodic net payments under related Hedge Contracts), or construction period distributions on equity issued (including
Incremental Incentive Distributions), to finance the construction of a Capital Improvement or replacement of a capital asset shall also be deemed to be equity issued to finance the construction of a Capital Improvement or replacement of such capital asset for purposes of this
clause (iv)
),
less
(b) the sum of (i) Operating Expenditures for the period beginning immediately after the Closing Date and ending on the last day of such period, (ii) the amount of cash reserves (or the Partnerships proportionate share of cash reserves in the case of Subsidiaries that are not wholly-owned)
established by the Board of Directors to provide funds for future Operating Expenditures, (iii) all Working Capital Borrowings not repaid within 12 months after having been incurred and (iv) any cash loss realized on disposition of an Investment Capital Expenditure;
provided, however
, that
disbursements made (including contributions to a Group Member or disbursements on behalf of a Group Member) or cash reserves established, increased or reduced after the end of such period but on or before the date of determination of Available Cash with respect to such period shall be deemed
to have been made, established, increased or reduced, for purposes of determining Operating Surplus, within such period if the Board of Directors so determines.
Notwithstanding the foregoing,
Operating Surplus
with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero. Cash receipts from Investment Capital Expenditures shall be treated as cash receipts only to the extent they are a return on capital, but
in no event shall a return of capital be treated as cash receipts.
Opinion of Counsel
means a written opinion of counsel (who may be regular counsel to the Partnership or the General Partner or any of its Affiliates) acceptable to the Board of Directors.
Option Closing Date
means the date or dates on which any Common Units are sold by the Partnership to the Underwriters upon the exercise of the Over-Allotment Option.
Organizational Limited Partner
means GasLog Ltd., in its capacity as the organizational limited partner of the Partnership.
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Outstanding
means, with respect to Partnership Interests, all Partnership Interests that are issued by the Partnership and reflected as outstanding on the Partnerships books and records as of the date of determination;
provided, however
, that if at any time any Person or Group beneficially owns
more than 4.9% of the Outstanding Partnership Interests of any class then Outstanding (or would own such percentage in the event this limitation were applied to other Persons or Groups), all Partnership Interests owned by such Person or Group in excess of such limitation shall not be voted on any
matter and shall not be considered to be Outstanding when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required by law), calculating required votes (except for purposes of nominating a Person for election to the Board of Directors pursuant to
Section 7.3
), determining the presence of a quorum or for other similar purposes under this Agreement, except that Partnership Interests so owned shall be considered to be Outstanding for purposes of
Section 11.1(b)(iv)
(such Partnership Interests shall not, however, be treated as a separate
class of Partnership Interests for purposes of this Agreement);
provided, further
, that the foregoing limitation shall not apply to (a) the General Partner or its Affiliates or (b) any Person or Group who acquired more than 4.9% of any Partnership Interests with the prior approval of the Board of Directors
after considering the potential effects of such approval on the Partnership, except, in each case, such limitation shall remain applicable with respect to the voting of Common Units in the election of the Elected Directors as provided in
Section 7.2(a)(ii)
.
Over-Allotment Option
means the over-allotment option granted to the Underwriters pursuant to the Underwriting Agreement.
Partners
means the General Partner and the Limited Partners.
Partnership
means GasLog Partners LP, a Marshall Islands limited partnership, and any successors thereto.
Partnership Group
means the Partnership and its Subsidiaries, including the Operating Company, treated as a single consolidated entity.
Partnership Interest
means any class or series of equity interest in the Partnership (but excluding any options, rights, warrants, restricted units and appreciation rights relating to an equity interest in the Partnership), including Common Units, Subordinated Units, General Partner Units and Incentive
Distribution Rights.
Percentage Interest
means as of any date of determination (a) as to the General Partner with respect to General Partner Units and as to any Unitholder with respect to Units, the product obtained by multiplying (i) 100% less the percentage applicable to
clause (b)
below by (ii) the
quotient obtained by dividing (A) the number of Units held by such Unitholder or the number of General Partner Units held by the General Partner, as the case may be, by (B) the total number of all Outstanding Units and General Partner Units, and (b) as to the holders of other Partnership Interests
issued by the Partnership in accordance with
Section 5.4
, the percentage established as a part of such issuance. The Percentage Interest with respect to an Incentive Distribution Right shall at all times be zero.
Person
means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, association, governmental agency or political subdivision thereof or other entity.
Plan of Conversion
has the meaning assigned to such term in
Section 14.1
.
Pro Rata
means (a) when used with respect to Units or any class thereof, apportioned equally among all designated Units in accordance with their relative Percentage Interests, (b) when used with respect to Partners or Record Holders, apportioned among all Partners or Record Holders in
accordance with their relative Percentage Interests and (c) when used with respect to holders of Incentive Distribution Rights, apportioned equally among all holders of Incentive Distribution Rights in accordance with the relative number or percentage of Incentive Distribution Rights held by each such
holder.
Purchase Date
means the date determined by the General Partner as the date for purchase of all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests owned by the General Partner and its Affiliates) pursuant to
Article XV
.
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Quarter
means, unless the context requires otherwise, a fiscal quarter, or, with respect to the first fiscal quarter including the Closing Date, the portion of such fiscal quarter after the Closing Date, of the Partnership.
Record Date
means the date established by the Board of Directors or otherwise in accordance with this Agreement for determining (a) the identity of the Record Holders entitled to notice of, or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer.
Record Holder
means (a) the Person in whose name a Common Unit is registered on the books of the Transfer Agent as of the opening of business on a particular Business Day, or (b) with respect to other Partnership Interests, the Person in whose name any such other Partnership Interest is
registered on the books that the Board of Directors has caused to be kept as of the opening of business on such Business Day (which books may be kept, at the Board of Directors option, by the Transfer Agent).
Registration Statement
means the Partnerships Registration Statement on Form F-1 (Registration No. 333-195109) as it has been or as it may be amended or supplemented from time to time, filed by the Partnership with the Commission under the Securities Act to register the offering and sale of
the Common Units in the Initial Offering.
Reset MQD
has the meaning set forth in
Section 5.10(e)
.
Reset Notice
has the meaning set forth in
Section 5.10(b)
.
Second Target Distribution
means $0.46875 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on June 30, 2014, it means the product of $0.46875 multiplied by a fraction of which the numerator is equal to the number of days in such period and of
which the denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with
Section 5.10
and
Section 6.5
.
Securities Act
means the Securities Act of 1933, as amended, supplemented or restated from time to time and any successor to such statute.
Special Approval
means approval by a majority of the members of the Conflicts Committee.
Subordinated Unit
means a Unit representing a fractional part of the Partnership Interests of all Limited Partners and having the rights and obligations specified with respect to Subordinated Units in this Agreement. The term
Subordinated Unit
does not include a Common Unit. A Subordinated
Unit that is convertible into a Common Unit shall not constitute a Common Unit until such conversion occurs.
Subordination Period
means the period commencing on the Closing Date and ending on the first to occur of the following dates:
(a) the second Business Day following the distribution of Available Cash to Partners pursuant to
Section 6.2(a)
in respect of any Quarter ending on or after March 31, 2017, in respect of which (i) (A) distributions of Available Cash from Operating Surplus on each of the Outstanding
Common Units, Subordinated Units, General Partner Units and any other Outstanding Units that are senior or equal in right of distribution to the Subordinated Units equaled or exceeded the sum of the Minimum Quarterly Distribution during each of the three consecutive, non-overlapping four-
Quarter periods immediately preceding such date and (B) the Adjusted Operating Surplus for each of the three consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the Common Units,
Subordinated Units, General Partner Units and any other Units that are senior or equal in right of distribution to the Subordinated Units that were Outstanding during such periods on a Fully Diluted Weighted Average Basis with respect to each such period and (ii) there are no Cumulative
Common Unit Arrearages; and
(b) the date on which the General Partner is removed as general partner of the Partnership upon the requisite vote by holders of Outstanding Units under circumstances where Cause does
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not exist and no Units held by the General Partner and its Affiliates are voted in favor of such removal.
Subsidiary
means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at
the date of determination, by such Person, by one or more Subsidiaries (as defined, but excluding
subsection (d)
of this definition) of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary (as defined, but excluding
subsection (d)
of this definition) of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly
or indirectly, at the date of determination, by such Person, by one or more Subsidiaries (as defined, but excluding
subsection (d)
of this definition) of such Person, or a combination thereof, (c) any other Person (other than a corporation or a partnership) in which such Person, one or more
Subsidiaries (as defined, but excluding
subsection (d)
of this definition) of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other
governing body of such Person, or (d) any other Person in which such Person, one or more Subsidiaries (as defined, but excluding this
subsection (d)
of this definition) of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) less than a majority
ownership interest or (ii) less than the power to elect or direct the election of a majority of the directors or other governing body of such Person,
provided
, that (A) such Person, one or more Subsidiaries (as defined, but excluding this subsection (d) of this definition) of such Person, or a combination
thereof, directly or indirectly, at the date of the determination, has at least a 20% ownership interest in such other Person, (B) such Person accounts for such other Person (under IFRS, as in effect on the later of the date of investment in such other Person or material expansion of the operations of such
other Person) on a consolidated or equity accounting basis, (C) such Person has directly or indirectly material negative control rights regarding such other Person including over such other Persons ability to materially expand its operations beyond that contemplated at the date of investment in such other
Person, and (D) such other Person is (i) other than with respect to the Operating Company, formed and maintained for the sole purpose of owning or leasing, operating and chartering vessels and (ii) obligated under its constituent documents, or as a result of a unanimous agreement of its owners, to
distribute to its owners all of its income on at least an annual basis (less any cash reserves that are approved by such Person).
Surviving Business Entity
has the meaning assigned to such term in
Section 14.2(b)(ii)
.
Third Target Distribution
means $0.56250 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on June 30, 2014, it means the product of $0.56250 multiplied by a fraction of which the numerator is equal to the number of days in such period and of
which the denominator is the total number of days in the Quarter in which the Closing Date occurs), subject to adjustment in accordance with
Section 5.10
and
Section 6.5
.
Trading Day
means, for the purpose of determining the Current Market Price of any class of Limited Partner Interests, a day on which the principal National Securities Exchange on which such class of Limited Partner Interests is listed or admitted for trading is open for the transaction of business
or, if Limited Partner Interests of a class are not listed on any National Securities Exchange, a day on which banking institutions in New York City generally are open.
transfer
has the meaning assigned to such term in
Section 4.4(a)
.
Transfer Agent
means such bank, trust company or other Person (including the General Partner or one of its Affiliates) as shall be appointed from time to time by the Partnership to act as registrar and transfer agent for the Common Units;
provided
,
however
, that if no Transfer Agent is
specifically designated for any other Partnership Interests, the Partnership shall act in such capacity.
Underwriter
means each Person named as an underwriter in Schedule I to the Underwriting Agreement who purchases Common Units pursuant thereto.
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Underwriting Agreement
means the Underwriting Agreement dated [
], 2014 among the Underwriters, the Partnership, the General Partner, the Operating Company, and GasLog, providing for the purchase of Common Units from the Partnership by such Underwriters in connection with the Initial
Offering.
Unit
means a Partnership Interest that is designated as a
Unit
and shall include Common Units and Subordinated Units, but shall not include (a) General Partner Units (or the General Partner Interest represented thereby) or (b) the Incentive Distribution Rights.
Unitholders
means the holders of Units.
Unit Majority
means (a) during the Subordination Period, at least (i) a majority of the Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates) voting as a single class and (ii) a majority of the Outstanding Subordinated Units, voting as a single class,
and (b) after the end of the Subordination Period, at least a majority of the Outstanding Common Units, voting as a single class.
Unit Register
means the register of the Partnership for the registration and transfer of Limited Partnership Interests as provided in
Section 4.5
.
Unrecovered Capital
means at any time, with respect to a Unit, the Initial Unit Price less the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial Common Unit and any distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore made in respect of an Initial Common Unit, adjusted as the Board of Directors determines to be appropriate to give effect to any distribution, subdivision or combination of such Units.
Vessel Interests
means the capital stock and other equity interests in certain of GasLogs wholly owned Subsidiaries that have interests in three vesselsthe
GasLog Shanghai
, the
GasLog Santiago
and the
GasLog Sydney
.
Volume-Weighted Average Market Price
means, for a specified period of consecutive Trading Days for the Common Units, an amount equal to (a) the cumulative sum of the products of (x) the sale price for each trade of Common Units occurring during such period multiplied by (y) the number
of Common Units sold at such price, divided by (b) the total number of Common Units so traded during such period.
Withdrawal Opinion of Counsel
has the meaning assigned to such term in
Section 11.1(b)(i)
.
Working Capital Borrowings
means borrowings used solely for working capital purposes or to pay distributions to Partners made pursuant to a credit facility, commercial paper facility or similar financing arrangement available to a Group Member,
provided
, that when such borrowing is incurred it
is the intent of the borrower to repay such borrowings within 12 months from the date of such borrowings other than from additional Working Capital Borrowings.
Section 1.2.
Construction
. Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and
Sections refer to Articles and Sections of this Agreement; (c) the term include or includes means includes, without limitation, and including means including, without limitation; and (d) the terms hereof, herein and hereunder refer to this Agreement as a whole and not to any particular
provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.
ARTICLE II
Section 2.1.
Formation
. The General Partner and the Organizational Limited Partner previously formed the Partnership as a limited partnership pursuant to the provisions of the Marshall Islands Act and hereby amend and restate the original Agreement of Limited Partnership of the Partnership in its
entirety. This amendment and restatement shall become effective as of the date hereof. Except
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ORGANIZATION
as expressly provided to the contrary in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of the Partners and the administration, dissolution and termination of the Partnership shall be governed by the Marshall Islands Act. All Partnership Interests shall constitute
personal property of the owner thereof for all purposes and a Partner has no interest in specific Partnership property.
Section 2.2.
Name
. The name of the Partnership shall be GasLog Partners LP. The Partnerships business may be conducted under any other name or names as determined by the Board of Directors. The words Limited Partnership or the letters LP or similar words or letters shall be included
in the Partnerships name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The Board of Directors may change the name of the Partnership at any time and from time to time in compliance with the requirements of the Marshall Islands Act and shall notify
the General Partner and the Limited Partners of such change in the next regular communication to the Limited Partners.
Section 2.3.
Registered Office; Registered Agent; Principal Office; Other Offices
. Unless and until changed by the Board of Directors, the registered office of the Partnership in The Marshall Islands shall be located at Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands
MH 96960, and the registered agent for service of process on the Partnership in The Marshall Islands at such registered office shall be The Trust Company of The Marshall Islands, Inc. The principal office of the Partnership shall be located at Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco,
or such other place as the Board of Directors may from time to time designate by notice to the General Partner and the Limited Partners. The Partnership may maintain offices at such other place or places within or outside The Marshall Islands as the Board of Directors determines to be necessary or
appropriate. The address of the General Partner shall be at Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco, or such other place as the General Partner may from time to time designate by notice to the Limited Partners.
Section 2.4.
Purpose and Business
. The purpose and nature of the business to be conducted by the Partnership shall be to (a) engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business
activity that lawfully may be conducted by a limited partnership organized pursuant to the Marshall Islands Act and, in connection therewith, to exercise all of the rights and powers conferred upon the Partnership pursuant to the agreements relating to such business activity, and (b) do anything necessary
or appropriate to the foregoing, including the making of capital contributions or loans to a Group Member.
Section 2.5.
Powers
. The Partnership shall be empowered to do any and all acts and things necessary and appropriate for the furtherance and accomplishment of the purposes and business described in
Section 2.4
and for the protection and benefit of the Partnership.
Section 2.6.
Term
. The term of the Partnership commenced upon the filing of the Certificate of Limited Partnership in accordance with the Marshall Islands Act and shall continue in existence until the dissolution of the Partnership in accordance with the provisions of
Article XII
. The
existence of the Partnership as a separate legal entity shall continue until the cancellation of the Certificate of Limited Partnership as provided in the Marshall Islands Act.
Section 2.7.
Title to Partnership Assets
. Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets
or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner, one or more of its Affiliates or one or more nominees, as the Board of Directors may determine. The General Partner hereby declares and warrants that any Partnership
assets for which record title is held in the name of the General Partner or one or more of its Affiliates or one or more nominees shall be held by the General Partner or such Affiliate or nominee for the use and benefit of the Partnership in accordance with the provisions of this Agreement;
provided,
however
, that the General Partner shall use commercially reasonable efforts to cause record title to such assets (other than those assets in respect of which the Board of Directors determines that the expense and difficulty of conveyancing
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makes transfer of record title to the Partnership impracticable) to be vested in the Partnership as soon as reasonably practicable; and,
provided, further
, that, prior to the withdrawal or removal of the General Partner or as soon thereafter as practicable, the General Partner shall use reasonable efforts to
effect the transfer of record title to the Partnership and, prior to any such transfer, will provide for the use of such assets in a manner satisfactory to the Board of Directors. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in
which record title to such Partnership assets is held.
ARTICLE III
Section 3.1.
Limitation of Liability
. The Limited Partners shall have no liability under this Agreement except as expressly provided in this Agreement or the Marshall Islands Act.
Section 3.2.
Management of Business
. No Limited Partner, in its capacity as such, shall participate in the operation, management or control (within the meaning of the Marshall Islands Act) of the Partnerships business, transact any business in the Partnerships name or have the power to sign
documents for or otherwise bind the Partnership. Any action taken by any Affiliate of the General Partner or any officer, director, employee, manager, member, general partner, agent or trustee of the General Partner or any of its Affiliates, or any officer, director, employee, manager, member, general
partner, agent or trustee of a Group Member, in its capacity as such, shall not be deemed to be participation in the control of the business of the Partnership by a limited partner of the Partnership (within the meaning of Section 30 of the Marshall Islands Act) and shall not affect, impair or eliminate the
limitations on the liability of the Limited Partners under this Agreement.
Section 3.3.
Outside Activities of the Limited Partners
. Subject to the provisions of Section 7.13 and the Omnibus Agreement, which shall continue to be applicable to the Persons referred to therein, regardless of whether such Persons shall also be Limited Partners, each Limited Partner shall be
entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities in direct competition with the Partnership Group. Neither the Partnership nor any of the other Partners shall have any rights by virtue of
this Agreement in any business ventures of any Limited Partner.
Section 3.4.
Rights of Limited Partners
. (a) In addition to other rights provided by this Agreement or by the Marshall Islands Act, and except as limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partners interest as a Limited Partner
in the Partnership, upon reasonable written demand stating the purpose of such demand and at such Limited Partners own expense, to:
(i) have furnished to him a current list of the name and last known business, residence or mailing address of each Partner;
(ii) obtain true and full information regarding the amount of cash and a description and statement of the Net Agreed Value of any other Capital Contribution by each Partner and which each Partner has agreed to contribute in the future, and the date on which each became a Partner;
(iii) have furnished to him a copy of this Agreement and the Certificate of Limited Partnership and all amendments thereto;
(iv) obtain true and full information regarding the status of the business and financial condition of the Partnership Group; and
(v) obtain such other information regarding the affairs of the Partnership as is just and reasonable.
(b) The Board of Directors may keep confidential from the Limited Partners, for such period of time as the Board of Directors deems reasonable, (i) any information that the Board of Directors reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which
the Board of Directors in good faith believes (A) is not in the best interests of the Partnership Group, (B) could damage the Partnership Group or its business or (C) that any Group
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RIGHTS OF LIMITED PARTNERS
Member is required by law or by agreement with any third party to keep confidential (other than agreements with Affiliates of the Partnership the primary purpose of which is to circumvent the obligations set forth in this
Section 3.4
).
ARTICLE IV
Section 4.1.
Certificates
. Notwithstanding anything otherwise to the contrary herein, unless the General Partner shall determine otherwise in respect of some or all of any or all classes of Partnership Interests, Partnership Interests shall not be evidenced by certificates. Certificates that may be issued
shall be executed on behalf of the Partnership by the Chairman of the Board of Directors, President, Chief Executive Officer or any Executive Vice President or Vice President and the Chief Financial Officer or the Secretary or any Assistant Secretary of the General Partner. If a Transfer Agent has
been appointed for a class of Partnership Interests, no Certificate for such class of Partnership Interests shall be valid for any purpose until it has been countersigned by the Transfer Agent;
provided, however
, that if the General Partner elects to cause the Partnership to issue Partnership Interests of such
class in global form, the Certificate shall be valid upon receipt of a certificate from the Transfer Agent certifying that the Partnership Interests have been duly registered in accordance with the directions of the Partnership. If Common Units are evidenced by Certificates, on or after the date on which
Subordinated Units are converted into Common Units pursuant to the terms of
Section 5.6
, the Record Holders of such Subordinated Units (a) if the Subordinated Units are evidenced by Certificates, may exchange such Certificates for Certificates evidencing Common Units or (b) if the
Subordinated Units are not evidenced by Certificates, shall be issued Certificates evidencing Common Units.
Section 4.2.
Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Transfer Agent (for Common Units) or the Partnership (for Partnership Interests other than Common Units), the appropriate Officers on behalf of the Partnership shall execute, and the
Transfer Agent (for Common Units) shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type of Partnership Interests as the Certificate so surrendered.
(b) The appropriate Officers on behalf of the Partnership shall execute and deliver, and the Transfer Agent (for Common Units), as applicable, shall countersign, a new Certificate in place of any Certificate previously issued, or issue uncertificated Units, if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the Partnership, that a previously issued Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate or the issuance of uncertificated Units before the Partnership has notice that the Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;
(iii) if requested by the Partnership, delivers to the Partnership a bond, in form and substance satisfactory to the Partnership, with surety or sureties and with fixed or open penalty as the Board of Directors may direct to indemnify the Partnership, the Partners, the General Partner and the
Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the Board of Directors.
If a Limited Partner fails to notify the Partnership within a reasonable period of time after he has notice of the loss, destruction or theft of a Certificate, and a transfer of the Limited Partner Interests represented by the Certificate is registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Limited Partner shall be precluded from making any claim against the Partnership, the General Partner or the Transfer Agent for such transfer or for a new Certificate or uncertificated Units.
(c) As a condition to the issuance of any new Certificate or uncertificated Units under this
Section 4.2
, the Partnership may require the payment of a sum sufficient to cover any tax or other
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CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS
governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Transfer Agent) reasonably connected therewith.
Section 4.3.
Record Holders
. The Partnership shall be entitled to recognize the Record Holder as the Partner with respect to any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest in, such Partnership Interest on the part of any other
Person, regardless of whether the Partnership shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which such Partnership Interests are listed or admitted to trading. Without
limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring and/or holding Partnership Interests, as between the
Partnership on the one hand, and such other Persons on the other, such representative Person (a) shall be the Record Holder of such Partnership Interest and (b) shall be bound by this Agreement and shall have the rights and obligations of a Partner hereunder and as, and to the extent, provided for
herein.
Section 4.4.
Transfer Generally.
(a) The term transfer, when used in this Agreement with respect to a Partnership Interest, shall mean a transaction (i) by which the General Partner assigns its General Partner Units to another Person or by which a holder of Incentive Distribution Rights assigns its
Incentive Distribution Rights to another Person, and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii) by which the holder of a Limited Partner Interest (other than an Incentive Distribution Right) assigns such
Limited Partner Interest to another Person who is or becomes a Limited Partner, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, excluding a pledge, encumbrance, hypothecation or mortgage, but including any transfer upon foreclosure of any pledge,
encumbrance, hypothecation or mortgage.
(b) No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this
Article IV
. Any transfer or purported transfer of a Partnership Interest not made in accordance with this
Article IV
shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a disposition by any stockholder, member, partner or other owner of the General Partner of any or all of the shares of stock, membership interests, partnership interests or other ownership interests in the General Partner, and the
term transfer shall not mean any such disposition.
Section 4.5.
Registration and Transfer of Limited Partner Interests.
(a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register in which, subject to such reasonable regulations as it may prescribe and subject to the provisions of
Section 4.5(b)
, the
Partnership will provide for the registration and transfer of Limited Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent for the purpose of registering Common Units and transfers of such Common Units as herein provided. The Partnership shall not recognize transfers of
Certificates evidencing Limited Partner Interests unless such transfers are effected in the manner described in this
Section 4.5
. Upon surrender of a Certificate for registration of transfer of any Limited Partner Interests evidenced by a Certificate, and subject to the provisions of
Section
4.5(b)
, the appropriate Officers on behalf of the Partnership shall execute and deliver, and in the case of Common Units, the Transfer Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holders instructions, one or more
new Certificates evidencing the same aggregate number and type of Limited Partner Interests as was evidenced by the Certificate so surrendered.
(b) If Limited Partner Interests are evidenced by Certificates, the Partnership shall not recognize any transfer of Limited Partner Interests until the Certificates evidencing such Limited Partner Interests are surrendered for registration of transfer. No charge shall be imposed by the Partnership for such
transfer;
provided, however
, that as a condition to the issuance of any new Certificate under this
Section 4.5
, the Partnership may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto.
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(c) By acceptance of the transfer of a Limited Partner Interest in accordance with this
Section 4.5
and except as otherwise provided in
Section 4.8
, each transferee of a Limited Partner Interest (including any nominee holder or an agent or representative acquiring such Limited
Partner Interests for the account of another Person) (i) shall be admitted to the Partnership as a Limited Partner with respect to the Limited Partner Interests so transferred to such Person when any such transfer or admission is reflected in the books and records of the Partnership and such Limited
Partner becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) represents that the transferee has the capacity, power and authority to enter into this Agreement and
(iv) makes the consents, acknowledgments and waivers contained in this Agreement, all with or without execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner shall not constitute an amendment to this Agreement.
(d) Subject to the provisions set forth in this
Article IV
and applicable securities laws, Limited Partner Interests shall be freely transferable.
(e) The General Partner and its Affiliates shall have the right at any time to transfer their Subordinated Units and Common Units (whether issued upon conversion of the Subordinated Units or otherwise) to one or more Persons.
Section 4.6.
Transfer of the General Partners General Partner Interest.
(a) Subject to
Section 4.6(c)
below, prior to March 31, 2024, the General Partner shall not transfer all or any part of its General Partner Interest (represented by General Partner Units) to a Person unless such transfer
(i) has been approved by the prior written consent or vote of the holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General Partner Interest to (A) an Affiliate of the
General Partner (other than an individual) or (B) another Person (other than an individual) in connection with (y) the merger or consolidation of the General Partner with or into such other Person or (z) the transfer by the General Partner of all or substantially all of its assets to such other Person.
(b) Subject to
Section 4.6(c)
below, on or after March 31, 2024, the General Partner may transfer all or any of its General Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all or any part of its General Partner Interest to another Person shall be permitted unless (i) the transferee agrees to assume the rights and duties of the General Partner under this Agreement and to be bound
by the provisions of this Agreement, (ii) the Partnership receives an Opinion of Counsel that such transfer would not result in the loss of limited liability of any Limited Partner or of any limited partner or member of any other Group Member under the laws of any such entitys jurisdiction of formation
and (iii) such transferee also agrees to purchase all (or the appropriate portion thereof, if applicable) of the partnership or membership interest of the General Partner as the general partner or managing member, if any, of each other Group Member. In the case of a transfer pursuant to and in
compliance with this
Section 4.6
, the transferee or successor (as the case may be) shall, subject to compliance with the terms of
Section 10.3
, be admitted to the Partnership as the General Partner immediately prior to the transfer of the General Partner Interest, and the business of the
Partnership shall continue without dissolution.
Section 4.7.
Transfer of Incentive Distribution Rights
. Prior to March 31, 2019, a holder of Incentive Distribution Rights may transfer any or all of the Incentive Distribution Rights held by such holder without any consent of the Unitholders to (a) an Affiliate of such holder (other than an individual)
or (b) another Person (other than an individual) in connection with (i) the merger or consolidation of such holder of Incentive Distribution Rights with or into such other Person or (ii) the transfer by such holder of all or substantially all of its assets to such other Person. Any other transfer of the
Incentive Distribution Rights prior to March 31, 2019, shall require the prior approval of holders of at least a majority of the Outstanding Common Units (excluding Common Units held by GasLog and its Affiliates). On or after March 31, 2019, any holder of Incentive Distribution Rights may transfer
any or all of its Incentive Distribution Rights without Unitholder
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approval. Notwithstanding anything herein to the contrary, (a) the transfer of Common Units issued pursuant to
Section 5.10
shall not be treated as a transfer of all or any part of the Incentive Distribution Rights and (b) no transfer of Incentive Distribution Rights to another Person shall be
permitted unless the transferee agrees to be bound by the provisions of this Agreement. The General Partner and any transferee or transferees of the Incentive Distribution Rights may agree in a separate instrument as to the General Partners exercise of its rights with respect to the Incentive
Distribution Rights under
Section 11.3
.
Section 4.8.
Restrictions on Transfers.
(a) Except as provided in
Section 4.8(b)
below, but notwithstanding the other provisions of this
Article IV
, no transfer of any Partnership Interests shall be made if such transfer would (i) violate the then applicable U.S. federal or state
securities laws, laws of the Republic of the Marshall Islands or rules and regulations of the Commission, any state securities commission or any other governmental authority with jurisdiction over such transfer or (ii) terminate the existence or qualification of the Partnership or any Group Member under
the laws of the jurisdiction of its formation.
(b) Nothing contained in this
Article IV
, or elsewhere in this Agreement, shall preclude the settlement of any transactions involving Partnership Interests entered into through the facilities of any National Securities Exchange on which such Partnership Interests are listed or admitted to
trading.
ARTICLE V
Section 5.1.
Contributions Prior to the Closing Date.
(a) In connection with the formation of the Partnership under the Marshall Islands Act, the General Partner made an initial Capital Contribution in the amount of $20, for a 2% General Partner Interest in the Partnership (the
Initial General
Partner Interest
) and was admitted as the General Partner of the Partnership, and the Organizational Limited Partner made an initial Capital Contribution in the amount of $980 for a 98% limited partner interest in the Partnership (the
Initial Limited Partner Interest
) and was admitted as a Limited
Partner of the Partnership.
Section 5.2.
Initial Unit Issuances; Tax Election; Initial Contributors and Redemption of Common Units.
(a) On the Closing Date, automatically pursuant to this Agreement and the Contribution Agreement (i) GasLog shall make a Capital Contribution of the Vessel Interests to the Partnership in
exchange for (A) 162,358 Common Units, representing a 0.81% limited partner interest in the Partnership, (B) 9,822,358 Subordinated Units, representing a 49.0% limited partner interest in the Partnership, (C) all of the Incentive Distribution Rights, (D) a payment of $[] and (E) the right to receive the
Deferred Issuance and Distribution, (ii) the Initial Limited Partner Interest shall be redeemed and (iii) the Initial General Partner Interest shall be converted into 400,913 General Partner Units (representing a 2.0% interest in the Partnership).
(b) On the Closing Date and pursuant to the Underwriting Agreement, each Underwriter shall contribute cash to the Partnership in exchange for the issuance by the Partnership of Common Units to each Underwriter, all as set forth in the Underwriting Agreement.
(c) Upon the exercise, if any, of the Over-Allotment Option, each Underwriter shall contribute cash to the Partnership in exchange for the issuance by the Partnership of Common Units to each Underwriter, all as set forth in the Underwriting Agreement.
(d) Effective on or before the Closing Date, the Partnership shall elect to be treated as an association taxable as a corporation for U.S. federal income tax purposes.
(e) No Limited Partner Interests will be issued or issuable as of or at the Closing Date other than (i) the Common Units and Subordinated Units issuable pursuant to Section 5.2(a), (ii) any Common Units issued pursuant to the Deferred Issuance and Distribution, (iii) the Common Units issued to
the Underwriters as described in subparagraphs (b) and (c) hereof and (iv) the Incentive Distribution Rights.
Section 5.3.
Interest and Withdrawal
. No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be entitled to the withdrawal or return of its Capital Contribution,
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CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
except to the extent, if any, that distributions made pursuant to this Agreement or upon dissolution of the Partnership may be considered and permitted as such by law and then only to the extent provided for in this Agreement. Except to the extent expressly provided in this Agreement, no Partner shall
have priority over any other Partner either as to the return of Capital Contributions or as to profits, losses or distributions.
Section 5.4.
Issuances of Additional Partnership Interests.
(a) The Partnership may issue additional Partnership Interests and options, rights, warrants and appreciation rights relating to the Partnership Interests for any Partnership purpose at any time and from time to time to such Persons for such
consideration and on such terms and conditions as the Board of Directors shall determine, all without the approval of any Partners.
(b) Each additional Partnership Interest authorized to be issued by the Partnership pursuant to
Section 5.4(a)
may be issued in one or more classes, or one or more series of any such classes, with such designations, preferences, rights, powers and duties (which may be senior to existing
classes and series of Partnership Interests), as shall be fixed by the Board of Directors, including (i) the right to share in Partnership distributions; (ii) the rights upon dissolution and liquidation of the Partnership; (iii) whether, and the terms and conditions upon which, the Partnership may or shall be
required to redeem the Partnership Interest (including sinking fund provisions); (iv) whether such Partnership Interest is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (v) the terms and conditions upon which each Partnership
Interest will be issued, evidenced by certificates and assigned or transferred; (vi) the method for determining the Percentage Interest as to such Partnership Interest; and (vii) the right, if any, of each such Partnership Interest to vote on Partnership matters, including matters relating to the relative rights,
preferences and privileges of such Partnership Interest.
(c) The Board of Directors shall take all actions that it determines to be necessary or appropriate in connection with (i) each issuance of Partnership Interests and options, rights, warrants and appreciation rights relating to Partnership Interests pursuant to this
Section 5.4
, including Common
Units issued in connection with the Deferred Issuance and Distribution, (ii) the conversion of the General Partner Interest (represented by General Partner Units) or any Incentive Distribution Rights into Units pursuant to the terms of this Agreement, (iii) the issuance of Common Units pursuant to
Section 5.10,
(iv) the admission of additional Limited Partners and (v) all additional issuances of Partnership Interests. The Board of Directors shall determine the relative rights, powers and duties of the holders of the Units or other Partnership Interests being so issued. The Board of Directors
shall do all things necessary to comply with the Marshall Islands Act and is authorized and directed to do all things that it determines to be necessary or appropriate in connection with any future issuance of Partnership Interests or in connection with the conversion of the General Partner Interest or any
Incentive Distribution Rights into Units pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency or any National Securities Exchange on which the Units or other Partnership Interests are listed or
admitted to trading.
Section 5.5.
Limitations on Issuance of Additional Partnership Interests
. The Partnership may issue an unlimited number of Partnership Interests (or options, rights, warrants or appreciation rights related thereto) pursuant to
Section 5.4
without the approval of the Partners;
provided, however
,
that no fractional units shall be issued by the Partnership; and
provided, further
, that without the approval of the General Partner, the Partnership shall not issue any equity where such issuance (as determined by the Board of Directors) (a) is not reasonably expected to be accretive to equity within 12
months of issuance or (b) would otherwise have a material adverse impact on the General Partner, the General Partner Interest or the ability of the Partnership to satisfy the tests set forth in the definition of Subordination Period.
Section 5.6.
Conversion of Subordinated Units to Common Units.
(a) The Subordinated Units shall convert into Common Units on a one-for-one basis upon the expiration of the Subordination Period.
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(b) Notwithstanding any other provision of this Agreement, the Subordinated Units will automatically convert into Common Units on a one-for-one basis as set forth in, and pursuant to the terms of,
Section 11.4
.
Section 5.7.
Limited Preemptive Right.
(a) Except as provided in this
Section 5.7
, no Person shall have any preemptive, preferential or other similar right with respect to the issuance of any Partnership Interest, whether unissued, held in the treasury or hereafter created. The General Partner
shall have the right, which it may from time to time assign in whole or in part to any of its Affiliates, to purchase Partnership Interests from the Partnership whenever, and on the same terms that, the Partnership issues Partnership Interests to Persons other than the General Partner and its Affiliates, to
the extent necessary to maintain the Percentage Interests of the General Partner and its Affiliates equal to that which existed immediately prior to the issuance of such Partnership Interests.
(b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other than Common Units issued pursuant to
Section 5.2(a)
,
Section 5.2(b)
and
Section 5.2(c)
and Common Units issued in connection with a reset of the Incentive Distribution target
levels or the issuance of Limited Partner Interests upon conversion of outstanding Limited Partner Interests), the General Partner may, in exchange for a proportionate number of General Partner Units, make additional Capital Contributions in an amount equal to the product obtained by multiplying (i)
the quotient determined by dividing (A) the General Partners Percentage Interest immediately prior to such issuance by (B) 100 less the General Partners Percentage Interest immediately prior to such issuance by (ii) the amount contributed to the Partnership by the Limited Partners in exchange for
such additional Limited Partner Interests. The General Partner shall not be obligated to make additional Capital Contributions to the Partnership.
Section 5.8.
Splits and Combinations.
(a) Subject to
Section 5.8(d)
and
Section 6.5
(dealing with adjustments of distribution levels), the Partnership may make a Pro Rata distribution of Partnership Interests to all Record Holders or may effect a subdivision or combination of
Partnership Interests so long as, after any such event, each Partner shall have the same Percentage Interest in the Partnership as before such event, and any amounts calculated on a per Unit basis (including any Common Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a number of
Units are proportionately adjusted.
(b) Whenever such a Pro Rata distribution, subdivision or combination of Partnership Interests is declared, the Board of Directors shall select a Record Date as of which the distribution, subdivision or combination shall be effective and shall send notice thereof at least 20 days prior to such Record
Date to each Record Holder as of a date not less than 10 days prior to the date of such notice. The Board of Directors also may cause a firm of independent public accountants selected by it to calculate the number of Partnership Interests to be held by each Record Holder after giving effect to such
distribution, subdivision or combination. The Board of Directors shall be entitled to rely on any certificate provided by such firm as conclusive evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or combination, the Partnership may issue Certificates or uncertificated Partnership Interests to the Record Holders of Partnership Interests as of the applicable Record Date representing the new number of Partnership Interests held by such
Record Holders, or the Board of Directors may adopt such other procedures that it determines to be necessary or appropriate to reflect such changes. If any such combination results in a smaller total number of Partnership Interests Outstanding, the Partnership shall require, as a condition to the delivery
to a Record Holder of such new Certificate or uncertificated Partnership Interest, the surrender of any Certificate held by such Record Holder immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution, subdivision or combination of Units. If a distribution, subdivision or combination of Units would result in the issuance of fractional Units but for the provisions of this
Section 5.8(d)
, each fractional Unit shall be
rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to the next higher Unit).
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Section 5.9.
Fully Paid and Non-Assessable Nature of Limited Partner Interests
. All Limited Partner Interests issued pursuant to, and in accordance with the requirements of, this
Article V
shall be fully paid and non-assessable Limited Partner Interests in the Partnership, except as such non-
assessability may be affected by the Marshall Islands Act.
Section 5.10.
Issuance of Common Units in Connection with Reset of Incentive Distribution Rights.
(a) Subject to the provisions of this
Section 5.10
, the holder of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a
majority in interest of the Incentive Distribution Rights) shall have the right, at any time when there are no Subordinated Units Outstanding and the Partnership has made a distribution pursuant to
Section 6.3(b)(v)
for each of the four most recently completed Quarters and the amount of each
such distribution did not exceed Adjusted Operating Surplus for such Quarter, to make an election (the
IDR Reset Election
) to cause the Minimum Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions of
Section 5.10(e)
and, in connection
therewith, the holder or holders of the Incentive Distribution Rights will become entitled to receive their respective proportionate shares of a number of Common Units (
IDR Reset Common Units
) derived by dividing (i) the average of the aggregate amount of cash distributions made by the
Partnership for each of the two full Quarters immediately preceding the giving of the Reset Notice in respect of the Incentive Distribution Rights by (ii) the average of the cash distributions made by the Partnership in respect of each Common Unit for each of the two full Quarters immediately preceding
the giving of the Reset Notice (the number of Common Units determined by such quotient is referred to herein as the
Aggregate Quantity of IDR Reset Common Units
). If at the time of any IDR Reset Election the General Partner and its Affiliates are not the holders of a majority interest of the
Incentive Distribution Rights, then the IDR Reset Election shall be subject to the prior approval of the Board of Directors that the conditions described in the immediately preceding sentence have been satisfied. Upon the issuance of such IDR Reset Common Units, the Partnership will issue to the
General Partner that number of additional General Partner Units equal to the product of (i) the quotient obtained by dividing (A) the Percentage Interest of the General Partner immediately prior to such issuance by (B) a percentage equal to 100% less such Percentage Interest and (ii) the number of
such IDR Reset Common Units, and the General Partner shall not be obligated to make any additional Capital Contribution to the Partnership in exchange for such issuance. The making of the IDR Reset Election in the manner specified in
Section 5.10(b)
shall cause the Minimum Quarterly
Distribution and the Target Distributions to be reset in accordance with the provisions of
Section 5.10(c)
and, in connection therewith, the holder or holders of the Incentive Distribution Rights will become entitled to receive IDR Reset Common Units and the General Partner will become
entitled to receive General Partner Units on the basis specified above, without any further approval required by the General Partner or the Unitholders, at the time specified in
Section 5.10(c)
, unless the IDR Reset Election is rescinded pursuant to
Section 5.10(d)
.
(b) To exercise the right specified in
Section 5.10(a)
, the holder of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights) shall deliver a written notice (the
Reset
Notice
) to the Partnership. Within 10 Business Days after the receipt by the Partnership of such Reset Notice, the Partnership shall deliver a written notice to the holder or holders of the Incentive Distribution Rights of the Partnerships determination of the aggregate number of Common Units that
each holder of Incentive Distribution Rights will be entitled to receive.
(c) The holder or holders of the Incentive Distribution Rights will be entitled to receive the Aggregate Quantity of IDR Reset Common Units and the General Partner will become entitled to receive the related additional General Partner Units on the 15th Business Day after receipt by the
Partnership of the Reset Notice, and the Partnership may issue Certificates for the Common Units or uncertificated Partnership Interests to the holder or holders of the Incentive Distribution Rights.
(d) If the principal National Securities Exchange upon which the Common Units are then traded has not approved the listing or admission for trading of the Common Units to be issued pursuant to this
Section 5.10
on or before the 30th calendar day following the Partnerships receipt of
the Reset Notice and such approval is required by the rules and regulations of such National Securities Exchange, then the holder of the Incentive Distribution Rights (or, if there is more than
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one holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights) shall have the right to either rescind the IDR Reset Election or elect to receive other Partnership Interests having such terms as the General Partner may approve, with the approval
of the Conflicts Committee, that will provide (i) the same economic value, in the aggregate, as the Aggregate Quantity of IDR Reset Common Units would have had at the time of the Partnerships receipt of the Reset Notice, as determined by the General Partner, and (ii) for the subsequent conversion
(on terms acceptable to the National Securities Exchange upon which the Common Units are then traded) of such Partnership Interests into Common Units within not more than 12 months following the Partnerships receipt of the Reset Notice upon the satisfaction of one or more conditions that are
reasonably acceptable to the holder of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights).
(e) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target Distribution shall be adjusted at the time of the issuance of Common Units or other Partnership Interests pursuant to this
Section 5.10
such that (i) the Minimum Quarterly
Distribution shall be reset to equal to the average cash distribution amount per Common Unit for the two Quarters immediately prior to the Partnerships receipt of the Reset Notice (the
Reset MQD
), (ii) the First Target Distribution shall be reset to equal 115% of the Reset MQD, (iii) the Second
Target Distribution shall be reset to equal 125% of the Reset MQD and (iv) the Third Target Distribution shall be reset to equal 150% of the Reset MQD.
ARTICLE VI
Section 6.1.
Allocations.
The Partnership shall determine its profit or loss and allocate such profit or loss among the Partners in a manner determined appropriate so as to cause, to the extent possible, a capital account maintained with respect to each Partnership Interest to equal the excess of (a) the
hypothetical distribution that would be paid with respect to such Partnership Interest in the event the Partnership sold all of its assets for their respective book values (as determined for such purpose), satisfied all outstanding liabilities (limited, with respect to nonrecourse liabilities, to the book value of
the assets securing such liabilities) and distributed the remaining proceeds in accordance with
Section 12.4
, over (b) the sum of the outstanding balance of any nonrecourse liabilities not required to be repaid in the event of such a hypothetical liquidation that are properly allocable to losses or
distributions with respect to such Partnership Interest and the amount (if any) that would be required to be contributed to the Partnership with respect to such Partnership Interest upon such a hypothetical liquidation; provided that the Partnership may deviate from the foregoing, as determined necessary
or appropriate, for proper administration of the Partnership or otherwise to preserve or achieve uniformity of the Limited Partner Interests (or any class or classes thereof). For the avoidance of doubt, the allocations described in this Section 6.1 shall not apply for U.S. federal income tax purposes.
Section 6.2.
Requirement and Characterization of Distributions; Distributions to Record Holders.
(a) Within 45 days following the end of each Quarter commencing with the Quarter ending on June 30, 2014, an amount equal to 100% of Available Cash with respect to such Quarter shall, subject to
Section 51 of the Marshall Islands Act, be distributed in accordance with this Article VI by the Partnership to the Partners as of the Record Date selected by the Board of Directors. All amounts of Available Cash distributed by the Partnership on any date following the Closing Date from any source
shall be deemed to be Operating Surplus until the sum of all amounts of Available Cash theretofore distributed by the Partnership to the Partners following the Closing Date pursuant to Section 6.3 equals the Operating Surplus from the Closing Date through the close of the immediately preceding
Quarter. Any remaining amounts of Available Cash distributed by the Partnership on such date shall, except as otherwise provided in
Section 6.4
, be deemed to be
Capital Surplus
. Notwithstanding any provision to the contrary contained in this Agreement, the Partnership shall not make a
distribution to any Partner on account of its interest in the Partnership if such distribution would violate the Marshall Islands Act or any other applicable law.
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DISTRIBUTIONS
(b) Notwithstanding the first three sentences of
Section 6.2(a)
, in the event of the dissolution and liquidation of the Partnership, all receipts received during or after the Quarter in which the Liquidation Date occurs, other than from borrowings described in
(a)(ii)
of the definition
of Available Cash, shall be applied and distributed solely in accordance with, and subject to the terms and conditions of,
Section 12.4
.
(c) Each distribution in respect of a Partnership Interest shall be paid by the Partnership, directly or through the Transfer Agent or through any other Person or agent, only to the Record Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment shall
constitute full payment and satisfaction of the Partnerships liability in respect of such payment, regardless of any claim of any Person who may have an interest in such payment by reason of an assignment or otherwise.
Section 6.3.
Distributions of Available Cash from Operating Surplus.
(a) During Subordination Period. Available Cash with respect to any Quarter or portion thereof within the Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of
Section 6.2
or
Section 6.4
shall, subject to Section 51 of the Marshall Islands Act, be distributed as follows, except as otherwise contemplated by
Section 5.4
in respect of other Partnership Interests issued pursuant thereto:
(i)
First
, (x) to the General Partner in accordance with its Percentage Interest and (y) to all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;
(ii)
Second
, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit Arrearage existing with respect to such Quarter;
(iii)
Third
, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Subordinated Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;
(iv)
Fourth
, to the General Partner and all Unitholders in accordance with their respective Percentage Interests, until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the First Target Distribution over the Minimum Quarterly Distribution for
such Quarter;
(v)
Fifth
, (A) to the General Partner in accordance with its Percentage Interest; (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclauses (A)
and
(B)
of this
clause (v)
until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Second Target Distribution over the First Target Distribution for such Quarter;
(vi)
Sixth
, (A) to the General Partner in accordance with its Percentage Interest, (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclauses (A)
and
(B)
of this
subclause (vi)
, until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Third Target Distribution over the Second Target Distribution for such Quarter; and
(vii)
Thereafter
, (A) to the General Partner in accordance with its Percentage Interest; (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclauses (A)
and
(B)
of this
clause (vii)
;
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provided, however
, that if the Minimum Quarterly Distribution, the First Target Distribution, the Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the second sentence of
Section 6.5
, the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with
Section 6.3(a)(vii)
.
(b) After Subordination Period. Available Cash with respect to any Quarter after the Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of
Section 6.2
or
Section 6.4
, shall subject to Section 51 of the Marshall Islands Act, be distributed as
follows, except as otherwise required by
Section 5.4(b)
in respect of additional Partnership Interests issued pursuant thereto:
(i)
First
, 100% to the General Partner and the Unitholders Pro Rata, until there has been distributed in respect of each Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;
(ii)
Second
, 100% to the General Partner and the Unitholders Pro Rata, until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the First Target Distribution over the Minimum Quarterly Distribution for such Quarter;
(iii)
Third
, (A) to the General Partner in accordance with its Percentage Interest; (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclauses (A)
and
(B)
of this
clause (iii)
, until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Second Target Distribution over the First Target Distribution for such Quarter;
(iv)
Fourth
, (A) to the General Partner in accordance with its Percentage Interest; (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclause (A)
and
(B)
of this
clause (iv)
, until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Third Target Distribution over the Second Target Distribution for such Quarter; and
(v)
Thereafter
, (A) to the General Partner in accordance with its Percentage Interest; (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclauses (A)
and
(B)
of this
clause (v)
;
provided, however
, that if the Minimum Quarterly Distribution, the First Target Distribution, the Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the second sentence of
Section 6.5
, the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with
Section 6.3(b)(v)
.
Section 6.4.
Distributions of Available Cash from Capital Surplus
. Available Cash that is deemed to be Capital Surplus pursuant to the provisions of
Section 6.2(a)
shall, subject to Section 51 of the Marshall Islands Act, be distributed, unless the provisions of
Section 6.2
require
otherwise, 100% to the General Partner and the Unitholders Pro Rata, until the Minimum Quarterly Distribution is reduced to zero pursuant to the second sentence of
Section 6.5
. Available Cash that is deemed to be Capital Surplus shall then be distributed (a) to the General Partner in
accordance with its Percentage Interest and (b) to all Unitholders holding Common Units their Pro Rata share of a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the
Cumulative Common Unit Arrearage. Thereafter, all Available Cash shall be distributed as if it were Operating Surplus and shall be distributed in accordance with
Section 6.3
.
Section 6.5.
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
. The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution, Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination or subdivision (whether
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effected by a distribution payable in Units or otherwise) of Units or other Partnership Interests in accordance with
Section 5.8
. In the event of a distribution of Available Cash that is deemed to be from Capital Surplus, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, shall be reduced in the same proportion that the distribution had to the fair market value of the Common Units prior to the announcement of the distribution. If the Common Units are publicly traded on a National Securities
Exchange, the fair market value will be the Current Market Price before the announcement of the distribution. If the Common Units are not publicly traded, the fair market value will be determined by the Board of Directors.
Section 6.6.
Special Provisions Relating to the Holders of Subordinated Units
. Except with respect to the right to vote on or approve matters requiring the vote or approval of a percentage of the holders of Outstanding Common Units and the right to participate in distributions made with respect to
Common Units, the holder of a Subordinated Unit shall have all of the rights and obligations of a Unitholder holding Common Units hereunder;
provided, however
, that immediately upon the conversion of Subordinated Units into Common Units, the Unitholder holding a Subordinated Unit shall possess
all of the rights and obligations of a Unitholder holding Common Units hereunder, including the right to vote as a Common Unitholder and the right to participate in distributions made with respect to Common Units.
Section 6.7.
Special Provisions Relating to the Holders of Incentive Distribution Rights
. Notwithstanding anything to the contrary set forth in this Agreement, the holders of the Incentive Distribution Rights (a) shall possess the rights and obligations provided in this Agreement with respect to a Limited
Partner pursuant to
Articles III
and
VII
and (b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders of Outstanding Units, except as provided by law, or (ii) be entitled to any distributions other than as provided in
Sections 6.3(a)(v)
,
6.3(a)(vi)
,
6.3(a)(vii)
,
6.3(b)(iii)
,
6.3(b)(iv)
,
6.3(b)(v)
, and
Section 12.4
.
ARTICLE VII
Section 7.1.
Management.
(a) Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be vested exclusively in the Board of Directors and, subject to the direction of the Board of Directors and in accordance with the
provisions of
Section 7.8
, the Officers. No Limited Partner shall have any management power or control over the business and affairs of the Partnership. Thus, except as expressly provided in this Agreement, the business and affairs of the Partnership shall be managed by or under the direction
of the Board of Directors, and the day-to-day activities of the Partnership shall be conducted on the Partnerships behalf by the Officers. In order to enable the Board of Directors to manage the business and affairs of the Partnership, the General Partner, except as otherwise expressly provided in this
Agreement, hereby irrevocably delegates to the Board of Directors all management powers over the business and affairs of the Partnership that it may now or hereafter possess under applicable law. The General Partner further agrees to take any and all action necessary and appropriate, in the sole
discretion of the Board of Directors, to effect any duly authorized actions by the Board of Directors, including executing or filing any agreements, instruments or certificates, delivering all documents, providing all information and taking or refraining from taking action as may be necessary or appropriate
to achieve the effective delegation of power described in this
Section 7.1(a)
. Each of the Partners and each Person who may acquire an interest in a Partnership Interest hereby approves, consents to, ratifies and confirms such delegation. The delegation by the General Partner to the Board of
Directors of management powers over the business and affairs of the Partnership pursuant to the provisions of this Agreement shall not cause the General Partner to cease to be a general partner of the Partnership nor shall it cause the Board of Directors or any member thereof to be a general partner
of the Partnership or to have or be subject to the liabilities of a general partner of the Partnership.
(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the Marshall Islands Act or any applicable law, rule or regulation, each of the Partners and each other
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MANAGEMENT AND OPERATION OF BUSINESS
Person who may acquire an interest in Partnership Interests hereby (i) approves, consents to, ratifies and confirms the General Partners delegation of management powers to the Board of Directors pursuant to
paragraph (a)
of this
Section 7.1
; (ii) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of this Agreement, the Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement, any Group Member Agreement of any other Group Member and the other agreements described in or filed as exhibits to the Registration
Statement that are related to the transactions contemplated by the Registration Statement; (iii) agrees that the General Partner (on behalf of the Partnership) is authorized to execute, deliver and perform the agreements referred to in
clause (ii)
of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Underwriting Agreement or described in or filed as exhibits to the Registration Statement, in each case, on behalf of the Partnership without any further act, approval or vote of the Partners or the other Persons who may acquire an interest in
Partnership Interests; and (iv) agrees that the execution, delivery or performance by the Board of Directors, the General Partner, any Group Member or any Affiliate of any of them of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General
Partner or any Affiliate of the General Partner of the rights accorded pursuant to
Article XV
) shall not constitute a breach by the Board of Directors or the General Partner of any duty that the Board of Directors or the General Partner may owe the Partnership or the Limited Partners or any
other Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or equity.
Section 7.2.
The Board of Directors; Election and Appointment; Term; Manner of Acting.
(a) The initial Board of Directors shall consist of the following five individuals, all of whom shall be Appointed Directors and serve until the 2015 Annual Meeting: Peter Livanos, Curtis Anastasio, Daniel
Bradshaw, Pamela Gibson and Donald J. Kintzer. Subject to Section 7.2(d), following the 2015 Annual Meeting, the Board of Directors shall consist of five individuals, three of whom shall be Appointed Directors and two of whom shall be Elected Directors. The Elected Directors shall be divided into
three classes: Class I, comprising one Elected Director, Class II, comprising one Elected Director and Class III, comprising one Elected Director; provided that prior to the addition of one additional Elected Director following a Surrender Election pursuant to Section 7.2(d), the Class III Elected Director
seat shall be empty. Any vacancy among the Appointed Directors shall be filled as if an Appointed Director had resigned, in accordance with
Section 7.6
. The successors of the initial members of the Board of Directors shall be appointed or elected, as the case may be, as follows:
(i) The Appointed Directors shall be appointed by the General Partner, and each Appointed Director shall hold office until his successor is duly appointed by the General Partner and qualified or until his earlier death, resignation or removal; and
(ii) The Class I Elected Director shall be elected at the 2015 Annual Meeting for a one-year term expiring on the date of the first succeeding Annual Meeting and the Class II Elected Director shall be elected at the 2015 Annual Meeting for a two-year term expiring on the second succeeding
Annual Meeting (and, if a Surrender Election has been made, the Class III Elected Director shall be elected at the 2015 Annual Meeting for a three-year term expiring on the third succeeding Annual Meeting), in each case by a plurality of the votes of the Outstanding Common Units present in
person or represented by proxy at the Annual Meeting with each Outstanding Common Unit having one vote.
(b) Except as provided in
paragraph (a)(ii)
above with respect to the Elected Directors elected at the 2015 Annual Meeting or as provided in paragraphs (d) through (g) below, each member of the Board of Directors appointed or elected, as the case may be, at an Annual Meeting shall
hold office until the third succeeding Annual Meeting and until his successor is duly elected or appointed, as the case may be, and qualified, or until his earlier death, resignation or removal.
(c) Each member of the Board of Directors shall have one vote. The vote of the majority of the members of the Board of Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. A majority of the number of members of the Board of Directors then in
office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than a quorum is present at a meeting, a majority of the members of the
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Board of Directors present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
(d) The General Partner shall have the right, exercisable in its sole discretion at any time, to elect in writing to surrender its right to appoint one Appointed Director (such election, a
Surrender Election
). If the Surrender Election is made, then in accordance with and at the times specified in
Sections 7.2(e) and (f) below, (i) the number of Appointed Directors shall decrease from three to two and (ii) the number of Elected Directors shall increase from two to three. The Partnership shall inform the Limited Partners of the date on which the Surrender Election is made within 30 days following
the Surrender Election.
(e) If a Surrender Election is made, then, unless Section 7.2(f) applies, the additional Elected Director resulting from the Surrender Election shall be elected at the Annual Meeting next following the Surrender Election. Such Elected Director shall be a Class III Elected Director and shall hold office
until the Annual Meeting at which the Class III Elected Director seat would expire.
(f) If the Surrender Election is made after the 2015 Annual Meeting, within 90 days following the date of the Surrender Election, the General Partner, the Board of Directors or the Limited Partners may call a special meeting to be held prior to the next Annual Meeting, in accordance with the
procedures in Section 13.4, for the sole purpose of the Limited Partners electing an additional Elected Director. Such Elected Director shall be a Class III Elected Director and shall hold office until the Annual Meeting at which the Class III Elected Director seat would expire.
(g) On and after the date that an additional Elected Director is elected in accordance with Section 7.2(e) or (f), only two Appointed Directors may be in office at any time. If necessary to satisfy this condition, the General Partner shall, immediately prior to the election of the additional Elected
Director and in accordance with Section 7.4(a)(i), designate the Appointed Director whose term shall terminate upon such election.
Section 7.3.
Nominations of Elected Directors
. The Board of Directors shall be entitled to nominate individuals to stand for election as Elected Directors at an Annual Meeting. In addition, any Limited Partner or Group of Limited Partners that beneficially owns 10% or more of the Outstanding
Common Units shall be entitled to nominate one or more individuals to stand for election as Elected Directors at an Annual Meeting by providing written notice thereof to the Board of Directors not more than 120 days and not less than 90 days prior to the date of such Annual Meeting;
provided,
however
, that in the event that the date of the Annual Meeting was not publicly announced by the Partnership by mail, press release or otherwise more than 100 days prior to the date of such meeting, such notice, to be timely, must be delivered to the Board of Directors not later than the close of
business on the 10th day following the date on which the date of the Annual Meeting was announced. Such notice shall set forth (a) the name and address of the Limited Partner or Limited Partners making the nomination or nominations, (b) the number of Common Units beneficially owned by such
Limited Partner or Limited Partners, (c) such information regarding the nominee(s) proposed by the Limited Partner or Limited Partners as would be required to be included in a proxy statement relating to the solicitation of proxies for the election of directors filed pursuant to the proxy rules of the
Commission had the nominee(s) been nominated or intended to be nominated to the Board of Directors, (d) the written consent of each nominee to serve as a member of the Board of Directors if so elected and (e) a certification that such nominee(s) qualify as Elected Directors.
Section 7.4.
Removal of Members of Board of Directors.
Members of the Board of Directors may only be removed as follows:
(a) Any Appointed Director may be removed at any time, (i) without Cause, only by the General Partner and, (ii) with Cause, by (x) the General Partner, (y) by the affirmative vote of the holders of a majority of the Outstanding Units at a properly called meeting of the Limited Partners or (z) by
the affirmative vote of a majority of the other members of the Board of Directors.
(b) Any Elected Director may be removed at any time, with Cause, only by the affirmative vote of a majority of the other members of the Board of Directors or at a properly called meeting of the
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Limited Partners only by the affirmative vote of the holders of a majority of the Outstanding Common Units.
Section 7.5.
Resignations of Members of the Board of Directors
. Any member of the Board of Directors may resign at any time by giving written notice to the Board of Directors. Such resignation shall take effect at the time specified therein.
Section 7.6.
Vacancies on the Board of Directors.
Vacancies on the Board of Directors may be filled only as follows:
(a) If any Appointed Director is removed, resigns or is otherwise unable to serve as a member of the Board of Directors, the General Partner shall, in its individual capacity, appoint an individual to fill the vacancy.
(b) If any Elected Director is removed, resigns or is unable to serve as a member of the Board of Directors, the vacancy shall be filled by a majority of the other Elected Directors then serving.
(c) A director appointed or elected pursuant to this
Section 7.6
to fill a vacancy shall be appointed or elected, as the case may be, for no more than the unexpired term of his predecessor in office.
Section 7.7.
Meetings; Committees; Chairman.
(a) Regular meetings of the Board of Directors shall be held at such times and places as shall be designated from time to time by resolution of the Board of Directors. Notice of such regular meetings shall not be required. Special meetings of the Board
of Directors may be called by the Chairman of the Board of Directors and shall be called by the Secretary upon the written request of two members of the Board of Directors, on at least 48 hours prior written notice to the other members. Any such notice, or waiver thereof, need not state the purpose
of such meeting except as may otherwise be required by law. Attendance of a member of the Board of Directors at a meeting (including pursuant to the penultimate sentence of this
Section 7.7(a)
) shall constitute a waiver of notice of such meeting, except where such member attends the
meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting, without prior notice and without a vote
if a consent or consents in writing, setting forth the action so taken, is signed by all the members of the Board of Directors. Members of the Board of Directors may participate in and hold meetings by means of conference telephone, videoconference or similar communications equipment by means of
which all Persons participating in the meeting can hear each other, and participation in such meetings shall constitute presence in person at the meeting. The Board of Directors may establish any additional rules governing the conduct of its meetings that are not inconsistent with the provisions of this
Agreement.
(b) The Board of Directors shall appoint the members of the Audit Committee and the Conflicts Committee. The Audit Committee and the Conflicts Committee shall, in each case, perform the functions delegated to it pursuant to the terms of this Agreement and such other matters as may be
delegated to it from time to time by resolution of the Board of Directors. The Board of Directors, by a majority of the whole Board of Directors, may appoint one or more additional committees of the Board of Directors to consist of one or more members of the Board of Directors, which committee(s)
shall have and may exercise such of the powers and authority of the Board of Directors (including in respect of
Section 7.1
) with respect to the management of the business and affairs of the Partnership as may be provided in a resolution of the Board of Directors. Any committee designated
pursuant to this
Section 7.7(b)
shall choose its own chairman, shall keep regular minutes of its proceedings and report the same to the Board of Directors when requested, shall fix its own rules or procedures and shall meet at such times and at such place or places as may be provided by such
rules or by resolution of such committee or resolution of the Board of Directors. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum and the affirmative vote of a majority of the members present shall be necessary for the taking of
any action. Any action required or permitted to be taken at a meeting of a committee of the Board of Directors may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by all the members of the committee of
the Board of Directors. Subject to the first sentence
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of this
Section 7.7(b)
, the Board of Directors may designate one or more members of the Board of Directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of such committee. Subject to the first sentence of this
Section
7.7(b)
, in the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the
absent or disqualified member.
(c) The Appointed Directors may designate one of the members of the Board of Directors as Chairman of the Board of Directors. The initial Chairman of the Board of Directors shall be Curtis Anastasio. The Chairman of the Board of Directors, if any, and if present and acting, shall preside at all
meetings of the Board of Directors. In the absence of the Chairman of the Board of Directors, another member of the Board of Directors chosen by the Appointed Directors shall preside. If, at any time, the Board of Directors consists solely of Elected Directors, the Board of Directors may designate
one of its members as Chairman of the Board of Directors and shall, in the absence of the Chairman of the Board of Directors at a meeting of the Board of Directors, designate another member of the Board of Directors to preside at the meeting.
Section 7.8.
Officers.
(a) The Board of Directors, as set forth below, shall appoint or designate agents of the Partnership, referred to as
Officers
of the Partnership as described in this
Section 7.8
. Such Officers may be employed by any Group Member directly or may be employed by one
or more third parties, including GasLog and its Affiliates, and designated by the Board of Directors to perform officer functions for the benefit of the Partnership.
(b) The Board of Directors shall appoint or designate such Officers and agents as may from time to time appear to be necessary or advisable in the conduct of the affairs of the Partnership, who shall hold such titles, exercise such powers and authority and perform such duties as shall be determined
from time to time by resolution of the Board of Directors. The Officers may include a Chairman of the Board of Directors, an Executive Vice Chairman or Vice Chairman of the Board of Directors, a Chief Executive Officer, a President, a Chief Financial Officer, any and all Vice Presidents, a Secretary,
any and all Assistant Secretaries, a Treasurer, any and all Assistant Treasurers and any other Officers appointed or designated by the Board of Directors pursuant to this
Section 7.8
. Any person may hold two or more offices.
(c) The Officers, including any Officer employed by a third party and designated by the Board of Directors to perform officer services for the benefit of the Partnership, shall be appointed by the Board of Directors at such time and for such terms as the Board of Directors shall determine. Any
Officer may be removed, with or without Cause, only by the Board of Directors. Vacancies in any office may be filled only by the Board of Directors.
(d) The Board of Directors may grant powers of attorney or other authority as appropriate to establish and evidence the authority of the Officers and other Persons.
(e) Unless otherwise provided by resolution of the Board of Directors, no Officer shall have the power or authority to delegate to any Person such Officers rights and powers as an Officer to manage the business and affairs of the Partnership.
Section 7.9.
Compensation of Directors
. The members of the Board of Directors who are not employees of the General Partner or its Affiliates shall receive such compensation for their services as members of the Board of Directors or members of a committee of the Board of Directors shall
determine. In addition, the members of the Board of Directors shall be entitled to be reimbursed for out-of-pocket costs and expenses incurred in the course of their service hereunder.
Section 7.10.
Certificate of Limited Partnership
. The General Partner has caused the Certificate of Limited Partnership to be filed with the Registrar of Corporations of The Marshall Islands as required by the Marshall Islands Act. The General Partner shall use all commercially reasonable efforts to
cause to be filed such other certificates or documents that the Board of Directors determines to be necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership or other entity in which the limited partners have limited liability) in The
Marshall Islands or any other jurisdiction in which the Partnership may
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elect to do business or own property. To the extent the Board of Directors determines such action to be necessary or appropriate, the General Partner shall file or cause to be filed amendments to and restatements of the Certificate of Limited Partnership and do all things to maintain the Partnership as a
limited partnership (or a partnership or other entity in which the limited partners have limited liability) under the laws of The Marshall Islands or of any other jurisdiction in which the Partnership may elect to do business or own property. Subject to the terms of
Section 3.4(a)
, the General
Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto to any Limited Partner.
Section 7.11.
Restrictions on the Authority of the Board of Directors and the General Partner.
(a) Except as otherwise provided in this Agreement, neither the Board of Directors nor the General Partner may, without written approval of the specific act by holders of all of the Outstanding Limited
Partner Interests or by other written instrument executed and delivered by holders of all of the Outstanding Limited Partner Interests subsequent to the date of this Agreement, take any action in contravention of this Agreement.
(b) Except as provided in
Articles XII
and
XIV
, the Board of Directors may not sell, exchange or otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a whole, in a single transaction or a series of related transactions (including by way of
merger, consolidation, other combination or sale of ownership interests in the Partnerships Subsidiaries) without the approval of holders of a Unit Majority and the General Partner;
provided, however
, that this provision shall not preclude or limit the ability of the Board of Directors to mortgage, pledge,
hypothecate or grant a security interest in all or substantially all of the assets of the Partnership Group and shall not apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the foreclosure of, or other realization upon, any such encumbrance. The transfer of the General
Partner Interest to and the election of a successor general partner of the Partnership shall be made in accordance with
Section 4.6
,
Section 11.1
and
Section 11.2
.
Section 7.12.
Reimbursement of the General Partner.
(a) Except as provided in this
Section 7.12
and elsewhere in this Agreement, the General Partner shall not be compensated for its services as a general partner or managing member of any Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the Board of Directors may determine, for any direct and indirect expenses it incurs that are allocable to the Partnership Group or payments it makes on behalf of the Partnership Group (including salary, bonus,
incentive compensation and other amounts paid to any Person, including Affiliates of the General Partner, to perform services for the Partnership Group or for the General Partner in the discharge of its duties to the Partnership Group, which amounts shall also include reimbursement for any Common
Units purchased to satisfy obligations of the Partnership under any of its equity compensation plans). The Board of Directors shall determine the expenses that are allocable to the Partnership Group. Reimbursements pursuant to this
Section 7.12
shall be in addition to any reimbursement to the
General Partner as a result of indemnification pursuant to
Section 7.15
.
(c) Subject to the applicable rules and regulations of the National Securities Exchange on which the Common Units are listed, the Board of Directors, without the approval of the Partners (who shall have no right to vote in respect thereof), may propose and adopt on behalf of the Partnership
employee benefit plans, employee programs and employee practices (including plans, programs and practices involving the issuance of Partnership Interests or options to purchase or rights, warrants or appreciation rights or phantom or tracking interests relating to Partnership Interests), or cause the
Partnership to issue Partnership Interests in connection with, or pursuant to, any employee benefit plan, employee program or employee practice maintained or sponsored by the Partnership, the General Partner or any of its Affiliates, in each case for the benefit of employees and directors of the
Partnership, the General Partner, any Group Member or any Affiliate thereof, or any of them, in respect of services performed, directly or indirectly, for the benefit of the Partnership Group. The Partnership agrees to issue and sell to the General Partner or any of its Affiliates any Partnership Interests
that the General Partner or such Affiliates are obligated to provide to any employees and directors pursuant to any such employee benefit plans, employee programs or employee practices.
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Expenses incurred by the General Partner in connection with any such plans, programs and practices (including the net cost to the General Partner or such Affiliates of Partnership Interests purchased by the General Partner or such Affiliates from the Partnership or otherwise to fulfill options or awards
under such plans, programs and practices) shall be reimbursed in accordance with
Section 7.12(b)
. Any and all obligations of the General Partner under any employee benefit plans, employee programs or employee practices adopted by the General Partner as permitted by this
Section
7.12(c)
shall constitute obligations of the General Partner hereunder and shall be assumed by any successor General Partner approved pursuant to
Section 11.1
or
Section 11.2
or the transferee of or successor to all of the General Partners General Partner Interest pursuant to
Section 4.6.
Section 7.13.
Outside Activities.
(a) After the Closing Date, the General Partner, for so long as it is the general partner of the Partnership (i) agrees that its sole business will be to act as a general partner or managing member, as the case may be, of the Partnership and any other partnership or
limited liability company of which the Partnership is, directly or indirectly, a partner or member and to undertake activities that are ancillary or related thereto (including being a limited partner in the Partnership), (ii) shall not engage in any business or activity or incur any debts or liabilities except in
connection with or incidental to (A) its performance as general partner or managing member, if any, of one or more Group Members or as described in or contemplated by the Registration Statement or (B) the acquiring, owning or disposing of debt or equity securities in any Group Member and (iii)
except to the extent permitted in the Omnibus Agreement, shall not acquire or own any Five-Year Vessels (as such term is defined in the Omnibus Agreement).
(b) GasLog, the Partnership, the General Partner and the Operating Company have entered into the Omnibus Agreement, which agreement sets forth certain restrictions on the ability of GasLog and certain of its Affiliates to acquire, own or operate any Five-Year Vessels (as such term is defined in
the Omnibus Agreement).
(c) Except as specifically restricted by
Section 7.13(a)
or the Omnibus Agreement, each Indemnitee (other than the General Partner) shall have the right to engage in businesses of every type and description and other activities for profit and to engage in and possess an interest in other
business ventures of any and every type or description, whether in businesses engaged in or anticipated to be engaged in by any Group Member, independently or with others, including business interests and activities in direct competition with the business and activities of any Group Member, and none
of the same shall constitute a breach of this Agreement or any duty expressed or implied by law to any Group Member or any Partner. Notwithstanding anything to the contrary in this Agreement, (i) the possessing of competitive interests and engaging in competitive activities by any Indemnitees (other
than the General Partner) in accordance with the provisions of this
Section 7.13
is hereby approved by the Partnership and all Partners and (ii) it shall be deemed not to be a breach of any duty (including any fiduciary duty) or any other obligation of any type whatsoever of the General
Partner or of any Indemnitee for the Indemnitees (other than the General Partner) to engage in such business interests and activities in preference to or to the exclusion of the Partnership.
(d) Notwithstanding anything to the contrary in this Agreement, the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to an Indemnitee (including the General Partner) and, subject to the terms of
Section 7.13(a)
,
Section 7.13(b)
,
Section
7.13(c)
and the Omnibus Agreement, no Indemnitee (including the General Partner) who acquires knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the Partnership shall have any duty to communicate or offer such opportunity to the
Partnership, and, subject to the terms of
Section 7.13(a)
,
Section 7.13(b)
,
Section 7.13(c)
and the Omnibus Agreement, such Indemnitee (including the General Partner) shall not be liable to the Partnership, to any Limited Partner or any other Person for breach of any
fiduciary or other duty by reason of the fact that such Indemnitee (including the General Partner) pursues or acquires such opportunity for itself, directs such opportunity to another Person or does not communicate such opportunity or information to the Partnership;
provided
, that such Indemnitee
(including the General Partner) does not engage in such business or activity as a result of using confidential or proprietary information provided by or on behalf of the Partnership to such Indemnitee (including the General Partner).
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(e) The General Partner and each of its Affiliates may own and acquire Units or other Partnership Interests in addition to those acquired on the Closing Date and, except as otherwise provided in this Agreement, shall be entitled to exercise, at their option, all rights relating to all Units or other
Partnership Interests acquired by them. The term
Affiliates
as used in this
Section 7.13(e)
with respect to the General Partner shall not include any Group Member.
Section 7.14.
Loans from the General Partner; Loans or Contributions from the Partnership or Group Members.
(a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group Member may borrow from the General Partner or any of its Affiliates, funds needed or
desired by the Group Member for such periods of time and in such amounts as the General Partner and the Board of Directors may determine;
provided, however
, that in any such case the lending party may not charge the borrowing party interest at a rate greater than the rate that would be charged the
borrowing party or impose terms less favorable to the borrowing party than would be charged or imposed on the borrowing party by unrelated lenders on comparable loans made on an arms length basis (without reference to the lending partys financial abilities or guarantees), all as determined by the
General Partner and the Board of Directors. The borrowing party shall reimburse the lending party for any costs (other than any additional interest costs) incurred by the lending party in connection with the borrowing of such funds. For purposes of this
Section 7.14(a)
and
Section
7.14(b)
, the term
Group Member
shall include any Affiliate of a Group Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, and any Group Member may borrow from the Partnership, funds on terms and conditions determined by the Board of Directors. No Group Member may lend funds to the General Partner or any of its Affiliates (other than another
Group Member).
(c) No borrowing by any Group Member or the approval thereof by the General Partner or the Board of Directors shall be deemed to constitute a breach of any duty, expressed or implied, of the General Partner or its Affiliates or the Board of Directors to the Partnership or the Limited Partners if
the purpose or effect of such borrowing is directly or indirectly to (i) enable distributions to the General Partner or its Affiliates (including in their capacities as Limited Partners) to exceed the General Partners Percentage Interest of the total amount distributed to all partners or (ii) hasten the expiration
of the Subordination Period or the conversion of any Subordinated Units into Common Units.
Section 7.15.
Indemnification.
(a) To the fullest extent permitted by the Marshall Islands Act but subject to the limitations expressly provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee;
provided, however
, that the Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of
the matter for which the Indemnitee is seeking indemnification pursuant to this
Section 7.15
, the Indemnitee acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitees conduct was unlawful; and,
provided, further
,
that no indemnification pursuant to this
Section 7.15
shall be available to the General Partner or its Affiliates (other than a Group Member) with respect to its or their obligations incurred pursuant to the Underwriting Agreement, the Omnibus Agreement or the Contribution Agreement (other
than obligations incurred by the General Partner on behalf of the Partnership). Any indemnification pursuant to this
Section 7.15
shall be made only out of the assets of the Partnership, it being agreed that the General Partner shall not be personally liable for such indemnification and shall
have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by the Marshall Islands Act, expenses (including legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant to
Section 7.15(a)
in
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defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior to a determination that the Indemnitee is not entitled to be indemnified upon receipt by the Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as authorized in this
Section 7.15
.
(c) The indemnification provided by this
Section 7.15
shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of Outstanding Limited Partner Interests, as a matter of law or otherwise, both as to actions in
the Indemnitees capacity as an Indemnitee and as to actions in any other capacity (including any capacity under the Underwriting Agreement), and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators
of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General Partner or its Affiliates for the cost of) insurance, on behalf of the Board of Directors and the General Partner, its Affiliates and such other Persons as the Board of Directors shall determine, against any liability that may be
asserted against, or expense that may be incurred by, such Person in connection with the Partnerships activities or such Persons activities on behalf of the Partnership, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this
Agreement or law.
(e) For purposes of this
Section 7.15
, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by the Indemnitee of its duties to the Partnership also imposes duties on, or otherwise involves services by, it
to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of
Section 7.15(a)
; and action taken or omitted by the Indemnitee with respect to any
employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the best interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this
Section 7.15
because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this
Section 7.15
are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this
Section 7.15
or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this
Section 7.15
as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
Section 7.16.
Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable for monetary damages to the Partnership, the Limited Partners or any other Persons who have acquired Partnership Interests or are otherwise bound by this
Agreement, for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee committed (i) acts of
active and deliberate dishonesty, (ii) with actual dishonest purpose and intent, and (iii) which acts were material to the cause of action so adjudicated.
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(b) Subject to their obligations and duties as members of the Board of Directors or as the General Partner, respectively, set forth in
Section 7.1(a)
, members of the Board of Directors and the General Partner may exercise any of the powers granted to them and perform any of the duties
imposed upon them hereunder either directly or by or through its agents, and the members of the Board of Directors and the General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by the Board of Directors or the General Partner in good
faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner and any other Indemnitee acting in connection with the Partnerships business or affairs shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of this Agreement.
(d) Any amendment, modification or repeal of this
Section 7.16
or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the Indemnitees under this
Section 7.16
as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.17.
Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties.
(a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement, whenever a potential conflict of interest exists or arises between the General Partner or any of its Affiliates,
or any member of the Board of Directors, on the one hand, and the Partnership, any Group Member or any Partner, on the other, any resolution or course of action in respect of such conflict of interest shall be permitted and deemed approved by all Partners, and shall not constitute a breach of this
Agreement, of any Group Member Agreement, of any agreement contemplated herein or therein, or of any duty stated or implied by law or equity, if the resolution or course of action in respect of such conflict of interest is (i) approved by Special Approval, (ii) approved by the vote of a majority of the
Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than those generally being provided to or available from unrelated third parties or (iv) fair and reasonable to the Partnership, taking into account the
totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership). The General Partner and the Board of Directors may but shall not be required in connection with the resolution of such conflict of interest to seek
Special Approval of such resolution, and the General Partner or the Board of Directors, as the case may be, may also adopt a resolution or course of action that has not received Special Approval. If Special Approval is sought, then, notwithstanding any other provision of this Agreement or law that
would otherwise apply, (x) the Conflicts Committee will be authorized in connection with its determination of whether to provide Special Approval to consider any and all factors as it determines to be relevant or appropriate under the circumstances and (y) it will be presumed that, in making its decision,
the Conflicts Committee acted in good faith, and if Special Approval is not sought and the Board of Directors determines that the resolution or course of action taken with respect to a conflict of interest satisfies either of the standards set forth in
clauses (iii)
or
(iv)
above, then it
shall be presumed that, in making its decision the Board of Directors, acted in good faith, and, in either case, in any proceeding brought by any Limited Partner or by or on behalf of such Limited Partner or any other Limited Partner or the Partnership challenging such approval, the Person bringing or
prosecuting such proceeding shall have the burden of overcoming such presumption. Notwithstanding anything to the contrary in this Agreement or any duty otherwise existing at law or equity, the existence of the conflicts of interest described in the Registration Statement are hereby approved by all
Partners and shall not constitute a breach of this Agreement or of any duty hereunder or existing at law, in equity or otherwise.
(b) Whenever the General Partner makes a determination or takes or declines to take any other action, or any of its Affiliates causes it to do so, in its capacity as the general partner of the Partnership as opposed to in its individual capacity, whether under this Agreement, any Group Member
Agreement or any other agreement contemplated hereby or otherwise, then, unless another express standard is provided for in this Agreement, the General Partner, or such Affiliates causing it
A-36
to do so, shall make such determination or take or decline to take such other action in good faith and shall not be subject to any other or different standards imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands Act or any
other law, rule or regulation or at equity. In order for a determination or other action to be in good faith for purposes of this Agreement, the Person or Persons making such determination or taking or declining to take such other action must reasonably believe that the determination or other action is
in the best interests of the Partnership, unless the context otherwise requires.
(c) Whenever the General Partner makes a determination or takes or declines to take any other action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in its capacity as the general partner of the Partnership, whether under this Agreement, any Group Member
Agreement or any other agreement contemplated hereby or otherwise, then the General Partner, or such Affiliates causing it to do so, are entitled to make such determination or to take or decline to take such other action free of any duty (including any fiduciary duty) or obligation whatsoever to the
Partnership or any Limited Partner, any Record Holder or any other Person bound by this Agreement, and, to the fullest extent permitted by law, the General Partner, or such Affiliates causing it to do so, shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands Act or any other law, rule or regulation or at equity. By way of illustration and not of limitation, whenever the phrase, at the option of the General Partner, or some variation of that
phrase, is used in this Agreement, it indicates that the General Partner is acting in its individual capacity. For the avoidance of doubt, whenever the General Partner votes or transfers its Units, General Partner Interest or Incentive Distribution Rights, if any, to the extent permitted under this Agreement,
or refrains from voting or transferring its Units, General Partner Units or Incentive Distribution Rights, as appropriate, it shall be acting in its individual capacity. The General Partners organizational documents may provide that determinations to take or decline to take any action in its individual, rather
than representative, capacity may or shall be determined by its members, if the General Partner is a limited liability company, stockholders, if the General Partner is a corporation, or the members or stockholders of the General Partners general partner, if the General Partner is a limited partnership.
(d) Whenever the Board of Directors makes a determination or takes or declines to take any other action, whether under this Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise, then, unless another express standard is provided for in this
Agreement, the Board of Directors, shall make such determination or take or decline to take such other action in good faith and shall not be subject to any other or different standards imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Marshall Islands Act or any other law, rule or regulation or at equity. In order for a determination or other action to be in good faith for purposes of this Agreement, the Person or Persons making such determination or taking or declining to take such other action must reasonably believe that the
determination or other action is in the best interests of the Partnership, unless the context otherwise requires.
(e) Notwithstanding anything to the contrary in this Agreement, the General Partner and its Affiliates shall have no duty or obligation, express or implied, to (i) approve the sale or other disposition of any asset of the Partnership Group (if such approval is required pursuant to
Section
7.11(b)
) or (ii) permit any Group Member to use any facilities or assets of the General Partner and its Affiliates, except as may be provided in contracts entered into from time to time specifically dealing with such use. Any determination by the General Partner or any of its Affiliates to enter into such
contracts shall, in each case, be at their option.
(f) Except as expressly set forth in this Agreement, neither the General Partner nor the Board of Directors or any other Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or any Limited Partner and the provisions of this Agreement, to the extent that they
restrict, eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the Board of Directors or the General Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities of the Board of Directors or
the General Partner or such other Indemnitee.
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(g) The Unitholders hereby authorize the Board of Directors, on behalf of the Partnership as a partner or member of a Group Member, to approve of actions by the general partner or managing member of such Group Member similar to those actions permitted to be taken by the Board of Directors
pursuant to this
Section 7.17
.
Section 7.18.
Other Matters Concerning the General Partner and the Board of Directors.
(a) The General Partner and the Board of Directors may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.
(b) The General Partner and the Board of Directors may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by either of them, and any act taken or omitted to be taken in reliance upon the advice or opinion
(including an Opinion of Counsel) of such Persons as to matters that the General Partner or the Board of Directors reasonably believes to be within such Persons professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such
advice or opinion.
(c) The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers, a duly appointed attorney or attorneys-in-fact or the duly authorized officers of the Partnership.
Section 7.19.
Purchase or Sale of Partnership Interests
. The Board of Directors may cause the Partnership to purchase or otherwise acquire Partnership Interests;
provided, however
, that the Board of Directors may not cause any Group Member to purchase Subordinated Units during the Subordination
Period. As long as Partnership Interests are held by any Group Member, such Partnership Interests shall not be considered Outstanding for any purpose, except as otherwise provided herein. The General Partner or any Affiliate of the General Partner may purchase or otherwise acquire and sell or
otherwise dispose of Partnership Interests for its own account, subject to the provisions of
Articles IV
and
X
.
Section 7.20.
Registration Rights of the General Partner and its Affiliates.
(a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes of this
Section 7.20
, any Person that is an Affiliate of the General Partner at the date hereof notwithstanding that it may
later cease to be an Affiliate of the General Partner) holds Partnership Interests that it desires to sell and (ii) Rule 144 of the Securities Act (or any successor rule or regulation to Rule 144) or another exemption from registration is not available to enable such holder of Partnership Interests (the
Holder
) to dispose of the number of Partnership Interests it desires to sell at the time it desires to do so without registration under the Securities Act, then at the option and upon the request of the Holder, the Partnership shall file with the Commission as promptly as practicable after receiving such
request, and use its commercially reasonable efforts to cause to become effective and remain effective for a period of not less than six months following its effective date or such shorter period as shall terminate when all Partnership Interests covered by such registration statement have been sold, a
registration statement under the Securities Act registering the offering and sale of the number of Partnership Interests specified by the Holder;
provided, however
, that the Partnership shall not be required to effect more than three registrations in total pursuant to this
Section 7.20(a)
, no more
than one of which shall be required to be made at any time that the Partnership is not eligible to use Form F-3 (or a comparable form) for the registration under the Securities Act of its securities; and,
provided, further
, that if the Conflicts Committee determines in good faith that the requested
registration would be materially detrimental to the Partnership and its Partners because such registration would (x) materially interfere with a significant acquisition, merger, disposition, corporate reorganization or other similar transaction involving the Partnership, (y) require premature disclosure of
material information that the Partnership has a bona fide business purpose for preserving as confidential or (z) render the Partnership unable to comply with requirements under applicable securities laws, then the Partnership shall have the right to postpone such requested registration for a period of not
more than six months after receipt of the Holders request, such right pursuant to this
Section 7.20(a)
not to be utilized more than once in any 12-
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month period. The Partnership shall use its commercially reasonable efforts to resolve any deferral with respect to any such registration and/or filing. Except as provided in the first sentence of this
Section 7.20(a)
, the Partnership shall be deemed not to have used all its commercially reasonable
efforts to keep the registration statement effective during the applicable period if it voluntarily takes any action that would result in Holders of Partnership Interests covered thereby not being able to offer and sell such Partnership Interests at any time during such period, unless such action is required by
applicable law or regulations. In connection with any registration pursuant to this
Section 7.20(a)
, the Partnership shall (i) promptly prepare and file (A) such documents as may be necessary to register or qualify the securities subject to such registration under the securities laws of such states as
the Holder shall reasonably request (
provided, however
, that no such qualification shall be required in any jurisdiction where, as a result thereof, the Partnership would become subject to general service of process or to taxation or qualification to do business as a foreign corporation or partnership doing
business in such jurisdiction solely as a result of such registration), and (B) such documents as may be necessary to apply for listing or to list the Partnership Interests subject to such registration on such National Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other acts
and things that may be necessary or appropriate to enable the Holder to consummate a public sale of such Partnership Interests in such states. Except as set forth in
Section 7.20(c)
, all costs and expenses of any such registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a registration statement under the Securities Act for an offering of equity interests of the Partnership for cash (other than an offering relating solely to an employee benefit plan), the Partnership shall use its commercially reasonable efforts to
include such number or amount of Partnership Interests held by any Holder in such registration statement as the Holder shall request;
provided, however
, that the Partnership is not required to make any effort or take any action to so include the Partnership Interests of the Holder once the registration
statement becomes or is declared effective by the Commission, including any registration statement providing for the offering from time to time of Partnership Interests pursuant to Rule 415 of the Securities Act. If the proposed offering pursuant to this
Section 7.20(b)
shall be an underwritten
offering, then, in the event that the managing underwriter or managing underwriters of such offering advise the Partnership and the Holder in writing that in their opinion the inclusion of all or some of the Holders Partnership Interests would adversely and materially affect the success of the offering, the
Partnership shall include in such offering only that number or amount, if any, of Partnership Interests held by the Holder that, in the opinion of the managing underwriter or managing underwriters, will not so adversely and materially affect the offering. Except as set forth in
Section 7.20(c)
, all
costs and expenses of any such registration and offering (other than the underwriting discounts and commissions) shall be paid by the Partnership, without reimbursement by the Holder.
(c) If underwriters are engaged in connection with any registration referred to in this
Section 7.20
, the Partnership shall provide indemnification, representations, covenants, opinions and other assurance to the underwriters in form and substance reasonably satisfactory to such underwriters.
Further, in addition to and not in limitation of the Partnerships obligation under
Section 7.15
, the Partnership shall, to the fullest extent permitted by law, indemnify and hold harmless the Holder, its officers, directors and each Person who controls the Holder (within the meaning of the
Securities Act) and any agent thereof (collectively,
Indemnified Persons
) from and against any and all losses, claims, demands, actions, causes of action, assessments, damages, liabilities (joint or several), costs and expenses (including interest, penalties and reasonable attorneys fees and disbursements),
resulting to, imposed upon, or incurred by the Indemnified Persons, directly or indirectly, under the Securities Act or otherwise (hereinafter referred to in this
Section 7.20(c)
as a
claim
and in the plural as
claims
) based upon, arising out of or resulting from any untrue statement or alleged
untrue statement of any material fact contained in any registration statement under which any Partnership Interests were registered under the Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus or issuer free writing prospectus as defined in Rule 433 of the Securities Act
(if used prior to the effective date of such registration statement), or in any summary,
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free writing or final prospectus or in any amendment or supplement thereto (if used during the period the Partnership is required to keep the registration statement current), or arising out of, based upon or resulting from the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein not misleading;
provided, however
, that the Partnership shall not be liable to any Indemnified Person to the extent that any such claim arises out of, is based upon or results from an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, such preliminary, summary, free writing or final prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Partnership by or on behalf of such Indemnified Person specifically for use
in the preparation thereof.
(d) The provisions of
Section 7.20(a)
and
Section 7.20(b)
shall continue to be applicable with respect to the General Partner (and any of the General Partners Affiliates) after it ceases to be a general partner of the Partnership, during a period of two years subsequent to the
effective date of such cessation and for so long thereafter as is required for the Holder to sell all of the Partnership Interests with respect to which it has requested during such two-year period inclusion in a registration statement otherwise filed or that a registration statement be filed;
provided, however
,
that the Partnership shall not be required to file successive registration statements covering the same Partnership Interests for which registration was demanded during such two-year period. The provisions of Section 7.20(c) shall continue in effect thereafter.
(e) The rights to cause the Partnership to register Partnership Interests pursuant to this
Section 7.20
may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such Partnership Interests,
provided
(i) the Partnership is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such transferee or assignee and the Partnership Interests with respect to which such registration rights are being assigned, and (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms set forth in this
Section 7.20
.
(f) Any request to register Partnership Interests pursuant to this
Section 7.20
shall (i) specify the Partnership Interests intended to be offered and sold by the Person making the request, (ii) express such Persons present intent to offer such Partnership Interests for distribution, (iii) describe
the nature or method of the proposed offer and sale of Partnership Interests, and (iv) contain the undertaking of such Person to provide all such information and materials and take all action as may be required in order to permit the Partnership to comply with all applicable requirements in connection
with the registration of such Partnership Interests.
Section 7.21.
Reliance by Third Parties
. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the Board of Directors, the General Partner and any Officer authorized by the Board of Directors to act on behalf of and in
the name of the Partnership has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such Person shall be entitled to deal with the Board of Directors, the General
Partner or any such Officer as if it were the Partnerships sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Board of Directors, the
General Partner or any such Officer in connection with any such dealing. In no event shall any Person dealing with the Board of Directors, the General Partner or any such Officer or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into
the necessity or expedience of any act or action of the Board of Directors, the General Partner or any such Officer or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the Board of Directors, the General Partner, the Officers or
representatives of the General Partner authorized by the General Partner or the Board of Directors shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (c) such certificate, document or
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instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.
ARTICLE VIII
Section 8.1.
Records and Accounting
. The Partnership shall keep or cause to be kept at the principal office of the Partnership appropriate books and records with respect to the Partnerships business, including all books and records necessary to provide to the Limited Partners any information
required to be provided pursuant to
Section 3.4(a)
. Any books and records maintained by or on behalf of the Partnership in the regular course of its business, including the record of the Record Holders of Units or other Partnership Interests, books of account and records of Partnership
proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information storage device;
provided, however
, that the books and records so maintained are convertible into clearly legible written form within a
reasonable period of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual basis in accordance with IFRS.
Section 8.2.
Fiscal Year
. The fiscal year of the Partnership shall be a fiscal year ending December 31.
Section 8.3.
Reports.
(a) As soon as practicable, but in no event later than 120 days after the close of each fiscal year of the Partnership, the Partnership shall cause to be mailed or made available, by any reasonable means (including posting on or accessible through the Partnerships or the
Commissions website), to each Record Holder of a Unit as of a date selected by the Board of Directors, an annual report containing financial statements of the Partnership for such fiscal year of the Partnership, presented in accordance with IFRS, including a balance sheet and statements of operations,
Partnership equity and cash flows, such statements to be audited by a firm of independent public accountants selected by the Board of Directors.
(b) As soon as practicable, but in no event later than 90 days after the close of each Quarter except the last Quarter of each fiscal year, the Partnership shall cause to be mailed or made available, by any reasonable means (including posting on or accessible through the Partnerships or the
Commissions website), to each Record Holder of a Unit, as of a date selected by the Board of Directors, a report containing unaudited financial statements of the Partnership and such other information as may be required by applicable law, regulation or rule of any National Securities Exchange on
which the Units are listed or admitted to trading, or as the Board of Directors determines to be necessary or appropriate.
Section 9.1.
Tax Elections and Information.
(a) The Partnership is authorized and has elected, effective as of January 23, 2014, to be treated as an association taxable as a corporation for U.S. federal income tax purposes. Except as otherwise provided herein, the Board of Directors shall
determine whether the Partnership should make any other elections permitted by any applicable tax law.
(b) The tax information reasonably required by Record Holders for U.S. federal income tax reporting purposes with respect to a calendar taxable year shall be furnished to them within 90 days of the close of each calendar year.
Section 9.2.
Tax Withholding
. Notwithstanding any other provision of this Agreement, the Board of Directors is authorized to take any action that may be required or advisable to cause the Partnership and other Group Members to comply with any withholding requirements with respect to
any tax established under any U.S. federal, state or local or any non-U.S. law. To the extent that the Partnership is required or elects to withhold and pay over to any taxing authority any amount with respect to a distribution or payment to or for the benefit of any Partner, the Board of Directors
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BOOKS, RECORDS, ACCOUNTING AND REPORTS
may treat the amount withheld as a distribution of cash to such Partner in the amount of such withholding from such Partner.
Section 9.3.
Conduct of Operations
. The Board of Directors shall use commercially reasonable efforts to conduct the business of the Partnership and its Affiliates in a manner that does not require a holder of Common Units to file a tax return in any jurisdiction with which the holder has no
contact other than through ownership of Common Units.
ARTICLE X
Section 10.1.
Admission of Initial Limited Partners
. Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive Distribution Rights to the General Partner, GasLog and the Underwriters as described in
Section 5.1
and
Section 5.2
, the Board
of Directors shall admit such parties to the Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or Incentive Distribution Rights issued to them.
Section 10.2.
Admission of Additional Limited Partners.
(a) From and after the Closing Date, by acceptance of the transfer of any Limited Partner Interests in accordance with
Article IV
or the acceptance of any Limited Partner Interests issued pursuant to
Article V
or
pursuant to a merger, consolidation or conversion pursuant to
Article XIV
, each transferee of, or other such Person acquiring, a Limited Partner Interest (including any nominee holder or an agent or representative acquiring such Limited Partner Interests for the account of another Person) (i)
shall be admitted to the Partnership as a Limited Partner with respect to the Limited Partner Interests so transferred or issued to such Person when any such transfer, issuance or admission is reflected in the books and records of the Partnership and such Limited Partner becomes the Record Holder of
the Limited Partner Interests so transferred, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) represents that the transferee or other recipient has the capacity, power and authority to enter into this Agreement and (iv) makes the consents,
acknowledgements and waivers contained in this Agreement, all with or without execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner shall not constitute an amendment to this Agreement. A Person may become a
Limited Partner or Record Holder of a Limited Partner Interest without the consent or approval of any of the Partners. A Person may not become a Limited Partner until such Person acquires a Limited Partner Interest and until such Person is reflected in the books and records of the Partnership as the
Record Holder of such Limited Partner Interest.
(b) The name and mailing address of each Limited Partner shall be listed on the books and records of the Partnership maintained for such purpose by the Partnership or the Transfer Agent. The General Partner shall update the books and records of the Partnership from time to time as necessary to
reflect accurately the information therein (or shall cause the Transfer Agent to do so, as applicable). A Limited Partner Interest may be represented by a Certificate, as provided in
Section 4.1
.
(c) Any transfer of a Limited Partner Interest shall not entitle the transferee to receive distributions or to any other rights to which the transferor was entitled until the transferee becomes a Limited Partner pursuant to
Section 10.2(a)
.
Section 10.3.
Admission of Successor General Partner
. A successor General Partner approved pursuant to
Section 11.1
or
Section 11.2
or the transferee of or successor to all or part of the General Partner Interest (represented by General Partner Units) pursuant to
Section 4.6
who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately prior to the withdrawal or removal of the predecessor or transferring General Partner, pursuant to
Section 11.1
or
Section
11.2
or the transfer of the General Partner Interest (represented by General Partner Units) pursuant to
Section 4.6
;
provided, however
, that no such Person shall be admitted to the Partnership as a successor or additional General Partner until compliance with the terms of
Section 4.6
has occurred and such Person has executed and delivered such other documents or instruments as may be required to effect such admission.
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ADMISSION OF PARTNERS
Any such successor or additional General Partner is hereby authorized to and shall, subject to the terms hereof, carry on the business of the members of the Partnership Group without dissolution.
Section 10.4.
Amendment of Agreement and Certificate of Limited Partnership
. To effect the admission to the Partnership of any Partner, the Board of Directors shall take all steps necessary or appropriate under the Marshall Islands Act to amend the records of the Partnership to reflect such
admission and, if necessary, to prepare as soon as practicable an amendment to this Agreement and, if required by law, the Board of Directors shall prepare and file an amendment to the Certificate of Limited Partnership.
ARTICLE XI
Section 11.1.
Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the occurrence of any one of the following events (each such event herein referred to as an
Event of Withdrawal
):
(i) The General Partner voluntarily withdraws from the Partnership by giving written notice to the other Partners;
(ii) The General Partner transfers all of its rights as General Partner pursuant to
Section 4.6
;
(iii) The General Partner is removed pursuant to
Section 11.2
;
(iv) The General Partner (A) makes a general assignment for the benefit of creditors; (B) files a voluntary petition in bankruptcy; (C) files a voluntary petition or answer seeking for itself a liquidation, dissolution or similar relief (but not a reorganization) under any law; (D) files an answer or
other pleading admitting or failing to contest the material allegations of a petition filed against the General Partner in a proceeding of the type described in
clauses (A)
,
(B)
or
(C)
of this
Section 11.1(a)(iv)
; or (E) seeks, consents to or acquiesces in the
appointment of a trustee (but not a debtor in possession), receiver or liquidating trustee of the General Partner or of all or any substantial part of its properties;
(v) The General Partner is adjudged bankrupt or insolvent, or has entered against it an order for relief in any bankruptcy or insolvency proceeding;
(vi) (A) in the event the General Partner is a corporation, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter and the expiration of 90 days after the date of notice to the General Partner of revocation without a reinstatement of its charter;
(B) in the event the General Partner is a partnership or a limited liability company, the dissolution and commencement of winding up of the General Partner; (C) in the event the General Partner is acting in such capacity by virtue of being a trustee of a trust, the termination of the trust; (D) in the
event the General Partner is a natural person, his death or adjudication of incompetency; and (E) otherwise in the event of the termination of the General Partner.
If an Event of Withdrawal specified in
Section 11.1(a)(iv)
,
11.1(a)(v)
or
11.1(a)(vi)(A)
,
11.1(a)(vi)(B)
,
11.1(a)(vi)(C)
or
11.1(a)(vi)(E)
occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30 days after
such occurrence. The Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1
shall result in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of Withdrawal shall not constitute a breach of this Agreement under the following circumstances:
(i) at any time during the period beginning on the Closing Date and ending at 12:00 midnight, prevailing Eastern Time, on March 31, 2024, the General Partner voluntarily withdraws by giving at least 90 days advance notice of its intention to withdraw to the Limited Partners, such withdrawal to
take effect on the date specified in the notice;
provided, however
, that prior to the effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a majority of the Outstanding Common Units (excluding Common Units held
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WITHDRAWAL OR REMOVAL OF PARTNERS
by the General Partner and its Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel (
Withdrawal Opinion of Counsel
) that such withdrawal (following the selection of the successor General Partner) would not result in the loss of the limited liability of any Limited
Partner or any Group Member;
(ii) at any time after 12:00 midnight, prevailing Eastern Time, on March 31, 2024, the General Partner voluntarily withdraws by giving at least 90 days advance notice to the Unitholders, such withdrawal to take effect on the date specified in such notice (
provided
, that, prior to the effective date
of such withdrawal, the General Partner delivers to the Partnership a Withdrawal Opinion of Counsel);
(iii) at any time that the General Partner ceases to be the General Partner pursuant to
Section 11.1(a)(ii)
or is removed pursuant to
Section 11.2
; or
(iv) notwithstanding
clause (i)
of this
Section 11.1(b)
, at any time that the General Partner voluntarily withdraws by giving at least 90 days advance notice of its intention to withdraw to the Limited Partners, such withdrawal to take effect on the date specified in the notice, if
at the time such notice is given one Person and its Affiliates (other than the General Partner and its Affiliates) own beneficially or of record or control at least 50% of the Outstanding Units. The withdrawal of the General Partner from the Partnership upon the occurrence of an Event of Withdrawal
shall also constitute the withdrawal of the General Partner as general partner or managing member, if any, to the extent applicable, of the other Group Members. If the General Partner gives a notice of withdrawal pursuant to
Section 11.1(a)(i)
, the holders of a Unit Majority, may, prior to
the effective date of such withdrawal, elect a successor General Partner. The Person so elected as successor General Partner shall automatically become the successor general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general
partner or a managing member. If, prior to the effective date of the General Partners withdrawal, a successor is not selected by the Unitholders as provided herein or, if applicable, the Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in accordance
with
Section 12.1.
Any successor General Partner elected in accordance with the terms of this
Section 11.1
shall be subject to the provisions of
Section 10.3.
Section 11.2.
Removal of the General Partner
. The General Partner may be removed if such removal is approved by the Unitholders holding at least 66 2 /3 % of the Outstanding Units (including Units held by the General Partner and its Affiliates), voting as a single class. Any such action by
such holders or the Board of Directors for removal of the General Partner must also provide for the election of a successor General Partner by the majority vote of the outstanding Common Units and Subordinated Units, voting together as a single class.
Such removal shall be effective immediately following the admission of a successor General Partner pursuant to
Section 10.3.
The removal of the General Partner shall also automatically constitute the removal of the General Partner as general partner or managing member, to the extent
applicable, of the other Group Members of which the General Partner is a general partner or a managing member. If a Person is elected as a successor General Partner in accordance with the terms of this
Section 11.2
, such Person shall, upon admission pursuant to
Section 10.3
,
automatically become a successor general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. The right of the holders of Outstanding Units to remove the General Partner shall not exist or be
exercised unless the Partnership has received an Opinion of Counsel opining as to the matters covered by a Withdrawal Opinion of Counsel. Any successor General Partner elected in accordance with the terms of this
Section 11.2
shall be subject to the provisions of
Section 10.3
.
Section 11.3.
Interest of Departing General Partner and Successor General Partner.
(a) In the event of (i) withdrawal of the General Partner under circumstances where such withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of Outstanding Units
under circumstances where Cause does not exist, if the successor General Partner is elected in accordance with the terms of
Section 11.1
or
Section 11.2
, (A) the Departing General Partner shall have the option, exercisable prior to the effective date of the departure of such Departing
General
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Partner, to require its successor to purchase its General Partner Interest (represented by General Partner Units) and its general partner interest (or equivalent interest), if any, in the other Group Members and its Incentive Distribution Rights, if any (collectively, the
Combined Interest
), in exchange for
an amount in cash equal to the fair market value of such Combined Interest, such amount to be determined and payable as of the effective date of its departure and (B) the other holders of the Incentive Distribution Rights shall have the option, exercisable prior to the effective date of the departure of
such Departing General Partner, to require such successor to purchase such holders Incentive Distribution Rights in exchange for an amount in cash equal to the fair market value of such Incentive Distribution Rights, such amount to be determined and payable as of the effective date of the Departing
General Partners departure. If the General Partner is removed by the Unitholders under circumstances where Cause exists or if the General Partner withdraws under circumstances where such withdrawal violates this Agreement, and if a successor General Partner is elected in accordance with the terms
of
Section 11.1
or
Section 11.2
(or if the business of the Partnership is continued pursuant to
Section 12.2
and the successor General Partner is not the former General Partner), such successor shall have the option, exercisable prior to the effective date of the departure of
such Departing General Partner (or, in the event the business of the Partnership is continued, prior to the date the business of the Partnership is continued), to purchase the Combined Interest in exchange for an amount in cash equal to such fair market value of such Combined Interest of the Departing
General Partner. In either event, the Departing General Partner shall be entitled to receive all reimbursements due such Departing General Partner pursuant to
Section 7.12
, including any employee related liabilities (including severance liabilities), incurred in connection with the termination of
any employees employed by the Departing General Partner or its Affiliates (other than any Group Member) for the benefit of the Partnership or the other Group Members.
For purposes of this
Section 11.3(a)
, the fair market value of the Departing General Partners Combined Interest and the value of the Incentive Distribution Rights held by holders other than the Departing General Partner shall be determined by agreement between the Departing General
Partner and its successor or, failing agreement within 30 days after the effective date of such Departing General Partners departure, by an independent investment banking firm or other independent expert selected by the Departing General Partner and its successor, which, in turn, may rely on other
experts, and the determination of which shall be conclusive as to such matter. If such parties cannot agree upon one independent investment banking firm or other independent expert within 45 days after the effective date of such departure, then the Departing General Partner shall designate an
independent investment banking firm or other independent expert, the Departing General Partners successor shall designate an independent investment banking firm or other independent expert, and such firms or experts shall mutually select a third independent investment banking firm or independent
expert, which third independent investment banking firm or other independent expert shall determine the fair market value of the Combined Interest of the Departing General Partner and the value of the Incentive Distribution Rights held by holders other than the Departing General Partner. In making
its determination, such third independent investment banking firm or other independent expert may consider the then current trading price of Units on any National Securities Exchange on which Units are then listed or admitted to trading, the value of the Partnerships assets, the rights and obligations of
the Departing General Partner and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner set forth in
Section 11.3(a)
, the Departing General Partner (or its transferee) shall become a Limited Partner and its Combined Interest shall be converted into Common Units pursuant to a valuation made by an investment
banking firm or other independent expert selected pursuant to
Section 11.3(a)
, without reduction in such Partnership Interest (but subject to proportionate dilution by reason of the admission of its successor). Any successor General Partner shall indemnify the Departing General Partner (or its
transferee) as to all debts and liabilities of the Partnership arising on or after the date on which the Departing General Partner (or its transferee) becomes a Limited Partner. For purposes of this Agreement, conversion of the Combined Interest of the Departing General Partner to Common
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Units will be characterized as if the Departing General Partner (or its transferee) contributed its Combined Interest to the Partnership in exchange for the newly issued Common Units.
(c) If a successor General Partner is elected in accordance with the terms of
Section 11.1
or
Section 11.2
(or if the Partnership is continued pursuant to
Section 12.2
and the successor General Partner is not the former General Partner) and the option described in
Section 11.3(a)
is not exercised by the party entitled to do so, the successor General Partner shall, at the effective date of its admission to the Partnership, contribute to the Partnership cash in the amount equal to the product of (i) the quotient obtained by dividing (A) the Percentage Interest of
the General Partner Interest of the Departing General Partner by (B) a percentage equal to 100% less the Percentage Interest of the General Partner Interest of the Departing General Partner and (ii) the Net Agreed Value of the Partnerships assets on such date. In such event, such successor General
Partner shall, subject to the following sentence, be entitled to its Percentage Interest of all Partnership allocations and distributions to which the Departing General Partner was entitled. In addition, the successor General Partner shall cause this Agreement to be amended to reflect that, from and after the
date of such successor General Partners admission, the successor General Partners interest in all Partnership distributions and allocations shall be its Percentage Interest.
Section 11.4.
Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages
. Notwithstanding any provision of this Agreement, if the General Partner is removed as general partner of the Partnership under circumstances
where Cause does not exist and no Units held by the General Partner and its Affiliates are voted in favor of such removal, (a) the Subordination Period will end and all Subordinated Units will immediately and automatically convert into Common Units on a one-for-one basis, (b) all Cumulative Common
Unit Arrearages on the Common Units will be extinguished, (c) the General Partner will have the right to convert its General Partner Interest (represented by General Partner Units) and its Incentive Distribution Rights into Common Units or to receive cash in exchange therefor, as provided in
Section 11.3
and (d) the other holders of the Incentive Distribution Rights will have the right to convert their Incentive Distribution Rights into Common Units or to receive cash in exchange therefor, as provided in
Section 11.3
.
Section 11.5.
Withdrawal of Limited Partners
. No Limited Partner shall have any right to withdraw from the Partnership;
provided, however
, that when a transferee of a Limited Partners Limited Partner Interest becomes a Record Holder of the Limited Partner Interest so transferred, such
transferring Limited Partner shall cease to be a Limited Partner with respect to the Limited Partner Interest so transferred.
ARTICLE XII
Section 12.1.
Dissolution.
The Partnership shall not be dissolved by the admission of additional Limited Partners or by the admission of a successor or additional General Partner in accordance with the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a
successor General Partner is elected pursuant to
Section 11.1
or
Section 11.2
, the Partnership shall not be dissolved and the Board of Directors shall continue the business of the Partnership. The Partnership shall dissolve, and (subject to
Section 12.2
) its affairs shall be
wound up, upon:
(a) an election to dissolve the Partnership by the General Partner and our Board of Directors that is approved by the holders of a Unit Majority;
(b) at any time there are no Limited Partners, unless the Partnership is continued without dissolution in accordance with the Marshall Islands Act;
(c) the entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Marshall Islands Act; or
(d) an Event of Withdrawal of the General Partner as provided in
Section 11.1(a)
(other than
Section 11.1(a)(ii))
, unless a successor is elected and an Opinion of Counsel is received as
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DISSOLUTION AND LIQUIDATION
provided in
Section 11.1(b)
or
Section 11.2
and such successor is admitted to the Partnership pursuant to
Section 10.3
.
Section 12.2.
Continuation of the Business of the Partnership After Dissolution
. Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or removal of the General Partner as provided in
Section 11.1(a)(i)
or
11.1(a)(iii)
and the
failure of the Partners to select a successor to such Departing General Partner pursuant to
Section 11.1
or
Section 11.2
, then within 90 days thereafter, or (b) dissolution of the Partnership upon an event constituting an Event of Withdrawal as defined in
Section 11.1(a)(iv)
,
11.1(a)(v)
or
11.1(a)(vi)
, then, to the maximum extent permitted by the Marshall Islands Act, within 180 days thereafter, the holders of a Unit Majority may elect in writing to continue the business of the Partnership on the same terms and conditions set forth in this Agreement by
appointing, effective as of the date of the Event of Withdrawal, as a successor General Partner a Person approved by the holders of a Unit Majority. Unless such an election is made within the applicable time period as set forth above, the Partnership shall dissolve and conduct only activities necessary to
wind up its affairs. If such an election is so made, then:
(i) the Partnership shall continue without dissolution unless earlier dissolved in accordance with this
Article XII
;
(ii) if the successor General Partner is not the former General Partner, then the interest of the former General Partner shall be treated in the manner provided in
Section 11.3
; and
(iii) the successor General Partner shall be admitted to the Partnership as General Partner, effective as of the Event of Withdrawal, by agreeing in writing to be bound by this Agreement;
provided, however
, that the right of the holders of a Unit Majority to approve a successor General Partner
and to reconstitute and to continue the business of the Partnership shall not exist and may not be exercised unless the Partnership has received an Opinion of Counsel that the exercise of the right would not result in the loss of limited liability of any Limited Partner.
Section 12.3.
Liquidating Trustee
. Upon dissolution of the Partnership, unless the business of the Partnership is continued pursuant to
Section 12.2
, the Board of Directors shall select one or more Persons to act as Liquidating Trustee. The Liquidating Trustee (if other than the
General Partner) shall be entitled to receive such compensation for its services as may be approved by holders of at least a majority of the Outstanding Common Units and Subordinated Units, voting as a single class. The Liquidating Trustee (if other than the General Partner) shall agree not to resign at
any time without 15 days prior notice and may be removed at any time, with or without cause, by notice of removal approved by holders of at least a majority of the Outstanding Common Units and Subordinated Units, voting as a single class. Upon dissolution, removal or resignation of the Liquidating
Trustee, a successor and substitute Liquidating Trustee (who shall have and succeed to all rights, powers and duties of the original Liquidating Trustee) shall within 30 days thereafter be approved by the holders of at least a majority of the Outstanding Common Units and Subordinated Units, voting as a
single class. The right to approve a successor or substitute Liquidating Trustee in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidating Trustee approved in the manner herein provided. Except as expressly provided in this
Article XII
, the
Liquidating Trustee approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the Board of Directors and the General Partner under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of such powers, other than the limitation on sale set forth in
Section 7.11(b)
) necessary or appropriate to carry out the duties and functions of the Liquidating Trustee hereunder for and during the period of time required to
complete the winding up and liquidation of the Partnership as provided for herein.
Section 12.4.
Liquidation.
The Liquidating Trustee shall proceed to dispose of the assets of the Partnership, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidating Trustee, subject to the Marshall Islands Act and the
following:
(a) The assets may be disposed of by public or private sale or by distribution in kind to one or more Partners on such terms as the Liquidating Trustee and such Partner or Partners
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may agree. If any property is distributed in kind, the Partner receiving the property shall be deemed for purposes of
Section 12.4(c)
to have received cash equal to its fair market value, and contemporaneously therewith, appropriate cash distributions must be made to the other Partners. The
Liquidating Trustee may defer liquidation or distribution of the Partnerships assets for a reasonable time if it determines that an immediate sale or distribution of all or some of the Partnerships assets would be impractical or would cause undue loss to the Partners. The Liquidating Trustee may
distribute the Partnerships assets, in whole or in part, in kind if it determines that a sale would be impractical or would cause undue loss to the Partners.
(b) The Liquidating Trustee shall first satisfy the liabilities of the Partnership. Liabilities of the Partnership include amounts owed to the Liquidating Trustee as compensation for serving in such capacity (subject to the terms of
Section 12.3
) and amounts to Partners otherwise than in
respect of their distribution rights under
Article VI
. With respect to any liability that is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidating Trustee shall either settle such claim for such amount as it deems appropriate or establish a reserve of cash
or other assets to provide for its payment. When paid, any unused portion of the reserve shall be distributed as additional liquidation proceeds.
(c) All property and all cash in excess of that required to discharge liabilities as provided in this
Section 12.4
shall be distributed as follows:
(i) If the Current Market Price of the Common Units as of the date three trading days prior to the announcement of the proposed liquidation exceeds the Unrecovered Capital for a Common Unit plus the Cumulative Common Unit Arrearage:
(A) First, (x) to the General Partner in accordance with its Percentage Interest and (y) to all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Common Unit
then Outstanding an amount equal to such Current Market Price of a Common Unit;
(B) Second (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Subordinated
Unit then Outstanding an amount equal to such Current Market Price of a Common Unit; and
(C) Thereafter (x) to the General Partner in accordance with its Percentage Interest; (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclauses (x)
and
(y)
of this
clause (i)(C)
;
(ii) If the Current Market Price of the Common Units as of the date three trading days prior to the announcement of the proposed liquidation is equal to or less than the Unrecovered Capital for a Common Unit plus the Cumulative Common Unit Arrearage:
(A) First, (x) to the General Partner in accordance with its Percentage Interest and (y) to all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Common Unit
then Outstanding an amount equal to the Unrecovered Capital for a Common Unit;
(B) Second, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Common Unit
then Outstanding an amount equal to the Cumulative Common Unit Arrearage;
(C) Third, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partners Percentage Interest, until there has been distributed in respect of each Subordinated
Unit then Outstanding an amount equal to the
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Unrecovered Capital for a Common Unit (as calculated prior to the distribution specified in
clause (ii)(A)
above); and
(D) Thereafter, (x) to the General Partner in accordance with its Percentage Interest; (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to
subclauses (x)
and
(y)
of this
clause (ii)(D)
;
Section 12.5.
Cancellation of Certificate of Limited Partnership
. Upon the completion of the distribution of Partnership cash and property as provided in
Section 12.4
in connection with the liquidation of the Partnership, the Certificate of Limited Partnership and all qualifications of
the Partnership as a foreign limited partnership in jurisdictions other than the Marshall Islands shall be canceled and such other actions as may be necessary to terminate the Partnership shall be taken.
Section 12.6.
Return of Contributions
. The General Partner shall not be personally liable for, and shall have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate, the return of the Capital Contributions of the Limited Partners or Unitholders,
or any portion thereof, it being expressly understood that any such return shall be made solely from Partnership assets.
Section 12.7.
Waiver of Partition
. To the maximum extent permitted by law, each Partner hereby waives any right to partition of the Partnership property.
ARTICLE XIII
Section 13.1.
Amendments to be Adopted Without Approval of the Limited Partners or the General Partner
. The General Partner and each Limited Partner agree that the Board of Directors, without the approval of any Limited Partner or, subject to
Section 5.5
, the General Partner,
may amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in accordance with this Agreement;
(c) a change that the Board of Directors determines to be necessary or appropriate to qualify or continue the qualification of the Partnership as a limited partnership or a partnership in which the Limited Partners have limited liability under the Marshall Islands Act;
(d) a change that the Board of Directors determines (i) does not adversely affect the rights of the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect, (ii) to be necessary or appropriate to (A)
satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any Marshall Islands authority (including the Marshall Islands Act) or (B) facilitate the trading of the Units or comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are or will be listed, or admitted to trading, (iii) to be necessary or appropriate in connection with action taken by the Board of Directors pursuant to
Section 5.8
or (iv) is required to effect the intent expressed in the Registration Statement or the
intent of the provisions of this Agreement or is otherwise contemplated by this Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any other changes that the Board of Directors determines to be necessary or appropriate as a result of a change in the fiscal year or taxable year of the Partnership including, if the Board of Directors shall so determine, a
change in the definition of Quarter and the dates on which distributions are to be made by the Partnership;
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AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, the members of the Board of Directors, or the General Partner or its or their directors, officers, trustees or agents from in any manner being subjected to the provisions of the U.S. Investment Company
Act of 1940, as amended, the U.S. Investment Advisers Act of 1940, as amended, or plan asset regulations adopted under the U.S. Employee Retirement Income Security Act of 1974, as amended, regardless of whether such regulations are substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;
(g) an amendment that the Board of Directors, and if required by
Section 5.5
, the General Partner, determines to be necessary or appropriate in connection with the authorization of issuance of any class or series of Partnership Interests pursuant to
Section 5.4
;
(h) an amendment that the Board of Directors determines to be necessary or appropriate for the authorization of additional Partnership Interests or rights to acquire Partnership Interests, including any amendment that the Board of Directors determines is necessary or appropriate in connection
with:
(i) the adjustments of the Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target Distribution in connection with the IDR Reset Election in accordance with
Section 5.10
;
(ii) the implementation of the provisions relating to GasLogs right to reset its Incentive Distribution Rights in exchange for Common Units;
(iii) any modification of the Incentive Distribution Rights made in connection with the issuance of additional Partnership Interests or rights to acquire Partnership Interests,
provided
, that, with respect to this
clause (iii)
, any such modifications to the Incentive Distribution Rights
and the related issuance of Partnership Interests have received Special Approval; or
(iv) any amendment expressly permitted in this Agreement to be made by the Board of Directors acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in accordance with
Section 14.3
;
(j) an amendment that the Board of Directors determines to be necessary or appropriate to reflect and account for the formation by the Partnership of, or investment by the Partnership in, any corporation, partnership, joint venture, limited liability company or other Person, in connection with
the conduct by the Partnership of activities permitted by the terms of
Section 2.4
;
(k) a conversion, merger or conveyance pursuant to
Section 14.3(d)
;
(l) an amendment to cure any ambiguity, defect or inconsistency; or
(m) any other amendments substantially similar to the foregoing.
Section 13.2.
Amendment Procedures
. Except as provided in
Section 13.1
and
Section 13.3
, all amendments to this Agreement shall be made in accordance with the following requirements. Amendments to this Agreement may be proposed only by, or with the written
consent of, the Board of Directors;
provided, however
, that the Board of Directors shall have no duty or obligation to propose any amendment to this Agreement and may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner, any Record Holder or
any other Person and, in declining to propose an amendment, to the fullest extent permitted by applicable law shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Marshall Islands Act or any other law, rule or regulation. A proposed amendment shall be effective upon its approval by the Board of Directors and, if applicable, the holders of a Unit Majority, unless a greater or different percentage is required under this Agreement or by the Marshall Islands Act.
Each proposed amendment that requires the approval of the holders of a specified percentage of Outstanding Units shall be set forth in a writing that contains the text of the proposed amendment. If such an amendment is proposed, the Board of Directors shall seek the written
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approval of the requisite percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such proposed amendment. The Board of Directors shall notify all Record Holders upon final adoption of any such proposed amendments.
Section 13.3.
Amendment Requirements.
(a) Notwithstanding the provisions of
Section 13.1
and
Section 13.2
, no provision of this Agreement that establishes a percentage of Outstanding Units (including Units deemed owned by the General Partner and its Affiliates)
required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would have the effect of (i) in the case of any provision of this Agreement other than
Section 11.2
or
Section 13.4
, reducing such percentage or (ii) in the case of
Section 11.2
or
Section 13.4
, increasing such percentage, unless such amendment is approved by the written consent or the affirmative vote of holders of Outstanding Units whose aggregate Outstanding Units constitute not less than the voting requirement sought to be reduced.
(b) Notwithstanding the provisions of
Section 13.1
and
Section 13.2
, no amendment to this Agreement may (i) enlarge the obligations of any Limited Partner without its consent, unless such enlargement shall be deemed to have occurred as a result of an amendment approved
pursuant to
Section 13.3(c)
or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable to, the General Partner or any of its Affiliates without its consent, which consent may be given or
withheld at the General Partners option.
(c) Except as provided in
Section 14.3
, and without limitation of the Board of Directors authority to adopt amendments to this Agreement without the approval of any Partners as contemplated in
Section 13.1
, any amendment that would have a material adverse effect on the
rights or preferences of any class of Partnership Interests in relation to other classes of Partnership Interests must be approved by the holders of not less than a majority of the Outstanding Partnership Interests of the class affected. If the General Partner determines an amendment does not satisfy the
requirements of
Section 13.1(d)(i)
because it adversely affects one or more classes of Partnership Interests, as compared to other classes of Partnership Interests, in any material respect, such amendment shall only be required to be approved by the adversely affected class or classes.
(d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 13.1
and except as otherwise provided by
Section 14.3(b)
, no amendments shall become effective without the approval of the holders of at least 90% of the Outstanding Units
voting as a single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment will not affect the limited liability of any Limited Partner under applicable law.
(e) Except as provided in
Section 13.1
, this
Section 13.3
shall only be amended with the approval of the holders of at least 90% of the Outstanding Units.
Section 13.4.
Special Meetings
. All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the manner provided in this
Article XIII
. Special meetings of the Limited Partners may be called by the General Partner, the Board of Directors or by Limited
Partners owning 20% or more of the Outstanding Units of the class or classes for which a meeting is proposed. Limited Partners shall call a special meeting by delivering to the Board of Directors one or more requests in writing stating that the signing Limited Partners wish to call a special meeting and
indicating the general or specific purposes for which the special meeting is to be called, it being understood that the purposes of such special meeting may only be to vote on matters that require the vote of the Unitholders pursuant to this Agreement. Within 60 days after receipt of such a call from
Limited Partners or within such greater time as may be reasonably necessary for the Partnership to comply with any statutes, rules, regulations, listing agreements or similar requirements governing the holding of a meeting or the solicitation of proxies for use at such a meeting, the Board of Directors
shall send a notice of the meeting to the Limited Partners either directly or indirectly through the Transfer Agent. A meeting shall be held at a time and place determined by the Board of Directors on a date not less than 10 days nor more than 60 days after the mailing of notice of the meeting. Limited
Partners shall not vote on matters that would cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs
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of the Partnership so as to jeopardize the Limited Partners limited liability under the Marshall Islands Act or the law of any other jurisdiction in which the Partnership is qualified to do business.
Section 13.5.
Notice of a Meeting
. Notice of a meeting called pursuant to
Section 13.4
shall be given to the Record Holders of the class or classes of Units for which a meeting is proposed in writing by mail or other means of written communication in accordance with
Section 16.1
at least 10 days in advance of such meeting. The notice shall be deemed to have been given at the time when deposited in the mail or sent by other means of written communication.
Section 13.6.
Record Date
. For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners or to give approvals without a meeting as provided in
Section 13.11
, the Board of Directors may set a Record Date, which shall not be
less than 10 nor more than 60 days before (a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading, in which case the rule, regulation, guideline or
requirement of such National Securities Exchange shall govern) or (b) in the event that approvals are sought without a meeting, the date by which Limited Partners are requested in writing by the Board of Directors to give such approvals. If the Board of Directors does not set a Record Date, then (a)
the Record Date for determining the Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners shall be the close of business on the day next preceding the day on which notice is given, and (b) the Record Date for determining the Limited Partners entitled to give approvals
without a meeting shall be the date the first written approval is deposited with the Partnership in care of the Board of Directors in accordance with
Section 13.11
.
Section 13.7.
Adjournment
. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting, the Partnership may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if a new Record Date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given in accordance with this
Article XIII
.
Section 13.8.
Waiver of Notice; Approval of Meeting; Approval of Minutes
. The transactions of any meeting of Limited Partners, however called and noticed, and whenever held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice, if a quorum is present
either in person or by proxy. Attendance of a Limited Partner at a meeting shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened; and except that attendance at a meeting is not a waiver of any right to disapprove the consideration of matters required to be included in the notice of the meeting, but not so included, if the disapproval is expressly made at the meeting.
Section 13.9.
Quorum and Voting
. The holders of 33
1
/
3
% of the Outstanding Units of the class or classes for which a meeting has been called (including Outstanding Units deemed owned by the General Partner and its Affiliates) represented in person or by proxy shall constitute a quorum at
a meeting of Limited Partners of such class or classes unless any such action by the Limited Partners requires approval by holders of a greater percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting of the Limited Partners duly called and held in accordance
with this Agreement at which a quorum is present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a majority of the Outstanding Units entitled to vote and present in person or by proxy at such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action under the provisions of this Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the aggregate represent at least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to leave less than a quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Units specified in this Agreement (including
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Outstanding Units deemed owned by the General Partner and its Affiliates). In the absence of a quorum, any meeting of Limited Partners may be adjourned from time to time by the affirmative vote of holders of at least a majority of the Outstanding Units entitled to vote at such meeting (including
Outstanding Units deemed owned by the General Partner and its Affiliates) and represented either in person or by proxy, but no other business may be transacted, except as provided in
Section 13.7
.
Section 13.10.
Conduct of a Meeting
. The Board of Directors shall have full power and authority concerning the manner of conducting any meeting of the Limited Partners or solicitation of approvals in writing, including the determination of Persons entitled to vote, the existence of a quorum,
the satisfaction of the requirements of
Section 13.4
, the conduct of voting, the validity and effect of any proxies and the determination of any controversies, votes or challenges arising in connection with or during the meeting or voting. The Chairman of the Board of Directors shall serve as
chairman of any meeting and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept with the records of the Partnership maintained by the Board of Directors. The Board of Directors may make such other regulations consistent with applicable law and this
Agreement as it may deem advisable concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in writing, including regulations in regard to the appointment of proxies, the appointment and duties of inspectors of votes and approvals, the submission and examination of
proxies and other evidence of the right to vote, and the revocation of approvals in writing.
Section 13.11.
Action Without a Meeting
. If authorized by the Board of Directors, any action that may be taken at a meeting of the Limited Partners may be taken without a meeting if an approval in writing setting forth the action so taken is signed by Limited Partners owning not less than
the minimum percentage of the Outstanding Units (including Units deemed owned by the General Partner and its Affiliates) that would be necessary to authorize or take such action at a meeting at which all the Limited Partners were present and voted (unless such provision conflicts with any rule,
regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading, in which case the rule, regulation, guideline or requirement of such National Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall be
given to the Limited Partners who have not approved the action in writing. The Board of Directors may specify that any written ballot submitted to Limited Partners for the purpose of taking any action without a meeting shall be returned to the Partnership within the time period, which shall be not less
than 20 days, specified by the Board of Directors. If a ballot returned to the Partnership does not vote all of the Units held by the Limited Partners, the Partnership shall be deemed to have failed to receive a ballot for the Units that were not voted. If approval of the taking of any action by the Limited
Partners is solicited by any Person other than by or on behalf of the Board of Directors, the written approvals shall have no force and effect unless and until (a) they are deposited with the Partnership in care of the Board of Directors, (b) approvals sufficient to take the action proposed are dated as of a
date not more than 90 days prior to the date sufficient approvals are deposited with the Partnership and (c) an Opinion of Counsel is delivered to the Board of Directors to the effect that the exercise of such right and the action proposed to be taken with respect to any particular matter (i) will not cause
the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to jeopardize the Limited Partners limited liability, and (ii) is otherwise permissible under the applicable statutes then governing the rights, duties and liabilities of the
Partnership and the Partners.
Section 13.12.
Right to Vote and Related Matters.
(a) Only those Record Holders of the Units on the Record Date set pursuant to
Section 13.6
(and also subject to the limitations contained in the definition of Outstanding) shall be entitled to notice of, and to vote at, a meeting of
Limited Partners or to act with respect to matters as to which the holders of the Outstanding Units have the right to vote or to act. All references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units shall be deemed to be references to the votes or acts of the Record
Holders of such Outstanding Units.
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(b) With respect to Units that are held for a Persons account by another Person (such as a broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing), in whose name such Units are registered, such other Person shall, in exercising the voting rights in respect of
such Units on any matter, and unless the arrangement between such Persons provides otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial owner, and the Partnership shall be entitled to assume it is so acting without further inquiry. The provisions of this
Section 13.12(b)
(as well as all other provisions of this Agreement) are subject to the provisions of
Section 4.3.
ARTICLE XIV
Section 14.1.
Authority
. The Partnership may merge or consolidate with or into one or more corporations, limited liability companies, statutory trusts or associations, real estate investment trusts, common law trusts or unincorporated businesses, including a partnership (whether general or
limited (including a limited liability partnership)) or convert into any such entity, pursuant to a written agreement of merger or consolidation (
Merger Agreement
) or a written plan of conversion (
Plan of Conversion
), as the case may be, in accordance with this
Article XIV
.
Section 14.2.
Procedure for Merger, Consolidation or Conversion.
(a) Merger, consolidation or conversion of the Partnership pursuant to this
Article XIV
requires the approval of the Board of Directors and the prior consent of the General Partner;
provided, however
, that, to the
fullest extent permitted by law, neither the Board of Directors nor the General Partner shall have a duty or obligation to consent to any merger, consolidation or conversion of the Partnership and may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any Limited
Partner and, in declining to consent to a merger, consolidation or conversion, shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands Act or any
other law, rule or regulation or at equity.
(b) If the Board of Directors and the General Partner shall determine to consent to the merger, consolidation or conversion, the Board of Directors and the General Partner shall approve the Merger Agreement, which shall set forth:
(i) the names and jurisdictions of formation or organization of each of the business entities proposing to merge or consolidate;
(ii) the name and jurisdiction of formation or organization of the business entity that is to survive the proposed merger or consolidation (the
Surviving Business Entity
);
(iii) the terms and conditions of the proposed merger or consolidation;
(iv) the manner and basis of exchanging or converting the equity securities of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the Surviving Business Entity; and (A) if any interests, securities or rights of any constituent business entity are
not to be exchanged or converted solely for, or into, cash, property or interests, rights, securities or obligations of the Surviving Business Entity, the cash, property or interests, rights, securities or obligations of any general or limited partnership, corporation, trust, limited liability company,
unincorporated business or other Person (other than the Surviving Business Entity) which the holders of such interests, securities or rights are to receive in exchange for, or upon conversion of their interests, securities or rights, and (B) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or interests, rights, securities or obligations of the Surviving Business Entity or any general or limited partnership, corporation, trust, limited liability company, unincorporated business or other Person (other than the Surviving Business Entity), or
evidences thereof, are to be delivered;
(v) a statement of any changes in the constituent documents or the adoption of new constituent documents (the articles or certificate of incorporation, articles of trust, declaration of
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MERGER, CONSOLIDATION OR CONVERSION
trust, certificate or agreement of limited partnership or other similar charter or governing document) of the Surviving Business Entity to be effected by such merger or consolidation;
(vi) the effective time of the merger, which may be the date of the filing of the certificate of merger pursuant to
Section 14.4
or a later date specified in or determinable in accordance with the Merger Agreement (
provided
, that if the effective time of the merger is to be later than the
date of the filing of such certificate of merger, the effective time shall be fixed at a date or time certain at or prior to the time of the filing of such certificate of merger and stated therein); and
(vii) such other provisions with respect to the proposed merger or consolidation that the Board of Directors and the General Partner determine to be necessary or appropriate.
(c) If the Board of Directors and the General Partner shall determine to consent to the conversion the Board of Directors and the General Partner shall approve the Plan of Conversion, which shall set forth:
(i) the name of the converting entity and the converted entity;
(ii) a statement that the Partnership is continuing its existence in the organizational form of the converted entity;
(iii) a statement as to the type of entity that the converted entity is to be and the state or country under the laws of which the converted entity is to be incorporated, formed or organized;
(iv) the manner and basis of exchanging or converting the equity securities of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the converted entity or another entity, or for the cancellation of such equity securities;
(v) in an attachment or exhibit, the certificate of limited partnership of the Partnership;
(vi) in an attachment or exhibit, the certificate of limited partnership, certificate of formation, articles of incorporation, or other organizational documents of the converted entity;
(vii) the effective time of the conversion, which may be the date of the filing of the articles of conversion or a later date specified in or determinable in accordance with the Plan of Conversion (
provided
, that if the effective time of the conversion is to be later than the date of the filing of such
articles of conversion, the effective time shall be fixed at a date or time certain and stated in such articles of conversion); and
(viii) such other provisions with respect to the proposed conversion the Board of Directors and the General Partner determines to be necessary or appropriate.
Section 14.3.
Approval by Limited Partners of Merger, Consolidation or Conversion.
(a) Except as provided in
Section 14.3(d)
and
14.3(e)
, the Board of Directors, upon its and the General Partners approval of the Merger Agreement or the Plan of Conversion, as the case
may be, shall direct that the Merger Agreement or the Plan of Conversion and the merger, consolidation or conversion contemplated thereby, as applicable, be submitted to a vote of Limited Partners, whether at a special meeting or by written consent, in either case in accordance with the requirements
of
Article XIII
. A copy or a summary of the Merger Agreement or the Plan of Conversion, as the case may be, shall be included in or enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in
Section 14.3(d)
and
14.3(e)
, the Merger Agreement or Plan of Conversion, as the case may be, shall be approved upon receiving the affirmative vote or consent of the holders of a Unit Majority.
(c) Except as provided in
Section 14.3(d)
and
14.3(e)
, after such approval by vote or consent of the Limited Partners, and at any time prior to the filing of the certificate of merger or certificate of conversion pursuant to
Section 14.4
, the merger, consolidation or
conversion may be abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or Plan of Conversion, as the case may be.
(d) Notwithstanding anything else contained in this
Article XIV
or in this Agreement, the Board of Directors is permitted, without Limited Partner approval, to convert the Partnership or any
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Group Member into a new limited liability entity, to merge the Partnership or any Group Member into, or convey all of the Partnerships assets to, another limited liability entity which shall be newly formed and shall have no assets, liabilities or operations at the time of such conversion, merger or
conveyance other than those it receives from the Partnership or other Group Member if (i) the Board of Directors has received an Opinion of Counsel that the conversion, merger or conveyance, as the case may be, would not result in the loss of the limited liability of any Limited Partner, (ii) the sole
purpose of such conversion, merger or conveyance is to effect a mere change in the legal form of the Partnership into another limited liability entity and (iii) the governing instruments of the new entity provide the Limited Partners, the General Partner and the Board of Directors with the same rights
and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained in this
Article XIV
or in this Agreement, the Board of Directors, with the prior consent of the General Partner, is permitted, without Limited Partner approval, to merge or consolidate the Partnership with or into another entity if (i)
the Board of Directors has received an Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the loss of the limited liability of any Limited Partner, (ii) the merger or consolidation would not result in an amendment to this Agreement, other than any amendments
that could be adopted pursuant to
Section 13.1
, (iii) the Partnership is the Surviving Business Entity in such merger or consolidation, (iv) each Unit outstanding immediately prior to the effective date of the merger or consolidation is to be an identical Unit of the Partnership after the effective
date of the merger or consolidation, and (v) the number of Partnership Interests to be issued by the Partnership in such merger or consolidation does not exceed 20% of the Partnership Interests Outstanding immediately prior to the effective date of such merger or consolidation.
Section 14.4.
Certificate of Merger or Conversion
. Upon the required approval by the Board of Directors, the General Partner and the Unitholders of a Merger Agreement or Plan of Conversion, as the case may be, a certificate of merger or conversion, as applicable, shall be executed and
filed in conformity with the requirements of the Marshall Islands Act.
Section 14.5.
Amendment of Partnership Agreement
. Pursuant to Section 20(2) of the Marshall Islands Act, an agreement of merger or consolidation approved in accordance with Section 20(2) of the Marshall Islands Act may (a) effect any amendment to this Agreement or (b) effect the
adoption of a new partnership agreement for a limited partnership if it is the Surviving Business Entity. Any such amendment or adoption made pursuant to this
Section 14.5
shall be effective at the effective time or date of the merger or consolidation.
Section 14.6.
Effect of Merger, Consolidation or Conversion.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business entities that has merged or consolidated, and all property, real, personal and mixed, and all debts due to any of those business entities and all other things and causes of action belonging to each of those business entities, shall be
vested in the Surviving Business Entity and after the merger or consolidation shall be the property of the Surviving Business Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of those constituent business entities shall not revert and is not in any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in property of any of those constituent business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business entities shall attach to the Surviving Business Entity and may be enforced against it to the same extent as if the debts, liabilities and duties had been incurred or contracted by it.
(b) At the effective time of the certificate of conversion, for all purposes of the laws of the Marshall Islands:
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(i) the Partnership shall continue to exist, without interruption, but in the organizational form of the converted entity rather than in its prior organizational form;
(ii) all rights, title, and interests to all real estate and other property owned by the Partnership shall remain vested in the converted entity in its new organizational form without reversion or impairment, without further act or deed, and without any transfer or assignment having occurred, but
subject to any existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Partnership shall continue to be liabilities and obligations of the converted entity in its new organizational form without impairment or diminution by reason of the conversion;
(iv) all rights of creditors or other parties with respect to or against the prior interest holders or other owners of the Partnership in their capacities as such in existence as of the effective time of the conversion will continue in existence as to those liabilities and obligations and are enforceable
against the converted entity by such creditors and obligees to the same extent as if the liabilities and obligations had originally been incurred or contracted by the converted entity; and
(v) the Partnership Interests that are to be converted into partnership interests, shares, evidences of ownership, or other rights or securities in the converted entity or cash as provided in the Plan of Conversion shall be so converted, and Partners shall be entitled only to the rights provided in the
Plan of Conversion.
ARTICLE XV
Section 15.1.
Right to Acquire Limited Partner Interests.
(a) Notwithstanding any other provision of this Agreement, if at any time from and after the Closing Date the General Partner and its Affiliates hold more than 80% of the total Limited Partner Interests of any class then Outstanding,
the General Partner shall then have the right, which right it may assign and transfer in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable at its option, to purchase all, but not less than all, of such Limited Partner Interests of such class then Outstanding held by
Persons other than the General Partner and its Affiliates, at the greater of (x) the Current Market Price as of the date three days prior to the date that the notice described in
Section 15.1(b)
is mailed and (y) the highest price paid by the General Partner or any of its Affiliates for any such
Limited Partner Interest of such class purchased during the 90-day period preceding the date that the notice described in
Section 15.1(b)
is mailed.
(b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to exercise the right to purchase Limited Partner Interests granted pursuant to
Section 15.1(a)
, the General Partner shall deliver to the Transfer Agent notice of such election to purchase (the
Notice
of Election to Purchase
) and shall cause the Transfer Agent to mail a copy of such Notice of Election to Purchase to the Record Holders of Limited Partner Interests of such class or classes (as of a Record Date selected by the General Partner) at least 10, but not more than 60, days prior to the
Purchase Date. Such Notice of Election to Purchase shall also be published for a period of at least three consecutive days in at least two daily newspapers of general circulation printed in the English language and published in the Borough of Manhattan, New York. The Notice of Election to Purchase
shall specify the Purchase Date and the price (determined in accordance with
Section 15.1(a)
) at which Limited Partner Interests will be purchased and state that the General Partner, its Affiliate or the Partnership, as the case may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates representing such Limited Partner Interests, if any, in exchange for payment, at such office or offices of the Transfer Agent as the Transfer Agent may specify, or as may be required by any National Securities Exchange on which such Limited Partner Interests are listed. Any such
Notice of Election to Purchase mailed to a Record Holder of Limited Partner Interests at his address as reflected in the records of the Transfer Agent shall be conclusively presumed to have been given regardless of whether the owner receives such notice. On or prior to the Purchase Date, the General
Partner, its Affiliate or the Partnership, as the case may be, shall deposit with the Transfer Agent cash in an amount sufficient to pay the aggregate purchase price of
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RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
all of such Limited Partner Interests to be purchased in accordance with this
Section 15.1.
If the Notice of Election to Purchase shall have been duly given as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to the Purchase Date the deposit described in the preceding
sentence has been made for the benefit of the holders of Limited Partner Interests subject to purchase as provided herein, then from and after the Purchase Date to the extent Certificates for the Limited Partner Interests are outstanding, notwithstanding that any Certificate shall not have been
surrendered for purchase, all rights of the holders of such Limited Partner Interests (including any rights pursuant to
Articles IV
,
V
,
VI
and
XII
) shall thereupon cease, except the right to receive the applicable purchase price (determined in accordance with
Section 15.1(a)
) for Limited Partner Interests therefor, without interest, upon surrender to the Transfer Agent of the Certificates representing such Limited Partner Interests, and such Limited Partner Interests shall thereupon be deemed to be transferred to the General Partner, its Affiliate or the
Partnership, as the case may be, on the record books of the Transfer Agent and the Partnership, and the General Partner or any Affiliate of the General Partner, or the Partnership, as the case may be, shall be deemed to be the owner of all such Limited Partner Interests from and after the Purchase
Date and shall have all rights as the owner of such Limited Partner Interests (including all rights as owner of such Limited Partner Interests pursuant to
Articles IV
,
V
,
VI
and
XII
).
(c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner Interest subject to purchase as provided in this
Section 15.1
may surrender his Certificate evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the amount
described in
Section 15.1(a)
, without interest thereon.
ARTICLE XVI
Section 16.1.
Addresses and Notices.
(a) Any notice, demand, request, report or proxy materials required or permitted to be given or made to a Partner under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United
States mail or by other means of written communication to the Partner at the address described below. Any notice, payment or report to be given or made to a Partner hereunder shall be deemed conclusively to have been given or made, and the obligation to give such notice or report or to make such
payment shall be deemed conclusively to have been fully satisfied, upon sending of such notice, payment or report to the Record Holder of such Partnership Interests at his address as shown on the records of the Transfer Agent or as otherwise shown on the records of the Partnership, regardless of any
claim of any Person who may have an interest in such Partnership Interests by reason of any assignment or otherwise. An affidavit or certificate of making of any notice, payment or report in accordance with the provisions of this
Section 16.1
executed by a member of the Board of Directors,
the General Partner, the Transfer Agent or the mailing organization shall be prima facie evidence of the giving or making of such notice, payment or report. If any notice, payment or report addressed to a Record Holder at the address of such Record Holder appearing on the books and records of the
Transfer Agent or the Partnership is returned by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver it, such notice, payment or report and any subsequent notices, payments and reports shall be deemed to have been duly given or made without
further mailing (until such time as such Record Holder or another Person notifies the Transfer Agent or the Partnership of a change in his address) if they are available for the Partner at the principal office of the Partnership for a period of one year from the date of the giving or making of such notice,
payment or report to the other Partners. Any notice to the Partnership shall be deemed given if received by the General Partner or the Board of Directors at the principal office of the Partnership designated pursuant to
Section 2.3.
The General Partner and the Board of Directors may rely and
shall be protected in relying on any notice or other document from a Partner or other Person if believed by it to be genuine.
(b) The terms in writing, written communications, written notice and words of similar import shall be deemed satisfied under this Agreement by use of e-mail and other forms of electronic communication.
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GENERAL PROVISIONS
Section 16.2.
Further Action
. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.
Section 16.3.
Binding Effect
. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 16.4.
Integration
. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
Section 16.5.
Creditors
. None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.
Section 16.6.
Waiver
. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty,
agreement or condition.
Section 16.7.
Counterparts
. This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by
this Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a Limited Partner Interest, pursuant to
Section 10.2(a)
, immediately upon the acquisition of such Limited Partner Interests without execution hereof.
Section 16.8.
Applicable Law; Forum, Venue and Jurisdiction.
(a) This Agreement shall be construed in accordance with and governed by the laws of The Republic of the Marshall Islands, without regard to the principles of conflicts of law.
(b) Each of the Partners and each Person holding any beneficial interest in the Partnership (whether through a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing or otherwise):
(i) irrevocably agrees that any claims, suits, actions or proceedings (A) arising out of or relating in any way to this Agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of this Agreement or the duties, obligations or liabilities among Partners or of Partners
to the Partnership, or the rights or powers of, or restrictions on, the Partners or the Partnership), (B) brought in a derivative manner on behalf of the Partnership, (C) asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of the Partnership or the General
Partner, or owed by the General Partner, to the Partnership or the Partners, (D) asserting a claim arising pursuant to any provision of the Marshall Islands Act or (E) asserting a claim governed by the internal affairs doctrine shall be exclusively brought in the Court of Chancery of the State of
Delaware (or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction), unless otherwise provided for by Marshall Islands law, in each case 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;
(ii) irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction), unless otherwise provided for by Marshall
Islands law, in connection with any such claim, suit, action or proceeding;
(iii) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (A) it is not personally subject to the jurisdiction of the Court of Chancery of the State of Delaware or of any other court to which proceedings in the Court of Chancery of the State of Delaware
may be appealed, (B) such claim, suit, action or proceeding is brought in an inconvenient forum, or (C) the venue of such claim, suit, action or proceeding is improper;
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(iv) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding; and
(v) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and
notice thereof;
provided
, nothing in
clause (v)
hereof shall affect or limit any right to serve process in any other manner permitted by law.
Section 16.9.
Invalidity of Provisions
. If any provision or part of a provision of this Agreement is or becomes for any reason, invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions and part thereof contained herein shall not be
affected thereby and this Agreement shall, to the fullest extent permitted by law, be reformed and construed as if such invalid, illegal or unenforceable provision, or part of a provision, had never been contained herein, and such provision or part reformed so that it would be valid, legal and enforceable to
the maximum extent possible.
Section 16.10.
Consent of Partners
. Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken upon the affirmative vote or consent of less than all of the Partners (including any amendment to this Agreement), such action
may be so taken upon the concurrence of less than all of the Partners and each Partner shall be bound by the results of such action (including any amendment to this Agreement).
Section 16.11.
Facsimile Signatures
. The use of facsimile signatures affixed in the name and on behalf of the transfer agent and registrar of the Partnership on certificates representing Common Units is expressly permitted by this Agreement.
Section 16.12.
Third-Party Beneficiaries
. Each Partner agrees that any Indemnitee shall be entitled to assert rights and remedies hereunder as a third party beneficiary hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to such Indemnitee.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this First Amended and Restated Agreement of Limited Partnership as a Deed as of the date first written above.
GENERAL PARTNER:
G
AS
L
OG
P
ARTNERS
GP LLC
By:
Name:
Title:
LIMITED PARTNER:
G
AS
L
OG
L
TD
.
By:
Name:
Title:
S
IGNATURE
P
AGE
T
O
A-61
F
IRST
A
MENDED
AND
R
ESTATED
A
GREEMENT
OF
L
IMITED
P
ARTNERSHIP
EXHIBIT A
Certificate Evidencing Common Units
No. Common Units
In accordance with Section 4.1 of the First Amended and Restated Agreement of Limited Partnership of GasLog Partners LP, as amended, supplemented or restated from time to time (the
Partnership Agreement
), GasLog Partners LP, a Marshall Islands limited partnership (the
Partnership
),
hereby certifies that (the
Holder
) is the registered owner of the above designated number of Common Units representing limited partner interests in the Partnership (the
Common Units
) transferable on the books of the Partnership, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed. The rights, preferences and limitations of the Common Units are set forth in, and this Certificate and the Common Units represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Partnership Agreement. Copies of the Partnership
Agreement are on file at, and will be furnished without charge on delivery of written request to the Partnership at, the principal office of the Partnership located at Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco. Capitalized terms used herein but not defined shall have the meanings given
them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (a) requested admission as, and agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have executed the Partnership Agreement, (b) represented and warranted that the Holder has all right, power
and authority and, if an individual, the capacity necessary to enter into the Partnership Agreement and (c) made the waivers and given the consents and approvals contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been countersigned and registered by the Transfer Agent and Registrar. This Certificate shall be governed by and construed in accordance with the laws of the Marshall Islands.
Dated:
Countersigned and Registered by:
GASLOG PARTNERS LP
By:
as Transfer Agent and Registrar
Title:
By:
By:
Authorized Signature
Secretary
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to the First Amended and Restated
Agreement of Limited Partnership of
GASLOG PARTNERS LP
Representing Limited Partner Interests in
GASLOG PARTNERS LP
[Reverse of Certificate]
The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as follows according to applicable laws or regulations:
TEN
COM
as tenants in common
UNIF GIFT/TRANSFERS MIN ACT
(Cust) (Minor)
TEN ENT
as tenants by the entireties
JT TEN
as joint tenants with right of
survivorship and not as tenants in
common
under Uniform Gifts /Transfers to CD
Additional abbreviations, though not in the above list, may also be used.
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ABBREVIATIONS
Custodian
Minors Act (State)
ASSIGNMENT OF COMMON UNITS
FOR VALUE RECEIVED,
hereby assigns, conveys, sells and transfers unto
(Please print or typewrite name and address
(Please insert Social Security or other identifying
Common Units representing limited partner interests evidenced by this Certificate, subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint as its attorney-in-fact with full power of substitution to transfer the same on the books of GasLog Partners LP.
No transfer of the Common Units evidenced hereby will be registered on the books of the Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered for registration or transfer.
A-64
in
GASLOG PARTNERS LP
of Assignee)
number of Assignee)
GasLog Partners LP
8,400,000 Common Units
PROSPECTUS
, 2014
Citigroup
Until
, 2014 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common units, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
Representing Limited Partner Interests
Credit Suisse
Wells Fargo Securities
Barclays
Evercore
UBS Investment Bank
Deutsche Bank Securities
DNB Markets
PART II
Item 6.
Indemnification of Directors and Officers.
The section of the prospectus entitled The Partnership AgreementIndemnification discloses that we will generally indemnify our directors, officers and the affiliates of our general partner to the fullest extent permitted by the law against all losses, claims, damages or similar events and is
incorporated herein by this reference. Reference is also made to the Underwriting Agreement filed as Exhibit 1.1 to this registration statement in which GasLog Partners LP and certain of its affiliates will agree to indemnify the underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, and to contribute to payments that may be required to be made in respect of these liabilities.
Item 7.
Recent Sales of Unregistered Securities.
On January 23, 2014, in connection with the formation of GasLog Partners LP, GasLog Partners LP issued to (a) GasLog Partners GP LLC the 2.0% general partner interest in the partnership for $20 and (b) GasLog Ltd. the 98.0% limited partner interest in the partnership for $980. These issuances
were exempt from registration under Section 4(2) of the Securities Act of 1933.
There have been no other sales of unregistered securities within the past three years.
Item 8.
Exhibits and Financial Statement Schedules.
(a) Exhibits
Exhibit
Description
1.1
Form of Underwriting Agreement
3.1
Certificate of Limited Partnership of GasLog Partners LP
3.2
Form of First Amended and Restated Agreement of Limited Partnership of GasLog Partners LP (included as Appendix A to the Prospectus)
3.3
Certificate of Formation of GasLog Partners GP LLC
3.4
Limited Liability Company Agreement of GasLog Partners GP LLC
5.1
Opinion of Cozen OConnor, with respect to the legality of the securities being registered
8.1
Opinion of Cravath, Swaine & Moore LLP, with respect to certain tax matters
8.2
Opinion of Cozen OConnor, with respect to certain tax matters
10.1
Form of Contribution Agreement
10.2
Form of Omnibus Agreement
10.3
Form of Administrative Services Agreement
10.4
Form of Commercial Management Agreement
10.5
Amended and Restated Ship Management Agreement for the GasLog Shanghai, dated , 2014, between GAS-three Ltd. and GasLog LNG Services Ltd.
10.6
Amended and Restated Ship Management Agreement for the GasLog Santiago, dated , 2014, between GAS-four Ltd. and GasLog LNG Services Ltd.
10.7
Amended and Restated Ship Management Agreement for the GasLog Sydney, dated , 2014, between GAS-five Ltd. and GasLog LNG Services Ltd.
10.8**
Master Time Charter Party among GAS-one Ltd., GAS-two Ltd., GAS-three Ltd., GAS-four Ltd., GAS-five Ltd., GAS-six Ltd. and Methane Services Limited, dated May 9, 2011
10.9**
Confirmation Memorandum between GAS-three Ltd. and Methane Services Limited, dated May 9, 2011
II-1
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Number
Exhibit
Description
10.10**
Confirmation Memorandum between GAS-four Ltd. and MethaneServices Limited, dated May 9, 2011
10.11**
Confirmation Memorandum between GAS-five Ltd. and Methane Services Limited, dated May 9, 2011
10.12**
Amendment and Restatement Agreement relating to Confirmation Memorandum between GAS-three Ltd. and Methane Services Limited, dated June 17, 2013
10.13**
Amendment and Restatement Agreement relating to Confirmation Memorandum between GAS-four Ltd. and Methane Services Limited, dated June 17, 2013
10.14**
Amendment and Restatement Agreement relating to Confirmation Memorandum between GAS-five Ltd. and Methane Services Limited, dated June 17, 2013
10.15**
Facilities Agreement dated March 14, 2012 relating to $272,500,000 loan facilities among GAS-three Ltd. and GAS-four Ltd. as borrowers, DnB Bank ASA and the Export-Import Bank of Korea as mandated lead arrangers, the financial institutions listed in Schedule 1 thereto as lenders and
DnB Bank ASA as hedging provider, bookrunner, agent and security agent
10.16
Form of $30.0 Million Revolving Credit Agreement by and between GasLog Partners LP and GasLog Ltd.
10.17
Second Supplemental Deed dated April 23, 2014, relating to a $272,500,000 loan facilities among GAS-three Ltd. and GAS-four Ltd. as borrowers, DnB Bank ASA and the Export-Import Bank of Korea as mandated lead arrangers, the financial institutions listed in Schedule 1 to the Facilities
Agreement as lenders and DnB Bank ASA as hedging provider, bookrunner, agent and security agent
10.18
Loan Agreement dated April 18, 2014 relating to $132,389,706 loan facility among GAS-five Ltd. as borrower, the banks and financial institutions listed in Schedule 1 thereto as lenders, Nordea Bank Finland Plc, London branch, ABN AMRO Bank N.V. and Citibank International Plc, London
Branch, as joint lead arrangers, the banks and financial institutions listed in Schedule 2 thereto as swap banks and Nordea Bank Finland Plc, London Branch as agent and security trustee
10.19
Amending and Restating Agreement dated April 18, 2014 relating to $277,000,000 loan facility among GAS-five Ltd. and GAS-six Ltd. as borrowers, GasLog Ltd. and GasLog Carriers Ltd. as guarantors, the banks and financial institutions listed in Schedule 1 thereto as lenders, Nordea Bank
Finland Plc, London branch, ABN AMRO Bank N.V. and Citibank International Plc, London Branch, as joint lead arrangers, the banks and financial institutions listed in Schedule 2 thereto as swap banks and Nordea Bank Finland Plc, London Branch as agent and security trustee
16.1
Letter from Deloitte Hadjipavlou, Sofianos & Cambanis S.A. to the Securities and Exchange Commission, dated April 25, 2014.
21.1
List of Subsidiaries of GasLog Partners LP
23.1
Consent of Independent Registered Public Accounting Firm relating to (i) the combined carve-out financial statements of GasLog Partners LP Predecessor, and (ii) the statement of financial position as of January 23, 2014 of GasLog Partners LP
23.2
Consent of Cozen OConnor (included in Exhibit 5.1 and Exhibit 8.2)
23.3
Consent of Cravath, Swaine & Moore LLP (included in Exhibit 8.1)
23.4
Consent of Clarkson Research Services Limited
23.5
Consent of Donald J. Kintzer, Director Nominee
23.6
Consent of Pamela Gibson, Director Nomineee
23.7
Consent of Daniel Bradshaw, Director Nominee
II-2
Number
Exhibit
Description
23.8
Consent of Peter G. Livanos, Director Nominee
24.1
Power of Attorney (included on the signature page hereto)
**
Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the Securities and Exchange Commission.
Previously filed.
Item 9.
Undertakings
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The registrant undertakes to send to each limited partner at least on an annual basis a detailed statement of any transactions with the general partner or its affiliates and of fees, commissions, compensation and other benefits paid, or accrued to the general partner or its affiliates for the fiscal year
completed, showing the amount paid or accrued to each recipient and the services performed.
The registrant undertakes to provide to the limited partners the financial statements required by Form 20-F for the first full fiscal year of operations of the partnership.
II-3
Number
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Principality of Monaco, on the day of April 28, 2014.
GASLOG PARTNERS LP
By:
/s/ C
URTIS
V. A
NASTASIO
Name:
Curtis V. Anastasio
Title:
Chairman of the Board
II-4
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the day of April 28, 2014.
Signature
Title
*
Paul Wogan
Chief Executive Officer and Director
*
Simon Crowe
Chief Financial Officer and Director
/
S
/ C
URTIS
V. A
NASTASIO
Curtis V. Anastasio
Chairman of the Board
By:
/s/ C
URTIS
V. A
NASTASIO
Curtis V. Anastasio
II-5
(Principal Executive Officer)
(Principal Financial and Accounting Officer)
Attorney-in-Fact
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrants duly authorized representative in the United States has signed this Registration Statement in the City of Newark, State of Delaware, on April 28, 2014.
PUGLISI & ASSOCIATES
By:
/s/ D
ONALD
J. P
UGLISI
Name:
Donald J. Puglisi
Title:
Managing Director
II-6
EXHIBIT INDEX
Set forth below is a list of exhibits that are being or will be filed with this Registration Statement on Form F-1.
Exhibit
Description
1.1
Form of Underwriting Agreement
3.1
Certificate of Limited Partnership of GasLog Partners LP
3.2
Form of First Amended and Restated Agreement of Limited Partnership of GasLog Partners LP (included as Appendix A to the Prospectus)
3.3
Certificate of Formation of GasLog Partners GP LLC
3.4
Limited Liability Company Agreement of GasLog Partners GP LLC
5.1
Opinion of Cozen OConnor, with respect to the legality of the securities being registered
8.1
Opinion of Cravath, Swaine & Moore LLP, with respect to certain tax matters
8.2
Opinion of Cozen OConnor, with respect to certain tax matters
10.1
Form of Contribution Agreement
10.2
Form of Omnibus Agreement
10.3
Form of Administrative Services Agreement
10.4
Form of Commercial Management Agreement
10.5
Amended and Restated Ship Management Agreement for the GasLog Shanghai, dated , 2014, between GAS-three Ltd. and GasLog LNG Services Ltd.
10.6
Amended and Restated Ship Management Agreement for the GasLog Santiago, dated , 2014, between GAS-four Ltd. and GasLog LNG Services Ltd.
10.7
Amended and Restated Ship Management Agreement for the GasLog Sydney, dated , 2014, between GAS-five Ltd. and GasLog LNG Services Ltd.
10.8**
Master Time Charter Party among GAS-one Ltd., GAS-two Ltd., GAS-three Ltd., GAS-four Ltd., GAS-five Ltd., GAS-six Ltd. and Methane Services Limited, dated May 9, 2011
10.9**
Confirmation Memorandum between GAS-three Ltd. and Methane Services Limited, dated May 9, 2011
10.10**
Confirmation Memorandum between GAS-four Ltd. and MethaneServices Limited, dated May 9, 2011
10.11**
Confirmation Memorandum between GAS-five Ltd. and Methane Services Limited, dated May 9, 2011
10.12**
Amendment and Restatement Agreement relating to Confirmation Memorandum between GAS-three Ltd. and Methane Services Limited, dated June 17, 2013
10.13**
Amendment and Restatement Agreement relating to Confirmation Memorandum between GAS-four Ltd. and Methane Services Limited, dated June 17, 2013
10.14**
Amendment and Restatement Agreement relating to Confirmation Memorandum between GAS-five Ltd. and Methane Services Limited, dated June 17, 2013
10.15**
Facilities Agreement dated March 14, 2012 relating to $272,500,000 loan facilities among GAS-three Ltd. and GAS-four Ltd. as borrowers, DnB Bank ASA and the Export-Import Bank of Korea as mandated lead arrangers, the financial institutions listed in Schedule 1 thereto as lenders and
DnB Bank ASA as hedging provider, bookrunner, agent and security agent
10.16
Form of $30.0 Million Revolving Credit Agreement by and between GasLog Partners LP and GasLog Ltd.
Number
Exhibit
Description
10.17
Second Supplemental Deed dated April 23, 2014, relating to a $272,500,000 loan facilities among GAS-three Ltd. and GAS-four Ltd. as borrowers, DnB Bank ASA and the Export-Import Bank of Korea as mandated lead arrangers, the financial institutions listed in Schedule 1 to the Facilities
Agreement as lenders and DnB Bank ASA as hedging provider, bookrunner, agent and security agent
10.18
Loan Agreement dated April 18, 2014 relating to $132,389,706 loan facility among GAS-five Ltd. as borrower, the banks and financial institutions listed in Schedule 1 thereto as lenders, Nordea Bank Finland Plc, London branch, ABN AMRO Bank N.V. and Citibank International Plc, London
Branch, as joint lead arrangers, the banks and financial institutions listed in Schedule 2 thereto as swap banks and Nordea Bank Finland Plc, London Branch as agent and security trustee
10.19
Amending and Restating Agreement dated April 18, 2014 relating to $277,000,000 loan facility among GAS-five Ltd. and GAS-six Ltd. as borrowers, GasLog Ltd. and GasLog Carriers Ltd. as guarantors, the banks and financial institutions listed in Schedule 1 thereto as lenders, Nordea Bank
Finland Plc, London branch, ABN AMRO Bank N.V. and Citibank International Plc, London Branch, as joint lead arrangers, the banks and financial institutions listed in Schedule 2 thereto as swap banks and Nordea Bank Finland Plc, London Branch as agent and security trustee
16.1
Letter from Deloitte Hadjipavlou, Sofianos & Cambanis S.A. to the Securities and Exchange Commission, dated April 25, 2014.
21.1
List of Subsidiaries of GasLog Partners LP
23.1
Consent of Independent Registered Public Accounting Firm relating to (i) the combined carve-out financial statements of GasLog Partners LP Predecessor, and (ii) the statement of financial position as of January 23, 2014 of GasLog Partners LP
23.2
Consent of Cozen OConnor (included in Exhibit 5.1 and Exhibit 8.2)
23.3
Consent of Cravath, Swaine & Moore LLP (included in Exhibit 8.1)
23.4
Consent of Clarkson Research Services Limited
23.5
Consent of Donald J. Kintzer, Director Nominee
23.6
Consent of Pamela Gibson, Director Nomineee
23.7
Consent of Daniel Bradshaw, Director Nominee
23.8
Consent of Peter G. Livanos, Director Nominee
24.1
Power of Attorney (included on the signature page hereto)
**
Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the Securities and Exchange Commission.
Previously filed.
Number
Exhibit 1.1
GasLog Partners LP
[8,400,000] Common Units
Representing Limited Partner Interests
Underwriting Agreement
May [●], 2014
Citigroup Global Markets Inc.
388 Greenwich Street, 34th Floor
New York, NY 10013
Credit Suisse (USA) LLC
Eleven Madison Avenue
New York, NY 10010
Wells Fargo Securities, LLC
375 Park Avenue
New York, NY 10152
As Representatives of the several Underwriters
named in
Schedule I
hereto,
Ladies and Gentlemen:
GasLog Partners LP, a limited partnership organized under the laws of the Republic of The Marshall Islands (the “ Partnership ”), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the “ Underwriters ”), for whom you are acting as representatives (the ” Representatives ”), an aggregate of [8,400,000] of its common units (the “ Firm Units ”), each representing a limited partner interest in the Partnership (the “ Common Units ”), and, at the election of the Underwriters, up to an additional [1,260,000] of its Common Units (the “ Option Units ”). The Firm Units and the Option Units that the Underwriters elect to purchase pursuant to Section 2 hereof are hereinafter referred to collectively as the “ Units ”. As part of the offering contemplated by this Agreement, Credit Suisse Securities (USA) LLC (the “ Designated Underwriter ”) has agreed to reserve out of the Firm Securities purchased by it under this Agreement, up to [420,000] Common Units, for sale to the Partnership’s directors, officers, employees and other parties associated with the Partnership (collectively, “ Participants ”), as set forth in the Prospectus (as defined herein) under the heading “Underwriting” (the “ Directed Unit Program ”). The Firm Units to be sold by the Designated Underwriter pursuant to the Directed Unit Program (the “ Directed Units ”) will be sold by the Designated Underwriter pursuant to this Agreement at the public offering price. Any Directed Units not subscribed for by the end of the business day on which this Agreement is executed will be offered to the public by the Underwriters as set forth in the Prospectus.
The Partnership was formed by GasLog Ltd., a Bermuda exempted company (“ GasLog ”), and GasLog Partners GP LLC, a limited liability company organized under the laws of the Republic of The Marshall Islands (the “ General Partner ”), to own, operate and acquire liquefied natural gas, or “LNG”, carriers engaged in LNG transportation under long-term charters, as described more particularly in the Pricing Prospectus and the Prospectus (as defined herein) (collectively, the “ Contributed Business ”). As of the date hereof:
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(a) GasLog directly owns a 100% membership interest in the General Partner and a 98% limited partner interest in the Partnership;
(b) the General Partner owns a 2.0% general partner interest in the Partnership;
(c) the Partnership owns a 100% membership interest in GasLog Partners Holdings LLC, a limited liability company organized under the laws of the Republic of The Marshall Islands (the “ Operating Company ”); and
(d) the entities set forth on Schedule III (the “ Operating Subsidiaries ”) own 100% interests in the vessels GasLog Shanghai , GasLog Santiago and GasLog Sidney , as applicable (collectively, the “ Vessels ”).
Prior to or at the First Time of Delivery (as defined in Section 4 hereof), the following transactions will have occurred (the “ Transactions ”):
(a) GasLog, the General Partner, the Partnership and the Operating Company entered into that certain Contribution and Conveyance Agreement whereby, among other things, GasLog contributed its interests in the Contributed Business (the “ Contribution Agreement ”); and in connection with the Contribution Agreement, GasLog, the General Partner, the Partnership and the Operating Company entered into various transfer agreements, bills of sale, assignments, conveyances, contribution agreements and related documents (collectively, and together with the Contribution Agreement, the “ Contribution Documents ”);
(b) GasLog contributed its 100% interest in the Operating Subsidiaries to the Operating Company;
(c) the Partnership issued to GasLog (i) [162,358] Common Units, (ii) [9,822,358] Subordinated Units (all such Common Units and Subordinated Units being collectively referred to herein as the “ Sponsor Units ”), representing a 98% limited partner interest in the Partnership, (iii) 100% of the Partnership’s incentive distribution rights (the “ Incentive Distribution Rights ”) as partial consideration for the Contributed Business pursuant to the Contribution Agreement, and (iv) the right to the Deferred Issuance and Distribution (as defined in the Partnership Agreement);
(d) the Partnership issued to the General Partner general partner units, representing a 2% general partner interest in the Partnership (the “ General Partner Interest ”);
(e) the Partnership made a payment of the remaining proceeds of the offering, after retaining $35.0 million for partnership purposes and prepaying certain debt obligations, to GasLog as partial consideration for the Contributed Business pursuant to the Contribution Agreement;
(f) GasLog, the General Partner, the Partnership and others entered into an omnibus agreement, which sets forth certain agreements concerning (i) competition among the parties thereto, (ii) the right to require GasLog to offer to the Partnership for purchase LNG carriers with cargo capacities greater than 75,000 cbm engaged in LNG transportation and charters having committed terms of five full years or more, (iii) the option to purchase from GasLog certain vessels within a specified time period and (iv) the indemnification of the Partnership for certain liabilities following the closing of the offering;
(g) the General Partner, the Partnership and GasLog entered into an administrative services agreement, pursuant to which GasLog will provide the Partnership with administrative and certain management services;
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(h) each of the Operating Subsidiaries entered into an amended ship management agreement with GasLog LNG Services Ltd., a Bermuda exempted company, with respect to the crew and technical management of each of the Vessels;
(i) each of the Operating Subsidiaries entered into an amended commercial management agreement with GasLog, pursuant to which GasLog will provide the Operating Subsidiaries with commercial management services;
(j) GasLog and the Partnership entered into a $30 million revolving credit facility (the “ Sponsor Credit Facility ”); and
(k) each of the Operating Subsidiaries entered in new financing agreements, amendments to financing agreements and/or waivers and confirmations in respect of financing agreements with respect to the respective Vessel as set forth on Schedule VII hereto (the “ New Credit Facilities ”).
The agreements described in subparagraphs (a), (f), (g), (h), (i), (j) and (k) are herein collectively referred to as the “ Operative Agreements. ”
The General Partner, the Partnership and the Operating Company are hereinafter referred to collectively as the “ Partnership Parties .” The General Partner, the Partnership, the Operating Company and the Operating Subsidiaries are hereinafter referred to collectively as the “ Partnership Entities .” GasLog and the Partnership Parties are hereinafter referred to collectively as the “ GasLog Parties ” and, together with the Operating Subsidiaries, the “ GasLog Entities .”
This is to confirm the agreement among the GasLog Parties and the Underwriters concerning the purchase of the Units from the Partnership by the Underwriters.
1. The GasLog Parties represent and warrant to, and agree with, each of the Underwriters that:
(a) A registration statement on Form F-1 (File No. 333-195109) (the “ Initial Registration Statement ”) in respect of the Units has been filed with the Securities and Exchange Commission (the “ Commission ”); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered to the Representatives, and, excluding exhibits thereto, to the Representatives for each of the other Underwriters, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a “ Rule 462(b) Registration Statement ”), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “ Act ”), which became effective upon filing, no other document with respect to the Initial Registration Statement has heretofore been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Act is hereinafter called a “ Preliminary Prospectus ”; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statement at the time it was declared effective, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the “ Registration Statement ”; the Preliminary Prospectus relating to the Units that was included in the
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Registration Statement immediately prior to the Applicable Time, together with the information set forth on Schedule VI hereto, is hereinafter called the “ Pricing Prospectus ”; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the “ Prospectus ”; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Units is hereinafter called an “ Issuer Free Writing Prospectus ”);
(b) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , however , that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Partnership by an Underwriter through the Representatives expressly for use therein;
(c) For the purposes of this Agreement, the “Applicable Time” is [ ] [a.m.][p.m.] (New York time) on the date of this Agreement. The Pricing Prospectus, as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus listed on Schedule II hereto or any Testing-the-Waters-Communication (as defined herein) does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus, and each such Issuer Free Writing Prospectus or Testing-the-Waters-Communication, as supplemented by and taken together with the Pricing Prospectus as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however , that this representation and warranty shall not apply to statements or omissions made in an Issuer Free Writing Prospectus or Testing-the-Waters-Communication in reliance upon and in conformity with information furnished in writing to the Partnership by an Underwriter through the Representatives expressly for use therein;
(d) (A) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Partnership by an Underwriter through the Representatives expressly for use therein; and (B) on the date of this Agreement, as of their applicable effective dates and at each Time of Delivery, each of the Registration Statement and the Prospectus and any further amendments or supplements thereto complied or comply, and such documents and any further amendments or supplements thereto will comply, with any applicable laws or regulations of foreign jurisdictions in which the Prospectus and any further amendments or supplements thereto, if applicable, are distributed in connection with the Directed Unit Program;
(e) From the time of the initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Partnership engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters Communication) through the Applicable Time, the Partnership has been and is an “emerging growth company” as defined in Section 2(a) of the Act (an
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“ Emerging Growth Company ”). “ Testing-the-Waters Communication ” shall mean any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Act;
(f) Each of the GasLog Parties (i) has not alone engaged in any Testing-the-Waters Communication and (ii) has not authorized anyone to engage in Testing-the-Waters Communications. None of the GasLog Parties have distributed or approved for distribution any Written Testing-the-Waters Communications. “ Written Testing-the-Waters Communication ” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act;
(g) None of the Partnership Entities has sustained, since the date of the latest audited financial statements included in the Pricing Prospectus, any material loss or interference with its business from fire, explosion, flood, piracy, terrorism or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been any material adverse change, or any development that would reasonably be expected to involve a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders’ equity or results of operations of the Partnership Entities, taken as a whole (a “ Material Adverse Effect ”), or any change in the share capital or long-term debt of the Partnership Entities, otherwise than as set forth or contemplated in the Pricing Prospectus;
(h) None of the Partnership Entities owns an interest in any material real property. Each of them has good and marketable title to all personal property owned by them which is material to the business of the Partnership Entities, including the Vessels owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Pricing Prospectus, including those arising under credit facilities, or such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property taken as a whole by the Partnership Entities; and any real property and buildings occupied by the Partnership Entities are occupied by them under valid, subsisting and enforceable contractual arrangements with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Partnership Entities, otherwise than as set forth or contemplated in the Pricing Prospectus;
(i) Each of the GasLog Entities has been duly formed or incorporated and is validly existing as a limited partnership, limited liability company, corporation or other entity, as applicable, in good standing under the laws of its respective jurisdiction of formation or incorporation, with all limited partnership, limited liability company, corporate or other entity power and authority, as applicable, to enter into and perform its obligations under the Operative Agreements (as defined herein) to which it is a party, to own or lease and to operate its properties currently owned or leased or to be owned or leased at the First Time of Delivery and any other Time of Delivery (as such terms are defined herein) and to conduct its business as currently conducted or as to be conducted at the First Time of Delivery and any other Time of Delivery, in each case as described in the Pricing Prospectus, except where the failure to be so qualified or in good standing and to have such power or authority would not, individually or in the aggregate, result in a Material Adverse Effect. Each of the Partnership Entities and each of the Operating Subsidiaries is, and at the First Time of Delivery and any other Time of Delivery will be (i) duly qualified to do business as a foreign limited partnership, limited liability company, corporation or other entity, as applicable, and (ii) is in good standing under the laws of each jurisdictions that requires, and at the First Time of Delivery and any other Time of Delivery will require, such qualification or registration except to the extent that a lack of such qualification would not, individually or in the aggregate, have a Material Adverse Effect or would subject the limited partners of the Partnership to any material liability or disability;
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(j) The General Partner has, and at the First Time of Delivery and any other Time of Delivery thereafter, will have full limited liability company power and authority to act as the general partner of the Partnership in all material respects as described in the Pricing Prospectus;
(k) At the First Time of Delivery, after giving effect to the Transactions and assuming no exercise of the option provided in Section 2 hereto, and at any other Time of Delivery thereafter, GasLog will own the Sponsor Units. The Sponsor Units, and the limited partner interests represented thereby, will have been duly authorized for issuance and sale and, when issued and delivered by the Partnership against payment therefor, will be validly issued in accordance with the limited partnership agreement of the Partnership (as the same may be amended and restated at or prior to the First Time of Delivery, the “ Partnership Agreement ”) and will be fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 30, 41, 51 and 60 of the Republic of The Marshall Islands Limited Partnership Act (the “ Marshall Islands LP Act ”)); and GasLog will own the Sponsor Units free and clear of all liens, encumbrances, security interests, charges, equities or other claims (“ Liens ”);
(l) At the First Time of Delivery, after giving effect to the Transactions, and at any other Time of Delivery thereafter, GasLog will own 100% of the Incentive Distribution Rights. At the First Time of Delivery, the Incentive Distribution Rights will have been duly authorized for issuance and sale, will be validly issued in accordance with the Partnership Agreement and will be fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 30, 41, 51 and 60 of the Marshall Islands LP Act); and GasLog will own the Incentive Distribution Rights free and clear of all Liens;
(m) The General Partner owns, and after giving effect to the Transactions, will own the General Partner Interest. The General Partner Interest has been duly authorized for issuance and sale, is validly issued in accordance with the Partnership Agreement and is fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 30, 41, 51 and 60 of the Marshall Islands LP Act); and the General Partner owns the General Partner Interest free and clear of all Liens;
(n) GasLog directly owns 100% of the limited liability company interest in the General Partner, such limited liability company interest has been duly authorized and validly issued in accordance with the limited liability company agreement of the General Partner (as the same may be amended and restated at or prior to the First Time of Delivery, the “ General Partner LLC Agreement ”) and is fully paid (to the extent required by the General Partner LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 20, 31, 40 and 49 of The Republic of The Marshall Islands Limited Liability Company Act of 1996 (the “ Marshall Islands LLC Act ”)); and GasLog own such limited liability company interest free and clear of all Liens;
(o) The Partnership directly owns 100% of the limited liability company interest in the Operating Company; such limited liability company interest has been duly authorized and validly issued in accordance with the limited liability company agreement of the Operating Company (as the same may be amended and restated at or prior to the First Time of Delivery, the “ Operating Company LLC Agreement ”) and is fully paid (to the extent required under the Operating Company LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 20, 31, 40 and 49 of the Marshall Islands LLC Act); and the Partnership owns such limited liability company interest free and clear of all Liens;
(p) At the first Time of Delivery, after giving effect to the Transactions, the Operating Company will own 100% of the equity interests in each of the Operating Subsidiaries; such equity
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interests have been duly authorized and validly issued in accordance with the bylaws, limited liability company agreement or limited partnership agreement, as applicable, and as amended from time to time, of each Operating Subsidiary (as the same may be amended or restated at or prior to the First Time of Delivery, the “ Operating Subsidiaries’ Organizational Documents ” and together with the Partnership Agreement, the General Partner LLC Agreement and the Operating Company LLC Agreement, the “ Partnership Entities Organizational Agreements ”) and are fully paid (to the extent required under the Operating Subsidiaries’ Organizational Documents) and non-assessable (except as such nonassessability may be affected by the applicable statutes of the jurisdiction of formation of the applicable Operating Subsidiary and the Operating Subsidiaries Organizational Documents); and the Operating Company owns each of such equity interests free and clear of all Liens;
(q) Except as described in Sections 1(m) , 1(o) and 1(p) herein, none of the Partnership Entities owns, or, on the First Time of Delivery or any other Time of Delivery, will own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity;
(r) At the First Time of Delivery, assuming no exercise of the option provided in Section 2 , the issued and outstanding limited partner interests of the Partnership will consist of [9,822,358] Common Units, [9,822,358] Subordinated Units and the Incentive Distribution Rights. Assuming no exercise of the option provided in Section 2 , other than the Subordinated Units, the Incentive Distribution Rights and the [162,358] Common Units issued to GasLog as partial consideration for the Contributed Business pursuant to the Contribution Agreement, the Firm Units will be the only limited partner interests of the Partnership issued and outstanding at the First Time of Delivery and will be free and clear of all Liens;
(s) The Units to be sold by the Partnership pursuant to this Agreement, and the limited partner interests represented thereby, have been duly authorized for issuance and sale to the Underwriters in accordance with this Agreement and the Partnership Agreement, and when issued and delivered by the Partnership pursuant to this Agreement against payment of the consideration set forth therein, will be validly issued, fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Sections 30, 41, 51 and 60 of the Marshall Islands LP Act), will conform in all material respects to the information in the Pricing Prospectus and to the description of such Units contained in the Prospectus; the unitholders of the Partnership do not and will not have preemptive rights with respect to the Common Units; and none of the outstanding Common Units of the Partnership have been issued in violation of any preemptive or similar rights of any security holder;
(t) The issue and sale of the Units and the compliance by the GasLog Entities with this Agreement and the consummation of the transactions herein contemplated (i) will not conflict with or result in a breach or violation of any of the terms or provisions of, or require the consent of any person, or constitute a default or Debt Repayment Triggering Event (as defined below), or result in the imposition of any lien, charge or encumbrance on any property of the GasLog Entities, under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument, or give any person the right to terminate any agreement or contract to which any GasLog Entity is a party or by which any GasLog Entity is bound or to which any of the property or assets of the GasLog Entities is subject; and (ii) will not result in any violation of (A) the organizational or governing documents of any of the GasLog Entities or (B) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the GasLog Entities or any of their properties or assets, except in the case of clause (i), for any conflict, breach, or violation that would not result in a Material Adverse Effect or have a material adverse effect on the consummation of the transactions contemplated hereby; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Units or the consummation by the GasLog Entities of the
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transactions contemplated by this Agreement, except the registration under the Act of the Units and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Units by the Underwriters, and such other consents, approvals, authorizations, orders, registrations or qualifications that have already been obtained. In addition, no authorization, consent, approval, license, qualification or order of, or filing or registration with any person (including any governmental agency or body or any court) in any foreign jurisdiction is required for the consummation of the transactions contemplated by this Agreement in connection with the offering, issuance and sale of the Directed Units under the laws and regulations of such jurisdiction except such as have been obtained or made. A “ Debt Repayment Triggering Event ” means any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any loan, note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to accelerate the due date of any payment of, or to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the GasLog Entities (for the avoidance of doubt Debt Repayment Triggering Event excludes any put right that is not triggered by the occurrence of an extraordinary event);
(u) This Agreement has been duly authorized, executed and delivered by each of the GasLog Parties;
(v) At the First Time of Delivery, each of the Operative Agreements, the Partnership Entities Organizational Agreements and the other instruments listed on Schedule VIII (the “ Covered Agreements ”) hereto, as applicable, has been duly authorized, executed and delivered by the GasLog Entities party thereto, and each such agreement is a valid and legally binding agreement of each such GasLog Entity, enforceable against such party in accordance with its terms; provided, that , with respect to each such agreement, the enforceability thereof may be limited by (A) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights and remedies generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (B) public policy, applicable law relating to fiduciary duties and indemnification and an implied covenant of good faith and fair dealing. The Operative Agreements, the Partnership Entities Organizational Agreements and the Covered Agreements referenced above are herein collectively referred to as the “ Operative Documents ;”
(w) The Contribution Documents were or will be legally sufficient to transfer or convey to, or vest in, the Partnership Entities satisfactory title to, or valid rights to use or manage, all properties not already held by them that are, individually or in the aggregate, required to enable the Partnership Entities to conduct their operations in all material respects as contemplated by the Registration Statement, the Pricing Prospectus and the Prospectus, subject to the conditions, reservations, encumbrances and limitations described therein or contained in the Operative Documents. The Partnership Entities, upon execution and delivery of the Contribution Documents, will succeed in all material respects to the business, assets, properties, liabilities and operations of the Contributed Business;
(x) None of the GasLog Entities is (i) in violation of its respective organizational or governing documents, (ii) in violation of any applicable statute, law, rule, regulation, judgment, order or decree of any competent court, regulatory body, administrative agency, governmental body, arbitrator or other authority or (iii) in default (or with the giving of notice or lapse of time would be in default) under any existing obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which any of them is a party or by which any of them is bound or to which any of the properties of any of them is subject, except in each case covered by clauses (ii) and (iii) such as would not result in a Material Adverse Effect or have a material adverse effect on the consummation of the Transactions contemplated hereby;
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(y) None of the Partnership Entities is currently prohibited, directly or indirectly, from paying any cash distributions to any other Partnership Entity, from making any other distribution on such entity’s equity securities, or from transferring any of such entity’s property or assets to any other Partnership Entity, except as described in the Pricing Prospectus;
(z) There are no contracts, agreements or understandings between the GasLog Parties and any person that would give rise to a valid claim against the Partnership or any Underwriter for a brokerage commission, finder’s fee or other like payment in connection with the issuance and sale of the Units;
(aa) The statements set forth in the Pricing Prospectus and Prospectus under the captions “Cash Distribution Policy and Restrictions on Distributions,” “How We make Cash Distributions,” “Business – Ship Time Charters,” “Business—Environmental and Other Regulation,” “Business—Legal Proceedings,” “Certain Relationships and Related Party Transactions,” “Description of the Common Units,” “The Partnership Agreement,” “Material U.S. Federal Income Tax Considerations,” and “Non-United States Tax Consideration”, insofar as such statements purport to summarize legal matters, agreements, documents or proceedings discussed therein, are accurate and fair summaries of such legal matters, agreements, documents or proceedings and present the information required to be shown;
(bb) There are no business relationships or related-party transactions involving the GasLog Entities or any other person required to be described in the Registration Statement, Pricing Prospectus and Prospectus which have not been described as required;
(cc) Any statistical and market-related data included in the Pricing Prospectus and Prospectus are based on or derived from sources that the Partnership Parties reasonably believe to be reliable and accurate, and the Partnership Parties have obtained the written consent for the use of such data from such sources to the extent required;
(dd) No forward-looking statement (within the meaning of Section 27A of the Act and Section 21E of the Exchange Act) contained in the Pricing Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith;
(ee) There are no legal or governmental proceedings pending to which any of the GasLog Entities is a party or of which any property of the GasLog Entities is the subject or, to the GasLog Parties’ knowledge, after due inquiry, to which any of the GasLog Entities’ directors or executive officers is a party, which, if determined adversely to any such entity, would individually or in the aggregate have a Material Adverse Effect; and, to the GasLog Parties’ knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;
(ff) Other than as set forth in the Pricing Prospectus, (A)(i) to the GasLog Parties’ knowledge, after due inquiry, none of the GasLog Entities is in violation of any applicable United States federal, state, local or non-U.S. statute, law, rule, regulation, ordinance, code, other requirement or rule of law (including common law), or decision or order of any competent domestic or foreign governmental agency, governmental body or court applicable to them, relating to pollution, to the use, handling, transportation, treatment, storage, discharge, disposal or release of Hazardous Substances, to the protection or restoration of the environment or natural resources (including biota), to health and safety as such relates to exposure to Hazardous Substances, and to natural resource damages (collectively, “ Environmental Laws ”), (ii) none of the GasLog Entities owns, operates or leases any real property contaminated with Hazardous Substances, (iii) none of the GasLog Entities is conducting or funding any investigation, remediation, remedial action or monitoring of actual or suspected Hazardous Substances in the environment, (iv) none of the GasLog Entities is liable or allegedly liable for any release or threatened
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release of Hazardous Substances, including at any off-site treatment, storage or disposal site, (v) none of the GasLog Entities is a party to any claim by any governmental agency or governmental body or person relating to Environmental Laws or Hazardous Substances, and (vi) the GasLog Entities have received and are in compliance with all, and have no liability under any, permits, licenses, authorizations, identification numbers or other approvals required under applicable Environmental Laws to conduct their respective businesses, except in each case covered by clauses (i) – (vi) such as would not individually or in the aggregate have a Material Adverse Effect; (B) to the GasLog Parties’ knowledge, there are no facts or circumstances that would reasonably be expected to result in a violation of, liability under, or claim against the GasLog Entities pursuant to any Environmental Law that would have a Material Adverse Effect; and (C) to the GasLog Parties’ knowledge, there are no requirements proposed for adoption or implementation under any Environmental Law that would reasonably be expected to have a Material Adverse Effect. For purposes of this subsection, “ Hazardous Substances ” means (x) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and mold and (y) any other chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under Environmental Laws;
(gg) Other than as set forth in the Pricing Prospectus, the GasLog Parties have reasonably concluded that none of the GasLog Entities has incurred any costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, individually or in the aggregate, have a Material Adverse Effect;
(hh) Other than as set forth in the Pricing Prospectus, the GasLog Entities possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities as necessary for the GasLog Entities to conduct their respective businesses as currently conducted, except as would not individually or in the aggregate have a Material Adverse Effect; and none of the GasLog Entities has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect;
(ii) The GasLog Entities own or possess, or hold a right or license to use, or can acquire on reasonable terms, all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by them, and none of the GasLog Entities has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing, which if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect;
(jj) No material labor dispute, work stoppage, slow down or other conflict with the employees of the GasLog Parties exists or, to the GasLog Parties’ knowledge, is threatened or contemplated;
(kk) The Partnership Entities and the Vessels are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; none of the Partnership Entities has been refused any insurance coverage sought or applied for; and none of the Partnership Entities has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect;
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(ll) None of the Partnership Entities has any off-balance sheet arrangements, except as described in the Registration Statement, the Pricing Prospectus and the Prospectus;
(mm) (A) None of the GasLog Entities or, to the GasLog Parties’ knowledge, any of their respective directors, executive officers, affiliates, employees or agents or other persons associated with or acting on behalf of the GasLog Entities: (i) knowingly does any business with or involving the government of, or any person or project located in, any country targeted by any of the economic sanctions promulgated by any Executive Order issued by the President of the United States or administered by the United States Treasury Department’s Office of Foreign Assets Control (the “ OFAC ”) (collectively, “ Sanctions ”); or (ii) knowingly supports or facilitates any such business or project, in each case other than as permitted under such economic sanctions; (B) none of the GasLog Parties is controlled (within the meaning of the Executive Orders or regulations promulgating such economic sanctions or the laws authorizing such promulgation) by any such government or person; (C) the proceeds from the offering of the Units contemplated hereby will not be used to fund any operations in, to finance any investments, projects or activities in, or to make any payments to, any country, or to make any payments to, or finance any activities with, any person targeted by any of such economic sanctions; and (D) the Partnership Parties maintain and have implemented adequate internal controls and procedures to monitor and audit transactions that are reasonably designed to detect and prevent any use of the proceeds from the offering of the Units contemplated hereby that is inconsistent with any of the representations and obligations under clause (C) of this paragraph or in the Registration Statement, Pricing Prospectus or Prospectus;
(nn) None of the GasLog Entities, or to the GasLog Parties’ knowledge, or any of their respective directors, executive officers, affiliates, employees or agents or other persons associated with or acting on behalf of the GasLog Entities, has taken any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage in violation of any applicable law; and the GasLog Entities and, to the knowledge of the GasLog Parties, their respective affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintain and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein;
(oo) The operations of the GasLog Entities, are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including to the extent applicable those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”); and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator or non-governmental authority involving the GasLog Entities with respect to the Money Laundering Laws is pending or, to the GasLog Parties’ knowledge, threatened;
(pp) None of the GasLog Parties has offered or sold, or caused the Underwriters to offer or sell, any Directed Units to any person pursuant to the Directed Unit Program with the specific intent to unlawfully influence (i) a charterer, customer or supplier of the GasLog Entities to alter the charterer’s,
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customer’s or supplier’s level or type of business with the GasLog Entities or (ii) a trade journalist or publication to write or publish favorable information about any of the GasLog Entities.
(qq) As of the effective date of the Registration Statement, the Partnership and, to the knowledge of the Partnership Parties, the officers and directors of the Partnership, in their capacities as such, were, and at the First Time of Delivery will be, in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith that are then in effect and with which any of them is required to comply, including Section 402 related to loans;
(rr) There are no restrictions on subsequent transfers of the Units under the laws of the Republic of The Marshall Islands;
(ss) Except as disclosed in the Pricing Prospectus, there are no contracts, agreements or understandings between the GasLog Parties and any person granting such person the right to require any of the Partnership Parties to file a registration statement under the Act with respect to any securities of the Partnership Entities or to require the Partnership Parties to include such securities with the Units registered pursuant to the Registration Statement;
(tt) The Units have been authorized for listing on the New York Stock Exchange (the ” Exchange ”), subject to official notice of issuance;
(uu) The Partnership Parties have taken all necessary actions to comply with all applicable corporate governance requirements of the Exchange that are, or will be, applicable to the Partnership, except for such requirements that have been waived and disclosed in the Pricing Prospectus;
(vv) Except as described in the Pricing Prospectus, the Partnership has not sold, issued or distributed any Common Units during the six-month period preceding the date hereof, including any sales pursuant to Rule 144A or Regulation D or S under the Act, other than Common Units issued pursuant to employee benefit plans, qualified option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants;
(ww) None of the GasLog Entities has taken, directly or indirectly, any action which was designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Partnership to facilitate the sale or resale of the Units;
(xx) Subsequent to the execution and delivery of this Agreement, there shall not have occurred any downgrading in the rating of any debt securities of the GasLog Parties by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g) of the Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the GasLog Parties;
(yy) The Partnership is not and, after giving effect to the offering and sale of the Units and the application of the proceeds thereof, will not be required to register as an “investment company”, as such term is defined in the Investment Company Act of 1940, as amended (the “ Investment Company Act ”);
(zz) At the time of filing the Initial Registration Statement the Partnership was not and is not an “ineligible issuer”, as defined under Rule 405 under the Act;
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(aaa) As described in the Registration Statement and subject to the limitations and restrictions described therein, the Partnership Parties believe that the Partnership should not be a “passive foreign investment company” as defined in the Internal Revenue Code of 1986, as amended;
(bbb) The Partnership is a “foreign private issuer” as defined in Rule 405 under the Act;
(ccc) Except as described in the Pricing Prospectus, there are no affiliations or associations between any member of the Financial Industry Regulatory Authority (“ FINRA ”) and the GasLog Entities and, to the GasLog Parties’ knowledge, there are no affiliations or associations between (A) any member of FINRA and (b) any member of the Partnership’s officers, directors or 5% or greater security holders or any beneficial owner of the Partnership’s unregistered equity securities that were acquired at any time on or after the 180th day immediately preceding the date the Registration Statement was initially submitted to the Commission;
(ddd) Deloitte Hadjipavlou, Sofianos & Cambanis S.A., who have certified certain financial statements included in the Registration Statement, Pricing Prospectus and Prospectus, are independent public accountants with respect to the Partnership Entities as required by the Act and the rules and regulations of the Commission thereunder;
(eee) The Partnership maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 (the “ Exchange Act ”)) sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with international financial reporting standards as adopted by the International Accounting Standards Board (“ IFRS ”) and such system will comply in all material respects with the requirements of the Exchange Act when so required. The Partnership’s internal control over financial reporting is effective, and the Partnership is not aware of any material weaknesses in its internal control over financial reporting;
(fff) Since the date of the latest audited financial statements included in the Pricing Prospectus, there has been no change in the Partnership’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting (each an “ Internal Control Event ”);
(ggg) The Partnership maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Partnership and its subsidiaries is made known to the Partnership’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective;
(hhh) The financial statements of the GasLog Partners LP Predecessor (the “ Predecessor Entities ”) included in the Pricing Prospectus, together with the related notes thereto, present fairly in all material respects the combined financial position of the Predecessor Entities as of the date shown, and such financial statements have been prepared in conformity with IFRS, applied on a consistent basis throughout the periods involved; and the schedules included in the Pricing Prospectus, if any, present fairly the information required to be stated therein. The selected financial data and the summary financial information included in the Pricing Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited and unaudited financial statements included in the Pricing Prospectus;
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(iii) Neither the Partnership’s independent auditors nor any internal auditor has recommended that the Partnership’s board of directors review or investigate, (i) adding to, deleting, changing the application of, or changing the Partnership’s disclosure with respect to, any of the Partnership’s material accounting policies; (ii) any matter which could result in a restatement of the Partnership’s audited balance sheet included in the Registration Statement; or (iii) any Internal Control Event;
(jjj) The Vessels are owned directly by the respective Operating Subsidiary listed on Schedule III hereto; each of the Vessels has been duly registered as a vessel under the laws and regulations and flag of the jurisdiction set forth opposite its name on Schedule III in the sole ownership of the subsidiary set forth opposite its name on Schedule III , and no other action is necessary to establish and perfect such entity’s title to and interest in such Vessel as against any charterer or other third party; each such subsidiary has good title to the applicable Vessel, free and clear of all mortgages, pledges, liens, security interests and claims and all defects of the title of record except for those mortgages, pledges, liens, security interests and claims arising under credit facilities, each as disclosed in the Registration Statement, the Pricing Prospectus and the Prospectus, and any other encumbrances which would not, in the aggregate, result in a Material Adverse Effect; and each such Vessel is in good standing with respect to the payment of past and current taxes, fees and other amounts payable under the laws of the jurisdiction where it is registered as would affect its registry with the ship registry of such jurisdiction except for failures to be in good standing which would not, in the aggregate, result in a Material Adverse Effect;
(kkk) Each Vessel is operated in compliance in all material respects with the rules, codes of practice, conventions, protocols, guidelines or similar requirements or restrictions imposed, published or promulgated by any governmental authority, classification society or insurer applicable to the respective vessel (collectively, “ Maritime Guidelines ”) and all applicable international, national, state and local conventions, laws, regulations, orders, governmental licenses and other requirements (including, without limitation, all Environmental Laws) in the jurisdictions in which the Partnership and its subsidiaries operate or where such vessel is operated, in each case as in effect on the date hereof, except where such failure to be in compliance would not have, individually or in the aggregate, a Material Adverse Effect. The Partnership Entities are qualified to own or lease, as the case may be, and operate such vessels under all applicable international, national, state and local conventions, laws, regulations, orders, governmental licenses and other requirements (including, without limitation, all Environmental Laws) and Maritime Guidelines, including the laws, regulations and orders of each such Vessel’s flag state, in each case as in effect on the date hereof, except where such failure to be so qualified would not have, individually or in the aggregate, a Material Adverse Effect;
(lll) None of the GasLog Parties is entitled to any immunity, whether characterized as sovereign immunity or otherwise, from any legal proceedings in respect of themselves or their respective properties under the laws of the United States or their jurisdiction of formation or incorporation; and
(mmm) The GasLog Entities have filed all United States federal, state and local and non-U.S. tax returns that are required to be filed or have requested extensions thereof (except in any case in which the failure so to file would not, individually or in the aggregate, have a Material Adverse Effect); except as set forth in the Pricing Prospectus, the GasLog Entities have paid all taxes (including any assessments, fines or penalties that are currently owed and due) required to be paid by them and that are currently owed and due, except for any such taxes, assessments, fines or penalties currently being contested in good faith or as would not, individually or in the aggregate, have a Material Adverse Effect; and no capital gains, income, withholding or other taxes or stamp or other issuance or transfer taxes or duties or similar fees or charges are payable by or on behalf of the Underwriters in connection with the sale and delivery by the Partnership of the Units to or for the respective accounts of the Underwriters or the sale and delivery by the Underwriters of the Units to the initial purchasers thereof.
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(nnn) The terms of the Sponsor Credit Facility, taken as whole, reflect in all material respects “arm’s length terms” as that phrase (or a substantially equivalent phrase) is used in the credit facilities to which the GasLog Parties are a party.
2. Subject to the terms and conditions herein set forth, (a) the Partnership agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Partnership, at a purchase price per Common Unit of $[ ], the number of Firm Units set forth opposite the name of such Underwriter in Schedule I hereto and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Option Units as provided below, the Partnership agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Partnership, at the purchase price per Common Unit set forth in clause (a) of this Section 2 , that portion of the number of Option Units as to which such election shall have been exercised (to be adjusted by the Representatives so as to eliminate fractional Common Units) determined by multiplying such number of Option Units by a fraction, the numerator of which is the maximum number of Option Units which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Option Units that all of the Underwriters are entitled to purchase hereunder.
The Partnership, as and to the extent indicated in Schedule I hereto, hereby grants severally and not jointly to the Underwriters the right to purchase at their election up to [1,260,000] Option Units, at the purchase price per Common Unit set forth in the paragraph above, for the sole purpose of covering sales of Common Units in excess of the number of Firm Units; provided, that the purchase price per Option Unit shall be reduced by an amount per Common Unit equal to any dividends or distributions declared by the Partnership and payable on the Firm Units but not payable on the Option Units. Any such election to purchase Option Units may be exercised only by written notice from the Representatives to the Partnership, given within a period of 30 calendar days after the date of this Agreement, setting forth the aggregate number of Option Units to be purchased and the business day on which such Option Units are to be delivered, as determined by the Representatives but in no event earlier than the First Time of Delivery or, unless the Representatives and the Partnership otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.
3. Upon the authorization by the Representatives of the release of the Firm Units, the several Underwriters propose to offer the Firm Units for sale upon the terms and conditions set forth in the Prospectus.
4. (a) The Units to be purchased by each Underwriter hereunder, in definitive form, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours’ prior notice to the Partnership shall be delivered by or on behalf of the Partnership to the Representatives, through the facilities of the Depository Trust Company (“ DTC ”), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Partnership to the Representatives at least forty-eight hours in advance. The time and date of such delivery and payment shall be, with respect to the Firm Units, 10:30 a.m., New York City time, on [ ], 2014 or such other time and date as the Representatives and the Partnership may agree upon in writing, but not later than [ ], 2014, and, with respect to the Option Units, 10:30 a.m., New York time, on the date specified by the Representatives in the written notice given by the Representatives of the Underwriters’ election to purchase such Option Units, or such other time and date as the Representatives and the Partnership may agree upon in writing, but not later than [ ], 2014. Such time and date for delivery of the Firm Units is herein called the “ First Time of Delivery ”, such time and date for delivery of the Option Units, if not the First Time of Delivery, is herein called the “ Second Time of Delivery ”, and each such time and date for delivery is herein called a “ Time of Delivery ”.
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(b) The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross receipt for the Units and any additional documents requested by the Underwriters pursuant to Section 8(o) hereof, will be delivered at the offices of Latham & Watkins LLP, 811 Main Street, Suite 3700, Houston, TX 77002 (the “ Closing Location ”). A meeting will be held at the Closing Location at [4:00] p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4 , “ New York Business Day ” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.
5. The GasLog Parties agree with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the last Time of Delivery, which shall be disapproved by the Representatives promptly after reasonable notice thereof; to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish the Representatives with copies thereof; to file promptly all material required to be filed by the Partnership with the Commission pursuant to Rule 433(d) under the Act; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Units, of the suspension of the qualification of the Units for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement, any Preliminary Prospectus, the Prospectus or Issuer Free Writing Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Units for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Units, provided that in connection therewith the Partnership shall not be required to qualify as a foreign corporation or to file a general consent to service of process or to subject itself to taxation for doing business in any jurisdiction if it is not otherwise so subject;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required, at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Units and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if
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for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act, to notify the Representatives and upon the request of the Representatives to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Units at any time nine months or more after the time of issue of the Prospectus, upon the request of the Representatives but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as the Representatives may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as practicable, but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Partnership and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Partnership, Rule 158);
(e)(1) During the period beginning from the date hereof and continuing to and including the date 180 days after the date of the Prospectus (the “ Lock-Up Period ”), not to (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Act relating to, any securities of the Partnership that are substantially similar to the Units, including but not limited to any options or warrants to purchase Common Units or any securities that are convertible into or exchangeable for, or that represent the right to receive, Common Units or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Units or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Units or such other securities, in cash or otherwise (other than (x) the Units to be sold hereunder, (y) securities offered or sold pursuant to employee stock option or other incentive compensation plans or employment arrangements existing on the date hereof as described in the Pricing Prospectus, or, provided such securities do not vest or become exercisable until after the Lock-Up Period, pursuant to incentive compensation plans or employment arrangements entered into in the ordinary course, or (z) the establishment of a trading plan pursuant to Rule 10b5-1 under the Act, for the transfer of Common Units, provided that such plan does not provide for the transfer of Common Units during the Lock-Up Period), without the prior written consent of Citigroup Global Markets Inc.;
(2) If Citigroup Global Markets Inc., in its sole discretion, agrees to release or waive the restrictions set forth in a lock-up letter described in Section 8(k) hereof for an officer or director of the Partnership or GasLog and provides the Partnership with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Partnership or GasLog, as applicable, agrees to announce the impending release or waiver by a press release substantially in the form of Annex I hereto through a major news service at least two business days before the effective date of the release or waiver;
(f) During the first 12 months following the last Time of Delivery, to furnish to its unitholders as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, unitholders’ equity and cash flows of the Partnership and its consolidated subsidiaries certified by an independent registered public accounting firm) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its unitholders consolidated
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summary financial information of the Partnership and its subsidiaries for such quarter in reasonable detail reviewed in accordance with SAS 100 by an independent registered public accounting firm; provided , however , that the Partnership may satisfy the requirements of this subsection by making any such reports, communications or information available on its website or by filing or furnishing such information with the Commission via EDGAR;
(g) During a period of three years from the effective date of the Registration Statement, to furnish to the Representatives copies of all reports or other communications (financial or other) furnished to unitholders, and to deliver to the Representatives as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Partnership is listed; provided , however , that the Partnership may satisfy the requirements of this subsection by making any such reports, communications or information available on its web site or by filing or furnishing such information with the Commission via EDGAR;
(h) The Partnership will promptly notify the Representatives if the Partnership ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Units within the meaning of the Act and (ii) completion of the Lock-Up Period referred to in Section 5(e) hereof.
(i) If at any time following the distribution of any Written Testing-the-Waters Communication, any event occurs as a result of which such Written Testing-the-Waters Communication would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made at such time not misleading, the Partnership will (i) promptly notify the Representatives so that use of the Written Testing-the-Waters Communication may cease until it is amended or supplemented; (ii) amend or supplement the Written Testing-the-Waters Communication to correct such statement or omission; and (iii) supply any amendment or supplement to the Representatives in such quantities as may be reasonably requested.
(j) To use the net proceeds received by the Partnership from the sale of the Units pursuant to this Agreement in the manner specified in the Pricing Prospectus under the caption “Use of Proceeds”;
(k) To use its reasonable best efforts to list, subject to notice of issuance, the Units on the Exchange;
(l) To file with the Commission such information on Form 20-F as may be required by Rule 463 under the Act;
(m) If the Partnership elects to rely upon Rule 462(b), the Partnership shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m., New York time, on the date of this Agreement, and the Partnership shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act; and
(n) Upon request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Partnership’s trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Units (the “ License ”); provided, however , that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred.
(o) In connection with the Directed Unit Program, the Partnership Parties will ensure that the Directed Units will be restricted to the extent required by the Financial Industry Regulatory Authority,
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Inc. (“ FINRA ”) or the FINRA rules from sale, transfer, assignment, pledge or hypothecation for a period of three months following the date of the effectiveness of the Registration Statement. The Designated Underwriter will notify the Partnership Parties as to which Participants will need to be so restricted. The Partnership Parties will direct the transfer agent to place stop transfer restrictions upon such securities for such period of time.
(p) The Partnership Parties will pay all fees and disbursements of counsel (including non-U.S. counsel) incurred by the Underwriters in connection with the Directed Unit Program and stamp duties, similar taxes or duties or other taxes, if any, incurred by the underwriters in connection with the Directed Unit Program.
(q) The Partnership Parties will comply with all applicable securities and other applicable laws, rules and regulations in each foreign jurisdiction in which the Directed Units are offered in connection with the Directed Unit Program.
6. (a) The Partnership represents and agrees that, without the prior consent of the Representatives, it has not made and will not make any offer relating to the Units that would constitute a “free writing prospectus” as defined in Rule 405 under the Act; each Underwriter represents and agrees that, without the prior consent of the Partnership and the Representatives, it has not made and will not make any offer relating to the Units that would constitute a free writing prospectus; any such free writing prospectus the use of which has been consented to by the Partnership and the Representatives is listed on Schedule II hereto.
(b) The Partnership has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and the Partnership represents that it has satisfied and agrees that it will satisfy the conditions under Rule 433 under the Act to avoid a requirement to file with the Commission any electronic road show.
(c) The Partnership agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Partnership will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however , that this representation and warranty shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Partnership by an Underwriter through the Representatives expressly for use therein.
7. The Partnership covenants and agrees with the several Underwriters that the Partnership will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Partnership’s counsel and accountants in connection with the registration of the Units under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any agreement among Underwriters, this Agreement, any Blue Sky memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Units; (iii) all expenses in connection with the qualification of the Units for offering and sale under state securities laws as provided
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in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (iv) all fees and expenses in connection with listing the Units on the Exchange; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by FINRA of the terms of the sale of the Units (such expenses of counsel shall not exceed $25,000); (vi) the cost of preparing certificates, as applicable; (vii) the cost and charges of any transfer agent or registrar; (viii) 50% of the cost of private aircraft chartered in connection with the road show; and (ix) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 7 . It is understood, however, that the Underwriters will pay (x) the remaining 50% of the cost of private aircraft chartered in connection with the road show; and (y) except as provided in this Section 7 , and Sections 9 and 13 hereof, all of their own costs and expenses, including the fees and disbursements of their counsel, transfer taxes on resale of any of the Units by them, and any advertising expenses connected with any offers they may make. In addition, the Partnership agrees to pay (i) each of Citigroup Global Markets Inc. and Evercore Group L.L.C. a structuring fee equal to 0.375% of the gross proceeds from the sale of the Firm Units for advice regarding the capital structure of the Partnership, the terms of the offering and the terms of the Partnership Agreement and (ii) the out-of-pocket expenses of Credit Suisse (USA) LLC in its capacity as the QIU (as defined below).
8. The obligations of the Underwriters hereunder, as to the Units to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the GasLog Parties herein are, at and as of such Time of Delivery, true and correct, the condition that the GasLog Parties shall have performed all of their obligations hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; all material required to be filed by the Partnership pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433; if the Partnership has elected to rely upon Rule 462(b) under the Act, the Rule 462(b) Registration Statement shall have become effective by 10:00 p.m., New York time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no stop order suspending or preventing the use of the Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the reasonable satisfaction of the Representatives;
(b) Latham & Watkins LLP, counsel for the Underwriters, shall have furnished to the Representatives such written opinion or opinions, dated such Time of Delivery, in form and substance reasonably satisfactory to the Representatives, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;
(c) Cravath, Swaine & Moore LLP, U.S. counsel for the GasLog Parties, shall have furnished to the Representatives their written opinion, dated such Time of Delivery, in form and substance satisfactory to the Representatives, to the effect set forth in Annex II ;
(d) Cozen O’Connor, special counsel on matters of Marshall Islands law for the GasLog Parties, shall have furnished to the Representatives their written opinion, dated such Time of Delivery, in form and substance satisfactory to the Representatives, to the effect set forth in Annex III ;
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(e) Conyers Dill & Pearman Limited, special Bermuda counsel for the GasLog Parties, shall have furnished to the Representatives their written opinion, dated such Time of Delivery, in form and substance satisfactory to the Representatives, to the effect set forth in Annex IV ;
(f) Clifford Chance LLP, special English counsel for the GasLog Parties, shall have furnished to the Representatives their written opinion, dated such Time of Delivery, in form and substance satisfactory to the Representatives, to the effect set forth in Annex V ;
(g) On the date hereof and at each Time of Delivery, Deloitte Hadjipavlou, Sofianos & Cambanis S.A. shall have furnished to the Representatives a letter or letters, dated the respective dates of delivery thereof, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, Pricing Prospectus and Prospectus, in form and substance satisfactory to the Representatives;
(h) (i) None of the Partnership Entities shall have sustained since the date of the latest audited financial statements included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood, piracy, terrorism or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any change in the capital or long-term debt of the Partnership Entities or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, unitholders’ or shareholders’ equity, as applicable, or results of operations of the Partnership Entities, otherwise than as set forth or contemplated in the Pricing Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Units being delivered at such Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(i) On or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Partnership Parties’ debt securities or preferred stock by any “nationally recognized statistical rating organization”, as such term is defined in Section 3(a)(62) of the Exchange Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Partnership Parties’ debt securities or preferred stock;
(j) On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the Exchange or the NASDAQ Global Select Stock Market; (ii) a suspension or material limitation in trading in the Partnership Parties’ securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the Republic of The Marshall Islands or the declaration by the United States of a national emergency or war; or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Units being delivered at such Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(k) The Units to be sold by the Partnership at such Time of Delivery shall have been duly listed, subject to notice of issuance, on the Exchange;
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(l) The Partnership shall have obtained and delivered to the Underwriters executed copies of an agreement substantially in form attached hereto as Schedule IV from those individuals and entities listed on Schedule V ;
(m) The Partnership shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement; and
(n) The Partnership shall have furnished or caused to be furnished to the Representatives at such Time of Delivery certificates of officers of the Partnership satisfactory to the Representatives as to the accuracy of the representations and warranties of the Partnership herein at and as of such Time of Delivery, as to the performance by the Partnership of all of its obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a) and (f) of this Section and as to such other matters as the Representatives may reasonably request.
9. (a) The GasLog Parties will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Written Testing-the-Waters Communication, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Act, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided , however , that the GasLog Parties shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus, the Prospectus, or any amendment or supplement thereto, any Written Testing-the-Waters Communication or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Partnership Parties by any Underwriter through the Representatives expressly for use therein. The GasLog Parties agree to indemnify and hold harmless the Designated Underwriter and its affiliates and each person, if any, who controls the Designated Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act (the “ Designated Entities ”), from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) (i) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the GasLog Parties for distribution to Participants in connection with the Directed Unit Program or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) arising out of or based upon the failure of any Participant to pay for and accept delivery of Directed Units that the Participant agreed to purchase; or (iii) arising out of, related to or in connection with the Directed Unit Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the bad faith, willful misconduct or gross negligence of the Designated Entities.
(b) Each Underwriter, severally and not jointly, will indemnify and hold harmless the GasLog Parties against any losses, claims, damages or liabilities to which the GasLog Parties may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement
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of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Written Testing-the-Waters Communication or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Written Testing-the-Waters Communication or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the GasLog Parties by such Underwriter through the Representatives expressly for use therein; and will reimburse the GasLog Parties for any legal or other expenses reasonably incurred by the GasLog Parties in connection with investigating or defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above or Section 10 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection or Section 10 , notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection or Section 10 . In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection or Section 10 for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding anything contained herein to the contrary, if indemnity may be sought pursuant to the last sentence in Section 9(a) hereof in respect of such action or proceeding, then in addition to such separate firm for the indemnified parties, the indemnifying party shall be liable for the reasonable fees and expenses of not more than one separate firm (in addition to any local counsel) for the Designated Underwriter for the defense of any losses, claims, damages and liabilities arising out of the Directed Unit Program, and all persons, if any, who control the Designated Underwriter within the meaning of either Section 15 of the Act of Section 20 of the Exchange Act. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the GasLog Parties on the one hand and the Underwriters on the other from the offering of the Units. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by
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such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the GasLog Parties on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the GasLog Parties on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the GasLog Parties bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the GasLog Parties on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The GasLog Parties and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Units underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint.
(e) The obligations of the GasLog Parties under this Section 9 shall be in addition to any liability which the GasLog Parties may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act, each broker-dealer affiliate of any Underwriter and each director, officer, employee and agent of any Underwriter or broker-dealer affiliate of any Underwriter; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Partnership (including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Partnership) and to each person, if any, who controls the Partnership within the meaning of the Act.
10. The GasLog Parties hereby confirm that at their request Credit Suisse (USA) LLC has without compensation acted as “qualified independent underwriter” (in such capacity, the “ QIU ”), within the meaning of FINRA Rule 5121, in connection with the offering of the Units. The GasLog Parties will indemnify and hold harmless the QIU, its directors, officers, employees and agents and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which the QIU may become subject, under the Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon the QIU’s acting (or alleged failing to act) as such “qualified independent underwriter” and will reimburse the QIU for any legal or other expenses reasonably incurred by the QIU in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, provided, however, that the GasLog Parties will not be liable in any such case to
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the extent that any such loss, claim, damage or liability is finally judicially determined to have resulted from the gross negligence or willful misconduct of the QIU.
11. (a) If any Underwriter shall default in its obligation to purchase the Units which it has agreed to purchase hereunder at a Time of Delivery, the Representatives may in their discretion arrange for the Representatives or another party or other parties to purchase such Units on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Units, then the Partnership shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Units on such terms. In the event that, within the respective prescribed periods, the Representatives notify the Partnership that the Representatives have so arranged for the purchase of such Units, or the Partnership notifies the Representatives that it has so arranged for the purchase of such Units, the Representatives or the Partnership shall have the right to postpone such Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Partnership agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section 11 with like effect as if such person had originally been a party to this Agreement with respect to such Units.
(b) If, after giving effect to any arrangements for the purchase of the Units of a defaulting Underwriter or Underwriters by the Representatives and the Partnership as provided in subsection (a) above, the aggregate number of such Units which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Units to be purchased at such Time of Delivery, then the Partnership shall have the right to require each non-defaulting Underwriter to purchase the number of Units which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Units which such Underwriter agreed to purchase hereunder) of the Units of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Units of a defaulting Underwriter or Underwriters by the Representatives and the Partnership as provided in subsection (a) above, the aggregate number of such Units which remains unpurchased exceeds one-eleventh of the aggregate number of all the Units to be purchased at such Time of Delivery, or if the Partnership shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Units of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to the Second Time of Delivery, the obligations of the Underwriters to purchase and of the Partnership to sell the Option Units) shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Partnership, except for the expenses to be borne by the GasLog Parties, as applicable, and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
12. The respective indemnities, agreements, representations, warranties and other statements of the GasLog Parties and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Partnership, or any officer or director or controlling person of the Partnership, and shall survive delivery of and payment for the Units.
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13. If this Agreement shall be terminated pursuant to Section 11 hereof, the GasLog Parties, as applicable, shall not then be under any liability to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other reason, any Units are not delivered by or on behalf of the Partnership as provided herein, the GasLog Parties will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Units not so delivered, but the GasLog Parties shall then be under no further liability in respect of the Units not so delivered to any Underwriter except as provided in Sections 7 and 9 hereof.
14. In all dealings hereunder, the Representatives shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by the Representatives.
All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Representatives at, in the case of Citigroup Global Markets Inc., to Citigroup General Counsel by facsimile at (212) 816-7912, and confirmed to Citigroup Global Markets Inc. at 388 Greenwich Street, New York, NY 10013, Attention: General Counsel, in the case of Credit Suisse Securities (USA) LLC, to Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, New York 10010-3629, Attention: LCD-IBD, and in the case of Wells Fargo Securities, LLC, to Wells Fargo Securities, LLC, 550 South Tryon Street, Charlotte, NC 28202, Attention: Transaction Management, Facsimile: (704) 410-0326; and if to the Partnership shall be delivered or sent by mail, telex or facsimile transmission to the address of the Partnership set forth in the Registration Statement, Attention: Secretary; provided, however , that any notice to an Underwriter pursuant to Section 9(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters’ Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Partnership by the Representatives upon request; provided, however , that notices under Section 5(e) shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Representatives at, in the case of Citigroup Global Markets Inc., to Citigroup General Counsel by facsimile at (212) 816-7912, and confirmed to Citigroup Global Markets Inc. at 388 Greenwich Street, New York, NY 10013, Attention: General Counsel, in the case of Credit Suisse Securities (USA) LLC, to Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, New York 10010-3629, Attention: LCD-IBD, and in the case of Wells Fargo Securities, LLC, to Wells Fargo Securities, LLC, 550 South Tryon Street, Charlotte, NC 28202, Attention: Transaction Management, Facsimile: (704) 410-0326. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Partnership, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.
15. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the GasLog Parties and, to the extent provided in Sections 9 and 12 hereof, the officers and directors of the Partnership and each person who controls the Partnership or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Units from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
16. Time shall be of the essence of this Agreement. As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.
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17. The GasLog Parties acknowledge and agree that (i) the purchase and sale of the Units pursuant to this Agreement is an arm’s-length commercial transaction between the GasLog Parties, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the GasLog Parties, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the GasLog Parties with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the GasLog Parties on other matters) or any other obligation to the GasLog Parties except the obligations expressly set forth in this Agreement and (iv) the GasLog Parties have consulted their own legal and financial advisors to the extent they deemed appropriate. The GasLog Parties agree that they will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect (other than structuring advisory services rendered by Citigroup Global Markets Inc. and Evercore Group L.L.C.), or owes a fiduciary or similar duty to the GasLog Parties, in connection with such transaction or the process leading thereto.
18. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the GasLog Parties and the Underwriters, or any of them, with respect to the subject matter hereof.
19. THIS AGREEMENT AND ANY MATTERS RELATED TO THIS TRANSACTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAWS OF THE STATE OF NEW YORK. The GasLog Parties agree that any suit or proceeding arising in respect of this agreement or the engagement of the Representatives will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York, and the GasLog Parties agree to submit to the jurisdiction of, and to venue in, such courts.
20. The Partnership has appointed C T Corporation as its authorized agent (the “ Authorized Agent ”) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated herein which may be instituted, by any Underwriter, the directors, officers, employees and agents of any Underwriter, or by any person who controls any Underwriter, and expressly accepts the non-exclusive jurisdiction of any such court in respect of any such suit, action or proceeding. The Partnership hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and each of them agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon the Partnership.
21. The GasLog Parties and each of the Underwriters hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
22. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.
[ Remainder of page intentionally left blank. ]
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If the foregoing is in accordance with the understanding of the Representatives, please sign and return to the Representatives one copy for the GasLog Parties and each of the Representatives plus one copy for each counsel counterparts hereof, and upon the acceptance hereof by the Representatives, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement between each of the Underwriters and the GasLog Parties. It is understood that the acceptance by the Representatives of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of agreement among Underwriters, the form of which shall be submitted to the Partnership for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof.
Very truly yours, | ||
GasLog Ltd. | ||
By: | ||
Name: Paul Wogan | ||
Title: Chief Executive Officer | ||
GasLog Partners GP LLC | ||
By: | GasLog Ltd., as sole member | |
By: | ||
Name: Paul Wogan | ||
Title: Chief Executive Officer | ||
GasLog Partners LP | ||
By: | ||
Name: Paul Wogan | ||
Title: Chief Executive Officer | ||
GasLog Partners Holdings LLC | ||
By: | GasLog Partners LP, as sole member | |
By: | ||
Name: Paul Wogan | ||
Title: Chief Executive Officer |
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Accepted as of the date hereof: | ||
Citigroup Global Markets Inc. | ||
By: | ||
Name: | ||
Title: | ||
Credit Suisse Securities (USA) LLC | ||
By: | ||
Name: | ||
Title: | ||
Wells Fargo Securities, LLC | ||
By: | ||
Name: | ||
Title: | ||
On behalf of each of the Underwriters |
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Schedule I
Underwriter |
Total
Number of
Firm Units to be Purchased |
Number
of
Optional Units to be Purchased if Maximum Option Exercised |
||
Citigroup Global Markets Inc. | [ ] | [ ] | ||
Credit Suisse Securities (USA) LLC | [ ] | [ ] | ||
Wells Fargo Securities, LLC | [ ] | [ ] | ||
Barclays Capital Inc. | [ ] | [ ] | ||
Evercore Group L.L.C. | [ ] | [ ] | ||
UBS Securities LLC | [ ] | [ ] | ||
Deutsche Bank Securities Inc. | [ ] | [ ] | ||
DNB Markets, Inc. | [ ] | [ ] | ||
Total | [8,400,000] | [1,260,000] |
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Schedule II
None.
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Schedule III
Owned Vessels | ||||||
Vessel | Flag | Owning Entity | IMO Number | |||
GasLog Shanghai | Bermuda | GAS-three Ltd. | 9600528 | |||
GasLog Santiago | Bermuda | GAS-four Ltd. | 9600530 | |||
GasLog Sydney | Bermuda | GAS-five Ltd. | 9626273 |
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Schedule IV
Form of Lock-Up Agreement
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GasLog Partners LP
Lock-Up Agreement
________, 2014
Citigroup Global Markets Inc.
388 Greenwich Street, 34th Floor
New York, NY 10013
Credit Suisse (USA) LLC
Eleven Madison Avenue
New York, NY 10010
Wells Fargo Securities, LLC
375 Park Avenue
New York, NY 10152
As Representatives of the several Underwriters
Re: GasLog Partners LP – Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that Citigroup Global Markets Inc., Credit Suisse (USA) LLC, and Wells Fargo Securities, LLC, as representatives, propose to enter into an Underwriting Agreement on behalf of the several Underwriters named in Schedule I to such agreement (collectively, the “ Underwriters ”), with GasLog Ltd., a Bermuda exempted company ( “ GasLog ”), GasLog Partners GP LLC, a limited liability company organized under the laws of the Republic of The Marshall Islands (the “ General Partner ”), GasLog Partners LP, a limited partnership organized under the laws of the Republic of The Marshall Islands (the “ Partnership ”), and GasLog Partners Holdings LLC, a limited liability company organized under the laws of the Republic of The Marshall Islands (the “ Operating Company ” and together with GasLog, the General Partner and the Partnership, the “ GasLog Parties ”), providing for a public offering of the Partnership’s common units, representing limited partner interests in the Partnership (the “ Common Units ”) pursuant to a Registration Statement on Form F-1 (the “ Registration Statement ”) filed with the Securities and Exchange Commission (the “ SEC ”).
In consideration of the agreement by the Underwriters to offer and sell the Common Units, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period specified in the following paragraph (the “ Lock-Up Period ”), the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any Common Units of the Partnership, or any options or warrants to purchase any Common Units of the Partnership, or any securities convertible into, exchangeable for or that represent the right to receive Common Units of the Partnership, whether now owned or hereinafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the SEC (collectively the “ Undersigned’s Units ”). The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned’s Units even if such Common Units would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned’s Units or with respect to any security that includes, relates to, or derives any significant part of its value from such Common Units.
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If the undersigned is an officer or director of the issuer, the undersigned further agrees that the foregoing provisions shall be equally applicable to any issuer-directed Common Units the undersigned may purchase in the offering.
The initial Lock-Up Period will commence on the date of this Lock-Up Agreement and continue for 180 days after the public offering date set forth on the final prospectus used to sell the Common Units (the “ Public Offering Date ”) pursuant to the Underwriting Agreement.
Notwithstanding the foregoing, the undersigned may transfer the Undersigned’s Units (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, (iii) with the prior written consent of Citigroup Global Markets Inc. on behalf of the Underwriters, (iv) distributions to limited partners or shareholders of the undersigned who agree to be bound by the terms of this Lock-Up Agreement, provided that no filing under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), shall be required or shall be voluntarily made, or (v) in the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Common Units, provided that such plan does not provide for the transfer of Common Units during the Lock-Up Period. For purposes of this Lock-Up Agreement, “ immediate family ” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. In addition, notwithstanding the foregoing, if the undersigned is a corporation, the corporation may transfer the Undersigned’s Units to any wholly owned subsidiary of such corporation; provided, however , that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such Common Units subject to the provisions of this Lock-Up Agreement and there shall be no further transfer of such Common Units except in accordance with this Lock-Up Agreement, and provided further that any such transfer shall not involve a disposition for value. The undersigned now has, and, except as contemplated by clauses (i) through (v) above, for the duration of this Lock-Up Agreement will have, good and marketable title to the Undersigned’s Units, free and clear of all liens, encumbrances, and claims whatsoever. The undersigned also agrees and consents to the entry of stop transfer instructions with the Partnership’s transfer agent and registrar against the transfer of the Undersigned’s Units except in compliance with the foregoing restrictions.
If the undersigned is an officer or director of the Partnership or GasLog, (i) Citigroup Global Markets Inc. agrees that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Common Units, Citigroup Global Markets Inc. will notify the Partnership of the impending release or waiver, and (ii) the Partnership has agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted by Citigroup Global Markets Inc. hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this letter to the extent and for the duration that such terms remain in effect at the time of the transfer.
The undersigned understands that the GasLog Parties and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors, and assigns.
* * *
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If (i) the Partnership notifies you in writing that it does not intend to proceed with the public offering, (ii) the Registration Statement filed with the SEC with respect to the public offering of the Common Units is withdrawn or (iii) for any reason the Underwriting Agreement shall be terminated prior to the First Time of Delivery (as defined in the Underwriting Agreement), the provisions of this Lock-Up Agreement shall be terminated and the undersigned shall be released from its obligations hereunder.
Very truly yours, | |
Exact Name of Unitholder | |
Authorized Signature | |
Title |
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Schedule V
List of Individuals and Entities Subject to Lock Up Agreement
[ ]
|
Schedule VI
Information Included in the Pricing Prospectus
Initial price to the public: $[ ] per Common Unit
Number Common Units offered to the public: [8,400,000]
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Schedule VII
Vessel Financing Agreements
1. | Facilities Agreement dated 14 March 2012 between GAS-three Ltd. and GAS-four Ltd. as borrowers, DNB and KEXIM as arrangers, DNB as original commercial facility lender, KEXIM as original KEXIM facility lender and DNB in its capacities as hedging provider, bookrunner, agent for the other finance parties and security agent for the other finance parties (the “ Original GAS 3/4 Facilities Agreement ”) as amended, and supplemented by the First Supplemental Deed dated 30 July 2012 between GasLog, GasLog Carriers, GasLog LNG and each of the parties to the Original Gas 3/4 Facilities Agreement in connection with the GasLog Shanghai and GasLog Santiago (the “ First Supplemental Deed ”) and as further amended, supplemented, waived and confirmed by the Second Supplemental Deed dated as April 23, 2014, between the parties to the First Supplemental Deed, in connection with the Original Gas 3/4 Facilities Agreement (and, together with the Original Gas 3/4 Facilities Agreement and the First Supplemental Deed, the “ Amended GAS3/4 Facilities Document ”). |
2. | Facility agreement, dated as April 18, 2014, by and among GAS-five Ltd. and the lenders party thereto in connection with the GasLog Sydney , as amended and waived pursuant to the Amending and Restating Agreement dated April 18, 2014 between GAS-five Ltd. and GAS-six Ltd. as borrowers, GasLog and GasLog Carriers as guarantors, Nordea Bank Finland Plc, ABN AMRO Bank N.V. and Citibank International Plc as lenders and as joint lead arrangers, Nordea Bank Finland Plc, ABN AMRO Bank N.V. and Citibank N.A. as swap banks and Nordea Bank Finland Plc as agent and security trustee (the “ New GAS5 Facility Agreement ”). |
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Schedule VIII
Covered Agreements
1. | Master Time Charter Party, dated May 9, 2011, between GAS-one Ltd., GAS-two Ltd., GAS-three Ltd., GAS-four Ltd., GAS-five Ltd. and GAS-six Ltd. and Methane Services Limited. |
2. | Confirmation Memorandum – SHI HN 1946, dated May 9, 2011, between GAS-three Ltd. and Methane Services Limited. |
3. | Amendment and Restatement Agreement relating to Confirmation Memorandum – SHI HN 1946, dated June 17, 2013, between GAS-three Ltd. and METHANE Services Limited. |
4. | Confirmation Memorandum – SHI HN 1947, dated May 9, 2011, between GAS-four Ltd. and Methane Services Limited. |
5. | Amendment and Restatement Agreement relating to Confirmation Memorandum – SHI HN 1947, dated June 17, 2013, between GAS-four Ltd. and METHANE Services Limited. |
6. | Confirmation Memorandum – SHI HN 2016, dated May 9, 2011, between GAS-five Ltd. and Methane Services Limited. |
7. | Amendment and Restatement Agreement relating to Confirmation Memorandum – SHI HN 2016, dated June 17, 2013, between GAS-five Ltd. and Methane Services Limited. |
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Annex I
Form of Press Release
GasLog Partners LP
[Date]
GasLog Partners LP (the “ Partnership ”) announced today that Citigroup Global Markets Inc., the lead book-running manager in the Partnership’s recent public sale of Common Units, is [waiving] [releasing] a lock-up restriction with respect to of the Partnership’s Common Units held by [certain officers or directors] [an officer or director] of the Partnership or GasLog. The [waiver] [release] will take effect on , 2014, and the Common Units may be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.
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Annex II
U.S. COUNSEL OPINION
1. | Assuming that the Underwriting Agreement has been duly authorized by each of GasLog, the General Partner, the Partnership and the Operating Company under the laws of its respective jurisdiction of formation, the Underwriting Agreement has been duly executed and delivered by GasLog, the General Partner, the Partnership and the Operating Company, to the extent such execution and delivery are governed by the laws of the State of New York. |
2. | The Registration Statement became effective under the Act on [ ], 2014 (the “ Effective Date ”), and thereupon the offering of the Units as contemplated by the Prospectus became registered under the Act; to such counsel’s knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and, to such counsel’s knowledge, no proceedings for that purpose have been instituted or are pending or contemplated under the Act; the required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b) (without reference to Rule 424(b)(8)); and to such counsel’s knowledge, no Issuer Free Writing Prospectus pursuant to Rule 433 was required to be filed pursuant to Rule 433(d). |
3. | Assuming that the Operative Documents governed by New York law (the “ NY Operative Documents ”) have been duly authorized and validly executed and delivered by each of the GasLog Entities or the other entities party thereto under the laws of Bermuda or the Republic of The Marshall Islands, as applicable, each NY Operative Document constitutes a legal, valid and binding obligation of the relevant GasLog Entity that is a party to such NY Operative Document, enforceable against each of them in accordance with its respective terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law). |
4. | To such counsel’s knowledge, there is no pending or threatened action, suit, proceeding or investigation before or by any United States Federal or New York State court, governmental agency or authority against any of the GasLog Entities of a character required to be disclosed in the Registration Statement, Pricing Prospectus or Prospectus which is not adequately disclosed as required. |
5. | The statements made in the Registration Statement, Pricing Prospectus and Prospectus under “Cash Distribution Policy and Restrictions on Distributions,” “How We make Cash Distributions,” “Business—Ship Time Charters,” “Certain Relationships and Related Party Transactions,” “Description of the Common Units,” and “The Partnership Agreement,” insofar as such statements purport to summarize any agreement, statute or regulation or refer to statements of law or legal conclusions, they fairly summarize the matters described therein; provided, however, that we express no opinion with respect to any laws other than the laws of the State of New York and, to the extent specifically identified herein, the federal laws of the United States of America. Such counsel’s opinion in the second preceding sentence relating to the contracts does not extend to compliance with any financial ratio or any limitation in any contractual restriction expressed as a dollar amount (or an amount expressed in another currency). |
6. | The Opinion of Cravath, Swaine & Moore LLP filed as Exhibit 8.1 to the Registration Statement is confirmed and the Underwriters may rely upon such opinion as if it were addressed to them. |
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7. | To such counsel’s knowledge, there is no contract, indenture, mortgage, loan agreement, note, lease or other document of a character required to be described in the Registration Statement, Pricing Prospectus or Prospectus, or to be filed as an exhibit, which is not described or filed as required. |
8. | No authorization, approval or other action by, and no notice to, consent of, order of or filing with, any United States Federal or New York governmental authority is required to be made or obtained by the Partnership for the consummation of the transactions contemplated by the Underwriting Agreement, other than (i) those that have been obtained or made under the Act, (ii) those that may be required under the Act in connection with the use of a “free writing prospectus” and (iii) those that may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Units by the Underwriters. |
9. | To such counsel’s knowledge, other than as have been validly waived and as described in the Pricing Prospectus, there are no persons with registration rights or other similar rights to have any securities registered pursuant to the Registration Statement by the Partnership under the Act. |
10. | Based solely on the certificate dated the date hereof, from an officer of [ ], after giving effect to the offering and sale of the Units, the Partnership will not be an “investment company” as such term is defined in the Investment Company Act of 1940, as amended. |
11. | The issuance of the Sponsor Units in accordance with the Partnership Agreement and the Contribution Agreement and the Incentive Distribution Rights to GasLog do not require registration under the Act. |
12. | None of the Partnership Entities should be a “passive foreign investment company” as such term is defined in the Internal Revenue Code of 1986, as amended. |
13. | The Common Units have been duly registered as a class pursuant to section 12 of the Securities Exchange Act of 1934, as amended. |
14. | Based on the New York Stock Exchange Authorization Letter dated [ ], the Units have been duly authorized for listing, subject to official notice of issuance, on the New York Stock Exchange. |
15. | Assuming the validity of such action under the laws of The Marshall Islands and Bermuda relating to submission to jurisdiction, pursuant to Sections 18 and 19 of the Underwriting Agreement (a) the GasLog Parties validly and irrevocably submitted to the personal jurisdiction of the courts of the State of New York, and (b) the Partnership appointed C T Corporation as its agent for service of process. |
16. | The Partnership is a “foreign private issuer” as defined in Rule 405 under the Securities Act. |
In addition to the matters set forth above, such counsel shall also state (i) on the basis of information gained in the course of the performance of the services rendered, that, the Registration Statement, at the time it initially became effective, and the Prospectus, as of the Closing Date, appeared or appears on its face to be appropriately responsive in all material respects to the requirements of the Act and the applicable rules and regulations thereunder, except that such counsel does not express any view as to the financial statements, other information of an accounting or financial nature or information relating to the LNG shipping industry provided by Clarkson Research Services Limited included therein and (ii) that their work in connection with this matter did not disclose any information that gave them reason to
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believe that (a) the Registration Statement, at the time the Registration Statement became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (b) the Prospectus, as of its date or at the Closing Date included or includes, an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (c) the Pricing Prospectus, as of the Applicable Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that, in each case, such counsel does not express any view as to the financial statements, other information of an accounting or financial nature or information relating to the LNG shipping industry provided by Clarkson Research Services Limited included therein.
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Annex III
MATTERS TO BE COVERED BY MARSHALL ISLANDS COUNSEL OPINION
1. | The Partnership is a limited partnership validly subsisting in good standing under Marshall Islands law and has all requisite limited partnership power and authority to own or lease and to operate its properties and to conduct its business in all material respects as described in the Registration Statement, the Pricing Prospectus and the Prospectus. |
2. | The General Partner is a limited liability company validly subsisting in good standing under Marshall Islands law and has all requisite limited liability company power and authority to own or lease and to operate its properties and to conduct its business in all material respects and act as the general partner of the Partnership as described in the Registration Statement, the Pricing Prospectus and the Prospectus. |
3. | The Operating Company is a limited liability company validly subsisting in good standing under Marshall Islands law and has all requisite limited liability company power and authority to own or lease and to operate its properties and to conduct its business in all material respects as described in the Registration Statement, the Pricing Prospectus and the Prospectus. |
4. | GasLog owns of record 100% of the limited liability company interests in the General Partner. Such limited liability company interests have been duly authorized and validly issued in accordance with the General Partner LLC Agreement and, to our knowledge, are fully paid (to the extent required under the General Partner LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 20, 31, 40 and 49 of the Marshall Islands LLC Act and except as may otherwise be provided in the General Partner LLC Agreement); and to our knowledge, GasLog owns such limited liability company interest free and clear of all Liens (except for restrictions on transferability under applicable securities laws or as described in the Pricing Prospectus or the Prospectus). |
5. | The General Partner owns of record the General Partner Interest and is the sole general partner of the Partnership. Such General Partner Interest has been duly authorized and validly issued in accordance with the Partnership Agreement and, to our knowledge, is fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 30, 41, 51 and 60 of the Marshall Islands LP Act and except as may otherwise be provided in the Partnership Agreement); and to our knowledge, the General Partner owns such General Partner Interest free and clear of all Liens (except for restrictions on transferability under applicable securities laws or as described in the Pricing Prospectus or the Prospectus). |
6. | The Partnership owns of record 100% of the limited liability company interests in the Operating Company. Such limited liability company interests have been duly authorized and validly issued in accordance with the Operating Company LLC Agreement and, to our knowledge, are fully paid (to the extent required under the Operating Company LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 20, 31, 40 and 49 of the Marshall Islands LLC Act and except as may otherwise be provided in the Operating Company LLC Agreement); and to our knowledge, the Partnership owns such limited liability company interests free and clear of all Liens (except for restrictions on transferability under applicable securities laws or as described in the Pricing Prospectus or the Prospectus). |
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7. | To our knowledge, the Operating Company owns of record all of the outstanding shares of capital stock of each of the Bermuda subsidiaries listed on Exhibit A to this opinion free and clear of all Liens (except for restrictions on transferability under applicable securities laws or as described in the Pricing Prospectus or the Prospectus). |
8. | To our knowledge, except as described in or incorporated by reference into the Underwriting Agreement, the Pricing Prospectus or the Prospectus, there are no preemptive rights or other rights to subscribe for or to purchase, or any other restriction upon transfer of, any limited partner interests in the Partnership. |
9. | Each of the MI Entities has all requisite limited partnership or limited liability company power and authority, as applicable, to execute and deliver the Underwriting Agreement and each of the other Operative Documents to which it is a party and, in each case as applicable, to perform its obligations thereunder and to consummate the transactions contemplated thereby. |
10. | The execution and delivery of the Underwriting Agreement and each of the other Operative Documents by the MI Entities party thereto have been duly authorized by all necessary limited partnership or limited liability company action, as applicable, of the relevant MI Entities. |
11. | The Underwriting Agreement and each of the other Operative Agreement have been validly executed and delivered by each of the MI Entities party thereto, and each Operative Agreement is a valid and legally binding agreement of the MI Entities party thereto enforceable against each of the MI Entities party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), and except that rights to indemnification and contribution thereunder may be limited by securities laws or considerations of public policy relating thereto. |
12. | The execution, delivery and performance of the Underwriting Agreement and each of the other Operative Agreements by each of the MI Entities party thereto, and the performance by each of the MI Entities of their respective obligations thereunder and the consummation of the transactions contemplated thereby, do not and will not (i) conflict with or constitute a violation of the organizational documents of the relevant MI Entity; (ii) violate any statute or law of general application of Republic of The Marshall Islands to which the relevant MI Entity is subject; or (iii) to our knowledge, violate any judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority situated in the Republic of The Marshall Islands directed to an MI Entity in a proceeding before such court, regulatory body, administrative agency, governmental body, arbitrator or other authority in the Republic of The Marshall Islands to which such MI Entity is a party. |
13. | No permit, consent, approval, authorization, order, registration, filing or qualification of or with any governmental agency or body of the Republic of The Marshall Islands having jurisdiction over the MI Entities or any of their respective properties is required in connection with the execution and delivery by each of the MI Entities of the Underwriting Agreement and each of the Operative Agreements to which it is a party, the consummation of the transactions contemplated thereby or the performance by the MI Entities of their respective obligations thereunder. |
14. | No permits, licenses, franchises, concessions, certificates and authorizations of, or declarations or filings with, any governmental or regulatory authorities of the Republic of The Marshall Islands |
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are required for each of the MI Entities to own or lease and to operate its properties and to conduct its business in the manner described in the Prospectus, other than such permits, consents, licenses, franchises, concessions, certificates and authorizations, declarations or filings with any Marshall Islands governmental authority currently held or filed by such MI Entity and which must be filed by such MI Entity annually in the future. |
15. | When the Units are issued against payment therefor in accordance with the terms and conditions of the Underwriting Agreement, the Partnership Agreement and the Prospectus, the Units will be duly authorized and validly issued in accordance with the Partnership Agreement, and will be fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 30, 41, 51 and 60 of the Marshall Islands LP Act). |
16. | The Incentive Distribution Rights and the Subordinated Units are duly authorized and validly issued in accordance with the Partnership Agreement, and will be fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 30, 41, 51 and 60 of the Marshall Islands Limited Partnership Act); and to our knowledge, GasLog will own such Subordinated Units and Incentive Distribution Rights free and clear of all Liens (except for restrictions on transferability under applicable securities laws or as described in the Pricing Prospectus or the Prospectus). |
17. | To our knowledge, there is no pending or threatened action, suit, proceeding or investigation before or by any Marshall Islands court, governmental agency or authority against any of the MI Entities of a character required to be disclosed in the Registration Statement, Pricing Prospectus or Prospectus which is not adequately disclosed as required. |
18. | The statements in the Registration Statement and Prospectus under the captions “Non-United States Tax Considerations—Marshall Islands Tax Consequences”, and “Service of Process and Enforcement of Civil Liabilities,” insofar as they constitute summaries of Marshall Islands law or legal conclusions of Marshall Islands law, accurately describe in all material respects the portions of the statutes and regulations addressed thereby, subject to the qualifications and assumptions stated therein. |
19. | So long as none of the Units are owned directly or indirectly by the Republic of The Marshall Islands or any other sovereign, the MI Entities are not entitled to any immunity under the laws of the Republic of The Marshall Islands, whether characterized as sovereign immunity or otherwise, from any legal proceedings in respect of themselves or their respective properties in relation to the Underwriting Agreement. |
20. | The choice of New York law to govern the Underwriting Agreement would be regarded by the courts of the Marshall Islands as a matter of civil contract to be enforced in the same manner as other contracts. |
21. | The submission of each of the MI Entities to the exclusive jurisdiction of any Federal or State court in the Borough of Manhattan, the City of New York in the Underwriting Agreement are valid and binding under the laws of the Republic of the Marshall Islands. We would inform you, however, that the validity and enforceability of such submission to jurisdiction provision set forth in the Underwriting Agreement is not dependent on the law of the Republic of the Marshall Islands and such provision may not be enforceable under the laws of any particular jurisdiction. |
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22. | A final non-appealable judgment against any of the MI Entities entered by a court in any United States or foreign jurisdiction in any suit, action or proceeding would be enforceable against the relevant MI Entity Company in the courts of the Republic of the Marshall Islands without a retrial of the merits of the matter except where: |
(a) | it has not been pronounced by a court of competent jurisdiction; |
(b) | it has not been given on the merits of the case; |
(c) | it appears on the face of the proceeding to be founded on an incorrect view of international law or a refusal to recognize the laws of the Republic of the Marshall Islands in cases in which such laws are applicable; |
(d) | the proceedings in which the judgment was obtained are opposed to natural justice; |
(e) | it has been obtained by fraud; |
(f) | it sustains a claim founded on a breach of any law in force in the Republic of the Marshall Islands; or |
(g) | it has been obtained by default where the relevant MI Entity was not represented. |
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Annex IV
MATTERS TO BE COVERED BY BERMUDA COUNSEL OPINION
1. | Each of the Companies is duly incorporated and validly existing as an exempted company with limited liability under the laws of Bermuda in good standing (meaning solely that the relevant company has not failed to make any required filing with any Bermuda governmental authority or to pay any Bermuda government fee or tax which would make it liable to be struck off the Register of Companies and thereby cease to exist under the laws of Bermuda). Each of the Companies possesses the capacity to sue and be sued in its own name under the laws of Bermuda. |
2. | Each of GasLog Ltd., GAS-three Ltd., GAS-four Ltd. and GAS-five Ltd. has the necessary corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, the Pricing Prospectus and the Prospectus. |
3. | Each of the Companies has the necessary corporate power and authority to enter into and perform its obligations under the Documents to which the respective Company is a party by such Company. The execution and delivery of the Documents to which the respective Company is a party and the performance by such Company of its obligations thereunder will not violate the memorandum of association or bye-laws of the respective Company, nor any applicable law, regulation, order or decree in Bermuda. |
4. | Based solely upon a review of the register of members of GAS-three Ltd. certified by the Secretary of GAS-three Ltd. on [ ] May 2014, GAS-three Ltd. has an authorized share capital of [US$12,000] comprising of [12,000] common shares of par value US$1.00 each (the “GAS-three Shares”), each of which is duly authorized, validly issued, fully paid and non-assessable (which term when used herein means that no further sums are required to be paid by the holders thereof in connection with the issue thereof). [GasLog Partners Holdings Ltd.] is the registered holder of all of the GAS-three Shares. |
5. | Based solely upon a review of the register of members of GAS-four Ltd. certified by the Secretary of GAS-four Ltd. on [ ] May 2014, GAS-four Ltd. has an authorized share capital of [US$12,000] comprising of [12,000] common shares of par value US$1.00 each (the “GAS-four Shares”), each of which is duly authorized, validly issued, fully paid and non-assessable (which term when used herein means that no further sums are required to be paid by the holders thereof in connection with the issue thereof). [GasLog Partners Holdings Ltd.] is the registered holder of all of the GAS-four Shares. |
6. | Based solely upon a review of the register of members of GAS-five Ltd. certified by the Secretary of GAS-five Ltd. on [ ] May 2014, GAS-five Ltd. has an authorized share capital of [US$12,000] comprising of [12,000] common shares of par value US$1.00 each (the “GAS-five Shares”), each of which is duly authorized, validly issued, fully paid and non-assessable (which term when used herein means that no further sums are required to be paid by the holders thereof in connection with the issue thereof). [GasLog Partners Holdings Ltd.] is the registered holder of all of the GAS-five Shares. |
7. | Each of the Companies has taken all corporate action required to authorize the execution, delivery and performance of the Documents to which it is a party. Such Documents have been duly executed and delivered by or on behalf of such Company and constitute the valid, binding and enforceable obligations of such Company in accordance with the terms thereof. |
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8. | No order, consent, approval, licence, authorisation or validation of or exemption by any government or public body or authority of Bermuda or any sub-division thereof is required to authorise or is required to be obtained by the Companies or the Underwriters to authorise or in connection with the execution, delivery, performance and enforcement of the Documents including the consummation by the Companies of the transactions contemplated by the Documents, except such as have been duly obtained in accordance with Bermuda law and which are in full force and effect. |
9. | No permit, licences, franchises, concessions, certificates and authorisations of, or declarations or filings with, any governmental or regulatory authorities of Bermuda are required for each of the Companies to own or lease and to operate its properties and to conduct its business in the manner described in the Prospectus, other than such permits, consents, licences, franchises, concessions, certificates and authorisations, declarations or filings with any Bermuda governmental authority held or filed by the Bermuda entities. |
10. | The Companies are not entitled to any immunity under the laws of Bermuda, whether characterized as sovereign immunity or otherwise, from any legal proceedings relating to the Documents or the transactions contemplated thereby in respect of themselves or their respective properties. |
11. | The choice of the Foreign Laws as the governing law of the Documents is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in Bermuda, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of Bermuda. The submission by the Companies to the non-exclusive jurisdiction of the New York Courts, the waiver by the Companies of any objection related to inconvenient forum and the appointment by the Companies of an agent for service of process, in each case pursuant to the Documents (other than the Administrative Services Agreement, Ship Management Agreements, Commercial Management Agreements, Vessel Financing Agreements and the Charter Related Documents), is valid and binding upon the Companies. The submission in the Administrative Services Agreement, Ship Management Agreements, Commercial Management Agreements, Vessel Financing Agreements and the Charter Related Documents to the [exclusive] jurisdiction of the English Courts is valid and binding upon the Companies. |
12. | It is not necessary or desirable to ensure the enforceability in Bermuda of the Documents that they be registered in any register kept by, or filed with, any governmental authority or regulatory body in Bermuda. However, to the extent that any of the Documents create a charge over assets of a Company, it may be desirable to ensure the priority in Bermuda of the charge that it be registered in the Register of Charges in accordance with Section 55 of the Bermuda Companies Act. On registration, to the extent that Bermuda law governs the priority of a charge, such charge will have priority in Bermuda over any unregistered charges, and over any subsequently registered charges, in respect of the assets which are the subject of the charge. A registration fee of $557 will be payable in respect of the registration. While there is no exhaustive definition of a charge under Bermuda law, a charge includes any interest created in property by way of security (including any mortgage, assignment, pledge, lien or hypothecation). As the Documents (other than the Administrative Services Agreement, Ship Management Agreements, Commercial Management Agreements, Vessel Financing Agreements and the Charter Related Documents) are governed by the laws of the State of New York, the question of whether it creates such an interest in property would be |
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determined under the laws of the State of New York. As the Administrative Services Agreement, Ship Management Agreements, Commercial Management Agreements, Vessel Financing Agreements and the Charter Related Documents are governed by the laws of England, the question whether it creates such an interest in property would be determined under the law of England. |
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Annex V
MATTERS TO BE COVERED BY ENGLISH COUNSEL OPINION
1. | The obligations expressed to be assumed by each of the Obligors in the Relevant Agreements to which it is a party constitute its legal, valid, binding and enforceable obligations. |
2. | Neither the execution nor the delivery of any MLP Document by any Obligor nor the performance on the date hereof by any Obligor of its obligations under any MLP Document (a) constitutes a breach of or conflicts with any obligation, undertaking or covenant of such Obligor under any of the Amended GAS3/4 Facility Document, the New GAS5 Facility Agreement and the Charter Documents or (b) violates any existing laws of England or Wales applicable to companies generally. |
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Exhibit 8.2
April 23, 2014 |
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GasLog Partners LP
Gildo Pastor Center 7Rue du Gabian MC 98000 Monaco |
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Re: | GasLog Partners LP |
Registration Statement on Form F-1
We have acted as special counsel as to matters of the law of the Republic of the Marshall Islands (“ Marshall Islands Law ”) for GasLog Partners LP, a Marshall Islands limited partnership (the “ Partnership ”), in connection with the proposed initial public offering by the Partnership of its common units, each representing limited partnership interests in the Partnership, pursuant to the Partnership’s registration statement on Form F-1 (such registration statement, any amendments or supplements thereto, including any post-effective amendments, the “ Registration Statement ”).
As counsel, we have examined originals or copies (certified or otherwise identified to our satisfaction) of the following documents:
(i) | the Registration Statement and the prospectus included therein (the “ Prospectus ”); and |
(ii) | such other papers, documents, agreements, certificates of public officials and certificates of representatives of the Partnership, and subsidiaries and affiliates of the Partnership as we have deemed relevant and necessary as the basis for the opinion hereafter expressed. |
In such examination, we have assumed (a) the legal capacity of each natural person, (b) the genuineness of all signatures and the authenticity of all documents submitted to us as originals, (c) the conformity to original documents of all documents submitted to us as conformed or photostatic copies, (d) that the documents reviewed by us in connection with the rendering of the opinion set forth herein are true, correct and complete and (e) the truthfulness of each statement as to all factual matters contained in any document or certificate encompassed within the due diligence review undertaken by us. As to any questions of fact material to our opinion, we have, when relevant facts were not independently established, relied upon the aforesaid certificates.
This opinion letter is limited to Marshall Islands Law and rendered as of the date hereof. We expressly disclaim any responsibility to advise of any development or circumstance of any kind, including any change of law or fact that may occur after the date of this opinion letter that might affect the opinion expressed herein.
Based on the facts as set forth in this Prospectus and having regard to legal considerations which we deem relevant, and subject to the qualifications, limitations and assumptions set forth herein, we hereby confirm that we have reviewed the discussion set forth in the Prospectus under the captions “ Business—Taxation of the Partnership—Marshall Islands ” and “ Non-United States Tax Considerations—Marshall Islands Tax Consequences ” and we confirm that the statements in such discussions to the extent they constitute summaries of law or legal conclusions, unless otherwise noted, are the opinions of Cozen O’Connor with respect to the taxation of the Partnership under Marshall Islands law and Marshall Islands tax consequences as of the effective date of the Registration Statement (except for the representations and statements of fact of the Partnership included under such captions, as to which we express no opinion).
We consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to our firm in the Prospectus. In giving this consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended (the “ Securities Act ”), or the rules and regulations promulgated thereunder, nor do we admit that we are experts with respect to any part of the Registration Statement within the meaning of the term “ expert ” as used in the Securities Act.
/s/ Cozen O’Connor
Exhibit 10.1
FORM OF
CONTRIBUTION AGREEMENT
Dated as of [•], 2014
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TABLE OF CONTENTS
ARTICLE I | |||
DEFINITIONS | |||
Section 1.1 | Definitions | 2 | |
ARTICLE II | |||
THE CONTRIBUTIONS | |||
Section 2.1 | Contribution of Vessel Owners to the Partnership | 4 | |
Section 2.2 | Contribution of Vessel Owners to New Holdings | 4 | |
Section 2.3 | Retained Right to Insurance Proceeds | 4 | |
ARTICLE III | |||
THE OFFERING AND CONCURRENT TRANSACTIONS | |||
Section 3.1 | The Offering | 4 | |
Section 3.2 | Use of the IPO Proceeds | 4 | |
ARTICLE IV | |||
DEFERRED ISSUANCE AND DISTRIBUTION | |||
Section 4.1 | Deferred Issuance and Distribution | 4 | |
ARTICLE V | |||
REPRESENTATIONS AND WARRANTIES OF GASLOG; DISCLAIMER | |||
Section 5.1 | Representations and Warranties | 5 | |
Section 5.2 | Disclaimer of Warranties | 6 | |
ARTICLE VI | |||
FURTHER ASSURANCES | |||
Section 6.1 | Further Assurances | 7 | |
Section 6.2 | Power of Attorney | 7 | |
ARTICLE VII | |||
MISCELLANEOUS | |||
Section 7.1 | Survival of Representations and Warranties | 8 | |
Section 7.2 | Taxes | 8 | |
Section 7.3 | Headings; References, Interpretation | 8 | |
Section 7.4 | Successors and Assigns | 8 | |
Section 7.5 | No Third Party Rights | 8 | |
Section 7.6 | Counterparts | 8 | |
Section 7.7 | Governing Law | 8 | |
Section 7.8 | Severability | 8 |
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Section 7.9 | Deed; Bill of Sale; Assignment | 9 | |
Section 7.10 | Amendment or Modification | 9 | |
Section 7.11 | Integration | 9 |
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FORM OF CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this “ Agreement ”), dated as of [•], 2014 is made by and among GASLOG LTD., an exempted company organized and existing under the laws of Bermuda (“ GasLog ”), GASLOG CARRIERS LTD., an exempted company organized and existing under the laws of Bermuda (“ Carriers ”), GASLOG PARTNERS LP, a limited partnership duly organized and existing under the laws of the Republic of the Marshall Islands (the “ Partnership ”), GASLOG PARTNERS GP LLC, a Marshall Islands limited liability company and the general partner of the Partnership (the “ General Partner ”) and GASLOG PARTNERS HOLDINGS LLC, a Marshall Islands limited liability company ( “ New Holdings ” ). The above-named entities are sometimes referred to in this Agreement each as a “ Party ” and collectively as the “ Parties .”
RECITALS
WHEREAS, the Partnership was formed pursuant to the Limited Partnership Act of The Republic of the Marshall Islands (the “ Marshall Islands LP Act ”) for the purposes set forth in the Agreement of Limited Partnership of the Partnership, dated as of January 23, 2014 (the “ Original LP Agreement ”);
WHEREAS, the Partnership formed New Holdings pursuant to the Marshall Islands Limited Liability Company Act of 1996 for the purposes set forth in the Limited Liability Company Agreement of New Holdings;
WHEREAS, GasLog formed the General Partner pursuant to the Marshall Islands Limited Liability Company Act of 1996 for the purposes set forth in the Limited Liability Company Agreement of the General Partner;
WHEREAS, on the date hereof:
1. | The General Partner is a wholly-owned subsidiary of GasLog. |
2. | GasLog owns a 98% limited partner interest in the Partnership and the General Partner owns a 2% general partner interest in the Partnership. |
3. | New Holdings is a wholly-owned subsidiary of the Partnership. |
4. | Carriers is a wholly-owned subsidiary of GasLog. |
5. | Carriers owns all of the issued and outstanding shares of GAS-three Ltd., an exempted company organized and existing under the laws of Bermuda (“ GAS-three ”), and the owner of the GasLog Shanghai . |
6. | Carriers owns all of the issued and outstanding shares of GAS-four Ltd., an exempted company organized and existing under the laws of Bermuda (“ GAS-four ”), and the owner of the GasLog Santiago . |
7. | Carriers owns all of the issued and outstanding shares of GAS-five Ltd., an exempted company organized and existing under the laws of Bermuda (“ GAS-five ”, and together with GAS-three and GAS-four, the “ Vessel Owners ”), and the owner of the GasLog Sydney . |
WHEREAS, pursuant to this Agreement, each of the following will occur on the closing date of the Offering (the “ Effective Time ”):
1. | GasLog will cause Carriers to contribute all of the shares of the Vessel Owners to the Partnership in exchange for [•] Common Units, [•] Subordinated Units, the IDRs and the |
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right to receive the Deferred Issuance and Distribution (as defined herein) and a payment of approximately $[•] to GasLog. |
2. | The Partnership will contribute all of the shares of the Vessel Owners to New Holdings in exchange for all of the equity interests in New Holdings. |
3. | The General Partner will continue to hold a 2% general partner interest in the Partnership. |
4. | The Partnership will issue [•] Common Units to the public in an underwritten initial public offering (the “ Offering ”) in exchange for $[•] (the “ IPO Proceeds ”). |
5. | The Partnership will use a portion of the IPO Proceeds to (a) pay underwriting discounts and commissions and structuring fees of $[•], (b) pay other transaction expenses incurred in connection with the Offering of approximately $[•] and (c) make a payment to GasLog of approximately $[•]. |
6. | The Partnership will contribute $[•] of the IPO Proceeds to New Holdings, to be further contributed to GAS-five, to repay a portion of its debt obligations related to the GasLog Sydney . |
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section 1.1 Definitions . The following defined terms will have the meanings given below:
“ Agreement ” means this Contribution Agreement.
“ Attorney-in-Fact ” has the meaning set forth in Section 6.2 .
“ Carriers ” has the meaning set forth in the opening paragraph of this Agreement.
“ Charter ” means the time charter party related to the applicable Vessel.
“ Commission ” means the Securities and Exchange Commission.
“ Common Unit ” means a common unit representing a limited partner interest in the Partnership having the rights set forth in the Partnership Agreement.
“ Conveying Party ” or “ Conveying Parties ” has the meaning set forth in Section 6.2 .
“ Deferred Issuance and Distribution ” has the meaning set forth in the Partnership Agreement.
“ Effective Time ” means [•] a.m. prevailing Eastern Time on the date that is the closing date of the Offering.
“ Firm Units ” means the Common Units to be sold to the Underwriters pursuant to the terms of the Underwriting Agreement, but does not include any Option Units.
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“ GasLog ” has the meaning set forth in the opening paragraph of this Agreement.
“ GAS-three ” has the meaning set forth in the Recitals of this Agreement.
“ GAS-four ” has the meaning set forth in the Recitals of this Agreement.
“ GAS-five ” has the meaning set forth in the Recitals of this Agreement.
“ General Partner ” has the meaning set forth in the opening paragraph of this Agreement.
“ IDRs ” means the incentive distribution rights of the Partnership having the rights set forth in the Partnership Agreement.
“ Interests ” means all of the outstanding shares of the Vessel Owners.
“ IPO Proceeds ” has the meaning set forth in the Recitals of this Agreement.
“ Laws ” has the meaning set forth in Section 5.1(c) .
“ Marshall Islands LP Act ” has the meaning set forth in the Recitals of this Agreement.
“ New Holdings ” has the meaning set forth in the opening paragraph of this Agreement.
“ Offering ” has the meaning set forth in the Recitals of this Agreement.
“ Option Units ” means a number of Common Units equal to up to 15% of the Firm Units, which the Partnership will agree to sell to the Underwriters, at their option, to cover over-allotments in connection with the Offering
“ Original LP Agreement ” has the meaning set forth in the Recitals of this Agreement.
“ Over-Allotment Option ” means the option to purchase the Option Units.
“ Partnership ” has the meaning set forth in the opening paragraph of this Agreement.
“ Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of the Partnership, to be dated as of [•], 2014.
“ Party ” or “ Parties ” has the meaning set forth in the opening paragraph of this Agreement.
“ Registration Statement ” means the Registration Statement on Form F-1 filed with the Commission (Registration No. 333-195109), as amended.
“ Representatives ” means Citigroup Global Markets Inc., Credit Suisse Securities, LLC and Wells Fargo Securities, LLC.
“ Subordinated Unit ” means a subordinated unit representing a limited partner interest in the Partnership having the rights set forth in the Partnership Agreement.
“ Underwriters ” means the underwriting syndicate listed in the Underwriting Agreement.
“ Underwriting Agreement ” means the underwriting agreement dated as of [•], 2014 among GasLog, the General Partner, the Partnership, New Holdings and the Representatives on behalf of themselves and the Underwriters..
“ Vessels ” has the meaning set forth in Section 5.1(d)
“ Vessel Financing Agreements ” means the vessel financing agreements of the Vessel Owners, as described in the Registrtion Statement.
“ Vessel Owners ” means collectively GAS-three, GAS-four and GAS-five.
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Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Partnership Agreement.
ARTICLE
II
THE CONTRIBUTIONS
As of the Effective Time, the following transactions shall be completed in the order set forth below.
Section 2.1 Contribution of Vessel Owners to the Partnership . GasLog hereby causes Carriers to contribute, assign and transfer as a capital contribution 100% of the shares of the Vessel Owners to the Partnership. Immediately following the forgoing contributions, assignments and transfers, the Partnership will own 100% of the shares of the Vessel Owners. In consideration for the capital contributions to the Partnership, (a) the Partnership will issue to GasLog [•] Common Units, [•] Subordinated Units, the Incentive Distribution Rights and the right to receive the Deferred Issuance and Distribution and make a payment of approximately $[•] to GasLog and (b) the General Partner will maintain its 2% general partner interest in the Partnership.
Section 2.2 Contribution of Vessel Owners to New Holdings. Issuance of equity interests to the Partnership. The Partnership hereby contributes, assigns and transfers as a capital contribution 100% of the shares of the Vessel Owners to New Holdings. In consideration for the capital contribution by the Partnership to New Holdings described in the preceding sentence, New Holdings will issue all of its equity interests to the Partnership.
Section 2.3 Retained Right to Insurance Proceeds . Notwithstanding the foregoing contributions, the Parties hereby agree that any insurance proceeds received by the Partnership after the Effective Time shall belong to GasLog and be promptly distributed to GasLog to the extent that such insurance proceeds (a) related to damage or periods of off-hire incurred by the Vessels prior to the Effective Time and (b) exceeded any costs incurred by the Partnership or any of its subsidiaries to repair any such damage to the Vessels.
ARTICLE
III
THE OFFERING AND CONCURRENT TRANSACTIONS
After the consummation of the transactions as described in ARTICLE II , the following transactions shall be completed in the order set forth below:
Section 3.1 The Offering. The Partnership will issue [•] Common Units to the public in the Offering pursuant to the Underwriting Agreement in exchange for the IPO Proceeds.
Section 3.2 Use of the IPO Proceeds .
(a) The Partnership will use a portion of the IPO Proceeds to (i) pay underwriting discounts and commissions and structuring fees of $[•], (ii) pay other transaction expenses incurred in connection with the Offering of approximately $[•] and (iii) make a payment to GasLog of approximately $[•].
(b) The Partnership will contribute $[•] of the IPO Proceeds to New Holdings, to be further contributed to GAS-five, to repay a portion of the debt obligations related to the GasLog Sydney .
ARTICLE
IV
DEFERRED ISSUANCE AND DISTRIBUTION
Section 4.1 Deferred Issuance and Distribution. Upon the earlier to occur of the expiration of the Over-Allotment Option period or the exercise in full of the Over-Allotment Option, the Partnership shall
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issue to GasLog a number of additional Common Units that is equal to the excess, if any, of (a) the total number of Option Units over (b) the aggregate number of Common Units, if any, actually purchased by and issued to the Underwriters pursuant to the exercise(s) of the Over-Allotment Option. Upon each exercise of the Over-Allotment Option, the Partnership shall distribute to GasLog an amount of cash equal to the proceeds therefrom net of the Underwriters’ discount of each such exercise.
ARTICLE
V
REPRESENTATIONS AND WARRANTIES OF Gaslog; DISCLAIMER
Section 5.1 Representations and Warranties. GasLog hereby represents and warrants that:
(a) Each of the Vessel Owners has been duly formed or incorporated and is validly existing and in good standing under the laws of its respective jurisdiction of formation or incorporation and has all requisite power and authority to operate its assets and conduct its business as described in the Registration Statement;
(b) The execution and delivery of this Agreement and all documents, instruments and agreements required to be executed and delivered by it pursuant to this Agreement in connection with the completion of the transactions contemplated by this Agreement, have been duly authorized by all necessary action on its part, and this Agreement has been duly executed and delivered by it and constitutes a legal, valid and binding obligation of it enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws of general application affecting the enforceability of remedies and rights of creditors and except that equitable remedies such as specific performance and injunction are in the discretion of a court;
(c) The execution, delivery and performance by it of this Agreement will not conflict with or result in any violation of or constitute a breach of any of the terms or provisions of, or result in the acceleration of any obligation under, or constitute a default under any provision of: (i) its or any Vessel Owner’s articles of association, articles of incorporation or bylaws or limited liability company agreement or other organizational documents; (ii) any lien, encumbrance, security interest, pledge, mortgage, charge, other claim, bond, indenture, agreement, contract, franchise license, permit or other instrument or obligation to which it or any Vessel Owner is a party or is subject or by which any of its or any Vessel Owner’s assets or properties may be bound; (iii) any applicable laws, statutes, ordinances, rules or regulations promulgated by a governmental authority, orders of a governmental authority, judicial decisions, decisions of arbitrators or determinations of any governmental authority or court (“ Laws ”); or (iv) any Charter to which any Vessel Owner is a party or any material provision of any material contract to which it or any Vessel Owner is a party or by which its or any Vessel Owner’s assets are bound;
(d) Except as have already been obtained or that will be obtained in the ordinary course of business, no consent, permit, approval or authorization of, notice or declaration to or filing with any governmental authority or any other person, including those related to any environmental laws or regulations, is required in connection with the execution and delivery by it of this Agreement or the consummation by it of the transactions contemplated hereunder, and any consents required for the transfer or assignment of the Charter related to the GasLog Shanghai, the GasLog Santiago and the GasLog Sydney (the “ Vessels ”) have been duly obtained;
(e) All of the issued and outstanding shares of each Vessel Owner are duly authorized and are validly issued in accordance with the articles of association, articles of incorporation or bylaws or limited liability company agreement or other organizational documents of such Vessel Owner and are fully paid and non-assessable;
(f) GasLog owns, directly or indirectly, all of the outstanding shares of each Vessel Owner and has good and marketable title thereto, free and clear of all liens, encumbrances, security interests, pledges, mortgages, charges or other claims, other than those arising under the Vessel Financing Agreements;
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(g) Each of Carriers and the Vessel Owners has made an election under U.S. Treasury Regulation Section 301.7701-3(c) to be classified as a disregarded entity for U.S. Federal income tax purposes, and such election is in effect as of the date hereof.
(h) There is no outstanding agreement, contract, option, commitment or other right or understanding in favor of, or held by, any person other than the Partnership to acquire the Vessel Owners or the assets of the Vessel Owners, including the Vessels, that has not been waived;
(i) Correct and complete copies of the organizational documents of each Vessel Owner (as amended to the date of this Agreement) and each Charter to which any Vessel Owner is a party have been made available to the Partnership;
(j) Each such Charter is a valid and binding agreement of each contracting Vessel Owner enforceable in accordance with its terms and, to the knowledge of GasLog, of all other parties thereto enforceable in accordance with its terms;
(k) As applicable, each Vessel Owner has fulfilled all material obligations required pursuant to its respective Charter to have been performed by it prior to the date of this Agreement and has not waived any material rights thereunder; and no material default or breach exists in respect thereof on its or any Vessel Owner’s part or, to its knowledge, any of the other parties thereto and, to its knowledge, no event has occurred which, after giving of notice or the lapse of time, or both, would constitute such a material default or breach;
(l) Except for such liabilities, debts, obligations, encumbrances, defects, restrictions or claims of a general nature and magnitude that would arise in connection with the operation of LNG carriers of the same type as the Vessels in the ordinary course of business, there are no liabilities, debts or obligations of, encumbrances, defects or restrictions with respect to, or claims against the Vessel Owners or any of the assets owned by the Vessel Owners, including the Vessels, other than those arising under or in connection with Vessel Financing Agreements; and
(m) Each Vessel is (i) adequate and suitable for use by the applicable Vessel Owner in such Vessel Owner’s business as presently conducted by it in all material respects as described in the Registration Statement, ordinary wear and tear excepted; (ii) in good running order and repair; (iii) insured against all risks, and in amounts, consistent with common industry practices; (iv) in compliance with applicable laws and regulations; (v) duly registered under the flag set forth opposite such Vessel’s name on Schedule A hereto; and (vi) in compliance in all material respects with the requirements of its present class and classification society; and all class certificates of each Vessel are clean and valid and free of recommendations affecting class.
Section 5.2 Disclaimer of Warranties. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT OR IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE ASSETS OWNED BY THE VESSEL OWNERS, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION OF THE ASSETS GENERALLY, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON SUCH ASSETS, (B) THE INCOME TO BE DERIVED FROM SUCH ASSETS, (C) THE SUITABILITY OF SUCH ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON OR THEREWITH, (D) THE COMPLIANCE OF OR BY SUCH ASSETS OR THEIR OPERATION WITH ANY LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF SUCH ASSETS. EXCEPT TO
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THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, EACH PARTY ACKNOWLEDGES AND AGREES THAT SUCH PARTY HAS HAD THE OPPORTUNITY TO INSPECT THE ASSETS OF THE VESSEL OWNERS, AND SUCH PARTY IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE ASSETS OF THE VESSEL OWNERS AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY ANY OF THE OTHER PARTIES. EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE ASSETS OF THE VESSEL OWNERS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. THIS SECTION SHALL SURVIVE THE CONTRIBUTION AND CONVEYANCE OF THE INTERESTS OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE ASSETS OF THE VESSEL OWNERS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT.
ARTICLE
VI
FURTHER ASSURANCES
Section 6.1 Further Assurances. From time to time on or after the date of this Agreement, and without any further consideration, the Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and will do all such other acts and things, all in accordance with applicable Law, as may be necessary or appropriate (a) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and their respective successors and assigns beneficial and record title to the interests contributed and assigned by this Agreement or intended so to be and (c) to more fully and effectively carry out the purposes and intent of this Agreement.
Section 6.2 Power of Attorney. Each Party that has conveyed any Interests as reflected by this Agreement (collectively, the “ Conveying Parties ”) hereby constitutes and appoints each of Simon Crowe, Paul Wogan and Graham Westgarth (each, the “ Attorney-in-Fact ”) its true and lawful Attorney-in-Fact with full power of substitution for it and in its name, place and stead or otherwise on behalf of the applicable Conveying Party and its successors and assigns, and for the benefit of the Attorney-in-Fact to demand and receive from time to time the Interests contributed and conveyed by this Agreement (or intended so to be) and to execute in the name of the applicable Conveying Party and its successors and assigns instruments of conveyance, instruments of further assurance and to give receipts and releases in respect of the same, and from time to time to institute and prosecute in the name of the applicable Conveying Party for the benefit of the Attorney-in-Fact, any and all proceedings at law, in equity or otherwise which the Attorney-in-Fact may deem proper in order to (a) collect, assert or enforce any claims, rights or titles of any kind in and to the Interests, (b) defend and compromise any and all actions, suits or proceedings in respect of any of the Interests, and (c) do any and all such acts and things in furtherance of this Agreement as the Attorney-in-Fact shall deem advisable. Each Conveying Party hereby declares that the appointment hereby made and the powers hereby granted are coupled with an interest and are and shall be irrevocable and perpetual and shall not be terminated by any act of any Conveying Party or its successors or assigns or by operation of law.
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ARTICLE
VII
MISCELLANEOUS
Section 7.1 Survival of Representations and Warranties. The representations and warranties of GasLog in this Agreement and in or under any documents, instruments and agreements delivered pursuant to this Agreement, will survive the completion of the transactions contemplated hereby regardless of any independent investigations that the Partnership may make or cause to be made, or knowledge it may have, prior to the date of this Agreement and will continue in full force and effect for a period of one year from the date of this Agreement. At the end of such period, such representations and warranties will terminate, and no claim may be brought by the Partnership against GasLog thereafter in respect of such representations and warranties, except for claims that have been asserted by the Partnership prior such date.
Section 7.2 Taxes . The Partnership shall pay any and all sales, use and similar taxes arising out of the contributions, conveyances and deliveries to be made hereunder, and shall pay all documentary, filing, recording, transfer, deed, and conveyance taxes and fees required in connection therewith.
Section 7.3 Headings; References, Interpretation. All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including, without limitation, all Schedules attached hereto, and not to any particular provision of this Agreement. All references herein to Articles, Sections and Schedules shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement and the Schedules attached hereto, and all such Schedules attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.
Section 7.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.
Section 7.5 No Third Party Rights. The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies, and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.
Section 7.6 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signatory Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument. The delivery of an executed counterpart copy of this Agreement by facsimile or electronic transmission in PDF format shall be deemed to be the equivalent of delivery of the originally executed copy thereof.
Section 7.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the state of New York, United States of America, applicable to contracts made and to be performed wholly within such jurisdiction without giving effect to conflict of law principles thereof other than Section 5-1401 of the New York General Obligations Law, except to the extent that it is mandatory that the law of some other jurisdiction, wherein the Interests are located, shall apply.
Section 7.8 Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any governmental body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire
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Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect, as nearly as possible, to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.
Section 7.9 Deed; Bill of Sale; Assignment. To the extent required and permitted by applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the interests referenced herein.
Section 7.10 Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the Parties. Each such instrument shall be reduced to writing and shall be designated on its face as an amendment to this Agreement.
Section 7.11 Integration. This Agreement and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to the subject matter of this Agreement and such instruments. This Agreement and such instruments contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the Parties after the date of this Agreement.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly executed as of the date first above written.
GASLOG PARTNERS HOLDINGS LLC | ||
Sole Member: Gaslog Partners LP | ||
By: | ||
Name: | ||
Title: | ||
GASLOG PARTNERS GP LLC | ||
Sole Member: Gaslog Ltd. | ||
By: | ||
Name: | ||
Title: | ||
GASLOG PARTNERS LP | ||
By: | ||
Name: | ||
Title: | ||
GASLOG LTD. | ||
By: | ||
Name: | ||
Title: | ||
GASLOG CARRIERS LTD. | ||
By: | ||
Name: | ||
Title: |
Signature
Page
To
Contribution Agreement
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SCHEDULE A
VESSEL OWNERS AND VESSELS
Vessel Owners Subsidiary | Jurisdiction of Registration | Vessel | Flag | |||
GAS-three Ltd. | Bermuda | GasLog Shanghai | Bermuda | |||
GAS-four Ltd. | Bermuda | GasLog Santiago | Bermuda | |||
GAS-five Ltd. | Bermuda | GasLog Sydney | Bermuda |
Schedule
A
To
Contribution Agreement
Exhibit 10.5
Dated , 2014
GAS-three LTD.
and
GASLOG LNG SERVICES LTD.
SHIP MANAGEMENT AGREEMENT
in respect of the Vessel, “
GasLog Shanghai
”
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TABLE OF CONTENTS
CLAUSE NO. | PAGE | ||||
1. | DEFINITIONS AND INTERPRETATION | 1 | |||
2. | APPOINTMENT OF MANAGERS | 6 | |||
3. | MANAGEMENT SERVICES | 6 | |||
4. | MANAGERS’ OBLIGATIONS | 17 | |||
5. | OWNERS’ OBLIGATIONS | 18 | |||
6. | INSURANCE POLICIES | 18 | |||
7. | MANAGEMENT FEE | 19 | |||
8. | VESSEL EXPENSES | 20 | |||
9. | MANAGERS’ RIGHT TO SUB-CONTRACT | 21 | |||
10. | RESPONSIBILITIES | 21 | |||
11. | DOCUMENTATION | 23 | |||
12. | DEPLOYMENT OF THE VESSEL | 24 | |||
13. | AUDITING | 24 | |||
14. | INSPECTION OF VESSEL | 25 | |||
15. | COMPLIANCE WITH LAWS AND REGULATIONS ETC. | 25 | |||
16. | DURATION OF THE AGREEMENT | 25 | |||
17. | TERMINATION | 25 | |||
18. | MISCELLANEOUS | 27 | |||
19. | LAW AND ARBITRATION | 27 | |||
20. | NOTICES AND BANK ACCOUNTS | 28 |
ANNEX “A”
DETAILS OF VESSEL
ANNEX “B”
DETAILS OF CREW / OFFICERS RATINGS
ANNEX “C”
INITIAL BUDGET
ANNEX “D”
OPERATIONAL AND MAINTENANCE PROTOCOL
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ANNEX “E”
PERMANENT INSTRUCTIONS
ANNEX “F”
FORM OF ACCOUNTING SYSTEM
ANNEX “G”
CONFIDENTIALITY AGREEMENT
ANNEX “H”
INCENTIVE BONUS PLAN
ANNEX “I”
PRIMARY TERMINALS
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THIS SHIP MANAGEMENT AGREEMENT is made the _____ day of _______, 2014
BETWEEN:
(1) | GAS-three Ltd., a company incorporated under the laws of Bermuda and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “Owners ”); |
(2) | GasLog LNG Services Ltd., a company incorporated in Bermuda and having a branch office at 69 Akti Miaouli, Piraeus GR 18537, Greece (the “Managers ”). |
WHEREAS:
(A) | The Owners, as of the Effective Date, are the registered owners of the 155,000 m 3 Liquefied Natural Gas Carrier “ GasLog Shanghai ” (the “Vessel ”) as more particularly described in Annex “A” hereto and wish to engage the Managers to manage and operate the Vessel; |
(B) | The Managers, being fully experienced, qualified and able vessel managers, wish to manage and operate the Vessel subject to and in accordance with the terms set out in this Agreement. |
IT IS AGREED AS FOLLOWS:
1. | DEFINITIONS AND INTERPRETATION |
1.1. | Definitions |
In this Agreement save where the context otherwise requires, the following words and expressions shall have the meanings hereby assigned to them:
“Affiliate” means any entity which, directly or indirectly, through one or more intermediaries, Controls or is Controlled by, or is under common Control with that party;
“Agreement” means this ship management agreement including the Annexes attached hereto as amended from time to time in accordance with the terms hereof;
“Annual Budget” shall have the meaning ascribed to it in Clause 3.3.2 below;
“Charter” means any future charter entered into between the Owners and any future charterer of the Vessel notified to the Managers pursuant to Clause 5.3;
“Charterers” means any future charterers of the Vessel notified to the Managers pursuant to Clause 5.3;
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“Communication Expenses” means the costs incurred by the Managers in performing the Management Services and for the account of the Owners in respect of all communications between the shore and the Vessel as detailed in the Annual Budget;
“Control” and “Controlled” mean the holding of power to direct or cause the direction of management, policies and decisions of a company, corporation, partnership or other entity including, without limitation, through control by direct or indirect means of not less than fifty per cent (50%) of the voting rights in such company, corporation, partnership or other entity;
“Crew” means the Officers and Ratings and any other individual who has signed Articles on the Vessel and is employed from time to time by the Managers under Managers’ obligation to provide the Management Services;
“Crew Insurances” means insurances against crew risks which shall include, but not be limited to, death, sickness, repatriation, injury, shipwreck and loss of personal effects;
“Crew Support Costs” means all expenses of a general nature which are not particularly referable to any individual vessel for the time being managed by the Managers and which are incurred by the Managers for the purpose of providing efficient and economic Management Services and, without prejudice to the generality of the foregoing, shall include the cost of crew standby pay, training schemes for officers and ratings, cadet training schemes, sick pay, study pay, recruitment and interviews;
“Dollar” or “ US$ ” means the currency of the United States of America;
“EDP Expenses” means the costs of any new computer software or hardware (including licensing, maintenance, installation and training costs) that may be installed or developed, in relation to the Vessel;
“Effective Date” means the date of this Agreement;
“Emergency Situation” means an emergency situation that:
(i) | involves a threat to human life; |
(ii) | involves a risk of loss of the Vessel or its cargo or of serious damage to the Vessel; |
(iii) | involves a risk of the Vessel causing serious environmental damage; |
(iv) | involves a risk of the Vessel being stolen, impounded or seized; or |
(v) | involves a security or safety risk to the Vessel, such as but not limited to terrorism, piracy, etc. |
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“Flag Administration / State” shall mean such state or registry as the Owners shall from time to time specify;
“HSSE Report” means a report on the health, safety, security and environmental status of the Vessel (together with relevant statistics) and including details of any specific health, safety, security and/or environmental incidents prepared in accordance with Clause 3.4.9;
“Incentive Bonus” means the bonus payable by the Owners to the Managers in accordance with Clause 7.7;
“ISM Code” means the International Ship Management Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organisation (IMO) by resolution A.741(18) as amended from time to time;
“ISPS Code” means the International Ship and Port Facility Security Code adopted by the International Maritime Organization Assembly as the same may have been or may be amended or supplemented from time to time;
“Maintenance Schedule” means a schedule referred to in Clause 3.2.1(iii) detailing the maintenance required for the Vessel for the period from delivery to the next dry-docking of the Vessel thereafter for each subsequent 30 month period to coincide with Classification Society Intermediate Survey;
“Managed Fleet” means all vessels owned, leased, or chartered by Owners or Owners’ Affiliates and managed by Managers pursuant to a ship management agreement or similar arrangement;
“Management Fee” means the fee payable by the Owners to the Managers in consideration of the Management Services, as specified in Clauses 7.1 to 7.3 and as adjusted pursuant to Clause 7.4;
“Management Services” means the services specified in Clause 3;
“Managers’ Account” means the bank account in the name of the Managers as specified in Clause 20.3, or such other bank account of the Managers as may be notified to the Owners from time to time;
“MTSA Code” means the Maritime Transportation Security Act as enacted by the United States of America as the same may have been amended or supplemented from time to time;
“Officers” means the Master and the officers (including, but not limited to, the Senior Officers) of the Vessel, whose numbers, rank and nationality are currently specified in Annex “B” attached hereto, as updated from time to time;
“OPA 90” means the Oil Pollution Act of 1990 as enacted by the United States of America as the same may have been amended or supplemented from time to time;
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“Operational and Maintenance Protocol” means the protocol set forth on Annex “D” attached hereto;
“Operational Costs” means costs and expenses incurred by the Managers on behalf of the Owners to operate and maintain the Vessel including Communication Expenses and EDP Expenses;
“Owners’ Insurances” means the insurance policies to be procured by the Owners in respect of the Vessel and as described in Clause 6.1(i), (ii), (iii), and (iv);
“Permanent Instructions” means the instructions relating to the operational procedures for communications between the Owners, Charterers and the Crew as currently specified in Annex “E” attached hereto which may be amended pursuant to Clause 12.2;
“Quality Assurance & Quality Management System” shall have the meaning ascribed to it in Clause 3.8.1;
“Ratings” means the ratings of the Vessel, whose numbers, rank and nationality are currently specified in Annex “B” as updated from time to time;
“Review Date” means January 1;
“Senior Officer” means the following positions or roles on the Vessel:
(i) | the Master; |
(ii) | the Chief Engineer; |
(iii) | the Chief Officer; |
(iv) | the Second Engineer; or |
(v) | any other person whose rank or role on the vessel is required and designated as Senior Officer by the Flag Administration |
“Severance Costs” means the costs which the Managers as employers of the Crew are legally obliged to pay, and actually do pay, to or in respect of the Crew as a result of the early termination of any employment contract for service on the Vessel;
“ SMS ” means a safety management system which complies with all laws, rules and regulations, and with all the codes, guidelines and standards recommended by the International Maritime Organization (including without limitation, the ISM Code), any relevant flag state and the classification society and approved by Owners, which may from time to time be applicable to the Vessel and/or the Owners and/or the Managers, and which is otherwise appropriate having regard to the Managers’ obligations under this Agreement;
“SOPEP” means the shipboard oil pollution emergency plan in the form approved by the Marine Environment Protection Committee of the International Maritime Organization pursuant to the requirements of Regulations 25 of Annex H of the
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International Convention of the Protection of Pollution from Ships, 1973, as modified by the Protocol of 1989 relating thereto, as amended (MARPOL 73/78);
“STCW 95” means the International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto;
“Supplementary Budget” shall have the meaning ascribed to it in Clause 3.3.4 below;
“Training Matrix” means the most updated Training Matrix as mutually agreed between the parties, as amended, supplemented or updated from time to time;
“Vessel Account” means a bank account in the name of the Managers opened and operated in accordance with Clause 8.4, the details of which shall be notified to the Owners from time to time;
“Vessel Condition Report” means a report detailing the physical condition, the progress of the Maintenance Schedule and the performance of the Vessel;
“ Vessel Data” means all records, invoices, logs, certificates and performance and maintenance data relating to the Vessel and all correspondence and documentation generated, collected or compiled during the provision of the Management Services by either former managers of the Vessel and given to the Managers, or by the Managers, to enable the Owners to effectively operate, manage or sell the Vessel, but excluding the Managers’ internal correspondence and any correspondence (other than invoices) between the Managers and their suppliers;
“Working Day” means a day when most banks are open for business in London, New York, Athens, and country of location of relevant bank accounts of Owners.
1.2. | Interpretation |
1.2.1. | “Owners”, “Managers” and “Charterers” include their respective successors and assigns. |
1.2.2. | Clause headings are inserted for convenience and shall be ignored in construing this Agreement. |
1.2.3. | Unless the context otherwise requires, words denoting the singular number include the plural number and vice versa. |
1.2.4. | References to clauses and annexes are to Clauses and Annexes of this Agreement except where otherwise expressly stated. |
1.2.5. | Reference to any document includes the same as varied, supplemented or replaced from time to time. |
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1.2.6. | References to any enactment include any re-enactments, amendments and extensions thereof. |
2. | APPOINTMENT OF MANAGERS |
2.1. | From the Effective Date and continuing, unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as managers of the Vessel. |
2.2. | Subject to the terms and conditions contained herein, during the period of this Agreement, the Managers shall carry out the Management Services as agents for and on behalf of the Owners. The Managers shall have authority to take such actions as they may from time to time consider necessary to enable them to perform their duties and obligations as set out in this Agreement in accordance with first class LNG ship management practice within the limits of authority delegated to them hereunder. |
3. | MANAGEMENT SERVICES |
3.1. | Crew Management |
3.1.1. | The Managers shall provide suitably and adequately qualified Crew for the Vessel in accordance with any requirements of the Owners, as described in the Operational and Maintenance Protocol set forth on Annex “D”, and the provisions of the STCW 95 and the requirements of this Agreement. |
3.1.2. | The Managers shall be responsible for: |
(i) | selecting, with Owners’ approval, which may be expressed from time to time in the form of standing instructions to the Managers for specific experience and qualification criteria pertaining to the Crew, including but not limited to the Training Matrix, and engaging the Crew (subject to the provisions of Clause 3.1.6 below) for the Vessel including payroll arrangements, pension administration, and insurances for the Crew other than those mentioned in Clause 6; |
(ii) | ensuring at all times the availability and supply of an adequate complement of Crew (including Master, Officers and Ratings complying with Annex“B”) relative to the particular operational status and size of the Vessel; |
(iii) | ensuring that the applicable requirements of the law of the flag of the Vessel are satisfied in respect of manning levels, rank, qualification and certification of the Crew and employment regulations (including those standards set forth by the International Transport Workers’ Federation (ITF)) pertaining to Crew’s tax, payroll, social insurance, welfare, discipline and other applicable requirements; |
(iv) | ensuring that all members of the Crew have passed a medical examination with a qualified doctor certifying that they |
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are fit for the duties for which they are engaged and are in possession of valid medical certificates issued in accordance with appropriate flag state requirements. In the absence of applicable Flag State requirements the medical certificate shall be dated not more than three months prior to the respective Crew member leaving their country of domicile and maintained for the duration of his service on board the Vessel; |
(v) | ensuring that the Crew shall have a command of the English language of a sufficient standard to enable them to perform their duties safely; |
(vi) | arranging transportation of the Crew, including repatriation, at Owners’ cost, unless otherwise arranged by Owners; |
(vii) | providing continuing training of the Crew and supervising their efficiency and competence, consistent with Owners’ requirements but in any event never less than the applicable international or Flag State standard for LNG vessels; |
(viii) | whenever the Vessel is operational, issuing instructions to the Master in accordance with the requirements of the Owners or Charterers, to trade along the most geographically direct, economical and safe route (except for any justifiable deviation allowed under English common law or the Hague Visby Rules and including all deviations that may be necessary in an Emergency Situation) and ensuring the Vessel is worked at a fuel-efficient speed consistent both with port arrival instructions given by the Owners and/or Charterers and with sea conditions; |
(ix) | issuing instructions to the Master to keep full and correct log books and furnishing the Owners with true and accurate copies of such log books when required; |
(x) | conducting union negotiations (if applicable); |
(xi) | operating a drug and alcohol policy, prepared by the Managers and approved by the Owners (such approval not to be unreasonably withheld or delayed), which includes, as a minimum, the principles set forth in the “Guidelines for the Control of Drugs and Alcohol Aboard Ship” of the Oil Companies International Marine Forum dated June 1995 (and in an amendments or successors thereto); |
(xii) | ensuring that the Crew and any other person on board the Vessel proceeding to sea shall be insured for the Crew Insurances with a first class insurance company, underwriter or protection and indemnity association (the “Crew Insurances”); |
(xiii) | ensuring that all premiums or calls in respect of the Crew Insurances are paid promptly by their due date; and |
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(xiv) | ensuring that the Crew Insurances shall name the Owners as co-assured (unless advised by the Owners to the contrary). |
3.1.3. | The Managers shall appoint a superintendent (ship manager) to be responsible for the day to day operation, maintenance and repair of the Vessel, the cost of which shall, subject to Clause 7.4, be included in the Management Fee. Should the Owners have reason to be dissatisfied with the superintendent so appointed, they shall raise their complaint with the Managers. The Managers shall investigate any such complaint promptly and, should the complaint prove to be well founded, the Managers shall replace such superintendent at no extra cost to the Owners. |
3.1.4. | The Managers shall institute onboard and shall ensure onboard compliance with a uniform standard of dress amongst the crew and officers, and uniform credentialing or identification of all Crew and Officers. |
3.1.5. | Should the Owners have any reason to be dissatisfied with any of the Crew, they shall raise their complaint with the Managers. The Managers shall investigate the complaint promptly and, should the complaint be well founded, the Managers shall replace the Crew member in question and undertake changes in the appointment of the Crew as the Owners may reasonably require. |
3.1.6. | The Managers shall employ the Crew in their name and for their own account and, for the avoidance of doubt, the Managers do not have authority to conclude or enter into contracts of employment with the Crew for and on behalf of the Owners and shall indemnify and hold harmless the Owners against all actions, proceedings, claims, demands or liabilities whatsoever and howsoever arising from the Managers’ breach of this Clause 3.1.6 or in relation to any disputes relating to Crew contracts of employment. |
3.1.7. | Except as allowed in clause 3.1.2(i), the Managers may not appoint any Senior Officers without the prior approval of the Owners (which shall not be unreasonably withheld or delayed), except that in the event that a shortage of crew would be likely to result under the terms of the Charter: |
(i) | in the Vessel going off hire under its Charter; or | |
(ii) | an Emergency Situation; |
and in such circumstances it is not practical for the Managers to wait for Owners’ approval, the Managers may make such temporary appointments as they deem necessary; however, the Vessel’s manning shall always remain in compliance with the regulations of the Flag State’s minimum manning requirements.
Officers CV and accomplished Training Matrix should be provided to the Owners for reviewing prior promotion or assignment to a Senior Officer position.
The Owners reserve the right to interview and approve all Senior Officers candidates.
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3.2. | Operational and Technical Management |
3.2.1. | The Managers shall provide operational and technical management of the Vessel which includes, but is not limited to, the following functions: |
(i) | provision of competent personnel with suitable experience of the LNG industry to supervise the maintenance and general efficiency of the Vessel in line with the Training Matrix and the requirements of the Charter; |
(ii) | all maintenance and work for the Vessel so as to ensure that the Vessel complies with all applicable laws including but not limited to IMO, MARPOL and SOLAS (and including, for the avoidance of doubt, all the provisions of the ISM Code), regulations and/or other requirements of the flag of the Vessel and of the Primary Terminals and other places where she trades, all applicable international conventions, all applicable regulations and/or requirements of any terminals or facilities in such port(s) or place(s) where the Vessel may load or discharge, and all requirements and recommendations of the Vessel’s classification society applicable to a Vessel carrying LNG worldwide within the limits of the Charter; |
(iii) | preparing the Maintenance Schedule and regular updates on request (such updates to commence at delivery of the Vessel from the shipyard, and then each year on or around the anniversary upon which the Vessel was classified by its classification society) for approval by the Owners (such approval not to be unreasonably withheld or delayed); |
(iv) | arrangement and supervision of dry dockings, repairs, alterations and the upkeep of the Vessel in accordance with first class LNG ship management practice provided that the Owners shall allocate sufficient funds and approve the relevant Annual Budgets and Supplementary Budgets to ensure that Managers can incur the necessary expenditure to ensure that the Vessel will comply with the law of the flag of the Vessel and of the places where she trades, and all requirements and recommendations of the classification society; |
(v) | investigating and reporting to Owners any technical faults or problems material to the performance of the Vessel and arranging for their repair in consultation with the Owners; |
(vi) | arrange for the victualing and storing of the Vessel appropriate to the declared operational status of the Vessel and place and effect payment for contracts for lubricating oil, paints and all consumable materials where they are not for the Charterers’ account, together with any other contracts that may be agreed with the Owners from time to time in accordance with Clause 3.2.2; |
(vii) | appointment of surveyors and technical consultants as the Managers may consider from time to time be necessary; | |
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(viii) | development, implementation of and maintenance of a SMS and obtaining and maintaining valid certificates evidencing compliance with this Clause, including without limitation, a valid document of compliance in relation to itself and valid safety management certificates in respect of the Vessel as required by the ISM and ISPS Codes; |
(ix) | provide the Owners with copies of any and all documents of compliance and safety management certificates as described in Clause 3.2.1(viii) upon issuance; |
(x) | keep or procure that there is kept on board the Vessel at all times: |
(a) | all certificates and documents required from time to time by any applicable law or regulations to enable her to perform the Charter between the Primary Terminals without delay, |
(b) | valid certificates in force as required by the Flag State, |
(c) | any further certificates and documents required from time to time by any applicable law or regulations to enable her to perform the Charter without delay, |
(d) | an ITF certificate or equivalent allowing Vessel’s calls and operations in all ports to which the Vessel is ordered under the Charter where an ITF certificate or equivalent is required, and |
(e) | a copy of all documents of compliance and the original of any safety management certificates as described in Clause 3.2.1(viii); |
(xi) | arrangement of periodic analysis by third parties of the bunker fuel and reporting the results of such analysis to the Owners (the costs being included in the Vessel’s running costs): |
(xii) | noting requirements resulting from safety and any external ship inspections and implementing these insofar as they affect the operation or safety of the Vessel (such implementation to be at the Owners’ expense); |
(xiii) | implementing safety recommendations issued in terms of all international conventions (at the Owners’ expense); |
(xiv) | arrange, where necessary for the superintendent or other staff of the Managers to visit the Vessel. If the superintendent or other staff of the Managers have reason to spend more than twenty-five (25) days in aggregate in any calendar year (or pro rata for part of a calendar year) visiting the Vessel, their services will be charged out at the rate specified in Clause 7.4 below; | |
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(xv) | ensure that maritime, safety and cargo custody standards are in accordance with first class international LNG shipping practice and are maintained by the Crew whenever such personnel are serving on board the Vessel; |
(xvi) | arrange and effect payment on behalf of the Owners for the towage of the Vessel when appropriate; |
(xvii) | arrange, maintain, and effect preparation and payment on behalf of the Owners for suitable moorings for the Vessel for lay-up at such locations as may from time to time be mutually agreed relative to the Vessel’s positioning requirements of the Owners; |
(xviii) | handle port disbursement accounts where these are not for the Charterers’ account; |
(xix) | navigate the Vessel, handle all necessary communications, manage all cargo operations on behalf of Owners, and provide for the security and safety of the Vessel, cargo and Crew, all in accordance with first class LNG ship management practice; |
(xx) | ensure that the Vessel is compatible with existing LNG liquefaction terminals, regasification terminals and ship/shore interfaces, at the Primary Terminals and to maintain such compatibility and all necessary certificates and documentation; |
(xxi) | undertake vessel-terminal compatibility studies as requested by Owners and at Owners’ expense; and |
(xxii) | manage and operate the Vessel on behalf of the Owners in any part of the world to first class industry standards for an LNG carrier, provided that the Vessel shall be employed in lawful trades, as the Owners may direct, between good and safe ports and places where she can always be safely afloat, and further provided that the Vessel shall not trade to ports or areas where, at the time in question, there are expected to be hostilities, wars, warlike operations, civil commotions or revolutions, unless the Owners are able to obtain war risks insurance against such eventuality. |
Managers shall at all times have the right to refuse to carry out any instructions from the Owners or the Charterers to trade or lay up the Vessel if Managers can clearly demonstrate that by doing so, it would contravene any applicable laws and regulations of the Vessel’s flag, the classification society or of the places she trades.
Furthermore, Managers shall not be held to be in breach of this Agreement, should at any time the Vessel fail to conform to its class standards or fail to conform to statutory or international standards, except to the extent that such failures result from the negligence or breach of this Agreement by the Managers.
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3.2.2. | Procurement |
Subject to the terms of this Agreement, the Managers shall have discretion to procure all stores, spares, equipment, provisions, oils, fuels and any other goods, materials or services to be supplied to the Vessel by the Managers in performance of their Management Services from whatever source or supplier they may deem appropriate provided that:
(i) | the Managers use all reasonable efforts to achieve the lowest prices available for the appropriate quality of goods or services; |
(ii) | the Managers shall provide Owners with the benefit of all discounts, rebates or other financial incentives provided by any suppliers, and all amounts billed to Owners in connection with all stores, spares, equipment, provisions, oils, fuels and any other goods, materials or services to be supplied to the Vessel shall reflect any such discounts, rebates or financial incentives; and |
(iii) | the Owners reserve the right to require the Managers to procure such goods, materials and services from sources or suppliers they may notify to the Managers from time to time provided that: |
(a) | the Owners shall not unreasonably interfere with the aforementioned Managers’ procurement processes; |
(b) | the Owners may not force the Managers to breach the terms of any existing procurement contract to the extent such contract is consistent with the terms of this Agreement and standard industry practices; and |
(c) | the Owners have due regard to the interests of the Managers in fostering good long-term relationships with suppliers; |
and where the Owners utilize their rights under this Clause 3.2.2, the Managers shall in no circumstances be liable for the quality or pricing of the goods, materials and services so provided.
3.3. | Accounting, Budgeting, and Reporting |
3.3.1. | The Managers shall: |
(i) | provide an accounting system in respect of the Vessel which meets the reasonable requirements of the Owners, and provide regular accounting services and supply regular accounting reports and records; and |
(ii) | maintain a record of all costs and expenditures incurred as well as data necessary or proper for the settlement of accounts between the parties. |
3.3.2. |
The Managers shall present to the Owners annually a budget in respect of the estimated costs of operating the Vessel for the following twelve months in the current |
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reporting form of the Managers, which is acceptable to the Owners (the “ Annual Budget ”). The initial Annual Budget is attached hereto at Annex “C,” and shall be for the period from the Effective Date until 31 December 2014, with a full twelve (12) month Annual Budget submitted yearly thereafter, ending on the day immediately preceding the Review Date. Subsequent Annual Budgets shall be prepared by the Managers for approval by the Owners at least two (2) months before each Review Date. |
3.3.3. | The Owners shall indicate to the Managers their acceptance and approval of the Annual Budget within one month of presentation and in the absence of any such indication the Managers shall be entitled to assume that the Owners have accepted the Annual Budget as provided. |
3.3.4. | If after the approval of the Annual Budget pursuant to Clauses 3.3.2 and 3.3.3, the Owners or Managers anticipate material changes in the Operational Costs (or in respect of the initial Annual Budget set out in Annex “C”, if the Managers believe such initial Annual Budget is inaccurate or unworkable), then the Managers shall prepare a supplementary budget reflecting such changes (the “ Supplementary Budget ”) for approval by the Owners and the Owners shall indicate their approval or non-approval of a Supplementary Budget within one month of it being presented to them (and in the absence of any such indication, the Managers shall be entitled to assume that the Owners have accepted a Supplementary Budget). Upon approval by the Owners, a Supplementary Budget shall be treated as the Annual Budget for the year in question or the remainder thereof. |
3.3.5. | For the avoidance of doubt, the Managers shall not incur expenditure in respect of the Vessel in excess of the Annual Budget (with due consideration to the fact that expenditure may be phased over varying periods or may fluctuate from month to month, notwithstanding that such expenditure was budgeted for on an annual basis) or incur expenditure that has not been accounted for in any Annual Budget without the prior consent of the Owners (which shall not be unreasonably withheld or delayed). |
3.3.6. | Notwithstanding Clause 3.3.5, the Managers may in each Annual Budget period, as specified in Clause 3.3.2, incur expenditure on behalf of the Owners in respect of items that are not budgeted for in the Annual Budget, or for amounts in excess of the Annual Budget amounts, without the approval of the Owners provided that: |
(i) | such expenditure is used only for the proper performance of the Management Services; and |
(ii) | such total expenditure does not exceed five (5) per cent of the total budgeted amount for that Annual Budget period or such other amount that may be agreed by the parties from time to time. |
3.3.7. | The Managers shall: | |
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(i) | by the fifteenth (15 th ) Working Day of the month provide the Owners with a Vessel Condition Report in respect of the previous month in such form as the Owners (acting reasonably) may require; |
(ii) | by the fifteenth (15 th ) Working Day of each month provide the Owners with a comparison between the budgeted Operational Costs as set out in the Annual Budget and actual Operational Costs in respect of the previous month (in accordance with the form set out in Annex “F”); |
(iii) | by the fifteenth (15 th ) Working Day of each month provide the Owners with a request for funds based upon an estimate of the funding requirements of the Vessel that are required in respect of the next month together with any requests for approval of expenditure pursuant to Clause 3.3.5 and any proposed amendments to the Annual Budget pursuant to Clause 3.3.4; and |
(iv) | by the fifteenth (15th) Working Day of each month provide the Owners with a consolidated report on actual Operational Costs and if requested by the Owners, capital costs, including all expenses in relation to financing of the Vessel, in respect of the previous month. |
3.3.8. | If requested and in such manner as may be required by the Owners, the Managers shall provide the necessary personnel, hardware and software, and other resources necessary to administer on Owners’ behalf and in its name the invoicing and collection of hire payable under the Charter. |
3.4. | Health, Safety, Security, and Environmental Protection |
3.4.1. | The Managers shall operate a management system which shall be approved by the Owners (such approval not to be unreasonably withheld or delayed), and comply and ensure that the Vessel and the Crew comply with all applicable health, safety, security and environmental laws and regulations, and nothing in this Clause 3.4 shall derogate from the obligations of Managers to comply with its statutory responsibilities insofar as they relate to the other Management Services. |
3.4.2. | The Managers shall, in relation to all persons engaged or likely to be engaged in the execution of the Management Services, take such steps as are reasonably practicable to ensure their health and safety. |
3.4.3. | The Managers shall make available for inspection by the Owners at all times all registers, records and other documentation concerning health, safety, security (where appropriate) and environmental matters relating to the Management Services. |
3.4.4. | The Managers shall send to the Owners a copy of every notice or other communication received from or sent to any person or body concerning health, safety, security and/or environmental matters relating to the Management Services and shall co-operate with the Owners in respect of all such health, security, safety and/or environmental matters, as may from time to time be requested by the Owners | |
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3.4.5. | The Managers shall use all reasonable endeavors to ensure that no oil, or harmful or hazardous substances, of any description, shall be discharged or escape accidentally or otherwise, from the Vessel; and that the Vessel, its Officers and Crew comply with all international, national, and state oil and air pollution laws, conventions or regulations applying in, or to, international waters and the territorial waters of the countries into which the Vessel may trade under the Charter including the provisions of OPA 90 that apply to tank ships. This shall also include adhering to the standards promulgated under OPA 90 as those regulations apply to non-tankships operating within the jurisdiction of the United States whether or not the same strictly apply to the Vessel. |
3.4.6. | The Managers shall not treat, keep or dispose of any waste produced and/or carried by the Managers as a result of the Management Services in a manner likely to cause harm to the health and safety of any person or harm to the environment (as far as the same may be reasonably practical) and shall comply with every statutory duty which is relevant. |
3.4.7. | During the execution of the Management Services, the Managers shall take such steps as are reasonably practicable to avoid (or where avoidance is not possible, to minimize) harm to the environment. |
3.4.8. | The Managers will prepare and obtain all necessary approvals for a SOPEP. The SOPEP will be written in the English language and will be reviewed and updated as required and be maintained with the correct list of coastal state contacts. If required, the Managers will arrange for the translation of the SOPEP into another language. The Managers will also undertake regular training of the Crew in the use of SOPEP including drills to ensure that the SOPEP functions as expected and that contact and information details specified are accurate. |
3.4.9. | The Managers shall prepare a HSSE Report in such form and detail as the Owners (acting reasonably) require, to be submitted to the Owners on the 5th day of the following month. |
3.5. | Insurance Arrangements |
3.5.1. | The Owners shall arrange insurances in accordance with Clause 6.1. |
3.5.2. | The Managers shall immediately inform and keep the Owners informed of any incident which gives or may give rise to claims or disputes relating to the insurances effected in accordance with Clause 6. |
3.5.3. | The Owners shall or, in their sole discretion instruct the Managers on a case-by-case basis and in consultation with the Owners to, handle insurance, average and salvage claims in connection with the Vessel. Any costs reasonably incurred by the Managers in handling claims in accordance with this Clause shall be paid by or for the account of the Owners. Until notified to the contrary, the Managers shall process all insurance claims relating to the Crew, in consultation with Owners. | |
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3.6. | Sale or Purchase of the Vessel |
The Managers shall, if requested, provide Owners with technical assistance in connection with any sale of the Vessel. Any costs or out-of-pocket expenses incurred by the Managers in providing such technical assistance shall be paid by or for the account of the Owners. The Owners will, however, be solely responsible for agreeing the terms of any agreement regulating any sale.
3.7. | General Administration |
3.7.1. | The Owners may, in their sole discretion and upon such terms and conditions as the Owners shall specify, instruct the Managers on a case-by-case basis to handle and/or settle all claims relating to the Vessel including but without limitation any claims involving the Charterers. |
3.7.2. | The Managers shall keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving the Charterers or other third parties. |
3.7.3. | The Owners shall, or in their sole discretion instruct the Managers on a case-by-case basis to, bring or defend actions, suits or proceedings in connection with matters entrusted to the Managers pursuant to this Agreement. |
3.7.4. | Where the Managers are retained to handle and/or settle claims relating to the Vessel pursuant to Clause 3.7.1, the Managers shall be entitled to obtain legal or technical or other outside expert advice in relation to the handling and settlement of such claims and disputes. |
3.7.5. | The Owners shall arrange for the provision of any necessary guarantee bond or other security in connection with any such claims. |
3.7.6. | Any external costs reasonably incurred by the Managers in carrying out their obligations in accordance with this Clause 3.7 shall be paid by or for the account of the Owners provided that the Owners have instructed the Managers in accordance with Clause 3.7.1. |
3.8. | Quality Assurance |
3.8.1. | The Managers shall have and maintain a quality assurance/quality management system (the “ Quality Assurance & Quality Management System ”). This system shall include on board and on shore operation/ management and shall at the time of delivery, or as reasonably soon thereafter, meet the requirements of ISO-9001-2008 and ISO-14001-2004 or any subsequent addition or substitution approved by the Owners. The Quality Assurance & Quality Management System shall be documented and available to the Owners for approval within three (3) months of execution of this Agreement. The Managers shall supply documentation to the Owners on request confirming the continued maintenance and operation of the Quality Assurance & | |
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Quality Management System in good standing throughout the period of this Agreement. |
3.9. | [Reserved] |
4. | MANAGERS’ OBLIGATIONS |
4.1. | The Managers undertake to use their best endeavours to provide the agreed Management Services as agents for and on behalf of the Owners in a timely and efficient manner in accordance with first class international LNG ship management practice and the Operational and Maintenance Protocol set forth on Annex “D” and to protect and promote the interests of the Owners in all matters relating to the provision of the Management Services hereunder provided, however, that the Managers in the performance of their management responsibilities under this Agreement shall be entitled to have regard to their overall responsibility in relation to the Managed Fleet, and in particular, but without prejudice to the generality of the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and reasonable. |
4.2. | The Managers shall procure that the requirements of the law of the flag of the Vessel are satisfied and the Managers shall in particular be deemed to be the “Company” as defined by the ISM and ISPS Codes, thereby assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by these Codes when applicable. The Managers shall comply at all times with the requirements of the ISM, ISPS, and MTSA Codes, and the Managers shall immediately inform Owners if there is any threatened or actual withdrawal of Managers document of compliance or the Vessel’s safety management certificate or ISS (Security Certificate). |
4.3. | In addition to the specific obligations to keep the Owners informed hereunder, the Managers shall keep the Owners informed of all relevant information regarding the Vessel and the performance of the Management Services which the Owners may, acting reasonably, specify from time to time. |
4.4. | When the Managers become aware of an Emergency Situation, they shall immediately contact the Owners and keep the Owners informed in respect of such Emergency Situation. |
4.5. | If, in an Emergency Situation, the Managers (or the Master) are required pursuant to this Agreement to solicit an approval from the Owners, but in such circumstances it is not practical to wait for such approval, then notwithstanding any other term in this Agreement, the Managers (or the Master) may take whatever action they may deem necessary to deal with such Emergency Situation. | |
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5. | OWNERS’ OBLIGATIONS |
5.1. | The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this Agreement. |
5.2. | The Owners shall provide prompt responses to any requests made by the Managers pursuant to this Agreement. |
5.3. | The Owners shall (subject to any confidentiality restrictions) provide the Managers with any relevant information relating to the Charters or Charterers and shall notify the Managers upon a change of Charterers or upon any new Charter in respect of the Vessel. |
5.4. | The Owners shall use reasonable endeavours (and subject to any confidentiality restrictions) to ensure that the Charterers shall keep the Managers informed of the relevant terms of any gas supply contract, charter party, contract of affreightment, contract of insurance and any other document relating to the Vessel and its cargo that the Managers may reasonably require in order to perform their obligations hereunder. |
6. | INSURANCE POLICIES |
6.1. | The Owners shall procure throughout the period of this Agreement that: |
(i) | at the Owners’ expense, the Vessel is insured for usual hull and machinery marine risks (including crew negligence) and war risks in accordance with the first class practice of prudent owners of vessels of a similar type to the Vessel; |
(ii) | at the Owners’ expense, the Vessel is insured against Protection and Indemnity risks (including pollution risks) based upon the Standard Rules of a member of the International Group of P&I Clubs and have arranged for the Managers to be included as named co-assured, and provide the Managers with Certificates of Entry to evidence that such insurances have been effected and confirm renewal within fifteen (15) Working Days of the same; |
(iii) | where the Vessel is directed to call at any port within the United States of America and at the Owners’ expense, the Vessel carries a Certificate of Financial Responsibility as required by the United States Offshore Pollution Act 1990; |
(iv) | the Vessel is insured against such other risks (including Freight, Demurrage and Defense) that are appropriate to the Vessel’s trade; |
(v) | the Owners’ Insurances name the Owners and the Managers as co-assureds, with full cover, with the Owners obtaining cover in respect of each of the insurances specified in Clause 6.1 on terms whereby the Owners are liable in respect of premiums or calls arising in connection with the Owners’ Insurances; and |
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(vi) | written evidence is provided, to the reasonable satisfaction of the Managers, of compliance by the Owners with their obligations under Clause 6 within a reasonable time of the commencement of the Agreement, and of each renewal date and, if specifically requested, of each payment date of the Owners’ Insurances. |
6.2. | Insofar as it affects the superintendent and other shore staff employed by the Managers in connection with this Agreement, the Managers shall procure and maintain at their own expense appropriate insurance cover with first class insurers in respect of death or injury to such superintendents or shore staff, and such insurance shall comply with all applicable law. |
6.3. | Managers shall name Owners as co-assureds on this insurance cover, and Managers agree to waive all subrogation rights against Owners that might arise under this entire Clause 6. |
7. | MANAGEMENT FEE |
7.1. | Subject to any adjustment in accordance with the provisions of Clause 7.2 the Owners shall pay to the Managers for the provision of Management Services, a monthly management fee of Fourty-Six Thousand Dollars (US$46,000) (the “Management Fee”) which shall be paid each calendar month in advance by the first Working Day of each applicable month provided that where a payment is due in respect of any part of a month that payment shall be paid on a pro-rata basis, such sums to be paid into the Managers’ Account. All invoices for the Management Fee shall be submitted by the Managers to the Owners in advance on a monthly basis. |
7.2. | If, during any calendar month, the Vessel is in: |
(i) | “deep” lay-up (that is with sea chests sealed off and all system drained down) the Management Fee shall be Three Thousand Five Hundred Dollars (US$3,500) per month and pro rata in respect of any part month; or |
(ii) | a partially manned stand-by condition, during a period of lay-up (other than deep lay-up) or during reactivation periods or during any period where the Managers are preparing to take over management of the Vessel from a third party the Management Fee shall be Ten Thousand Dollars (US$10,000) per month and pro rata in respect of any part month. |
7.3. | The Management Fee is exclusive of value added tax and any other existing sales or services tax that may be applicable. The Managers warrant that at the Effective Date, no such taxes are payable in respect of the Management Fee under Greek Law. |
The Management Fee payable to the Managers will be adjusted annually on the first Review Date after the Effective Date and on each Review Date thereafter. The adjustment will be agreed between the Parties in good faith on the basis of general inflation and proof of increases in actual costs incurred by the Managers.
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7.4. | In addition to the Management Fee, if the Managers’ superintendent or other staff are reasonably required to spend more than twenty-five (25) days in aggregate visiting the Vessel in any calendar year (or pro-rata for part of a calendar year), the cost of visits in excess of twenty-five (25) days shall be paid by the Owners, into the Managers’ Account, at a rate of One Thousand Dollars (US$1,000.00) per day (or pro rata in respect of any part day on board the Vessel). Notwithstanding the foregoing, all reasonable travelling expenses in connection with reasonably required visits to the Vessel by Managers’ superintendent or other staff (excluding visits in connection with drydocking) shall be part of the Management Fee, irrespective of the duration of such visits. |
7.5. | In the event of this Agreement being terminated by the Owners or the Managers in accordance with the provisions of Clause 17.3 or 17.4, the Management Fee payable to the Managers according to the provisions of Clauses 7.1 and 7.2, shall continue to be payable for a further period of three calendar months as from the termination date. In addition, provided that the Managers provide Crew for the Vessel in accordance with Clause 3.1: |
(i) | the Owners shall continue to pay Crew Support Costs during the said further period of three calendar months; and |
(ii) | the Owners shall pay any reasonable Severance Costs which may materialise provided the Managers have used reasonable endeavours to mitigate such obligations to the Crew. |
7.6. | Unless otherwise agreed in writing all discounts and commissions obtained by the Managers in the course of the management of the Vessel shall be credited to the Owners. |
7.7. | The Owners shall, in respect of each year of this Agreement, on or around the Review Date, decide whether or not to pay an Incentive Bonus to the Managers for remittance to the Crew of an amount and in the manner described in Annex “H” attached hereto. |
Any Incentive Bonus that the Owners decide to pay shall be paid into the Managers’ Account with fifteen (15) Working Days of the Review Date and the Managers shall remit any such bonus to the Crew. In addition the Owners shall within fifteen (15) Working Days of the Review Date provide a written explanation to the Managers of their decision which sets out in reasonable detail the rationale for making such a decision. |
8. | VESSEL EXPENSES |
8.1. | Upon receipt of a request for funds for the Vessel pursuant to Clause 3.3.7 (iii) the Owners shall pay such funds into the Vessel Account, provided that such request is made in respect of items and amounts accounted for in the Annual Budget or made in respect of items or amounts for which the Managers do not require the approval of the Owners pursuant to Clause 3.3.6. |
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8.2. | In the event that the Managers request funds from the Owners pursuant to Clause 3.3.7(iii), but the Owners are not obliged to pay such funds pursuant to Clause 8.1, then the Owners may refuse to provide such funds provided that, in such circumstances, the Managers shall not be liable for any losses or damages incurred by the Owners as a result of such refusal and in any event, the Owners shall not unreasonably refuse to pay or delay the payment of such sums. |
8.3. | All sums payable by the Owners in respect of requests made by the Managers pursuant to Clauses 8.1 and 8.2 shall be paid into the Vessel Account by the first Working Day of the month following that month in which such request was made. |
8.4. | The Managers shall open the Vessel Account and communicate the details of the Vessel Account to the Owners prior to the Effective Date. The Vessel Account shall be an account that only contains monies payable into such Vessel Account pursuant to this Agreement. All monies paid into the Vessel Account (including interest, if payable) shall be held on trust for and to the credit of the Owners and the Managers may only utilise funds in the Vessel Account for the proper performance of the Management Services hereunder. The Managers shall provide full details of all transactions in relation to the Vessel Account and shall procure that monthly Vessel Account bank statements are provided to the Owners for each month of this Agreement. |
8.5. | Notwithstanding anything contained in this Agreement, the Managers shall in no circumstances be required to use or commit their own funds to finance the provision of the Management Services. |
9. | MANAGERS’ RIGHT TO SUB-CONTRACT |
9.1. | The Managers shall have the right to sub-contract any of their obligations in this Agreement, subject to Clause 9.2 below. |
9.2. | The Managers shall obtain the prior written consent of the Owners if they wish to sub-contract any of their obligations under this Agreement for amounts exceeding Fifty Thousand United States Dollars over and beyond the approved Annual Budget. |
9.3. | Notwithstanding any sub-contract the Managers shall remain fully liable for the due performance of their obligations under this Agreement, the Managers shall procure that each sub-contractor engaged pursuant to this Clause 9 shall comply with the requirements of Clause 3.4. |
10. | RESPONSIBILITIES |
10.1. | Force Majeure |
10.1.1. | Neither the Owners, nor the Managers shall be liable for any loss or damage or total or partial failure to perform this Agreement (other than a failure to perform an obligation to pay money) caused wholly or partly by any circumstances or things beyond the reasonable control of the Owners or the Managers, as the case may be, |
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including (without limiting the generality of the foregoing) acts of God, fires, floods, epidemics, quarantine restrictions, wars, terrorism, insurrections, riots, violent demonstrations, criminal offences, acts and omissions of civil or military authority or of usurped power, requisition or hire by any governmental or other competent authority, or embargoes. |
10.1.2. | The party invoking force majeure will advise the other party of the force majeure event at the earliest opportunity and also advise same party of the likely duration of such force majeure situation. |
10.2. | Liability to Owners |
The Managers shall be under no liability to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services, unless the same is proved to have resulted from the breach of this Agreement, fraud, gross negligence, or wilful misconduct of the Managers or their employees, or agents or sub-contractors employed by them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers’ personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers’ liability for each incident or series of incidents giving rise to a claim or claims shall not exceed a total of twelve (12) times the monthly Management Fee of Forty-Six Thousand Dollars (US$46,000) as adjusted annually pursuant to Clause 7.3 above. |
Notwithstanding anything herein contained in the contrary, the Managers shall not be liable for any of the actions of the Crew, even if such actions are negligent or wilful, except only to the extent that they are shown to have resulted from a failure by the Managers to discharge their obligations under Clauses 3.1 or 3.4, in which case their liability shall be limited in accordance with the terms of this Clause 10.2. |
10.3. | Indemnity |
Except to the extent and solely for the amount that the Managers would be liable under Clause 10.2, the Owners hereby undertake to keep the Managers and their employees, agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of the Agreement, and against and in respect of all costs, losses, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
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10.4. | “Himalaya” |
It is hereby expressly agreed that no employee or agent of the Managers (including sub-contractors from time to time employed by the Managers) shall in any circumstances whatsoever be under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Clause 10, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 10 the Managers are or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.
11. | DOCUMENTATION |
11.1. | The Managers shall also maintain and cause their agents to maintain and retain in accordance with generally accepted accounting practices, applicable tax requirements and good international shipping practices, all books, accounts and records pertaining to this Agreement, and all records, documents and other materials related to the Managers’ implementation of and compliance with the Quality Assurance & Quality Control System, including vouchers, invoices, receipts, correspondence, copies of original documents and such other documentation as is necessary in order to verify the compensation payable hereunder. |
11.2. | The Managers shall make available, upon Owners’ request, all documentation and records relating to the performance of the Management Services, the SMS and/or the Crew which the Owners require in order to demonstrate compliance with the ISM Code, ISPS Code, and STCW 95, or to defend or prosecute a claim against a third party or otherwise. |
11.3. | All Vessel Data is and shall remain the property of the Owners and shall be made available to the Owners by the Managers on the Owners’ request. Upon termination of this Agreement for any reason, the Managers shall promptly provide the Owners with all the Vessel Data, whether onboard the Vessel or otherwise. |
11.4. | The Managers shall retain and properly store all Vessel Data in accordance with first class LNG ship management practice. If, in the Managers’ opinion, certain Vessel Data should be destroyed, then the Managers shall first offer to return that Vessel Data (at the Owners’ expense) to the Owners, and in the event that the Owners decline such offer, the Managers may destroy such Vessel Data. |
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12. | DEPLOYMENT OF THE VESSEL |
12.1. | The Managers shall ensure that the Crew of the Vessel shall comply with any Permanent Instructions. |
12.2. | The Owners may change the terms of the Permanent Instructions, or upon the execution of a new Charter replace the existing Permanent Instructions with new Permanent Instructions with the consent of the Managers which shall not be unreasonably withheld or delayed. |
12.3. | In the event that the Managers or the Crew receive instructions from the Charterers, that in the opinion of the Managers, conflict with instructions provided by the Owners or which go beyond the scope of authority of the Charterers (to the extent such scope of authority has been disclosed by the Owners to the Managers), the Managers shall use best endeavours to immediately notify the Owners and the Charterers of the same. In such circumstances, subject to Clause 3.1.2(viii), the Owners’ instructions shall take precedence over the Charterers’ instructions. |
12.4. | Except for the purposes of saving life, the Vessel shall not, unless expressly authorised by the Owners, undertake attempts of salvage. |
12.5. | If: |
(i) | the Vessel undertakes attempts at salvage pursuant to Clause 12.4, or |
(ii) | the Vessel requests that a third party attempts salvage of the Vessel, |
then without prejudice to the Master of the Vessel’s overriding right to take whatever action he may deem necessary to preserve life or prevent the loss of the Vessel, all salvage shall be under the terms of the current “Lloyds Open Form No Cure — No Pay” agreement.
12.6. | Any proceeds arising from salvage of third party property shall be for the benefit of the Owners. |
12.7. | Notwithstanding any other provision of this Agreement, the Managers shall not (and shall procure that the Crew shall not), without the written consent of the Owners, sign any bill of lading on behalf of the Owners. |
13. | AUDITING |
13.1. | The Managers shall prepare the Annual Budget and accounts (as referred to in Clause 3.3.1 above) and shall make the same available for inspection and auditing by the Owners at such times as may be mutually agreed. |
13.2. | The Owners shall have the right to audit the Managers’ records and documentation as set out in Clause 11 above for the purpose of verifying their correctness and completeness at all times on reasonable notice to the Managers. Where staff or |
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auditors of the Owners visit the premises of the Managers for the purpose of carrying out an audit, the Managers shall provide office space and facilities to such staff or auditors at no extra cost to the Owners.
14. | INSPECTION OF VESSEL |
14.1. | The Owners shall have the right at any time after giving reasonable notice to the Managers to inspect the Vessel for any reason they consider necessary. |
15. | COMPLIANCE WITH LAWS AND REGULATIONS ETC. |
15.1. | The Managers will not do or permit to be done anything which might cause any breach or infringement or the laws and regulations of the Vessel’s flag, the classification society or of the Primary Terminals and other places where she trades. |
16. | DURATION OF THE AGREEMENT |
16.1. | This Agreement is entered into on the date of signing and shall continue until terminated in accordance with Clause 17. |
17. | TERMINATION |
17.1. | If the Managers: |
(i) | fail to meet any material obligation under this Agreement; or |
(ii) | fail to meet any obligation under this Agreement that has a material adverse effect upon the Owners or the Vessel; |
then the Owners may give notice to the Managers of the default, requiring them to remedy it (if such default is capable of being remedied) as soon as practically possible. In the event that the default is not capable of being remedied or the Managers fail to remedy the default within a reasonable time to the satisfaction of the Owners, the Owners shall be entitled to terminate this Agreement by giving the Managers ninety (90) days’ written notice.
17.2. | The Owners may also terminate this Agreement by giving the Managers ninety (90) days’ written notice in the event that the Managers, in the reasonable opinion of the Owners, fail to manage the Vessel in accordance with first class LNG ship management practice and such failure has not been remedied within a reasonable time after written notice of such failure. |
17.3. | The Managers shall be entitled to terminate the Agreement by notice in writing if: |
(i) | any moneys payable by the Owners to the Managers have not been received into the Managers’ Account within thirty (30) days (excluding Saturdays, Sundays and public holidays) of payment having been requested in writing by the Managers; or |
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(ii) | this Agreement or any of the Owners’ rights and/or obligations are assigned to any person or entity without the Managers’ prior written agreement or approval. |
17.4. | This Agreement shall be deemed to be terminated: |
(i) | in the case of the sale of the Vessel (other than a sale or transfer to an Affiliate of the Owners); |
(ii) | if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned for hire; or |
(iii) | in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than of the purpose of a solvent reconstruction or amalgamation) or if a receiver or similar officer is appointed of the whole or a material part of its assets or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. |
17.5. | If the Owners elect to provide Officers and, for any reason within their control, the Owners fail to: |
(i) | procure Officers and Ratings supplied by them or on their behalf, complying with the requirements of STCW 95; or |
(ii) | instruct such officers and ratings to obey all reasonable orders of the Managers’ SMS; |
then the Managers may give notice to the Owners of the default, requiring them to remedy it (if such default is capable of being remedied) as soon as practicably possible. In the event that the default is not capable of being remedied or if the Owners fail to remedy the default within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate this agreement.
17.6. | [Reserved] |
17.7. | Notwithstanding Clauses 17.1 and 17.2, the Owners shall have the right to terminate this Agreement at any time and for any reason by giving the other party not less than three (3) months’ written notice of their intention to terminate this Agreement. |
17.8. | If the Owners proceed with the employment of, or continue to employ the Vessel in blockade running or in an unlawful trade or on a voyage, which in the reasonable opinion of the Managers, is unduly hazardous, the Managers may give notice to the Owners requiring them to cease to employ the Vessel in such manner as soon as possible. If the Owners fail to comply with such notice within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate this Agreement with immediate effect by notice in writing. |
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17.9. | The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination. |
18. | MISCELLANEOUS |
18.1. | The confidentiality obligations of the parties are set out in a separate Confidentiality Agreement that is attached for reference in Annex “G”. |
18.2. | A person who is not a party to this Agreement may not enforce, or otherwise have the benefit of, any provision of this Agreement under the Contracts (Rights of Third Parties) Act 1999, but this provision does not affect any right or remedy of a third party which exists or is available apart from that Act. |
18.3. | At the expiry or earlier termination of any existing ship management agreement(s) in relation to the Vessel, Managers shall co-operate in the transfer arrangements to be notified to the Managers by the Owners and shall facilitate the smooth transition of all operations and duties to Managers with the minimum of disruption. |
18.4. | Either party may at any time assign or transfer to an Affiliate its respective rights and obligations under this Agreement provided that they first obtain the written consent of the other party. Such consent shall not be unreasonably withheld, conditioned or delayed and the parties agree to promptly execute any reasonable novation or transfer documentation to give effect to such an assignment or transfer. |
19. | LAW AND ARBITRATION |
19.1. | This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
19.2. | The arbitration shall be construed and conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The language used for such arbitration shall be English and the arbitration shall be conducted in London. |
19.3. | The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. |
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19.4. | Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
19.5. | In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. The language used for such arbitration shall be English and the arbitration shall be conducted in London. |
20. | NOTICES AND BANK ACCOUNTS |
20.1. | Any notice to be given by either party to the other party pursuant to this Agreement shall be in writing and shall be effective upon delivery pursuant to Clause 20.2 and shall be sent by fax, registered mail or by personal service to the following addresses: |
for the Owners:
Gas-three Ltd.
Claredon House
2 Church Street
Hamilton HM11
Bermuda
Fax. No.:
Attn:
for the Managers:
GasLog LNG Services Ltd.
Piraeus Branch Office
69, Akti Miaouli,
185 37 Piraeus, Greece
Fax No: +30 210 4591247
Attention: Theodoros Katemidis, General Manager
20.2. | A notice is deemed to have been received: |
(i) | if delivered personally, at the time of delivery; |
(ii) | in the case of fax, at the time of transmission; |
(iii) | in the case of delivery of courier, on the date of receipt by the courier of written acknowledgement of such delivery; |
(iv) | in the case of pre-paid first class post, recorded delivery or registered post, on receipt; and |
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(v) | if deemed receipt under the previous paragraphs of this sub-clause is not within business hours (meaning 9:00 am to 5:30 pm Monday to Friday (or Sunday to Thursday if the place of receipt is in Egypt) on a day that is not a public holiday in the place of receipt), when business next starts in the place of receipt. |
20.3. | For the purposes of this Agreement, the Managers’ Account currently has the following details: |
Account Holder | : | GasLog LNG Services Ltd. | |
Bank | : |
CITIBANK INTERNATIONAL plc |
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(47-49, Akti Miaouli, 185 36 Piraeus, Greece) | |||
IBAN | : | GR35 0840 00200 000 00 44 4031026 | |
Account Number | : | 044 4031026 | |
Currency | : | Dollars |
IN WITNESS whereof the parties have duly signed this Agreement the day and year first above written.
SIGNED for and on behalf
of GAS-three
by
in the presence of
SIGNED for and on behalf
of GASLOG LNG SERVICES LTD.
by
in the presence of
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ANNEX “A”
DETAILS OF VESSEL
[OWNERS TO PROVIDE ON OR BEFORE EFFECTIVE DATE]
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ANNEX “B”
DETAILS OF CREW / OFFICERS
RATINGS
[MANAGERS TO PROVIDE AT LEAST 30 DAYS PRIOR TO EFFECTIVE DATE]
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ANNEX “C”
INITIAL BUDGET
To be provided in accordance with Clause 3.3.2 prior to the Effective Date and once approved by Owners to be inserted
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ANNEX “D”
OPERATIONAL AND MAINTENANCE PROTOCOL
The provisions of this Operational and Maintenance Protocol (“Protocol”) are integral with the provisions of the Agreement. The Owners agree to provide the manager with the necessary financial resources to comply with the requirements of this Operational and Maintenance Protocol.
The Vessel shall always be operated and maintained in accordance with the first class international standards for LNG vessels. These standards shall include, without limitation, that:
· | The Vessel is always manned, operated and maintained in a safe and prudent manner to minimise the risk of accidents; | |
· | the maintenance and operation of the Vessel shall be thorough and proactive and not based merely on the minimum standards required by the Vessel’s flag state and classification society but to the highest standards applicable in the shipping and LNG industry; | |
· | the Managers agree to maintain membership in the Society of International Gas Tankers and Terminal Operators Association (SIGTTO) and to abide by all guidelines, recommendations, and training schedules that are applicable to the safe and reliable operation of LNG vessels made by this industry association; | |
· | the Managers agree to observe and abide by all guidelines, recommendations, and training standards that are promulgated by the Oil Companies’ International Marine Forum (OCIMF) and are applicable to the safe and reliable operation of LNG vessels made by this industry association; | |
· | the Vessel shall be maintained and refurbished and where necessary restored to ensure the safe, reliable, and efficient transportation of LNG for a minimum 40 year trading life. |
Other than for Manager-scheduled maintenance periods of seventy two (72) hours every six (6) months (days which shall be agreed by the Owners), the Owners expect the Vessel to be available for the safe and efficient transportation of LNG for 100% of the year. The Manager shall put in place a robust and comprehensive vessel management system designed to meet this availability objective.
The Managers shall take the necessary steps to promote a culture of safety awareness, compliance with established procedures, and non-conformance reporting to facilitate continuous improvement throughout the organization including all crewmembers onboard the Vessel.
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CREWING
The Managers agree that having a well-trained and qualified vessel crew and shoreside support staff, well versed in LNG vessel operations and management, is the foundation of a safe, reliable, and efficient LNG vessel operation.
· | The Managers agree to adhere to the Training Matrix, and also agree that if the Training Matrix conflicts with less stringent standards contained in this Agreement, the Training Matrix will control. | |
· | Managers shall arrange for all Deck Officers, including the Master, to attend Bridge Team Management Training at one of the recognized training centers. This training shall be repeated every five (5) calendar years. | |
· | Managers are required to ensure that all Masters have attended a ship handling simulator-training course applicable for the type of vessel in use for LNG transportation. The training shall be repeated at a minimum of every five (5) calendar years. | |
· | In addition to the requirements of the Management Agreement, all senior operational positions (Master, Chief Engineer, Chief Mate, and Second Engineers, Cargo Engineer) on board must have a minimum of three (3) years of sea time (time onboard) experience onboard LNG Carriers in any position in the position directly below the senior operational position they will assume. All senior operational positions must receive a minimum of two (2) weeks vessel familiarization and specific operational training, with a training scope appropriate to their position, prior to embarking onboard the Vessel for the first time. Any deviation from this section’s experience requirement must be approved by Owners. | |
· | All officers and unlicensed crew on board require, as a minimum, specific training on the hazards and unique operational aspects associated with LNG carriers that meet the requirements of Section A-V/l paragraphs 1-7 of the STCW 1995 convention. All licensed officers that form part of the cargo transfer watch or carry out operational or maintenance duties and responsibilities directly related to the vessel’s cargo system shall also receive specific training meeting the requirements of Section A-V/l paragraphs 22-34 of the STCW 1995 convention. The Managers are to document what special LNG ship operations training is provided to licensed and unlicensed crewmembers prior to their employment on the LNG carrier. | |
· | All crew are required to be properly qualified and certificated in accordance with the IMO Standards of Training, Certification and Watch keeping for Seafarers (STCW), 1995, as amended, and in compliance with the Training Matrix. |
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· | Managers shall provide to Owners copies of all newly appointed senior officers’ certification and details of experience prior to their embarkation onboard the Vessel. Owners have the right to review and verify the qualifications of all LNG vessel senior officers prior to their embarkation onboard the Vessel. Owners shall be given the opportunity to approve the certificates and experience of all senior officers a reasonable period prior to their initial embarkation onboard the Vessel), and shall have the discretion to reject any such officer if they do not meet the qualification and training requirements agreed between the Managers and Owners. Owners’ approval shall not be unreasonably withheld or delayed. | |
· | Procedures shall be put in place in the ship’s Safety Management System clearly documenting who is responsible for the ship’s LNG Cargo System including cargo transfer operations. The responsibilities and interface between the Chief Mate and Cargo Engineer shall be clearly defined. The Managers shall identify and document the qualifications of a Person In Charge (PIC) of the Cargo Transfer Watch that exceed the requirements of Regulation V/l of the STCW 95 requirements. These qualifications shall be made available to Owners upon request. A training program shall be established and documented for junior officers to allow them to meet the qualifications of the PIC of the Cargo Transfer Watch during periods of steady state operation to allow the Chief Officer and Cargo Engineer to take rest periods if required to meet work hour restrictions. This program shall include some mechanism for competency assessment either on a cargo simulator or under supervised conditions during an actual cargo transfer onboard the Vessel. | |
· | The Managers shall establish, as a minimum, the following policies and should ensure that all officers and crew are fully conversant and comply with these policies: |
· | Safety Policy | |
· | Health Policy | |
· | Environmental Policy | |
· | Quality of Service Policy | |
· | Operations Policy | |
· | Navigation Policy | |
· | Maintenance Policy | |
· | Drug and Alcohol Policy |
· | The Managers shall ensure that all seafarers undergo a medical examination, which shall include a drug and alcohol test annually. On completion of a satisfactory medical examination a certificate shall be issued which shall remain valid for the period that the seafarer is onboard the Vessel. An OCIMF-compliant drug and alcohol policy, which includes random drug testing, shall be implemented, and tests conducted directly onboard the Vessel or by an outside contractor to deter the use of illegal drugs and controlled substances by crewmembers while onboard the Vessel. |
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· | The organization employed by the Managers to provide manning to the Vessel shall be engaged through a contract, which shall stipulate the Manager’s minimum competency and experience requirements. | |
· | At intervals not exceeding two years the Managers shall ensure that the organization providing the manning of the Vessel is audited by a qualified auditor for compliance with the Managers’ minimum requirements. Copies of the audit report, non-compliances and corrective actions shall be provided to Owners, upon request. | |
· | Managers shall implement a system that interrogates and confirms officer’s qualifications and fitness for duty prior to joining the Vessel. | |
· | The Managers shall keep a minimum number of officers employed onboard the Vessel during dry-dock overhaul periods for inspection and quality assurance purposes. As a minimum, these people shall include all Licensed Engineering Officers , the Chief Officer and the Captain. |
MAINTENANCE
· | A Master Maintenance Plan shall be developed for the Vessel and approved by Owners’, provided that Owners’ approval does not conflict with the Vessel’s Class or Flag State requirements. The objective of this plan shall be to maintain the safe, reliable, and efficient operation of the Vessel over its projected 40 year life. This plan shall cover the following areas associated with efficient operation and Vessel maintenance and repair: |
1. | Dry-docking interval | |
2. | Procedures associated with pre-qualification of repair shipyards | |
3. | Hull Roughness measurement and maintenance to an acceptable level | |
4. | Anticipated schedule of maintenance, major overhaul, and refurbishment of all vessel critical equipment | |
5. | A description of the Preventive Maintenance System covering scheduled maintenance of all vessel equipment | |
6. | Inventory Control Procedures and stock of critical spare parts both onboard and ashore | |
7. | Procedures associated with pre-qualification of equipment and spare parts vendors | |
8. | Propulsion plant efficiency performance monitoring procedures and corrective action steps |
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9. | Condition Monitoring Systems and Condition Monitoring based maintenance | |
10. | Means of collecting the necessary date in a structured format to monitor and benchmark equipment reliability performance | |
11. | Performing Root Cause Analysis of equipment failures and equipment/systems reliability improvement | |
12. | Procedures associated with Equipment Obsolescence |
· | The Preventive Maintenance system shall incorporate the equipment suppliers or makers’ instructions and maintenance recommendations. | |
· | All maintenance work carried out on vessel equipment, other than normal routine operational work, shall be carried out using a permit to work system. | |
· | Where equipment isolation is required for operational and/or personnel safety or where hot work is involved all work must be carried out under a written procedure under the guidelines of the Safety Management System’s Lockout/Tag out/Isolation or Hot work permit procedures. |
The following is the proposed maintenance cycle that shall be followed with the Vessel. It is based on a 60 month period coinciding with the Vessel’s 5 year special survey requirements. This cycle may be adjusted through mutual agreement between Manager and Owners. The Managers shall notify Owners in writing at least 30 days in advance of the proposed dates for each 2 day Scheduled Maintenance Window and at least 6 months in advance of the proposed dates for dry-docking the Vessel. The Owners are primarily responsible for coordinating the communication and discussion of the scheduling of maintenance cycle events with the vessel’s charterer.
Month | Maintenance Event | ||
6 | 48 Hours Scheduled Maintenance Window | ||
12 | 48 Hours Scheduled Maintenance Window | ||
18 | 48 Hours Scheduled Maintenance Window | ||
24 | 48 Hours Scheduled Maintenance Window | ||
30 | Minor Drydocking – Intermediate Survey | ||
36 | 48 Hours Scheduled Maintenance Window | ||
42 | 48 Hours Scheduled Maintenance Window | ||
48 | 48 Hours Scheduled Maintenance Window | ||
54 | 48 Hours Scheduled Maintenance Window | ||
60 | Major Drydocking – 5 Year Special Survey |
OPERATIONS
· | The Managers shall establish detailed procedures for all critical operations performed onboard the Vessel as part of the Vessel’s Safety Management System. These procedures shall be developed and tailored specifically to the Vessel. Steps |
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shall be taken to familiarize Vessel personnel with these procedures and a robust internal audit program shall be carried out to verify crew compliance with these established procedures. Checklists should be used where appropriate to assist personnel in following procedures and to provide documented evidence of adherence to procedures. Copies of all work instructions and procedures in force shall be on file in the head office facilities of the Manager. The complete Safety Management System shall be made available in hard or electronic copy to the Owners. | ||
· | Changes to operating procedures must be reviewed by a senior officer onboard and approved by shore based management before the changes are implemented. | |
· | The Vessel and crew at all times shall be capable of operating with no venting of cargo boil-off gases to the atmosphere. Any such venting shall immediately be reported to the Owners with a full explanation as to why the venting operation was required and an estimate of venting duration and quantity vented. It is recognized that under rare extreme conditions the cargo tank pressure may approach the P.V. valve release settings. This condition is to be avoided through proper management of cargo during laden voyages and of the heel and spray cooling during ballast voyages, and if necessary to prevent P/V valves from lifting, the Vessel will, when possible, reduce cargo tank pressure below this setting by intentional venting in a controlled manner. | |
· | Whenever the vessel is transiting restricted waters the following operating profile shall normally be adhered to unless specific equipment breakdown prevents this: |
· | The Throttle shall be in Bridge Control | |
· | The Steering Gear systems shall be fully tested (including all standby pumps) prior to entry into restricted waters | |
· | Boilers shall be operated in the Dual Fuel Mode | |
· | Two ship service generators shall be on line for redundancy | |
· | The main engine shall be placed in “Standby” and the engine room shall be manned if there is a high probability of the vessel maneuvering |
· | All inhibits on any trip (safety shutdown) and alarm system must be approved by the Master or Chief Engineer before being applied. A written procedure is necessary to document the operational conditions that must exist before any trip or alarm may be inhibited and what additional safety measures must be put in place when trips or alarms are inhibited. A daily log of all inhibited trips and alarms shall be displayed on the bridge and in the engine room. |
INSPECTIONS
· | The Managers shall arrange on a bi annual basis for a fully accredited OCIMF SIRE inspection of the ship. A copy of the report issued by the independent accredited inspector is to be made immediately available to Owners. Within one week of the inspection report being issued the Managers are required to provide a |
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programme to the charterer to indicate how and when any of the agreed comments are going to be corrected.
· | The Managers shall arrange for an OCIMF/SIGTTO compliant self assessment inspection and audit to be carried out onboard the Vessel on an annual basis. This may be carried out as part of the Managers’ internal audit program. Copies of completed annual assessments are to be kept on board available for inspection by Owners upon request. Where the Managers are unable to obtain copies of the OCIMF/SIGTTO inspection guidelines, Managers shall apply their own internal audit/inspection procedures providing that the Manager’s inspection guidelines are subject to review and approval by Owners. |
· | The Managers shall arrange for Owners’ representative to carry out a detailed assessment and operational audit of the Managers’ head office facilities a minimum of once every two (2) years. The inspection will include but not be limited to Company Profile, Management Review, Document Control, Fleet Management, ISM Safety Management System, Corrective Action, Recruitment and Training, Health, Safety and Environmental Protection, Technical Support, Navigation, Safe Mooring, and Emergency Response. |
· | The Managers shall ensure that a Vessel inspection report in accordance with Owners’ format is completed annually. This inspection report is to be completed by attending manager’s superintendents during a twelve month period, ensuring that all items are addressed during that period. Copies of completed reports are to be submitted to Owners annually. The Managers may utilize their own internal inspection format and checklist if Owners can review and approve inspection guidelines prior to their use. |
· | Owners, or their designated representatives, will arrange for qualified auditors to carry out annual audits of the Vessel to confirm that the Vessels safety, quality and environmental protection system is functioning effectively. The Managers are to provide corrective actions to any non-conformities identified during the audits within thirty days of receiving the audit report. Confirmation of implementation is to be carried out at the next audit. Items that would normally be considered non-conformities would include, but not be limited to; crew members not properly qualified or certified, deteriorated physical conditions on the Vessel or equipment malfunctions with no documented schedule for repair, lack of documentation control, insufficient spare parts for normal maintenance, poor accuracy of onboard spare parts inventory, and lack of procedures for work being performed. |
· | Owners, or their designated representatives, shall arrange for qualified surveyors to carry out inspections and a condition assessment of the Vessel while undergoing a drydock overhaul as necessary to verify proper planning and adherence to the approved Master Maintenance Plan. |
The Managers will implement contingency planning to be activated in the event of any emergency occurring on or to the Vessel and shall ensure that the contingency plan is
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exercised annually with the participation of Owners. A copy of the Manager’s contingency plan is to be provided to Owners who shall be included in the Emergency Contact Chart and the nominated recipients for amendments.
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ANNEX “E”
PERMANENT INSTRUCTIONS
The Permanent Instructions shall be provided by the Charterers to the Managers on or prior to the Effective Date and shall be a protocol of communication among Charterers, the Vessel Owners and/or the Managers. The protocol of communication will set out, inter alia, who has authority to issue instructions and provide information to the Vessel and its master and who has authority to receive communications and information from the Vessel.
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ANNEX “F”
FORM OF ACCOUNTING SYSTEM
[MANAGERS TO PROVIDE]
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ANNEX “G”
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (“Agreement”) is made and entered into as of the _____ day of ________, 2014, by and between GAS-three LTD., a company incorporated under the laws of Bermuda and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “Owners”), and GasLog LNG Services Ltd., a company incorporated in Bermuda and having a branch office at 69 Akti Miaouli, Piraeus GR 18537, Greece (the “Managers”).
Owners and Managers entered into that certain Ship Management Agreement of even date herewith (the “Management Agreement”). In connection with the Management Agreement, it has been necessary and may continue to be necessary for Owners and Managers to exchange or provide access to certain proprietary and/or confidential information. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned thereto in the Management Agreement.
1. Confidential Information. At all times during the term of the Management Agreement and for two years thereafter, Owners and Managers shall keep confidential and shall not, without the prior written consent of the other party, issue any press release in relation to the transactions evidenced by the Management Agreement or the transactions contemplated thereunder, or disclose to any other person, the terms of the Management Agreement, any information provided to party pursuant to or in connection with the Management Agreement, any information connected with the Vessel (both technical or operational) or any other information identified as confidential or which may be protected by copyright, trademark or intellectual property law, or release copies of any such document which discloses any such information. Any and all such information described herein, together with all notes, analyses, compilations, studies, interpretations or other documents or records prepared by a party receiving such information or its Representatives (defined below), or copies thereof, which contain or otherwise reflect such information made available by are hereinafter referred to as the “Confidential Information.” In addition, Confidential Information shall mean any discussions between the parties concerning the Management Agreement or in connection with the Management Agreement, any and all written, printed or other materials, regardless of form, provided by a party concerning the Management Agreement or in connection with the Management Agreement, whether provided prior to or after the execution of this Agreement, and the substance and content thereof, and all information ascertained through the discussions between employees or representatives of the parties concerning the Management Agreement.
2. Exclusions. The term Confidential Information does not include any information which:
(a) at the time of disclosure is in the public domain or thereafter becomes generally available other than as a result of a disclosure by the receiving party or its Representatives;
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(b) is available to such party or its Representatives on a non-confidential basis from a source other than the disclosing party, provided that such source is not bound by a confidentiality agreement with the disclosing party; or,
(c) has been independently acquired or developed by receiving party or its Representatives without violating any of its obligations under this Agreement or the Management Agreement.
3. Permitted Disclosures. Notwithstanding the provisions of Section 1 above, either party shall be entitled to disclose Confidential Information without the consent of the other:
(a) pursuant to applicable law or order of a court of competent jurisdiction or a regulatory agency with jurisdiction, provided such party agrees prior to any such disclosure to provide the other party with prompt written notice of such requirements;
(b) to its directors, officers, employees, agents, representatives, advisors and consultants (“Representatives”), whose assistance in evaluating the Confidential Information is necessary and who are legally obligated to maintain the Confidential Information in confidence; and
(c) to any charterer or subcharterer of the Vessel.
4. CHOICE OF LAW. This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or reenactment thereof save to the extent necessary to give effect to the provisions of this Clause. Any dispute arising under this Agreement shall be resolved pursuant to the arbitration provisions set forth in Article 19 of the Management Agreement.
5. Term. As to the Confidential Information, the obligations of confidentiality and non-disclosure under this Agreement shall terminate two (2) years after the date on which the Management Agreement is terminated. Upon termination of this Agreement, each party shall return all Confidential Information furnished to it hereunder in written or other tangible form, and copies thereof, and destroy all copies of Confidential Information consisting of notes, analyses, compilations, studies, interpretations or documents or records prepared by it, or its Representatives.
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IN WITNESS whereof the parties have duly signed this Agreement the day and year first above written.
SIGNED for and on behalf of GAS-three LTD. by
in the presence of |
SIGNED for and on behalf of GASLOG LNG SERVICES LTD. by
in the presence of |
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ANNEX “H”
INCENTIVE BONUS PLAN
The Incentive Bonus shall be based on an annual assessment of the Key Performance Indicators (“KPIs”) listed below, as divided in three sections: HSSE, Vessel Performance, and Financial Performance.
There will be an annual assessment of the KPIs in each section, and a total Incentive Bonus of $72,000 may be awarded. The total Incentive Bonus shall be allocated across the three sections in three equal awards of $24,000 per section. Exceeding the noted maximum acceptable KPI in any section will mean that the $24,000 section award will not be paid for that year.
Where the Bonus Target is met for every KPI within a section then the full section award will be made for that section.
Where the KPIs in a section fall between the Maximum acceptable and the Bonus Target, then the level of award will be assessed by mutual agreement.
Key Performance Indicators (KPIs)
The KPIs below are agreed to be reviewed on an annual basis. These are the initial KPIs and may be adjusted and changed as agreed mutually on review.
KPI | Maximum acceptable | Bonus |
HSSE
Fatality | 0 | 0 | ||
Total Recordable Cases | 1 | 0 | ||
Near miss reports | To be agreed annually | To be agreed annually | ||
Oil Spills to water | 0 | 0 | ||
Venting cargo vapor to atmosphere - unless approved or emergency | 0 | 0 | ||
Major Incidents (collisions, groundings, flooding, fire explosion etc.) | 0 | 0 | ||
TMSA | To be agreed annually based on no improvement from the previous year | To be agreed annually based on stretched improvement from the previous year |
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Vessel Performance | ||||
Off hire | 12 hours (assuming 4 days per annum total maintenance window (2 days every 6 months) or any other instances with permission) | No off hire | ||
Vetting | Total deficiencies per inspection 12 low risk – 1 high risk | 5 low risk | ||
Port State Control | No requirements for rectification prior to departure | Maximum 2 observations (recorded on Equasis) per vessel inspection | ||
Fuel consumption (using conversion ) | Fuel consumption (as measured during quarterly Kyma Performance Trials) equal to that which is indicated in the Gas form C | 5% or more less than that which is indicated in the Gas Form C | ||
Heel management | Requires two hours cool down alongside | Fully in compliance with voyage orders (e.g. 1 day heel on arrival and at temperature to load or as instructed by voyage) | ||
Dry dock control - delivery after repair (discounting yard delays) | 2 days delay from initial planned delivery date | Delivery on time | ||
Financial Performance | ||||
Compliance with annual budget, against declared expenditure, allowing for exchange rate fluctuations $ to € and approved extra items | 0% above approved budget | Below the approved budget (excluding approved extra items) at an amount to be mutually agreed annually |
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Dry docking budget | 0% above approved budget | Below the approved budget (excluding approved extra items) at an amount to be mutually agreed at the award of the drydock contract |
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ANNEX “I”
PRIMARY TERMINALS
Load | Country | Status | |||
Gladstone | Australia | * 2 | |||
Withnell Bay | Australia | 1 | |||
Pluto | Australia | 1 | |||
Idku | Egypt | 1 | |||
Damietta | Egypt | 1 | |||
Punta Europa | Equatorial Guinea | 1 | |||
Discharge | Country | Status | |||
Bahia Blanca FSRU | Argentina | 1 | |||
Zeebrugge | Belgium | 1 | |||
Pecem | Brazil | 1 | |||
Guanabara Bay | Brazil | 1 | |||
Canaport | Canada | 1 | |||
Mejillones | Chile | 1 | |||
Quintero | Chile | 1 | |||
Dalian | China | 1 | |||
Fujian | China | 1 | |||
Guangdong | China | 1 | |||
Jiangsu | China | 1 | |||
Shanghai | China | 1 | |||
Zhejiang | China | 1 | |||
Zhuhai | China | *2 | |||
Montoir | France | 1 | |||
Revithoussa | Greece | 1 | |||
Dahej | India | 1 | |||
Hazira | India | 1 | |||
Chita | Japan | 1 | |||
Futtsu | Japan | 1 | |||
Himeji | Japan | 1 | |||
Senboku II | Japan | 1 | |||
Kawagoe | Japan | 1 | |||
Sodeshi | Japan | 1 | |||
Niigata | Japan | 1 | |||
Tobata | Japan | 1 | |||
Hitachi | Japan | *2 | |||
Joetsu Thermal Power | Japan | 1 | |||
INPEX Naoetsu | Japan | 1A | |||
Negishi | Japan | 1 | |||
Yanai | Japan | 1 | |||
Sodegaura | Japan | 1 | |||
Ohgishima | Japan | 1 | |||
Oita | Japan | 1 | |||
Sakai | Japan | 1 |
Load | Country | Status | |||
Bonny Island (Jetty 1,2) | Nigeria | 1 | |||
Snohvit | Norway | *4 | |||
Point Fortin | Trinidad | 1 | |||
Das Island | UAE | 1 | |||
Lake Charles | USA | 1 | |||
Sabine Pass (Cheniere)* | USA | 1 | |||
Discharge | Country | Status | |||
Incheon | Korea | 1 | |||
Pyeongtaek | Korea | 1 | |||
Tongyeong | Korea | 1 | |||
Gwang Yang | Korea | 1 | |||
Mina Al Ahmadi | Kuwait | 1 | |||
Bintulu | Malaysia | 1 | |||
Altamira | Mexico | 1 | |||
Costa Azul | Mexico | 1 | |||
Sines | Portugal | 1 | |||
Ras Laffan | Qatar | 1 | |||
Singapore | Singapore | 1 | |||
Barcelona | Spain | 1 | |||
Bilbao | Spain | 1 | |||
Cartagena | Spain | 1 | |||
Huelva | Spain | 1 | |||
Sagunto | Spain | 1 | |||
Map Ta Phut | Thailand | 1 | |||
Rotterdam | The Netherlands | 1 | |||
Yung-An | Taiwan | 1 | |||
Taichung | Taiwan | 1 | |||
Aliaga | Turkey | 1 | |||
Marmara Ereglisi | Turkey | *3 | |||
Jebel Ali FSRU | UAE | 1 | |||
Elba Island | USA | 1 | |||
Cameron | USA | 1 | |||
Pascagoula | USA | 1 | |||
Freeport | USA | 1 | |||
Isle of Grain | UK | 1 | |||
Dragon | UK | 1 |
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* 1 A - Primary Terminals ~ Pending
Signifies terminals where some terminal data is not complete, but which will be treated as Primary Terminals so long as, in order for the Vessel to be accepted by the terminal, no changes are required to the principal dimensions of the Vessel, including: length, breadth, draft, displacement, location of cargo manifolds and lay-out of cargo manifolds (pipe size, layout of liquid and vapour lines, manifold dimensions, etc). Owners and Charterers to cooperate to complete any missing terminal data and to achieve Terminal acceptance and any minor changes to the Vessel (gangway landing areas/rails, etc.) will be the responsibility of the Owners.
*2 Terminals Under Construction
Signifies terminals that are under construction at the date of signing the Charter party and are not Primary Terminals (“Terminals Under Construction”). Owners and Charterers agree to work together in good faith in order to obtain: (i) the necessary relevant information to enable Owners to reasonably assess whether each of the Terminals Under Construction are in all material respects compatible with the Vessel; and (ii) acceptance of the Vessel by the Terminal Under Construction. Once Owners are reasonably satisfied that a Terminal Under Construction is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge, and the Terminal Under Construction has confirmed to Owners that they are prepared to accept the vessel to call and carry out cargo operations at their terminal (once completed), Owners agree to add such Terminal Under Construction to the list of Primary Terminals.
*3 Terminals With Compatibility Issues
Signifies terminals which have identified compatibility issues and are not Primary Terminals. However, Owners agree to allow the Vessel to call at such terminals provided: (i) they are reasonably satisfied that there is sufficient compatibility to allow safe navigation, loading and/or discharge; and (ii) the terminal have confirmed to Owners their acceptance of the Vessel to call, and carry out cargo operations at their terminal.
*4 Terminals Pending Further Data
Signifies terminals in respect of which, at the date hereof, there is insufficient information available in order to allow Owners to assess whether the terminal is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge (“Pending Terminals”). Owners and Charterers agree to work together in good faith in order to obtain: (i) the necessary relevant information to enable Owners to reasonably assess whether each of the Pending Terminals are in all material respects compatible with the Vessel; and (ii) acceptance of the Vessel by the Pending Terminals. Once Owners are reasonably satisfied that an Pending Terminal is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge, and the Pending Terminal has confirmed to Owners that they are prepared to accept the vessel to call and carry out cargo operations at their terminal (once completed), Owners agree to add such Pending Terminals to the list of Primary Terminals.
Exhibit 10.6
Dated , 2014
GAS-four
LTD.
and
GASLOG LNG SERVICES LTD.
SHIP
MANAGEMENT AGREEMENT
in respect of the Vessel, “
GasLog Santiago
”
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TABLE OF CONTENTS
CLAUSE NO. | PAGE | ||||
1 . | DEFINITIONS AND INTERPRETATION | 1 | |||
2. | APPOINTMENT OF MANAGERS | 6 | |||
3 . | MANAGEMENT SERVICES | 6 | |||
4 . | MANAGERS’ OBLIGATIONS | 17 | |||
5 . | OWNERS’ OBLIGATIONS | 18 | |||
6 . | INSURANCE POLICIES | 18 | |||
7 . | MANAGEMENT FEE | 19 | |||
8 . | VESSEL EXPENSES | 20 | |||
9 . | MANAGERS’ RIGHT TO SUB-CONTRACT | 21 | |||
10. | RESPONSIBILITIES | 21 | |||
11. | DOCUMENTATION | 23 | |||
12. | DEPLOYMENT OF THE VESSEL | 24 | |||
13. | AUDITING | 24 | |||
14. | INSPECTION OF VESSEL | 25 | |||
15. | COMPLIANCE WITH LAWS AND REGULATIONS ETC. | 25 | |||
16. | DURATION OF THE AGREEMENT | 25 | |||
17. | TERMINATION | 25 | |||
18. | MISCELLANEOUS | 27 | |||
19. | LAW AND ARBITRATION | 27 | |||
20. | NOTICES AND BANK ACCOUNTS | 28 |
ANNEX
“A”
DETAILS OF VESSEL
ANNEX
“B”
DETAILS OF CREW / OFFICERS RATINGS
ANNEX
“C”
INITIAL BUDGET
ANNEX “D”
OPERATIONAL AND MAINTENANCE PROTOCOL
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ANNEX
“E”
PERMANENT INSTRUCTIONS
ANNEX
“F”
FORM OF ACCOUNTING SYSTEM
ANNEX
“G”
CONFIDENTIALITY AGREEMENT
ANNEX
“H”
INCENTIVE BONUS PLAN
ANNEX
“I”
PRIMARY TERMINALS
ii |
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THIS SHIP MANAGEMENT AGREEMENT is made the _____ day of _______, 2014
BETWEEN:
(1) | GAS-four Ltd., a company incorporated under the laws of Bermuda and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “Owners” ); |
(2) | GasLog LNG Services Ltd., a company incorporated in Bermuda and having a branch office at 69 Akti Miaouli, Piraeus GR 18537, Greece (the “Managers” ). |
WHEREAS:
(A) | The Owners, as of the Effective Date, are the registered owners of the 155,000 m 3 Liquefied Natural Gas Carrier “ GasLog Santiago ” (the “Vessel” ) as more particularly described in Annex “A” hereto and wish to engage the Managers to manage and operate the Vessel; |
(B) | The Managers, being fully experienced, qualified and able vessel managers, wish to manage and operate the Vessel subject to and in accordance with the terms set out in this Agreement. |
IT IS AGREED AS FOLLOWS:
1. | DEFINITIONS AND INTERPRETATION |
1.1. | Definitions |
In this Agreement save where the context otherwise requires, the following words and expressions shall have the meanings hereby assigned to them:
“Affiliate” means any entity which, directly or indirectly, through one or more intermediaries, Controls or is Controlled by, or is under common Control with that party;
“Agreement” means this ship management agreement including the Annexes attached hereto as amended from time to time in accordance with the terms hereof;
“Annual Budget” shall have the meaning ascribed to it in Clause 3.3.2 below;
“Charter” means any future charter entered into between the Owners and any future charterer of the Vessel notified to the Managers pursuant to Clause 5.3;
“Charterers” means any future charterers of the Vessel notified to the Managers pursuant to Clause 5.3;
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“Communication Expenses” means the costs incurred by the Managers in performing the Management Services and for the account of the Owners in respect of all communications between the shore and the Vessel as detailed in the Annual Budget;
“Control” and “Controlled” mean the holding of power to direct or cause the direction of management, policies and decisions of a company, corporation, partnership or other entity including, without limitation, through control by direct or indirect means of not less than fifty per cent (50%) of the voting rights in such company, corporation, partnership or other entity;
“Crew” means the Officers and Ratings and any other individual who has signed Articles on the Vessel and is employed from time to time by the Managers under Managers’ obligation to provide the Management Services;
“Crew Insurances” means insurances against crew risks which shall include, but not be limited to, death, sickness, repatriation, injury, shipwreck and loss of personal effects;
“Crew Support Costs” means all expenses of a general nature which are not particularly referable to any individual vessel for the time being managed by the Managers and which are incurred by the Managers for the purpose of providing efficient and economic Management Services and, without prejudice to the generality of the foregoing, shall include the cost of crew standby pay, training schemes for officers and ratings, cadet training schemes, sick pay, study pay, recruitment and interviews;
“Dollar” or “ US$ ” means the currency of the United States of America;
“EDP Expenses” means the costs of any new computer software or hardware (including licensing, maintenance, installation and training costs) that may be installed or developed, in relation to the Vessel;
“Effective Date” means the date of this Agreement;
“Emergency Situation” means an emergency situation that:
(i) | involves a threat to human life; |
(ii) | involves a risk of loss of the Vessel or its cargo or of serious damage to the Vessel; |
(iii) | involves a risk of the Vessel causing serious environmental damage; |
(iv) | involves a risk of the Vessel being stolen, impounded or seized; or |
(v) | involves a security or safety risk to the Vessel, such as but not limited to terrorism, piracy, etc. |
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“Flag Administration / State” shall mean such state or registry as the Owners shall from time to time specify;
“HSSE Report” means a report on the health, safety, security and environmental status of the Vessel (together with relevant statistics) and including details of any specific health, safety, security and/or environmental incidents prepared in accordance with Clause 3.4.9;
“Incentive Bonus” means the bonus payable by the Owners to the Managers in accordance with Clause 7.7;
“ISM Code” means the International Ship Management Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organisation (IMO) by resolution A.741(18) as amended from time to time;
“ISPS Code” means the International Ship and Port Facility Security Code adopted by the International Maritime Organization Assembly as the same may have been or may be amended or supplemented from time to time;
“Maintenance Schedule” means a schedule referred to in Clause 3.2.1(iii) detailing the maintenance required for the Vessel for the period from delivery to the next dry-docking of the Vessel thereafter for each subsequent 30 month period to coincide with Classification Society Intermediate Survey;
“Managed Fleet” means all vessels owned, leased, or chartered by Owners or Owners’ Affiliates and managed by Managers pursuant to a ship management agreement or similar arrangement;
“Management Fee” means the fee payable by the Owners to the Managers in consideration of the Management Services, as specified in Clauses 7.1 to 7.3 and as adjusted pursuant to Clause 7.4;
“Management Services” means the services specified in Clause 3;
“Managers’ Account” means the bank account in the name of the Managers as specified in Clause 20.3, or such other bank account of the Managers as may be notified to the Owners from time to time;
“MTSA Code” means the Maritime Transportation Security Act as enacted by the United States of America as the same may have been amended or supplemented from time to time;
“Officers” means the Master and the officers (including, but not limited to, the Senior Officers) of the Vessel, whose numbers, rank and nationality are currently specified in Annex “B” attached hereto, as updated from time to time;
“OPA 90” means the Oil Pollution Act of 1990 as enacted by the United States of America as the same may have been amended or supplemented from time to time;
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“Operational and Maintenance Protocol” means the protocol set forth on Annex “D” attached hereto;
“Operational Costs” means costs and expenses incurred by the Managers on behalf of the Owners to operate and maintain the Vessel including Communication Expenses and EDP Expenses;
“Owners’ Insurances” means the insurance policies to be procured by the Owners in respect of the Vessel and as described in Clause 6.1(i), (ii), (iii), and (iv);
“Permanent Instructions” means the instructions relating to the operational procedures for communications between the Owners, Charterers and the Crew as currently specified in Annex “E” attached hereto which may be amended pursuant to Clause 12.2;
“Quality Assurance & Quality Management System” shall have the meaning ascribed to it in Clause 3.8.1;
“Ratings” means the ratings of the Vessel, whose numbers, rank and nationality are currently specified in Annex “B” as updated from time to time;
“Review Date” means January 1;
“Senior Officer” means the following positions or roles on the Vessel:
(i) | the Master; |
(ii) | the Chief Engineer; |
(iii) | the Chief Officer; |
(iv) | the Second Engineer; or |
(v) | any other person whose rank or role on the vessel is required and designated as Senior Officer by the Flag Administration |
“Severance Costs” means the costs which the Managers as employers of the Crew are legally obliged to pay, and actually do pay, to or in respect of the Crew as a result of the early termination of any employment contract for service on the Vessel;
“ SMS ” means a safety management system which complies with all laws, rules and regulations, and with all the codes, guidelines and standards recommended by the International Maritime Organization (including without limitation, the ISM Code), any relevant flag state and the classification society and approved by Owners, which may from time to time be applicable to the Vessel and/or the Owners and/or the Managers, and which is otherwise appropriate having regard to the Managers’ obligations under this Agreement;
“SOPEP” means the shipboard oil pollution emergency plan in the form approved by the Marine Environment Protection Committee of the International Maritime Organization pursuant to the requirements of Regulations 25 of Annex H of the
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International Convention of the Protection of Pollution from Ships, 1973, as modified by the Protocol of 1989 relating thereto, as amended (MARPOL 73/78);
“STCW 95” means the International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto;
“Supplementary Budget” shall have the meaning ascribed to it in Clause 3.3.4 below;
“Training Matrix” means the most updated Training Matrix as mutually agreed between the parties, as amended, supplemented or updated from time to time;
“Vessel Account” means a bank account in the name of the Managers opened and operated in accordance with Clause 8.4, the details of which shall be notified to the Owners from time to time;
“Vessel Condition Report” means a report detailing the physical condition, the progress of the Maintenance Schedule and the performance of the Vessel;
“Vessel Data” means all records, invoices, logs, certificates and performance and maintenance data relating to the Vessel and all correspondence and documentation generated, collected or compiled during the provision of the Management Services by either former managers of the Vessel and given to the Managers, or by the Managers, to enable the Owners to effectively operate, manage or sell the Vessel, but excluding the Managers’ internal correspondence and any correspondence (other than invoices) between the Managers and their suppliers;
“Working Day” means a day when most banks are open for business in London, New York, Athens, and country of location of relevant bank accounts of Owners.
1.2. | Interpretation |
1.2.1. | “Owners”, “Managers” and “Charterers” include their respective successors and assigns. |
1.2.2. | Clause headings are inserted for convenience and shall be ignored in construing this Agreement. |
1.2.3. | Unless the context otherwise requires, words denoting the singular number include the plural number and vice versa. |
1.2.4. | References to clauses and annexes are to Clauses and Annexes of this Agreement except where otherwise expressly stated. |
1.2.5. | Reference to any document includes the same as varied, supplemented or replaced from time to time. |
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1.2.6. | References to any enactment include any re-enactments, amendments and extensions thereof. |
2. | APPOINTMENT OF MANAGERS |
2.1. | From the Effective Date and continuing, unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as managers of the Vessel. |
2.2. | Subject to the terms and conditions contained herein, during the period of this Agreement, the Managers shall carry out the Management Services as agents for and on behalf of the Owners. The Managers shall have authority to take such actions as they may from time to time consider necessary to enable them to perform their duties and obligations as set out in this Agreement in accordance with first class LNG ship management practice within the limits of authority delegated to them hereunder. |
3. | MANAGEMENT SERVICES |
3.1. | Crew Management |
3.1.1. | The Managers shall provide suitably and adequately qualified Crew for the Vessel in accordance with any requirements of the Owners, as described in the Operational and Maintenance Protocol set forth on Annex “D”, and the provisions of the STCW 95 and the requirements of this Agreement. |
3.1.2. | The Managers shall be responsible for: |
(i) | selecting, with Owners’ approval, which may be expressed from time to time in the form of standing instructions to the Managers for specific experience and qualification criteria pertaining to the Crew, including but not limited to the Training Matrix, and engaging the Crew (subject to the provisions of Clause 3.1.6 below) for the Vessel including payroll arrangements, pension administration, and insurances for the Crew other than those mentioned in Clause 6; |
(ii) | ensuring at all times the availability and supply of an adequate complement of Crew (including Master, Officers and Ratings complying with Annex “B”) relative to the particular operational status and size of the Vessel; |
(iii) | ensuring that the applicable requirements of the law of the flag of the Vessel are satisfied in respect of manning levels, rank, qualification and certification of the Crew and employment regulations (including those standards set forth by the International Transport Workers’ Federation (ITF)) pertaining to Crew’s tax, payroll, social insurance, welfare, discipline and other applicable requirements; |
(iv) | ensuring that all members of the Crew have passed a medical examination with a qualified doctor certifying that they are fit for the duties for which they |
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are engaged and are in possession of valid medical certificates issued in accordance with appropriate flag state requirements. In the absence of applicable Flag State requirements the medical certificate shall be dated not more than three months prior to the respective Crew member leaving their country of domicile and maintained for the duration of his service on board the Vessel; |
(v) | ensuring that the Crew shall have a command of the English language of a sufficient standard to enable them to perform their duties safely; |
(vi) | arranging transportation of the Crew, including repatriation, at Owners’ cost, unless otherwise arranged by Owners; |
(vii) | providing continuing training of the Crew and supervising their efficiency and competence, consistent with Owners’ requirements but in any event never less than the applicable international or Flag State standard for LNG vessels; |
(viii) | whenever the Vessel is operational, issuing instructions to the Master in accordance with the requirements of the Owners or Charterers, to trade along the most geographically direct, economical and safe route (except for any justifiable deviation allowed under English common law or the Hague Visby Rules and including all deviations that may be necessary in an Emergency Situation) and ensuring the Vessel is worked at a fuel-efficient speed consistent both with port arrival instructions given by the Owners and/or Charterers and with sea conditions; |
(ix) | issuing instructions to the Master to keep full and correct log books and furnishing the Owners with true and accurate copies of such log books when required; |
(x) | conducting union negotiations (if applicable); |
(xi) | operating a drug and alcohol policy, prepared by the Managers and approved by the Owners (such approval not to be unreasonably withheld or delayed), which includes, as a minimum, the principles set forth in the “Guidelines for the Control of Drugs and Alcohol Aboard Ship” of the Oil Companies International Marine Forum dated June 1995 (and in an amendments or successors thereto); |
(xii) | ensuring that the Crew and any other person on board the Vessel proceeding to sea shall be insured for the Crew Insurances with a first class insurance company, underwriter or protection and indemnity association (the “Crew Insurances”); |
(xiii) | ensuring that all premiums or calls in respect of the Crew Insurances are paid promptly by their due date; and |
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(xiv) | ensuring that the Crew Insurances shall name the Owners as co-assured (unless advised by the Owners to the contrary). |
3.1.3. | The Managers shall appoint a superintendent (ship manager) to be responsible for the day to day operation, maintenance and repair of the Vessel, the cost of which shall, subject to Clause 7.4, be included in the Management Fee. Should the Owners have reason to be dissatisfied with the superintendent so appointed, they shall raise their complaint with the Managers. The Managers shall investigate any such complaint promptly and, should the complaint prove to be well founded, the Managers shall replace such superintendent at no extra cost to the Owners. |
3.1.4. | The Managers shall institute onboard and shall ensure onboard compliance with a uniform standard of dress amongst the crew and officers, and uniform credentialing or identification of all Crew and Officers. |
3.1.5. | Should the Owners have any reason to be dissatisfied with any of the Crew, they shall raise their complaint with the Managers. The Managers shall investigate the complaint promptly and, should the complaint be well founded, the Managers shall replace the Crew member in question and undertake changes in the appointment of the Crew as the Owners may reasonably require. |
3.1.6. | The Managers shall employ the Crew in their name and for their own account and, for the avoidance of doubt, the Managers do not have authority to conclude or enter into contracts of employment with the Crew for and on behalf of the Owners and shall indemnify and hold harmless the Owners against all actions, proceedings, claims, demands or liabilities whatsoever and howsoever arising from the Managers’ breach of this Clause 3.1.6 or in relation to any disputes relating to Crew contracts of employment. |
3.1.7. | Except as allowed in clause 3.1.2(i), the Managers may not appoint any Senior Officers without the prior approval of the Owners (which shall not be unreasonably withheld or delayed), except that in the event that a shortage of crew would be likely to result under the terms of the Charter: |
(i) | in the Vessel going off hire under its Charter; or |
(ii) | an Emergency Situation; |
and in such circumstances it is not practical for the Managers to wait for Owners’ approval, the Managers may make such temporary appointments as they deem necessary; however, the Vessel’s manning shall always remain in compliance with the regulations of the Flag State’s minimum manning requirements.
Officers CV and accomplished Training Matrix should be provided to the Owners for reviewing prior promotion or assignment to a Senior Officer position.
The Owners reserve the right to interview and approve all Senior Officers candidates.
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3.2. | Operational and Technical Management |
3.2.1. | The Managers shall provide operational and technical management of the Vessel which includes, but is not limited to, the following functions: |
(i) | provision of competent personnel with suitable experience of the LNG industry to supervise the maintenance and general efficiency of the Vessel in line with the Training Matrix and the requirements of the Charter; |
(ii) | all maintenance and work for the Vessel so as to ensure that the Vessel complies with all applicable laws including but not limited to IMO, MARPOL and SOLAS (and including, for the avoidance of doubt, all the provisions of the ISM Code), regulations and/or other requirements of the flag of the Vessel and of the Primary Terminals and other places where she trades, all applicable international conventions, all applicable regulations and/or requirements of any terminals or facilities in such port(s) or place(s) where the Vessel may load or discharge, and all requirements and recommendations of the Vessel’s classification society applicable to a Vessel carrying LNG worldwide within the limits of the Charter; |
(iii) | preparing the Maintenance Schedule and regular updates on request (such updates to commence at delivery of the Vessel from the shipyard, and then each year on or around the anniversary upon which the Vessel was classified by its classification society) for approval by the Owners (such approval not to be unreasonably withheld or delayed); |
(iv) | arrangement and supervision of dry dockings, repairs, alterations and the upkeep of the Vessel in accordance with first class LNG ship management practice provided that the Owners shall allocate sufficient funds and approve the relevant Annual Budgets and Supplementary Budgets to ensure that Managers can incur the necessary expenditure to ensure that the Vessel will comply with the law of the flag of the Vessel and of the places where she trades, and all requirements and recommendations of the classification society; |
(v) | investigating and reporting to Owners any technical faults or problems material to the performance of the Vessel and arranging for their repair in consultation with the Owners; |
(vi) | arrange for the victualing and storing of the Vessel appropriate to the declared operational status of the Vessel and place and effect payment for contracts for lubricating oil, paints and all consumable materials where they are not for the Charterers’ account, together with any other contracts that may be agreed with the Owners from time to time in accordance with Clause 3.2.2; |
(vii) | appointment of surveyors and technical consultants as the Managers may consider from time to time be necessary; |
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(viii) | development, implementation of and maintenance of a SMS and obtaining and maintaining valid certificates evidencing compliance with this Clause, including without limitation, a valid document of compliance in relation to itself and valid safety management certificates in respect of the Vessel as required by the ISM and ISPS Codes; |
(ix) | provide the Owners with copies of any and all documents of compliance and safety management certificates as described in Clause 3.2.1(viii) upon issuance; |
(x) | keep or procure that there is kept on board the Vessel at all times: |
(a) | all certificates and documents required from time to time by any applicable law or regulations to enable her to perform the Charter between the Primary Terminals without delay, |
(b) | valid certificates in force as required by the Flag State, |
(c) | any further certificates and documents required from time to time by any applicable law or regulations to enable her to perform the Charter without delay, |
(d) | an ITF certificate or equivalent allowing Vessel’s calls and operations in all ports to which the Vessel is ordered under the Charter where an ITF certificate or equivalent is required, and |
(e) | a copy of all documents of compliance and the original of any safety management certificates as described in Clause 3.2.1(viii); |
(xi) | arrangement of periodic analysis by third parties of the bunker fuel and reporting the results of such analysis to the Owners (the costs being included in the Vessel’s running costs): |
(xii) | noting requirements resulting from safety and any external ship inspections and implementing these insofar as they affect the operation or safety of the Vessel (such implementation to be at the Owners’ expense); |
(xiii) | implementing safety recommendations issued in terms of all international conventions (at the Owners’ expense); |
(xiv) | arrange, where necessary for the superintendent or other staff of the Managers to visit the Vessel. If the superintendent or other staff of the Managers have reason to spend more than twenty-five (25) days in aggregate in any calendar year (or pro rata for part of a calendar year) visiting the Vessel, their services will be charged out at the rate specified in Clause 7.4 below; |
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(xv) | ensure that maritime, safety and cargo custody standards are in accordance with first class international LNG shipping practice and are maintained by the Crew whenever such personnel are serving on board the Vessel; |
(xvi) | arrange and effect payment on behalf of the Owners for the towage of the Vessel when appropriate; |
(xvii) | arrange, maintain, and effect preparation and payment on behalf of the Owners for suitable moorings for the Vessel for lay-up at such locations as may from time to time be mutually agreed relative to the Vessel’s positioning requirements of the Owners; |
(xviii) | handle port disbursement accounts where these are not for the Charterers’ account; |
(xix) | navigate the Vessel, handle all necessary communications, manage all cargo operations on behalf of Owners, and provide for the security and safety of the Vessel, cargo and Crew, all in accordance with first class LNG ship management practice; |
(xx) | ensure that the Vessel is compatible with existing LNG liquefaction terminals, regasification terminals and ship/shore interfaces, at the Primary Terminals and to maintain such compatibility and all necessary certificates and documentation; |
(xxi) | undertake vessel-terminal compatibility studies as requested by Owners and at Owners’ expense; and |
(xxii) | manage and operate the Vessel on behalf of the Owners in any part of the world to first class industry standards for an LNG carrier, provided that the Vessel shall be employed in lawful trades, as the Owners may direct, between good and safe ports and places where she can always be safely afloat, and further provided that the Vessel shall not trade to ports or areas where, at the time in question, there are expected to be hostilities, wars, warlike operations, civil commotions or revolutions, unless the Owners are able to obtain war risks insurance against such eventuality. |
Managers shall at all times have the right to refuse to carry out any instructions from the Owners or the Charterers to trade or lay up the Vessel if Managers can clearly demonstrate that by doing so, it would contravene any applicable laws and regulations of the Vessel’s flag, the classification society or of the places she trades.
Furthermore, Managers shall not be held to be in breach of this Agreement, should at any time the Vessel fail to conform to its class standards or fail to conform to statutory or international standards, except to the extent that such failures result from the negligence or breach of this Agreement by the Managers.
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3.2.2. | Procurement |
Subject to the terms of this Agreement, the Managers shall have discretion to procure all stores, spares, equipment, provisions, oils, fuels and any other goods, materials or services to be supplied to the Vessel by the Managers in performance of their Management Services from whatever source or supplier they may deem appropriate provided that:
(i) | the Managers use all reasonable efforts to achieve the lowest prices available for the appropriate quality of goods or services; |
(ii) | the Managers shall provide Owners with the benefit of all discounts, rebates or other financial incentives provided by any suppliers, and all amounts billed to Owners in connection with all stores, spares, equipment, provisions, oils, fuels and any other goods, materials or services to be supplied to the Vessel shall reflect any such discounts, rebates or financial incentives; and |
(iii) | the Owners reserve the right to require the Managers to procure such goods, materials and services from sources or suppliers they may notify to the Managers from time to time provided that: |
(a) | the Owners shall not unreasonably interfere with the aforementioned Managers’ procurement processes; |
(b) | the Owners may not force the Managers to breach the terms of any existing procurement contract to the extent such contract is consistent with the terms of this Agreement and standard industry practices; and |
(c) | the Owners have due regard to the interests of the Managers in fostering good long-term relationships with suppliers; |
and where the Owners utilize their rights under this Clause 3.2.2, the Managers shall in no circumstances be liable for the quality or pricing of the goods, materials and services so provided.
3.3. | Accounting, Budgeting, and Reporting |
3.3.1. | The Managers shall: |
(i) | provide an accounting system in respect of the Vessel which meets the reasonable requirements of the Owners, and provide regular accounting services and supply regular accounting reports and records; and |
(ii) | maintain a record of all costs and expenditures incurred as well as data necessary or proper for the settlement of accounts between the parties. |
3.3.2. | The Managers shall present to the Owners annually a budget in respect of the estimated costs of operating the Vessel for the following twelve months in the current |
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reporting form of the Managers, which is acceptable to the Owners (the “ Annual Budget ”). The initial Annual Budget is attached hereto at Annex “C,” and shall be for the period from the Effective Date until 31 December 2014, with a full twelve (12) month Annual Budget submitted yearly thereafter, ending on the day immediately preceding the Review Date. Subsequent Annual Budgets shall be prepared by the Managers for approval by the Owners at least two (2) months before each Review Date. |
3.3.3. | The Owners shall indicate to the Managers their acceptance and approval of the Annual Budget within one month of presentation and in the absence of any such indication the Managers shall be entitled to assume that the Owners have accepted the Annual Budget as provided. |
3.3.4. | If after the approval of the Annual Budget pursuant to Clauses 3.3.2 and 3.3.3, the Owners or Managers anticipate material changes in the Operational Costs (or in respect of the initial Annual Budget set out in Annex “C”, if the Managers believe such initial Annual Budget is inaccurate or unworkable), then the Managers shall prepare a supplementary budget reflecting such changes (the “ Supplementary Budget ”) for approval by the Owners and the Owners shall indicate their approval or non-approval of a Supplementary Budget within one month of it being presented to them (and in the absence of any such indication, the Managers shall be entitled to assume that the Owners have accepted a Supplementary Budget). Upon approval by the Owners, a Supplementary Budget shall be treated as the Annual Budget for the year in question or the remainder thereof. |
3.3.5. | For the avoidance of doubt, the Managers shall not incur expenditure in respect of the Vessel in excess of the Annual Budget (with due consideration to the fact that expenditure may be phased over varying periods or may fluctuate from month to month, notwithstanding that such expenditure was budgeted for on an annual basis) or incur expenditure that has not been accounted for in any Annual Budget without the prior consent of the Owners (which shall not be unreasonably withheld or delayed). |
3.3.6. | Notwithstanding Clause 3.3.5, the Managers may in each Annual Budget period, as specified in Clause 3.3.2, incur expenditure on behalf of the Owners in respect of items that are not budgeted for in the Annual Budget, or for amounts in excess of the Annual Budget amounts, without the approval of the Owners provided that: |
(i) | such expenditure is used only for the proper performance of the Management Services; and |
(ii) | such total expenditure does not exceed five (5) per cent of the total budgeted amount for that Annual Budget period or such other amount that may be agreed by the parties from time to time. |
3.3.7. | The Managers shall: |
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(i) | by the fifteenth (15 th ) Working Day of the month provide the Owners with a Vessel Condition Report in respect of the previous month in such form as the Owners (acting reasonably) may require; |
(ii) | by the fifteenth (15 th ) Working Day of each month provide the Owners with a comparison between the budgeted Operational Costs as set out in the Annual Budget and actual Operational Costs in respect of the previous month (in accordance with the form set out in Annex “F”); |
(iii) | by the fifteenth (15 th ) Working Day of each month provide the Owners with a request for funds based upon an estimate of the funding requirements of the Vessel that are required in respect of the next month together with any requests for approval of expenditure pursuant to Clause 3.3.5 and any proposed amendments to the Annual Budget pursuant to Clause 3.3.4; and |
(iv) | by the fifteenth (15th) Working Day of each month provide the Owners with a consolidated report on actual Operational Costs and if requested by the Owners, capital costs, including all expenses in relation to financing of the Vessel, in respect of the previous month. |
3.3.8. | If requested and in such manner as may be required by the Owners, the Managers shall provide the necessary personnel, hardware and software, and other resources necessary to administer on Owners’ behalf and in its name the invoicing and collection of hire payable under the Charter. |
3.4. | Health, Safety, Security, and Environmental Protection |
3.4.1. | The Managers shall operate a management system which shall be approved by the Owners (such approval not to be unreasonably withheld or delayed), and comply and ensure that the Vessel and the Crew comply with all applicable health, safety, security and environmental laws and regulations, and nothing in this Clause 3.4 shall derogate from the obligations of Managers to comply with its statutory responsibilities insofar as they relate to the other Management Services. |
3.4.2. | The Managers shall, in relation to all persons engaged or likely to be engaged in the execution of the Management Services, take such steps as are reasonably practicable to ensure their health and safety. |
3.4.3. | The Managers shall make available for inspection by the Owners at all times all registers, records and other documentation concerning health, safety, security (where appropriate) and environmental matters relating to the Management Services. |
3.4.4. | The Managers shall send to the Owners a copy of every notice or other communication received from or sent to any person or body concerning health, safety, security and/or environmental matters relating to the Management Services and shall co-operate with the Owners in respect of all such health, security, safety and/or environmental matters, as may from time to time be requested by the Owners |
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3.4.5. | The Managers shall use all reasonable endeavors to ensure that no oil, or harmful or hazardous substances, of any description, shall be discharged or escape accidentally or otherwise, from the Vessel; and that the Vessel, its Officers and Crew comply with all international, national, and state oil and air pollution laws, conventions or regulations applying in, or to, international waters and the territorial waters of the countries into which the Vessel may trade under the Charter including the provisions of OPA 90 that apply to tank ships. This shall also include adhering to the standards promulgated under OPA 90 as those regulations apply to non-tankships operating within the jurisdiction of the United States whether or not the same strictly apply to the Vessel. |
3.4.6. | The Managers shall not treat, keep or dispose of any waste produced and/or carried by the Managers as a result of the Management Services in a manner likely to cause harm to the health and safety of any person or harm to the environment (as far as the same may be reasonably practical) and shall comply with every statutory duty which is relevant. |
3.4.7. | During the execution of the Management Services, the Managers shall take such steps as are reasonably practicable to avoid (or where avoidance is not possible, to minimize) harm to the environment. |
3.4.8. | The Managers will prepare and obtain all necessary approvals for a SOPEP. The SOPEP will be written in the English language and will be reviewed and updated as required and be maintained with the correct list of coastal state contacts. If required, the Managers will arrange for the translation of the SOPEP into another language. The Managers will also undertake regular training of the Crew in the use of SOPEP including drills to ensure that the SOPEP functions as expected and that contact and information details specified are accurate. |
3.4.9. | The Managers shall prepare a HSSE Report in such form and detail as the Owners (acting reasonably) require, to be submitted to the Owners on the 5th day of the following month. |
3.5. | Insurance Arrangements |
3.5.1. | The Owners shall arrange insurances in accordance with Clause 6.1. |
3.5.2. | The Managers shall immediately inform and keep the Owners informed of any incident which gives or may give rise to claims or disputes relating to the insurances effected in accordance with Clause 6. |
3.5.3. | The Owners shall or, in their sole discretion instruct the Managers on a case-by-case basis and in consultation with the Owners to, handle insurance, average and salvage claims in connection with the Vessel. Any costs reasonably incurred by the Managers in handling claims in accordance with this Clause shall be paid by or for the account of the Owners. Until notified to the contrary, the Managers shall process all insurance claims relating to the Crew, in consultation with Owners. |
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3.6. | Sale or Purchase of the Vessel |
The Managers shall, if requested, provide Owners with technical assistance in connection with any sale of the Vessel. Any costs or out-of-pocket expenses incurred by the Managers in providing such technical assistance shall be paid by or for the account of the Owners. The Owners will, however, be solely responsible for agreeing the terms of any agreement regulating any sale.
3.7. | General Administration |
3.7.1. | The Owners may, in their sole discretion and upon such terms and conditions as the Owners shall specify, instruct the Managers on a case-by-case basis to handle and/or settle all claims relating to the Vessel including but without limitation any claims involving the Charterers. |
3.7.2. | The Managers shall keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving the Charterers or other third parties. |
3.7.3. | The Owners shall, or in their sole discretion instruct the Managers on a case-by-case basis to, bring or defend actions, suits or proceedings in connection with matters entrusted to the Managers pursuant to this Agreement. |
3.7.4. | Where the Managers are retained to handle and/or settle claims relating to the Vessel pursuant to Clause 3.7.1, the Managers shall be entitled to obtain legal or technical or other outside expert advice in relation to the handling and settlement of such claims and disputes. |
3.7.5. | The Owners shall arrange for the provision of any necessary guarantee bond or other security in connection with any such claims. |
3.7.6. | Any external costs reasonably incurred by the Managers in carrying out their obligations in accordance with this Clause 3.7 shall be paid by or for the account of the Owners provided that the Owners have instructed the Managers in accordance with Clause 3.7.1. |
3.8. | Quality Assurance |
3.8.1. | The Managers shall have and maintain a quality assurance/quality management system (the “ Quality Assurance & Quality Management System ”). This system shall include on board and on shore operation/ management and shall at the time of delivery, or as reasonably soon thereafter, meet the requirements of ISO-9001-2008 and ISO-14001-2004 or any subsequent addition or substitution approved by the Owners. The Quality Assurance & Quality Management System shall be documented and available to the Owners for approval within three (3) months of execution of this Agreement. The Managers shall supply documentation to the Owners on request confirming the continued maintenance and operation of the Quality Assurance & |
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Quality Management System in good standing throughout the period of this Agreement. |
3.9. | [Reserved] |
4. | MANAGERS’ OBLIGATIONS |
4.1. | The Managers undertake to use their best endeavours to provide the agreed Management Services as agents for and on behalf of the Owners in a timely and efficient manner in accordance with first class international LNG ship management practice and the Operational and Maintenance Protocol set forth on Annex “D” and to protect and promote the interests of the Owners in all matters relating to the provision of the Management Services hereunder provided, however, that the Managers in the performance of their management responsibilities under this Agreement shall be entitled to have regard to their overall responsibility in relation to the Managed Fleet, and in particular, but without prejudice to the generality of the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and reasonable. |
4.2. | The Managers shall procure that the requirements of the law of the flag of the Vessel are satisfied and the Managers shall in particular be deemed to be the “Company” as defined by the ISM and ISPS Codes, thereby assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by these Codes when applicable. The Managers shall comply at all times with the requirements of the ISM, ISPS, and MTSA Codes, and the Managers shall immediately inform Owners if there is any threatened or actual withdrawal of Managers document of compliance or the Vessel’s safety management certificate or ISS (Security Certificate). |
4.3. | In addition to the specific obligations to keep the Owners informed hereunder, the Managers shall keep the Owners informed of all relevant information regarding the Vessel and the performance of the Management Services which the Owners may, acting reasonably, specify from time to time. |
4.4. | When the Managers become aware of an Emergency Situation, they shall immediately contact the Owners and keep the Owners informed in respect of such Emergency Situation. |
4.5. | If, in an Emergency Situation, the Managers (or the Master) are required pursuant to this Agreement to solicit an approval from the Owners, but in such circumstances it is not practical to wait for such approval, then notwithstanding any other term in this Agreement, the Managers (or the Master) may take whatever action they may deem necessary to deal with such Emergency Situation. |
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5. | OWNERS’ OBLIGATIONS |
5.1. | The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this Agreement. |
5.2. | The Owners shall provide prompt responses to any requests made by the Managers pursuant to this Agreement. |
5.3. | The Owners shall (subject to any confidentiality restrictions) provide the Managers with any relevant information relating to the Charters or Charterers and shall notify the Managers upon a change of Charterers or upon any new Charter in respect of the Vessel. |
5.4. | The Owners shall use reasonable endeavours (and subject to any confidentiality restrictions) to ensure that the Charterers shall keep the Managers informed of the relevant terms of any gas supply contract, charter party, contract of affreightment, contract of insurance and any other document relating to the Vessel and its cargo that the Managers may reasonably require in order to perform their obligations hereunder. |
6. | INSURANCE POLICIES |
6.1. | The Owners shall procure throughout the period of this Agreement that: |
(i) | at the Owners’ expense, the Vessel is insured for usual hull and machinery marine risks (including crew negligence) and war risks in accordance with the first class practice of prudent owners of vessels of a similar type to the Vessel; |
(ii) | at the Owners’ expense, the Vessel is insured against Protection and Indemnity risks (including pollution risks) based upon the Standard Rules of a member of the International Group of P&I Clubs and have arranged for the Managers to be included as named co-assured, and provide the Managers with Certificates of Entry to evidence that such insurances have been effected and confirm renewal within fifteen (15) Working Days of the same; |
(iii) | where the Vessel is directed to call at any port within the United States of America and at the Owners’ expense, the Vessel carries a Certificate of Financial Responsibility as required by the United States Offshore Pollution Act 1990; |
(iv) | the Vessel is insured against such other risks (including Freight, Demurrage and Defense) that are appropriate to the Vessel’s trade; |
(v) | the Owners’ Insurances name the Owners and the Managers as co-assureds, with full cover, with the Owners obtaining cover in respect of each of the insurances specified in Clause 6.1 on terms whereby the Owners are liable in respect of premiums or calls arising in connection with the Owners’ Insurances; and |
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(vi) | written evidence is provided, to the reasonable satisfaction of the Managers, of compliance by the Owners with their obligations under Clause 6 within a reasonable time of the commencement of the Agreement, and of each renewal date and, if specifically requested, of each payment date of the Owners’ Insurances. |
6.2. | Insofar as it affects the superintendent and other shore staff employed by the Managers in connection with this Agreement, the Managers shall procure and maintain at their own expense appropriate insurance cover with first class insurers in respect of death or injury to such superintendents or shore staff, and such insurance shall comply with all applicable law. |
6.3. | Managers shall name Owners as co-assureds on this insurance cover, and Managers agree to waive all subrogation rights against Owners that might arise under this entire Clause 6. |
7. | MANAGEMENT FEE |
7.1. | Subject to any adjustment in accordance with the provisions of Clause 7.2 the Owners shall pay to the Managers for the provision of Management Services, a monthly management fee of Fourty-Six Thousand Dollars (US$46,000) (the “Management Fee”) which shall be paid each calendar month in advance by the first Working Day of each applicable month provided that where a payment is due in respect of any part of a month that payment shall be paid on a pro-rata basis, such sums to be paid into the Managers’ Account. All invoices for the Management Fee shall be submitted by the Managers to the Owners in advance on a monthly basis. |
7.2. | If, during any calendar month, the Vessel is in: |
(i) | “deep” lay-up (that is with sea chests sealed off and all system drained down) the Management Fee shall be Three Thousand Five Hundred Dollars (US$3,500) per month and pro rata in respect of any part month; or |
(ii) | a partially manned stand-by condition, during a period of lay-up (other than deep lay-up) or during reactivation periods or during any period where the Managers are preparing to take over management of the Vessel from a third party the Management Fee shall be Ten Thousand Dollars (US$10,000) per month and pro rata in respect of any part month. |
7.3. | The Management Fee is exclusive of value added tax and any other existing sales or services tax that may be applicable. The Managers warrant that at the Effective Date, no such taxes are payable in respect of the Management Fee under Greek Law. |
The Management Fee payable to the Managers will be adjusted annually on the first Review Date after the Effective Date and on each Review Date thereafter. The adjustment will be agreed between the Parties in good faith on the basis of general inflation and proof of increases in actual costs incurred by the Managers.
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7.4. | In addition to the Management Fee, if the Managers’ superintendent or other staff are reasonably required to spend more than twenty-five (25) days in aggregate visiting the Vessel in any calendar year (or pro-rata for part of a calendar year), the cost of visits in excess of twenty-five (25) days shall be paid by the Owners, into the Managers’ Account, at a rate of One Thousand Dollars (US$1,000.00) per day (or pro rata in respect of any part day on board the Vessel). Notwithstanding the foregoing, all reasonable travelling expenses in connection with reasonably required visits to the Vessel by Managers’ superintendent or other staff (excluding visits in connection with drydocking) shall be part of the Management Fee, irrespective of the duration of such visits. |
7.5. | In the event of this Agreement being terminated by the Owners or the Managers in accordance with the provisions of Clause 17.3 or 17.4, the Management Fee payable to the Managers according to the provisions of Clauses 7.1 and 7.2, shall continue to be payable for a further period of three calendar months as from the termination date. In addition, provided that the Managers provide Crew for the Vessel in accordance with Clause 3.1: |
(i) | the Owners shall continue to pay Crew Support Costs during the said further period of three calendar months; and |
(ii) | the Owners shall pay any reasonable Severance Costs which may materialise provided the Managers have used reasonable endeavours to mitigate such obligations to the Crew. |
7.6. | Unless otherwise agreed in writing all discounts and commissions obtained by the Managers in the course of the management of the Vessel shall be credited to the Owners. |
7.7. | The Owners shall, in respect of each year of this Agreement, on or around the Review Date, decide whether or not to pay an Incentive Bonus to the Managers for remittance to the Crew of an amount and in the manner described in Annex “H” attached hereto. |
Any Incentive Bonus that the Owners decide to pay shall be paid into the Managers’ Account with fifteen (15) Working Days of the Review Date and the Managers shall remit any such bonus to the Crew. In addition the Owners shall within fifteen (15) Working Days of the Review Date provide a written explanation to the Managers of their decision which sets out in reasonable detail the rationale for making such a decision.
8. | VESSEL EXPENSES |
8.1. | Upon receipt of a request for funds for the Vessel pursuant to Clause 3.3.7 (iii) the Owners shall pay such funds into the Vessel Account, provided that such request is made in respect of items and amounts accounted for in the Annual Budget or made in respect of items or amounts for which the Managers do not require the approval of the Owners pursuant to Clause 3.3.6. |
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8.2. | In the event that the Managers request funds from the Owners pursuant to Clause 3.3.7(iii), but the Owners are not obliged to pay such funds pursuant to Clause 8.1, then the Owners may refuse to provide such funds provided that, in such circumstances, the Managers shall not be liable for any losses or damages incurred by the Owners as a result of such refusal and in any event, the Owners shall not unreasonably refuse to pay or delay the payment of such sums. |
8.3. | All sums payable by the Owners in respect of requests made by the Managers pursuant to Clauses 8.1 and 8.2 shall be paid into the Vessel Account by the first Working Day of the month following that month in which such request was made. |
8.4. | The Managers shall open the Vessel Account and communicate the details of the Vessel Account to the Owners prior to the Effective Date. The Vessel Account shall be an account that only contains monies payable into such Vessel Account pursuant to this Agreement. All monies paid into the Vessel Account (including interest, if payable) shall be held on trust for and to the credit of the Owners and the Managers may only utilise funds in the Vessel Account for the proper performance of the Management Services hereunder. The Managers shall provide full details of all transactions in relation to the Vessel Account and shall procure that monthly Vessel Account bank statements are provided to the Owners for each month of this Agreement. |
8.5. | Notwithstanding anything contained in this Agreement, the Managers shall in no circumstances be required to use or commit their own funds to finance the provision of the Management Services. |
9. | MANAGERS’ RIGHT TO SUB-CONTRACT |
9.1. | The Managers shall have the right to sub-contract any of their obligations in this Agreement, subject to Clause 9.2 below. |
9.2. | The Managers shall obtain the prior written consent of the Owners if they wish to sub-contract any of their obligations under this Agreement for amounts exceeding Fifty Thousand United States Dollars over and beyond the approved Annual Budget. |
9.3. | Notwithstanding any sub-contract the Managers shall remain fully liable for the due performance of their obligations under this Agreement, the Managers shall procure that each sub-contractor engaged pursuant to this Clause 9 shall comply with the requirements of Clause 3.4. |
10. | RESPONSIBILITIES |
10.1. | Force Majeure |
10.1.1. | Neither the Owners, nor the Managers shall be liable for any loss or damage or total or partial failure to perform this Agreement (other than a failure to perform an obligation to pay money) caused wholly or partly by any circumstances or things beyond the reasonable control of the Owners or the Managers, as the case may be, |
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including (without limiting the generality of the foregoing) acts of God, fires, floods, epidemics, quarantine restrictions, wars, terrorism, insurrections, riots, violent demonstrations, criminal offences, acts and omissions of civil or military authority or of usurped power, requisition or hire by any governmental or other competent authority or embargoes. |
10.1.2. | The party invoking force majeure will advise the other party of the force majeure event at the earliest opportunity and also advise same party of the likely duration of such force majeure situation. |
10.2. | Liability to Owners |
The Managers shall be under no liability to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services, unless the same is proved to have resulted from the breach of this Agreement, fraud, gross negligence, or wilful misconduct of the Managers or their employees, or agents or sub-contractors employed by them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers’ personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers’ liability for each incident or series of incidents giving rise to a claim or claims shall not exceed a total of twelve (12) times the monthly Management Fee of Forty-Six Thousand Dollars (US$46,000) as adjusted annually pursuant to Clause 7.3 above.
Notwithstanding anything herein contained in the contrary, the Managers shall not be liable for any of the actions of the Crew, even if such actions are negligent or wilful, except only to the extent that they are shown to have resulted from a failure by the Managers to discharge their obligations under Clauses 3.1 or 3.4, in which case their liability shall be limited in accordance with the terms of this Clause 10.2.
10.3. | Indemnity |
Except to the extent and solely for the amount that the Managers would be liable under Clause 10.2, the Owners hereby undertake to keep the Managers and their employees, agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of the Agreement, and against and in respect of all costs, losses, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
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10.4. | “Himalaya” |
It is hereby expressly agreed that no employee or agent of the Managers (including sub-contractors from time to time employed by the Managers) shall in any circumstances whatsoever be under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Clause 10, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 10 the Managers are or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.
11. | DOCUMENTATION |
11.1. | The Managers shall also maintain and cause their agents to maintain and retain in accordance with generally accepted accounting practices, applicable tax requirements and good international shipping practices, all books, accounts and records pertaining to this Agreement, and all records, documents and other materials related to the Managers’ implementation of and compliance with the Quality Assurance & Quality Control System, including vouchers, invoices, receipts, correspondence, copies of original documents and such other documentation as is necessary in order to verify the compensation payable hereunder. |
11.2. | The Managers shall make available, upon Owners’ request, all documentation and records relating to the performance of the Management Services, the SMS and/or the Crew which the Owners require in order to demonstrate compliance with the ISM Code, ISPS Code, and STCW 95, or to defend or prosecute a claim against a third party or otherwise. |
11.3. | All Vessel Data is and shall remain the property of the Owners and shall be made available to the Owners by the Managers on the Owners’ request. Upon termination of this Agreement for any reason, the Managers shall promptly provide the Owners with all the Vessel Data, whether onboard the Vessel or otherwise. |
11.4. | The Managers shall retain and properly store all Vessel Data in accordance with first class LNG ship management practice. If, in the Managers’ opinion, certain Vessel Data should be destroyed, then the Managers shall first offer to return that Vessel Data (at the Owners’ expense) to the Owners, and in the event that the Owners decline such offer, the Managers may destroy such Vessel Data. |
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12. | DEPLOYMENT OF THE VESSEL |
12.1. | The Managers shall ensure that the Crew of the Vessel shall comply with any Permanent Instructions. |
12.2. | The Owners may change the terms of the Permanent Instructions, or upon the execution of a new Charter replace the existing Permanent Instructions with new Permanent Instructions with the consent of the Managers which shall not be unreasonably withheld or delayed. |
12.3. | In the event that the Managers or the Crew receive instructions from the Charterers, that in the opinion of the Managers, conflict with instructions provided by the Owners or which go beyond the scope of authority of the Charterers (to the extent such scope of authority has been disclosed by the Owners to the Managers), the Managers shall use best endeavours to immediately notify the Owners and the Charterers of the same. In such circumstances, subject to Clause 3.1.2(viii), the Owners’ instructions shall take precedence over the Charterers’ instructions. |
12.4. | Except for the purposes of saving life, the Vessel shall not, unless expressly authorised by the Owners, undertake attempts of salvage. |
12.5. | If: |
(i) | the Vessel undertakes attempts at salvage pursuant to Clause 12.4, or |
(ii) | the Vessel requests that a third party attempts salvage of the Vessel, |
then without prejudice to the Master of the Vessel’s overriding right to take whatever action he may deem necessary to preserve life or prevent the loss of the Vessel, all salvage shall be under the terms of the current “Lloyds Open Form No Cure — No Pay” agreement.
12.6. | Any proceeds arising from salvage of third party property shall be for the benefit of the Owners. |
12.7. | Notwithstanding any other provision of this Agreement, the Managers shall not (and shall procure that the Crew shall not), without the written consent of the Owners, sign any bill of lading on behalf of the Owners. |
13. | AUDITING |
13.1. | The Managers shall prepare the Annual Budget and accounts (as referred to in Clause 3.3.1 above) and shall make the same available for inspection and auditing by the Owners at such times as may be mutually agreed. |
13.2. | The Owners shall have the right to audit the Managers’ records and documentation as set out in Clause 11 above for the purpose of verifying their correctness and completeness at all times on reasonable notice to the Managers. Where staff or |
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auditors of the Owners visit the premises of the Managers for the purpose of carrying out an audit, the Managers shall provide office space and facilities to such staff or auditors at no extra cost to the Owners. |
14. | INSPECTION OF VESSEL |
14.1. | The Owners shall have the right at any time after giving reasonable notice to the Managers to inspect the Vessel for any reason they consider necessary. |
15. | COMPLIANCE WITH LAWS AND REGULATIONS ETC. |
15.1. | The Managers will not do or permit to be done anything which might cause any breach or infringement or the laws and regulations of the Vessel’s flag, the classification society or of the Primary Terminals and other places where she trades. |
16. | DURATION OF THE AGREEMENT |
16.1. | This Agreement is entered into on the date of signing and shall continue until terminated in accordance with Clause 17. |
17. | TERMINATION |
17.1. | If the Managers: |
(i) | fail to meet any material obligation under this Agreement; or |
(ii) | fail to meet any obligation under this Agreement that has a material adverse effect upon the Owners or the Vessel; |
then the Owners may give notice to the Managers of the default, requiring them to remedy it (if such default is capable of being remedied) as soon as practically possible. In the event that the default is not capable of being remedied or the Managers fail to remedy the default within a reasonable time to the satisfaction of the Owners, the Owners shall be entitled to terminate this Agreement by giving the Managers ninety (90) days’ written notice.
17.2. | The Owners may also terminate this Agreement by giving the Managers ninety (90) days’ written notice in the event that the Managers, in the reasonable opinion of the Owners, fail to manage the Vessel in accordance with first class LNG ship management practice and such failure has not been remedied within a reasonable time after written notice of such failure. |
17.3. | The Managers shall be entitled to terminate the Agreement by notice in writing if: |
(i) | any moneys payable by the Owners to the Managers have not been received into the Managers’ Account within thirty (30) days (excluding Saturdays, Sundays and public holidays) of payment having been requested in writing by the Managers; or |
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(ii) | this Agreement or any of the Owners’ rights and/or obligations are assigned to any person or entity without the Managers’ prior written agreement or approval. |
17.4. | This Agreement shall be deemed to be terminated: |
(i) | in the case of the sale of the Vessel (other than a sale or transfer to an Affiliate of the Owners); |
(ii) | if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned for hire; or |
(iii) | in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than of the purpose of a solvent reconstruction or amalgamation) or if a receiver or similar officer is appointed of the whole or a material part of its assets or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. |
17.5. | If the Owners elect to provide Officers and, for any reason within their control, the Owners fail to: |
(i) | procure Officers and Ratings supplied by them or on their behalf, complying with the requirements of STCW 95; or |
(ii) | instruct such officers and ratings to obey all reasonable orders of the Managers’ SMS; |
then the Managers may give notice to the Owners of the default, requiring them to remedy it (if such default is capable of being remedied) as soon as practicably possible. In the event that the default is not capable of being remedied or if the Owners fail to remedy the default within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate this agreement.
17.6. | [Reserved] |
17.7. | Notwithstanding Clauses 17.1 and 17.2, the Owners shall have the right to terminate this Agreement at any time and for any reason by giving the other party not less than three (3) months’ written notice of their intention to terminate this Agreement. |
17.8. | If the Owners proceed with the employment of, or continue to employ the Vessel in blockade running or in an unlawful trade or on a voyage, which in the reasonable opinion of the Managers, is unduly hazardous, the Managers may give notice to the Owners requiring them to cease to employ the Vessel in such manner as soon as possible. If the Owners fail to comply with such notice within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate this Agreement with immediate effect by notice in writing. |
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17.9. | The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination. |
18. | MISCELLANEOUS |
18.1. | The confidentiality obligations of the parties are set out in a separate Confidentiality Agreement that is attached for reference in Annex “G”. |
18.2. | A person who is not a party to this Agreement may not enforce, or otherwise have the benefit of, any provision of this Agreement under the Contracts (Rights of Third Parties) Act 1999, but this provision does not affect any right or remedy of a third party which exists or is available apart from that Act. |
18.3. | At the expiry or earlier termination of any existing ship management agreement(s) in relation to the Vessel, Managers shall co-operate in the transfer arrangements to be notified to the Managers by the Owners and shall facilitate the smooth transition of all operations and duties to Managers with the minimum of disruption. |
18.4. | Either party may at any time assign or transfer to an Affiliate its respective rights and obligations under this Agreement provided that they first obtain the written consent of the other party. Such consent shall not be unreasonably withheld, conditioned or delayed and the parties agree to promptly execute any reasonable novation or transfer documentation to give effect to such an assignment or transfer. |
19. | LAW AND ARBITRATION |
19.1. | This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
19.2. | The arbitration shall be construed and conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The language used for such arbitration shall be English and the arbitration shall be conducted in London. |
19.3. | The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. |
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19.4. | Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
19.5. | In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. The language used for such arbitration shall be English and the arbitration shall be conducted in London. |
20. | NOTICES AND BANK ACCOUNTS |
20.1. | Any notice to be given by either party to the other party pursuant to this Agreement shall be in writing and shall be effective upon delivery pursuant to Clause 20.2 and shall be sent by fax, registered mail or by personal service to the following addresses: |
for the Owners:
GAS-four Ltd.
Claredon House
2 Church Street
Hamilton HM11
Bermuda
Fax. No.:
Attn:
for the Managers:
GasLog LNG Services Ltd.
Piraeus Branch Office
69, Akti Miaouli,
185 37 Piraeus, Greece
Fax No: +30 210 4591247
Attention: Theodoros Katemidis, General Manager
20.2. | A notice is deemed to have been received: |
(i) | if delivered personally, at the time of delivery; |
(ii) | in the case of fax, at the time of transmission; |
(iii) | in the case of delivery of courier, on the date of receipt by the courier of written acknowledgement of such delivery; |
(iv) | in the case of pre-paid first class post, recorded delivery or registered post, on receipt; and |
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(v) | if deemed receipt under the previous paragraphs of this sub-clause is not within business hours (meaning 9:00 am to 5:30 pm Monday to Friday (or Sunday to Thursday if the place of receipt is in Egypt) on a day that is not a public holiday in the place of receipt), when business next starts in the place of receipt. |
20.3. | For the purposes of this Agreement, the Managers’ Account currently has the following details: |
Account Holder | : | GasLog LNG Services Ltd. | |
Bank | : | CITIBANK INTERNATIONAL plc | |
(47-49, Akti Miaouli, 185 36 Piraeus, Greece) | |||
IBAN | : | GR35 0840 00200 000 00 44 4031026 | |
Account Number | : | 044 4031026 | |
Currency | : | Dollars |
IN WITNESS whereof the parties have duly signed this Agreement the day and year first above written.
SIGNED for and on behalf |
of GAS-four |
by |
in the presence of |
SIGNED for and on behalf |
of GASLOG LNG SERVICES LTD. |
by |
in the presence of |
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ANNEX “A”
DETAILS OF VESSEL
[OWNERS TO PROVIDE ON OR BEFORE EFFECTIVE DATE]
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ANNEX “B”
DETAILS OF CREW / OFFICERS
RATINGS
[MANAGERS TO PROVIDE AT LEAST 30 DAYS PRIOR TO EFFECTIVE DATE]
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ANNEX “C”
INITIAL BUDGET
To be provided in accordance with Clause 3.3.2 prior to the Effective Date and once approved by Owners to be inserted
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ANNEX “D”
OPERATIONAL AND MAINTENANCE PROTOCOL
The provisions of this Operational and Maintenance Protocol (“Protocol”) are integral with the provisions of the Agreement. The Owners agree to provide the manager with the necessary financial resources to comply with the requirements of this Operational and Maintenance Protocol.
The Vessel shall always be operated and maintained in accordance with the first class international standards for LNG vessels. These standards shall include, without limitation, that:
· | The Vessel is always manned, operated and maintained in a safe and prudent manner to minimise the risk of accidents; |
· | the maintenance and operation of the Vessel shall be thorough and proactive and not based merely on the minimum standards required by the Vessel’s flag state and classification society but to the highest standards applicable in the shipping and LNG industry; |
· | the Managers agree to maintain membership in the Society of International Gas Tankers and Terminal Operators Association (SIGTTO) and to abide by all guidelines, recommendations, and training schedules that are applicable to the safe and reliable operation of LNG vessels made by this industry association; |
· | the Managers agree to observe and abide by all guidelines, recommendations, and training standards that are promulgated by the Oil Companies’ International Marine Forum (OCIMF) and are applicable to the safe and reliable operation of LNG vessels made by this industry association; |
· | the Vessel shall be maintained and refurbished and where necessary restored to ensure the safe, reliable, and efficient transportation of LNG for a minimum 40 year trading life. |
Other than for Manager-scheduled maintenance periods of seventy two (72) hours every six (6) months (days which shall be agreed by the Owners), the Owners expect the Vessel to be available for the safe and efficient transportation of LNG for 100% of the year. The Manager shall put in place a robust and comprehensive vessel management system designed to meet this availability objective.
The Managers shall take the necessary steps to promote a culture of safety awareness, compliance with established procedures, and non-conformance reporting to facilitate continuous improvement throughout the organization including all crewmembers onboard the Vessel.
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CREWING
The Managers agree that having a well-trained and qualified vessel crew and shoreside support staff, well versed in LNG vessel operations and management, is the foundation of a safe, reliable, and efficient LNG vessel operation.
· | The Managers agree to adhere to the Training Matrix, and also agree that if the Training Matrix conflicts with less stringent standards contained in this Agreement, the Training Matrix will control. |
· | Managers shall arrange for all Deck Officers, including the Master, to attend Bridge Team Management Training at one of the recognized training centers. This training shall be repeated every five (5) calendar years. |
· | Managers are required to ensure that all Masters have attended a ship handling simulator-training course applicable for the type of vessel in use for LNG transportation. The training shall be repeated at a minimum of every five (5) calendar years. |
· | In addition to the requirements of the Management Agreement, all senior operational positions (Master, Chief Engineer, Chief Mate, and Second Engineers, Cargo Engineer) on board must have a minimum of three (3) years of sea time (time onboard) experience onboard LNG Carriers in any position in the position directly below the senior operational position they will assume. All senior operational positions must receive a minimum of two (2) weeks vessel familiarization and specific operational training, with a training scope appropriate to their position, prior to embarking onboard the Vessel for the first time. Any deviation from this section’s experience requirement must be approved by Owners. |
· | All officers and unlicensed crew on board require, as a minimum, specific training on the hazards and unique operational aspects associated with LNG carriers that meet the requirements of Section A-V/l paragraphs 1-7 of the STCW 1995 convention. All licensed officers that form part of the cargo transfer watch or carry out operational or maintenance duties and responsibilities directly related to the vessel’s cargo system shall also receive specific training meeting the requirements of Section A-V/l paragraphs 22-34 of the STCW 1995 convention. The Managers are to document what special LNG ship operations training is provided to licensed and unlicensed crewmembers prior to their employment on the LNG carrier. |
· | All crew are required to be properly qualified and certificated in accordance with the IMO Standards of Training, Certification and Watch keeping for Seafarers (STCW), 1995, as amended, and in compliance with the Training Matrix. |
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· | Managers shall provide to Owners copies of all newly appointed senior officers’ certification and details of experience prior to their embarkation onboard the Vessel. Owners have the right to review and verify the qualifications of all LNG vessel senior officers prior to their embarkation onboard the Vessel. Owners shall be given the opportunity to approve the certificates and experience of all senior officers a reasonable period prior to their initial embarkation onboard the Vessel), and shall have the discretion to reject any such officer if they do not meet the qualification and training requirements agreed between the Managers and Owners. Owners’ approval shall not be unreasonably withheld or delayed. |
· | Procedures shall be put in place in the ship’s Safety Management System clearly documenting who is responsible for the ship’s LNG Cargo System including cargo transfer operations. The responsibilities and interface between the Chief Mate and Cargo Engineer shall be clearly defined. The Managers shall identify and document the qualifications of a Person In Charge (PIC) of the Cargo Transfer Watch that exceed the requirements of Regulation V/l of the STCW 95 requirements. These qualifications shall be made available to Owners upon request. A training program shall be established and documented for junior officers to allow them to meet the qualifications of the PIC of the Cargo Transfer Watch during periods of steady state operation to allow the Chief Officer and Cargo Engineer to take rest periods if required to meet work hour restrictions. This program shall include some mechanism for competency assessment either on a cargo simulator or under supervised conditions during an actual cargo transfer onboard the Vessel. |
· | The Managers shall establish, as a minimum, the following policies and should ensure that all officers and crew are fully conversant and comply with these policies: |
· | Safety Policy |
· | Health Policy |
· | Environmental Policy |
· | Quality of Service Policy |
· | Operations Policy |
· | Navigation Policy |
· | Maintenance Policy |
· | Drug and Alcohol Policy |
· | The Managers shall ensure that all seafarers undergo a medical examination, which shall include a drug and alcohol test annually. On completion of a satisfactory medical examination a certificate shall be issued which shall remain valid for the period that the seafarer is onboard the Vessel. An OCIMF-compliant drug and alcohol policy, which includes random drug testing, shall be implemented, and tests conducted directly onboard the Vessel or by an outside contractor to deter the use of illegal drugs and controlled substances by crewmembers while onboard the Vessel. |
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· | The organization employed by the Managers to provide manning to the Vessel shall be engaged through a contract, which shall stipulate the Manager’s minimum competency and experience requirements. |
· | At intervals not exceeding two years the Managers shall ensure that the organization providing the manning of the Vessel is audited by a qualified auditor for compliance with the Managers’ minimum requirements. Copies of the audit report, non-compliances and corrective actions shall be provided to Owners, upon request. |
· | Managers shall implement a system that interrogates and confirms officer’s qualifications and fitness for duty prior to joining the Vessel. |
· | The Managers shall keep a minimum number of officers employed onboard the Vessel during dry-dock overhaul periods for inspection and quality assurance purposes. As a minimum, these people shall include all Licensed Engineering Officers , the Chief Officer and the Captain. |
MAINTENANCE
· | A Master Maintenance Plan shall be developed for the Vessel and approved by Owners’, provided that Owners’ approval does not conflict with the Vessel’s Class or Flag State requirements. The objective of this plan shall be to maintain the safe, reliable, and efficient operation of the Vessel over its projected 40 year life. This plan shall cover the following areas associated with efficient operation and Vessel maintenance and repair: |
1. | Dry-docking interval | |
2. | Procedures associated with pre-qualification of repair shipyards | |
3. | Hull Roughness measurement and maintenance to an acceptable level | |
4. | Anticipated schedule of maintenance, major overhaul, and refurbishment of all vessel critical equipment | |
5. | A description of the Preventive Maintenance System covering scheduled maintenance of all vessel equipment | |
6. | Inventory Control Procedures and stock of critical spare parts both onboard and ashore | |
7. | Procedures associated with pre-qualification of equipment and spare parts vendors | |
8. | Propulsion plant efficiency performance monitoring procedures and corrective action steps |
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9. | Condition Monitoring Systems and Condition Monitoring based maintenance | |
10. | Means of collecting the necessary date in a structured format to monitor and benchmark equipment reliability performance | |
11. | Performing Root Cause Analysis of equipment failures and equipment/systems reliability improvement | |
12. | Procedures associated with Equipment Obsolescence |
· | The Preventive Maintenance system shall incorporate the equipment suppliers or makers’ instructions and maintenance recommendations. |
· | All maintenance work carried out on vessel equipment, other than normal routine operational work, shall be carried out using a permit to work system. |
· | Where equipment isolation is required for operational and/or personnel safety or where hot work is involved all work must be carried out under a written procedure under the guidelines of the Safety Management System’s Lockout/Tag out/Isolation or Hot work permit procedures. |
The following is the proposed maintenance cycle that shall be followed with the Vessel. It is based on a 60 month period coinciding with the Vessel’s 5 year special survey requirements. This cycle may be adjusted through mutual agreement between Manager and Owners. The Managers shall notify Owners in writing at least 30 days in advance of the proposed dates for each 2 day Scheduled Maintenance Window and at least 6 months in advance of the proposed dates for dry-docking the Vessel. The Owners are primarily responsible for coordinating the communication and discussion of the scheduling of maintenance cycle events with the vessel’s charterer.
Month | Maintenance Event | ||
6 | 48 Hours Scheduled Maintenance Window | ||
12 | 48 Hours Scheduled Maintenance Window | ||
18 | 48 Hours Scheduled Maintenance Window | ||
24 | 48 Hours Scheduled Maintenance Window | ||
30 | Minor Drydocking – Intermediate Survey | ||
36 | 48 Hours Scheduled Maintenance Window | ||
42 | 48 Hours Scheduled Maintenance Window | ||
48 | 48 Hours Scheduled Maintenance Window | ||
54 | 48 Hours Scheduled Maintenance Window | ||
60 | Major Drydocking – 5 Year Special Survey |
OPERATIONS
· | The Managers shall establish detailed procedures for all critical operations performed onboard the Vessel as part of the Vessel’s Safety Management System. These procedures shall be developed and tailored specifically to the Vessel. Steps |
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shall be taken to familiarize Vessel personnel with these procedures and a robust internal audit program shall be carried out to verify crew compliance with these established procedures. Checklists should be used where appropriate to assist personnel in following procedures and to provide documented evidence of adherence to procedures. Copies of all work instructions and procedures in force shall be on file in the head office facilities of the Manager. The complete Safety Management System shall be made available in hard or electronic copy to the Owners. | ||
· | Changes to operating procedures must be reviewed by a senior officer onboard and approved by shore based management before the changes are implemented. |
· | The Vessel and crew at all times shall be capable of operating with no venting of cargo boil-off gases to the atmosphere. Any such venting shall immediately be reported to the Owners with a full explanation as to why the venting operation was required and an estimate of venting duration and quantity vented. It is recognized that under rare extreme conditions the cargo tank pressure may approach the P.V. valve release settings. This condition is to be avoided through proper management of cargo during laden voyages and of the heel and spray cooling during ballast voyages, and if necessary to prevent P/V valves from lifting, the Vessel will, when possible, reduce cargo tank pressure below this setting by intentional venting in a controlled manner. |
· | Whenever the vessel is transiting restricted waters the following operating profile shall normally be adhered to unless specific equipment breakdown prevents this: |
· | The Throttle shall be in Bridge Control |
· | The Steering Gear systems shall be fully tested (including all standby pumps) prior to entry into restricted waters | |
· | Boilers shall be operated in the Dual Fuel Mode | |
· | Two ship service generators shall be on line for redundancy | |
· | The main engine shall be placed in “Standby” and the engine room shall be manned if there is a high probability of the vessel maneuvering |
· | All inhibits on any trip (safety shutdown) and alarm system must be approved by the Master or Chief Engineer before being applied. A written procedure is necessary to document the operational conditions that must exist before any trip or alarm may be inhibited and what additional safety measures must be put in place when trips or alarms are inhibited. A daily log of all inhibited trips and alarms shall be displayed on the bridge and in the engine room. |
INSPECTIONS
· | The Managers shall arrange on a bi annual basis for a fully accredited OCIMF SIRE inspection of the ship. A copy of the report issued by the independent accredited inspector is to be made immediately available to Owners. Within one week of the inspection report being issued the Managers are required to provide a |
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programme to the charterer to indicate how and when any of the agreed comments are going to be corrected. | ||
· | The Managers shall arrange for an OCIMF/SIGTTO compliant self assessment inspection and audit to be carried out onboard the Vessel on an annual basis. This may be carried out as part of the Managers’ internal audit program. Copies of completed annual assessments are to be kept on board available for inspection by Owners upon request. Where the Managers are unable to obtain copies of the OCIMF/SIGTTO inspection guidelines, Managers shall apply their own internal audit/inspection procedures providing that the Manager’s inspection guidelines are subject to review and approval by Owners. |
· | The Managers shall arrange for Owners’ representative to carry out a detailed assessment and operational audit of the Manager’s head office facilities a minimum of once every two (2) years. The inspection will include but not be limited to Company Profile, Management Review, Document Control, Fleet Management, ISM Safety Management System, Corrective Action, Recruitment and Training, Health, Safety and Environmental Protection, Technical Support, Navigation, Safe Mooring, and Emergency Response. |
· | The Managers shall ensure that a Vessel inspection report in accordance with Owners’ format is completed annually. This inspection report is to be completed by attending manager’s superintendents during a twelve month period, ensuring that all items are addressed during that period. Copies of completed reports are to be submitted to Owners annually. The Managers may utilize their own internal inspection format and checklist if Owners can review and approve inspection guidelines prior to their use. |
· | Owners, or their designated representatives, will arrange for qualified auditors to carry out annual audits of the Vessel to confirm that the Vessels safety, quality and environmental protection system is functioning effectively. The Managers are to provide corrective actions to any non-conformities identified during the audits within thirty days of receiving the audit report. Confirmation of implementation is to be carried out at the next audit. Items that would normally be considered non-conformities would include, but not be limited to; crew members not properly qualified or certified, deteriorated physical conditions on the Vessel or equipment malfunctions with no documented schedule for repair, lack of documentation control, insufficient spare parts for normal maintenance, poor accuracy of onboard spare parts inventory, and lack of procedures for work being performed. |
· | Owners, or their designated representatives, shall arrange for qualified surveyors to carry out inspections and a condition assessment of the Vessel while undergoing a drydock overhaul as necessary to verify proper planning and adherence to the approved Master Maintenance Plan. |
The Managers will implement contingency planning to be activated in the event of any emergency occurring on or to the Vessel and shall ensure that the contingency plan is
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exercised annually with the participation of Owners. A copy of the Manager’s contingency plan is to be provided to Owners who shall be included in the Emergency Contact Chart and the nominated recipients for amendments.
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ANNEX “E”
PERMANENT INSTRUCTIONS
The Permanent Instructions shall be provided by the Charterers to the Managers on or prior to the Effective Date and shall be a protocol of communication among Charterers, the Vessel Owners and/or the Managers. The protocol of communication will set out, inter alia, who has authority to issue instructions and provide information to the Vessel and its master and who has authority to receive communications and information from the Vessel.
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ANNEX “F”
FORM OF ACCOUNTING SYSTEM
[MANAGERS TO PROVIDE]
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ANNEX “G”
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (“Agreement”) is made and entered into as of the _____ day of ________, 2014, by and between GAS-four LTD., a company incorporated under the laws of Bermuda and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “Owners”), and GasLog LNG Services Ltd., a company incorporated in Bermuda and having a branch office at 69 Akti Miaouli, Piraeus GR 18537, Greece (the “Managers”).
Owners and Managers entered into that certain Ship Management Agreement of even date herewith (the “Management Agreement”). In connection with the Management Agreement, it has been necessary and may continue to be necessary for Owners and Managers to exchange or provide access to certain proprietary and/or confidential information. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned thereto in the Management Agreement.
1. Confidential Information. At all times during the term of the Management Agreement and for two years thereafter, Owners and Managers shall keep confidential and shall not, without the prior written consent of the other party, issue any press release in relation to the transactions evidenced by the Management Agreement or the transactions contemplated thereunder, or disclose to any other person, the terms of the Management Agreement, any information provided to party pursuant to or in connection with the Management Agreement, any information connected with the Vessel (both technical or operational) or any other information identified as confidential or which may be protected by copyright, trademark or intellectual property law, or release copies of any such document which discloses any such information. Any and all such information described herein, together with all notes, analyses, compilations, studies, interpretations or other documents or records prepared by a party receiving such information or its Representatives (defined below), or copies thereof, which contain or otherwise reflect such information made available by are hereinafter referred to as the “Confidential Information.” In addition, Confidential Information shall mean any discussions between the parties concerning the Management Agreement or in connection with the Management Agreement, any and all written, printed or other materials, regardless of form, provided by a party concerning the Management Agreement or in connection with the Management Agreement, whether provided prior to or after the execution of this Agreement, and the substance and content thereof, and all information ascertained through the discussions between employees or representatives of the parties concerning the Management Agreement.
2. Exclusions. The term Confidential Information does not include any information which:
(a) at the time of disclosure is in the public domain or thereafter becomes generally available other than as a result of a disclosure by the receiving party or its Representatives;
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(b) is available to such party or its Representatives on a non-confidential basis from a source other than the disclosing party, provided that such source is not bound by a confidentiality agreement with the disclosing party; or,
(c) has been independently acquired or developed by receiving party or its Representatives without violating any of its obligations under this Agreement or the Management Agreement.
3. Permitted Disclosures. Notwithstanding the provisions of Section 1 above, either party shall be entitled to disclose Confidential Information without the consent of the other:
(a) pursuant to applicable law or order of a court of competent jurisdiction or a regulatory agency with jurisdiction, provided such party agrees prior to any such disclosure to provide the other party with prompt written notice of such requirements;
(b) to its directors, officers, employees, agents, representatives, advisors and consultants (“Representatives”), whose assistance in evaluating the Confidential Information is necessary and who are legally obligated to maintain the Confidential Information in confidence; and
(c) to any charterer or subcharterer of the Vessel.
4. CHOICE OF LAW. This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or reenactment thereof save to the extent necessary to give effect to the provisions of this Clause. Any dispute arising under this Agreement shall be resolved pursuant to the arbitration provisions set forth in Article 19 of the Management Agreement.
5. Term. As to the Confidential Information, the obligations of confidentiality and non-disclosure under this Agreement shall terminate two (2) years after the date on which the Management Agreement is terminated. Upon termination of this Agreement, each party shall return all Confidential Information furnished to it hereunder in written or other tangible form, and copies thereof, and destroy all copies of Confidential Information consisting of notes, analyses, compilations, studies, interpretations or documents or records prepared by it, or its Representatives.
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IN WITNESS whereof the parties have duly signed this Agreement the day and year first above written.
SIGNED for and on behalf of GAS-four LTD. by
in the presence of
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SIGNED for and on behalf of GASLOG LNG SERVICES LTD. by
in the presence of |
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ANNEX “H”
INCENTIVE BONUS PLAN
The Incentive Bonus shall be based on an annual assessment of the Key Performance Indicators (“KPIs”) listed below, as divided in three sections: HSSE, Vessel Performance, and Financial Performance.
There will be an annual assessment of the KPIs in each section, and a total Incentive Bonus of $72,000 may be awarded. The total Incentive Bonus shall be allocated across the three sections in three equal awards of $24,000 per section. Exceeding the noted maximum acceptable KPI in any section will mean that the $24,000 section award will not be paid for that year.
Where the Bonus Target is met for every KPI within a section then the full section award will be made for that section.
Where the KPIs in a section fall between the Maximum acceptable and the Bonus Target, then the level of award will be assessed by mutual agreement.
Key Performance Indicators (KPIs)
The KPIs below are agreed to be reviewed on an annual basis. These are the initial KPIs and may be adjusted and changed as agreed mutually on review.
KPI | Maximum acceptable | Bonus | ||
HSSE |
Fatality | 0 | 0 | ||
Total Recordable Cases | 1 | 0 | ||
Near miss reports | To be agreed annually | To be agreed annually | ||
Oil Spills to water | 0 | 0 | ||
Venting cargo vapor to atmosphere - unless approved or emergency | 0 | 0 | ||
Major Incidents (collisions, groundings, flooding, fire explosion etc.) | 0 | 0 | ||
TMSA | To be agreed annually based on no improvement from the previous year | To be agreed annually based on stretched improvement from the previous year |
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Compliance with annual budget, against declared expenditure, allowing for exchange rate fluctuations $ to € and approved extra items | 0% above approved budget | Below the approved budget (excluding approved extra items) at an amount to be mutually agreed annually |
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Dry docking budget | 0% above approved budget | Below the approved budget (excluding approved extra items) at an amount to be mutually agreed at the award of the drydock contract |
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ANNEX “I”
PRIMARY TERMINALS
Load | Country | Status | ||
Gladstone | Australia | * 2 | ||
Withnell Bay | Australia | 1 | ||
Pluto | Australia | 1 | ||
Idku | Egypt | 1 | ||
Damietta | Egypt | 1 | ||
Punta Europa | Equatorial Guinea | 1 | ||
Discharge | Country | Status | ||
Bahia Blanca FSRU | Argentina | 1 | ||
Zeebrugge | Belgium | 1 | ||
Pecem | Brazil | 1 | ||
Guanabara Bay | Brazil | 1 | ||
Canaport | Canada | 1 | ||
Mejillones | Chile | 1 | ||
Quintero | Chile | 1 | ||
Dalian | China | 1 | ||
Fujian | China | 1 | ||
Guangdong | China | 1 | ||
Jiangsu | China | 1 | ||
Santiago | China | 1 | ||
Zhejiang | China | 1 | ||
Zhuhai | China | *2 | ||
Montoir | France | 1 | ||
Revithoussa | Greece | 1 | ||
Dahej | India | 1 | ||
Hazira | India | 1 | ||
Chita | Japan | 1 | ||
Futtsu | Japan | 1 | ||
Himeji | Japan | 1 | ||
Senboku II | Japan | 1 | ||
Kawagoe | Japan | 1 | ||
Sodeshi | Japan | 1 | ||
Niigata | Japan | 1 | ||
Tobata | Japan | 1 | ||
Hitachi | Japan | *2 | ||
Joetsu Thermal Power | Japan | 1 | ||
INPEX Naoetsu | Japan | 1A | ||
Negishi | Japan | 1 | ||
Yanai | Japan | 1 | ||
Sodegaura | Japan | 1 | ||
Ohgishima | Japan | 1 | ||
Oita | Japan | 1 | ||
Sakai | Japan | 1 | ||
Load | Country | Status | ||
Bonny Island (Jetty 1,2) | Nigeria | 1 | ||
Snohvit | Norway | *4 | ||
Point Fortin | Trinidad | 1 | ||
Das Island | UAE | 1 | ||
Lake Charles | USA | 1 | ||
Sabine Pass (Cheniere)* | USA | 1 | ||
Discharge | Country | Status | ||
Incheon | Korea | 1 | ||
Pyeongtaek | Korea | 1 | ||
Tongyeong | Korea | 1 | ||
Gwang Yang | Korea | 1 | ||
Mina Al Ahmadi | Kuwait | 1 | ||
Bintulu | Malaysia | 1 | ||
Altamira | Mexico | 1 | ||
Costa Azul | Mexico | 1 | ||
Sines | Portugal | 1 | ||
Ras Laffan | Qatar | 1 | ||
Singapore | Singapore | 1 | ||
Barcelona | Spain | 1 | ||
Bilbao | Spain | 1 | ||
Cartagena | Spain | 1 | ||
Huelva | Spain | 1 | ||
Sagunto | Spain | 1 | ||
Map Ta Phut | Thailand | 1 | ||
Rotterdam | The Netherlands | 1 | ||
Yung-An | Taiwan | 1 | ||
Taichung | Taiwan | 1 | ||
Aliaga | Turkey | 1 | ||
Marmara Ereglisi | Turkey | *3 | ||
Jebel Ali FSRU | UAE | 1 | ||
Elba Island | USA | 1 | ||
Cameron | USA | 1 | ||
Pascagoula | USA | 1 | ||
Freeport | USA | 1 | ||
Isle of Grain | UK | 1 | ||
Dragon | UK | 1 |
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* 1 A - Primary Terminals ~ Pending
Signifies terminals where some terminal data is not complete, but which will be treated as Primary Terminals so long as, in order for the Vessel to be accepted by the terminal, no changes are required to the principal dimensions of the Vessel, including: length, breadth, draft, displacement, location of cargo manifolds and lay-out of cargo manifolds (pipe size, layout of liquid and vapour lines, manifold dimensions, etc). Owners and Charterers to cooperate to complete any missing terminal data and to achieve Terminal acceptance and any minor changes to the Vessel (gangway landing areas/rails, etc.) will be the responsibility of the Owners.
*2 Terminals Under Construction
Signifies terminals that are under construction at the date of signing the Charter party and are not Primary Terminals (“Terminals Under Construction”). Owners and Charterers agree to work together in good faith in order to obtain: (i) the necessary relevant information to enable Owners to reasonably assess whether each of the Terminals Under Construction are in all material respects compatible with the Vessel; and (ii) acceptance of the Vessel by the Terminal Under Construction. Once Owners are reasonably satisfied that a Terminal Under Construction is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge, and the Terminal Under Construction has confirmed to Owners that they are prepared to accept the vessel to call and carry out cargo operations at their terminal (once completed), Owners agree to add such Terminal Under Construction to the list of Primary Terminals.
*3 Terminals With Compatibility Issues
Signifies terminals which have identified compatibility issues and are not Primary Terminals. However, Owners agree to allow the Vessel to call at such terminals provided: (i) they are reasonably satisfied that there is sufficient compatibility to allow safe navigation, loading and/or discharge; and (ii) the terminal have confirmed to Owners their acceptance of the Vessel to call, and carry out cargo operations at their terminal.
*4 Terminals Pending Further Data
Signifies terminals in respect of which, at the date hereof, there is insufficient information available in order to allow Owners to assess whether the terminal is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge (“Pending Terminals”). Owners and Charterers agree to work together in good faith in order to obtain: (i) the necessary relevant information to enable Owners to reasonably assess whether each of the Pending Terminals are in all material respects compatible with the Vessel; and (ii) acceptance of the Vessel by the Pending Terminals. Once Owners are reasonably satisfied that an Pending Terminal is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge, and the Pending Terminal has confirmed to Owners that they are prepared to accept the vessel to call and carry out cargo operations at their terminal (once completed), Owners agree to add such Pending Terminals to the list of Primary Terminals.
Exhibit 10.7
Dated , 2014
GAS-five LTD.
and
GASLOG LNG SERVICES LTD.
SHIP MANAGEMENT AGREEMENT
in respect of the Vessel, “ GasLog Sydney ”
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TABLE OF CONTENTS
ANNEX “A”
DETAILS OF VESSEL
ANNEX “B”
DETAILS OF CREW / OFFICERS RATINGS
ANNEX “C”
INITIAL BUDGET
ANNEX “D”
OPERATIONAL AND MAINTENANCE PROTOCOL
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ANNEX “E”
PERMANENT INSTRUCTIONS
ANNEX “F”
FORM OF ACCOUNTING SYSTEM
ANNEX “G”
CONFIDENTIALITY AGREEMENT
ANNEX “H”
INCENTIVE BONUS PLAN
ANNEX “I”
PRIMARY TERMINALS
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THIS SHIP MANAGEMENT AGREEMENT is made the _____ day of _______, 2014
BETWEEN:
(1) | GAS-five Ltd., a company incorporated under the laws of Bermuda and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “Owners ”); |
(2) | GasLog LNG Services Ltd., a company incorporated in Bermuda and having a branch office at 69 Akti Miaouli, Piraeus GR 18537, Greece (the “Managers ”). |
WHEREAS:
(A) | The Owners, as of the Effective Date, are the registered owners of the 155,000 m 3 Liquefied Natural Gas Carrier “ GasLog Sydney ” (the “Vessel ”) as more particularly described in Annex “A” hereto and wish to engage the Managers to manage and operate the Vessel; |
(B) | The Managers, being fully experienced, qualified and able vessel managers, wish to manage and operate the Vessel subject to and in accordance with the terms set out in this Agreement. |
IT IS AGREED AS FOLLOWS:
1. | DEFINITIONS AND INTERPRETATION |
1.1. | Definitions |
In this Agreement save where the context otherwise requires, the following words and expressions shall have the meanings hereby assigned to them: | |
“Affiliate” means any entity which, directly or indirectly, through one or more intermediaries, Controls or is Controlled by, or is under common Control with that party; | |
“Agreement” means this ship management agreement including the Annexes attached hereto as amended from time to time in accordance with the terms hereof; | |
“Annual Budget” shall have the meaning ascribed to it in Clause 3.3.2 below; | |
“Charter” means any future charter entered into between the Owners and any future charterer of the Vessel notified to the Managers pursuant to Clause 5.3; | |
“Charterers” means any future charterers of the Vessel notified to the Managers pursuant to Clause 5.3; |
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“Communication Expenses” means the costs incurred by the Managers in performing the Management Services and for the account of the Owners in respect of all communications between the shore and the Vessel as detailed in the Annual Budget;
“Control” and “Controlled” mean the holding of power to direct or cause the direction of management, policies and decisions of a company, corporation, partnership or other entity including, without limitation, through control by direct or indirect means of not less than fifty per cent (50%) of the voting rights in such company, corporation, partnership or other entity;
“Crew” means the Officers and Ratings and any other individual who has signed Articles on the Vessel and is employed from time to time by the Managers under Managers’ obligation to provide the Management Services;
“Crew Insurances” means insurances against crew risks which shall include, but not be limited to, death, sickness, repatriation, injury, shipwreck and loss of personal effects;
“Crew Support Costs” means all expenses of a general nature which are not particularly referable to any individual vessel for the time being managed by the Managers and which are incurred by the Managers for the purpose of providing efficient and economic Management Services and, without prejudice to the generality of the foregoing, shall include the cost of crew standby pay, training schemes for officers and ratings, cadet training schemes, sick pay, study pay, recruitment and interviews;
“Dollar” or “ US$ ” means the currency of the United States of America;
“EDP Expenses” means the costs of any new computer software or hardware (including licensing, maintenance, installation and training costs) that may be installed or developed, in relation to the Vessel;
“Effective Date” means the date of this Agreement;
“Emergency Situation” means an emergency situation that:
(i) | involves a threat to human life; |
(ii) | involves a risk of loss of the Vessel or its cargo or of serious damage to the Vessel; |
(iii) | involves a risk of the Vessel causing serious environmental damage; |
(iv) | involves a risk of the Vessel being stolen, impounded or seized; or |
(v) | involves a security or safety risk to the Vessel, such as but not limited to terrorism, piracy, etc. |
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“Flag Administration / State” shall mean such state or registry as the Owners shall from time to time specify;
“HSSE Report” means a report on the health, safety, security and environmental status of the Vessel (together with relevant statistics) and including details of any specific health, safety, security and/or environmental incidents prepared in accordance with Clause 3.4.9;
“Incentive Bonus” means the bonus payable by the Owners to the Managers in accordance with Clause 7.7;
“ISM Code” means the International Ship Management Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organisation (IMO) by resolution A.741(18) as amended from time to time;
“ISPS Code” means the International Ship and Port Facility Security Code adopted by the International Maritime Organization Assembly as the same may have been or may be amended or supplemented from time to time;
“Maintenance Schedule” means a schedule referred to in Clause 3.2.1(iii) detailing the maintenance required for the Vessel for the period from delivery to the next dry-docking of the Vessel thereafter for each subsequent 30 month period to coincide with Classification Society Intermediate Survey;
“Managed Fleet” means all vessels owned, leased, or chartered by Owners or Owners’ Affiliates and managed by Managers pursuant to a ship management agreement or similar arrangement;
“Management Fee” means the fee payable by the Owners to the Managers in consideration of the Management Services, as specified in Clauses 7.1 to 7.3 and as adjusted pursuant to Clause 7.4;
“Management Services” means the services specified in Clause 3;
“Managers’ Account” means the bank account in the name of the Managers as specified in Clause 20.3, or such other bank account of the Managers as may be notified to the Owners from time to time;
“MTSA Code” means the Maritime Transportation Security Act as enacted by the United States of America as the same may have been amended or supplemented from time to time;
“Officers” means the Master and the officers (including, but not limited to, the Senior Officers) of the Vessel, whose numbers, rank and nationality are currently specified in Annex “B” attached hereto, as updated from time to time;
“OPA 90” means the Oil Pollution Act of 1990 as enacted by the United States of America as the same may have been amended or supplemented from time to time;
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“Operational and Maintenance Protocol” means the protocol set forth on Annex “D” attached hereto;
“Operational Costs” means costs and expenses incurred by the Managers on behalf of the Owners to operate and maintain the Vessel including Communication Expenses and EDP Expenses;
“Owners’ Insurances” means the insurance policies to be procured by the Owners in respect of the Vessel and as described in Clause 6.1(i), (ii), (iii), and (iv);
“Permanent Instructions” means the instructions relating to the operational procedures for communications between the Owners, Charterers and the Crew as currently specified in Annex “E” attached hereto which may be amended pursuant to Clause 12.2;
“Quality Assurance & Quality Management System” shall have the meaning ascribed to it in Clause 3.8.1;
“Ratings” means the ratings of the Vessel, whose numbers, rank and nationality are currently specified in Annex “B” as updated from time to time;
“Review Date” means January 1;
“Senior Officer” means the following positions or roles on the Vessel:
(i) | the Master; |
(ii) | the Chief Engineer; |
(iii) | the Chief Officer; |
(iv) | the Second Engineer; or |
(v) | any other person whose rank or role on the vessel is required and designated as Senior Officer by the Flag Administration |
“Severance Costs” means the costs which the Managers as employers of the Crew are legally obliged to pay, and actually do pay, to or in respect of the Crew as a result of the early termination of any employment contract for service on the Vessel;
“ SMS ” means a safety management system which complies with all laws, rules and regulations, and with all the codes, guidelines and standards recommended by the International Maritime Organization (including without limitation, the ISM Code), any relevant flag state and the classification society and approved by Owners, which may from time to time be applicable to the Vessel and/or the Owners and/or the Managers, and which is otherwise appropriate having regard to the Managers’ obligations under this Agreement;
“SOPEP” means the shipboard oil pollution emergency plan in the form approved by the Marine Environment Protection Committee of the International Maritime Organization pursuant to the requirements of Regulations 25 of Annex H of the
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International Convention of the Protection of Pollution from Ships, 1973, as modified by the Protocol of 1989 relating thereto, as amended (MARPOL 73/78);
“STCW 95” means the International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto;
“Supplementary Budget” shall have the meaning ascribed to it in Clause 3.3.4 below;
“Training Matrix” means the most updated Training Matrix as mutually agreed between the parties, as amended, supplemented or updated from time to time;
“Vessel Account” means a bank account in the name of the Managers opened and operated in accordance with Clause 8.4, the details of which shall be notified to the Owners from time to time;
“Vessel Condition Report” means a report detailing the physical condition, the progress of the Maintenance Schedule and the performance of the Vessel;
“ Vessel Data” means all records, invoices, logs, certificates and performance and maintenance data relating to the Vessel and all correspondence and documentation generated, collected or compiled during the provision of the Management Services by either former managers of the Vessel and given to the Managers, or by the Managers, to enable the Owners to effectively operate, manage or sell the Vessel, but excluding the Managers’ internal correspondence and any correspondence (other than invoices) between the Managers and their suppliers;
“Working Day” means a day when most banks are open for business in London, New York, Athens, and country of location of relevant bank accounts of Owners.
1.2. | Interpretation |
1.2.1. | “Owners”, “Managers” and “Charterers” include their respective successors and assigns. |
1.2.2. | Clause headings are inserted for convenience and shall be ignored in construing this Agreement. |
1.2.3. | Unless the context otherwise requires, words denoting the singular number include the plural number and vice versa. |
1.2.4. | References to clauses and annexes are to Clauses and Annexes of this Agreement except where otherwise expressly stated. |
1.2.5. | Reference to any document includes the same as varied, supplemented or replaced from time to time. |
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1.2.6. | References to any enactment include any re-enactments, amendments and extensions thereof. |
2. | APPOINTMENT OF MANAGERS |
2.1. | From the Effective Date and continuing, unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as managers of the Vessel. |
2.2. | Subject to the terms and conditions contained herein, during the period of this Agreement, the Managers shall carry out the Management Services as agents for and on behalf of the Owners. The Managers shall have authority to take such actions as they may from time to time consider necessary to enable them to perform their duties and obligations as set out in this Agreement in accordance with first class LNG ship management practice within the limits of authority delegated to them hereunder. |
3. | MANAGEMENT SERVICES |
3.1. | Crew Management |
3.1.1. | The Managers shall provide suitably and adequately qualified Crew for the Vessel in accordance with any requirements of the Owners, as described in the Operational and Maintenance Protocol set forth on Annex “D”, and the provisions of the STCW 95 and the requirements of this Agreement. |
3.1.2. | The Managers shall be responsible for: |
(i) | selecting, with Owners’ approval, which may be expressed from time to time in the form of standing instructions to the Managers for specific experience and qualification criteria pertaining to the Crew, including but not limited to the Training Matrix, and engaging the Crew (subject to the provisions of Clause 3.1.6 below) for the Vessel including payroll arrangements, pension administration, and insurances for the Crew other than those mentioned in Clause 6; |
(ii) | ensuring at all times the availability and supply of an adequate complement of Crew (including Master, Officers and Ratings complying with Annex “B”) relative to the particular operational status and size of the Vessel; |
(iii) | ensuring that the applicable requirements of the law of the flag of the Vessel are satisfied in respect of manning levels, rank, qualification and certification of the Crew and employment regulations (including those standards set forth by the International Transport Workers’ Federation (ITF)) pertaining to Crew’s tax, payroll, social insurance, welfare, discipline and other applicable requirements; |
(iv) | ensuring that all members of the Crew have passed a medical examination with a qualified doctor certifying that they are fit for the duties for which they |
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are engaged and are in possession of valid medical certificates issued in accordance with appropriate flag state requirements. In the absence of applicable Flag State requirements the medical certificate shall be dated not more than three months prior to the respective Crew member leaving their country of domicile and maintained for the duration of his service on board the Vessel; |
(v) | ensuring that the Crew shall have a command of the English language of a sufficient standard to enable them to perform their duties safely; |
(vi) | arranging transportation of the Crew, including repatriation, at Owners’ cost, unless otherwise arranged by Owners; |
(vii) | providing continuing training of the Crew and supervising their efficiency and competence, consistent with Owners’ requirements but in any event never less than the applicable international or Flag State standard for LNG vessels; |
(viii) | whenever the Vessel is operational, issuing instructions to the Master in accordance with the requirements of the Owners or Charterers, to trade along the most geographically direct, economical and safe route (except for any justifiable deviation allowed under English common law or the Hague Visby Rules and including all deviations that may be necessary in an Emergency Situation) and ensuring the Vessel is worked at a fuel-efficient speed consistent both with port arrival instructions given by the Owners and/or Charterers and with sea conditions; |
(ix) | issuing instructions to the Master to keep full and correct log books and furnishing the Owners with true and accurate copies of such log books when required; |
(x) | conducting union negotiations (if applicable); |
(xi) | operating a drug and alcohol policy, prepared by the Managers and approved by the Owners (such approval not to be unreasonably withheld or delayed), which includes, as a minimum, the principles set forth in the “Guidelines for the Control of Drugs and Alcohol Aboard Ship” of the Oil Companies International Marine Forum dated June 1995 (and in an amendments or successors thereto); |
(xii) | ensuring that the Crew and any other person on board the Vessel proceeding to sea shall be insured for the Crew Insurances with a first class insurance company, underwriter or protection and indemnity association (the “Crew Insurances”); |
(xiii) | ensuring that all premiums or calls in respect of the Crew Insurances are paid promptly by their due date; and |
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(xiv) | ensuring that the Crew Insurances shall name the Owners as co-assured (unless advised by the Owners to the contrary). |
3.1.3. | The Managers shall appoint a superintendent (ship manager) to be responsible for the day to day operation, maintenance and repair of the Vessel, the cost of which shall, subject to Clause 7.4, be included in the Management Fee. Should the Owners have reason to be dissatisfied with the superintendent so appointed, they shall raise their complaint with the Managers. The Managers shall investigate any such complaint promptly and, should the complaint prove to be well founded, the Managers shall replace such superintendent at no extra cost to the Owners. |
3.1.4. | The Managers shall institute onboard and shall ensure onboard compliance with a uniform standard of dress amongst the crew and officers, and uniform credentialing or identification of all Crew and Officers. |
3.1.5. | Should the Owners have any reason to be dissatisfied with any of the Crew, they shall raise their complaint with the Managers. The Managers shall investigate the complaint promptly and, should the complaint be well founded, the Managers shall replace the Crew member in question and undertake changes in the appointment of the Crew as the Owners may reasonably require. |
3.1.6. | The Managers shall employ the Crew in their name and for their own account and, for the avoidance of doubt, the Managers do not have authority to conclude or enter into contracts of employment with the Crew for and on behalf of the Owners and shall indemnify and hold harmless the Owners against all actions, proceedings, claims, demands or liabilities whatsoever and howsoever arising from the Managers’ breach of this Clause 3.1.6 or in relation to any disputes relating to Crew contracts of employment. |
3.1.7. | Except as allowed in clause 3.1.2(i), the Managers may not appoint any Senior Officers without the prior approval of the Owners (which shall not be unreasonably withheld or delayed), except that in the event that a shortage of crew would be likely to result under the terms of the Charter: |
(i) | in the Vessel going off hire under its Charter; or |
(ii) | an Emergency Situation; |
and in such circumstances it is not practical for the Managers to wait for Owners’ approval, the Managers may make such temporary appointments as they deem necessary; however, the Vessel’s manning shall always remain in compliance with the regulations of the Flag State’s minimum manning requirements.
Officers CV and accomplished Training Matrix should be provided to the Owners for reviewing prior promotion or assignment to a Senior Officer position.
The Owners reserve the right to interview and approve all Senior Officers candidates.
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3.2. | Operational and Technical Management |
3.2.1. | The Managers shall provide operational and technical management of the Vessel which includes, but is not limited to, the following functions: |
(i) | provision of competent personnel with suitable experience of the LNG industry to supervise the maintenance and general efficiency of the Vessel in line with the Training Matrix and the requirements of the Charter; |
(ii) | all maintenance and work for the Vessel so as to ensure that the Vessel complies with all applicable laws including but not limited to IMO, MARPOL and SOLAS (and including, for the avoidance of doubt, all the provisions of the ISM Code), regulations and/or other requirements of the flag of the Vessel and of the Primary Terminals and other places where she trades, all applicable international conventions, all applicable regulations and/or requirements of any terminals or facilities in such port(s) or place(s) where the Vessel may load or discharge, and all requirements and recommendations of the Vessel’s classification society applicable to a Vessel carrying LNG worldwide within the limits of the Charter; |
(iii) | preparing the Maintenance Schedule and regular updates on request (such updates to commence at delivery of the Vessel from the shipyard, and then each year on or around the anniversary upon which the Vessel was classified by its classification society) for approval by the Owners (such approval not to be unreasonably withheld or delayed); |
(iv) | arrangement and supervision of dry dockings, repairs, alterations and the upkeep of the Vessel in accordance with first class LNG ship management practice provided that the Owners shall allocate sufficient funds and approve the relevant Annual Budgets and Supplementary Budgets to ensure that Managers can incur the necessary expenditure to ensure that the Vessel will comply with the law of the flag of the Vessel and of the places where she trades, and all requirements and recommendations of the classification society; |
(v) | investigating and reporting to Owners any technical faults or problems material to the performance of the Vessel and arranging for their repair in consultation with the Owners; |
(vi) | arrange for the victualing and storing of the Vessel appropriate to the declared operational status of the Vessel and place and effect payment for contracts for lubricating oil, paints and all consumable materials where they are not for the Charterers’ account, together with any other contracts that may be agreed with the Owners from time to time in accordance with Clause 3.2.2; |
(vii) | appointment of surveyors and technical consultants as the Managers may consider from time to time be necessary; |
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(viii) | development, implementation of and maintenance of a SMS and obtaining and maintaining valid certificates evidencing compliance with this Clause, including without limitation, a valid document of compliance in relation to itself and valid safety management certificates in respect of the Vessel as required by the ISM and ISPS Codes; |
(ix) | provide the Owners with copies of any and all documents of compliance and safety management certificates as described in Clause 3.2.1(viii) upon issuance; |
(x) | keep or procure that there is kept on board the Vessel at all times: |
(a) | all certificates and documents required from time to time by any applicable law or regulations to enable her to perform the Charter between the Primary Terminals without delay, |
(b) | valid certificates in force as required by the Flag State, |
(c) | any further certificates and documents required from time to time by any applicable law or regulations to enable her to perform the Charter without delay, |
(d) | an ITF certificate or equivalent allowing Vessel’s calls and operations in all ports to which the Vessel is ordered under the Charter where an ITF certificate or equivalent is required, and |
(e) | a copy of all documents of compliance and the original of any safety management certificates as described in Clause 3.2.1(viii); |
(xi) | arrangement of periodic analysis by third parties of the bunker fuel and reporting the results of such analysis to the Owners (the costs being included in the Vessel’s running costs): |
(xii) | noting requirements resulting from safety and any external ship inspections and implementing these insofar as they affect the operation or safety of the Vessel (such implementation to be at the Owners’ expense); |
(xiii) | implementing safety recommendations issued in terms of all international conventions (at the Owners’ expense); |
(xiv) | arrange, where necessary for the superintendent or other staff of the Managers to visit the Vessel. If the superintendent or other staff of the Managers have reason to spend more than twenty-five (25) days in aggregate in any calendar year (or pro rata for part of a calendar year) visiting the Vessel, their services will be charged out at the rate specified in Clause 7.4 below; |
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(xv) | ensure that maritime, safety and cargo custody standards are in accordance with first class international LNG shipping practice and are maintained by the Crew whenever such personnel are serving on board the Vessel; |
(xvi) | arrange and effect payment on behalf of the Owners for the towage of the Vessel when appropriate; |
(xvii) | arrange, maintain, and effect preparation and payment on behalf of the Owners for suitable moorings for the Vessel for lay-up at such locations as may from time to time be mutually agreed relative to the Vessel’s positioning requirements of the Owners; |
(xviii) | handle port disbursement accounts where these are not for the Charterers’ account; |
(xix) | navigate the Vessel, handle all necessary communications, manage all cargo operations on behalf of Owners, and provide for the security and safety of the Vessel, cargo and Crew, all in accordance with first class LNG ship management practice; |
(xx) | ensure that the Vessel is compatible with existing LNG liquefaction terminals, regasification terminals and ship/shore interfaces, at the Primary Terminals and to maintain such compatibility and all necessary certificates and documentation; |
(xxi) | undertake vessel-terminal compatibility studies as requested by Owners and at Owners’ expense; and |
(xxii) | manage and operate the Vessel on behalf of the Owners in any part of the world to first class industry standards for an LNG carrier, provided that the Vessel shall be employed in lawful trades, as the Owners may direct, between good and safe ports and places where she can always be safely afloat, and further provided that the Vessel shall not trade to ports or areas where, at the time in question, there are expected to be hostilities, wars, warlike operations, civil commotions or revolutions, unless the Owners are able to obtain war risks insurance against such eventuality. |
Managers shall at all times have the right to refuse to carry out any instructions from the Owners or the Charterers to trade or lay up the Vessel if Managers can clearly demonstrate that by doing so, it would contravene any applicable laws and regulations of the Vessel’s flag, the classification society or of the places she trades.
Furthermore, Managers shall not be held to be in breach of this Agreement, should at any time the Vessel fail to conform to its class standards or fail to conform to statutory or international standards, except to the extent that such failures result from the negligence or breach of this Agreement by the Managers.
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3.2.2. | Procurement |
Subject to the terms of this Agreement, the Managers shall have discretion to procure all stores, spares, equipment, provisions, oils, fuels and any other goods, materials or services to be supplied to the Vessel by the Managers in performance of their Management Services from whatever source or supplier they may deem appropriate provided that:
(i) | the Managers use all reasonable efforts to achieve the lowest prices available for the appropriate quality of goods or services; |
(ii) | the Managers shall provide Owners with the benefit of all discounts, rebates or other financial incentives provided by any suppliers, and all amounts billed to Owners in connection with all stores, spares, equipment, provisions, oils, fuels and any other goods, materials or services to be supplied to the Vessel shall reflect any such discounts, rebates or financial incentives; and |
(iii) | the Owners reserve the right to require the Managers to procure such goods, materials and services from sources or suppliers they may notify to the Managers from time to time provided that: |
(a) | the Owners shall not unreasonably interfere with the aforementioned Managers’ procurement processes; |
(b) | the Owners may not force the Managers to breach the terms of any existing procurement contract to the extent such contract is consistent with the terms of this Agreement and standard industry practices; and |
(c) | the Owners have due regard to the interests of the Managers in fostering good long-term relationships with suppliers; |
and where the Owners utilize their rights under this Clause 3.2.2, the Managers shall in no circumstances be liable for the quality or pricing of the goods, materials and services so provided.
3.3. | Accounting, Budgeting, and Reporting |
3.3.1. | The Managers shall: |
(i) | provide an accounting system in respect of the Vessel which meets the reasonable requirements of the Owners, and provide regular accounting services and supply regular accounting reports and records; and |
(ii) | maintain a record of all costs and expenditures incurred as well as data necessary or proper for the settlement of accounts between the parties. |
3.3.2. | The Managers shall present to the Owners annually a budget in respect of the estimated costs of operating the Vessel for the following twelve months in the current |
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reporting form of the Managers, which is acceptable to the Owners (the “ Annual Budget ”). The initial Annual Budget is attached hereto at Annex “C,” and shall be for the period from the Effective Date until 31 December 2014, with a full twelve (12) month Annual Budget submitted yearly thereafter, ending on the day immediately preceding the Review Date. Subsequent Annual Budgets shall be prepared by the Managers for approval by the Owners at least two (2) months before each Review Date.
3.3.3. | The Owners shall indicate to the Managers their acceptance and approval of the Annual Budget within one month of presentation and in the absence of any such indication the Managers shall be entitled to assume that the Owners have accepted the Annual Budget as provided. |
3.3.4. | If after the approval of the Annual Budget pursuant to Clauses 3.3.2 and 3.3.3, the Owners or Managers anticipate material changes in the Operational Costs (or in respect of the initial Annual Budget set out in Annex “C”, if the Managers believe such initial Annual Budget is inaccurate or unworkable), then the Managers shall prepare a supplementary budget reflecting such changes (the “ Supplementary Budget ”) for approval by the Owners and the Owners shall indicate their approval or non-approval of a Supplementary Budget within one month of it being presented to them (and in the absence of any such indication, the Managers shall be entitled to assume that the Owners have accepted a Supplementary Budget). Upon approval by the Owners, a Supplementary Budget shall be treated as the Annual Budget for the year in question or the remainder thereof. |
3.3.5. | For the avoidance of doubt, the Managers shall not incur expenditure in respect of the Vessel in excess of the Annual Budget (with due consideration to the fact that expenditure may be phased over varying periods or may fluctuate from month to month, notwithstanding that such expenditure was budgeted for on an annual basis) or incur expenditure that has not been accounted for in any Annual Budget without the prior consent of the Owners (which shall not be unreasonably withheld or delayed). |
3.3.6. | Notwithstanding Clause 3.3.5, the Managers may in each Annual Budget period, as specified in Clause 3.3.2, incur expenditure on behalf of the Owners in respect of items that are not budgeted for in the Annual Budget, or for amounts in excess of the Annual Budget amounts, without the approval of the Owners provided that: |
(i) | such expenditure is used only for the proper performance of the Management Services; and |
(ii) | such total expenditure does not exceed five (5) per cent of the total budgeted amount for that Annual Budget period or such other amount that may be agreed by the parties from time to time. |
3.3.7. | The Managers shall: |
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(i) | by the fifteenth (15 th ) Working Day of the month provide the Owners with a Vessel Condition Report in respect of the previous month in such form as the Owners (acting reasonably) may require; |
(ii) | by the fifteenth (15 th ) Working Day of each month provide the Owners with a comparison between the budgeted Operational Costs as set out in the Annual Budget and actual Operational Costs in respect of the previous month (in accordance with the form set out in Annex “F”); |
(iii) | by the fifteenth (15 th ) Working Day of each month provide the Owners with a request for funds based upon an estimate of the funding requirements of the Vessel that are required in respect of the next month together with any requests for approval of expenditure pursuant to Clause 3.3.5 and any proposed amendments to the Annual Budget pursuant to Clause 3.3.4; and |
(iv) | by the fifteenth (15th) Working Day of each month provide the Owners with a consolidated report on actual Operational Costs and if requested by the Owners, capital costs, including all expenses in relation to financing of the Vessel, in respect of the previous month. |
3.3.8. | If requested and in such manner as may be required by the Owners, the Managers shall provide the necessary personnel, hardware and software, and other resources necessary to administer on Owners’ behalf and in its name the invoicing and collection of hire payable under the Charter. |
3.4. | Health, Safety, Security, and Environmental Protection |
3.4.1. | The Managers shall operate a management system which shall be approved by the Owners (such approval not to be unreasonably withheld or delayed), and comply and ensure that the Vessel and the Crew comply with all applicable health, safety, security and environmental laws and regulations, and nothing in this Clause 3.4 shall derogate from the obligations of Managers to comply with its statutory responsibilities insofar as they relate to the other Management Services. |
3.4.2. | The Managers shall, in relation to all persons engaged or likely to be engaged in the execution of the Management Services, take such steps as are reasonably practicable to ensure their health and safety. |
3.4.3. | The Managers shall make available for inspection by the Owners at all times all registers, records and other documentation concerning health, safety, security (where appropriate) and environmental matters relating to the Management Services. |
3.4.4. | The Managers shall send to the Owners a copy of every notice or other communication received from or sent to any person or body concerning health, safety, security and/or environmental matters relating to the Management Services and shall co-operate with the Owners in respect of all such health, security, safety and/or environmental matters, as may from time to time be requested by the Owners |
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3.4.5. | The Managers shall use all reasonable endeavors to ensure that no oil, or harmful or hazardous substances, of any description, shall be discharged or escape accidentally or otherwise, from the Vessel; and that the Vessel, its Officers and Crew comply with all international, national, and state oil and air pollution laws, conventions or regulations applying in, or to, international waters and the territorial waters of the countries into which the Vessel may trade under the Charter including the provisions of OPA 90 that apply to tank ships. This shall also include adhering to the standards promulgated under OPA 90 as those regulations apply to non-tankships operating within the jurisdiction of the United States whether or not the same strictly apply to the Vessel. |
3.4.6. | The Managers shall not treat, keep or dispose of any waste produced and/or carried by the Managers as a result of the Management Services in a manner likely to cause harm to the health and safety of any person or harm to the environment (as far as the same may be reasonably practical) and shall comply with every statutory duty which is relevant. |
3.4.7. | During the execution of the Management Services, the Managers shall take such steps as are reasonably practicable to avoid (or where avoidance is not possible, to minimize) harm to the environment. |
3.4.8. | The Managers will prepare and obtain all necessary approvals for a SOPEP. The SOPEP will be written in the English language and will be reviewed and updated as required and be maintained with the correct list of coastal state contacts. If required, the Managers will arrange for the translation of the SOPEP into another language. The Managers will also undertake regular training of the Crew in the use of SOPEP including drills to ensure that the SOPEP functions as expected and that contact and information details specified are accurate. |
3.4.9. | The Managers shall prepare a HSSE Report in such form and detail as the Owners (acting reasonably) require, to be submitted to the Owners on the 5th day of the following month. |
3.5. | Insurance Arrangements |
3.5.1. | The Owners shall arrange insurances in accordance with Clause 6.1. |
3.5.2. | The Managers shall immediately inform and keep the Owners informed of any incident which gives or may give rise to claims or disputes relating to the insurances effected in accordance with Clause 6. |
3.5.3. | The Owners shall or, in their sole discretion instruct the Managers on a case-by-case basis and in consultation with the Owners to, handle insurance, average and salvage claims in connection with the Vessel. Any costs reasonably incurred by the Managers in handling claims in accordance with this Clause shall be paid by or for the account of the Owners. Until notified to the contrary, the Managers shall process all insurance claims relating to the Crew, in consultation with Owners. |
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3.6. | Sale or Purchase of the Vessel |
The Managers shall, if requested, provide Owners with technical assistance in connection with any sale of the Vessel. Any costs or out-of-pocket expenses incurred by the Managers in providing such technical assistance shall be paid by or for the account of the Owners. The Owners will, however, be solely responsible for agreeing the terms of any agreement regulating any sale.
3.7. | General Administration |
3.7.1. | The Owners may, in their sole discretion and upon such terms and conditions as the Owners shall specify, instruct the Managers on a case-by-case basis to handle and/or settle all claims relating to the Vessel including but without limitation any claims involving the Charterers. |
3.7.2. | The Managers shall keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving the Charterers or other third parties. |
3.7.3. | The Owners shall, or in their sole discretion instruct the Managers on a case-by-case basis to, bring or defend actions, suits or proceedings in connection with matters entrusted to the Managers pursuant to this Agreement. |
3.7.4. | Where the Managers are retained to handle and/or settle claims relating to the Vessel pursuant to Clause 3.7.1, the Managers shall be entitled to obtain legal or technical or other outside expert advice in relation to the handling and settlement of such claims and disputes. |
3.7.5. | The Owners shall arrange for the provision of any necessary guarantee bond or other security in connection with any such claims. |
3.7.6. | Any external costs reasonably incurred by the Managers in carrying out their obligations in accordance with this Clause 3.7 shall be paid by or for the account of the Owners provided that the Owners have instructed the Managers in accordance with Clause 3.7.1. |
3.8. | Quality Assurance |
3.8.1. | The Managers shall have and maintain a quality assurance/quality management system (the “ Quality Assurance & Quality Management System ”). This system shall include on board and on shore operation/ management and shall at the time of delivery, or as reasonably soon thereafter, meet the requirements of ISO-9001-2008 and ISO-14001-2004 or any subsequent addition or substitution approved by the Owners. The Quality Assurance & Quality Management System shall be documented and available to the Owners for approval within three (3) months of execution of this Agreement. The Managers shall supply documentation to the Owners on request confirming the continued maintenance and operation of the Quality Assurance & |
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Quality Management System in good standing throughout the period of this Agreement.
3.9. | [Reserved] |
4. | MANAGERS’ OBLIGATIONS |
4.1. | The Managers undertake to use their best endeavours to provide the agreed Management Services as agents for and on behalf of the Owners in a timely and efficient manner in accordance with first class international LNG ship management practice and the Operational and Maintenance Protocol set forth on Annex “D” and to protect and promote the interests of the Owners in all matters relating to the provision of the Management Services hereunder provided, however, that the Managers in the performance of their management responsibilities under this Agreement shall be entitled to have regard to their overall responsibility in relation to the Managed Fleet, and in particular, but without prejudice to the generality of the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and reasonable. |
4.2. | The Managers shall procure that the requirements of the law of the flag of the Vessel are satisfied and the Managers shall in particular be deemed to be the “Company” as defined by the ISM and ISPS Codes, thereby assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by these Codes when applicable. The Managers shall comply at all times with the requirements of the ISM, ISPS, and MTSA Codes, and the Managers shall immediately inform Owners if there is any threatened or actual withdrawal of Managers document of compliance or the Vessel’s safety management certificate or ISS (Security Certificate). |
4.3. | In addition to the specific obligations to keep the Owners informed hereunder, the Managers shall keep the Owners informed of all relevant information regarding the Vessel and the performance of the Management Services which the Owners may, acting reasonably, specify from time to time. |
4.4. | When the Managers become aware of an Emergency Situation, they shall immediately contact the Owners and keep the Owners informed in respect of such Emergency Situation. |
4.5. | If, in an Emergency Situation, the Managers (or the Master) are required pursuant to this Agreement to solicit an approval from the Owners, but in such circumstances it is not practical to wait for such approval, then notwithstanding any other term in this Agreement, the Managers (or the Master) may take whatever action they may deem necessary to deal with such Emergency Situation. |
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5. | OWNERS’ OBLIGATIONS |
5.1. | The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this Agreement. |
5.2. | The Owners shall provide prompt responses to any requests made by the Managers pursuant to this Agreement. |
5.3. | The Owners shall (subject to any confidentiality restrictions) provide the Managers with any relevant information relating to the Charters or Charterers and shall notify the Managers upon a change of Charterers or upon any new Charter in respect of the Vessel. |
5.4. | The Owners shall use reasonable endeavours (and subject to any confidentiality restrictions) to ensure that the Charterers shall keep the Managers informed of the relevant terms of any gas supply contract, charter party, contract of affreightment, contract of insurance and any other document relating to the Vessel and its cargo that the Managers may reasonably require in order to perform their obligations hereunder. |
6. | INSURANCE POLICIES |
6.1. | The Owners shall procure throughout the period of this Agreement that: |
(i) | at the Owners’ expense, the Vessel is insured for usual hull and machinery marine risks (including crew negligence) and war risks in accordance with the first class practice of prudent owners of vessels of a similar type to the Vessel; |
(ii) | at the Owners’ expense, the Vessel is insured against Protection and Indemnity risks (including pollution risks) based upon the Standard Rules of a member of the International Group of P&I Clubs and have arranged for the Managers to be included as named co-assured, and provide the Managers with Certificates of Entry to evidence that such insurances have been effected and confirm renewal within fifteen (15) Working Days of the same; |
(iii) | where the Vessel is directed to call at any port within the United States of America and at the Owners’ expense, the Vessel carries a Certificate of Financial Responsibility as required by the United States Offshore Pollution Act 1990; |
(iv) | the Vessel is insured against such other risks (including Freight, Demurrage and Defense) that are appropriate to the Vessel’s trade; |
(v) | the Owners’ Insurances name the Owners and the Managers as co-assureds, with full cover, with the Owners obtaining cover in respect of each of the insurances specified in Clause 6.1 on terms whereby the Owners are liable in respect of premiums or calls arising in connection with the Owners’ Insurances; and |
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(vi) | written evidence is provided, to the reasonable satisfaction of the Managers, of compliance by the Owners with their obligations under Clause 6 within a reasonable time of the commencement of the Agreement, and of each renewal date and, if specifically requested, of each payment date of the Owners’ Insurances. |
6.2. | Insofar as it affects the superintendent and other shore staff employed by the Managers in connection with this Agreement, the Managers shall procure and maintain at their own expense appropriate insurance cover with first class insurers in respect of death or injury to such superintendents or shore staff, and such insurance shall comply with all applicable law. |
6.3. | Managers shall name Owners as co-assureds on this insurance cover, and Managers agree to waive all subrogation rights against Owners that might arise under this entire Clause 6. |
7. | MANAGEMENT FEE |
7.1. | Subject to any adjustment in accordance with the provisions of Clause 7.2 the Owners shall pay to the Managers for the provision of Management Services, a monthly management fee of Fourty-Six Thousand Dollars (US$46,000) (the “Management Fee”) which shall be paid each calendar month in advance by the first Working Day of each applicable month provided that where a payment is due in respect of any part of a month that payment shall be paid on a pro-rata basis, such sums to be paid into the Managers’ Account. All invoices for the Management Fee shall be submitted by the Managers to the Owners in advance on a monthly basis. |
7.2. | If, during any calendar month, the Vessel is in: |
(i) | “deep” lay-up (that is with sea chests sealed off and all system drained down) the Management Fee shall be Three Thousand Five Hundred Dollars (US$3,500) per month and pro rata in respect of any part month; or |
(ii) | a partially manned stand-by condition, during a period of lay-up (other than deep lay-up) or during reactivation periods or during any period where the Managers are preparing to take over management of the Vessel from a third party the Management Fee shall be Ten Thousand Dollars (US$10,000) per month and pro rata in respect of any part month. |
7.3. | The Management Fee is exclusive of value added tax and any other existing sales or services tax that may be applicable. The Managers warrant that at the Effective Date, no such taxes are payable in respect of the Management Fee under Greek Law. |
The Management Fee payable to the Managers will be adjusted annually on the first Review Date after the Effective Date and on each Review Date thereafter. The adjustment will be agreed between the Parties in good faith on the basis of general inflation and proof of increases in actual costs incurred by the Managers.
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7.4. | In addition to the Management Fee, if the Managers’ superintendent or other staff are reasonably required to spend more than twenty-five (25) days in aggregate visiting the Vessel in any calendar year (or pro-rata for part of a calendar year), the cost of visits in excess of twenty-five (25) days shall be paid by the Owners, into the Managers’ Account, at a rate of One Thousand Dollars (US$1,000.00) per day (or pro rata in respect of any part day on board the Vessel). Notwithstanding the foregoing, all reasonable travelling expenses in connection with reasonably required visits to the Vessel by Managers’ superintendent or other staff (excluding visits in connection with drydocking) shall be part of the Management Fee, irrespective of the duration of such visits. |
7.5. | In the event of this Agreement being terminated by the Owners or the Managers in accordance with the provisions of Clause 17.3 or 17.4, the Management Fee payable to the Managers according to the provisions of Clauses 7.1 and 7.2, shall continue to be payable for a further period of three calendar months as from the termination date. In addition, provided that the Managers provide Crew for the Vessel in accordance with Clause 3.1: |
(i) | the Owners shall continue to pay Crew Support Costs during the said further period of three calendar months; and |
(ii) | the Owners shall pay any reasonable Severance Costs which may materialise provided the Managers have used reasonable endeavours to mitigate such obligations to the Crew. |
7.6. | Unless otherwise agreed in writing all discounts and commissions obtained by the Managers in the course of the management of the Vessel shall be credited to the Owners. |
7.7. | The Owners shall, in respect of each year of this Agreement, on or around the Review Date, decide whether or not to pay an Incentive Bonus to the Managers for remittance to the Crew of an amount and in the manner described in Annex “H” attached hereto. |
Any Incentive Bonus that the Owners decide to pay shall be paid into the Managers’ Account with fifteen (15) Working Days of the Review Date and the Managers shall remit any such bonus to the Crew. In addition the Owners shall within fifteen (15) Working Days of the Review Date provide a written explanation to the Managers of their decision which sets out in reasonable detail the rationale for making such a decision.
8. | VESSEL EXPENSES |
8.1. | Upon receipt of a request for funds for the Vessel pursuant to Clause 3.3.7 (iii) the Owners shall pay such funds into the Vessel Account, provided that such request is made in respect of items and amounts accounted for in the Annual Budget or made in respect of items or amounts for which the Managers do not require the approval of the Owners pursuant to Clause 3.3.6. |
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8.2. | In the event that the Managers request funds from the Owners pursuant to Clause 3.3.7(iii), but the Owners are not obliged to pay such funds pursuant to Clause 8.1, then the Owners may refuse to provide such funds provided that, in such circumstances, the Managers shall not be liable for any losses or damages incurred by the Owners as a result of such refusal and in any event, the Owners shall not unreasonably refuse to pay or delay the payment of such sums. |
8.3. | All sums payable by the Owners in respect of requests made by the Managers pursuant to Clauses 8.1 and 8.2 shall be paid into the Vessel Account by the first Working Day of the month following that month in which such request was made. |
8.4. | The Managers shall open the Vessel Account and communicate the details of the Vessel Account to the Owners prior to the Effective Date. The Vessel Account shall be an account that only contains monies payable into such Vessel Account pursuant to this Agreement. All monies paid into the Vessel Account (including interest, if payable) shall be held on trust for and to the credit of the Owners and the Managers may only utilise funds in the Vessel Account for the proper performance of the Management Services hereunder. The Managers shall provide full details of all transactions in relation to the Vessel Account and shall procure that monthly Vessel Account bank statements are provided to the Owners for each month of this Agreement. |
8.5. | Notwithstanding anything contained in this Agreement, the Managers shall in no circumstances be required to use or commit their own funds to finance the provision of the Management Services. |
9. | MANAGERS’ RIGHT TO SUB-CONTRACT |
9.1. | The Managers shall have the right to sub-contract any of their obligations in this Agreement, subject to Clause 9.2 below. |
9.2. | The Managers shall obtain the prior written consent of the Owners if they wish to sub-contract any of their obligations under this Agreement for amounts exceeding Fifty Thousand United States Dollars over and beyond the approved Annual Budget. |
9.3. | Notwithstanding any sub-contract the Managers shall remain fully liable for the due performance of their obligations under this Agreement, the Managers shall procure that each sub-contractor engaged pursuant to this Clause 9 shall comply with the requirements of Clause 3.4. |
10. | RESPONSIBILITIES |
10.1. | Force Majeure |
10.1.1. | Neither the Owners, nor the Managers shall be liable for any loss or damage or total or partial failure to perform this Agreement (other than a failure to perform an obligation to pay money) caused wholly or partly by any circumstances or things beyond the reasonable control of the Owners or the Managers, as the case may be, |
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including (without limiting the generality of the foregoing) acts of God, fires, floods, epidemics, quarantine restrictions, wars, terrorism, insurrections, riots, violent demonstrations, criminal offences, acts and omissions of civil or military authority or of usurped power, requisition or hire by any governmental or other competent authority or embargoes.
10.1.2. | The party invoking force majeure will advise the other party of the force majeure event at the earliest opportunity and also advise same party of the likely duration of such force majeure situation. |
10.2. | Liability to Owners |
The Managers shall be under no liability to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services, unless the same is proved to have resulted from the breach of this Agreement, fraud, gross negligence, or wilful misconduct of the Managers or their employees, or agents or sub-contractors employed by them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers’ personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers’ liability for each incident or series of incidents giving rise to a claim or claims shall not exceed a total of twelve (12) times the monthly Management Fee of Forty-Six Thousand Dollars (US$46,000) as adjusted annually pursuant to Clause 7.3 above.
Notwithstanding anything herein contained in the contrary, the Managers shall not be liable for any of the actions of the Crew, even if such actions are negligent or wilful, except only to the extent that they are shown to have resulted from a failure by the Managers to discharge their obligations under Clauses 3.1 or 3.4, in which case their liability shall be limited in accordance with the terms of this Clause 10.2.
10.3. | Indemnity |
Except to the extent and solely for the amount that the Managers would be liable under Clause 10.2, the Owners hereby undertake to keep the Managers and their employees, agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of the Agreement, and against and in respect of all costs, losses, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
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10.4. | “Himalaya” |
It is hereby expressly agreed that no employee or agent of the Managers (including sub-contractors from time to time employed by the Managers) shall in any circumstances whatsoever be under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Clause 10, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 10 the Managers are or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.
11. | DOCUMENTATION |
11.1. | The Managers shall also maintain and cause their agents to maintain and retain in accordance with generally accepted accounting practices, applicable tax requirements and good international shipping practices, all books, accounts and records pertaining to this Agreement, and all records, documents and other materials related to the Managers’ implementation of and compliance with the Quality Assurance & Quality Control System, including vouchers, invoices, receipts, correspondence, copies of original documents and such other documentation as is necessary in order to verify the compensation payable hereunder. |
11.2. | The Managers shall make available, upon Owners’ request, all documentation and records relating to the performance of the Management Services, the SMS and/or the Crew which the Owners require in order to demonstrate compliance with the ISM Code, ISPS Code, and STCW 95, or to defend or prosecute a claim against a third party or otherwise. |
11.3. | All Vessel Data is and shall remain the property of the Owners and shall be made available to the Owners by the Managers on the Owners’ request. Upon termination of this Agreement for any reason, the Managers shall promptly provide the Owners with all the Vessel Data, whether onboard the Vessel or otherwise. |
11.4. | The Managers shall retain and properly store all Vessel Data in accordance with first class LNG ship management practice. If, in the Managers’ opinion, certain Vessel Data should be destroyed, then the Managers shall first offer to return that Vessel Data (at the Owners’ expense) to the Owners, and in the event that the Owners decline such offer, the Managers may destroy such Vessel Data. |
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12. | DEPLOYMENT OF THE VESSEL |
12.1. | The Managers shall ensure that the Crew of the Vessel shall comply with any Permanent Instructions. |
12.2. | The Owners may change the terms of the Permanent Instructions, or upon the execution of a new Charter replace the existing Permanent Instructions with new Permanent Instructions with the consent of the Managers which shall not be unreasonably withheld or delayed. |
12.3. | In the event that the Managers or the Crew receive instructions from the Charterers, that in the opinion of the Managers, conflict with instructions provided by the Owners or which go beyond the scope of authority of the Charterers (to the extent such scope of authority has been disclosed by the Owners to the Managers), the Managers shall use best endeavours to immediately notify the Owners and the Charterers of the same. In such circumstances, subject to Clause 3.1.2(viii), the Owners’ instructions shall take precedence over the Charterers’ instructions. |
12.4. | Except for the purposes of saving life, the Vessel shall not, unless expressly authorised by the Owners, undertake attempts of salvage. |
12.5. | If: |
(i) | the Vessel undertakes attempts at salvage pursuant to Clause 12.4, or |
(ii) | the Vessel requests that a third party attempts salvage of the Vessel, |
then without prejudice to the Master of the Vessel’s overriding right to take whatever action he may deem necessary to preserve life or prevent the loss of the Vessel, all salvage shall be under the terms of the current “Lloyds Open Form No Cure — No Pay” agreement.
12.6. | Any proceeds arising from salvage of third party property shall be for the benefit of the Owners. |
12.7. | Notwithstanding any other provision of this Agreement, the Managers shall not (and shall procure that the Crew shall not), without the written consent of the Owners, sign any bill of lading on behalf of the Owners. |
13. | AUDITING |
13.1. | The Managers shall prepare the Annual Budget and accounts (as referred to in Clause 3.3.1 above) and shall make the same available for inspection and auditing by the Owners at such times as may be mutually agreed. |
13.2. | The Owners shall have the right to audit the Managers’ records and documentation as set out in Clause 11 above for the purpose of verifying their correctness and completeness at all times on reasonable notice to the Managers. Where staff or |
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auditors of the Owners visit the premises of the Managers for the purpose of carrying out an audit, the Managers shall provide office space and facilities to such staff or auditors at no extra cost to the Owners. | ||
14. | INSPECTION OF VESSEL |
14.1. | The Owners shall have the right at any time after giving reasonable notice to the Managers to inspect the Vessel for any reason they consider necessary. |
15. | COMPLIANCE WITH LAWS AND REGULATIONS ETC. |
15.1. | The Managers will not do or permit to be done anything which might cause any breach or infringement or the laws and regulations of the Vessel’s flag, the classification society or of the Primary Terminals and other places where she trades. |
16. | DURATION OF THE AGREEMENT |
16.1. | This Agreement is entered into on the date of signing and shall continue until terminated in accordance with Clause 17. |
17. | TERMINATION |
17.1. | If the Managers: |
(i) | fail to meet any material obligation under this Agreement; or |
(ii) | fail to meet any obligation under this Agreement that has a material adverse effect upon the Owners or the Vessel; |
then the Owners may give notice to the Managers of the default, requiring them to remedy it (if such default is capable of being remedied) as soon as practically possible. In the event that the default is not capable of being remedied or the Managers fail to remedy the default within a reasonable time to the satisfaction of the Owners, the Owners shall be entitled to terminate this Agreement by giving the Managers ninety (90) days’ written notice.
17.2. | The Owners may also terminate this Agreement by giving the Managers ninety (90) days’ written notice in the event that the Managers, in the reasonable opinion of the Owners, fail to manage the Vessel in accordance with first class LNG ship management practice and such failure has not been remedied within a reasonable time after written notice of such failure. |
17.3. | The Managers shall be entitled to terminate the Agreement by notice in writing if: |
(i) | any moneys payable by the Owners to the Managers have not been received into the Managers’ Account within thirty (30) days (excluding Saturdays, Sundays and public holidays) of payment having been requested in writing by the Managers; or |
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(ii) | this Agreement or any of the Owners’ rights and/or obligations are assigned to any person or entity without the Managers’ prior written agreement or approval. |
17.4. | This Agreement shall be deemed to be terminated: |
(i) | in the case of the sale of the Vessel (other than a sale or transfer to an Affiliate of the Owners); |
(ii) | if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned for hire; or |
(iii) | in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than of the purpose of a solvent reconstruction or amalgamation) or if a receiver or similar officer is appointed of the whole or a material part of its assets or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. |
17.5. | If the Owners elect to provide Officers and, for any reason within their control, the Owners fail to: |
(i) | procure Officers and Ratings supplied by them or on their behalf, complying with the requirements of STCW 95; or |
(ii) | instruct such officers and ratings to obey all reasonable orders of the Managers’ SMS; |
then the Managers may give notice to the Owners of the default, requiring them to remedy it (if such default is capable of being remedied) as soon as practicably possible. In the event that the default is not capable of being remedied or if the Owners fail to remedy the default within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate this agreement.
17.6. | [Reserved] |
17.7. | Notwithstanding Clauses 17.1 and 17.2, the Owners shall have the right to terminate this Agreement at any time and for any reason by giving the other party not less than three (3) months’ written notice of their intention to terminate this Agreement. |
17.8. | If the Owners proceed with the employment of, or continue to employ the Vessel in blockade running or in an unlawful trade or on a voyage, which in the reasonable opinion of the Managers, is unduly hazardous, the Managers may give notice to the Owners requiring them to cease to employ the Vessel in such manner as soon as possible. If the Owners fail to comply with such notice within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate this Agreement with immediate effect by notice in writing. |
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17.9. | The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination. |
18. | MISCELLANEOUS |
18.1. | The confidentiality obligations of the parties are set out in a separate Confidentiality Agreement that is attached for reference in Annex “G”. |
18.2. | A person who is not a party to this Agreement may not enforce, or otherwise have the benefit of, any provision of this Agreement under the Contracts (Rights of Third Parties) Act 1999, but this provision does not affect any right or remedy of a third party which exists or is available apart from that Act. |
18.3. | At the expiry or earlier termination of any existing ship management agreement(s) in relation to the Vessel, Managers shall co-operate in the transfer arrangements to be notified to the Managers by the Owners and shall facilitate the smooth transition of all operations and duties to Managers with the minimum of disruption. |
18.4. | Either party may at any time assign or transfer to an Affiliate its respective rights and obligations under this Agreement provided that they first obtain the written consent of the other party. Such consent shall not be unreasonably withheld, conditioned or delayed and the parties agree to promptly execute any reasonable novation or transfer documentation to give effect to such an assignment or transfer. |
19. | LAW AND ARBITRATION |
19.1. | This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
19.2. | The arbitration shall be construed and conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The language used for such arbitration shall be English and the arbitration shall be conducted in London. |
19.3. | The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. |
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19.4. | Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
19.5. | In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. The language used for such arbitration shall be English and the arbitration shall be conducted in London. |
20. | NOTICES AND BANK ACCOUNTS |
20.1. | Any notice to be given by either party to the other party pursuant to this Agreement shall be in writing and shall be effective upon delivery pursuant to Clause 20.2 and shall be sent by fax, registered mail or by personal service to the following addresses: |
for the Owners:
GAS-five Ltd.
Claredon House
2 Church Street
Hamilton HM11
Bermuda
Fax. No.:
Attn:
for the Managers:
GasLog LNG Services Ltd.
Piraeus Branch Office
69, Akti Miaouli,
185 37 Piraeus, Greece
Fax No: +30 210 4591247
Attention: Theodoros Katemidis, General Manager
20.2. | A notice is deemed to have been received: |
(i) | if delivered personally, at the time of delivery; |
(ii) | in the case of fax, at the time of transmission; |
(iii) | in the case of delivery of courier, on the date of receipt by the courier of written acknowledgement of such delivery; |
(iv) | in the case of pre-paid first class post, recorded delivery or registered post, on receipt; and |
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(v) | if deemed receipt under the previous paragraphs of this sub-clause is not within business hours (meaning 9:00 am to 5:30 pm Monday to Friday (or Sunday to Thursday if the place of receipt is in Egypt) on a day that is not a public holiday in the place of receipt), when business next starts in the place of receipt. |
20.3. | For the purposes of this Agreement, the Managers’ Account currently has the following details: |
Account Holder | : | GasLog LNG Services Ltd. |
Bank | : | CITIBANK INTERNATIONAL plc |
(47-49, Akti Miaouli, 185 36 Piraeus, Greece) | ||
IBAN | : | GR35 0840 00200 000 00 44 4031026 |
Account Number | : | 044 4031026 |
Currency | : | Dollars |
IN WITNESS whereof the parties have duly signed this Agreement the day and year first above written.
SIGNED
for and on behalf
of GAS-five
by
in the presence of
SIGNED for and on behalf
of GASLOG LNG SERVICES LTD.
by
in the presence of
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ANNEX “A”
DETAILS OF VESSEL
[OWNERS TO PROVIDE ON OR BEFORE EFFECTIVE DATE]
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ANNEX “B”
DETAILS OF CREW / OFFICERS
RATINGS
[MANAGERS TO PROVIDE AT LEAST 30 DAYS PRIOR TO EFFECTIVE DATE]
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ANNEX “C”
INITIAL BUDGET
To be provided in accordance with Clause 3.3.2 prior to the Effective Date and once approved by Owners to be inserted
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ANNEX “D”
OPERATIONAL AND MAINTENANCE PROTOCOL
The provisions of this Operational and Maintenance Protocol (“Protocol”) are integral with the provisions of the Agreement. The Owners agree to provide the manager with the necessary financial resources to comply with the requirements of this Operational and Maintenance Protocol.
The Vessel shall always be operated and maintained in accordance with the first class international standards for LNG vessels. These standards shall include, without limitation, that:
· | The Vessel is always manned, operated and maintained in a safe and prudent manner to minimise the risk of accidents; |
· | the maintenance and operation of the Vessel shall be thorough and proactive and not based merely on the minimum standards required by the Vessel’s flag state and classification society but to the highest standards applicable in the shipping and LNG industry; |
· | the Managers agree to maintain membership in the Society of International Gas Tankers and Terminal Operators Association (SIGTTO) and to abide by all guidelines, recommendations, and training schedules that are applicable to the safe and reliable operation of LNG vessels made by this industry association; |
· | the Managers agree to observe and abide by all guidelines, recommendations, and training standards that are promulgated by the Oil Companies’ International Marine Forum (OCIMF) and are applicable to the safe and reliable operation of LNG vessels made by this industry association; |
· | the Vessel shall be maintained and refurbished and where necessary restored to ensure the safe, reliable, and efficient transportation of LNG for a minimum 40 year trading life. |
Other than for Manager-scheduled maintenance periods of seventy two (72) hours every six (6) months (days which shall be agreed by the Owners), the Owners expect the Vessel to be available for the safe and efficient transportation of LNG for 100% of the year. The Manager shall put in place a robust and comprehensive vessel management system designed to meet this availability objective.
The Managers shall take the necessary steps to promote a culture of safety awareness, compliance with established procedures, and non-conformance reporting to facilitate continuous improvement throughout the organization including all crewmembers onboard the Vessel.
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CREWING
The Managers agree that having a well-trained and qualified vessel crew and shoreside support staff, well versed in LNG vessel operations and management, is the foundation of a safe, reliable, and efficient LNG vessel operation.
· | The Managers agree to adhere to the Training Matrix, and also agree that if the Training Matrix conflicts with less stringent standards contained in this Agreement, the Training Matrix will control. |
· | Managers shall arrange for all Deck Officers, including the Master, to attend Bridge Team Management Training at one of the recognized training centers. This training shall be repeated every five (5) calendar years. |
· | Managers are required to ensure that all Masters have attended a ship handling simulator-training course applicable for the type of vessel in use for LNG transportation. The training shall be repeated at a minimum of every five (5) calendar years. |
· | In addition to the requirements of the Management Agreement, all senior operational positions (Master, Chief Engineer, Chief Mate, and Second Engineers, Cargo Engineer) on board must have a minimum of three (3) years of sea time (time onboard) experience onboard LNG Carriers in any position in the position directly below the senior operational position they will assume. All senior operational positions must receive a minimum of two (2) weeks vessel familiarization and specific operational training, with a training scope appropriate to their position, prior to embarking onboard the Vessel for the first time. Any deviation from this section’s experience requirement must be approved by Owners. |
· | All officers and unlicensed crew on board require, as a minimum, specific training on the hazards and unique operational aspects associated with LNG carriers that meet the requirements of Section A-V/l paragraphs 1-7 of the STCW 1995 convention. All licensed officers that form part of the cargo transfer watch or carry out operational or maintenance duties and responsibilities directly related to the vessel’s cargo system shall also receive specific training meeting the requirements of Section A-V/l paragraphs 22-34 of the STCW 1995 convention. The Managers are to document what special LNG ship operations training is provided to licensed and unlicensed crewmembers prior to their employment on the LNG carrier. |
· | All crew are required to be properly qualified and certificated in accordance with the IMO Standards of Training, Certification and Watch keeping for Seafarers (STCW), 1995, as amended, and in compliance with the Training Matrix. |
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· | Managers shall provide to Owners copies of all newly appointed senior officers’ certification and details of experience prior to their embarkation onboard the Vessel. Owners have the right to review and verify the qualifications of all LNG vessel senior officers prior to their embarkation onboard the Vessel. Owners shall be given the opportunity to approve the certificates and experience of all senior officers a reasonable period prior to their initial embarkation onboard the Vessel), and shall have the discretion to reject any such officer if they do not meet the qualification and training requirements agreed between the Managers and Owners. Owners’ approval shall not be unreasonably withheld or delayed. |
· | Procedures shall be put in place in the ship’s Safety Management System clearly documenting who is responsible for the ship’s LNG Cargo System including cargo transfer operations. The responsibilities and interface between the Chief Mate and Cargo Engineer shall be clearly defined. The Managers shall identify and document the qualifications of a Person In Charge (PIC) of the Cargo Transfer Watch that exceed the requirements of Regulation V/l of the STCW 95 requirements. These qualifications shall be made available to Owners upon request. A training program shall be established and documented for junior officers to allow them to meet the qualifications of the PIC of the Cargo Transfer Watch during periods of steady state operation to allow the Chief Officer and Cargo Engineer to take rest periods if required to meet work hour restrictions. This program shall include some mechanism for competency assessment either on a cargo simulator or under supervised conditions during an actual cargo transfer onboard the Vessel. |
· | The Managers shall establish, as a minimum, the following policies and should ensure that all officers and crew are fully conversant and comply with these policies: |
· | Safety Policy |
· | Health Policy |
· | Environmental Policy |
· | Quality of Service Policy |
· | Operations Policy |
· | Navigation Policy |
· | Maintenance Policy |
· | Drug and Alcohol Policy |
· | The Managers shall ensure that all seafarers undergo a medical examination, which shall include a drug and alcohol test annually. On completion of a satisfactory medical examination a certificate shall be issued which shall remain valid for the period that the seafarer is onboard the Vessel. An OCIMF-compliant drug and alcohol policy, which includes random drug testing, shall be implemented, and tests conducted directly onboard the Vessel or by an outside contractor to deter the use of illegal drugs and controlled substances by crewmembers while onboard the Vessel. |
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· | The organization employed by the Managers to provide manning to the Vessel shall be engaged through a contract, which shall stipulate the Manager’s minimum competency and experience requirements. |
· | At intervals not exceeding two years the Managers shall ensure that the organization providing the manning of the Vessel is audited by a qualified auditor for compliance with the Managers’ minimum requirements. Copies of the audit report, non-compliances and corrective actions shall be provided to Owners, upon request. |
· | Managers shall implement a system that interrogates and confirms officer’s qualifications and fitness for duty prior to joining the Vessel. |
· | The Managers shall keep a minimum number of officers employed onboard the Vessel during dry-dock overhaul periods for inspection and quality assurance purposes. As a minimum, these people shall include all Licensed Engineering Officers , the Chief Officer and the Captain. |
MAINTENANCE
· | A Master Maintenance Plan shall be developed for the Vessel and approved by Owners’, provided that Owners’ approval does not conflict with the Vessel’s Class or Flag State requirements. The objective of this plan shall be to maintain the safe, reliable, and efficient operation of the Vessel over its projected 40 year life. This plan shall cover the following areas associated with efficient operation and Vessel maintenance and repair: |
1. | Dry-docking interval |
2. | Procedures associated with pre-qualification of repair shipyards |
3. | Hull Roughness measurement and maintenance to an acceptable level |
4. | Anticipated schedule of maintenance, major overhaul, and refurbishment of all vessel critical equipment |
5. | A description of the Preventive Maintenance System covering scheduled maintenance of all vessel equipment |
6. | Inventory Control Procedures and stock of critical spare parts both onboard and ashore |
7. | Procedures associated with pre-qualification of equipment and spare parts vendors |
8. | Propulsion plant efficiency performance monitoring procedures and corrective action steps |
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9. | Condition Monitoring Systems and Condition Monitoring based maintenance |
10. | Means of collecting the necessary date in a structured format to monitor and benchmark equipment reliability performance |
11. | Performing Root Cause Analysis of equipment failures and equipment/systems reliability improvement |
12. | Procedures associated with Equipment Obsolescence |
· | The Preventive Maintenance system shall incorporate the equipment suppliers or makers’ instructions and maintenance recommendations. |
· | All maintenance work carried out on vessel equipment, other than normal routine operational work, shall be carried out using a permit to work system. |
· | Where equipment isolation is required for operational and/or personnel safety or where hot work is involved all work must be carried out under a written procedure under the guidelines of the Safety Management System’s Lockout/Tag out/Isolation or Hot work permit procedures. |
The following is the proposed maintenance cycle that shall be followed with the Vessel. It is based on a 60 month period coinciding with the Vessel’s 5 year special survey requirements. This cycle may be adjusted through mutual agreement between Manager and Owners. The Managers shall notify Owners in writing at least 30 days in advance of the proposed dates for each 2 day Scheduled Maintenance Window and at least 6 months in advance of the proposed dates for dry-docking the Vessel. The Owners are primarily responsible for coordinating the communication and discussion of the scheduling of maintenance cycle events with the vessel’s charterer.
Month | Maintenance Event | ||
6 | 48 Hours Scheduled Maintenance Window | ||
12 | 48 Hours Scheduled Maintenance Window | ||
18 | 48 Hours Scheduled Maintenance Window | ||
24 | 48 Hours Scheduled Maintenance Window | ||
30 | Minor Drydocking – Intermediate Survey | ||
36 | 48 Hours Scheduled Maintenance Window | ||
42 | 48 Hours Scheduled Maintenance Window | ||
48 | 48 Hours Scheduled Maintenance Window | ||
54 | 48 Hours Scheduled Maintenance Window | ||
60 | Major Drydocking – 5 Year Special Survey |
OPERATIONS
· | The Managers shall establish detailed procedures for all critical operations performed onboard the Vessel as part of the Vessel’s Safety Management System. These procedures shall be developed and tailored specifically to the Vessel. Steps |
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shall be taken to familiarize Vessel personnel with these procedures and a robust internal audit program shall be carried out to verify crew compliance with these established procedures. Checklists should be used where appropriate to assist personnel in following procedures and to provide documented evidence of adherence to procedures. Copies of all work instructions and procedures in force shall be on file in the head office facilities of the Manager. The complete Safety Management System shall be made available in hard or electronic copy to the Owners.
· | Changes to operating procedures must be reviewed by a senior officer onboard and approved by shore based management before the changes are implemented. |
· | The Vessel and crew at all times shall be capable of operating with no venting of cargo boil-off gases to the atmosphere. Any such venting shall immediately be reported to the Owners with a full explanation as to why the venting operation was required and an estimate of venting duration and quantity vented. It is recognized that under rare extreme conditions the cargo tank pressure may approach the P.V. valve release settings. This condition is to be avoided through proper management of cargo during laden voyages and of the heel and spray cooling during ballast voyages, and if necessary to prevent P/V valves from lifting, the Vessel will, when possible, reduce cargo tank pressure below this setting by intentional venting in a controlled manner. |
· | Whenever the vessel is transiting restricted waters the following operating profile shall normally be adhered to unless specific equipment breakdown prevents this: |
· | The Throttle shall be in Bridge Control | |
· | The Steering Gear systems shall be fully tested (including all standby pumps) prior to entry into restricted waters | |
· | Boilers shall be operated in the Dual Fuel Mode | |
· | Two ship service generators shall be on line for redundancy | |
· | The main engine shall be placed in “Standby” and the engine room shall be manned if there is a high probability of the vessel maneuvering |
· | All inhibits on any trip (safety shutdown) and alarm system must be approved by the Master or Chief Engineer before being applied. A written procedure is necessary to document the operational conditions that must exist before any trip or alarm may be inhibited and what additional safety measures must be put in place when trips or alarms are inhibited. A daily log of all inhibited trips and alarms shall be displayed on the bridge and in the engine room. |
INSPECTIONS
· | The Managers shall arrange on a bi annual basis for a fully accredited OCIMF SIRE inspection of the ship. A copy of the report issued by the independent accredited inspector is to be made immediately available to Owners. Within one week of the inspection report being issued the Managers are required to provide a |
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programme to the charterer to indicate how and when any of the agreed comments are going to be corrected.
· | The Managers shall arrange for an OCIMF/SIGTTO compliant self assessment inspection and audit to be carried out onboard the Vessel on an annual basis. This may be carried out as part of the Managers’ internal audit program. Copies of completed annual assessments are to be kept on board available for inspection by Owners upon request. Where the Managers are unable to obtain copies of the OCIMF/SIGTTO inspection guidelines, Managers shall apply their own internal audit/inspection procedures providing that the Manager’s inspection guidelines are subject to review and approval by Owners. |
· | The Managers shall arrange for Owners’ representative to carry out a detailed assessment and operational audit of the Managers’ head office facilities a minimum of once every two (2) years. The inspection will include but not be limited to Company Profile, Management Review, Document Control, Fleet Management, ISM Safety Management System, Corrective Action, Recruitment and Training, Health, Safety and Environmental Protection, Technical Support, Navigation, Safe Mooring, and Emergency Response. |
· | The Managers shall ensure that a Vessel inspection report in accordance with Owners’ format is completed annually. This inspection report is to be completed by attending manager’s superintendents during a twelve month period, ensuring that all items are addressed during that period. Copies of completed reports are to be submitted to Owners annually. The Managers may utilize their own internal inspection format and checklist if Owners can review and approve inspection guidelines prior to their use. |
· | Owners, or their designated representatives, will arrange for qualified auditors to carry out annual audits of the Vessel to confirm that the Vessels safety, quality and environmental protection system is functioning effectively. The Managers are to provide corrective actions to any non-conformities identified during the audits within thirty days of receiving the audit report. Confirmation of implementation is to be carried out at the next audit. Items that would normally be considered non-conformities would include, but not be limited to; crew members not properly qualified or certified, deteriorated physical conditions on the Vessel or equipment malfunctions with no documented schedule for repair, lack of documentation control, insufficient spare parts for normal maintenance, poor accuracy of onboard spare parts inventory, and lack of procedures for work being performed. |
· | Owners, or their designated representatives, shall arrange for qualified surveyors to carry out inspections and a condition assessment of the Vessel while undergoing a drydock overhaul as necessary to verify proper planning and adherence to the approved Master Maintenance Plan. |
The Managers will implement contingency planning to be activated in the event of any emergency occurring on or to the Vessel and shall ensure that the contingency plan is
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exercised annually with the participation of Owners. A copy of the Manager’s contingency plan is to be provided to Owners who shall be included in the Emergency Contact Chart and the nominated recipients for amendments.
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ANNEX “E”
PERMANENT INSTRUCTIONS
The Permanent Instructions shall be provided by the Charterers to the Managers on or prior to the Effective Date and shall be a protocol of communication among Charterers, the Vessel Owners and/or the Managers. The protocol of communication will set out, inter alia, who has authority to issue instructions and provide information to the Vessel and its master and who has authority to receive communications and information from the Vessel.
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ANNEX “F”
FORM OF ACCOUNTING SYSTEM
[MANAGERS TO PROVIDE]
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ANNEX “G”
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (“Agreement”) is made and entered into as of the _____ day of ________, 2014, by and between GAS-five LTD., a company incorporated under the laws of Bermuda and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “Owners”), and GasLog LNG Services Ltd., a company incorporated in Bermuda and having a branch office at 69 Akti Miaouli, Piraeus GR 18537, Greece (the “Managers”).
Owners and Managers entered into that certain Ship Management Agreement of even date herewith (the “Management Agreement”). In connection with the Management Agreement, it has been necessary and may continue to be necessary for Owners and Managers to exchange or provide access to certain proprietary and/or confidential information. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned thereto in the Management Agreement.
1. Confidential Information. At all times during the term of the Management Agreement and for two years thereafter, Owners and Managers shall keep confidential and shall not, without the prior written consent of the other party, issue any press release in relation to the transactions evidenced by the Management Agreement or the transactions contemplated thereunder, or disclose to any other person, the terms of the Management Agreement, any information provided to party pursuant to or in connection with the Management Agreement, any information connected with the Vessel (both technical or operational) or any other information identified as confidential or which may be protected by copyright, trademark or intellectual property law, or release copies of any such document which discloses any such information. Any and all such information described herein, together with all notes, analyses, compilations, studies, interpretations or other documents or records prepared by a party receiving such information or its Representatives (defined below), or copies thereof, which contain or otherwise reflect such information made available by are hereinafter referred to as the “Confidential Information.” In addition, Confidential Information shall mean any discussions between the parties concerning the Management Agreement or in connection with the Management Agreement, any and all written, printed or other materials, regardless of form, provided by a party concerning the Management Agreement or in connection with the Management Agreement, whether provided prior to or after the execution of this Agreement, and the substance and content thereof, and all information ascertained through the discussions between employees or representatives of the parties concerning the Management Agreement.
2. Exclusions. The term Confidential Information does not include any information which:
(a) at the time of disclosure is in the public domain or thereafter becomes generally available other than as a result of a disclosure by the receiving party or its Representatives;
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(b) is available to such party or its Representatives on a non-confidential basis from a source other than the disclosing party, provided that such source is not bound by a confidentiality agreement with the disclosing party; or,
(c) has been independently acquired or developed by receiving party or its Representatives without violating any of its obligations under this Agreement or the Management Agreement.
3. Permitted Disclosures. Notwithstanding the provisions of Section 1 above, either party shall be entitled to disclose Confidential Information without the consent of the other:
(a) pursuant to applicable law or order of a court of competent jurisdiction or a regulatory agency with jurisdiction, provided such party agrees prior to any such disclosure to provide the other party with prompt written notice of such requirements;
(b) to its directors, officers, employees, agents, representatives, advisors and consultants (“Representatives”), whose assistance in evaluating the Confidential Information is necessary and who are legally obligated to maintain the Confidential Information in confidence; and
(c) to any charterer or subcharterer of the Vessel.
4. CHOICE OF LAW. This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or reenactment thereof save to the extent necessary to give effect to the provisions of this Clause. Any dispute arising under this Agreement shall be resolved pursuant to the arbitration provisions set forth in Article 19 of the Management Agreement.
5. Term. As to the Confidential Information, the obligations of confidentiality and non-disclosure under this Agreement shall terminate two (2) years after the date on which the Management Agreement is terminated. Upon termination of this Agreement, each party shall return all Confidential Information furnished to it hereunder in written or other tangible form, and copies thereof, and destroy all copies of Confidential Information consisting of notes, analyses, compilations, studies, interpretations or documents or records prepared by it, or its Representatives.
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IN WITNESS whereof the parties have duly signed this Agreement the day and year first above written.
SIGNED for and on behalf
of
GAS-five LTD.
by
in the presence of
SIGNED for and on behalf
of GASLOG LNG SERVICES LTD.
by
in the presence of
ANNEX “H”
INCENTIVE BONUS PLAN
The Incentive Bonus shall be based on an annual assessment of the Key Performance Indicators (“KPIs”) listed below, as divided in three sections: HSSE, Vessel Performance, and Financial Performance.
There will be an annual assessment of the KPIs in each section, and a total Incentive Bonus of $72,000 may be awarded. The total Incentive Bonus shall be allocated across the three sections in three equal awards of $24,000 per section. Exceeding the noted maximum acceptable KPI in any section will mean that the $24,000 section award will not be paid for that year.
Where the Bonus Target is met for every KPI within a section then the full section award will be made for that section.
Where the KPIs in a section fall between the Maximum acceptable and the Bonus Target, then the level of award will be assessed by mutual agreement.
Key Performance Indicators (KPIs)
The KPIs below are agreed to be reviewed on an annual basis. These are the initial KPIs and may be adjusted and changed as agreed mutually on review.
KPI | Maximum acceptable | Bonus |
HSSE
Fatality | 0 | 0 | ||
Total Recordable Cases | 1 | 0 | ||
Near miss reports | To be agreed annually | To be agreed annually | ||
Oil Spills to water | 0 | 0 | ||
Venting cargo vapor to atmosphere - unless approved or emergency | 0 | 0 | ||
Major Incidents (collisions, groundings, flooding, fire explosion etc.) | 0 | 0 | ||
TMSA | To be agreed annually based on no improvement from the previous year | To be agreed annually based on stretched improvement from the previous year |
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Vessel Performance
Off hire | 12 hours (assuming 4 days per annum total maintenance window (2 days every 6 months) or any other instances with permission) | No off hire | ||
Vetting | Total deficiencies per inspection 12 low risk – 1 high risk | 5 low risk | ||
Port State Control | No requirements for rectification prior to departure | Maximum 2 observations (recorded on Equasis) per vessel inspection | ||
Fuel consumption (using conversion) | Fuel consumption (as measured during quarterly Kyma Performance Trials) equal to that which is indicated in the Gas form C | 5% or more less than that which is indicated in the Gas Form C | ||
Heel management | Requires two hours cool down alongside | Fully in compliance with voyage orders (e.g. 1 day heel on arrival and at temperature to load or as instructed by voyage) | ||
Dry dock control - delivery after repair (discounting yard delays) | 2 days delay from initial planned delivery date | Delivery on time |
Financial Performance
Compliance with annual budget, against declared expenditure, allowing for exchange rate fluctuations $ to € and approved extra items | 0% above approved budget | Below the approved budget (excluding approved extra items) at an amount to be mutually agreed annually |
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Dry docking budget | 0% above approved budget | Below the approved budget (excluding approved extra items) at an amount to be mutually agreed at the award of the drydock contract |
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ANNEX “I”
PRIMARY TERMINALS
Load | Country | Status | ||
Gladstone | Australia | * 2 | ||
Withnell Bay | Australia | 1 | ||
Pluto | Australia | 1 | ||
Idku | Egypt | 1 | ||
Damietta | Egypt | 1 | ||
Punta Europa | Equatorial Guinea | 1 | ||
Discharge | Country | Status | ||
Bahia Blanca FSRU | Argentina | 1 | ||
Zeebrugge | Belgium | 1 | ||
Pecem | Brazil | 1 | ||
Guanabara Bay | Brazil | 1 | ||
Canaport | Canada | 1 | ||
Mejillones | Chile | 1 | ||
Quintero | Chile | 1 | ||
Dalian | China | 1 | ||
Fujian | China | 1 | ||
Guangdong | China | 1 | ||
Jiangsu | China | 1 | ||
Sydney | China | 1 | ||
Zhejiang | China | 1 | ||
Zhuhai | China | *2 | ||
Montoir | France | 1 | ||
Revithoussa | Greece | 1 | ||
Dahej | India | 1 | ||
Hazira | India | 1 | ||
Chita | Japan | 1 | ||
Futtsu | Japan | 1 | ||
Himeji | Japan | 1 | ||
Senboku II | Japan | 1 | ||
Kawagoe | Japan | 1 | ||
Sodeshi | Japan | 1 | ||
Niigata | Japan | 1 | ||
Tobata | Japan | 1 | ||
Hitachi | Japan | *2 | ||
Joetsu Thermal Power | Japan | 1 | ||
INPEX Naoetsu | Japan | 1A | ||
Negishi | Japan | 1 | ||
Yanai | Japan | 1 | ||
Sodegaura | Japan | 1 | ||
Ohgishima | Japan | 1 | ||
Oita | Japan | 1 | ||
Sakai | Japan | 1 |
Load | Country | Status | ||
Bonny Island (Jetty 1,2) | Nigeria | 1 | ||
Snohvit | Norway | *4 | ||
Point Fortin | Trinidad | 1 | ||
Das Island | UAE | 1 | ||
Lake Charles | USA | 1 | ||
Sabine Pass (Cheniere)* | USA | 1 | ||
Discharge | Country | Status | ||
Incheon | Korea | 1 | ||
Pyeongtaek | Korea | 1 | ||
Tongyeong | Korea | 1 | ||
Gwang Yang | Korea | 1 | ||
Mina Al Ahmadi | Kuwait | 1 | ||
Bintulu | Malaysia | 1 | ||
Altamira | Mexico | 1 | ||
Costa Azul | Mexico | 1 | ||
Sines | Portugal | 1 | ||
Ras Laffan | Qatar | 1 | ||
Singapore | Singapore | 1 | ||
Barcelona | Spain | 1 | ||
Bilbao | Spain | 1 | ||
Cartagena | Spain | 1 | ||
Huelva | Spain | 1 | ||
Sagunto | Spain | 1 | ||
Map Ta Phut | Thailand | 1 | ||
Rotterdam | The Netherlands | 1 | ||
Yung-An | Taiwan | 1 | ||
Taichung | Taiwan | 1 | ||
Aliaga | Turkey | 1 | ||
Marmara Ereglisi | Turkey | *3 | ||
Jebel Ali FSRU | UAE | 1 | ||
Elba Island | USA | 1 | ||
Cameron | USA | 1 | ||
Pascagoula | USA | 1 | ||
Freeport | USA | 1 | ||
Isle of Grain | UK | 1 | ||
Dragon | UK | 1 |
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* 1 A - Primary Terminals ~ Pending
Signifies terminals where some terminal data is not complete, but which will be treated as Primary Terminals so long as, in order for the Vessel to be accepted by the terminal, no changes are required to the principal dimensions of the Vessel, including: length, breadth, draft, displacement, location of cargo manifolds and lay-out of cargo manifolds (pipe size, layout of liquid and vapour lines, manifold dimensions, etc). Owners and Charterers to cooperate to complete any missing terminal data and to achieve Terminal acceptance and any minor changes to the Vessel (gangway landing areas/rails, etc.) will be the responsibility of the Owners.
*2 Terminals Under Construction
Signifies terminals that are under construction at the date of signing the Charter party and are not Primary Terminals (“Terminals Under Construction”). Owners and Charterers agree to work together in good faith in order to obtain: (i) the necessary relevant information to enable Owners to reasonably assess whether each of the Terminals Under Construction are in all material respects compatible with the Vessel; and (ii) acceptance of the Vessel by the Terminal Under Construction. Once Owners are reasonably satisfied that a Terminal Under Construction is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge, and the Terminal Under Construction has confirmed to Owners that they are prepared to accept the vessel to call and carry out cargo operations at their terminal (once completed), Owners agree to add such Terminal Under Construction to the list of Primary Terminals.
*3 Terminals With Compatibility Issues
Signifies terminals which have identified compatibility issues and are not Primary Terminals. However, Owners agree to allow the Vessel to call at such terminals provided: (i) they are reasonably satisfied that there is sufficient compatibility to allow safe navigation, loading and/or discharge; and (ii) the terminal have confirmed to Owners their acceptance of the Vessel to call, and carry out cargo operations at their terminal.
*4 Terminals Pending Further Data
Signifies terminals in respect of which, at the date hereof, there is insufficient information available in order to allow Owners to assess whether the terminal is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge (“Pending Terminals”). Owners and Charterers agree to work together in good faith in order to obtain: (i) the necessary relevant information to enable Owners to reasonably assess whether each of the Pending Terminals are in all material respects compatible with the Vessel; and (ii) acceptance of the Vessel by the Pending Terminals. Once Owners are reasonably satisfied that an Pending Terminal is in all material respects compatible with the Vessel so as to allow safe navigation, loading and/or discharge, and the Pending Terminal has confirmed to Owners that they are prepared to accept the vessel to call and carry out cargo operations at their terminal (once completed), Owners agree to add such Pending Terminals to the list of Primary Terminals.
Exhibit 10.16
Date [●] 2014
GASLOG LTD.
as Lender
-and-
GASLOG PARTNERS LP
as Borrower
FORM OF LOAN AGREEMENT
relating to
a $30,000,000 unsecured revolving
credit facility
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INDEX
Clause | Page | |
1. | INTERPRETATION | 1 |
2. | FACILITY | 2 |
3. | DRAWDOWN | 2 |
4. | INTEREST AND FEES | 3 |
5. | REPAYMENT, PREPAYMENT AND CANCELLATION | 4 |
6. | CONDITIONS PRECEDENT | 5 |
7. | REPRESENTATIONS AND WARRANTIES | 5 |
8. | UNDERTAKINGS | 6 |
9. | PAYMENTS AND CALCULATIONS | 6 |
10. | EVENTS OF DEFAULT | 6 |
11. | COSTS | 8 |
12. | INDEMNITIES | 8 |
13. | NO SET-OFF OR TAX DEDUCTION | 9 |
14. | ILLEGALITY | 10 |
15. | TRANSFERS | 10 |
16. | NOTICES | 11 |
17. | SUPPLEMENTAL | 11 |
18. | LAW AND JURISDICTION | 12 |
SCHEDULE 1 DRAWDOWN NOTICE | 14 |
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THIS AGREEMENT is made on [●] 2014
BETWEEN
(1) | GASLOG LTD. , a company incorporated in Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda (the “ Lender ”); and |
(2) | GASLOG PARTNERS LP , a limited partnership formed in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH96960 (the “ Borrower) ”. |
IT IS AGREED as follows:
1. | INTERPRETATION |
1.1. | Definitions. In this Agreement: |
“ Advance ” means the principal amount of each borrowing by the Borrower under this Agreement;
“ Availability Period ” means the period commencing on the date of this Agreement and ending on:
(a) | the date falling 36 months after the date of this Agreement (or such later date as the Lender may agree with the Borrower); or |
(b) | if earlier, the date on which the Commitment is fully cancelled or terminated; |
“ Available Commitment ” means, at any time during the Availability Period, the Commitment less the amount of the Loan at that time;
“ Business Day ” means a day on which banks are open in London and, in respect of a day on which a payment is required to be made under this Agreement, also in New York City;
“ Commitment ” means $30,000,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement;
“ 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 Borrower for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;
“ Drawdown Notice ” means a notice in the form set out in Schedule 1 (or in any other form approved by the Lender);
“ Event of Default ” means any of the events or circumstances described in Clause 10.1;
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“ IPO ” means the initial public offering of units in the Borrower to be effected with the New York Stock Exchange (NYSE);
“ Loan ” means the aggregate principal amount for the time being outstanding under this Agreement;
“ Quarterly Payment Date ” means the last day of March, June, September and December.
“ Repayment Date ” means, in relation to an Advance, the date falling 6 months after the Drawdown Date for that Advance or, if earlier, the Termination Date; and
“ Termination Date ” means the date falling 36 months after the date of this Agreement.
1.2. | Clause references. References in this Agreement to Clauses are, unless otherwise specified, references to clauses of this Agreement. |
1.3. | References to persons. References to “ person ” or “ persons ” or to words importing persons include, without limitation, individuals, firms, corporations, government agencies, committees, departments, authorities and other bodies, incorporated or unincorporated, whether having distinct legal personality or not. |
1.4. | Clause headings. Clause headings are for ease of reference only. |
2. | FACILITY |
2.1. | Amount of facility. Subject to the other provisions of this Agreement, the Lender shall make a revolving credit facility not exceeding $30,000,000 available to the Borrower. |
2.2. | Purpose of facility. The Borrower undertakes to use each Advance for general partnership purposes. |
3. | DRAWDOWN |
3.1. | Request for Advance. Subject to the following conditions, the Borrower may request an Advance to be made by ensuring that the Lender receives a completed Drawdown Notice not later than 11.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date. |
3.2. | Availability. The conditions referred to in Clause 3.1 are that: |
(a) | a Drawdown Date has to be a Business Day during the Availability Period; |
(b) | the amount of an Advance shall be at least $2,000,000 and in multiples of $1,000,000 in excess thereof and shall not exceed the Available Commitment; and |
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(c) | the aggregate amount of the Advances outstanding shall not exceed the Commitment. |
3.3. | Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender. |
3.4. | Disbursement of Advance. Subject to the provisions of this Agreement, the Lender shall on each Drawdown Date make each Advance to the Borrower; and payment to the Borrower shall be made to the account which the Borrower specifies in the Drawdown Notice. |
4. | INTEREST AND FEES |
4.1. | Interest on Advances for the first year. From [●] 2014 until [●], 2015, each Advance shall accrue interest at a rate of 5% per annum. |
4.2. | Interest on Advances after the first year. Starting on [●], 2015, each Advance shall accrue interest at a rate of 6% per annum (including any Advance outstanding on such date). |
4.3. | Interest payment date. The Borrower shall pay interest due and payable on the Advances in arrears on each Quarterly Payment Date. |
4.4. | Computation of interest . All computations of interest shall be made by the Lender on the basis of a year of 360 days consisting of twelve 30 day months. Each determination by the Lender of an interest amount hereunder shall, except for manifest error, be final, conclusive and binding for all purposes. |
4.5. | Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the provisions of Clause 4.6 to 4.9 on any amount payable by the Borrower under this Agreement which the Lender does not receive on or before the Termination Date, the applicable Quarterly Payment Date or, if immediately due and payable under this Agreement, the date on which it became immediately due and payable. |
4.6. | Default rate of interest. Interest shall accrue on an overdue amount (and any unpaid interest with respect thereto) from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate of 2% per annum. |
4.7. | Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under Clause 4.5 shall be paid on the last day of the period by reference to which it was determined. |
4.8. | Basis for calculation of default interest . Default interest 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 consisting of twelve 30 day months. |
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4.9. | 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. |
4.10. | Fees. Starting on [●], 2015, the Borrower shall pay to the Lender, quarterly in arrears on each Quarterly Payment Date an unused commitment fee at the rate of 2.4% per annum of the difference between (x) the Commitment and (y) the average daily outstanding amount of the Loan during the immediately preceding calendar quarter (or other applicable shorter period). |
4.11. | Notice of cancelation. The Borrower shall have the right at any time to immediately and irrevocably reduce the Commitment in part (in multiples of $1,000,000) or in whole by written notice to the Lender. |
5. | REPAYMENT, PREPAYMENT AND CANCELLATION |
5.1. | Repayment Date for each Advance. Each Advance shall be repaid in full on the Repayment Date applicable to it. |
5.2. | Deemed repayment. In respect of an Advance, if no repayment is made on the Repayment Date for that Advance then the Advance shall be deemed to have been repaid by a further Advance in the same amount which shall be deemed to have been drawn down on the Repayment Date for the original Advance. For the avoidance of doubt, this Clause only applies in respect of amounts due on Repayment Dates and not in respect of amounts due on the Termination Date. |
5.3. | Additional payments on Termination Date. On the Termination Date, the Borrower shall repay any Advance then outstanding in full and shall additionally pay to the Lender all other sums, if any, then owing or accrued under this Agreement, including any accrued but unpaid interest. |
5.4. | Voluntary prepayment. The Borrower may at any time prepay in whole or in part any Advance on giving at least 13 days prior written notice to the Lender. |
5.5. | Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice. |
5.6. | Amounts payable on prepayment. A prepayment shall be made together with any amount payable under Clause 12 or otherwise under this Agreement in respect of the amount prepaid. |
5.7. | Reborrowing permitted. Subject to the terms of this Agreement, any amount repaid or prepaid may be reborrowed. |
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6. | CONDITIONS PRECEDENT |
6.1. | Conditions. The 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 IPO shall have taken place; |
(b) | that, on the Drawdown Date, the representations and warranties of the Borrower herein are accurate; and |
(c) | that, on the Drawdown Date, but prior to the making of the Advance, no Event of Default has occurred and is continuing or would result from the borrowing of the Advance. |
7. | REPRESENTATIONS AND WARRANTIES |
7.1. | Borrower’s representations and warranties. The Borrower represents and warrants to the Lender that the following statements are, at the date hereof and on any Drawdown Date, true and accurate: |
(a) | it is duly formed under the laws of the Republic of the Marshall Islands and has full power and authority to enter into and perform its obligations under this Agreement; |
(b) | the execution, delivery and performance of this Agreement: |
(i) | have been duly authorized by all necessary limited partnership action on its part; and |
(ii) | do not contravene any applicable law, regulation or order binding on it or any of its assets or its constitutional documents; |
(c) | neither the execution, delivery and performance by it of this Agreement require the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any relevant governmental authority or agency, except such as have been obtained and are in full force and effect; and |
(d) | this Agreement constitutes its legal, valid and binding obligations. |
7.2. | Survival of representations and warranties. The representations and warranties given in this Clause 7 shall survive the execution of this Agreement. |
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8. | UNDERTAKINGS |
8.1. | General. The Borrower undertakes with the Lender to comply with the following provisions of this Clause 8 at all times whilst it has any outstanding obligations or liabilities under this Agreement, except as the Lender may otherwise permit. |
8.2. | Notification of Event of Default. The Borrower will promptly inform the Lender of any event which constitutes or may constitute an Event of Default or which may adversely affect the Borrower’s ability to perform its obligations under this Agreement. |
8.3. | Information. The Borrower will deliver to the Lender such financial or other information in respect of its business and financial status as the Lender may reasonably require including, but not limited to, copies of its unaudited quarterly financial statements and of its audited annual financial statements. |
9. | PAYMENTS AND CALCULATIONS |
9.1. | Currency and method of payments. All payments to be made by the Borrower to the Lender under this Agreement shall be made to the Lender: |
(a) | by not later than 11.00 a.m. (New York City time) on the due date; |
(b) | in same day Dollar funds; and |
(c) | to such account of the Lender as the Lender may from time to time notify to the Borrower. |
9.2. | Payment on non-Business Day. If any payment by the Borrower under this Agreement 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. |
10. | EVENTS OF DEFAULT |
10.1. | Events of Default. An Event of Default occurs if: |
(a) | the Borrower fails to pay when due any sum payable under this Agreement unless such failure is due to a technical breakdown or communication error in which case the Borrower shall rectify such non-payment within 3 Business Days of it having been notified of the missed payment by the Lender; or |
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(b) | any breach by the Borrower occurs of any provision of this Agreement (other than a breach covered by paragraph (a)) which, in the opinion of the Lender, is capable of remedy and which continues unremedied 10 Business Days after receipt by the Borrower of a written request from the Lender that the breach be remedied; or |
(c) | any information given by the Borrower to the Lender in relation to this Agreement proves to be misleading or materially inaccurate or incorrect when made; or |
(d) | any other loan, guarantee or other obligation of the Borrower exceeding $10,000,000 is declared by the relevant creditor or creditors due prematurely due to a default, to non-payment or any security in respect thereof becomes enforceable; or |
(e) | a lien, arrest, distress or similar event is levied upon or against any substantial part of the assets of the Borrower which is not discharged or disputed in good faith within 10 Business Days after the Borrower has become aware of the same; or |
(f) | a substantial part of the Borrower’s business or assets is destroyed, abandoned, seized, appropriated or forfeited for any reason; or |
(g) | any order shall be made by any competent court or resolution passed by the Borrower for the appointment of a liquidator, administrator or receiver of, or for the winding-up of, the Borrower; or |
(h) | an encumbrancer takes possession of or a receiver is appointed of the whole or, in the opinion of the Lender, any material part of the assets of the Borrower or a distress, execution or other process is levied or enforced upon or sued out against the whole or, in the opinion of the Lender, a material part of the assets of the Borrower; or |
(i) | the Borrower shall stop payment or shall be unable to, or shall admit inability to, pay its debts as they fall due, or shall be adjudicated or found bankrupt or insolvent, or shall enter into any composition or other arrangement with its creditors generally; or |
(j) | any event shall occur which under the law of any jurisdiction to which the Borrower is subject has an effect equivalent or similar to any of the events referred to in Clause 10.1(c), (d) or (e); or |
(k) | the Borrower ceases or suspends or threatens to cease or suspend the carrying on of its business or a part of its business or disposes of or threatens to dispose of a substantial part of its business or assets which, in the opinion of the Lender, is material in the context of this Agreement; or |
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(l) | it becomes unlawful for the Borrower to fulfill its obligations under this Agreement; or |
(m) | GasLog Partners GP LLC ceases to be the General Partner of the Borrower; or |
(n) | the constitutional documents of the Borrower are amended or varied in any way which is, in the reasonable opinion of the Lender, adverse to its interests in connection with this Agreement. |
10.2. | Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default the Lender may: |
(a) | serve on the Borrower a notice stating that all obligations of the Lender to the Borrower under this Agreement are cancelled; or |
(b) | serve on the Borrower a notice stating that the Loan, any accrued interest and all other amounts owing under this Agreement are immediately due and payable or are due and payable on demand; or |
(c) | take any other action which, as a result of the Event of Default or any notice served under paragraph (a) or (b), the Lender is entitled to take under this Agreement or any applicable law. |
10.3. | Termination of obligations. On the service of a notice under Clause 10.2(a), all the obligations of the Lender to the Borrower under this Agreement shall terminate. |
10.4. | Acceleration of Loan. On the service of a notice under Clause 10.2(b), the Loan and all other amounts accrued or owing from the Borrower under this Agreement shall become immediately due and payable or, as the case may be, payable on demand. |
11. | COSTS |
11.1. | Costs. The Borrower shall pay all reasonable costs incurred by the Lender in connection with the preparation of this Agreement and any and all other costs incurred by the Lender in connection with the facility provided pursuant to this Agreement. |
12. | INDEMNITIES |
12.1. | Indemnities regarding the borrowing and repayment of Loan. The Borrower shall fully indemnify the Lender on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with: |
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(a) | an Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender; |
(b) | the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on a Repayment Date or the Termination Date or other relevant date; |
(c) | any failure (for whatever reason) by the Borrower to make payment of any amount due under this Agreement on the due date or, if so payable, on demand; and |
(d) | the occurrence of an Event of Default and/or the acceleration of repayment of the Loan under Clause 10, |
and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under this Agreement.
12.2. | Breakage costs. Without limiting its generality, Clause 12.1 covers any claim, expense, liability or loss, including a loss of a prospective profit, incurred by the Lender in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount). |
13. | NO SET-OFF OR TAX DEDUCTION |
13.1. | No deductions. All amounts due from the Borrower under this Agreement 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 the Borrower is required by law to make. |
13.2. | Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment: |
(a) | the Borrower shall notify the Lender as soon as it becomes aware of the requirement; |
(b) | the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and |
(c) | the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax |
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deduction, is equal to the full amount which it would otherwise have received.
13.3. | Exclusion of tax on overall net income. In this Clause 13 “ tax deduction ” means any deduction or withholding for or on account of any present or future tax except tax on the Lender’s overall net income. |
14. | ILLEGALITY |
14.1. | Illegality. This Clause 14 applies if the Lender notifies the Borrower 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 Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.
14.2. | Notification and effect of illegality. On the Lender notifying the Borrower under Clause 14.1, the Commitment shall terminate; and thereupon or, if later, on the date specified in the Lender’s notice under Clause 14.1 as the date on which the notified event would become effective the Borrower shall prepay the Loan in full. |
14.3. | Mitigation . If circumstances arise which would result in a notification under Clause 14.1 then, without in any way limiting the rights of the Lender under Clause 14.2, the Lender shall use reasonable endeavors to transfer its obligations, liabilities and rights under this Agreement to a subsidiary not affected by the circumstances but the 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. |
15. | TRANSFERS |
15.1. | No Transfers. Neither party may, without the consent of the other party, transfer any of its rights, liabilities or obligations under this Agreement. |
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16. | NOTICES |
16.1. | General. Unless otherwise specifically provided, any notice under or in connection with this Agreement shall be given by letter or fax and shall be effective upon receipt; and references in this Agreement to written notices, notices in writing and notices signed by particular persons shall be construed accordingly. |
16.2. | Addresses for communications. A notice by letter or fax shall be sent: |
(a) | to the Lender: |
GasLog Ltd.,
c/o GasLog Monaco S.A.M.
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
Fax:+377 9797 5124
Attention: Simon CroweChief
Financial Officer
Copy to: Line LjungdahlHead of Legal
(b) | to the Borrower: |
GasLog Partners LP,
c/o GasLog Monaco S.A.M.
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
Fax:+377 9797 5124
Attention: Simon CroweChief
Financial Officer
Copy to: Line Køhler LjungdahlHead of Legal
or to such other address as the relevant party may notify the other.
17. | SUPPLEMENTAL |
17.1. | Rights cumulative. The rights and remedies which this Agreement gives to the Lender are: |
(a) | cumulative; |
(b) | may be exercised as often as appears expedient; and |
(c) | shall not, unless explicitly and specifically stated so, be taken to exclude or limit any right or remedy conferred by any law. |
17.2. | Severability. If any provision of this Agreement is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of this Agreement. |
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17.3. | 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. |
18. | LAW AND JURISDICTION |
18.1. | English law. This Agreement shall be governed by, and construed in accordance with, English law. |
18.2. | Exclusive English jurisdiction. Subject to Clause 18.3, the courts of England shall have exclusive jurisdiction to settle any Dispute. |
18.3. | Choice of forum for the exclusive benefit of the Lender. Clause 18.2 is for the exclusive benefit of the Lender, which reserves the rights: |
(a) | to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; 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. |
The Borrower shall not commence any proceedings in any country other than England in relation to a Dispute.
18.4. | Process agent. The Borrower irrevocably appoints Unisea Maritime Ltd at its registered office for the time being, presently at 14 Headfort Place, London, SWLX 7DH, 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 a Dispute. |
18.5. | Lender’s rights unaffected. Nothing in this Clause 18 shall exclude or limit any right which the Lender 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. |
18.6. | Meaning of “proceedings”. In this Clause 18, “ proceedings ” means proceedings of any kind, including an application for a provisional or protective measure and a “ Dispute ” means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement). |
THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.
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BORROWER | ||
By: | ||
Name: | ||
Title: | ||
for and on behalf of | ||
GASLOG PARTNERS LP | ||
in the presence of: | ||
LENDER | ||
By: | ||
Name: | ||
Title: | ||
for and on behalf of | ||
GASLOG LTD. | ||
in the presence of: |
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SCHEDULE 1
DRAWDOWN NOTICE
To: GasLog Ltd.,
c/o GasLog Monaco S.A.M.
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
Attention: [●]
[●] 2014
1. | We refer to the loan agreement (the “ Loan Agreement ”) dated [●] 2014 and made between us as Borrower and you as Lender in connection with a revolving credit facility of up to $30,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice. |
2. | We request to borrow as follows: |
(a) Amount: $[●];
(b) Drawdown Date: [●];
(c) Payment instructions: account in our name and numbered [●] with [●] of [●].
3. | We represent and warrant that (i) no Event of Default has occurred or will result from the borrowing of the Advance and (ii) the representations and warranties made by us in Clause 7 of the Loan Agreement are, at the date hereof, true and accurate. |
4. | We confirm that we will indemnity you against any loss or expense which you may sustain or incur as a consequence of the Advance not being drawn, including but not limited to any loss or expenses incurred by you to fund the Advance. |
5. | This notice cannot be revoked without the prior consent of the Lender. |
Yours faithfully
Name:
Title:
for and on behalf of
GASLOG PARTNERS LP
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Exhibit 10.17
Private & Confidential
DATED 23 April 2014
SECOND SUPPLEMENTAL DEED
relating to a
US$272,500,000 Loan
to
GAS-THREE LTD.
and
GAS-FOUR LTD.
arranged by
DNB BANK ASA
and
THE EXPORT-IMPORT BANK OF KOREA
with
DNB BANK ASA
as Agent
DNB BANK ASA
as Security Agent
|
Contents
Clause | Page | |
1 | Definitions | 2 |
2 | Agreement of the Lenders and Agent | 3 |
3 | Amendments to Principal Agreement | 3 |
4 | Representations and warranties | 7 |
5 | Conditions | 7 |
6 | Finance Documents | 8 |
7 | Costs and expenses | 8 |
8 | Miscellaneous and notices | 8 |
9 | Applicable law | 8 |
Schedule 1 Documents and evidence required as conditions precedent | 10 | |
Schedule 2 Form of Effective Date Notice | 12 |
|
THIS SECOND SUPPLEMENTAL DEED is dated | 2014 and made BETWEEN : |
(1) | GAS-THREE LTD. and GAS-FOUR LTD. each of the addresses set out in Schedule 1 to the Facilities Agreement as Borrowers; |
(2) | GASLOG LTD. of the address set out in Schedule 1 to the Facilities Agreement as GasLog; |
(3) | GASLOG CARRIERS LTD. of the address set out in Schedule 1 to the Facilities Agreement as GasLog Carriers (and together with GasLog, the Guarantors ); |
(4) | GASLOG LNG SERVICES LTD. of the address set out in Schedule 1 to the Facilities Agreement as Manager; |
(5) | THE EXPORT-IMPORT BANK OF KOREA and DNB BANK ASA each of the addresses set out in Schedule 1 to the Facilities Agreement as Arrangers; |
(6) | THE FINANCIAL INSTITUTION of the address set out in Schedule 1 to the Facilities Agreement as the original Commercial Facility Lender; |
(7) | THE FINANCIAL INSTITUTION of the address set out in Schedule 1 to the Facilities Agreement as the original KEXIM Facility Lender; |
(8) | DNB BANK ASA of the address set out in Schedule 1 to the Facilities Agreement as Hedging Provider; |
(9) | DNB BANK ASA of the address set out in Schedule 1 to the Facilities Agreement as Bookrunner; |
(10) | DNB BANK ASA of the address set out in Schedule 1 to the Facilities Agreement as Agent; and |
(11) | DNB BANK ASA of the address set out in Schedule 1 to the Facilities Agreement as Security Agent. |
WHEREAS :
(A) | This Deed is supplemental to an agreement dated 14 March 2012 as supplemented and amended by a first supplemental deed dated 30 July 2012 (but having effect from 30 June 2012) (the Principal Agreement ) and made between, inter alios, (1) the Borrowers, (2) the Lenders, (3) the Hedging Provider, (4) the Bookrunner, (5) the Agent and (6) the Security Agent, whereby the Lenders agreed to make available to the Borrowers, as joint and several borrowers, loan facilities of up to $272,500,000 upon the terms and subject to the conditions therein contained. |
(B) | By a waiver and consent request dated 28 March 2014 (the Waiver and Consent Request ) and a further waiver and consent request supplemental thereto dated 2 April 2013, the Borrowers have requested the Lenders to (1) permit the disposal by GasLog Carriers, and the acquisition, directly or indirectly, by GPHL of the shares in the Borrowers (the Sale ), (2) waive any potential breaches of or defaults under the Finance Documents arising from, in connection with or which may occur by implementation (and, in the case of the MLP, formation and/or operation) of, the Sale or the MLP and the agreements referred to in paragraph 3 and at appendix A of the Waiver and Consent Request (including, without limitation, pursuant to clauses 19.6 ( Merger ) and 26.7 ( Contracts and arrangements with Affiliates ) of the Principal |
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Agreement), (3) approve the New Management Agreements and (4) amend the Principal Agreement on the terms set out in this Deed.
NOW IT IS HEREBY AGREED as follows:
1 | Definitions |
1.1 | Defined expressions |
Words and expressions defined in the Principal Agreement shall unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Deed.
1.2 | Definitions |
In this Deed, unless the context otherwise requires:
Deed of Release means the deed of release executed or (as the context may require) to be executed by the Security Agent pursuant to which the Security Agent shall release the Share Security granted by GasLog Carriers.
Effective Date means the date specified in the Effective Date Notice.
Effective Date Notice means the notice to be signed by the Agent in accordance with Clause 5.1 in the form set out in Schedule 2.
Facilities Agreement means the Principal Agreement as amended, supplemented and waived by this Deed.
GPHL means GasLog Partners Holdings LLC of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
GPHL Guarantee means the guarantee executed or (as the context may require) to be executed by GPHL in favour of the Security Agent in the agreed form.
MLP means GasLog Partners LP of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
MLP IPO Closing Date means the date of the closing of the initial public offering of the common units in the MLP.
New Management Agreements means the agreements in the agreed form made or (as the context may require) to be made between each of the Borrowers and the Manager (as commercial manager and technical manager) pursuant to which the Manager shall agree to continue to commercially and technically manage the Ships following the Effective Date.
New Share Security means each document containing a first Security Interest by GPHL in favour of the Security Agent in the agreed form in respect of all of the shares in the Borrowers.
Relevant Parties means each Borrower, the Guarantors, the Manager, MLP and GPHL or, where the context so requires or permits, means any or all of them.
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1.3 | Principal Agreement |
References in the Principal Agreement to “this Agreement” shall, with effect from the Effective Date and unless the context otherwise requires, be references to the Principal Agreement as amended, waived and/or supplemented by this Deed and words such as “herein”, “hereof”, “hereunder”, “hereafter”, “hereby” and “hereto”, where they appear in the Principal Agreement, shall be construed accordingly.
1.4 | Construction |
Clauses 1.2 ( Construction ), 1.3 ( Third party rights ) and 1.4 ( Finance Documents ) of the Facilities Agreement and any other provision of the Facilities Agreement which, by its terms, purports to apply to all of the Finance Documents and/or any Obligor shall apply to this Deed as if set out in it but with all necessary changes and as if references in the provision to Finance Documents referred to this Deed. This Deed is a Finance Document.
2 | Agreement of the Lenders and Agent |
The Lenders and the Agent, relying upon the representations and warranties on the part of each of the Borrowers, the Guarantors and the Manager contained in clause 4, agree with the Borrowers that, subject to the terms and conditions of this Deed and in particular, but without prejudice to the generality of the foregoing, fulfilment on or before the MLP IPO Closing Date (provided that the MLP IPO Closing Date occurs no later than 15 July 2014 (or such later date as the Agent, acting on the instructions of the Lenders, may agree)) of the conditions contained in clause 5 and Schedule 1, the Agent and the Lenders:
(a) | agree to the Sale; |
(b) | waive any potential breaches of or defaults or Events of Default under the Finance Documents arising from, in connection with or which may occur by implementation (and in the case of the MLP, formation) of, the Sale or the MLP or the agreements referred to at paragraph 3 of and Appendix A to the Waiver and Consent Request (including pursuant to clauses 19.6 ( Merger ) and 26.7 ( Contracts and arrangements with Affiliates ) of the Facilities Agreement) provided that the above waiver in relation to clause 26.7 shall not apply to (i) the offer and sale by MLP to the public of common units in the initial public offering of the common units in the MLP or (ii) any transaction effected after the closing of such offer and sale; |
(c) | permit the Security Agent to execute and deliver the Deed of Release; |
(d) | approve the New Management Agreements; and |
(e) | agree to the amendment of the Principal Agreement on the terms set out in clause 3 ( Amendments to Principal Agreement ). |
3 | Amendments to Principal Agreement |
3.1 | Amendments |
The Principal Agreement shall, with effect on and from the Effective Date, be (and is hereby) amended in accordance with the following provisions (and the Principal Agreement (as so amended) will continue to be binding upon each of the parties hereto upon such terms as so amended):
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(a) | new definitions of “ GPHL ” and “ GPHL Guarantee ” shall be inserted in clause 1.1 ( Definitions ) of the Principal Agreement reading as follows: |
“ GPHL means GasLog Partners Holdings Ltd. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
GPHL Guarantee means the guarantee to be executed by GPHL in favour of the Security Agent in the agreed form.”;
(b) | the definitions of “ Guarantees ” and “ Guarantors ” in clause 1.1 ( Definitions ) of the Principal Agreement shall be deleted and replaced as follows: |
“ Guarantees means the GasLog Guarantee, the GasLog Carriers Guarantee, the GPHL Guarantee and, if an MLP Guarantee is provided pursuant to clause 19.14 ( MLP ), the MLP Guarantee and Guarantee means any of them.
Guarantors means persons acceptable to the Lenders at their discretion which may now or at any time throughout the Facility Period guarantee the obligations and liabilities of the Borrowers to the Lenders and the Hedging Provider (including, without limitation, GasLog, GasLog Carriers, GPHL and, if an MLP Guarantee is provided pursuant to clause 19.14 ( MLP ), MLP).”;
(c) | the definition of “ IPO Change of Control ” in clause 1.1 ( Definitions ) of the Principal Agreement shall be deleted and replaced with: |
“ IPO Change of Control occurs if, at any time after an IPO has been completed:
(a) | two or more persons acting in concert or any individual person (other than the current ultimate beneficial owners of the Counter Guarantors) (i) acquire, legally and/or beneficially and either directly or indirectly, in excess of 50% of the issued share capital (or equivalent) of GasLog or (ii) have the right or ability to control, either directly or indirectly, the affairs or the composition of the majority of the board of directors (or equivalent) of GasLog; or |
(b) | the current ultimate beneficial owners of the Counter Guarantors cease to hold, in aggregate, legally and/or beneficially, and either directly or indirectly, at least: |
(i) | until 28 March 2015, 20%; and |
(ii) | from 28 March 2015 and at all other times thereafter, 15%, of the issued share capital of GasLog; or |
(c) | GasLog ceases to control, directly or indirectly, the affairs or the composition of the board of directors (or equivalent) of the Borrowers or the Holding Company of the Borrowers, |
in any case without the prior written consent of the Agent (acting with the authorisation of the Lenders).”;
(d) | a new definition of “MLP” shall be inserted in clause 1.1 ( Definitions ) of the Principal Agreement reading as follows: |
“ MLP means GasLog Partners LP of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.”;
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(e) | a new clause 1.2.1(g) ( Construction ) of the Principal Agreement shall be inserted reading as follows and each of the other sub-paragraphs of clause 1.2.1 ( Construction ) of the Principal Agreement shall be re-lettered accordingly: |
“(g) | two or more persons are acting in concert if pursuant to an agreement or understanding (whether formal or informal) they actively co-operate, through the acquisition (directly or indirectly) of shares in GasLog or MLP (as applicable) by any of them, either directly or indirectly to obtain or consolidate control of GasLog or MLP (as applicable);”; |
(f) | the words “GasLog Carriers” in the first line of clause 17.20 ( Legal and beneficial ownership ) of the Principal Agreement shall be deleted and replaced with the word “GPHL”; |
(g) | a new clause 19.14 shall be inserted into the Principal Agreement as follows: |
“ MLP
19.14.1 | The Borrowers undertake that they will promptly notify the Agent if (a) MLP grants a guarantee or indemnity in respect of Financial Indebtedness (whether actual or contingent) owed by Subsidiaries of MLP (any such Financial Indebtedness in respect of which MLP has granted a guarantee or indemnity or any Financial Indebtedness (whether actual or contingent) owed by MLP, being MLP Financial Indebtedness ) (the persons (or a security agent or trustee on their behalf) to whom such MLP Financial Indebtedness is owed being Other MLP Finance Parties ) and the Borrowers shall also confirm whether GasLog has also granted a guarantee or indemnity in favour of such Other MLP Finance Parties or (b) GasLog grants a guarantee or indemnity in favour of Other MLP Finance Parties in respect of MLP Financial Indebtedness, or (c) any financial covenants in respect of MLP are agreed or given in connection with any MLP Financial Indebtedness by MLP or any Subsidiary of MLP ( MLP Financial Covenants ). |
19.14.2 | If GasLog has provided a guarantee or indemnity (whether at or about the same time or previously) in respect of MLP Financial Indebtedness, the Borrowers shall procure that MLP will within 30 days of notice from the Agent requiring the same (a) execute in favour of the Security Agent a guarantee in form and substance reasonably satisfactory to the Agent provided that, to the extent such MLP Financial Indebtedness contains MLP Financial Covenants, any financial covenants contained in the guarantee to be granted by MLP in favour of the Security Agent shall be equivalent to such MLP Financial Covenants (the MLP Guarantee ) and (b) deliver to the Agent such documents as the Agent may (acting on the instructions of the Lenders, acting reasonably) require, including (without limitation) any and all corporate authorisations for MLP of the nature described in Schedule 3, Part 1, paragraph 1 (Original Obligors’ corporate documents ) and any legal opinions, in each case, reasonably required by the Agent. |
19.14.3 | If any MLP Financial Indebtedness is entered into in circumstances where GasLog has not provided a guarantee or indemnity, the Borrowers shall procure that MLP will, subject to the proviso hereto, within 30 days of notice from the Agent requiring the same (a) execute in favour of the Security |
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Agent the MLP Guarantee (containing financial covenants equivalent to any MLP Financial Covenants given in connection with such MLP Financial Indebtedness) and (b) deliver to the Agent such documents as the Agent may (acting on the instructions of the Lenders, acting reasonably) require, including (without limitation) any and all corporate authorisations for MLP of the nature described in Schedule 3, Part 1, paragraph 1 (Original Obligors’ corporate documents ) and any legal opinions, in each case, reasonably required by the Agent, Provided always that the Security Agent shall, within two Business Days of MLP granting the MLP Guarantee, release the GasLog Guarantee and the GasLog Carriers Guarantee.
19.14.4 | If, following the granting of the MLP Guarantee and release of the GasLog Guarantee and the GasLog Carriers Guarantee in accordance with clause 19.14.3, the Agent receives a notification by the Borrowers under clause 19.14.1(b) (or becomes otherwise aware that GasLog has granted a guarantee or indemnity in favour of Other MLP Finance Parties), the Borrowers shall procure that GasLog and GasLog Carriers will within 30 days of notice from the Agent requiring the same (a) execute in favour of the Security Agent a guarantee in form and substance reasonably satisfactory to the Agent and (b) deliver to the Agent such documents as the Agent may (acting on the instructions of the Lenders, acting reasonably) require, including (without limitation) any and all corporate authorisations for GasLog and GasLog Carriers of the nature described in Schedule 3, Part 1, paragraph 1 (Original Obligors’ corporate documents ) and any legal opinions, in each case, reasonably required by the Agent.”; |
(h) | clause 28.23.3 of the Principal Agreement shall be deleted and replaced as follows: |
“At any time:
(a) | any Borrower ceases to be a wholly-owned subsidiary of GPHL; |
(b) | GPHL ceases to be a wholly-owned subsidiary of MLP; |
(c) | GasLog Partners GP LLC ceases to be a wholly-owned subsidiary of GasLog; |
(d) | two or more persons (other than GasLog or its Affiliates) acting in concert or any individual person (other than GasLog or its Affiliates) (i) acquire, legally and/or beneficially and either directly or indirectly, in excess of 35 per cent of the total equity of MLP or (ii) have the right or ability to control, either directly or indirectly, the affairs or the composition of the majority of the board of directors (or equivalent) of MLP; |
(g) | GasLog ceases to own legally and beneficially, and either directly or indirectly, at least 35 per cent of the total equity of MLP; or |
(e) | GasLog Partners GP LLC ceases to be the general partner of MLP.”. |
3.2 | Continued force and effect |
Save as amended by this Deed, the provisions of the Principal Agreement shall continue in full force and effect and the Principal Agreement and this Deed shall be read and construed as one instrument.
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4 | Representations and warranties |
Each of the Borrowers, the Guarantors and the Manager represents and warrants for the benefit of each Finance Party, each in respect of itself, that the following statements shall, on the date of this Deed and the Effective Date, be true and accurate as if made with reference to the facts and circumstances existing on such date:
(a) | each of the Repeating Representations are true and correct (save that in relation to clause 17.20 ( Legal and beneficial ownership ) of the Principal Agreement or, as the case may be, clause 17.20 of the Facilities Agreement, such Repeating Representation shall, on the date of this Deed, be made in respect of clause 17.20 ( Legal and beneficial ownership ) of the Principal Agreement and on the Effective Date, in respect of clause 17.20 ( Legal and beneficial ownership ) of the Facilities Agreement); |
(b) | it is duly incorporated as a limited liability company and has power to carry on its business as it is now being conducted and to own its property and other assets; and |
(c) | it has power to execute, deliver and perform its obligations under this Deed and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same. |
5 | Conditions |
5.1 | Documents, evidence and Effective Date Notice |
(a) | The agreement of the Lenders and the Agent referred to in clause 2 shall be subject to the receipt by the Agent or its duly authorised representative of the documents and evidence specified in Schedule 1 in form and substance satisfactory to the Agent. |
(b) | On, or prior, to the MLP IPO Closing Date, the Agent shall sign the Effective Date Notice and specify the Effective Date to be the MLP IPO Closing Date, provided that (i) the Agent has received the documents and evidence specified in Clause 5 and Schedule 1 in a form and substance satisfactory to it and (ii) the MLP IPO Closing Date occurs no later than 15 July 2014 (or such later date as the Agent acting on the instructions of the Lenders may agree). |
5.2 | General conditions precedent |
The agreement of the Lenders and the Agent referred to in clause 2 shall be further subject to:
(a) | the representations and warranties in clause 4 being true and correct on the Effective Date as if each was made with respect to the facts and circumstances existing at such time; and |
(b) | no Default having occurred and continuing at the time of the Effective Date. |
5.3 | Waiver of conditions precedent |
The conditions specified in this clause 5 are inserted solely for the benefit of the Finance Parties and may be waived by the Agent (acting on the instructions of the Lenders) in whole or in part with or without conditions.
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6 | Finance Documents |
Each of the Borrowers, the Guarantors and the Manager confirms its consent to the amendments to the Principal Agreement contained in this Deed and each of the Borrowers, the Guarantors and the Manager further acknowledges and agrees, for the avoidance of doubt, that:
(a) | each of the other Finance Documents to which it is a party, and its obligations thereunder, shall remain in full force and effect notwithstanding the amendments made to the Principal Agreement by this Deed; and |
(b) | with effect from the Effective Date, references to the “Facilities Agreement” in any of the other Finance Documents to which it is a party shall henceforth be reference to the Principal Agreement as amended by this Deed and as from time to time hereafter amended. |
7 | Costs and expenses |
For the avoidance of doubt, clause 16 of the Facilities Agreement shall apply in respect of all reasonably incurred costs and expenses of the Finance Parties in connection with this Deed.
8 | Miscellaneous and notices |
8.1 | Notices |
The provisions of clause 37 of the Principal Agreement shall apply to this Deed if set out herein.
8.2 | Counterparts |
This Deed may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original but all counterparts shall together constitute one and the same instrument.
9 | Applicable law |
9.1 | Governing law |
This Deed and any non-contractual obligations connected with it are governed by English law.
9.2 | Jurisdiction of English courts |
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Deed) (a Dispute ).
The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
This clause 9.2 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.
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This Deed has been duly executed and delivered as a deed on the date stated at the beginning of this Deed.
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Schedule 1
Documents and evidence required as conditions precedent
(referred to in clause 5.1)
1 | Relevant Parties’ corporate documents |
(a) | A copy of the Constitutional Documents of MLP and GPHL (and confirmation from an officer of each other Relevant Party that no changes have been made to the Constitutional Documents of each other Relevant Party from the copies previously provided to the Agent). |
(b) | A copy of a resolution of the board of directors of each Relevant Party (or any committee of such board empowered to approve and authorise the following matters): |
(i) | approving and/or ratifying the terms of, and the transactions contemplated by, this Deed, the GPHL Guarantee and the New Share Security ( Relevant Documents ) to which it is a party and resolving that it execute the Relevant Documents to which it is a party; |
(ii) | authorising a specified person or persons to execute the Relevant Documents on its behalf and/or ratifying the execution of the Relevant Documents; and |
(iii) | authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices to be signed and/or despatched by it under or in connection with the Relevant Documents to which it is a party and/or ratifying the signing and/or despatch of all such documents and notices. |
(c) | If applicable, a copy of a resolution of the board of directors of the relevant company, establishing any committee referred to in paragraph (b) above and conferring authority on that committee. |
(d) | A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above. |
(e) | (If required under the Constitutional Documents of the Relevant Parties or Marshall Islands or Bermudian law), a copy of a resolution signed by all the holders of the issued shares in each Relevant Party, approving the terms of, and the transactions contemplated by, the Relevant Documents to which such Relevant Party is a party. |
(f) | A copy of any power of attorney under which any person is to execute any of the Relevant Documents on behalf of any Relevant Party. |
(g) | A certificate of an authorised signatory of each Relevant Party certifying that each copy document relating to it specified in this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Deed and that any such resolutions or power of attorney have not been revoked. |
2 | Legal opinions |
(a) | A legal opinion of Norton Rose Fulbright LLP, London addressed to the Arrangers, the Security Agent and the Agent and for the benefit of all the Finance Parties on matters of English law, substantially in the form approved by the Agent prior to signing this Deed. |
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(b) | A legal opinion of the legal advisers to the Arrangers, the Security Agent and the Agent in each jurisdiction in which each Relevant Party is incorporated or which is required by the Lenders in substantially in the form approved by the Agent prior to signing this Deed. |
3 | Other documents and evidence |
(a) | Evidence that any process agent referred to in the Relevant Documents has accepted its appointment. |
(b) | Evidence satisfactory to the Agent that the Repeating Representations are true and correct (save that in relation to clause 17.20 ( Legal and beneficial ownership ) of the Principal Agreement or, as the case may be, clause 17.20 of the Facilities Agreement, such Repeating Representation shall, on the date of this Deed, be made in respect of clause 17.20 ( Legal and beneficial ownership ) of the Principal Agreement and on the Effective Date, in respect of clause 17.20 ( Legal and beneficial ownership ) of the Facilities Agreement). |
(c) | A copy of any other authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by any Relevant Document or for the validity and enforceability of any Relevant Document. |
4 | New Management Agreements |
A copy, certified by an approved person to be a true and complete copy, of the New Management Agreements.
5 | “Know your customer” information |
Such documentation and information in respect of the Relevant Parties as any Finance Party may reasonably request through the Agent to comply with “know your customer” or similar identification procedures under all laws and regulations applicable to that Finance Party.
6 | New Share Security |
(a) | Approval of the arrangements for completion of the Sale. |
(b) | Evidence satisfactory to the Agent that all of the shares in the Borrowers are legally and beneficially owned by GPHL. |
(c) | The New Share Security in respect of the Borrowers duly executed by GPHL together with all letters, transfers, certificates and other documents required to be delivered under the New Share Security. |
7 | Guarantee |
The GPHL Guarantee to be executed by GPHL.
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Schedule 2
Form of Effective Date Notice
To: |
GAS-three Ltd.
GAS-four Ltd. |
Second Supplemental Deed dated [•] 2014 (the “Deed”) relating to a US$272,500,000 loan to GAS-three Ltd. and GAS-four Ltd.
In accordance with clause 5.1 of the Deed, we confirm that the Effective Date is [•] 2014.
This is the Effective Date Notice under (and as defined in) the Deed.
for and on behalf of
DNB BANK ASA
as Agent
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13 |
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14 |
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15 |
Exhibit 10.18
Date 18 April 2014
GAS-FIVE LTD.
as Borrower
– and –
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
– and –
NORDEA BANK FINLAND PLC, LONDON BRANCH
ABN AMRO BANK N.V.
CITIBANK INTERNATIONAL PLC, LONDON BRANCH
as Joint Lead Arrangers
– and –
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 2
as Swap Banks
– and –
NORDEA BANK FINLAND PLC, LONDON BRANCH
as Agent
and Security Trustee
LOAN AGREEMENT
relating to
a facility of up to US$132,389,706
assumed by the Borrower in relation to
m.v. “GASLOG SYDNEY”
(ex Samsung Heavy Industries Co., Ltd. hull number 2016)
Watson, Farley & Williams
London
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INDEX
Clause | Page | |
1 | INTERPRETATION | 1 |
2 | FACILITY | 18 |
3 | POSITION OF THE LENDERS AND SWAP BANKS | 18 |
4 | effective date | 19 |
5 | INTEREST | 19 |
6 | INTEREST PERIODS | 21 |
7 | DEFAULT INTEREST | 22 |
8 | REPAYMENT AND PREPAYMENT | 23 |
9 | CONDITIONS PRECEDENT | 26 |
10 | REPRESENTATIONS AND WARRANTIES | 27 |
11 | GENERAL UNDERTAKINGS | 29 |
12 | CORPORATE UNDERTAKINGS | 39 |
13 | INSURANCE | 40 |
14 | SHIP COVENANTS | 44 |
15 | SECURITY COVER | 48 |
16 | PAYMENTS AND CALCULATIONS | 49 |
17 | APPLICATION OF RECEIPTS | 51 |
18 | APPLICATION OF EARNINGS | 52 |
19 | EVENTS OF DEFAULT | 52 |
20 | AGENCY FEE AND EXPENSES | 58 |
21 | INDEMNITIES | 59 |
22 | NO SET-OFF OR TAX DEDUCTION | 61 |
23 | ILLEGALITY, ETC | 62 |
24 | INCREASED COSTS | 63 |
25 | SET-OFF | 65 |
26 | TRANSFERS AND CHANGES IN LENDING OFFICES | 65 |
27 | VARIATIONS AND WAIVERS | 69 |
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28 | NOTICES | 71 |
29 | SUPPLEMENTAL | 72 |
30 | LAW AND JURISDICTION | 73 |
SCHEDULE 1 LENDERS AND COMMITMENTS | 74 | |
SCHEDULE 2 SWAP BANKS | 75 | |
SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS | 76 | |
SCHEDULE 4 TRANSFER CERTIFICATE | 78 | |
SCHEDULE 5 DESIGNATION NOTICE | 82 | |
SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE | 83 | |
EXECUTION PAGE | 85 |
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THIS AGREEMENT is made on 18 April 2014
BETWEEN
(1) | GAS-FIVE LTD. , an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, as borrower (the “ Borrower ”); |
(2) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders ; |
(3) | NORDEA BANK FINLAND PLC, London Branch, ABN AMRO BANK N.V. and CITIBANK INTERNATIONAL PLC , LONDON BRANCH as Joint Lead Arrangers ; |
(4) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2, as Swap Banks ; |
(5) | NORDEA BANK FINLAND PLC, LONDON BRANCH , as Agent ; and |
(6) | NORDEA BANK FINLAND PLC, LONDON BRANCH , as Security Trustee . |
BACKGROUND
(A) | Pursuant to the Original Loan Agreement, the Lenders made available to the Original Loan Agreement Borrowers a facility of (originally) $277,000,000 for the purpose of (amongst other things) part financing the purchase price of the Ship which was constructed by the Builder for, and purchased by, the Borrower pursuant to the Shipbuilding Contract. |
(B) | The Amending and Restating Agreement sets out the terms and conditions on which the Original Loan Agreement Creditor Parties agree, at the request of the Original Loan Agreement Borrowers, GasLog and GasLog Carriers, to (amongst other things) the Borrower being released from all obligations and liabilities under the Original Loan Agreement and the aggregate principal amount outstanding under the Original Loan Agreement being reduced by an amount equal to the Original Loan Agreement Tranche for the Ship, such release and reduction to be effected by the terms of the Amending and Restating Agreement and with a condition of such release and reduction being the Borrower assuming a principal liability under this Agreement by an amount equal to the Original Loan Agreement Tranche for the Ship. |
(C) | The Swap Banks may enter into interest rate and currency swap transactions with the Borrower from time to time to hedge the Borrower’s exposure under this Agreement to interest rate and currency fluctuations. |
(D) | The Lenders and the Swap Banks have agreed to share in the security to be granted to the Security Trustee pursuant to this Agreement. |
IT IS AGREED as follows:
1 | INTERPRETATION |
1.1 | Definitions. Subject to Clause 1.5, in this Agreement: |
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“ Account Security Deed ” means a deed creating security in respect of the Earnings Account in the Agreed Form;
“ Advance ” means the principal amount of each borrowing by the Borrower under this Agreement;
“ Affected Lender ” has the meaning given in Clause 5.7;
“ Affected Party ” has the meaning given in the relevant Master Agreement;
“ Agency and Trust Deed ” means the agency and trust deed executed or to be executed between the same parties as this Agreement in the Agreed Form;
“ Agent ” means Nordea Bank Finland Plc, London Branch, acting in such capacity through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB, or any successor of it appointed under clause 5 of the Agency and Trust Deed;
“ Agreed Form ” means in relation to any document, that document in the form approved in writing by the Agent (acting on the instructions of all the Lenders) and agreed with the Borrower or as otherwise approved in accordance with any other approval procedure specified in any relevant provisions of any Finance Document;
“ Amending and Restating Agreement ” means the amending and restating agreement dated the same date as this Agreement and signed by the parties to this Agreement, GAS-six, GasLog and GasLog Carriers;
“ Approved Managers ” means:
(a) | in relation to the commercial management of the Ship, GasLog or any of its wholly owned subsidiaries; and |
(b) | in relation to the technical management of the Ship, GasLog LNG, |
or, in each case, any other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the technical or commercial manager of the Ship (such authorisation and approval not to be unreasonably withheld);
“ Approved Shipbroker ” means Fearnleys A.S., Poten & Partners Inc., Simpson Spence & Young Limited, R.S. Platou Shipbrokers A.S., H. Clarkson & Co. Ltd., Braemar Seascope Ltd. and Arrow Sale & Purchase (UK) Ltd. or such other independent sale and purchase shipbroker which the Agent has approved or selected (with the authorisation of the Majority Lenders);
“ Break Costs ” means the amount (if any) by which:
(a) | the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan to the last day of the current Interest Period in respect of that Loan, had the principal amount received been paid on the last day of that Interest Period |
exceeds
(b) | the amount which that Lender would be able to obtain by placing an amount equal to the principal amount received by it on deposit with a leading bank in the London Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. |
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“ Builder ” means Samsung Heavy Industries Co., Ltd., a corporation incorporated in the Republic of Korea whose registered office is at 34th Fl., Samsung Insurance Seocho Tower 1321-15, Seocho-Dong, Seocho-Gu, Seoul, Korea 137-857;
“ Business Day ” means a day on which banks are open in London, Monaco and Piraeus 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 ” occurs if:
(a) | any person or persons acting in concert other than Counter-Guarantor 2 or its associates (acting through the Holding Company): |
(i) | acquires legally and/or beneficially, and either directly or indirectly, in excess of 50 per cent. of the issued share capital of GasLog; or |
(ii) | has the right or the ability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent) of GasLog; or |
(b) | GasLog ceases to control, directly or indirectly, the affairs or composition of the board of directors (or equivalent) of the MLP or the MLP General Partner; |
in either case, without the prior written consent of the Agent (acting with the authorisation of the Majority Lenders);
“ Charter ” means the time charter of the Ship dated 9 May 2011 and entered into between the Borrower and the Charterer pursuant to the Master Charterparty Agreement and approved by the Lenders;
“ Charter Assignment ” means an assignment of the Charter or Replacement Charter, and any guarantee in relation to the Charter or the Replacement Charter, executed or to be executed by the Borrower in favour of the Security Trustee in the Agreed Form;
“ Charterer ” means Methane Services Ltd., a company incorporated in England and Wales with its registered office at 100 Thames Valley Park Drive, Reading, Berkshire, RG6 1PT, United Kingdom, which as at the date of this Agreement is a subsidiary of BG Group plc;
“ Code ” means the United States Internal Revenue Code of 1986;
“ Commitment ” means, 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 the aggregate of the Commitments of all the Lenders);
“ Confirmation ” and “ Early Termination Date ”, in relation to any continuing Designated Transaction, have the meanings given in the relevant Master Agreement;
“ 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;
“ Counter-Guarantor 2 ” means the company identified in the letter referred to in Schedule 3, Paragraph 7(b);
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“ Creditor Party ” means the Agent, the Security Trustee, any Swap Bank, any Joint Lead Arranger or any Lender, whether as at the date of this Agreement or at any later time;
“ Deed of Covenant ” means the first priority deed of covenant collateral to the Mortgage executed or to be executed by the Borrower in favour of the Security Trustee in the Agreed Form;
“ Designated Transaction ” means a Transaction which fulfils the following requirements:
(a) | it is entered into by the Borrower pursuant to a Master Agreement with a Swap Bank which, at the time the Transaction is entered into, is also a Lender; |
(b) | its purpose is the hedging of the Borrower’s exposure under this Agreement to fluctuations in LIBOR or currency fluctuations respectively arising from the funding of the Loan (or any part thereof) or the operation of the Ship respectively for a period expiring no later than the final Repayment Date; and |
(c) | it is designated by the Borrower, by delivery by the Borrower to the Agent of a notice of designation in the form set out in Schedule 5, as a Designated Transaction for the purposes of the Finance Documents; |
“ Dollars ” and “ $ ” means the lawful currency for the time being of the United States of America;
“ Earnings ” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Security Trustee and which arise out of the use or operation of the Ship, including (but not limited to):
(a) | except to the extent that they fall within paragraph (b); |
(i) | all freight, hire and passage moneys; |
(ii) | compensation payable to the Borrower or the Security Trustee in the event of requisition of the Ship for hire; |
(iii) | remuneration for salvage and towage services; |
(iv) | demurrage and detention moneys; |
(v) | damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship; and |
(vi) | all moneys which are at any time payable under any Insurances in respect of loss of hire; and |
(b) | if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) 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 the Ship; |
“ Earnings Account ” means an account in the name of the Borrower with the Agent in London with account number 0045675701, or any other account (with that or another
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office of the Agent or with a bank or financial institution other than the Agent) which is designated by the Agent as the Earnings Account for the purposes of this Agreement;
“ Effective Date ” means the date specified in the Effective Date Notice;
“ Effective Date Notice ” means the notice to be signed by the Agent in accordance with clause 3.1 of the Amending and Restating Agreement in the form set out in Appendix 1 of the Amending and Restating Agreement;
“ 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 the Ship; or |
(b) | any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship and/or the Borrower and/or any operator or manager of the 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 the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Borrower and/or any operator or manager of the 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;
“ Fair Market Value ” means the market value of the Ship, as determined in accordance with Clause 15.3;
“ FATCA ” means:
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(a) | sections 1471 to 1474 of the Code or any associated regulations or other official guidance; |
(b) | any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of 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 July 2014; |
(b) | in relation to a “withholdable payment” described in section 1473(1)(A)(ii) of the Code (which relates to “gross proceeds” from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or |
(c) | in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within 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 Event ” has the meaning given to it in Clause 8.11;
“ FATCA Exempt Party ” means a party to a Finance Document that is entitled to receive payments free from any FATCA Deduction;
“ FATCA FFI ” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Creditor Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction;
“ FATCA Protected Lender ” means any Lender irrevocably designated as a “FATCA Protected Lender” by the Borrower by notice to that Lender and the Agent at least six months prior to the earliest FATCA Application Date for a payment by a party to a Finance Document to that Lender (or to the Agent for the account of that Lender);
“ Fee Letter ” means the fee letter executed or to be executed between the Borrower and the Agent in the Agreed Form;
“ Finance Documents ” means:
(a) | this Agreement; |
(b) | the Fee Letter; |
(c) | the Agency and Trust Deed; |
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(d) | the Guarantees; |
(e) | the Mortgage; |
(f) | the Deed of Covenant; |
(g) | the Account Security Deed; |
(h) | the General Assignment; |
(i) | the Management Agreement Assignment; |
(j) | the Charter Assignment; |
(k) | the Shares Pledge; and |
(l) | any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower 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 and/or the Swap Banks under this Agreement or any of the other 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 or dematerialised equivalent made available to the debtor; |
(d) | under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
(e) | under any foreign exchange transaction, 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 paragraphs (a) to (e) if the references to the debtor referred to the other person; |
“ GAS-six ” means GAS-six Ltd., an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
“ GasLog ” means GasLog Ltd., an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
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“ GasLog Carriers ” means GasLog Carriers Ltd., an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
“ GasLog LNG ” means GasLog LNG Services Ltd. (formerly known as Ceres LNG Services Ltd.), an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
“ GasLog Partners ” means GasLog Partners Holdings LLC, a limited liability company formed in the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;
“ General Assignment ” means the first priority general assignment of the Earnings, the Insurances and any Requisition Compensation executed or to be executed by the Borrower in favour of the Security Trustee in the Agreed Form;
“ Guarantee ” means, in relation to GasLog or GasLog Partners, the guarantee in the Agreed Form executed or to be executed by that Guarantor in favour of the Security Trustee and, in the plural, means both such Guarantees;
“ Guarantors ” means GasLog and GasLog Partners and, in the singular, means either of them;
“ Holding Company ” means the company identified in the letter referred to in Schedule 3, Paragraph 7(a);
“ IFRS ” means international accounting standards within the meaning of the IAS Regulations 1606/2002 to the extent applicable to the relevant financial statements;
“ Insurances ” means:
(a) | all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; 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 and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement; |
“ ISM Code ” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation as the same may be amended or supplemented from time to time (and the terms “ safety management system ”, “ Safety Management Certificate ” and “ Document of Compliance ” have the same meanings as are given to them in the ISM Code);
“ ISPS Code ” means the International Ship and Port Facility Security Code as adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time;
“ ISSC ” means a valid and current International Ship Security Certificate issued under the ISPS Code;
“ Interest Period ” means a period determined in accordance with Clause 6;
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“ Joint Lead Arrangers ” means each of Nordea Bank Finland plc, London Branch acting through its office at 8 th Floor, City Place House, 55 Basinghall Street, London EX2V 5NB, ABN AMRO Bank N.V. acting through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands and Citibank International Plc, London Branch acting through its office at Citigroup Centre, 33 Canada Square, London E14 5LB;
“ Lender ” means, subject to Clause 26.6, a bank or financial institution listed in Part 1 of Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Agent under Clause 26.14) or its transferee, successor or assign;
“ LIBOR ” means, for an Interest Period:
(a) | the Screen Rate; or |
(b) | (if no Screen Rate is available for that Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London Interbank Market, |
at or about 11 a.m. (London time) on the Quotation Date for the offering of deposits in Dollars for a period comparable to that Interest Period and, if any such rate is below zero, LIBOR will be deemed to be 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 $1,000,000 or the equivalent in any other currency;
“ Majority Lenders ” means:
(a) | before an Advance has been made, Lenders whose Commitments total 67 per cent. of the Total Commitments; and |
(b) | after an Advance has been made, Lenders whose Contributions total 67 per cent. of the Loan; |
“ Management Agreement ” means the management agreement in relation to the Ship made or to be made between the Borrower and the technical Approved Manager;
“ Management Agreement Assignment ” means the first priority assignment of the Management Agreement executed or to be executed by the Borrower in favour of the Security Trustee in the Agreed Form;
“ Margin ” means 2.25 per cent. per annum;
“ Master Agreements ” means:
(a) | the master agreement (on the 2002 Master Agreement form together with the schedule thereto) dated 2 November 2011 (as amended on or around the Effective Date) and made between the Borrower and Nordea Bank Finland Plc, as Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under such master agreement; |
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(b) | the master agreement (together with the schedule thereto) made or to be made between the Borrower and ABN AMRO Bank N.V., as Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under such master agreement; and |
(c) | the master agreement (together with the schedule thereto) made or to be made between the Borrower and Citibank N.A., London Branch, as Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under such master agreement, |
and, in the singular, means any of them;
“ Master Charterparty Agreement ” means the master charterparty agreement dated 9 May 2011 and entered into between (amongst others) the Borrower and the Charterer and approved by the Lenders;
“ Maturity Date ” means 24 May 2019;
“ MLP ” means GasLog Partners LP, a Marshall Islands limited partnership;
“ MLP General Partner ” means GasLog Partners GP LLC, a Marshall Islands limited liability company;
“ MLP IPO ” means the initial public offering of the common units in the MLP;
“ Mortgage ” means the first priority Bermuda ship mortgage executed or to be executed by the Borrower in favour of the Security Trustee in the Agreed Form;
“ Negotiation Period ” has the meaning given in Clause 5.9;
“ Notifying Lender ” has the meaning given in Clause 23.1 or Clause 24.1 as the context requires;
“ Original Loan Agreement ” means the loan agreement dated 3 October 2011 (as amended by a side letter no. 1 dated 22 February 2012, a side letter no. 2 dated 22 February 2012 and a third supplemental agreement dated 11 July 2013) and made between (i) the Original Loan Agreement Borrowers, (ii) the Lenders, (iii) the Swap Banks, (iv) the Joint Lead Arrangers, (v) the Agent and (vi) the Security Trustee;
“ Original Loan Agreement Borrowers ” means the Borrower and GAS-six and, in the singular, means either of them;
“ Original Loan Agreement Creditor Party ” has the meaning given to “Creditor Party” in the Original Loan Agreement;
“ Original Loan Agreement Designated Transaction ” has the meaning given to “Designated Transaction” in the Original Loan Agreement;
“ Original Loan Agreement Interest Period ” has the meaning given to “Interest Period” in the Original Loan Agreement;
“ Original Loan Agreement Tranche ” has the meaning given to “Tranche” in the Original Loan Agreement;
“ Payment Currency ” has the meaning given in Clause 21.4;
“ Permitted Security Interests ” means:
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(a) | Security Interests created by the Finance Documents; |
(b) | liens for unpaid master’s and 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 for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(g); |
(f) | any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and |
(g) | Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; |
“ Pertinent Document ” means:
(a) | any Finance Document; |
(b) | any policy or contract of insurance contemplated by or referred to in any provision of this Agreement or another Finance Document; |
(c) | any other document contemplated by or referred to in any Finance Document; and |
(d) | any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c); |
“ 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 in which the company has the centre of its main interest or in which the company’s central management and control is or has recently been exercised; |
(d) | a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax; |
(e) | 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 |
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company maintains a branch or 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
(f) | a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company, whether as main or territorial or ancillary proceedings, or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c); |
“ Pertinent Matter ” means:
(a) | any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or |
(b) | any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a); |
and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;
“ 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 on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;
“ Reference Banks ” means, subject to Clause 26.16, Nordea Bank Finland plc, London Branch, ABN AMRO Bank N.V. and Citibank International Plc and any one other prime international bank from time to time selected by the Agent;
“ Relevant Person ” has the meaning given in Clause 19.9;
“ Repayment Date ” means a date on which a repayment is required to be made under Clause 8;
“ Replacement Charter ” means any charter of the Ship entered into between the Borrower and a charterer which is acceptable to the Majority Lenders and on terms approved by the Lenders;
“ 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 Party ” means a person:
(a) | that is listed on any Sanctions List (whether designated by name or by reason of being included in a class of person); |
(b) | that is domiciled, registered as located or having its main place of business in, or is incorporated under the laws of, a country which is subject to Sanctions Laws; |
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(c) | that is directly or indirectly owned or controlled by a person referred to in paragraph (i) and/or (ii) above; or |
(d) | with which any Lender is prohibited from dealing or otherwise engaging in a transaction with by any Sanctions Laws; |
“ Sanctions Authority ” means the Norwegian State, the United Nations, the European Union, the member states of the European Union, the United States of America and any authority acting on behalf of any of them in connection with Sanctions Laws;
“ Sanctions Laws ” means the economic or financial sanctions laws and/or regulations, trade embargoes, prohibitions, restrictive measures, decisions. Executive Orders or notices from regulators implemented, adapted, imposed, administered, enacted and/or enforced by any Sanctions Authority;
“ Sanctions List ” means any list of persons or entities published in connection with Sanctions Laws by or on behalf of any Sanctions Authority;
“ Screen Rate ” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed on the appropriate page of the Telerate or Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders;
“ Secured Liabilities ” means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any Designated Transaction under any Master Agreement or any judgment relating to any Finance Document or any Designated Transaction under any Master Agreement; 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 security rights of a plaintiff under an action in rem; 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 this paragraph (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 Guarantors and any other person (except a Creditor Party) who, as a surety, pledgor, chargor or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within any paragraph of the definition of “Finance Documents”;
“ Security Period ” means the period commencing on the Effective Date and ending on the date on which the Agent notifies the Borrower, the Security Parties and the other Creditor Parties that:
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(a) | all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents and the Master Agreements have been paid; |
(b) | no amount is owing or has accrued (without yet having become due for payment) under any Finance Document or any Master Agreement; |
(c) | neither the 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 or a Master Agreement; 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 or a Master Agreement would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or a Master Agreement or any asset covered (or previously covered) by a Security Interest created by a Finance Document; |
“ Security Trustee ” means Nordea Bank Finland Plc, London Branch, acting in such capacity through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB, or any successor of it appointed under clause 5 of the Agency and Trust Deed;
“ Servicing Bank ” means the Agent or the Security Trustee;
“ Shares Pledges ” means a deed creating security over the share capital of the Borrower granted or to be granted by GasLog Partners to the Security Trustee in the Agreed Form;
“ Ship ” means the 155,000 cbm LNG vessel which was constructed by the Builder for, and purchased by, the Borrower under the Shipbuilding Contract with the Builder’s hull number 2016 and which is now registered in the ownership of the Borrower under Bermudan flag with the name “GASLOG SYDNEY”;
“ Shipbuilding Contract ” means the shipbuilding contract dated 30 March 2011 and made between the Builder and the Borrower for the construction by the Builder of the Ship and its purchase by the Borrower as supplemented and amended from time to time;
“ SMC ” means a safety management certificate issued in respect of the Ship in accordance with Rule 13 of the ISM Code;
“ Swap Bank ” means a bank or financial institution listed in Schedule 2 and acting through its branch indicated in Schedule 2;
“ Swap Counterparty ” means, at any relevant time and in relation to a continuing Designated Transaction, the Swap Bank which is a party to that Designated Transaction;
“ Swap Exposure ” means, as at any relevant date and in relation to a Swap Counterparty, the amount certified by the Swap Counterparty to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrower to the Swap Counterparty under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement entered into by the Swap Counterparty with the Borrower if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrower and the Swap Counterparty and as if the Borrower were the sole Affected Party;
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“ Total Loss ” means:
(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 its 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 1 year without any right to an extension and provided that market hire is being paid for such requisition) unless it is within 2 months redelivered to the full control of the Borrower; and |
(c) | any arrest, capture, seizure, detention, destruction or abandonment of the Ship (including any hijacking, theft or condemnation) unless it is within 2 months redelivered to the full control of the Borrower; |
“ Total Loss Date ” means:
(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 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; |
“ Transaction ” has the meaning given in each Master Agreement;
“ 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; and
“ US Tax Obligor ” means:
(a) | the Borrower if it is resident for tax purposes in the United States of America; or |
(b) | the Borrower or 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: |
two or more persons are “ acting in concert ” if pursuant to an agreement or understanding (whether formal or informal) they actively co-operate, through the acquisition (directly or indirectly) of shares in an entity by any of them, either directly or indirectly to obtain or consolidate control of that entity;
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“ approved ” means, for the purposes of Clause 13, approved in writing by the Agent;
“ administration notice ” means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;
“ 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 and legalisation;
“ contingent liability ” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“ control ” of an entity means:
(i) | the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: |
(A) | cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of that entity; or |
(B) | appoint or remove all, or the majority, of the directors or other equivalent officers of that entity; or |
(C) | give directions with respect to the operating and financial policies of that entity with which the directors or other equivalent officers of that entity are obliged to comply; and/or |
(ii) | the holding beneficially of more than 50% of the issued share capital of that entity (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, a Security Interest over share capital shall be disregarded in determining the beneficial ownership of such share capital), |
and “ controlled ” shall be construed accordingly;
“ document ” includes a deed; also a letter or fax;
“ excess risks ” means, in relation to the Ship, 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 its 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 order or decree, any form of delegated legislation, 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;
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“ liability ” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
“ months ” shall be construed in accordance with Clause 1.3;
“ obligatory insurances ” means, in relation to the Ship, all insurances effected, or which the Borrower is obliged to effect, 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 contracts 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 in them of Clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“ regulation ” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
“ subsidiary ” has the meaning given in Clause 1.4;
“ 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 ” includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls)(1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
1.3 | Meaning of “month”. A period of 1 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: |
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(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 attaching 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. In this Agreement: |
(a) | references to, or to a provision of, a Finance Document or any other document are references to it as amended, supplemented or restated, whether before the date of this Agreement or otherwise; |
(b) | 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; |
(c) | words denoting the singular number shall include the plural and vice versa; and |
(d) | Clauses 1.1 to 1.5 apply unless the contrary intention appears. |
1.6 | Headings. In interpreting a Finance Document or a Master Agreement or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document or any Master Agreement shall be entirely disregarded. |
2 | FACILITY |
2.1 | Amount of facility. Subject to the other provisions of this Agreement, the Lenders shall make a loan facility of up to $132,389,706 available to the Borrower. |
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 Effective Date, its Commitment bears to the Total Commitments. |
2.3 | Purpose of Loan. |
(a) | The Borrower undertakes with each Creditor Party to use each Advance only for the purpose stated in the preamble to this Agreement. |
(b) | The Borrower also undertakes with each Creditor Party that no proceeds of any Advance shall be made available, directly or indirectly, to or for the benefit of a Restricted Person nor shall they otherwise be applied in a manner or for a purpose prohibited by Sanctions Laws. |
2.4 | Application of amounts. No Creditor Party is obliged to monitor or verify the application of any amount borrowed under this Agreement. |
3 | POSITION OF THE LENDERS AND SWAP BANKS |
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3.1 | Interests of Lenders several. The rights of the Lenders and of the Swap Banks under this Agreement and under the Master Agreements are several. |
3.2 | Individual Lender’s right of action. Each Lender and each Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement or under a Master Agreement without joining the Agent, the Security Trustee, any other Swap Bank or any other Lender as additional parties in the proceedings. |
3.3 | Proceedings by individual Lender, requiring Majority Lenders’ consent. Except as provided in Clause 3.2, no Lender and no Swap Bank may commence proceedings against the Borrower or any Security Party in connection with a Finance Document or a Master Agreement without the prior consent of the Majority Lenders. |
3.4 | Obligations of Creditor Parties several. The obligations of the Creditor Parties under this Agreement and the Master Agreement to which each is a party are several; and a failure of the Creditor Parties to perform its obligations under this Agreement or under the Master Agreement to which it is a party shall not result in: |
(a) | the obligations of the other Creditor Parties being increased; nor |
(b) | the Borrower, any Security Party, or any other Creditor Party being discharged (in whole or in part) from its obligations under any Finance Document or under any Master Agreement; |
and in no circumstances shall a Creditor Party have any responsibility for a failure of another Creditor Party to perform its obligations under this Agreement or a Master Agreement.
4 | effective date |
4.1 | Assumption by the Borrower. On the Effective Date and in consideration of the release of the Borrower under the Original Loan Agreement and the amendments to the Original Loan Agreement pursuant to the Amending and Restating Agreement, the Lenders shall be deemed to have made on that date an Advance to the Borrower in an aggregate amount equal to the amount (immediately prior to the occurrence of the Effective Date) of the Original Loan Agreement Tranche for the Ship; and the Borrower shall thereupon become indebted pursuant to this Agreement, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution (as determined in accordance with Clause 2.2). For the avoidance of doubt, there shall be no payment by any Creditor Party to the Borrower required as a result of the making of such Advance. |
5 | INTEREST |
5.1 | Payment of normal interest. Subject to the provisions of this Agreement, interest on each Advance in respect of each Interest Period applicable to it shall be paid by the Borrower on the last day of that Interest Period applicable to it. For the first Interest Period applicable to the Loan, the outstanding principal amount of the Loan on which interest shall accrue and be paid under this Clause 5.1 shall be deemed to be throughout the whole of that Interest Period the same as the outstanding principal amount (immediately prior to the occurrence of the Effective Date) of the Original Loan Agreement Tranche for the Ship. |
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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 applicable to it shall be the aggregate of the Margin and LIBOR 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 Borrower 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 | Obligation of Reference Banks to quote. A Lender which is a Reference Bank shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement. |
5.6 | Absence of quotations by Reference Banks. If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks; but if 2 or more of the Reference Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5. |
5.7 | Market disruption. The following provisions of this Clause 5 apply if: |
(a) | no Screen Rate is quoted and 2 or more of the Reference Banks do not, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or |
(b) | at least 1 Business Day before the start of an Interest Period, Lender(s) having Contributions together amounting to 50 per cent. or more of the Loan (or, if an Advance has not been made, Commitments together amounting to 50 per cent. or more of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lender(s) of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or |
(c) | at least 1 Business Day before the start of an Interest Period, 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. |
5.8 | Notification of market disruption. The Agent shall promptly notify the Borrower, each of the Lenders and each of the Swap Counterparties stating the circumstances falling within Clause 5.7 which have caused its notice to be given. |
5.9 | Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.8 is served after an Advance is made, the Borrower, the Agent, the Lenders or (as the case may be) the Affected Lender and the Swap Counterparties shall use reasonable |
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endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.8 (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 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 Borrower does not agree with an interest rate set by the Agent under Clause 5.11, the Borrower may give the Agent not less than 15 Business Days’ notice of its intention to prepay 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 Borrower’s 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 last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
5.14 | Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment. |
5.15 | Designated Transactions under a Master Agreement . At any time the Borrower may request the Swap Banks (by advising the Agent who shall (after first advising the Swap Banks of the amount and the maturity of the intended hedge and consulting with them) then advise the Swap Banks of the rate as determined by the Agent and invite each Swap Bank to participate on a pro-rata basis in the intended hedge by entering into a Designated Transaction at such rate) to conclude Designated Transactions for the purpose of swapping their interest payment obligations and/or their currency exposure under this Agreement. Signature of a Master Agreement does not commit the Swap Bank concerned to conclude Designated Transactions, or even to offer terms for doing so, but does provide a contractual framework within which Designated Transactions may be concluded and secured, assuming that the Swap Bank concerned is willing to conclude any Designated Transaction at the relevant time and that, if that is the case, mutually acceptable terms can then be agreed at the relevant time. |
6 | INTEREST PERIODS |
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6.1 | Commencement of Interest Periods. Notwithstanding that the Loan shall be made on the Effective Date, the first Interest Period applicable to the Loan shall be deemed on the Effective Date (subject to Clause 6.3) to have commenced on the same commencement date, and end on the same expiry date, as the Original Loan Agreement Interest Period (immediately prior to the occurrence of the Effective Date) for the Original Loan Agreement Tranche for the Ship; and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period. |
6.2 | Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period (other than the first Interest Period to which Clause 6.1 shall apply) shall be: |
(a) | 1, 2, 3 or 6 months as notified by the Borrower to the Agent not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; |
(b) | 3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or |
(c) | such other period as the Agent may, with the authorisation of all the Lenders, agree with the Borrower. |
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 shall end on that Repayment Date. |
6.4 | Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than 6 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 6 months. |
7 | DEFAULT INTEREST |
7.1 | Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower 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: |
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(a) | in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or |
(b) | in the case of any other overdue amount, the rate set out at Clause 7.3(b). |
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 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 (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank 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 Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine. |
7.4 | Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower 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 Borrower is 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 last day of the period by reference to which it was determined; and the payment shall be made to the Agent 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 9(h)(i) (Default Interest; Other Amounts) of that Master Agreement shall apply. |
8 | REPAYMENT AND PREPAYMENT |
8.1 | Amount of repayment instalments. The Borrower shall repay the Loan by (i) consecutive quarterly instalments each equal to the amount (immediately prior to the occurrence of the Effective Date) of the quarterly repayment instalment of the Original Loan Agreement Tranche for the Ship under the Original Loan Agreement; and by (ii) a balloon instalment equal to the balance of the Loan at that time. |
8.2 | Repayment Dates. |
(a) | The first quarterly instalment for the Loan shall be repaid on 30 May 2014. |
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(b) | The final quarterly instalment, and the balloon instalment, of the Loan shall be repaid on the Maturity Date. |
8.3 | Maturity Date. On the Maturity Date, the Borrower shall additionally pay to the Agent 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 Borrower may prepay the whole or any part of the Loan on any day. |
8.5 | Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that: |
(a) | a partial prepayment shall be $3,000,000 or a higher integral multiple of $1,000,000; |
(b) | the Agent has received from the Borrower at least 5 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; |
(c) | the Borrower has provided evidence satisfactory to the Agent that any consent required by the 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 the Borrower or any Security Party has been complied with; and |
(d) | the Borrower has complied with Clause 8.15 on or prior to the date of prepayment. |
8.6 | Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower 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 Borrower under Clause 8.5(c). |
8.8 | Mandatory prepayment on sale or Total Loss . The Borrower shall be obliged to prepay the Loan if the Ship is sold or becomes a Total Loss: |
(a) | in the case of a sale, on the date on which the sale is completed by delivery of the Ship to the buyer; or |
(b) | in the case of a Total Loss, on the earlier of the date falling 180 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. |
8.9 | Mandatory prepayment on Change of Control. If there is a Change of Control, the Borrower shall be obliged to prepay all of the Loan no later than 60 days following the Change of Control unless such Change of Control is, before the end of such period, approved by the Agent acting with the consent of the Majority Lenders. |
8.10 | Right of replacement or cancellation and prepayment in relation to a single FATCA Protected Lender after the occurrence of a FATCA Event. |
(a) | If any FATCA Protected Lender notifies the Agent of a FATCA Event pursuant to Clause 8.11, the Borrower may, whilst the circumstance giving rise to that FATCA Event |
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continues for a maximum period of 30 days, give the Agent notice of cancellation of the Commitment of that Lender and the Borrower’s intention to procure the repayment of that Lender’s participation in the Loan or give the Agent notice of the Borrower’s intention to replace that Lender in accordance with Clause 8.10(d).
(b) | On receipt of a notice referred to in Clause 8.10(a), the Commitment of that Lender shall immediately be reduced to zero and (unless the Commitment of the relevant Lender is replaced in accordance with Clause 8.10(d)) the Total Commitment shall be reduced by the same amount. |
(c) | On the last day of the Interest Period which ends after the Borrower has given a notice under Clause 8.10(a) in relation to a Lender (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender’s participation in the Loan in accordance with this Clause 8. |
(d) | The Borrower may, in the circumstances set out in Clause 8.10(a), on 15 Business Days’ prior notice to the Agent and that Lender, replace that Lender by requiring that Lender to transfer (and, to the extent permitted by law, that Lender shall transfer) pursuant to Clause 26 all (and not part only) of its rights under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity selected by the Borrower which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 26 for a purchase price in cash or other cash payment payable at the time of the transfer equal to the aggregate of: |
(i) | the outstanding principal amount of such Lender’s participation in the Loan; |
(ii) | all accrued interest owing to such Lender; |
(iii) | the Break Costs which would have been payable to such Lender pursuant to Clauses 21.1(a) and 21.2 had the Borrower prepaid in full that Lender’s participation in the Loan on the date of the transfer; and |
(iv) | all other amounts payable to that Lender under the Finance Documents on the date of the transfer. |
(e) | The replacement of a Lender pursuant to Clause 8.10(d) shall be subject to the following conditions: |
(i) | the Borrower shall have no right to replace the Agent; |
(ii) | neither the Agent nor any Lender shall have any obligation to find a replacement Lender; |
(iii) | in no event shall the Lender replaced under Clause 8.10(d) be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and |
(iv) | the Lender shall only be obliged to transfer its rights pursuant to Clause 8.10(d) once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer. |
(f) | A Lender shall perform the checks described in Clause 8.10(e)(iv) as soon as reasonably practicable following delivery of a notice referred to in Clause 8.10(d) and shall notify the Agent and the Borrower when it is satisfied that it has complied with those checks. |
8.11 | Mandatory repayment and cancellation of FATCA Protected Lenders. If, on the date falling 3 months before the earliest FATCA Application Date for any payment by a |
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party to a Finance Document to a FATCA Protected Lender (or to the Agent for the account of that Lender), that Lender is not a FATCA Exempt Party and, in the opinion of that Lender (acting reasonably), that party will, as a consequence, be required to make a FATCA Deduction from a payment to that Lender (or to the Agent for the account of that Lender) on or after that FATCA Application Date (a “ FATCA Event ”):
(a) | that Lender shall, reasonably promptly after that date, notify the Agent of that FATCA Event and the relevant FATCA Application Date; |
(b) | if, on the date falling 1 month before such FATCA Application Date, that FATCA Event is continuing and that Lender has not been repaid or replaced pursuant to Clause 8.10 (other than by reason of that Lender’s failure to comply with its obligations pursuant to Clause 8.10(d)): |
(i) | that Lender may, at any time between 1 month and 2 weeks before such FATCA Application Date, notify the Agent; |
(ii) | upon the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and |
(iii) | the Borrower shall repay that Lender’s participation in the Loan in accordance with this Clause 8 on the last day of the Interest Period for the Loan occurring after the Agent has notified the Borrower or, if earlier, the last Business Day before the relevant FATCA Application Date. |
8.12 | Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clauses 20 or 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 sums payable under Clause 21.1(a) but without premium or penalty. |
8.13 | Application of partial prepayment. Each partial prepayment shall be applied against the repayment instalments specified in Clause 8.1 on a pro-rata basis. |
8.14 | No reborrowing . No amount prepaid may be reborrowed and, for the avoidance of doubt, any amount prepaid shall permanently cancel a corresponding amount of the Total Commitments. |
8.15 | Unwinding of Designated Transactions. On or prior to any repayment or prepayment of the Loan under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time thereafter pursuant to Clause 8.1. |
9 | CONDITIONS PRECEDENT |
9.1 | Documents and no default. The occurrence of the Effective Date is subject to the following conditions precedent: |
(a) | that, on or before the Effective Date, the Agent receives the documents described in Schedule 3 in form and substance satisfactory to the Agent and its lawyers; |
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(b) | that, on or before the Effective Date, the Agent has received the annual agency fee referred to in Clause 20.1; |
(c) | that, at the Effective Date: |
(i) | no Event of Default or Potential Event of Default has occurred and is continuing or would result from the occurrence of the Effective Date; and |
(ii) | the representations and warranties in Clause 10 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on that date with reference to the circumstances then existing; |
(d) | that, if the ratio set out in Clause 15.1 were applied immediately following the occurrence of the Effective Date, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; and |
(e) | that the Agent has received, and found to be acceptable to it, any further 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 Borrower prior to the Effective Date. |
9.2 | Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit the Effective Date to occur before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Effective Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify). |
10 | REPRESENTATIONS AND WARRANTIES |
10.1 | General. The Borrower represents and warrants to each Creditor Party as follows. |
10.2 | Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of Bermuda; and neither the Borrower nor either Guarantor is a FATCA FFI or a US Tax Obligor. |
10.3 | Share capital and ownership. The Borrower has an authorised share capital of 12,000 registered shares of $1.00 each, all of which shares have been issued in registered form, and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, (on and after the Effective Date) by GasLog Partners. |
10.4 | Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it: |
(a) | to purchase and pay for the Ship under the Shipbuilding Contract and register the Ship on Bermudan flag; |
(b) | to execute the Finance Documents to which the Borrower is a party and the Master Agreements; and |
(c) | to borrow under this Agreement, to enter into Designated Transactions under the Master Agreements and to make all the payments contemplated by, and to comply with, those Finance Documents to which the Borrower is a party and the Master Agreements. |
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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 the Borrower is a party and the Master Agreements, 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 the Borrower’s legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; 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) | the Borrower which is a party to that Finance Document 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 the Borrower of each Finance Document and each Master Agreement to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document and each Master Agreement 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 the Borrower; or |
(c) | any contractual or other obligation or restriction which is binding on the Borrower or any of its assets. |
10.9 | No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents or any Master Agreement to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction. |
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 Borrower or any Security Party to any Creditor Party in connection with any Finance Document or any Master Agreement satisfied the requirements of Clause 11.6; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower or either Guarantor from that disclosed in the latest of those accounts. |
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10.12 | No litigation. No legal or administrative action involving the Borrower (including acting relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower’s financial position or profitability. |
10.13 | Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 11.3, 11.5, 11.9 and 11.15. |
10.14 | Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower, its business or the Ship. |
10.15 | ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Managers and the Ship have been complied with. |
10.16 | No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents and the Master Agreements, and the transactions and other arrangements affected or contemplated by the Finance Documents and the Master Agreements to which the Borrower is a party, the Borrower confirms (i) that it is acting for its own account; (ii) that it will use the proceeds of the Loan for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement; and (iii) that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council. |
10.17 | Sanctions . |
(a) | The Borrower, each Security Party, the MLP, each other subsidiary of GasLog, each other subsidiary of the MLP, their respective joint ventures and their respective directors, officers, employees, agents or representatives has been and is in compliance with Sanctions Laws. |
(b) | None of the Borrower, each Security Party, the MLP, each other subsidiary of GasLog, each other subsidiary of the MLP, their respective joint ventures and their respective directors, officers, employees, agents or representatives: |
(i) | is a Restricted Party, or is involved in any transaction through which it is likely to become a Restricted Party; or |
(ii) | is subject to or involved in any inquiry, claim, action, suit, proceeding or investigation against it with respect to Sanctions Laws. |
11 | GENERAL UNDERTAKINGS |
11.1 | General. The Borrower 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 authorisation of the Majority Lenders, otherwise permit. |
11.2 | Title. The Borrower will hold the legal title to, and own the entire beneficial interest in the Ship, its 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 |
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effect of assignments contained in the Finance Documents and except for Permitted Security Interests.
11.3 | Negative pledge. The Borrower will not create nor permit to arise any Security Interest (except for Permitted Security Interests) over any asset, present or future (including, but not limited to, the Borrower’s rights against a Swap Counterparty under a Master Agreement or all or any part of the Borrower’s interest in any amount payable to the Borrower by a Swap Counterparty under a Master Agreement). |
11.4 | No disposal of assets. The Borrower will not 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, |
other than in the ordinary course of business.
11.5 | No other liabilities or obligations to be incurred. The Borrower will not incur any liability (including, without limitation and for the avoidance of doubt, any contingent liability) or obligation except: |
(a) | liabilities and obligations under the Finance Documents to which it is a party and the Charter (it being acknowledged that the Borrower entered into the Original Loan Agreement and various other documents pursuant thereto but that the Borrower has on the Effective Date been released from any obligations or liabilities thereunder); |
(b) | obligations reasonably incurred in the ordinary course of operating and chartering the Ship; |
(c) | Designated Transactions; |
(d) | any liability to pay a guarantee fee to GasLog at a rate of no more than 0.5 per cent. per annum on the aggregate amount of the principal guaranteed by GasLog under its Guarantee, provided that such guarantee fee only accrues from (and including) the Effective Date and is only payable in arrears on such dates as the Borrower and GasLog may agree; and |
(e) | liabilities and obligations under any loan made to the Borrower by its shareholders which is fully subordinated to the satisfaction of the Agent (and the Borrower undertakes to procure that no such loan shall be due nor capable of becoming due, nor will the Borrower pay or repay any amount under any such loan, until after the end of the Security Period). |
11.6 | Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration. |
11.7 | Provision of financial statements. The Borrower will send to the Agent: |
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(a) | as soon as possible, but in no event later than 150 days after the end of each financial year of the Borrower, the audited individual accounts of the Borrower; |
(b) | as soon as possible, but in no event later than 90 days after the end of the first 6-month period in each financial year of the Borrower, the unaudited individual accounts of the Borrower, certified as to their correctness by the chief financial officer of the Borrower; |
(c) | as soon as possible, but in no event later than 150 days after the end of each financial year of GasLog, the audited consolidated accounts of GasLog and its subsidiaries; |
(d) | as soon as possible, but in no event later than 90 days after the end of the first 6-month period in each financial year of GasLog, the unaudited consolidated accounts of GasLog and its subsidiaries, certified as to their correctness by the chief financial officer of GasLog; |
(e) | together with each set of accounts provided under 11.7(a), (b), (c) and (d), a compliance certificate in the form set out in Schedule 6 to this Agreement (or in such other form as the Agent may reasonably require) duly signed by the chief financial officers of the Borrower and GasLog together with such other financial and other information relating to the Borrower or GasLog as the Security Trustee may request for this purpose; and |
(f) | as soon as possible, but in no event later than 3 months after the end of each financial year of the Borrower, a 3 year financial projection for the Borrower in a format approved by the Agent. |
11.8 | Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.6 will: |
(a) | be prepared in accordance with all applicable laws and IFRS; |
(b) | give a true and fair view of the state of affairs of the Borrower (or, as the case may be, GasLog and its subsidiaries) at the date of those accounts and of its or their profit for the period to which those accounts relate; and |
(c) | fully disclose or provide for all significant liabilities of the Borrower (or, as the case may be, GasLog and its subsidiaries). |
11.9 | Shareholder and creditor notices. The Borrower will send the Agent, at the same time as they are despatched, copies of all communications which the Borrower is legally obliged to despatch to the Borrower’s shareholders or creditors or any class of them. |
11.10 | Consents and compliance with laws. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required: |
(a) | for the Borrower to perform its obligations under any Finance Document to which it is party or any Master Agreement; |
(b) | for the validity or enforceability of any Finance Document to which it is a party or any Master Agreement; and |
(c) | for the Borrower to continue to own and operate the Ship; |
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and the Borrower will comply with the terms of all such consents. Without prejudice to the other obligations under the Finance Documents, the Borrower shall comply in all respects with all laws and regulations to which it may be subject.
11.11 | Maintenance of Security Interests. The Borrower will: |
(a) | at its own cost, do all that it reasonably 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), 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, 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. |
11.12 | Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any Security Party, any Approved Manager or the Ship, the Earnings or the Insurances as soon as it becomes apparent to the Borrower that such action has been instituted or 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. |
11.13 | No amendment to Master Agreements. The Borrower will not agree to any amendment or supplement to, nor waive or fail to enforce, any Master Agreement or any of its provisions. For the avoidance of doubt, this clause will not prevent the Borrower from entering into or amending Designated Transactions or Confirmations. |
11.14 | Principal place of business. The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated at the commencement of this Agreement; and the Borrower will not establish, nor do anything as a result of which it would be deemed to have, a place of business in any country other than Bermuda. |
11.15 | Confirmation of no default. The Borrower will, 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 the Borrower and which: |
(a) | states that no Event of Default or Potential Event of Default has occurred; or |
(b) | states 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. |
11.16 | Notification of default. The Borrower will notify the Agent as soon as the Borrower 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 keep the Agent fully up-to-date with all developments.
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11.17 | Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating: |
(a) | to the Borrower or the Ship, the Earnings or the Insurances; 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, any Lender or any Swap Bank at any time.
11.18 | Provision of translation of documents. In relation to the documents referred to above, if the Agent so requires in respect of any of those documents, the Borrower will provide a certified English translation prepared by a translator approved by the Agent. |
11.19 | Access to books and records. The Borrower shall permit one or more representatives of the Agent, at the reasonable request of the Agent, to have reasonable access to its books and records and to inspect the same during normal business hours at its offices upon reasonable prior written notice. |
11.20 | Press releases. The Borrower will send to the Agent, at the same time as they are dispatched, copies of all press releases which are issued by the Borrower. |
11.21 | “Know your customer” checks . The Borrower shall (and shall procure that the Guarantors shall) promptly upon the request of the Agent, the Lender or Swap Bank concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender or Swap Bank) or the Lender or Swap Bank concerned (for itself or on behalf of any prospective new Lender or new Swap Bank) in order for the Agent, the Lender or Swap Bank concerned or any prospective new Lender or new Swap Bank to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents and Master Agreements. |
11.22 | Termination of Charter or Replacement Charter . Upon termination or expiry of the Charter or a Replacement Charter, the Borrower shall, within 30 days after the date of such termination or cancellation, deposit $20,000,000 on an account with the Agent and the Borrower shall execute security, in favour of the Security Trustee (on behalf of the Lenders and the Swap Banks) and acceptable to the Lenders, over such account. Such cash collateral shall be released to the Borrower upon the Borrower having entered into a Replacement Charter (or, as the case may be, another Replacement Charter) and the Ship having been delivered and accepted under such Replacement Charter. |
11.23 | Charter non-extension |
(a) | If the Charterer does not exercise its option to extend the Charter and subject to Clause 11.23(b), with effect on and from 12 months prior to the expiry of the Charter, the Borrower shall on each Repayment Date pursuant to Clause 8.1 transfer 90 per cent. of any free cash (after deductions for operating expenses in relation to the Ship but otherwise the Borrower undertakes not to withdraw or transfer any other amount from the Earnings Account) on the Earnings Account (up to $10,000,000 in aggregate for the Ship) to an account with the Agent and shall execute security, in favour of the Security Trustee (on behalf of the Lenders and the Swap Banks) and acceptable to the Lenders, over such account (with the monies in such secured account (including any interest thereon) only being used for repaying, on the Maturity Date, firstly the Loan, and making the payments |
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referred to in Clause 8.3, secondly any Swap Exposure and thereafter returned to the Borrower).
(b) | However, if Clause 11.23(a) applies but subsequently the Borrower enters into a Replacement Charter and the Ship is delivered and accepted under such Replacement Charter, the monies in the secured account referred to in Clause 11.23(a) shall be released to the Borrower and Clause 11.23(a) shall thereupon cease to apply. |
11.24 | Financial covenants. |
(a) | In this Clause 11.24, Clause 12.4 and any compliance certificate delivered pursuant to Clause 11.7(e): |
“ Borrower’s Cash ” means, in relation to the Borrower at any date of determination under this Agreement, the aggregate value on the date of determination of the Borrower’s credit balances on any deposit, savings or current account and the Borrower’s cash in hand, each as determined in accordance with IFRS, but excluding any such credit balances and cash then subject to a Security Interest (other than any Security Interest arising under a Finance Document);
“ Borrower’s Cash Equivalent ” means, in relation to the Borrower at any date of determination under this Agreement, the aggregate value of:
(a) | each certificate of deposit maturing within 1 year after the date of determination and issued by either the Agent or any other bank or financial institution approved by the Agent; |
(b) | each investment in marketable debt obligations issued or guaranteed by the government of the United States of America or any member state of the European Economic Area and having a rating of AAA from Standard & Poor’s Ratings Group or the equivalent with any other principal credit rating agency in the United States of America or Europe, or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within 1 year after the date of determination and not convertible or exchangeable to any other security; |
(c) | each commercial paper not convertible or exchangeable to any other security: |
(i) | for which a recognised trading market exists; |
(ii) | issued by an issuer incorporated in the United States of America or any member state of the European Economic Area; |
(iii) | which matures within 1 year after the date of determination; and |
(iv) | which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating; |
(d) | each Sterling bill of exchange eligible for rediscount at the Bank of England and accepted by a bank or financial institution approved by the Facility Agent (or their dematerialised equivalent); |
(e) | each investment in a money market fund which: |
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(i) | has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited; |
(ii) | invests substantially all its assets in securities of the types described in paragraphs (a) to (d) above; and |
(iii) | can be turned into cash on not more than 30 days’ notice; and |
(f) | each other debt security approved by the Majority Lenders, |
in each case as determined in accordance with IFRS, to which the Borrower is beneficially entitled at that time and which is not issued or guaranteed by any Excluded Company nor subject to any Security Interest (other than any Security Interest arising under a Finance Document);
“ Excluded Companies ” means GasLog, GasLog Carriers, the MLP and each subsidiary of GasLog, GasLog Carriers or the MLP and, in the singular, means any of them;
“ GasLog Group ” means GasLog and its subsidiaries;
“ GasLog Group’s Cash ” means, at any date of determination under this Agreement, the aggregate value on the date of determination of the GasLog Group’s credit balances on any deposit, savings or current account and the GasLog Group’s cash in hand, each as determined on a consolidated basis in accordance with IFRS, but excluding any such credit balances and cash then subject to a Security Interest (other than any Security Interest arising under a Finance Document);
“ GasLog Group’s Cash Equivalent ” means, at any date of determination under this Agreement, the aggregate value of:
(a) | each certificate of deposit maturing within 1 year after the date of determination and issued by either the Agent or any other bank or financial institution approved by the Agent; |
(b) | each investment in marketable debt obligations issued or guaranteed by the government of the United States of America or any member state of the European Economic Area and having a rating of AAA from Standard & Poor’s Ratings Group or the equivalent with any other principal credit rating agency in the United States of America or Europe, or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within 1 year after the date of determination and not convertible or exchangeable to any other security; |
(c) | each commercial paper not convertible or exchangeable to any other security: |
(i) | for which a recognised trading market exists; |
(ii) | issued by an issuer incorporated in the United States of America or any member state of the European Economic Area; |
(iii) | which matures within 1 year after the date of determination; and |
(iv) | which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating; |
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(d) | each Sterling bill of exchange eligible for rediscount at the Bank of England and accepted by a bank or financial institution approved by the Facility Agent (or their dematerialised equivalent); |
(e) | each investment in a money market fund which: |
(i) | has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited; |
(ii) | invests substantially all its assets in securities of the types described in paragraphs (a) to (d) above; and |
(iii) | can be turned into cash on not more than 30 days’ notice; and |
(f) | each other debt security approved by the Majority Lenders, |
in each case as determined on a consolidated basis in accordance with IFRS, to which any member of the GasLog Group is alone (or together with any other member of the GasLog Group) beneficially entitled at that time and which is not issued or guaranteed by any Excluded Company nor subject to any Security Interest (other than any Security Interest arising under a Finance Document);
“ GasLog Group’s Current Assets ” means, at any date of determination under this Agreement, the amount of the current assets of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Current Liabilities ” means, at any date of determination under this Agreement, the amount of the current liabilities of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts (but excluding the short term portion of any long term Financial Indebtedness);
“ GasLog Group’s Debt Service ” means, at any date of determination under this Agreement, the aggregate amount of interest, other finance charges (in each case, whether or not paid, payable or capitalised) and principal accrued by the GasLog Group in respect of borrowings including:
(a) | the interest element of leasing and hire purchase payments; |
(b) | commitment fees, commissions, arrangement fees and guarantee fees; and |
(c) | amounts in the nature of interest payable in respect of any shares other than equity share capital, |
adjusted (but without double counting) by:
(i) | adding back the net amount payable (or deducting the net amount receivable) by members of the GasLog Group under any interest or (so far as they relate to interest) currency hedging arrangements; and |
(ii) | deducting interest income of the GasLog Group to the extent freely distributable to a member of the GasLog Group in cash, |
each as determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
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“ GasLog Group’s EBITDA ” means, at any date of determination under this Agreement, the profit on ordinary activities before taxation of the GasLog Group, adjusted by:
(a) | adding back GasLog Group’s Interest Payable; |
(b) | deducting GasLog Group’s Interest Receivable; |
(c) | taking no account of any exceptional or extraordinary item; |
(d) | adding back depreciation and amortisation; |
(e) | deducting its share of profits from affiliates; and |
(f) | adding back its loss of profits from affiliates; |
determined, in each case, on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Interest Payable ” means, at any date of determination under this Agreement, all interest (including, without limitation, all net interest payable under interest rate swaps), all fees (including, but not limited to, commitment fees) and periodic financing charges including commissions, discounts and the interest element of rental payments or finance or capital leases (whether, in each case, paid, payable or capitalised), and all other costs, charges and expenses incurred by the GasLog Group in effecting, servicing or maintaining its GasLog Group’s Total Interest Bearing Debt determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Interest Receivable ” means, at any date of determination under this Agreement, all interest (including, without limitation, all net interest receivable under interest rate swaps), all fees (including, but not limited to, commitment fees) and periodic financing charges including commissions, discounts and the interest element of rental payments or finance or capital leases (whether, in each case, paid, payable or capitalised), and all other costs, charges and expenses received or receivable by the GasLog Group in connection with any Financial Indebtedness of a type referred to in the definition of GasLog Group’s Total Interest Bearing Debt determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Latest Accounts ” means, at any date, the consolidated accounts of the GasLog Group most recently delivered to the Agent pursuant to clause 11.3 of the Guarantee executed by GasLog;
“ GasLog Group’s Market Adjusted Net Worth ” means, at any date of determination under this Agreement, the GasLog Group’s Total Capitalisation adjusted to reflect the market value of the ships and all other assets owned by the GasLog Group, less GasLog Group’s Total Debt;
“ GasLog Group’s Total Capitalisation ” means, at any date of determination under this Agreement, the amount of the total assets of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Balance Sheet;
“ GasLog Group’s Total Debt ” means, at any date of determination under this Agreement, the amount of the total debt of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Balance Sheet;
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“ GasLog Group’s Total Interest Bearing Debt ” means, in respect of the GasLog Group, at any time the aggregate of the following:
(a) | the outstanding principal amount of any moneys borrowed or raised; |
(b) | the outstanding principal amount of any acceptance under any acceptance credit; |
(c) | the outstanding principal amount of any bond, note, debenture, loan stock or other similar instrument; |
(d) | the capitalised element of indebtedness under a finance or capital lease; |
(e) | the outstanding principal amount of all moneys owing in connection with the sale or discounting of receivables (otherwise than on a non-recourse basis); |
(f) | the outstanding principal amount of any indebtedness arising from any deferred payment agreements arranged primarily as a method of raising finance or financing the acquisition of an asset; |
(g) | any fixed or minimum premium payable on the repayment or redemption of any instrument referred to in paragraph (c) above; |
(h) | the outstanding principal amount of any indebtedness arising in connection with any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; and |
(i) | the outstanding principal amount of any indebtedness of any person of a type referred to in paragraphs (a) - (h) above which is the subject of a guarantee, indemnity or similar assurance against financial loss given by a member of the GasLog Group; and |
“ GasLog Group’s Working Capital ” means Current Assets less Current Liabilities.
(b) | The Borrower shall ensure that the consolidated financial position of the GasLog Group on a consolidated basis is such that at all times during the Security Period (other than in relation to the ratio of GasLog Group’s EBITDA to GasLog Group’s Debt Service in sub-clause “b(v)” below which shall apply from 31 December 2013): |
(i) | GasLog Group’s Working Capital is not less than $0; |
(ii) | there is available to the GasLog Group at all times after the date of this Agreement an aggregate amount of GasLog Group’s Cash and GasLog Group’s Cash Equivalents equal to at least the greater of (i) $20,000,000 and (ii) 3 per cent. of GasLog Group’s Total Interest Bearing Debt; |
(iii) | the ratio of GasLog Group’s Total Debt to GasLog Group’s Total Capitalisation is not more than 0.75 : 1; |
(iv) | GasLog Group’s Market Adjusted Net Worth is not less than $350,000,000; and |
(v) | the ratio of GasLog Group’s EBITDA to GasLog Group’s Debt Service is not less than 1.10 : 1. |
(c) | The Borrower shall ensure that there is available to the Borrower at all times from the date of this Agreement an aggregate amount of Borrower’s Cash and Borrower’s Cash Equivalents of at least US$1,500.000. |
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11.25 | Sanctions. The Borrower shall ensure that none of the Borrower, the Security Parties, the MLP, each other subsidiary of GasLog, each other subsidiary of the MLP, their respective directors, officers, employees, agents or representatives and any other person acting on any of their behalves, is or will become a Restricted Person. |
11.26 | Sanctions - compliance with laws. The Borrower shall (and shall ensure that each Security Party, the MLP, each other subsidiary of GasLog, each other subsidiary of the MLP, each Approved Manager and the Charterer shall) comply with all laws or regulations: |
(a) | applicable to its business; and |
(b) | applicable to the Ship, its ownership, employment, operation, management and registration, |
including, without limitation, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions Laws and the laws of the flag of the Ship.
11.27 | Sanctions - provision of information. The Borrower shall (and shall ensure that each Security Party shall) supply to the Agent: |
(a) | promptly upon becoming aware of them, the details of any inquiry, claim, action, suit, proceeding or investigation pursuant to Sanctions Laws against it, any of its direct or indirect owners, GasLog or any subsidiary of GasLog, the MLP or any subsidiary of the MLP, any of their respective joint ventures or any of their respective directors, officers, employees, agents or representatives, as well as information on what steps are being taken with regards to answer or oppose such; and |
(b) | promptly upon becoming aware that it, any of its direct or indirect owners. GasLog or any subsidiary of GasLog, the MLP or any subsidiary of the MLP, any of their respective joint ventures or any of their respective directors, officers, employees, agents or representatives has become or is likely to become a Restricted Party. |
11.28 | Voluntary prepayment following the MLP IPO. The Borrower shall procure that as soon as reasonably practicable after the occurrence of the Effective Date a voluntary prepayment of the Loan in an amount at least equal to $25,000,000 is made pursuant to Clauses 8.4, 8.5 and 8.6 from the proceeds of the MLP IPO. |
12 | CORPORATE UNDERTAKINGS |
12.1 | General. The Borrower 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 authorisation of the Majority Lenders, otherwise permit. |
12.2 | Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of Bermuda. |
12.3 | Negative undertakings. The Borrower will not: |
(a) | carry on any business other than the ownership, chartering, operation and supervision of construction of the Ship; or |
(b) | change its legal name, type of organisation or jurisdiction of organisation; or |
(c) | provide any form of credit or financial assistance to any person or enter into any transaction with or involving any person on terms which are, in any respect, less |
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favourable to the 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 Agent 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; |
(f) | acquire, sell or otherwise dispose of in any manner whatsoever any asset, or enter into any transaction in a derivative other than Designated Transactions; |
(g) | enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation; or |
(h) | change its fiscal year end date. |
12.4 | Dividends |
(a) | GasLog shall be entitled to declare and pay dividends in such amount as it may decide provided that: |
(i) | there is available to the GasLog Group following the payment of such dividend an aggregate amount of GasLog Group’s Cash and GasLog Group’s Cash Equivalents equal to at least 4 per cent. of GasLog Group’s Total Interest Bearing Debt; and |
(ii) | no Event of Default has occurred which is continuing and no Event of Default will result from the declaration or payment of such dividends. |
(b) | The Borrower shall be entitled to declare and pay dividends in such amount as it may decide provided that no Event of Default has occurred which is continuing and no Event of Default will result from the declaration or payment of such dividends. |
(c) | Save as permitted by this Clause 12.4, the Borrower will not pay any dividend nor make any other form of distribution nor effect any form of redemption, purchase or return of share capital. |
13 | INSURANCE |
13.1 | General . The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit. |
13.2 | Maintenance of obligatory insurances. The Borrower shall keep the Ship insured at the expense of the Borrower against: |
(a) | fire and usual marine risks (including hull and machinery, hull and freight interest and excess risks); |
(b) | war risks (including, without limitation, risks relating to terrorism, piracy, war risk P&I and confiscation); |
(c) | protection and indemnity risks; and |
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(d) | any other risks against which, having regard to practices and other circumstances prevailing at the relevant time and in the reasonable opinion of the Security Trustee requiring it, would be reasonable for the Borrower to insure. |
13.3 | Terms of obligatory insurances. The Borrower shall effect such insurances in respect of the Ship: |
(a) | in Dollars; |
(b) | in the case of fire and usual marine risks and war risks (including hull interest and freight interest), in an amount on an agreed value basis at least the greater of (i) 120 per cent. of the Loan and (ii) the Fair Market Value of the Ship; |
(c) | in the case of hull and machinery insurances (excluding hull interest and freight interest), in an amount on an agreed value basis of at least 80 per cent. of the Fair Market Value of the Ship provided that the Borrower always complies with the obligation in Clause 13.3(b); |
(d) | 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 and in the international marine insurance market; |
(e) | in relation to protection and indemnity risks in respect of the full tonnage of the Ship; |
(f) | on approved terms; and |
(g) | 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, the Borrower shall procure that the obligatory insurances shall: |
(a) | whenever the Security Trustee requires, 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 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 such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party; and |
(e) | provide that the Security Trustee may make proof of loss if the Borrower fails to do so. |
13.5 | Renewal of obligatory insurances. The Borrower shall: |
(a) | at least 15 days before the expiry of any obligatory insurance: |
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(i) | notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and |
(ii) | obtain the Security Trustee’s approval to the matters referred to in paragraph (i); |
(b) | at least 5 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); 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. The Borrower shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee 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 10 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the 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. The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provides the Security Trustee with: |
(a) | a certified copy of the certificate of entry for the Ship; |
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(b) | a letter or letters of undertaking in such form as may be required by the Security Trustee; and |
(c) | 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. The 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. The 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. The 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 | Compliance with terms of insurances. The Borrower shall not do nor omit to do (nor 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 under an obligatory insurance repayable in whole or in part; and, in particular: |
(a) | The 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 13.6(c)) 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) | The Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Ship unless approved by the underwriters of the obligatory insurances; |
(c) | the Borrower shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship 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); |
(d) | the Borrower shall procure that no change is made to the arrangements for insurances of war risks and allied perils (including piracy) coverage and shall comply at all times with provisions of trading to conditional or excluded areas; and |
(e) | the Borrower shall not employ the Ship, 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. |
13.12 | Alteration to terms of insurances. The Borrower shall not make nor agree to any material alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance. |
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13.13 | Settlement of claims. The Borrower shall not 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.
13.14 | Provision of copies of communications. The Borrower shall provide the Security Trustee, at the time of each such communication, copies of all material written communications between the 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) | the Borrower’s obligations relating to, under the obligatory insurances, declarations and payments of additional premiums or calls; and |
(ii) | any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances. |
13.15 | Provision of information. In addition, the Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) reasonably 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 or dealing with or considering any matters relating to any such insurances; |
and the Borrower 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) no more than once per calendar year unless an Event of Default has occurred which is continuing.
13.16 | Mortgagee’s interest and additional perils insurances . The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance and a mortgagee’s interest insurance 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 and the Borrower 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. |
14 | SHIP COVENANTS |
14.1 | General. The Borrower 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 authorisation of the Majority Lenders, may otherwise permit. |
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14.2 | Ship’s name and registration. The Borrower shall keep the Ship registered in its name as a Bermudan Ship; shall not do, omit to 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. |
14.3 | Repair and classification. The Borrower shall keep the Ship 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 notation with the classification of the Ship specified in the Shipbuilding Contract free of overdue recommendations and conditions affecting the Ship’s class; and |
(c) | so as to comply with all laws and regulations applicable to vessels registered at ports in Bermuda or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code. |
14.4 | Modification. The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce its value. |
14.5 | Removal of parts. The Borrower shall not remove any material part of the Ship, or any item of equipment installed on, the 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 Ship the property of the Borrower and subject to the security constituted by the Mortgage and the Deed of Covenant Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship. |
14.6 | Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports. |
14.7 | Inspection. The Borrower shall permit the Security Trustee (at any given time by no more than two (2) surveyors or other persons appointed by it for that purpose at the cost of the Borrower) to board the Ship at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections Provided that prior to the occurrence of an Event of Default which is continuing, any such inspection shall be carried out without interfering with or hindering the Ship’s safe and efficient operations. |
14.8 | Prevention of and release from arrest. The 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, the Earnings or the Insurances; |
(b) | all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and |
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(c) | all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances; |
and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall procure its release by providing bail or otherwise as the circumstances may require.
14.9 | Compliance with laws etc . The 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, its ownership, operation and management or to the business of the Borrower; |
(b) | not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code, the ISPS Code and all Sanctions Laws; and |
(c) | in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers (and, in the case of piracy, verified by the International Group of P&I clubs) unless, prior to entering or trading to any such zone, the Borrower: |
(i) | takes reasonable preventive measures, and complies with all applicable provisions of the Charter, for the Ship entering or trading to such zone; and |
(ii) | effects (at its own expense) any special, additional or modified insurance cover if such cover is necessary to keep the Ship properly insured in accordance with this Agreement notwithstanding such entry or trade; and |
(iii) | confirms in writing to the Security Trustee that the Borrower has complied with paragraphs (i) and (ii) above and provides any evidence of such compliance which may be reasonably requested by the Security Trustee. |
14.10 | Provision of information. The Borrower shall promptly provide the Security Trustee with any information which it reasonably requests regarding: |
(a) | the Ship, its employment and position; |
(b) | the Earnings and payments and amounts due to the master and crew of the Ship; |
(c) | any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made in respect of the Ship; |
(d) | any towages and salvages; |
(e) | its compliance, the technical Approved Managers’ compliance and the compliance of the Ship with the ISM Code and the ISPS Code, |
and, upon the Security Trustee’s request, provide copies of any current charter relating to the Ship, of any current charter guarantee and copies of the Borrower’s or the technical Approved Manager’s Document of Compliance.
14.11 | Notification of certain events. The Borrower shall immediately notify the Security Trustee by fax, confirmed forthwith by letter, of: |
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(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 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, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of the Ship for hire; |
(e) | any intended dry docking of the Ship; |
(f) | any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident; |
(g) | any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, any technical Approved Manager or otherwise in connection with the Ship; or |
(h) | any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with; |
and the Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Borrower’s, that Approved Manager’s or any other person’s response to any of those events or matters.
14.12 | Restrictions on chartering, appointment of managers etc. The Borrower shall not: |
(a) | let the Ship on demise charter for any period; |
(b) | save for any Charter or Replacement Charter, enter into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 13 months; |
(c) | save for any Charter or Replacement Charter, enter into any charter in relation to the Ship under which more than 2 months’ hire (or the equivalent) is payable in advance; |
(d) | save for any Charter or Replacement Charter, charter the Ship otherwise than on bona fide arm’s length terms at the time when the Ship is fixed; |
(e) | appoint a manager of the Ship other than an Approved Manager (and then provided that that Approved Manager has provided to the Security Trustee the undertaking referred to in Schedule 3, Paragraph 9(a)) nor agree to any material alteration to the terms of any Approved Manager’s appointment; |
(f) | de-activate or lay up the Ship; or |
(g) | put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $5,000,000 (or the equivalent in any other currency) unless the Borrower has established to the reasonable satisfaction of the Agent that the Borrower has sufficient reserves to pay for the cost of such work. |
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14.13 | Notice of Mortgage. The Borrower shall keep the Mortgage registered against the Ship as a valid first priority mortgage, carry on board the 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 the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Security Trustee. |
14.14 | Sharing of Earnings. The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings. |
14.15 | ISPS Code. The Borrower shall comply with the ISPS Code and in particular, without limitation, shall: |
(a) | procure that the Ship and the company responsible for the Ship’s compliance with the ISPS Code comply with the ISPS Code; and |
(b) | maintain for the Ship an ISSC; and |
(c) | notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC. |
15 | SECURITY COVER |
15.1 | Minimum required security cover. Clause 15.2 applies if the Agent notifies the Borrower that: |
(a) | the market value (determined as provided in Clause 15.3) of the Ship; plus |
(b) | the net realisable value of any additional security previously provided under this Clause 15; |
is below 120 per cent. of the Loan.
15.2 | Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 15.1, the Borrower shall, within 1 month after the date on which the Agent’s notice is served, either: |
(a) | provide, or ensure that a third party provides, additional security, in favour of the Security Trustee (on behalf of the Lenders and the Swap Banks), of a type acceptable to the Majority Lenders which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require; or |
(b) | prepay such part (at least) of the Loan as will eliminate the shortfall. |
15.3 | Valuation of Ship. The market value of the Ship shall be determined (i) on the date each compliance certificate is provided in relation to the annual accounts of the Borrower, (ii) upon request of the Agent (acting on the instructions of the Majority Lenders) 6 months after a valuation was last submitted (whether under this Agreement or the Original Loan Agreement) and (iii) upon the request of the Agent if the Agent considers that an Event of Default has occurred or that there may be a risk that the requirements of Clause 15.1 are not then being complied with. The “ Fair Market Value ” of the Ship is that shown by the average of 2 valuations each prepared: |
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(a) | as at a date not more than 45 days previously; |
(b) | by 2 Approved Shipbrokers, with 1 selected by the Agent and 1 selected by the Borrower but following an Event of Default which is continuing, with both selected by the Agent; |
(c) | with or without physical inspection of the Ship (as the Agent may require); |
(d) | 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; |
(e) | after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale. |
15.4 | Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.3. |
15.5 | Valuations binding. Any valuation under Clause 15.2, 15.3 or 15.4 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Security Interest. |
15.6 | Provision of information. The Borrower shall promptly provide the Agent and any shipbroker or expert acting under Clause 15.3 or 15.4 with any information which the Agent or the shipbroker or expert may reasonably request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Majority Lenders (or the expert appointed by them) consider prudent. |
15.7 | Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any shipbroker or expert instructed by the Agent under this Clause (no more than twice per year unless an Event of Default has occurred which is continuing) and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause. |
15.8 | Application of prepayment . Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.2(b). |
16 | PAYMENTS AND CALCULATIONS |
16.1 | Currency and method of payments. All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it: |
(a) | by not later than 11.00 a.m. (New York City time) on the due date; |
(b) | 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); |
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(c) | in the case of an amount payable by a Lender to the Agent or by the Borrower to the Agent or any Lender, to such account with such bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and |
(d) | in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties. |
16.2 | Payment on non-Business Day. If any payment by the 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 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 under a Finance Document for distribution or remittance to a Lender, a Swap Counterparty or the Security Trustee shall be made available by the Agent to that Lender, that Swap Counterparty or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender, the Swap Counterparty or, as the case may be, 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 and/or the Swap Counterparties generally shall be distributed by the Agent to each Lender and each Swap Counterparty 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 or a Swap Counterparty, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or that Swap Counterparty under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or that Swap Counterparty 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 Borrower, any Lender or any Swap Counterparty any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender or that Swap Counterparty 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 Borrower, or a Lender or a Swap Counterparty, without first having |
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received that sum, the Borrower or the Lender concerned or (as the case may be) the Swap Counterparty 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 Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower 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 Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower 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 Borrower or a Security Party to a Creditor Party, those accounts shall 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 after service of notice on the Borrower under Clause 19.2(a)(i) or (ii) shall be applied: |
(a) | FIRST: in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent and the Security Trustee under the Finance Documents; |
(b) | SECONDLY: in or towards payment pro rata of any accrued interest or commission due but unpaid under this Agreement; |
(c) | THIRDLY: in or towards payment pro rata of any principal due but unpaid under this Agreement; |
(d) | FOURTHLY: in or towards payment pro rata of any other amounts due but unpaid under any Finance Document; |
(e) | FIFTHLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, 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 provisions of Clause 17.1(a), 17.1(b), 17.1(c) and 17.1(d); |
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(f) | SIXTHLY: in or towards satisfaction pro rata of any amount then due and payable under any Master Agreement which relates to a Designated Transaction; |
(g) | SEVENTHLY: in retention of an amount equal to any amount not then due and payable under any Master Agreement which relates to a Designated Transactions but which the Agent, by notice to the Borrower, 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 provisions of Clause 17.1(f); and |
(h) | EIGHTHLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it. |
17.2 | Variation of order of application. The Agent may, with the authorisation of the Majority Lenders and the Swap Counterparties, by notice to the Borrower, 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 Agent 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 Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party. |
18 | APPLICATION OF EARNINGS |
18.1 | Payment of Earnings. The 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 are paid to the Earnings Account. The Earnings shall, subject to Clause 11.23, be available to the Borrower provided that no Event of Default has occurred and is continuing. |
18.2 | Location of accounts. The Borrower shall promptly: |
(a) | comply with any requirement of the Agent as to the location or re-location of the Earnings Account; and |
(b) | execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account. |
18.3 | Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Account without 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. |
19 | EVENTS OF DEFAULT |
19.1 | Events of Default. An Event of Default occurs if: |
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(a) | The 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: |
(i) | Clauses 9.2, 11.2, 11.3, 11.4, 11.24(b), 12.2, 12.3, 12.4 or 15.2 of this Agreement; or |
(ii) | clauses 11.13 and 11.15 of the Guarantee from GasLog; or |
(iii) | clause 11.12 of the Guarantee from GasLog Partners; or |
(c) | any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 10 Business Days after written notice from the Agent requesting action to remedy the same; or |
(d) | (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c)); or |
(e) | any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or |
(f) | any of the following occurs in relation to any Financial Indebtedness of a Relevant Person in respect of a sum of, or sums aggregating, $1,000,000 or more (in the case of a Relevant Person other than a Guarantor) or $5,000,000 or more (in the case of a Guarantor) or the equivalent in another currency: |
(i) | any Financial Indebtedness of a Relevant Person is not paid when due; 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; |
(g) | any of the following occurs in relation to a Relevant Person: |
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(i) | a Relevant Person becomes 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, $1,000,000 or more (in the case of a Relevant Person other than a Guarantor) or $5,000,000 or more (in the case of a Guarantor) or in either case the equivalent in another currency; or |
(iii) | any administrative or other receiver is appointed over any asset of a Relevant Person; or |
(iv) | an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or |
(v) | any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or |
(vi) | a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or |
(vii) | a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or a Guarantor 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 |
(viii) | an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 30 days of being made or presented, or (bb) within 30 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or |
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(ix) | a Relevant Person or its directors take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or |
(x) | any meeting of the members or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or |
(xi) | in a country other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Majority Lenders is similar to any of the foregoing; or |
(h) | the Borrower ceases or suspends carrying on its business or a part of its business which, in the reasonable opinion of the Majority Lenders, is material in the context of this Agreement; or |
(i) | it becomes unlawful or impossible: |
(i) | for the 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, 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 |
(j) | any official consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders reasonably 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 |
(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 |
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(m) | an Event of Default (as defined in section 14 of a Master Agreement) occurs which is continuing; or |
(n) | 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 consent of the Agent, acting with the authorisation of the Majority Lenders; or |
(o) | without the prior written consent of the Agent (acting with the authorisation of the Majority Lenders), the Holding Company ceases to hold the legal title and beneficial ownership of: |
(i) | on or before 4 April 2015, 20 per cent. of the issued and allotted shares of GasLog; or |
(ii) | following 4 April 2015, 15 per cent. of the issued and allotted shares of GasLog; or |
(p) | there occurs or develops a change in the financial position, state of affairs or prospects of the Borrower or any Security Party since 31 December 2010 which, in the reasonable opinion of the Majority Lenders, has a material adverse effect on the Borrower’s or any Security Party’s ability to discharge its liabilities under the Finance Documents as they fall due. |
19.2 | Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default which is continuing: |
(a) | the Agent may, and if so instructed by the Majority Lenders, the Agent shall: |
(i) | serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or |
(ii) | serve on the Borrower 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), 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), the Security Trustee, the Agent, the Lenders and/or the Swap Counterparties are entitled to take under any Finance Document or any applicable law. |
19.3 | Termination of Commitments. On the service of a notice under Clause 19.2(a)(i), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate. |
19.4 | Acceleration of Loan. On the service of a notice under Clause 19.2(a)(ii), the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any |
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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 Clauses 19.2(a)(i) or (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 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, each Swap Counterparty, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, 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 the Borrower or any Security Party with any form of claim or defence. |
19.7 | Creditor Parties’ rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or Swap Counterparties under a Finance Document, a Master Agreement 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 Borrower 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 directly and mainly caused by the dishonesty 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 “ Relevant Persons ” means the Borrower, the Security Parties and each technical Approved Manager and, in the singular, means any of them. |
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. |
19.11 | Position of Swap Counterparties. Prior to such time as the Loan has been repaid in full, neither the Agent nor the Security Trustee shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this Clause 19, to have any regard to the requirements of a Swap Counterparty except to the extent that such Swap Counterparty is also a Lender. |
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20 | AGENCY FEE AND EXPENSES |
20.1 | Agency fee. The Borrower shall pay to the Agent on the Effective Date and on each anniversary thereof during the Security Period, an annual agency fee of the amount set out in the Fee Letter. |
20.2 | Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document. |
20.3 | Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Creditor Party concerned the amount of all expenses (reasonably in the case of (a), (b) and (c) below) incurred by a Creditor Party 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 Swap Banks, the Majority Lenders or the Creditor Party concerned under or in connection with a 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; or |
(d) | any step taken by the Creditor Party 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 | Documentary taxes. The Borrower 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 claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax. |
20.5 | Financial Conduct Authority, Prudential Regulation Authority etc fees. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Lender concerned the amounts which the Agent from time to time notifies the Borrower that a Lender has notified the Agent to be necessary to compensate that Lender for the cost attributable to its Contribution resulting from the imposition from time to time under or pursuant to the Bank of England Act 1998 and/or by the Bank of England and/or by the Financial Conduct Authority and/or by the Prudential Regulation Authority (and/or, in any such case, by any other authority which replaces all or any of its functions) of a requirement to pay fees calculated by reference to liabilities used to fund that Lender’s Contribution. |
20.6 | 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 |
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under this Clause 20 and which indicates the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due. | ||
21 | INDEMNITIES |
21.1 | Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with: |
(a) | the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period; |
(b) | any failure (for whatever reason) by the Borrower 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 Borrower on the amount concerned under Clause 7); |
(c) | the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19; |
(d) | any claim, action, civil penalty or fine against, any settlement, and any other kind of loss or liability, and all reasonable costs and expenses (including reasonable counsel fees and disbursements) incurred by any Creditor Party as a result of conduct of the Borrower, any Security Party or any of their respective partners, directors, officers, employees, agents or advisors, that violates any Sanctions Laws, |
and in respect of any tax (other than tax on its overall net income) 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 | Breakage costs. |
(a) | Without limiting its generality, Clause 21.1 covers any Break Costs or claim, expense, liability or loss including a loss of prospective profit, incurred by a Lender: |
(i) | in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and |
(ii) | in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one. |
(b) | For the avoidance of doubt, no amounts shall be payable by the Borrower under Clause 21.1 in connection with the entering into of this Agreement during an Interest Period (having regard to Clause 6.1). |
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21.3 | Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by a Creditor Party, in any country, as a result of or in connection with: |
(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; or |
(b) | any other Pertinent Matter; |
other than claims, expenses, liabilities and losses which are shown to have been caused by the dishonesty or wilful misconduct of the officers or employees of the Creditor Party concerned.
Without prejudice to its generality, this Clause 21.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, any Environmental Law or any Sanctions Laws.
21.4 | Currency indemnity. If any sum due from the Borrower 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 Borrower 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 Borrower 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 Borrower 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 to Master Agreements. For the avoidance of doubt, Clause 21.4 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of that 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 the matters in respect of which the amount, or |
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aggregate amount, is due shall 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 Borrower 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 Borrower 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 the Borrower is required by law to make or a FATCA Deduction. |
22.2 | Grossing-up for taxes. If the Borrower is required by law to make a tax deduction (other than a FATCA Deduction) from any payment: |
(a) | the Borrower shall notify the Agent as soon as it becomes aware of the requirement; |
(b) | the 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, the Borrower 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 | Application to Master Agreements. For the avoidance of doubt, Clause 22 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of that Master Agreement shall apply. |
22.6 | FATCA |
(a) | FATCA Information |
(i) | Subject to paragraph (iii) below, each party to a Finance Document shall, within 10 Business Days of a reasonable request by another party to the Finance Documents: |
(A) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
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(B) | supply to the requesting party such forms, documentation and other information relating to its status under FATCA (including its applicable “passthru percentage” or other information required under the U.S. Treasury regulations or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purposes of such requesting party’s compliance with FATCA. |
(ii) | If a party to any Finance Document confirms to another party pursuant to Clause 22.6(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 and the Agent reasonably promptly. |
(iii) | Sub-clause (i) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any fiduciary duty or any duty of confidentiality. |
(iv) | If a party to any Finance Document fails to confirm its status or to supply forms, documentation or other information requested in accordance with sub-clause (i) above (including, for the avoidance of doubt, where sub-clause (iii) above applies), then: |
(A) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and |
(B) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable passthru percentage is 100 per cent., |
until (in each case) such time as the party in question provides the requested confirmation, forms, documentation or other information.
(b) | FATCA Deduction |
(i) | Each party to a Finance 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 a Finance 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) | Each party to a Finance 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 relevant party to a Finance Document to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Finance Parties. |
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: |
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(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 Borrower, 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 Borrower under Clause 23.2, the Notifying Lender’s 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 Borrower shall prepay the Notifying Lender’s Contribution 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) | complying with any regulation (including any 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, |
the Notifying Lender (or a parent company of it) has incurred or will incur an “ increased cost ”.
24.2 | Meaning of “ increased cost ”. In this Clause 24, “ increased cost ” means, in relation to a Notifying Lender: |
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(a) | 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; |
(b) | 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; |
(c) | 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 |
(d) | 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 an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22 or an item attributable to a FATCA Deduction required to be made by a party to a Finance Document or an item arising directly out of the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004, in the form existing on the date of this Agreement (“ Basel II ”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Creditor Party or any of its affiliates) provided that this exception shall not apply to any Increased Cost arising directly or indirectly from the implementation or application of or compliance with the global regulatory standards on bank capital adequacy and liquidity referred to by the Basel Committee as “Basel III” or the “Basel III Framework” published in December 2010, together with any further guidance or standards in relation to “Basel III” or the “Basel III Framework” published or to be published by the Basel Committee.
For the purposes of this Clause 24.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.
24.3 | Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1. |
24.4 | Payment of increased costs. The Borrower 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 Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost. |
24.5 | Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4, the Borrower may give the Agent not less than 14 days’ notice of their intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period. |
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24.6 | Prepayment; termination of Commitment. A notice under Clause 24.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s 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 Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
24.7 | Application of prepayment. Clause 8 shall apply in relation to the prepayment. |
25 | 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 the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents or Master Agreements provided that Nordea Bank Finland Plc acting in its capacity as a Swap Bank shall not be entitled to set off amounts due to it under the Master Agreement to which it is a party against amounts in the Earnings Account held by Nordea Bank Finland Plc, London Branch in its capacity as an account bank; and |
(b) | for that purpose: |
(i) | break, or alter the maturity of, all or any part of a deposit of the 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 Borrower 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. |
25.4 | No Security Interest. This Clause 25 gives the Creditor Parties a contractual right of set-off only and does not create any equitable charge or other Security Interest over any credit balance of the Borrower. |
26 | TRANSFERS AND CHANGES IN LENDING OFFICES |
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26.1 | Transfer by Borrower. The Borrower may not, without the consent of the Agent, given on the instructions of all the Lenders transfer any of its rights, liabilities or obligations under any Finance Document. |
26.2 | Transfer by a Lender. Subject to Clauses 26.4 and 26.11 and the proviso to this Clause 26.2, a Lender (the “ Transferor Lender ”) may at any time, with the consent of the Agent and (prior to an Event of Default) the Borrower (such consent of the Borrower not to be unreasonably withheld or delayed) but not any Security Party, cause: |
(a) | its rights in respect of all or part (subject to a minimum of $10,000,000) of its Contribution; or |
(b) | its obligations in respect of all or part (subject to a minimum of $10,000,000) 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 (a “ Transferee Lender ”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “ Transfer Certificate ”) executed by the Transferor Lender and the Transferee Lender Provided that a Lender may, without requiring the consent of the Borrower or any Security Party, transfer any its rights and/or obligations mentioned above at no cost or expense to the Borrower to:
(i) | any other branch of that Lender; |
(ii) | any direct or indirect subsidiary or affiliate of that Lender; or |
(iii) | a company of which that Lender is a subsidiary. |
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 Agreement.
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 Borrower, the Security Parties, the Security Trustee, each of the other Lenders and each of Swap Banks; |
(b) | on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; |
(c) | send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) |
but the Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Transferor Lender and the Transferee Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to that Transferee Lender.
26.4 | Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is |
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signed by the Agent under Clause 26.3, and the fee referred to in Clause 26.11 has been received by the Agent, 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 is binding on, or effective in relation to, the Borrower, any Security Party, the Agent, the Security Trustee or a Swap Bank 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 Borrower 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 takes 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 are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender; |
(b) | the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate; |
(c) | the Transferee Lender becomes 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 becomes 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 ceases to be bound by them; |
(e) | any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks 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 Borrower or any Security Party against the Transferor Lender had not existed; |
(f) | the Transferee Lender becomes 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 ceases 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 |
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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 Borrower 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 | Maintenance of register of Lenders . During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days prior notice. |
26.9 | Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents. |
26.10 | Authorisation of Agent to sign Transfer Certificates. The Borrower, the Security Trustee, each Lender and each Swap Bank irrevocably authorises the Agent to sign Transfer Certificates on its behalf. |
26.11 | Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to receive a registration fee of $3,500 from the Transferor Lender or (at the Agent’s option) the Transferee Lender. |
26.12 | 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 Borrower, 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. |
26.13 | Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature. |
26.14 | 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. |
26.15 | Notification. On receiving such a notice, the Agent shall notify the Borrower 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. |
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26.16 | Replacement of Reference Bank. If any Reference Bank ceases to be a Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 then, unless the Borrower, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting the Borrower, shall appoint another bank (whether or not a Lender) to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank’s appointment shall cease to be effective. |
26.17 | Security over Lenders’ rights . In addition to the other rights provided to Lenders under this Clause 26, each Lender may without consulting with or obtaining consent from the Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation: |
(a) | any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and |
(b) | in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities; |
except that no such charge, assignment or Security Interest shall:
(i) | release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or |
(ii) | require any payments to be made by the Borrower or any Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents. |
27 | VARIATIONS AND WAIVERS |
27.1 | Variations, waivers etc. by Majority Lenders. Subject to Clauses 27.2 and 27.3, 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 Borrower, 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; |
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(d) | a change to the definition of “ Creditor Parties ”, “ Confirmation ”, “ Designated Transaction ”, “ Finance Documents ”, “ Majority Lenders ”, “ Master Agreement ”, “ Secured Liabilities ”, “ Swap Bank ”, “ Swap Counterparty ”, ” Swap Exposure ” or “ Transaction ”; |
(e) | a change to Clause 3 or this Clause 27; |
(f) | any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; |
(g) | a change to any of the consent rights granted to the Swap Banks under the Finance Documents; and |
(h) | any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s and Swap Bank’s consent is required. |
27.3 | FATCA. |
(a) | If the Agent or a Lender reasonably believes that an amendment or waiver to any term of this Agreement, may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a party to a Finance Document being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Borrower and the Agent accordingly, that amendment or waiver may not be effected without the consent of the Agent or that Lender (as the case may be). The consent of a Lender shall not be required pursuant to this Clause 27.3(a) if that Lender is a FATCA Protected Lender. |
(b) | No amendment or waiver may be made before the date falling 10 Business Days after the terms of an amendment or waiver have been notified by the Agent to the Lenders, unless each Lender is a FATCA Protected Lender. The Agent shall notify the Lenders reasonably promptly of any amendments or waivers proposed by the Borrower. |
27.4 | Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1, 27.2 and 27.3, 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, another Finance Document or a Master Agreement; or |
(b) | an Event of Default; or |
(c) | a breach by the Borrower or a Security Party of an obligation under a Finance Document, a Master Agreement or the general law; or |
(d) | any right or remedy conferred by any Finance Document, by a Master Agreement 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.
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28 | NOTICES |
28.1 | General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter 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: |
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 Borrower, the Lenders, the Swap Banks 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; |
(b) | a notice which is sent by fax 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.
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28.5 | Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within 1 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: |
(a) | 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 |
(b) | 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. Any communication to be made between the Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender: |
(a) | agree that, unless and until notified to the contrary, this is to be an accepted form of communication; |
(b) | 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 |
(c) | notify each other of any change to their respective addresses or any other such information supplied to them. |
Any electronic communication made between the Agent and a Lender will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender to the Agent, only if it is addressed in such a manner as the Agent 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 28, “ 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. |
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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 | Counterparts. A Finance Document may be executed in any number of counterparts. |
29.4 | 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. |
30 | LAW AND JURISDICTION |
30.1 | 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. |
30.2 | Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any Dispute. |
30.3 | Choice of forum for the exclusive benefit of the Creditor Parties. Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right: |
(a) | to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; 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. |
The Borrower shall not commence any proceedings in any country other than England in relation to a Dispute.
30.4 | Process agent. The Borrower irrevocably appoints Unisea Maritime Limited at its office for the time being, presently at 14 Headfort Place, London SW1X 7DH, 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 a Dispute. |
30.5 | Creditor Party rights unaffected. Nothing in this Clause 30 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. |
30.6 | Meaning of “proceedings”. In this Clause 30, “ proceedings ” means proceedings of any kind, including an application for a provisional or protective measure and a “ Dispute ” means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement. |
THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.
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SCHEDULE
1
LENDERS AND COMMITMENTS
Lender | Lending Office |
Commitment
(US Dollars) |
Nordea Bank Finland Plc,
London Branch |
8th Floor
City Place House 55 Basinghall Street London EC2V 5NB |
$44,129,902 |
ABN AMRO Bank N.V. |
Coolsingel 93
3012 AE Rotterdam The Netherlands |
$44,129,902 |
Citibank International Plc,
London Branch |
Citigroup Centre
33 Canada Square Canary Wharf London E14 5LB |
$44,129,902 |
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SCHEDULE
2
SWAP BANKS
Swap Bank | Booking Office |
Nordea Bank Finland Plc |
Aleksanterinkatu 36
(FIN-00020 NORDEA) 00100 Helsinki Finland |
ABN AMRO Bank N.V. |
Coolsingel 93
3012 AE Rotterdam The Netherlands |
Citibank N.A., London Branch |
Citigroup Centre
33 Canada Square Canary Wharf London E14 5LB |
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SCHEDULE
3
CONDITION PRECEDENT DOCUMENTS
The following are the documents referred to in Clause 9.1(a).
1 | A duly executed original of each Finance Document (and of each document required to be delivered by each Finance Document). |
2 | Copies of the constitutional documents of the Borrower and each Security Party. |
3 | Copies of resolutions of the shareholders (only if required to obtain a satisfactory legal opinion from the lawyers referred to in paragraph 11 below) and directors of the Borrower and each Security Party authorising the execution of each of the Finance Documents to which the Borrower or that Security Party is a party and, in the case of the Borrower, authorising named officers to give notices under this Agreement. |
4 | The original of any power of attorney under which any Finance Document is executed on behalf of the Borrower or a Security Party. |
5 | Copies of all consents which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document. |
6 | Documentary evidence that the agent for service of process named in Clause 30 has accepted its appointment. |
7 | A letter from a person acceptable to the Agent confirming as at the date of this Agreement: |
(a) | the identity of the company which is the legal holder and direct beneficial owner of 38.7 per cent. of the entire authorised and issued share capital of GasLog; and |
(b) | the identity of the company which (together with its affiliate(s)) is the legal holder and direct beneficial owner of 61.25 per cent. of the entire authorised and issued share capital of the company referred to in paragraph (a) above. |
8 | Documentary evidence that: |
(a) | the Ship is definitively and permanently registered in the name of the Borrower under Bermudan flag; |
(b) | the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents; |
(c) | the Ship maintains the highest notation with its classification society free of all recommendations and conditions of such classification society; |
(d) | the Mortgage is duly registered against the Ship as a valid first preferred Bermudan ship mortgage in accordance with the laws of Bermuda; and |
(e) | the Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with. |
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9 | Documents establishing that the Ship is managed by each Approved Manager on terms acceptable to the Lenders and in accordance with the ISM Code and the ISPS Code, together with: |
(a) | a letter of undertaking executed by each Approved Manager in favour of the Agent in the terms required by the Agent agreeing certain matters in relation to the management of the Ship and subordinating the rights of that Approved Manager against the Borrower and the Ship to the rights of the Creditor Parties under the Finance Documents; and |
(b) | copies of the technical Approved Manager’s Document of Compliance and of the Ship’s Safety Management Certificate (together with any other details of the applicable safety management system which the Agent requires). |
10 | A favourable opinion from an independent insurance consultant acceptable to the Agent (at the Borrower’s cost) on such matters relating to the insurances for the Ship as the Agent may require. |
11 | Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of Bermuda and the Republic of the Marshall Islands. |
12 | An acknowledgement by the Borrower and the Guarantors to the Agent of the aggregate principal amount of the Loan which will be outstanding under this Agreement (immediately following the occurrence of the Effective Date) and the amount of each quarterly repayment instalment of the Loan under this Agreement. |
13 | In relation to each Original Loan Agreement Designated Transaction relating to the Original Loan Agreement Tranche for the Ship, a completed and signed notice of designation in the form set out in Schedule 5 so as to make that Original Loan Agreement Designated Transaction a Designated Transaction for the purposes of this Agreement. |
14 | If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent. |
Each of the documents specified in paragraphs 2, 3 and 5 and every other copy document delivered under this Schedule shall be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of the Borrower or, as the case may be, a Security Party.
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SCHEDULE
4
TRANSFER CERTIFICATE
The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.
To: | Nordea Bank Finland Plc, London Branch for itself and for and on behalf of the Borrower, each Security Party, the Security Trustee, each Lender, each Arranger and each Swap Bank, as defined in the Loan Agreement referred to below. |
1 | This Certificate relates to a loan agreement dated [ l ] 2014 (as amended, supplemented and/or restated from time to time, the “ Loan Agreement ”) and made between (1) GAS-five Ltd. as borrower (the “ Borrower ”), (2) the banks and financial institutions named therein as Lenders, (3) the banks and financial institutions named therein as Swap Banks, (4) Nordea Bank Finland Plc, London Branch, ABN AMRO Bank N.V. and Citibank International Plc, London Branch as Joint Lead Arrangers and (5) Nordea Bank Finland Plc, London Branch as Agent and as Security Trustee for a loan facility of up to US$132,389,706. |
2 | In this Certificate, terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings and: |
“ Relevant Parties ” means the Agent, the Borrower, each Security Party, the Security Trustee, each Lender, each Joint Lead Arrangers and each Swap Bank;
“ Transferor ” means [ full name ] of [ lending office ]; and
“ Transferee ” means [ full name ] of [ lending office ].
3 | The effective date of this Certificate is [ l ] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date. |
4 | The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [ l ] per cent. of its Contribution, which percentage represents $[ l ]. |
5 | By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[ l ]] [from [ l ] per cent. of its Commitment, which percentage represents $[ l ]] and the Transferee acquires a Commitment of $[ l ]. |
6 | The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect. |
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7 | The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement. |
8 | The Transferor: |
(a) | warrants to the Transferee and each Relevant Party that: |
(i) | the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and |
(ii) | this Certificate is valid and binding as regards the Transferor; |
(b) | warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4; and |
(c) | undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee’s title under this Certificate or for a similar purpose. |
9 | The Transferee: |
(a) | confirms that it has received a copy of the Loan Agreement and each other Finance Document; |
(b) | agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Security Trustee, any Lender or any Swap Bank in the event that: |
(i) | any of the Finance Documents prove to be invalid or ineffective, |
(ii) | the Borrower or any Security Party fails to observe or perform its obligations, or to discharge its liabilities, under any of the Finance Documents; |
(iii) | it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrower or Security Party under the Finance Documents; |
(c) | agrees that it will have no rights of recourse on any ground against the Agent, the Security Trustee, any Lender or any Swap Bank in the event that this Certificate proves to be invalid or ineffective; |
(d) | warrants to the Transferor and each Relevant Party that: |
(i) | it has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which it needs to take or obtain in connection with this transaction; and |
(ii) | this Certificate is valid and binding as regards the Transferee; and |
(e) | confirms the accuracy of the administrative details set out below regarding the Transferee. |
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10 | The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent’s or the Security Trustee’s own officers or employees. |
11 | The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it. |
[ Name of Transferor ] | [ Name of Transferee ] |
By: | By: |
Date: | Date: |
Agent
Signed for itself and for and on behalf of itself
as Agent and for every other Relevant Party
NORDEA BANK FINLAND PLC, LONDON BRANCH
By:
Date:
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Administrative Details of Transferee
Name of Transferee:
Lending Office:
Contact Person
(Loan Administration Department):
Telephone:
Fax:
Contact Person
(Credit Administration Department):
Telephone:
Fax:
Account for payments:
Note : | This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor’s interest in the security constituted by the Finance Documents in the Transferor’s or Transferee’s jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose. |
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SCHEDULE
5
DESIGNATION NOTICE
To: Nordea Bank Finland Plc, London Branch
8th Floor
City Place House
55 Basinghall Street
London EC2V 5NB
Attn: Loans Administration
[ date ]
Dear Sirs
Loan Agreement dated [ l ] 2014 (as amended, supplemented and/or restated from time to time, the “Loan Agreement”) and made between (i) ourselves as Borrower, (ii) the Lenders, (iii) the Swap Banks, (iv) yourselves, ABN AMRO Bank N.V. and Citibank International Plc, London Branch as Joint Lead Arrangers and (v) yourselves as Agent and Security Trustee
We refer to:
1 | the Loan Agreement; |
2 | the Master Agreement dated as of [ l ] made between ourselves and [ l ]; and |
3 | a Confirmation delivered pursuant to the said Master Agreement dated [ l ] and addressed by [ l ] to us. |
In accordance with the terms of the Loan Agreement, we hereby give you notice of the said Confirmation and hereby confirm that the Transaction evidenced by it will be designated as a “Designated Transaction” for the purposes of the Loan Agreement and the Finance Documents.
Yours faithfully
for and on behalf of
GAS-FIVE LTD.
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SCHEDULE 6
FORM OF COMPLIANCE CERTIFICATE
To: | Nordea Bank Finland Plc, London Branch | |
8th Floor, City Place House 55 Basinghall Street London EC2V 5NB |
||
From: |
GasLog Ltd. and GAS-five Ltd. |
[Date]
OFFICER’S CERTIFICATE
This Certificate is rendered pursuant to:
(a) | clause [11.7(e)] of the loan agreement dated [ l ] 2014 (as amended, supplemented and/or restated from time to time, the “ Loan Agreement ”) and made between (i) GAS-five Ltd., as borrower (the “ Borrower ”), (ii) certain banks and financial institutions, as lenders, (iii) certain banks and financial institutions, as swap banks, (iv) Nordea Bank Finland Plc, ABN AMRO Bank N.V. and Citibank International Plc, London Branch, as joint lead arrangers, (v) Nordea Bank Finland Plc, London Branch, as agent and as security trustee; and |
(b) | clause [11.3(c)] of the guarantee dated [ l ] 2014 (as amended and/or supplemented from time to time, the “ GasLog Guarantee ”) and executed by GasLog Ltd. (“ GasLog ”), in favour of Nordea Bank Finland Plc, London Branch, as Security Trustee. |
Words and expressions defined in the Loan Agreement (including, without limitation, in clause 11.24 thereof) shall have the same meanings when used herein.
We, the Chief Financial Officers of GasLog Ltd. and GAS-five Ltd., hereby certify that:
1 | Attached to this Certificate [are][is] the latest [audited consolidated accounts of GasLog and its subsidiaries for the financial year ending on [ l ]] [unaudited consolidated accounts of GasLog and its subsidiaries in relation to the first six months of the financial year ending on [ l ]]. |
2 | Attached also to this Certificate [are][is] the latest [audited accounts of the Borrower for the financial year ending on [ l ]] [unaudited accounts of the Borrower in relation to the first six months of the financial year ending on [ l ]]. |
3 | As at the date of this Certificate the financial covenants set out in clause 11.24 of the Loan Agreement [are] [are not] complied with, in that as at [ l ]: |
(a) | GasLog Group’s Working Capital [is][is not] less than $0; |
(b) | the aggregate amount of GasLog Group’s Cash and GasLog Group’s Cash Equivalents is [ l ] and GasLog Group’s Total Interest Bearing Debt is [ l ]; |
(c) | the ratio of GasLog Group’s Total Debt to GasLog Group’s Total Capitalisation is [ l ] : [ l ]; |
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(d) | GasLog Group’s Market Adjusted Net Worth is [ l ]; |
(e) | the ratio of GasLog Group’s EBITDA to GasLog Group’s Debt Service is [ l ] : [ l ]; and |
(f) | for GAS-five Ltd., the aggregate amount of Borrower’s Cash and Borrower’s Cash Equivalents is [ l ]. |
[ or, as the case may be, specify in what respect any of the financial covenants are not complied with. ]
4 | Attached also to this Certificate are our calculations evidencing the statements set out in paragraph 3 above. |
5 | Attached also to this Certificate are valuations evidencing the Fair Market Value of the Ship as at the date of this Certificate. |
6 | As at [ l ] no Potential Event of Default or Event of Default has occurred and is continuing. |
[ or, specify/identify any Potential Event of Default or Event of Default ]
7 | This Certificate shall be governed by, and construed in accordance with, English law. |
Chief Financial Officer
GASLOG LTD. |
|
Chief Financial Officer
GAS-FIVE LTD. |
84 |
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EXECUTION PAGE
BORROWER
SIGNED by | ) |
) | |
for and on behalf of | ) |
GAS-FIVE LTD. | ) |
in the presence of: | ) |
LENDERS | |
SIGNED by | ) |
) | |
for and on behalf of | ) |
NORDEA BANK FINLAND PLC, | ) |
LONDON BRANCH | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
ABN AMRO BANK N.V. | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
Citibank International | ) |
Plc , LONDON BRANCH | ) |
in the presence of: | ) |
85 |
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JOINT LEAD ARRANGERS
SIGNED by | ) |
) | |
for and on behalf of | ) |
NORDEA BANK FINLAND PLC, | ) |
LONDON BRANCH | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
ABN AMRO BANK N.V. | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
Citibank International | ) |
Plc , LONDON BRANCH | ) |
in the presence of: | ) |
SWAP BANKS | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
NORDEA BANK FINLAND PLC | ) |
in the presence of: | |
SIGNED by | ) |
) | |
for and on behalf of | ) |
ABN AMRO BANK N.V. | ) |
in the presence of: | ) |
86 |
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87 |
Exhibit 10.19
Date 18 April 2014
GAS-FIVE LTD.
GAS-SIX LTD.
as joint and several Borrowers
-and-
GasLog
Ltd.
GasLog Carriers Ltd.
as Guarantors
-and-
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
-and-
NORDEA BANK FINLAND PLC, LONDON BRANCH
ABN AMRO BANK N.V.
CITIBANK INTERNATIONAL PLC, LONDON BRANCH
as Joint Lead Arrangers
-and-
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 2
as Swap Banks
-and-
NORDEA BANK FINLAND PLC, LONDON BRANCH
as Agent
and Security Trustee
AMENDING AND RESTATING AGREEMENT
relating to
a facility of up to (originally) US$277,000,000
for the purpose of (amongst other things)
financing the construction and acquisition of
m.v. “GASLOG SKAGEN”
(ex Samsung Heavy Industries Co., Ltd. hull number 2017)
Watson, Farley & Williams
London
|
INDEX
Clause | Page | |
1 | INTERPRETATION | 2 |
2 | agreement of the CREDITOR PARTIES | 3 |
3 | CONDITIONS precedent | 4 |
4 | representations and WARRANTIES | 5 |
5 | amendment and restatement of existing loan agreement and other finance documents | 5 |
6 | FURTHER ASSURANCES | 7 |
7 | RELEASE OF OBLIGATIONS AND SECURITY | 7 |
8 | FEES AND expenses | 8 |
9 | communications | 8 |
10 | SUPPLEMENTAL | 8 |
11 | law and jurisdiction | 8 |
SCHEDULE 1 lenders | 10 | |
SCHEDULE 2 SWAP BANKS | 11 | |
execution pages | 12 | |
APPENDIX 1 FORM OF EFFECTIVE DATE NOTICE | 16 |
|
THIS AGREEMENT is made on 18 April 2014
BETWEEN
(1) | GAS-FIVE LTD. (“ GAS-five ”) and GAS-SIX LTD. (“ GAS-six ” and together with GAS-five, the “ Borrowers ” and each a “ Borrower ”), each an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda; |
(2) | GasLog Ltd. (“ GasLog ”) and GasLog Carriers Ltd. (“ GasLog Carriers ” and together with GasLog, the “ Guarantors ” and each a “ Guarantor ”), each an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda; |
(3) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 (each acting in its capacity as a lender and together, the “ Lenders ” and each a “ Lender ”); |
(4) | Nordea Bank Finland plc, London Branch acting through its office at 8 th Floor, City Place House, 55 Basinghall Street, London EX2V 5NB, ABN AMRO Bank N.V. acting through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands and Citibank International Plc, London Branch acting through its office at Citigroup Centre, 33 Canada Square, London E14 5LB (each acting in its capacity as an arranger and together, the “ Joint Lead Arrangers ” and each a “ Joint Lead Arranger ”); |
(5) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2 (each acting in its capacity as a swap bank and together, the “ Swap Banks ” and each a “ Swap Bank ”); |
(6) | NORDEA BANK FINLAND PLC, LONDON BRANCH , acting in its capacity as the agent through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB (the “ Agent ”); and |
(7) | NORDEA BANK FINLAND PLC, LONDON BRANCH , acting in its capacity as the security trustee through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB (the “ Security Trustee ”). |
BACKGROUND
(A) | By a loan agreement dated 3 October 2011 (as amended by a side letter no. 1 dated 22 February 2012, a side letter no. 2 dated 22 February 2012 and a third supplemental agreement dated 11 July 2013) and made between (i) the Borrowers, (ii) the Lenders, (iii) the Swap Banks, (iv) the Joint Lead Arrangers, (v) the Agent and (vi) the Security Trustee, the Lenders have made available to the Borrowers a facility of up to (originally) US$277,000,000, of which US$264,779,411.76 is outstanding at the date of this Agreement (the “ Existing Loan Agreement ”). |
(B) | Pursuant to the arrangements in connection with a proposed initial public offering of units in the MLP to be established by GasLog, it is intended that GasLog Carriers will dispose of, and GasLog Partners will acquire (directly or indirectly), all the issued shares of GAS-five (the “ Sale ”). |
(C) | The consideration payable by the MLP under such arrangements includes that GAS-five shall be released from its obligations and liabilities under the Existing Loan Agreement and the other Finance Documents, such release to be effected by the terms of this Agreement and by GAS-five entering into the New Loan Agreement as borrower. |
(D) | Pursuant to a consent request dated 20 March 2014 (the “ Consent Request ”) and sent by the Borrowers and acknowledged by the Lenders (acting through the Agent), the Swap |
|
Banks, the Agent and the Security Trustee, the Lenders (acting through the Agent), the Swap Banks, the Agent and the Security Trustee agreed in principle to enter into this Agreement. |
(E) | This Agreement sets out the terms and conditions on which the Creditor Parties agree, at the request of the Borrowers and the Guarantors, to: |
(i) | release GAS-five from all obligations and liabilities (whether joint or several) under the Existing Loan Agreement and the other Finance Documents; |
(ii) | certain changes to the terms of the Existing Loan Agreement as documented in the Amended and Restated Loan Agreement; and |
(iii) | the consequential amendment and restatement of the Existing Loan Agreement and the other Finance Documents in connection with those matters. |
IT IS AGREED as follows:
1 | INTERPRETATION |
1.1 | Defined expressions. Words and expressions defined in the Existing Loan Agreement shall have the same meanings when used in this Agreement unless the context otherwise requires. |
1.2 | Definitions. In this Agreement, unless the contrary intention appears: |
“ Agreed Form ” means in relation to any document, that document in the form approved in writing by the Agent (acting on the instructions of all of the Lenders) and agreed with GAS-six or as otherwise approved in accordance with any approved procedure specified in any relevant provision of any Finance Document;
“ Amended and Restated Loan Agreement ” means the Existing Loan Agreement as amended and restated by this Agreement in the form set out in Appendix 2;
“ Consent Request ” means the consent request referred to in Recital (D);
“ Effective Date ” means the date specified in the Effective Date Notice;
“ Effective Date Notice ” means the notice to be signed by the Agent in accordance with Clause 3.1 in the form set out in Appendix 1;
“ Existing Loan Agreement ” means the loan agreement dated 3 October 2011, as amended, referred to in Recital (A);
“ GasLog Partners ” means GasLog Partners Holdings LLC, a limited liability company formed in the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;
“ MLP ” means GasLog Partners LP, a Marshall Islands limited partnership;
“ MLP IPO ” means the initial public offering of the common units in the MLP;
“ MLP IPO Closing Date ” means the date of the closing of the MLP IPO;
“ New Creditor Parties ” means the Agent, the Security Trustee, the Swap Banks, the Joint Lead Arrangers and the Lenders, each acting in their respective capacities under the New Loan Agreement, and, in the singular, means any of them;
2 |
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“ New Loan Agreement ” means the loan agreement dated or to be dated on or around the date of this Agreement and made or to be made between (i) GAS-five, as borrower, (ii) the Lenders, (iii) the Joint Lead Arrangers, (iv) the Swap Banks, (v) the Agent and (vi) the Security Trustee;
“ New Mortgage ” means, in relation to the Ship named “GASLOG SKAGEN”, the first priority Bermuda ship mortgage executed or to be executed by GAS-six in favour of the Security Trustee in the Agreed Form;
“ QEL Confirmation ” means, in relation to the Charter of the Ship named “GASLOG SKAGEN”, a confirmation of the letter of quiet enjoyment signed or to be signed by the Security Trustee and the Charterer; and
“ Sale ” has the meaning given to it in Recital (B).
1.3 | Application of construction and interpretation provisions of Existing Loan Agreement. Clauses 1.2, 1.5 and 1.6 of the Existing Loan Agreement apply, with any necessary modifications, to this Agreement. |
2 | agreement of the CREDITOR PARTIES |
2.1 | Agreement of the Creditor Parties. The Creditor Parties agree, subject to and upon the terms and conditions of this Agreement, to: |
(a) | the amendments referred to in Recital (E); and |
(b) | the consequential amendment of the Existing Loan Agreement and the other Finance Documents in connection with the matters referred to in Recital (E). |
2.2 | Effective Date. The agreement of the Creditor Parties contained in Clause 2.1 shall have effect on and from the Effective Date. |
2.3 | Closing of the Sale on the MLP IPO Closing Date not a breach etc. |
(a) | For the avoidance of doubt, the Creditor Parties and the New Creditor Parties confirm that none of (i) the implementation and operation of the MLP on or prior to the Effective Date (including entry by the applicable Security Parties into the customary agreements referred to at paragraph 3(c) of, and appendix A to, the Consent Request), (ii) the MLP IPO nor (iii) the closing of the Sale on the MLP IPO Closing Date constitutes under each of the Existing Loan Agreement, the Amended and Restated Loan Agreement and the New Loan Agreement: |
(i) | a change “which, in the reasonable opinion of the Majority Lenders, has a material adverse effect on the Borrower’s or any Security Party’s ability to discharge its liabilities under the Finance Documents as they fall due” under clause 19.1(p) of that agreement; |
(ii) | a “substantial change to the nature of its business” under clause 11.11(a) of the guarantee executed or to be executed by GasLog pursuant to that agreement or clause 11.10(a) of the guarantee executed or to be executed by GasLog Carriers or (as the case may be) GasLog Partners pursuant to that agreement; or |
(iii) | a “merger, sub-division, amalgamation or other reorganisation which may, in the reasonable opinion of the Majority Lenders, have a material adverse effect on the financial position of the Guarantor” under clause 11.12 of the guarantee executed or to be executed by GasLog pursuant to that agreement or clause 11.11 of the guarantee executed or to be executed by GasLog Carriers or (as the case may be) GasLog Partners pursuant to that agreement, |
3 |
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and, provided that clause 11.13 of the guarantee executed by GasLog pursuant to the Existing Loan Agreement (such clause as amended following the occurrence of the Effective Date) and clause 11.12 of the guarantee executed by GasLog Carriers pursuant to the Existing Loan Agreement (such clause as amended following the occurrence of the Effective Date) will not be in breach upon the occurrence of the Effective Date, the Creditor Parties also confirm that the closing of the Sale on the MLP IPO Closing Date does not constitute a breach under clause 11.13 of the guarantee executed by GasLog pursuant to the Existing Loan Agreement (such clause in the form existing prior to the occurrence of the Effective Date) and clause 11.12 of the guarantee executed by GasLog Carriers pursuant to the Existing Loan Agreement (such clause in the form existing prior to the occurrence of the Effective Date).
(b) | The Creditor Parties further confirm that: |
(i) | the entry by the Borrowers into this Agreement; |
(ii) | the entry by GAS-six into the New Mortgage; and |
(iii) | the entry by GAS-five into: |
(B) | the New Loan Agreement; |
(C) | the other Finance Documents (as defined in the New Loan Agreement); |
(D) | a new management agreement with each Approved Manager in respect of the technical or (as the case may be) commercial management of the Ship named “GASLOG SYDNEY”; and |
(E) | a liability to pay a guarantee fee to GasLog which is not prohibited by clause 11.5(d) of the New Loan Agreement, |
does not constitute a breach of clause 11.5 of the Existing Loan Agreement.
(a) | Nothing in this Clause 2.3 applies to any event or circumstance which may arise at any time after the Effective Date. |
3 | CONDITIONS precedent |
3.1 | General. The agreement of the Creditor Parties contained in Clause 2.1 is subject to the fulfilment (or waiver by the Agent) of the conditions precedent in Clause 3.2. On the MLP IPO Closing Date, the Agent shall sign the Effective Date Notice and specify the Effective Date to be the MLP IPO Closing Date, provided that the Agent is satisfied that the conditions precedent in Clause 3 have then been satisfied. The Borrower and the Guarantors shall keep the Agent fully informed at all times about when the MLP IPO Closing Date is expected to occur. |
3.2 | Conditions precedent. The conditions precedent referred to in Clause 3.1 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Agent and its lawyers on or before 15 July 2014 (or such later date as the Agent may agree with the Borrowers): |
(a) | originals of this Agreement, the New Mortgage and the QEL Confirmation each duly executed by the parties to it; |
(b) | an original of an amendment to the Master Agreement entered into between GAS-five and Nordea Bank Finland Plc duly executed by the parties to it; |
4 |
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(c) | an original of an amendment to the Master Agreement entered into between the Borrowers and ABN AMRO Bank N.V. duly executed by the parties to it; |
(d) | documents of the kind specified in Schedule 4, Part A, paragraphs 2, 3, 4 and 5 of the Existing Loan Agreement as amended and supplemented by this Agreement and updated with appropriate modifications to refer to this Agreement and the New Mortgage; |
(e) | documentary evidence that the agent for service of process named in Clause 11 has accepted its appointment; |
(f) | a favourable legal opinion from lawyers appointed by the Agent on such matters concerning the laws of Bermuda as the Agent may require; |
(g) | documentary evidence that the New Mortgage has been duly registered against the Ship named “GASLOG SKAGEN” as a valid first preferred Bermudan ship mortgage in accordance with the laws of Bermuda; |
(h) | evidence satisfactory to the Agent that the conditions precedent to the occurrence of the Effective Date as set out in clause 9.1 of the New Loan Agreement have been met; |
(i) | an acknowledgement by GAS-six and the Guarantors to the Agent of the aggregate principal amount of the Loan which will be outstanding under the Existing Loan Agreement (once amended and restated by this Agreement and immediately following the occurrence of the Effective Date) and the amount of each quarterly repayment instalment of the Loan under such Existing Loan Agreement; |
(j) | that, on or before service of the Effective Date Notice, the Agent has received the handling fee referred to in Clause 8.1; and |
(k) | any further opinions, consents, agreements and documents in connection with this Agreement, the Finance Documents and the New Mortgage which the Agent may request by notice to the Borrowers prior to the Effective Date. |
4 | representations and WARRANTIES |
4.1 | Repetition of Loan Agreement representations and warranties. GAS-six represents and warrants to the Creditor Parties that the representations and warranties in clause 10 ( Representations and Warranties ) of the Existing Loan Agreement, as amended and restated by this Agreement and updated with appropriate modifications to refer to this Agreement and, where appropriate, the New Mortgage, remain true and not misleading if repeated on the date of this Agreement with reference to the circumstances now existing. |
4.2 | Repetition of Finance Document representations and warranties. Each of GAS-six and the Guarantors represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Existing Loan Agreement) to which it is a party, as amended and restated by this Agreement and updated with appropriate modifications to refer to this Agreement and, where appropriate, the New Mortgage, remain true and not misleading if repeated on the date of this Agreement with reference to the circumstances now existing. |
5 | amendment and restatement of existing loan agreement and other finance documents |
5.1 | Amendment and restatement of the Existing Loan Agreement. With effect on and from the Effective Date, the Existing Loan Agreement shall be, and shall be deemed by this Agreement to be, amended and restated in the form of the Amended and Restated Loan Agreement and, as so amended and restated, the Existing Loan Agreement shall |
5 |
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(subject to Clause 7.1) continue to be binding on each of the parties to it in accordance with its terms as so amended and restated. |
5.2 | Amendment of the GAS-six/Nordea Master Agreement. With effect on and from the Effective Date, the Master Agreement dated 2 November 2011 and entered into between Nordea Bank Finland Plc and GAS-six shall be, and shall be deemed by this Agreement to be, amended so that references throughout to the Borrowers (or either of them) shall be construed as references to GAS-six only and references throughout to the Existing Loan Agreement shall be construed as references to the Existing Loan Agreement as amended and restated by this Agreement. Save as so amended, that Master Agreement shall continue to be binding on each of the parties to it in accordance with its terms as so amended. |
5.3 | Amendments to Finance Documents. With effect on and from the Effective Date, each of the Finance Documents (other than the Existing Loan Agreement (to which Clause 5.1 applies), the New Mortgage and the Mortgages) shall be, and shall be deemed by this Agreement to be, amended as follows: |
(a) | the definition of, and references throughout each of the Finance Documents to, the Loan Agreement and any of the other Finance Documents shall be construed as if the same referred to the Existing Loan Agreement and those Finance Documents each as amended and restated or supplemented by this Agreement; |
(b) | the definition of, and references throughout each of the Finance Documents to, the Mortgage of the Ship named “GASLOG SKAGEN” shall be construed as if the same referred to the New Mortgage; |
(c) | the definition of, and references throughout each of the Finance Documents to, the “Borrowers” (or either of them) shall be construed to refer to GAS-six only and each such Finance Document shall be construed with such further or consequential modifications as may be necessary to give effect to the foregoing and shall, subject only to the foregoing and the other amendments referred to in this Clause 5, remain in full force and effect in accordance with its terms; and |
(d) | by construing references throughout each of the Finance Documents to “this Agreement”, “this Deed”, “hereunder” and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement. |
5.4 | Finance Documents to remain in full force and effect . The Finance Documents other than the Existing Loan Agreement shall each remain in full force and effect in accordance with its terms save as amended by: |
(a) | the amendments contained or referred to in Clause 5.2 and 5.3; and |
(b) | such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement, |
except as released pursuant to Clause 7.
5.5 | Confirmation of security . Each of GAS-six and the Guarantors confirms that, on and from the Effective Date, each of the Finance Documents executed by it shall remain in full force and effect in accordance with its terms (save as amended by this Clause 5) and continue only to the extent required to secure the obligations of GAS-six in connection with the Existing Loan Agreement and every other Finance Document (as defined in the Existing Loan Agreement) each as amended and restated/supplemented by this Agreement. |
6 |
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6 | FURTHER ASSURANCES |
6.1 | GAS-six’s and each Guarantor’s obligation to execute further documents etc. Each of GAS-six and the Guarantors shall: |
(a) | execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other appropriate country as the Security Trustee may, in any particular case, reasonably specify; and |
(b) | effect any registration or notarisation, give any notice or take any other step, |
which the Security Trustee may, by notice to GAS-six or (or as the case may be) that Guarantor, reasonably specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.
6.2 | Purposes of further assurances. Those purposes are: |
(a) | validly and effectively to create any Security Interest or right of any kind which the Creditor Parties intended should be created by or pursuant to the Existing Loan Agreement or any other Finance Document, each as amended and restated or supplemented by this Agreement, or the New Mortgage; and |
(b) | implementing the terms and provisions of this Agreement. |
6.3 | Terms of further assurances. The Security Trustee may specify the terms of any document to be executed by GAS-six or any Guarantor under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee reasonably considers necessary to protect its interests. |
6.4 | Obligation to comply with notice. GAS-six or any Guarantor shall comply with a notice under Clause 6.1 by the date specified in the notice. |
6.5 | Additional corporate action. At the same time as GAS-six or any Guarantor delivers to the Security Trustee any document executed under Clause 6.1, GAS-six or (as the case may be) that Guarantor shall also deliver to the Security Trustee a certificate signed by 2 of GAS-six’s or (as the case may be) that Guarantor’s directors which shall: |
(a) | set out the text of a resolution of GAS-six’s or (as the case may be) that Guarantor’s directors specifically authorising the execution of the document specified by the Security Trustee; and |
(b) | state that either the resolution was duly passed at a meeting of the directors validly convened and held throughout which a quorum of directors entitled to vote on the resolution was present or that the resolution has been signed by all the directors and is valid under GAS-six’s or (as the case may be) that Guarantor’s articles of association or other constitutional documents. |
7 | RELEASE OF OBLIGATIONS AND SECURITY |
7.1 | Release. With effect on and from the Effective Date, the Security Trustee hereby irrevocably and unconditionally releases and discharges: |
(a) | any Security Interest granted by GAS-five under the Finance Documents; |
(b) | the Share Pledge in relation to the shares of GAS-five; and |
(c) | each obligation and liability of GAS-five under the Finance Documents. |
7 |
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For the avoidance of doubt, it is confirmed that with effect on and from the Effective Date, the Guarantee of GasLog Carriers shall no longer cover any obligation or liability of GAS-five under the Finance Documents.
7.2 | Reassignment. With effect on and from the Effective Date, the Security Trustee hereby irrevocably and unconditionally reassigns (without any warranty, representation, covenant or other recourse) to GAS-five such rights as the Security Trustee has on the Effective Date to any right previously assigned by GAS-five to the Security Trustee pursuant to the Finance Documents; and the Security Trustee shall sign and provide to GAS-five notices of reassignment of the Insurances, the Charter and the Management Agreement in each case of the Ship named “GASLOG SYDNEY”. |
7.3 | Mortgage discharge. On the Effective Date, the Security Trustee shall execute and register a discharge of the Mortgage of the Ship named “GASLOG SYDNEY”. |
7.4 | Return of Share Pledge documentation. As soon as reasonably practicable after the occurrence of the Effective Date, the Security Trustee shall return to GasLog Carriers all documentation delivered to it under the Share Pledge in relation to the shares of GAS-five (to the extent not required to be delivered under the share pledge executed or to be executed under the New Loan Agreement). |
8 | FEES AND expenses |
8.1 | Handling fee. The Borrowers shall pay to the Agent on the date of this Agreement a non-refundable handling fee in an amount of $75,000, for distribution among the Lenders pro rata to their Commitments. |
8.2 | Expenses. The provisions of clause 20 ( Fees and Expenses ) of the Loan Agreement, as amended and restated by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications. |
9 | communications |
9.1 | General. The provisions of clause 28 ( Notices ) of the Existing Loan Agreement, as amended and restated by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications with notices to any Guarantor also being sent to the same address or (as the case may be) fax number for GAS-six. |
10 | SUPPLEMENTAL |
10.1 | Counterparts. This Agreement may be executed in any number of counterparts. |
10.2 | 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. |
11 | law and jurisdiction |
11.1 | Governing 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. |
11.2 | Incorporation of the Existing Loan Agreement provisions. The provisions of clause 31 ( Law and Jurisdiction ) of the Existing Loan Agreement shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications and each Borrower and each Guarantor irrevocably appoints Unisea Maritime Limited at its office for the time being, presently at 14 Headfort Place, London SW1X 7DH, England, to act as its agent to receive and accept on its behalf any process or |
8 |
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other document relating to any proceedings in the English courts which are connected with any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement.
This Agreement has been duly executed as a Deed on the date stated at the beginning of this Agreement.
9 |
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SCHEDULE 1
lenders
L ender | L ending O ffice | |
ABN Amro Bank N.V. |
Coolsingel 93
3012 AE Rotterdam The Netherlands |
|
Citibank International Plc, London Branch |
Citigroup Centre
33 Canada Square Canary Wharf London E14 5LB |
|
Nordea Bank Finland Plc, London Branch |
8th Floor
City Place House 55 Basinghall Street London EC2V 5NB |
10 |
|
SCHEDULE 2
SWAP BANKS
Swap Bank | Booking Office | |
ABN Amro Bank N.V. |
Coolsingel 93
3012 AE Rotterdam The Netherlands |
|
Citibank N.A., London Branch |
Citigroup Centre
33 Canada Square Canary Wharf London E14 5LB |
|
Nordea Bank Finland Plc |
Aleksanterinkatu 36
(FIN-00020 NORDEA) 00100 Helsinki Finland |
11 |
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execution pages
BORROWERS
EXECUTED AND DELIVERED as a deed | ) |
by GAS-FIVE LTD. | ) |
acting by | ) |
expressly authorised | ) |
by virtue of a power of attorney granted | ) |
On April 2014 | ) |
such execution being | ) |
witnessed by: | ) |
EXECUTED AND DELIVERED as a deed | ) |
by GAS-SIX LTD. | ) |
acting by | ) |
expressly authorised | ) |
by virtue of a power of attorney granted | ) |
on April 2014 | ) |
such execution being | ) |
witnessed by: | ) |
GUARANTORS | |
EXECUTED AND DELIVERED as a deed | ) |
by GasLog Ltd. | ) |
acting by | ) |
duly authorised | ) |
such execution being | ) |
witnessed by: | ) |
EXECUTED AND DELIVERED as a deed | ) |
by GasLog CARRIERS Ltd. | ) |
acting by | ) |
expressly authorised | ) |
by virtue of a power of attorney granted | ) |
on April 2014 | ) |
such execution being | ) |
witnessed by: | ) |
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LENDERS
13 |
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EXECUTED AND DELIVERED as a deed | ) |
by Citibank N.A., London Branch | ) |
acting by | ) |
duly authorised | ) |
such execution being | ) |
witnessed by: | ) |
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SECURITY TRUSTEE
EXECUTED AND DELIVERED as a deed | ) |
by Nordea Bank Finland Plc, | ) |
London Branch | ) |
acting by | ) |
duly authorised | ) |
such execution being | ) |
witnessed by: | ) |
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APPENDIX
1
FORM OF EFFECTIVE DATE NOTICE
Amending and Restating Agreement
dated 18 April 2014 (the “Agreement”) in relation to
m.v. “GASLOG SKAGEN”
In accordance with clause 3.1 of the Agreement, we confirm that the Effective Date is [ l ] 2014.
for and on behalf of
NORDEA BANK FINLAND PLC, LONDON BRANCH
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APPENDIX 2
FORM OF AMENDED AND RESTATED LOAN AGREEMENT
Date 3 October 2011
as amended, supplemented and/or restated by
the Amending Agreements
GAS-SIX LTD.
as Borrower
– and –
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
– and –
NORDEA BANK FINLAND PLC, LONDON BRANCH
ABN AMRO BANK N.V.
CITIBANK INTERNATIONAL PLC, LONDON BRANCH
as Joint Lead Arrangers
– and –
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 2
as Swap Banks
– and –
NORDEA BANK FINLAND PLC, LONDON BRANCH
as Agent
and Security Trustee
LOAN AGREEMENT
relating to
a facility of up to (originally) US$277,000,000
for the purpose of (amongst other things)
financing the construction and acquisition of
m.v. “GASLOG SKAGEN”
Watson, Farley & Williams
London
(ex Samsung Heavy Industries Co., Ltd. hull number 2017)
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INDEX
Clause | Page | |
1 | INTERPRETATION | 1 |
2 | FACILITY | 18 |
3 | POSITION OF THE LENDERS AND SWAP BANKS | 19 |
4 | DRAWDOWN | 19 |
5 | INTEREST | 20 |
6 | INTEREST PERIODS | 22 |
7 | DEFAULT INTEREST | 23 |
8 | REPAYMENT AND PREPAYMENT | 24 |
9 | CONDITIONS PRECEDENT/SUBSEQUENT | 27 |
10 | REPRESENTATIONS AND WARRANTIES | 28 |
11 | GENERAL UNDERTAKINGS | 31 |
12 | CORPORATE UNDERTAKINGS | 41 |
13 | INSURANCE | 42 |
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 | 54 |
20 | FEES AND EXPENSES | 59 |
21 | INDEMNITIES | 60 |
22 | NO SET-OFF OR TAX DEDUCTION | 63 |
23 | ILLEGALITY, ETC | 64 |
24 | INCREASED COSTS | 65 |
25 | SET-OFF | 67 |
26 | TRANSFERS AND CHANGES IN LENDING OFFICES | 68 |
27 | VARIATIONS AND WAIVERS | 71 |
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28 | NOTICES | 73 |
29 | SUPPLEMENTAL | 74 |
30 | LAW AND JURISDICTION | 75 |
SCHEDULE 1 LENDERS AND COMMITMENTS | 77 | |
SCHEDULE 2 SWAP BANKS | 78 | |
SCHEDULE 3 DRAWDOWN NOTICE | 79 | |
SCHEDULE 4 CONDITION PRECEDENT DOCUMENTS | 80 | |
SCHEDULE 5 TRANSFER CERTIFICATE | 84 | |
SCHEDULE 6 DESIGNATION NOTICE | 88 | |
SCHEDULE 7 FORM OF COMPLIANCE CERTIFICATE | 89 | |
EXECUTION PAGE | 91 |
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THIS AGREEMENT is made on 3 October 2011 as amended, supplemented and/or restated by the Amending Agreements
BETWEEN
(1) | GAS-SIX LTD. , an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda, as borrower (the “ Borrower ”); |
(2) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders ; |
(3) | NORDEA BANK FINLAND PLC, London Branch, ABN AMRO BANK N.V. and CITIBANK INTERNATIONAL PLC , LONDON BRANCH as Joint Lead Arrangers ; |
(4) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2, as Swap Banks ; |
(5) | NORDEA BANK FINLAND PLC, LONDON BRANCH , as Agent ; and |
(6) | NORDEA BANK FINLAND PLC, LONDON BRANCH , as Security Trustee . |
BACKGROUND
(A) | The Lenders made available to the Borrower a facility of up to (originally) $277,000,000 for the purpose of (amongst other things) part financing the purchase price of the Ship which was constructed by the Builder for, and purchased by, the Borrower pursuant to the Shipbuilding Contract. |
(B) | The Swap Banks may enter into interest rate and currency swap transactions with the Borrower from time to time to hedge the Borrower’s exposure under this Agreement to interest rate and currency fluctuations. |
(C) | The Lenders and the Swap Banks have agreed to share in the security to be granted to the Security Trustee pursuant to this Agreement. |
IT IS AGREED as follows:
1 | INTERPRETATION |
1.1 | Definitions. Subject to Clause 1.5, in this Agreement: |
“ Account Security Deed ” means a deed dated 22 February 2012 and creating security in respect of the Earnings Account as amended and supplemented by the Amending Agreements;
“ Advance ” means the principal amount of each borrowing by the Borrower under this Agreement;
“ Affected Lender ” has the meaning given in Clause 5.7;
“ Affected Party ” has the meaning given in the relevant Master Agreement;
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“ Agency and Trust Deed ” means the agency and trust deed dated the same date as this Agreement and executed between the same parties as this Agreement as amended and supplemented by the Amending Agreements;
“ Agent ” means Nordea Bank Finland Plc, London Branch, acting in such capacity through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB, or any successor of it appointed under clause 5 of the Agency and Trust Deed;
“ Agreed Form ” means in relation to any document, that document in the form approved in writing by the Agent (acting on the instructions of all the Lenders) and agreed with the Borrower or as otherwise approved in accordance with any other approval procedure specified in any relevant provisions of any Finance Document;
“ Amending Agreements ” means:
(a) | the side letter no. 1 dated 22 February 2012 and signed by the Agent and acknowledged by (amongst others) the Borrower and the Guarantors; | |
(b) | the side letter no. 2 dated 22 February 2012 and signed by the Creditor Parties and acknowledged by (amongst others) the Borrower and the Guarantors; | |
(c) | the third supplemental agreement dated 11 July 2013 and signed by the Creditor Parties and acknowledged by (amongst others) the Borrower and the Guarantors; and | |
(d) | the Amending and Restating Agreement, |
and, in the singular, means any of them;
“ Amending and Restating Agreement ” means the amending and restating agreement dated 18 April 2014 and signed by the parties to this Agreement, GAS-five and the Guarantors;
“ Approved Managers ” means:
(a) | in relation to the commercial management of the Ship, GasLog or any of its wholly owned subsidiaries; and | |
(b) | in relation to the technical management of the Ship, GasLog LNG, |
or, in each case, any other company which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the technical or commercial manager of the Ship (such authorisation and approval not to be unreasonably withheld);
“ Approved Shipbroker ” means Fearnleys A.S., Poten & Partners Inc., Simpson Spence & Young Limited, R.S. Platou Shipbrokers A.S., H. Clarkson & Co. Ltd., Braemar Seascope Ltd. and Arrow Sale & Purchase (UK) Ltd. or such other independent sale and purchase shipbroker which the Agent has approved or selected (with the authorisation of the Majority Lenders);
“ Availability Period ” means the period commencing on the Original Loan Agreement Date and ending on:
(a) | 17 February 2014 or such later date as the Agent may, with the authorisation of the Lenders, agree with the Borrower in the event that: |
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(i) | arbitration proceedings have commenced pursuant to the Shipbuilding Contract; or | |
(ii) | there is a delay in the delivery of the Ship under the Shipbuilding Contract and the Charterer has for the purposes of the Charter consented in writing to such delay; or |
(b) | if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated; | |
“ Break Costs ” means the amount (if any) by which: | ||
(a) | the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan to the last day of the current Interest Period in respect of that Loan, had the principal amount received been paid on the last day of that Interest Period | |
exceeds | ||
(b) | the amount which that Lender would be able to obtain by placing an amount equal to the principal amount received by it on deposit with a leading bank in the London Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. |
“ Builder ” means Samsung Heavy Industries Co., Ltd., a corporation incorporated in the Republic of Korea whose registered office is at 34th Fl., Samsung Insurance Seocho Tower 1321-15, Seocho-Dong, Seocho-Gu, Seoul, Korea 137-857;
“ Business Day ” means a day on which banks are open in London, Monaco, Piraeus and, for the purposes of the Delivery Date, Bermuda 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 ” means, in relation to GasLog, if any person or persons acting in concert other than Counter-Guarantor 2 or its associates (acting through the Holding Company):
(a) | acquires legally and/or beneficially, and either directly or indirectly, in excess of 50 per cent. of the issued share capital of GasLog; or | |
(b) | has the right or the ability to control, either directly or indirectly, the affairs or composition of the majority of the board of directors (or equivalent) of GasLog, |
in either case, without the prior written consent of the Agent (acting with the authorisation of the Majority Lenders);
“ Charter ” means the time charter of the Ship dated 9 May 2011 and entered into between the Borrower and the Charterer pursuant to the Master Charterparty Agreement and approved by the Lenders;
“ Charter Assignment ” means an assignment of the Charter or Replacement Charter, and any guarantee in relation to the Charter or the Replacement Charter, dated 25 July 2013 and executed by the Borrower in favour of the Security Trustee as amended and supplemented by the Amending Agreements;
“ Charterer ” means Methane Services Ltd., a company incorporated in England and Wales with its registered office at 100 Thames Valley Park Drive, Reading, Berkshire,
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RG6 1PT, United Kingdom, which as at the Original Loan Agreement Date is a subsidiary of BG Group plc;
“ Code ” means the United States Internal Revenue Code of 1986;
“ Commitment ” means, 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 the aggregate of the Commitments of all the Lenders);
“ Confirmation ” and “ Early Termination Date ”, in relation to any continuing Designated Transaction, have the meanings given in the relevant Master Agreement;
“ 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;
“ Counter-Guarantor 2 ” means the company identified in the letter referred to in Schedule 4, Part A, Paragraph 11(c);
“ Creditor Party ” means the Agent, the Security Trustee, any Swap Bank, any Joint Lead Arranger or any Lender, whether as at the Original Loan Agreement Date or at any later time;
“ Deed of Covenant ” means the first priority deed of covenant collateral to the Mortgage dated 25 July 2013 and executed by the Borrower in favour of the Security Trustee as amended and supplemented by the Amending Agreements;
“ Delivery Date ” means the date on which the Ship is actually delivered to, and accepted by, the Borrower under the Shipbuilding Contract;
“ Designated Transaction ” means a Transaction which fulfils the following requirements:
(a) | it is entered into by the Borrower pursuant to a Master Agreement with a Swap Bank which, at the time the Transaction is entered into, is also a Lender; | |
(b) | its purpose is the hedging of the Borrower’s exposure under this Agreement to fluctuations in LIBOR or currency fluctuations respectively arising from the funding of the Loan (or any part thereof) or the operation of the Ship respectively for a period expiring no later than the final Repayment Date; and | |
(c) | it is designated by the Borrower, by delivery by the Borrower to the Agent of a notice of designation in the form set out in Schedule 6, as a Designated Transaction for the purposes of the Finance Documents; |
“ 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 Borrower for the Advance to be made, or (as the context requires) the date on which the 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 reasonably requires);
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“ Earnings ” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Security Trustee and which arise out of the use or operation of the Ship, including (but not limited to):
(a) | except to the extent that they fall within paragraph (b); | ||
(i) | all freight, hire and passage moneys; | ||
(ii) | compensation payable to the Borrower or the Security Trustee in the event of requisition of the Ship for hire; | ||
(iii) | remuneration for salvage and towage services; | ||
(iv) | demurrage and detention moneys; | ||
(v) | damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship; and | ||
(vi) | all moneys which are at any time payable under any Insurances in respect of loss of hire; and | ||
(b) | if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) 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 the Ship; |
“ Earnings Account ” means an account in the name of the Borrower with Citibank N.A., London Branch in London designated “GAS-six Ltd.” with account number 0013008649, or any other account (with that or another office of Citibank N.A., London Branch or with a bank or financial institution other than Citibank N.A., London Branch) which is designated by the Agent as the Earnings Account for the purposes of this Agreement;
“ 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 the Ship; or | |
(b) | any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship and/or the Borrower and/or any |
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operator or manager of the 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 the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Borrower and/or any operator or manager of the 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;
“ Fair Market Value ” means the market value of the Ship, as determined in accordance with Clause 15.3;
“ FATCA ” means:
(a) | sections 1471 to 1474 of the Code or any associated regulations or other official guidance; | |
(b) | any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of 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 July 2014; | |
(b) | in relation to a “withholdable payment” described in section 1473(1)(A)(ii) of the Code (which relates to “gross proceeds” from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or | |
(c) | in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within 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 Event ” has the meaning given to it in Clause 8.11;
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“ FATCA Exempt Party ” means a party to a Finance Document that is entitled to receive payments free from any FATCA Deduction;
“ FATCA FFI ” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Creditor Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction;
“ FATCA Protected Lender ” means any Lender irrevocably designated as a “FATCA Protected Lender” by the Borrower by notice to that Lender and the Agent at least six months prior to the earliest FATCA Application Date for a payment by a party to a Finance Document to that Lender (or to the Agent for the account of that Lender);
“ Finance Documents ” means:
(a) | this Agreement; | |
(b) | the Agency and Trust Deed; | |
(c) | the Guarantees; | |
(d) | the Mortgage; | |
(e) | the Deed of Covenant; | |
(f) | the Account Security Deed; | |
(g) | the General Assignment; | |
(h) | the Management Agreement Assignment; | |
(i) | the Charter Assignment; | |
(j) | the Shares Pledge; | |
(k) | the Amending Agreements; and | |
(l) | any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower 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 and/or the Swap Banks under this Agreement or any of the other 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 or dematerialised equivalent made available to the debtor; |
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(d) | under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; | |
(e) | under any foreign exchange transaction, 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 paragraphs (a) to (e) if the references to the debtor referred to the other person; |
“ GAS-five ” means GAS-five Ltd., an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
“ GasLog ” means GasLog Ltd., an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
“ GasLog Carriers ” means GasLog Carriers Ltd., an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
“ GasLog LNG ” means GasLog LNG Services Ltd. (formerly known as Ceres LNG Services Ltd.), an exempted company incorporated under the laws of Bermuda whose registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
“ General Assignment ” means the first priority general assignment of the Earnings, the Insurances and any Requisition Compensation dated 25 July 2013 and executed by the Borrower in favour of the Security Trustee as amended and supplemented by the Amending Agreements;
“ Guarantee ” means, in relation to GasLog or GasLog Carriers, the guarantee dated the same date as this Agreement and executed by that Guarantor in favour of the Security Trustee as amended and supplemented by the Amending Agreements and, in the plural, means both such Guarantees;
“ Guarantors ” means GasLog and GasLog Carriers and, in the singular, means either of them;
“ Holding Company ” means the company identified in the letter referred to in Schedule 4, Part A, Paragraph 11(a);
“ IFRS ” means international accounting standards within the meaning of the IAS Regulations 1606/2002 to the extent applicable to the relevant financial statements;
“ Insurances ” means:
(a) | all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to it whether before, on or after the Original Loan Agreement Date; and |
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(b) | all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the Original Loan Agreement Date; |
“ ISM Code ” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation as the same may be amended or supplemented from time to time (and the terms “ safety management system ”, “ Safety Management Certificate ” and “ Document of Compliance ” have the same meanings as are given to them in the ISM Code);
“ ISPS Code ” means the International Ship and Port Facility Security Code as adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time;
“ ISSC ” means a valid and current International Ship Security Certificate issued under the ISPS Code;
“ Interest Period ” means a period determined in accordance with Clause 6;
“ Joint Lead Arrangers ” means each of Nordea Bank Finland plc, London Branch acting through its office at 8 th Floor, City Place House, 55 Basinghall Street, London EX2V 5NB, ABN AMRO Bank N.V. acting through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands and Citibank International Plc, London Branch acting through its office at Citigroup Centre, 33 Canada Square, London E14 5LB;
“ Lender ” means, subject to Clause 26.6, a bank or financial institution listed in Part 1 of Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Agent under Clause 26.14) or its transferee, successor or assign;
“ LIBOR ” means, for an Interest Period:
(a) | the Screen Rate; or |
(b) | (if no Screen Rate is available for that Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London Interbank Market, |
at or about 11 a.m. (London time) on the Quotation Date for the offering of deposits in Dollars for a period comparable to that Interest Period and, if any such rate is below zero, LIBOR will be deemed to be 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 $1,000,000 or the equivalent in any other currency;
“ Majority Lenders ” means:
(a) | before an Advance has been made, Lenders whose Commitments total 67 per cent. of the Total Commitments; and |
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(b) | after an Advance has been made, Lenders whose Contributions total 67 per cent. of the Loan; |
“ Management Agreement ” means the management agreement in relation to the Ship made or to be made between the Borrower and the technical Approved Manager;
“ Management Agreement Assignment ” means the first priority assignment of the Management Agreement dated 25 July 2013 and executed by the Borrower in favour of the Security Trustee as amended and supplemented by the Amending Agreements;
“ Margin ” means 2.25 per cent. per annum;
“ Master Agreements ” means:
(a) | the master agreement (on the 2002 Master Agreement form together with the schedule thereto) dated 2 November 2011 and made between the Borrower and Nordea Bank Finland Plc, as Swap Bank as amended and supplemented by the Amending and Restating Agreement and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under such master agreement; |
(b) | the master agreement (on the 2002 Master Agreement form together with the schedule thereto) dated 7 May 2012 (as amended on or around the Effective Date (as defined in the Amending and Restating Agreement)) and (as amended) made between the Borrower and ABN AMRO Bank N.V., as Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under such master agreement; and |
(c) | the master agreement (together with the schedule thereto) made or to be made between the Borrower and Citibank N.A., London Branch, as Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under such master agreement, |
and, in the singular, means any of them;
“ Master Charterparty Agreement ” means the master charterparty agreement dated 9 May 2011 and entered into between (amongst others) the Borrower and the Charterer and approved by the Lenders;
“ Maturity Date ” means 24 May 2019;
“ Mortgage ” means the first priority Bermuda ship mortgage executed or to be executed by the Borrower in favour of the Security Trustee in the Agreed Form;
“ Negotiation Period ” has the meaning given in Clause 5.10;
“ Notifying Lender ” has the meaning given in Clause 23.1 or Clause 24.1 as the context requires;
“ Original Loan Agreement Date ” means 3 October 2011;
“ Payment Currency ” has the meaning given in Clause 21.4;
“ Permitted Security Interests ” means:
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(a) | Security Interests created by the Finance Documents; |
(b) | liens for unpaid master’s and 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 for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(g); |
(f) | any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and |
(g) | Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; |
“ Pertinent Document ” means:
(a) | any Finance Document; |
(b) | any policy or contract of insurance contemplated by or referred to in any provision of this Agreement or another Finance Document; |
(c) | any other document contemplated by or referred to in any Finance Document; and |
(d) | any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c); |
“ 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 in which the company has the centre of its main interest or in which the company’s central management and control is or has recently been exercised; |
(d) | a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax; |
(e) | 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 |
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company maintains a branch or 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 |
(f) | a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company, whether as main or territorial or ancillary proceedings, or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c); |
“ Pertinent Matter ” means:
(a) | any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or |
(b) | any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a); |
and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;
“ 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 on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;
“ Reference Banks ” means, subject to Clause 26.16, Nordea Bank Finland plc, London Branch, ABN AMRO Bank N.V. and Citibank International Plc and any one other prime international bank from time to time selected by the Agent;
“ Relevant Person ” has the meaning given in Clause 19.9;
“ Repayment Date ” means a date on which a repayment is required to be made under Clause 8;
“ Replacement Charter ” means any charter of the Ship entered into between the Borrower and a charterer which is acceptable to the Majority Lenders and on terms approved by the Lenders;
“ 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 Party ” means a person:
(a) | that is listed on any Sanctions List (whether designated by name or by reason of being included in a class of person); |
(b) | that is domiciled, registered as located or having its main place of business in, or is incorporated under the laws of, a country which is subject to Sanctions Laws; |
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(c) | that is directly or indirectly owned or controlled by a person referred to in paragraph (i) and/or (ii) above; or |
(d) | with which any Lender is prohibited from dealing or otherwise engaging in a transaction with by any Sanctions Laws; |
“ Sanctions Authority ” means the Norwegian State, the United Nations, the European Union, the member states of the European Union, the United States of America and any authority acting on behalf of any of them in connection with Sanctions Laws;
“ Sanctions Laws ” means the economic or financial sanctions laws and/or regulations, trade embargoes, prohibitions, restrictive measures, decisions. Executive Orders or notices from regulators implemented, adapted, imposed, administered, enacted and/or enforced by any Sanctions Authority;
“ Sanctions List ” means any list of persons or entities published in connection with Sanctions Laws by or on behalf of any Sanctions Authority;
“ Screen Rate ” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed on the appropriate page of the Telerate or Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders;
“ Secured Liabilities ” means all liabilities which the Borrower, the Security Parties or any of them have, at the Original Loan Agreement Date or at any later time or times, under or in connection with any Finance Document or any Designated Transaction under any Master Agreement or any judgment relating to any Finance Document or any Designated Transaction under any Master Agreement; 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 security rights of a plaintiff under an action in rem; 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 this paragraph (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 Guarantors and any other person (except a Creditor Party) who, as a surety, pledgor, chargor or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within any paragraph of the definition of “Finance Documents”;
“ Security Period ” means the period commencing on the Original Loan Agreement Date and ending on the date on which the Agent notifies the Borrower, the Security Parties and the other Creditor Parties that:
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(a) | all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents and the Master Agreements have been paid; |
(b) | no amount is owing or has accrued (without yet having become due for payment) under any Finance Document or any Master Agreement; |
(c) | neither the 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 or a Master Agreement; 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 or a Master Agreement would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or a Master Agreement or any asset covered (or previously covered) by a Security Interest created by a Finance Document; |
“ Security Trustee ” means Nordea Bank Finland Plc, London Branch, acting in such capacity through its office at 8th Floor, City Place House, 55 Basinghall Street, London EC2V 5NB, or any successor of it appointed under clause 5 of the Agency and Trust Deed;
“ Servicing Bank ” means the Agent or the Security Trustee;
“ Shares Pledge ” means a deed creating security over the share capital of the Borrower dated 22 February 2012 and granted by GasLog Carriers to the Security Trustee as amended and supplemented by the Amending Agreements;
“ Ship ” means the 155,000 cbm LNG vessel which was constructed by the Builder for, and purchased by, the Borrower under the Shipbuilding Contract with the Builder’s hull number 2017 and which is now registered in the ownership of the Borrower under Bermudan flag with the name “GASLOG SKAGEN”;
“ Shipbuilding Contract ” means the shipbuilding contract dated 30 March 2011 and made between the Builder and the Borrower for the construction by the Builder of the Ship and its purchase by the Borrower as supplemented and amended from time to time;
“ SMC ” means a safety management certificate issued in respect of the Ship in accordance with Rule 13 of the ISM Code;
“ Swap Bank ” means a bank or financial institution listed in Schedule 2 and acting through its branch indicated in Schedule 2;
“ Swap Counterparty ” means, at any relevant time and in relation to a continuing Designated Transaction, the Swap Bank which is a party to that Designated Transaction;
“ Swap Exposure ” means, as at any relevant date and in relation to a Swap Counterparty, the amount certified by the Swap Counterparty to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrower to the Swap Counterparty under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement entered into by the Swap Counterparty with the Borrower if an Early Termination Date had occurred on the relevant date in relation to all continuing
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Designated Transactions entered into between the Borrower and the Swap Counterparty and as if the Borrower were the sole Affected Party;
“ Total Loss ” means:
(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 its 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 1 year without any right to an extension and provided that market hire is being paid for such requisition) unless it is within 2 months redelivered to the full control of the Borrower; and |
(c) | any arrest, capture, seizure, detention, destruction or abandonment of the Ship (including any hijacking, theft or condemnation) unless it is within 2 months redelivered to the full control of the Borrower; |
“ Total Loss Date ” means:
(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 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; |
“ Transaction ” has the meaning given in each Master Agreement;
“ 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; and
“ US Tax Obligor ” means:
(a) | the Borrower if it is resident for tax purposes in the United States of America; or |
(b) | the Borrower or 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: |
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two or more persons are “ acting in concert ” if pursuant to an agreement or understanding (whether formal or informal) they actively co-operate, through the acquisition (directly or indirectly) of shares in an entity by any of them, either directly or indirectly to obtain or consolidate control of that entity;
“ approved ” means, for the purposes of Clause 13, approved in writing by the Agent;
“ administration notice ” means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;
“ 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 and legalisation;
“ contingent liability ” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“ control ” of an entity means:
(i) | the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: |
(A) | cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of that entity; or |
(B) | appoint or remove all, or the majority, of the directors or other equivalent officers of that entity; or |
(C) | give directions with respect to the operating and financial policies of that entity with which the directors or other equivalent officers of that entity are obliged to comply; and/or |
(ii) | the holding beneficially of more than 50% of the issued share capital of that entity (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, a Security Interest over share capital shall be disregarded in determining the beneficial ownership of such share capital), |
and “ controlled ” shall be construed accordingly;
“ document ” includes a deed; also a letter or fax;
“ excess risks ” means, in relation to the Ship, 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 its 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;
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“ law ” includes any order or decree, any form of delegated legislation, 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;
“ months ” shall be construed in accordance with Clause 1.3;
“ obligatory insurances ” means, in relation to the Ship, all insurances effected, or which the Borrower is obliged to effect, 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 contracts 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 in them of Clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“ regulation ” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
“ subsidiary ” has the meaning given in Clause 1.4;
“ 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 ” includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls)(1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
1.3 | Meaning of “month”. A period of 1 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 |
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(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 attaching 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. In this Agreement: |
(a) | references to, or to a provision of, a Finance Document or any other document are references to it as amended, supplemented or restated, whether before the Original Loan Agreement Date or otherwise; |
(b) | references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the Original Loan Agreement Date or otherwise; |
(c) | words denoting the singular number shall include the plural and vice versa; and |
(d) | Clauses 1.1 to 1.5 apply unless the contrary intention appears. |
1.6 | Headings. In interpreting a Finance Document or a Master Agreement or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document or any Master Agreement shall be entirely disregarded. |
2 | FACILITY |
2.1 | Amount of facility. Subject to the other provisions of this Agreement, the Lenders made available a loan facility of up to (originally) $277,000,000 to the Borrower. |
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 Commitment bears to the Total Commitments. |
2.3 | Purpose of Loan. |
(a) | The Borrower undertakes with each Creditor Party to use each Advance only for the purpose stated in the preamble to this Agreement. |
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(b) | The Borrower also undertakes with each Creditor Party that no proceeds of any Advance shall be made available, directly or indirectly, to or for the benefit of a Restricted Person nor shall they otherwise be applied in a manner or for a purpose prohibited by Sanctions Laws. |
2.4 | Application of amounts. No Creditor Party is obliged to monitor or verify the application of any amount borrowed under this Agreement. |
3 | POSITION OF THE LENDERS AND SWAP BANKS |
3.1 | Interests of Lenders several. The rights of the Lenders and of the Swap Banks under this Agreement and under the Master Agreements are several. |
3.2 | Individual Lender’s right of action. Each Lender and each Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement or under a Master Agreement without joining the Agent, the Security Trustee, any other Swap Bank or any other Lender as additional parties in the proceedings. |
3.3 | Proceedings by individual Lender, requiring Majority Lenders’ consent. Except as provided in Clause 3.2, no Lender and no Swap Bank may commence proceedings against the Borrower or any Security Party in connection with a Finance Document or a Master Agreement without the prior consent of the Majority Lenders. |
3.4 | Obligations of Creditor Parties several. The obligations of the Creditor Parties under this Agreement and the Master Agreement to which each is a party are several; and a failure of the Creditor Parties to perform its obligations under this Agreement or under the Master Agreement to which it is a party shall not result in: |
(a) | the obligations of the other Creditor Parties being increased; nor |
(b) | the Borrower, any Security Party, or any other Creditor Party being discharged (in whole or in part) from its obligations under any Finance Document or under any Master Agreement; |
and in no circumstances shall a Creditor Party have any responsibility for a failure of another Creditor Party to perform its obligations under this Agreement or a Master Agreement.
4 | DRAWDOWN |
4.1 | Request for Advance. The Borrower may request an Advance to be made 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 | 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; |
(b) | the amount of that Lender’s participation in the Advance; and |
(c) | the duration of the first Interest Period. |
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4.3 | Drawdown Notice irrevocable. A Drawdown Notice must be signed by an authorised signatory of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting with the authorisation of the Majority Lenders. |
4.4 | Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on each Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender on that Drawdown Date under Clause 2.2. |
4.5 | Disbursement of Advance. Subject to the provisions of this Agreement, the Agent shall on each Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.4; and that payment to the Borrower shall be made: |
(a) | to the account of the Builder which the Borrower specifies in the Drawdown Notice; and |
(b) | in the like funds as the Agent received the payments from the Lenders. |
4.6 | Disbursement of Advance to third party. The payment by the Agent under Clause 4.5 to the Builder shall constitute the making of the Advance and the Borrower shall thereupon become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution. |
5 | INTEREST |
5.1 | Payment of normal interest. Subject to the provisions of this Agreement, interest on each Advance in respect of each Interest Period applicable to it shall be paid by the Borrower on the last day of that Interest Period applicable to it. |
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 applicable to it shall be the aggregate of the Margin and LIBOR 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 Borrower 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 | Obligation of Reference Banks to quote. A Lender which is a Reference Bank shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement. |
5.6 | Absence of quotations by Reference Banks. If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks; but if 2 or more of the Reference Banks |
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fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5. |
5.7 | Market disruption. The following provisions of this Clause 5 apply if: |
(a) | no Screen Rate is quoted and 2 or more of the Reference Banks do not, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or |
(b) | at least 1 Business Day before the start of an Interest Period, Lender(s) having Contributions together amounting to 50 per cent. or more of the Loan (or, if an Advance has not been made, Commitments together amounting to 50 per cent. or more of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lender(s) of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or |
(c) | at least 1 Business Day before the start of an Interest Period, 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. |
5.8 | Notification of market disruption. The Agent shall promptly notify the Borrower, each of the Lenders and each of the Swap Counterparties stating the circumstances falling within Clause 5.7 which have caused its notice to be given. |
5.9 | Suspension of drawdown. If the Agent’s notice under Clause 5.8 is served before an Advance is made: |
(a) | in a case falling within Clauses 5.7(a) or (b), the Lenders’ obligations to make the Advance; |
(b) | in a case falling within Clause 5.7(c), the Affected Lender’s obligation to participate in the Advance; |
shall be suspended while the circumstances referred to in the Agent’s notice continue.
5.10 | Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.8 is served after an Advance is made, the Borrower, the Agent, the Lenders or (as the case may be) the Affected Lender and the Swap Counterparties shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.8 (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. |
5.11 | 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. |
5.12 | 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 |
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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 the procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent. |
5.13 | Notice of prepayment. If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12, the Borrower may give the Agent not less than 15 Business Days’ notice of its intention to prepay at the end of the interest period set by the Agent. |
5.14 | Prepayment; termination of Commitments. A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s 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 last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
5.15 | Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment. |
5.16 | Designated Transactions under a Master Agreement . At any time the Borrower may request the Swap Banks (by advising the Agent who shall (after first advising the Swap Banks of the amount and the maturity of the intended hedge and consulting with them) then advise the Swap Banks of the rate as determined by the Agent and invite each Swap Bank to participate on a pro-rata basis in the intended hedge by entering into a Designated Transaction at such rate) to conclude Designated Transactions for the purpose of swapping their interest payment obligations and/or their currency exposure under this Agreement. Signature of a Master Agreement does not commit the Swap Bank concerned to conclude Designated Transactions, or even to offer terms for doing so, but does provide a contractual framework within which Designated Transactions may be concluded and secured, assuming that the Swap Bank concerned is willing to conclude any Designated Transaction at the relevant time and that, if that is the case, mutually acceptable terms can then be agreed at the relevant time. |
6 | INTEREST PERIODS |
6.1 | Commencement of Interest Periods. The first Interest Period applicable to the Loan commenced on 19 July 2013 and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period. |
6.2 | Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be: |
(a) | 1, 2, 3 or 6 months as notified by the Borrower to the Agent not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; |
(b) | 3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or |
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(c) | such other period as the Agent may, with the authorisation of all the Lenders, agree with the Borrower. |
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 shall end on that Repayment Date. |
6.4 | Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than 6 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 6 months. |
7 | DEFAULT INTEREST |
7.1 | Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower 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 Clauses 7.3(a) and (b); or |
(b) | in the case of any other overdue amount, the rate set out at Clause 7.3(b). |
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 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 (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of |
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business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine. |
7.4 | Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrower 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 Borrower is 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 last day of the period by reference to which it was determined; and the payment shall be made to the Agent 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 9(h)(i) (Default Interest; Other Amounts) of that Master Agreement shall apply. |
8 | REPAYMENT AND PREPAYMENT |
8.1 | Amount of repayment instalments. The Borrower shall repay the Loan by consecutive quarterly instalments each equal to $2,036,764.71 and by a balloon instalment equal to the balance of the Loan at that time. |
8.2 | Repayment Dates. |
(a) | The first quarterly instalment for the Loan shall be repaid on 25 October 2013. |
(b) | The final quarterly instalment, and the balloon instalment, of the Loan shall be repaid on the Maturity Date. |
8.3 | Maturity Date. On the Maturity Date, the Borrower shall additionally pay to the Agent 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 Borrower may prepay the whole or any part of the Loan on any day. |
8.5 | Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that: |
(a) | a partial prepayment shall be $3,000,000 or a higher integral multiple of $1,000,000; |
(b) | the Agent has received from the Borrower at least 5 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; |
(c) | the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any Security Party in connection with the prepayment has been |
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obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrower or any Security Party has been complied with; and |
(d) | the Borrower has complied with Clause 8.15 on or prior to the date of prepayment. |
8.6 | Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrower 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 Borrower under Clause 8.5(c). |
8.8 | Mandatory prepayment on sale or Total Loss . The Borrower shall be obliged to prepay the Loan if the Ship is sold or becomes a Total Loss: |
(a) | in the case of a sale, on the date on which the sale is completed by delivery of the Ship to the buyer; or |
(b) | in the case of a Total Loss, on the earlier of the date falling 180 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. |
8.9 | Mandatory prepayment on Change of Control. If there is a Change of Control, the Borrower shall be obliged to prepay all of the Loan no later than 60 days following the Change of Control unless such Change of Control is, before the end of such period, approved by the Agent acting with the consent of the Majority Lenders. |
8.10 | Right of replacement or cancellation and prepayment in relation to a single FATCA Protected Lender after the occurrence of a FATCA Event. |
(a) | If any FATCA Protected Lender notifies the Agent of a FATCA Event pursuant to Clause 8.11, the Borrower may, whilst the circumstance giving rise to that FATCA Event continues for a maximum period of 30 days, give the Agent notice of cancellation of the Commitment of that Lender and the Borrower’s intention to procure the repayment of that Lender’s participation in the Loan or give the Agent notice of the Borrower’s intention to replace that Lender in accordance with Clause 8.10(d). |
(b) | On receipt of a notice referred to in Clause 8.10(a), the Commitment of that Lender shall immediately be reduced to zero and (unless the Commitment of the relevant Lender is replaced in accordance with Clause 8.10(d)) the Total Commitment shall be reduced by the same amount. |
(c) | On the last day of the Interest Period which ends after the Borrower has given a notice under Clause 8.10(a) in relation to a Lender (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender’s participation in the Loan in accordance with this Clause 8. |
(d) | The Borrower may, in the circumstances set out in Clause 8.10(a), on 15 Business Days’ prior notice to the Agent and that Lender, replace that Lender by requiring that Lender to transfer (and, to the extent permitted by law, that Lender shall transfer) pursuant to Clause 26 all (and not part only) of its rights under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity selected by the Borrower which confirms its willingness to assume and does assume all the obligations of the transferring Lender in |
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accordance with Clause 26 for a purchase price in cash or other cash payment payable at the time of the transfer equal to the aggregate of: |
(i) | the outstanding principal amount of such Lender’s participation in the Loan; |
(ii) | all accrued interest owing to such Lender; |
(iii) | the Break Costs which would have been payable to such Lender pursuant to Clauses 21.1(a) and 21.2 had the Borrower prepaid in full that Lender’s participation in the Loan on the date of the transfer; and |
(iv) | all other amounts payable to that Lender under the Finance Documents on the date of the transfer. |
(e) | The replacement of a Lender pursuant to Clause 8.10(d) shall be subject to the following conditions: |
(i) | the Borrower shall have no right to replace the Agent; |
(ii) | neither the Agent nor any Lender shall have any obligation to find a replacement Lender; |
(iii) | in no event shall the Lender replaced under Clause 8.10(d) be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and |
(iv) | the Lender shall only be obliged to transfer its rights pursuant to Clause 8.10(d) once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer. |
(f) | A Lender shall perform the checks described in Clause 8.10(e)(iv) as soon as reasonably practicable following delivery of a notice referred to in Clause 8.10(d) and shall notify the Agent and the Borrower when it is satisfied that it has complied with those checks. |
8.11 | Mandatory repayment and cancellation of FATCA Protected Lenders. If, on the date falling 3 months before the earliest FATCA Application Date for any payment by a party to a Finance Document to a FATCA Protected Lender (or to the Agent for the account of that Lender), that Lender is not a FATCA Exempt Party and, in the opinion of that Lender (acting reasonably), that party will, as a consequence, be required to make a FATCA Deduction from a payment to that Lender (or to the Agent for the account of that Lender) on or after that FATCA Application Date (a “ FATCA Event ”): |
(a) | that Lender shall, reasonably promptly after that date, notify the Agent of that FATCA Event and the relevant FATCA Application Date; |
(b) | if, on the date falling 1 month before such FATCA Application Date, that FATCA Event is continuing and that Lender has not been repaid or replaced pursuant to Clause 8.10 (other than by reason of that Lender’s failure to comply with its obligations pursuant to Clause 8.10(d)): |
(i) | that Lender may, at any time between 1 month and 2 weeks before such FATCA Application Date, notify the Agent; |
(ii) | upon the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and |
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(iii) | the Borrower shall repay that Lender’s participation in the Loan in accordance with this Clause 8 on the last day of the Interest Period for the Loan occurring after the Agent has notified the Borrower or, if earlier, the last Business Day before the relevant FATCA Application Date. |
8.12 | Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clauses 20 or 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 sums payable under Clause 21.1(b) but without premium or penalty. |
8.13 | Application of partial prepayment. Each partial prepayment shall be applied against the repayment instalments specified in Clause 8.1 on a pro-rata basis. |
8.14 | No reborrowing . No amount prepaid may be reborrowed and, for the avoidance of doubt, any amount prepaid shall permanently cancel a corresponding amount of the Total Commitments. |
8.15 | Unwinding of Designated Transactions. On or prior to any repayment or prepayment of the Loan under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time thereafter pursuant to Clause 8.1. |
9 | CONDITIONS PRECEDENT/SUBSEQUENT |
9.1 | Documents, fees and no default. Each Lender’s obligation to contribute to 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 Agent and its lawyers; |
(b) | that on or before the Drawdown Date for an Advance, the Agent receives in respect of that Advance the documents described in Part B of Schedule 4 is in a form and substance satisfactory to the Agents and its lawyers; |
(c) | that, on or before the service of the first Drawdown Notice, the Agent has received the arrangement fee and structuring fee referred to in Clause 20.1, all accrued commitment fee payable pursuant to Clause 20.1 and the annual agency fee referred to in Clause 20.1 and has received payment of the expenses referred to in Clause 20.2; |
(d) | 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 Advance; |
(ii) | the representations and warranties in Clause 10 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and |
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(iii) | none of the circumstances contemplated by Clause 5.7 has occurred and is continuing; and |
(e) | that, if the ratio set out in Clause 15.1 were applied immediately following the making of the Advance, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; |
(f) | that the Agent has received, and found to be acceptable to it, any further 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 Borrower prior to the Drawdown Date. |
9.2 | Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Delivery Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify). |
9.3 | Condition subsequent - Charter. The Borrower will send to the Agent as soon as possible, but in no event later than 2 Business Days after the Delivery Date, documentary evidence that the Ship has been unconditionally delivered by the Borrower to, and accepted by, the Charterer under the Charter. |
10 | REPRESENTATIONS AND WARRANTIES |
10.1 | General. The Borrower represents and warrants to each Creditor Party as follows. |
10.2 | Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of Bermuda; and neither the Borrower nor any Guarantor is a FATCA FFI or a US Tax Obligor. |
10.3 | Share capital and ownership. The Borrower has an authorised share capital of 12,000 registered shares of $1.00 each, all of which shares have been issued in registered form, and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, by GasLog Carriers. |
10.4 | Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it: |
(a) | to purchase and pay for the Ship under the Shipbuilding Contract and register the Ship on Bermudan flag; |
(b) | to execute the Finance Documents to which the Borrower is a party and the Master Agreements; and |
(c) | to borrow under this Agreement, to enter into Designated Transactions under the Master Agreements and to make all the payments contemplated by, and to comply with, those Finance Documents to which the Borrower is a party and the Master Agreements. |
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. |
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10.6 | Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party and the Master Agreements, 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 the Borrower’s legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; 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) | the Borrower which is a party to that Finance Document 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 the Borrower of each Finance Document and each Master Agreement to which it is a party, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document and each Master Agreement 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 the Borrower; or |
(c) | any contractual or other obligation or restriction which is binding on the Borrower or any of its assets. |
10.9 | No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents or any Master Agreement to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction. |
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 Borrower or any Security Party to any Creditor Party in connection with any Finance Document or any Master Agreement satisfied the requirements of Clause 11.6; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower or any Guarantor from that disclosed in the latest of those accounts. |
10.12 | No litigation. No legal or administrative action involving the Borrower (including acting relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been |
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commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower’s financial position or profitability. |
10.13 | Validity and completeness of Shipbuilding Contract. The Shipbuilding Contract constitutes valid, binding and enforceable obligations of the parties thereto respectively in accordance with its terms; and: |
(a) | the copy of the Shipbuilding Contract delivered to the Agent before the Original Loan Agreement Date is a true and complete copy; and |
(b) | no amendments or additions to the Shipbuilding Contract have been agreed nor has any party to the Shipbuilding Contract waived any of their respective rights under those agreements. |
10.14 | No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrower, the Builder or a third party in connection with the purchase by the Borrower of the Ship, other than as disclosed to the Lenders in writing on or prior to the Original Loan Agreement Date. |
10.15 | Compliance with certain undertakings. At the Original Loan Agreement Date, the Borrower is in compliance with Clauses 11.3, 11.5, 11.9 and 11.16. |
10.16 | Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower, its business or the Ship. |
10.17 | ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Managers and the Ship have been complied with. |
10.18 | No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents and the Master Agreements, and the transactions and other arrangements affected or contemplated by the Finance Documents and the Master Agreements to which the Borrower is a party, the Borrower confirms (i) that it is acting for its own account; (ii) that it will use the proceeds of the Loan for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement; and (iii) that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council. |
10.19 | Sanctions . |
(a) | The Borrower, each Security Party, each other subsidiary of GasLog, their respective joint ventures and their respective directors, officers, employees, agents or representatives has been and is in compliance with Sanctions Laws. |
(b) | None of the Borrower, each Security Party, each other subsidiary of GasLog, their respective joint ventures and their respective directors, officers, employees, agents or representatives: |
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(i) | is a Restricted Party, or is involved in any transaction through which it is likely to become a Restricted Party; or |
(ii) | is subject to or involved in any inquiry, claim, action, suit, proceeding or investigation against it with respect to Sanctions Laws. |
11 | GENERAL UNDERTAKINGS |
11.1 | General. The Borrower 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 authorisation of the Majority Lenders, otherwise permit. |
11.2 | Title. The Borrower will hold the legal title to, and own the entire beneficial interest in the Ship, its 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 except for Permitted Security Interests. |
11.3 | Negative pledge. The Borrower will not create nor permit to arise any Security Interest (except for Permitted Security Interests) over any asset, present or future (including, but not limited to, the Borrower’s rights against a Swap Counterparty under a Master Agreement or all or any part of the Borrower’s interest in any amount payable to the Borrower by a Swap Counterparty under a Master Agreement). |
11.4 | No disposal of assets. The Borrower will not 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, |
other than in the ordinary course of business.
11.5 | No other liabilities or obligations to be incurred. The Borrower will not incur any liability (including, without limitation and for the avoidance of doubt, any contingent liability) or obligation except: |
(a) | liabilities and obligations under the Shipbuilding Contract, the Finance Documents to which it is a party and the Charter; |
(b) | obligations reasonably incurred in the ordinary course of operating and chartering the Ship; |
(c) | Designated Transactions; and |
(d) | liabilities and obligations under any loan made to the Borrower by its shareholders which is fully subordinated to the satisfaction of the Agent (and the Borrower undertakes to procure that no such loan shall be due nor capable of becoming due, nor will the Borrower pay or repay any amount under any such loan, until after the end of the Security Period). |
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11.6 | Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration. |
11.7 | Provision of financial statements. The Borrower will send to the Agent: |
(a) | as soon as possible, but in no event later than 150 days after the end of each financial year of the Borrower, the audited individual accounts of the Borrower; |
(b) | as soon as possible, but in no event later than 90 days after the end of the first 6-month period in each financial year of the Borrower, the unaudited individual accounts of the Borrower, certified as to their correctness by the chief financial officer of the Borrower; |
(c) | as soon as possible, but in no event later than 150 days after the end of each financial year of GasLog, the audited consolidated accounts of GasLog and its subsidiaries; |
(d) | as soon as possible, but in no event later than 90 days after the end of the first 6-month period in each financial year of GasLog, the unaudited consolidated accounts of GasLog and its subsidiaries, certified as to their correctness by the chief financial officer of GasLog; |
(e) | together with each set of accounts provided under 11.7(a), (b), (c) and (d), a compliance certificate in the form set out in Schedule 7 to this Agreement (or in such other form as the Agent may reasonably require) duly signed by the chief financial officers of the Borrower and GasLog together with such other financial and other information relating to the Borrower or GasLog as the Security Trustee may request for this purpose; and |
(f) | as soon as possible, but in no event later than 3 months after the end of each financial year of the Borrower, a 3 year financial projection for the Borrower in a format approved by the Agent. |
11.8 | Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.6 will: |
(a) | be prepared in accordance with all applicable laws and IFRS; |
(b) | give a true and fair view of the state of affairs of the Borrower (or, as the case may be, GasLog and its subsidiaries) at the date of those accounts and of its or their profit for the period to which those accounts relate; and |
(c) | fully disclose or provide for all significant liabilities of the Borrower (or, as the case may be, GasLog and its subsidiaries). |
11.9 | Shareholder and creditor notices. The Borrower will send the Agent, at the same time as they are despatched, copies of all communications which the Borrower is legally obliged to despatch to the Borrower’s shareholders or creditors or any class of them. |
11.10 | Consents and compliance with laws. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required: |
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(a) | for the Borrower to perform its obligations under any Finance Document to which it is party or any Master Agreement; |
(b) | for the validity or enforceability of any Finance Document to which it is a party or any Master Agreement; and |
(c) | for the Borrower to continue to own and operate the Ship; |
and the Borrower will comply with the terms of all such consents. Without prejudice to the other obligations under the Finance Documents, the Borrower shall comply in all respects with all laws and regulations to which it may be subject.
11.11 | Maintenance of Security Interests. The Borrower will: |
(a) | at its own cost, do all that it reasonably 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), 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, 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. |
11.12 | Notification of litigation. The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any Security Party, any Approved Manager or the Ship, the Earnings or the Insurances as soon as it becomes apparent to the Borrower that such action has been instituted or 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. |
11.13 | No amendment to Shipbuilding Contract. The Borrower will not agree to any material amendment or supplement to, nor waive or fail to enforce, the Shipbuilding Contract or any of its provisions without the prior written consent of the Agent (acting with the authorisation of the Majority Lenders) (such consent and authorisation not to be unreasonably withheld) save that the Borrower may, without requiring such consent of the Agent, agree with the Builder to amend the Shipbuilding Contract if such amendment: |
(a) | does not alter the intended type, commercial use, purpose or trading capacity of the Ship; |
(b) | does not alter the construction milestones for payment of the instalments of the contract price of the Ship under the Shipbuilding Contract; |
(c) | does not extend the scheduled delivery date for the Ship beyond the end of the Availability Period; |
(d) | does not alter the circumstances in which the Shipbuilding Contract may be cancelled, terminated or suspended or in which the Borrower and/or the Builder may elect to do so; |
(e) | will not materially reduce the Ship’s anticipated value when completed; and |
(f) | will not result in the Charterer under the Charter being entitled to either reject the Ship or cancel the Charter. |
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Provided that as soon as reasonably practicable after any such amendment permitted by this Clause 11.13, the Borrower will notify the Agent of such amendment.
11.14 | No amendment to Master Agreements. The Borrower will not agree to any amendment or supplement to, nor waive or fail to enforce, any Master Agreement or any of its provisions. For the avoidance of doubt, this clause will not prevent the Borrower from entering into or amending Designated Transactions or Confirmations |
11.15 | Principal place of business. The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated at the commencement of this Agreement; and the Borrower will not establish, nor do anything as a result of which it would be deemed to have, a place of business in any country other than Bermuda. |
11.16 | Confirmation of no default. The Borrower will, 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 the Borrower and which: |
(a) | states that no Event of Default or Potential Event of Default has occurred; or |
(b) | states 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. |
11.17 | Notification of default. The Borrower will notify the Agent as soon as the Borrower 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 keep the Agent fully up-to-date with all developments.
11.18 | Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating: |
(a) | to the Borrower or the Ship, the Earnings or the Insurances; 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, any Lender or any Swap Bank at any time.
11.19 | Provision of translation of documents. In relation to the documents referred to above, if the Agent so requires in respect of any of those documents, the Borrower will provide a certified English translation prepared by a translator approved by the Agent. |
11.20 | Access to books and records. The Borrower shall permit one or more representatives of the Agent, at the reasonable request of the Agent, to have reasonable access to its books and records and to inspect the same during normal business hours at its offices upon reasonable prior written notice. |
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11.21 | Press releases. The Borrower will send to the Agent, at the same time as they are dispatched, copies of all press releases which are issued by the Borrower. |
11.22 | “Know your customer” checks . The Borrower shall (and shall procure that the Guarantors shall) promptly upon the request of the Agent, the Lender or Swap Bank concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender or Swap Bank) or the Lender or Swap Bank concerned (for itself or on behalf of any prospective new Lender or new Swap Bank) in order for the Agent, the Lender or Swap Bank concerned or any prospective new Lender or new Swap Bank to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents and Master Agreements. |
11.23 | Termination of Charter or Replacement Charter . Upon termination or expiry of the Charter or a Replacement Charter, the Borrower shall, within 30 days after the date of such termination or cancellation, deposit $20,000,000 on an account with the Agent and the Borrower shall execute security, in favour of the Security Trustee (on behalf of the Lenders and the Swap Banks) and acceptable to the Lenders, over such account. Such cash collateral shall be released to the Borrower upon the Borrower having entered into a Replacement Charter (or, as the case may be, another Replacement Charter) and the Ship having been delivered and accepted under such Replacement Charter. |
11.24 | Charter non-extension |
(a) | If the Charterer does not exercise its option to extend the Charter and subject to Clause 11.24(b), with effect on and from 12 months prior to the expiry of the Charter, the Borrower shall on each Repayment Date pursuant to Clause 8.1 transfer 90 per cent. of any free cash (after deductions for operating expenses in relation to the Ship but otherwise the Borrower undertakes not to withdraw or transfer any other amount from the Earnings Account) on the Earnings Account (up to $10,000,000 in aggregate for the Ship) to an account with the Agent and shall execute security, in favour of the Security Trustee (on behalf of the Lenders and the Swap Banks) and acceptable to the Lenders, over such account (with the monies in such secured account (including any interest thereon) only being used for repaying, on the Maturity Date, firstly the Loan, and making the payments referred to in Clause 8.3, secondly any Swap Exposure and thereafter returned to the Borrower). |
(b) | However, if Clause 11.24(a) applies but subsequently the Borrower enters into a Replacement Charter and the Ship is delivered and accepted under such Replacement Charter, the monies in the secured account referred to in Clause 11.24(a) shall be released to the Borrower and Clause 11.24(a) shall thereupon cease to apply. |
11.25 | Financial covenants. |
(a) | In this Clause 11.25, Clause 12.4 and any compliance certificate delivered pursuant to Clause 11.7(e): |
“ Borrower’s Cash ” means, in relation to the Borrower at any date of determination under this Agreement, the aggregate value on the date of determination of the Borrower’s credit balances on any deposit, savings or current account and the Borrower’s cash in hand, each as determined in accordance with IFRS, but excluding any such credit balances and cash then subject to a Security Interest (other than any Security Interest arising under a Finance Document);
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“ Borrower’s Cash Equivalent ” means, in relation to the Borrower at any date of determination under this Agreement, the aggregate value of:
(a) | each certificate of deposit maturing within 1 year after the date of determination and issued by either the Agent or any other bank or financial institution approved by the Agent; |
(b) | each investment in marketable debt obligations issued or guaranteed by the government of the United States of America or any member state of the European Economic Area and having a rating of AAA from Standard & Poor’s Ratings Group or the equivalent with any other principal credit rating agency in the United States of America or Europe, or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within 1 year after the date of determination and not convertible or exchangeable to any other security; |
(c) | each commercial paper not convertible or exchangeable to any other security: |
(i) | for which a recognised trading market exists; |
(ii) | issued by an issuer incorporated in the United States of America or any member state of the European Economic Area; |
(iii) | which matures within 1 year after the date of determination; and |
(iv) | which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating; |
(d) | each Sterling bill of exchange eligible for rediscount at the Bank of England and accepted by a bank or financial institution approved by the Facility Agent (or their dematerialised equivalent); |
(e) | each investment in a money market fund which: |
(i) | has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited; |
(ii) | invests substantially all its assets in securities of the types described in paragraphs (a) to (d) above; and |
(iii) | can be turned into cash on not more than 30 days’ notice; and |
(f) | each other debt security approved by the Majority Lenders, |
in each case as determined in accordance with IFRS, to which the Borrower is beneficially entitled at that time and which is not issued or guaranteed by any Excluded Company nor subject to any Security Interest (other than any Security Interest arising under a Finance Document);
“ Excluded Companies ” means GasLog, GasLog Carriers and each subsidiary of GasLog or GasLog Carriers and, in the singular, means any of them;
“ GasLog Group ” means GasLog and its subsidiaries;
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“ GasLog Group’s Cash ” means, at any date of determination under this Agreement, the aggregate value on the date of determination of the GasLog Group’s credit balances on any deposit, savings or current account and the GasLog Group’s cash in hand, each as determined on a consolidated basis in accordance with IFRS, but excluding any such credit balances and cash then subject to a Security Interest (other than any Security Interest arising under a Finance Document);
“ GasLog Group’s Cash Equivalent ” means, at any date of determination under this Agreement, the aggregate value of:
(a) | each certificate of deposit maturing within 1 year after the date of determination and issued by either the Agent or any other bank or financial institution approved by the Agent; |
(b) | each investment in marketable debt obligations issued or guaranteed by the government of the United States of America or any member state of the European Economic Area and having a rating of AAA from Standard & Poor’s Ratings Group or the equivalent with any other principal credit rating agency in the United States of America or Europe, or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within 1 year after the date of determination and not convertible or exchangeable to any other security; |
(c) | each commercial paper not convertible or exchangeable to any other security: |
(i) | for which a recognised trading market exists; |
(ii) | issued by an issuer incorporated in the United States of America or any member state of the European Economic Area; |
(iii) | which matures within 1 year after the date of determination; and |
(iv) | which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating; |
(d) | each Sterling bill of exchange eligible for rediscount at the Bank of England and accepted by a bank or financial institution approved by the Facility Agent (or their dematerialised equivalent); |
(e) | each investment in a money market fund which: |
(i) | has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited; |
(ii) | invests substantially all its assets in securities of the types described in paragraphs (a) to (d) above; and |
(iii) | can be turned into cash on not more than 30 days’ notice; and |
(f) | each other debt security approved by the Majority Lenders, |
in each case as determined on a consolidated basis in accordance with IFRS, to which any member of the GasLog Group is alone (or together with any other member of the GasLog Group) beneficially entitled at that time and which is not issued or guaranteed by any
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Excluded Company nor subject to any Security Interest (other than any Security Interest arising under a Finance Document);
“ GasLog Group’s Current Assets ” means, at any date of determination under this Agreement, the amount of the current assets of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Current Liabilities ” means, at any date of determination under this Agreement, the amount of the current liabilities of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts (but excluding the short term portion of any long term Financial Indebtedness);
“ GasLog Group’s Debt Service ” means, at any date of determination under this Agreement, the aggregate amount of interest, other finance charges (in each case, whether or not paid, payable or capitalised) and principal accrued by the GasLog Group in respect of borrowings including:
(a) | the interest element of leasing and hire purchase payments; |
(b) | commitment fees, commissions, arrangement fees and guarantee fees; and |
(c) | amounts in the nature of interest payable in respect of any shares other than equity share capital, |
adjusted (but without double counting) by:
(i) | adding back the net amount payable (or deducting the net amount receivable) by members of the GasLog Group under any interest or (so far as they relate to interest) currency hedging arrangements; and |
(ii) | deducting interest income of the GasLog Group to the extent freely distributable to a member of the GasLog Group in cash, |
each as determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s EBITDA ” means, at any date of determination under this Agreement, the profit on ordinary activities before taxation of the GasLog Group, adjusted by:
(a) | adding back GasLog Group’s Interest Payable; |
(b) | deducting GasLog Group’s Interest Receivable; |
(c) | taking no account of any exceptional or extraordinary item; |
(d) | adding back depreciation and amortisation; |
(e) | deducting its share of profits from affiliates; and |
(f) | adding back its loss of profits from affiliates; |
determined, in each case, on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Interest Payable ” means, at any date of determination under this Agreement, all interest (including, without limitation, all net interest payable under interest rate swaps), all fees (including, but not limited to, commitment fees) and periodic
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financing charges including commissions, discounts and the interest element of rental payments or finance or capital leases (whether, in each case, paid, payable or capitalised), and all other costs, charges and expenses incurred by the GasLog Group in effecting, servicing or maintaining its GasLog Group’s Total Interest Bearing Debt determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Interest Receivable ” means, at any date of determination under this Agreement, all interest (including, without limitation, all net interest receivable under interest rate swaps), all fees (including, but not limited to, commitment fees) and periodic financing charges including commissions, discounts and the interest element of rental payments or finance or capital leases (whether, in each case, paid, payable or capitalised), and all other costs, charges and expenses received or receivable by the GasLog Group in connection with any Financial Indebtedness of a type referred to in the definition of GasLog Group’s Total Interest Bearing Debt determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Accounts;
“ GasLog Group’s Latest Accounts ” means, at any date, the consolidated accounts of the GasLog Group most recently delivered to the Agent pursuant to clause 11.3 of the Guarantee executed by GasLog;
“ GasLog Group’s Market Adjusted Net Worth ” means, at any date of determination under this Agreement, the GasLog Group’s Total Capitalisation adjusted to reflect the market value of the ships and all other assets owned by the GasLog Group, less GasLog Group’s Total Debt;
“ GasLog Group’s Total Capitalisation ” means, at any date of determination under this Agreement, the amount of the total assets of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Balance Sheet;
“ GasLog Group’s Total Debt ” means, at any date of determination under this Agreement, the amount of the total debt of the GasLog Group determined on a consolidated basis in accordance with IFRS and as shown in the GasLog Group’s Latest Balance Sheet;
“ GasLog Group’s Total Interest Bearing Debt ” means, in respect of the GasLog Group, at any time the aggregate of the following:
(a) | the outstanding principal amount of any moneys borrowed or raised; |
(b) | the outstanding principal amount of any acceptance under any acceptance credit; |
(c) | the outstanding principal amount of any bond, note, debenture, loan stock or other similar instrument; |
(d) | the capitalised element of indebtedness under a finance or capital lease; |
(e) | the outstanding principal amount of all moneys owing in connection with the sale or discounting of receivables (otherwise than on a non-recourse basis); |
(f) | the outstanding principal amount of any indebtedness arising from any deferred payment agreements arranged primarily as a method of raising finance or financing the acquisition of an asset; |
(g) | any fixed or minimum premium payable on the repayment or redemption of any instrument referred to in paragraph (c) above; |
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(h) | the outstanding principal amount of any indebtedness arising in connection with any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; and |
(i) | the outstanding principal amount of any indebtedness of any person of a type referred to in paragraphs (a) - (h) above which is the subject of a guarantee, indemnity or similar assurance against financial loss given by a member of the GasLog Group; and |
“ GasLog Group’s Working Capital ” means Current Assets less Current Liabilities.
(b) | The Borrower shall ensure that the consolidated financial position of the GasLog Group on a consolidated basis is such that at all times during the Security Period (other than in relation to the ratio of GasLog Group’s EBITDA to GasLog Group’s Debt Service in sub-clause “b(v)” below which shall apply from 31 December 2013): |
(i) | GasLog Group’s Working Capital is not less than $0; |
(ii) | there is available to the GasLog Group at all times after 24 May 2013 an aggregate amount of GasLog Group’s Cash and GasLog Group’s Cash Equivalents equal to at least the greater of (i) $20,000,000 and (ii) 3 per cent. of GasLog Group’s Total Interest Bearing Debt; |
(iii) | the ratio of GasLog Group’s Total Debt to GasLog Group’s Total Capitalisation is not more than 0.75 : 1; |
(iv) | GasLog Group’s Market Adjusted Net Worth is not less than $350,000,000; and |
(v) | the ratio of GasLog Group’s EBITDA to GasLog Group’s Debt Service is not less than 1.10 : 1. |
(c) | The Borrower shall ensure that there is available to the Borrower at all times from 19 July 2013 an aggregate amount of Borrower’s Cash and Borrower’s Cash Equivalents of at least US$1,500.000. |
11.26 | Sanctions. The Borrower shall ensure that none of the Borrower, the Security Parties, each other subsidiary of GasLog, their respective directors, officers, employees, agents or representatives and any other person acting on any of their behalves, is or will become a Restricted Person. |
11.27 | Sanctions - compliance with laws. The Borrower shall (and shall ensure that each Security Party, each other subsidiary of GasLog, each Approved Manager and the Charterer shall) comply with all laws or regulations: |
(a) | applicable to its business; and |
(b) | applicable to the Ship, its ownership, employment, operation, management and registration, |
including, without limitation, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions Laws and the laws of the flag of the Ship.
11.28 | Sanctions - provision of information. The Borrower shall (and shall ensure that each Security Party shall) supply to the Agent: |
(a) | promptly upon becoming aware of them, the details of any inquiry, claim, action, suit, proceeding or investigation pursuant to Sanctions Laws against it, any of its direct or indirect owners, GasLog or any subsidiary of GasLog, any of their respective joint |
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ventures or any of their respective directors, officers, employees, agents or representatives, as well as information on what steps are being taken with regards to answer or oppose such; and
(b) | promptly upon becoming aware that it, any of its direct or indirect owners. GasLog or any subsidiary of GasLog, any of their respective joint ventures or any of their respective directors, officers, employees, agents or representatives has become or is likely to become a Restricted Party. |
12 | CORPORATE UNDERTAKINGS |
12.1 | General. The Borrower 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 authorisation of the Majority Lenders, otherwise permit. |
12.2 | Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of Bermuda. |
12.3 | Negative undertakings. The Borrower will not: |
(a) | carry on any business other than the ownership, chartering, operation and supervision of construction of the Ship; or |
(b) | change its legal name, type of organisation or jurisdiction of organisation; or |
(c) | provide any form of credit or financial assistance to any person or enter into any transaction with or involving any person on terms which are, in any respect, less favourable to the 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 Agent and Citibank N.A., London Branch (in its capacity as the holder of the Earnings Account) 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; |
(f) | acquire, sell or otherwise dispose of in any manner whatsoever any asset, or enter into any transaction in a derivative other than Designated Transactions; |
(g) | enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation; or |
(h) | change its fiscal year end date. |
12.4 | Dividends |
(a) | GasLog shall be entitled to declare and pay dividends in such amount as it may decide provided that: |
(i) | there is available to the GasLog Group following the payment of such dividend an aggregate amount of GasLog Group’s Cash and GasLog Group’s Cash Equivalents equal to at least 4 per cent. of GasLog Group’s Total Interest Bearing Debt; and |
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(ii) | no Event of Default has occurred which is continuing and no Event of Default will result from the declaration or payment of such dividends. |
(b) | The Borrower shall be entitled to declare and pay dividends in such amount as it may decide provided that no Event of Default has occurred which is continuing and no Event of Default will result from the declaration or payment of such dividends. |
(c) | Save as permitted by this Clause 12.4, the Borrower will not pay any dividend nor make any other form of distribution nor effect any form of redemption, purchase or return of share capital. |
13 | INSURANCE |
13.1 | General . The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period (from the Delivery Date) except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit. |
13.2 | Maintenance of obligatory insurances. The Borrower shall keep the Ship insured at the expense of the Borrower against: |
(a) | fire and usual marine risks (including hull and machinery, hull and freight interest and excess risks); |
(b) | war risks (including, without limitation, risks relating to terrorism, piracy, war risk P&I and confiscation); |
(c) | protection and indemnity risks; and |
(d) | any other risks against which, having regard to practices and other circumstances prevailing at the relevant time and in the reasonable opinion of the Security Trustee requiring it, would be reasonable for the Borrower to insure. |
13.3 | Terms of obligatory insurances. The Borrower shall effect such insurances in respect of the Ship: |
(a) | in Dollars; |
(b) | in the case of fire and usual marine risks and war risks (including hull interest and freight interest), in an amount on an agreed value basis at least the greater of (i) 120 per cent. of the Loan and (ii) the Fair Market Value of the Ship; |
(c) | in the case of hull and machinery insurances (excluding hull interest and freight interest), in an amount on an agreed value basis of at least 80 per cent. of the Fair Market Value of the Ship provided that the Borrower always complies with the obligation in Clause 13.3(b); |
(d) | 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 and in the international marine insurance market; |
(e) | in relation to protection and indemnity risks in respect of the full tonnage of the Ship; |
(f) | on approved terms; and |
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(g) | 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, the Borrower shall procure that the obligatory insurances shall: |
(a) | whenever the Security Trustee requires, 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 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 such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party; and |
(e) | provide that the Security Trustee may make proof of loss if the Borrower fails to do so. |
13.5 | Renewal of obligatory insurances. The Borrower shall: |
(a) | at least 15 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 the Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and |
(ii) | obtain the Security Trustee’s approval to the matters referred to in paragraph (i); |
(b) | at least 5 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); 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. The Borrower shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee 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; |
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(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 10 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the 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. The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provides the Security Trustee with: |
(a) | a certified copy of the certificate of entry for the Ship; |
(b) | a letter or letters of undertaking in such form as may be required by the Security Trustee; and |
(c) | 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. The 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. The 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. The 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 | Compliance with terms of insurances. The Borrower shall not do nor omit to do (nor 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 under an obligatory insurance repayable in whole or in part; and, in particular: |
(a) | The 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 |
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the obligation contained in Clause 13.6(c)) 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) | The Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Ship unless approved by the underwriters of the obligatory insurances; |
(c) | the Borrower shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship 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); |
(d) | the Borrower shall procure that no change is made to the arrangements for insurances of war risks and allied perils (including piracy) coverage and shall comply at all times with provisions of trading to conditional or excluded areas; and |
(e) | the Borrower shall not employ the Ship, 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. |
13.12 | Alteration to terms of insurances. The Borrower shall not make nor agree to any material alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance. |
13.13 | Settlement of claims. The Borrower shall not 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. |
13.14 | Provision of copies of communications. The Borrower shall provide the Security Trustee, at the time of each such communication, copies of all material written communications between the 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) | the Borrower’s obligations relating to, under the obligatory insurances, declarations and payments of additional premiums or calls; and |
(ii) | any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances. |
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13.15 | Provision of information. In addition, the Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) reasonably 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 or dealing with or considering any matters relating to any such insurances; |
and the Borrower 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) no more than once per calendar year unless an Event of Default has occurred which is continuing.
13.16 | Mortgagee’s interest and additional perils insurances . The Security Trustee shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils insurance and a mortgagee’s interest insurance 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 and the Borrower 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. |
14 | SHIP COVENANTS |
14.1 | General. The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period (from the Delivery Date) except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit. |
14.2 | Ship’s name and registration. The Borrower shall keep the Ship registered in its name as a Bermudan Ship; shall not do, omit to 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. |
14.3 | Repair and classification. The Borrower shall keep the Ship 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 notation with the classification of the Ship specified in the Shipbuilding Contract free of overdue recommendations and conditions affecting the Ship’s class; and |
(c) | so as to comply with all laws and regulations applicable to vessels registered at ports in Bermuda or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code. |
14.4 | Modification. The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce its value. |
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14.5 | Removal of parts. The Borrower shall not remove any material part of the Ship, or any item of equipment installed on, the 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 Ship the property of the Borrower and subject to the security constituted by the Mortgage and the Deed of Covenant Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship. |
14.6 | Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports. |
14.7 | Inspection. The Borrower shall permit the Security Trustee (at any given time by no more than two (2) surveyors or other persons appointed by it for that purpose at the cost of the Borrower) to board the Ship at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections Provided that prior to the occurrence of an Event of Default which is continuing, any such inspection shall be carried out without interfering with or hindering the Ship’s safe and efficient operations. |
14.8 | Prevention of and release from arrest. The 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, the Earnings or the Insurances; |
(b) | all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and |
(c) | all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances; |
and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall procure its release by providing bail or otherwise as the circumstances may require.
14.9 | Compliance with laws etc . The 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, its ownership, operation and management or to the business of the Borrower; |
(b) | not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code, the ISPS Code and all Sanctions Laws; and |
(c) | in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers (and, in the case of piracy, verified by the International Group of P&I clubs) unless, prior to entering or trading to any such zone, the Borrower: |
(i) | takes reasonable preventive measures, and complies with all applicable provisions of the Charter, for the Ship entering or trading to such zone; and |
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(ii) | effects (at its own expense) any special, additional or modified insurance cover if such cover is necessary to keep the Ship properly insured in accordance with this Agreement notwithstanding such entry or trade; and |
(iii) | confirms in writing to the Security Trustee that the Borrower has complied with paragraphs (i) and (ii) above and provides any evidence of such compliance which may be reasonably requested by the Security Trustee. |
14.10 | Provision of information. The Borrower shall promptly provide the Security Trustee with any information which it reasonably requests regarding: |
(a) | the Ship, its employment and position; |
(b) | the Earnings and payments and amounts due to the master and crew of the Ship; |
(c) | any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made in respect of the Ship; |
(d) | any towages and salvages; |
(e) | its compliance, the technical Approved Managers’ compliance and the compliance of the Ship with the ISM Code and the ISPS Code, |
and, upon the Security Trustee’s request, provide copies of any current charter relating to the Ship, of any current charter guarantee and copies of the Borrower’s or the technical Approved Manager’s Document of Compliance.
14.11 | Notification of certain events. The Borrower shall immediately notify the Security Trustee by fax, confirmed forthwith 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 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, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of the Ship for hire; |
(e) | any intended dry docking of the Ship; |
(f) | any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident; |
(g) | any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, any technical Approved Manager or otherwise in connection with the Ship; or |
(h) | any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with; |
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and the Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Borrower’s, that Approved Manager’s or any other person’s response to any of those events or matters.
14.12 | Restrictions on chartering, appointment of managers etc. The Borrower shall not: |
(a) | let the Ship on demise charter for any period; |
(b) | save for any Charter or Replacement Charter, enter into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 13 months; |
(c) | save for any Charter or Replacement Charter, enter into any charter in relation to the Ship under which more than 2 months’ hire (or the equivalent) is payable in advance; |
(d) | save for any Charter or Replacement Charter, charter the Ship otherwise than on bona fide arm’s length terms at the time when the Ship is fixed; |
(e) | appoint a manager of the Ship other than an Approved Manager (and then provided that that Approved Manager has provided to the Security Trustee the undertaking referred to in Schedule 4, Part B, Paragraph 4(a)) nor agree to any material alteration to the terms of any Approved Manager’s appointment; |
(f) | de-activate or lay up the Ship; or |
(g) | put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $5,000,000 (or the equivalent in any other currency) unless the Borrower has established to the reasonable satisfaction of the Agent that the Borrower has sufficient reserves to pay for the cost of such work. |
14.13 | Notice of Mortgage. The Borrower shall keep the Mortgage registered against the Ship as a valid first priority mortgage, carry on board the 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 the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Security Trustee. |
14.14 | Sharing of Earnings. The Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings. |
14.15 | ISPS Code. The Borrower shall comply with the ISPS Code and in particular, without limitation, shall: |
(a) | procure that the Ship and the company responsible for the Ship’s compliance with the ISPS Code comply with the ISPS Code; and |
(b) | maintain for the Ship an ISSC; and |
(c) | notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC. |
15 | SECURITY COVER |
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15.1 | Minimum required security cover. Clause 15.2 applies if the Agent notifies the Borrower that: |
(a) | the market value (determined as provided in Clause 15.3) of the Ship; plus |
(b) | the net realisable value of any additional security previously provided under this Clause 15; |
is below 120 per cent. of the Loan.
15.2 | Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 15.1, the Borrower shall, within 1 month after the date on which the Agent’s notice is served, either: |
(a) | provide, or ensure that a third party provides, additional security, in favour of the Security Trustee (on behalf of the Lenders and the Swap Banks), of a type acceptable to the Majority Lenders which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require; or |
(b) | prepay such part (at least) of the Loan as will eliminate the shortfall. |
15.3 | Valuation of Ship. The market value of the Ship shall be determined (i) on delivery of the Ship, (ii) on the date each compliance certificate is provided in relation to the annual accounts of the Borrower, (iii) upon request of the Agent (acting on the instructions of the Majority Lenders) 6 months after a valuation was last submitted and (iv) upon the request of the Agent if the Agent considers that an Event of Default has occurred or that there may be a risk that the requirements of Clause 15.1 are not then being complied with. The “ Fair Market Value ” of the Ship is that shown by the average of 2 valuations each prepared: |
(a) | as at a date not more than 45 days previously; |
(b) | by 2 Approved Shipbrokers, with 1 selected by the Agent and 1 selected by the Borrower but following an Event of Default which is continuing, with both selected by the Agent; |
(c) | with or without physical inspection of the Ship (as the Agent may require); |
(d) | 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; |
(e) | after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale. |
15.4 | Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.3. |
15.5 | Valuations binding. Any valuation under Clause 15.2, 15.3 or 15.4 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Security Interest. |
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15.6 | Provision of information. The Borrower shall promptly provide the Agent and any shipbroker or expert acting under Clause 15.3 or 15.4 with any information which the Agent or the shipbroker or expert may reasonably request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Majority Lenders (or the expert appointed by them) consider prudent. |
15.7 | Payment of valuation expenses. Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any shipbroker or expert instructed by the Agent under this Clause (no more than twice per year unless an Event of Default has occurred which is continuing) and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause. |
15.8 | Application of prepayment . Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.2(b). |
16 | PAYMENTS AND CALCULATIONS |
16.1 | Currency and method of payments. All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it: |
(a) | by not later than 11.00 a.m. (New York City time) on the due date; |
(b) | 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); |
(c) | in the case of an amount payable by a Lender to the Agent or by the Borrower to the Agent or any Lender, to such account with such bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and |
(d) | in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties. |
16.2 | Payment on non-Business Day. If any payment by the 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. |
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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 under a Finance Document for distribution or remittance to a Lender, a Swap Counterparty or the Security Trustee shall be made available by the Agent to that Lender, that Swap Counterparty or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender, the Swap Counterparty or, as the case may be, 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 and/or the Swap Counterparties generally shall be distributed by the Agent to each Lender and each Swap Counterparty 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 or a Swap Counterparty, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or that Swap Counterparty under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or that Swap Counterparty 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 Borrower, any Lender or any Swap Counterparty any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender or that Swap Counterparty 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 Borrower, or a Lender or a Swap Counterparty, without first having received that sum, the Borrower or the Lender concerned or (as the case may be) the Swap Counterparty 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 Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower 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 Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the |
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Finance Documents and all payments in respect of those amounts made by the Borrower 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 Borrower or a Security Party to a Creditor Party, those accounts shall 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 after service of notice on the Borrower under Clause 19.2(a)(i) or (ii) shall be applied: |
(a) | FIRST: in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent and the Security Trustee under the Finance Documents; |
(b) | SECONDLY: in or towards payment pro rata of any accrued interest or commission due but unpaid under this Agreement; |
(c) | THIRDLY: in or towards payment pro rata of any principal due but unpaid under this Agreement; |
(d) | FOURTHLY: in or towards payment pro rata of any other amounts due but unpaid under any Finance Document; |
(e) | FIFTHLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, 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 provisions of Clause 17.1(a), 17.1(b), 17.1(c) and 17.1(d); |
(f) | SIXTHLY: in or towards satisfaction pro rata of any amount then due and payable under any Master Agreement which relates to a Designated Transaction; |
(g) | SEVENTHLY: in retention of an amount equal to any amount not then due and payable under any Master Agreement which relates to a Designated Transactions but which the Agent, by notice to the Borrower, 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 provisions of Clause 17.1(f); and |
(h) | EIGHTHLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it. |
17.2 | Variation of order of application. The Agent may, with the authorisation of the Majority Lenders and the Swap Counterparties, by notice to the Borrower, 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 Agent 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 |
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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 Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party. |
18 | APPLICATION OF EARNINGS |
18.1 | Payment of Earnings. The 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 are paid to the Earnings Account. The Earnings shall, subject to Clause 11.24, be available to the Borrower provided that no Event of Default has occurred and is continuing. |
18.2 | Location of accounts. The Borrower shall promptly: |
(a) | comply with any requirement of the Agent as to the location or re-location of the Earnings Account; and |
(b) | execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Account. |
18.3 | Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Account without 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. |
19 | EVENTS OF DEFAULT |
19.1 | Events of Default. An Event of Default occurs if: |
(a) | The 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: |
(i) | Clauses 9.2, 9.3, 11.2, 11.3, 11.4, 11.25(b), 12.2, 12.3, 12.4 or 15.2 of this Agreement; or |
(ii) | clauses 11.13 and 11.15 of the Guarantee from GasLog; or |
(iii) | clause 11.12 of the Guarantee from GasLog Carriers; or |
(c) | any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 10 Business Days after written notice from the Agent requesting action to remedy the same; or |
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(d) | (subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c)); or |
(e) | any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or |
(f) | any of the following occurs in relation to any Financial Indebtedness of a Relevant Person in respect of a sum of, or sums aggregating, $1,000,000 or more (in the case of a Relevant Person other than a Guarantor) or $5,000,000 or more (in the case of a Guarantor) or the equivalent in another currency: |
(i) | any Financial Indebtedness of a Relevant Person is not paid when due; 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; |
(g) | any of the following occurs in relation to a Relevant Person: |
(i) | a Relevant Person becomes 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, $1,000,000 or more (in the case of a Relevant Person other than a Guarantor) or $5,000,000 or more (in the case of a Guarantor) or in either case the equivalent in another currency; or |
(iii) | any administrative or other receiver is appointed over any asset of a Relevant Person; or |
(iv) | an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or |
(v) | any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or |
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(vi) | a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or |
(vii) | a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or the Guarantors 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 |
(viii) | an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 30 days of being made or presented, or (bb) within 30 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or |
(ix) | a Relevant Person or its directors take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or |
(x) | any meeting of the members or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or |
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(xi) | in a country other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Majority Lenders is similar to any of the foregoing; or |
(h) | the Borrower ceases or suspends carrying on its business or a part of its business which, in the reasonable opinion of the Majority Lenders, is material in the context of this Agreement; or |
(i) | it becomes unlawful or impossible: |
(i) | for the 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, 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 |
(j) | any official consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders reasonably consider material of a Finance Document or the Shipbuilding Contract 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 |
(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 |
(m) | an Event of Default (as defined in section 14 of a Master Agreement) occurs which is continuing; or |
(n) | 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 consent of the Agent, acting with the authorisation of the Majority Lenders; or |
(o) | without the prior written consent of the Agent (acting with the authorisation of the Majority Lenders), the Holding Company ceases to hold the legal title and beneficial ownership of: |
(i) | on or before 4 April 2015, 20 per cent. of the issued and allotted shares of GasLog; or |
(ii) | following 4 April 2015, 15 per cent. of the issued and allotted shares of GasLog; or |
(p) | there occurs or develops a change in the financial position, state of affairs or prospects of the Borrower or any Security Party since 31 December 2010 which, in the reasonable opinion of the Majority Lenders, has a material adverse effect on the Borrower’s or any |
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Security Party’s ability to discharge its liabilities under the Finance Documents as they fall due. |
19.2 | Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default which is continuing: |
(a) | the Agent may, and if so instructed by the Majority Lenders, the Agent shall: |
(i) | serve on the Borrower a notice stating that the Commitments and all other obligations of each Lender to the Borrower under this Agreement are terminated; and/or |
(ii) | serve on the Borrower 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), 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), the Security Trustee, the Agent, the Lenders and/or the Swap Counterparties are entitled to take under any Finance Document or any applicable law. |
19.3 | Termination of Commitments. On the service of a notice under Clause 19.2(a)(i), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall terminate. |
19.4 | Acceleration of Loan. On the service of a notice under Clause 19.2(a)(ii), the Loan, all accrued interest and all other amounts accrued or owing from the 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 Clauses 19.2(a)(i) or (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 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, each Swap Counterparty, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, 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 the Borrower or any Security Party with any form of claim or defence. |
19.7 | Creditor Parties’ rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or Swap Counterparties under a Finance Document, a Master Agreement or the general law; and, in particular, this Clause is without prejudice to Clause 3.1. |
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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 Borrower 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 directly and mainly caused by the dishonesty 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 “ Relevant Persons ” means the Borrower, the Security Parties and each technical Approved Manager and, in the singular, means any of them. |
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. |
19.11 | Position of Swap Counterparties. Prior to such time as the Loan has been repaid in full, neither the Agent nor the Security Trustee shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this Clause 19, to have any regard to the requirements of a Swap Counterparty except to the extent that such Swap Counterparty is also a Lender. |
20 | FEES AND EXPENSES |
20.1 | Arrangement, commitment, agency fees. The Borrower shall pay to the Agent: |
(a) | on the Original Loan Agreement Date, a non-refundable arrangement fee and a non-refundable structuring fee each in an amount previously agreed in writing between the Agent and GasLog, for distribution among the Lenders and the Lead Arrangers in the proportions agreed by the Agent and the Lenders; |
(b) | quarterly in arrears and on each Drawdown Date during the period from (and including) 10 August 2011 to the earlier of (i) the final Drawdown Date and (ii) the end of the Availability Period and on the last day of that period, for the account of the Lenders, a commitment fee at the rate of 0.7875 per cent. per annum on the amount of the Total Commitments less the amount of the Loan, for distribution among the Lenders pro rata to their Commitments; and |
(c) | on the Original Loan Agreement Date and on each anniversary thereof during the Security Period, an annual agency fee of an amount previously agreed in writing between the Agent and GasLog. |
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20.2 | Costs of negotiation, preparation etc. The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document. |
20.3 | Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Creditor Party concerned the amount of all expenses (reasonably in the case of (a), (b) and (c) below) incurred by a Creditor Party 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 Swap Banks, the Majority Lenders or the Creditor Party concerned under or in connection with a 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; or |
(d) | any step taken by the Creditor Party 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 | Documentary taxes. The Borrower 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 claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax. |
20.5 | Financial Conduct Authority, Prudential Regulation Authority etc fees. The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Lender concerned the amounts which the Agent from time to time notifies the Borrower that a Lender has notified the Agent to be necessary to compensate that Lender for the cost attributable to its Contribution resulting from the imposition from time to time under or pursuant to the Bank of England Act 1998 and/or by the Bank of England and/or by the Financial Conduct Authority and/or by the Prudential Regulation Authority (and/or, in any such case, by any other authority which replaces all or any of its functions) of a requirement to pay fees calculated by reference to liabilities used to fund that Lender’s Contribution. |
20.6 | 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 20 and which indicates the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due. |
21 | INDEMNITIES |
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21.1 | Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, 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 the Lender claiming the indemnity; |
(b) | the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period; |
(c) | any failure (for whatever reason) by the Borrower 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 Borrower on the amount concerned under Clause 7); |
(d) | the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19; |
(e) | any claim, action, civil penalty or fine against, any settlement, and any other kind of loss or liability, and all reasonable costs and expenses (including reasonable counsel fees and disbursements) incurred by any Creditor Party as a result of conduct of the Borrower, any Security Party or any of their respective partners, directors, officers, employees, agents or advisors, that violates any Sanctions Laws, |
and in respect of any tax (other than tax on its overall net income) 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 | Breakage costs. Without limiting its generality, Clause 21.1 covers any Break Costs or claim, expense, liability or loss including a loss of prospective profit, incurred by a Lender: |
(a) | in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and |
(b) | in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one. |
21.3 | Miscellaneous indemnities. The Borrower shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, expenses, liabilities and losses which may be made or brought against or incurred by a Creditor Party, in any country, as a result of or in connection with: |
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(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; or |
(b) | any other Pertinent Matter; |
other than claims, expenses, liabilities and losses which are shown to have been caused by the dishonesty or wilful misconduct of the officers or employees of the Creditor Party concerned.
Without prejudice to its generality, this Clause 21.3 covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, any Environmental Law or any Sanctions Laws.
21.4 | Currency indemnity. If any sum due from the Borrower 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 Borrower 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 Borrower 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 Borrower 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 to Master Agreements. For the avoidance of doubt, Clause 21.4 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of that 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 the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due. |
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21.7 | Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrower 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 Borrower 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 the Borrower is required by law to make or a FATCA Deduction. |
22.2 | Grossing-up for taxes. If the Borrower is required by law to make a tax deduction (other than a FATCA Deduction) from any payment: |
(a) | the Borrower shall notify the Agent as soon as it becomes aware of the requirement; |
(b) | the 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, the Borrower 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 | Application to Master Agreements. For the avoidance of doubt, Clause 22 does not apply in respect of sums due from the Borrower to a Swap Counterparty under or in connection with a Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of that Master Agreement shall apply. |
22.6 | FATCA |
(a) | FATCA Information |
(i) | Subject to paragraph (iii) below, each party to a Finance Document shall, within 10 Business Days of a reasonable request by another party to the Finance Documents: |
(A) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(B) | supply to the requesting party such forms, documentation and other information relating to its status under FATCA (including its applicable |
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“passthru percentage” or other information required under the U.S. Treasury regulations or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purposes of such requesting party’s compliance with FATCA. |
(ii) | If a party to any Finance Document confirms to another party pursuant to Clause 22.6(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 and the Agent reasonably promptly. |
(iii) | Sub-clause (i) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any fiduciary duty or any duty of confidentiality. |
(iv) | If a party to any Finance Document fails to confirm its status or to supply forms, documentation or other information requested in accordance with sub-clause (i) above (including, for the avoidance of doubt, where sub-clause (iii) above applies), then: |
(A) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and |
(B) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable passthru percentage is 100 per cent., |
until (in each case) such time as the party in question provides the requested confirmation, forms, documentation or other information.
(b) | FATCA Deduction |
(i) | Each party to a Finance 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 a Finance 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) | Each party to a Finance 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 relevant party to a Finance Document to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Finance Parties. |
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: |
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(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 Borrower, 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 Borrower under Clause 23.2, the Notifying Lender’s 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 Borrower shall prepay the Notifying Lender’s Contribution 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 Original Loan Agreement Date of a law or an alteration after the Original Loan Agreement Date 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) | complying with any regulation (including any 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 Original Loan Agreement Date, |
the Notifying Lender (or a parent company of it) has incurred or will incur an “ increased cost ”.
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24.2 | Meaning of “ increased cost ”. In this Clause 24, “ increased cost ” means, in relation to a Notifying Lender: |
(a) | 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; |
(b) | 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; |
(c) | 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 |
(d) | 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 an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22 or an item attributable to a FATCA Deduction required to be made by a party to a Finance Document or an item arising directly out of the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004, in the form existing on the Original Loan Agreement Date (“ Basel II ”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Creditor Party or any of its affiliates) provided that this exception shall not apply to any Increased Cost arising directly or indirectly from the implementation or application of or compliance with the global regulatory standards on bank capital adequacy and liquidity referred to by the Basel Committee as “Basel III” or the “Basel III Framework” published in December 2010, together with any further guidance or standards in relation to “Basel III” or the “Basel III Framework” published or to be published by the Basel Committee.
For the purposes of this Clause 24.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.
24.3 | Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1. |
24.4 | Payment of increased costs. The Borrower 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 Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost. |
24.5 | Notice of prepayment. If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4, the Borrower may give the |
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Agent not less than 14 days’ notice of their intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period |
24.6 | Prepayment; termination of Commitment. A notice under Clause 24.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s 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 Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
24.7 | Application of prepayment. Clause 8 shall apply in relation to the prepayment. |
25 | 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 the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents or Master Agreements provided that Citibank N.A., London Branch acting in its capacity as a Swap Bank shall not be entitled to set off amounts due to it under the Master Agreement to which it is a party against amounts in the Earnings Account held by Citibank N.A., London Branch in its capacity as an account bank; and |
(b) | for that purpose: |
(i) | break, or alter the maturity of, all or any part of a deposit of the 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 Borrower 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. |
25.4 | No Security Interest. This Clause 25 gives the Creditor Parties a contractual right of set-off only and does not create any equitable charge or other Security Interest over any credit balance of the Borrower. |
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26 | TRANSFERS AND CHANGES IN LENDING OFFICES |
26.1 | Transfer by Borrower. The Borrower may not, without the consent of the Agent, given on the instructions of all the Lenders transfer any of its rights, liabilities or obligations under any Finance Document. |
26.2 | Transfer by a Lender. Subject to Clauses 26.4 and 26.11 and the proviso to this Clause 26.2, a Lender (the “ Transferor Lender ”) may at any time, with the consent of the Agent and (prior to an Event of Default) the Borrower (such consent of the Borrower not to be unreasonably withheld or delayed) but not any Security Party, cause: |
(a) | its rights in respect of all or part (subject to a minimum of $10,000,000) of its Contribution; or |
(b) | its obligations in respect of all or part (subject to a minimum of $10,000,000) 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 (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 Provided that a Lender may, without requiring the consent of the Borrower or any Security Party, transfer any its rights and/or obligations mentioned above at no cost or expense to the Borrower to:
(i) | any other branch of that Lender; |
(ii) | any direct or indirect subsidiary or affiliate of that Lender; or |
(iii) | a company of which that Lender is a subsidiary. |
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 Agreement.
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 Borrower, the Security Parties, the Security Trustee, each of the other Lenders and each of Swap Banks; |
(b) | on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; |
(c) | send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) |
but the Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Transferor Lender and the Transferee Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to that Transferee Lender.
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26.4 | Effective Date of Transfer Certificate. A Transfer Certificate becomes 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, and the fee referred to in Clause 26.11 has been received by the Agent, 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 is binding on, or effective in relation to, the Borrower, any Security Party, the Agent, the Security Trustee or a Swap Bank 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 Borrower 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 takes 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 are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender; |
(b) | the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate; |
(c) | the Transferee Lender becomes 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 becomes 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 ceases to be bound by them; |
(e) | any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks 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 Borrower or any Security Party against the Transferor Lender had not existed; |
(f) | the Transferee Lender becomes 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 ceases to be entitled to them; and |
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(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 Borrower 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 | Maintenance of register of Lenders . During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days prior notice. |
26.9 | Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents. |
26.10 | Authorisation of Agent to sign Transfer Certificates. The Borrower, the Security Trustee, each Lender and each Swap Bank irrevocably authorises the Agent to sign Transfer Certificates on its behalf. |
26.11 | Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to receive a registration fee of $3,500 from the Transferor Lender or (at the Agent’s option) the Transferee Lender. |
26.12 | 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 Borrower, 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. |
26.13 | Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature. |
26.14 | 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. |
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26.15 | Notification. On receiving such a notice, the Agent shall notify the Borrower 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. |
26.16 | Replacement of Reference Bank. If any Reference Bank ceases to be a Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 then, unless the Borrower, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting the Borrower, shall appoint another bank (whether or not a Lender) to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank’s appointment shall cease to be effective. |
26.17 | Security over Lenders’ rights . In addition to the other rights provided to Lenders under this Clause 26, each Lender may without consulting with or obtaining consent from the Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation: |
(a) | any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and |
(b) | in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities; |
except that no such charge, assignment or Security Interest shall:
(i) | release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or |
(ii) | require any payments to be made by the Borrower or any Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents. |
27 | VARIATIONS AND WAIVERS |
27.1 | Variations, waivers etc. by Majority Lenders. Subject to Clauses 27.2 and 27.3, 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 Borrower, 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; |
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(c) | a change to any Lender’s Commitment; |
(d) | an extension of Availability Period; |
(e) | a change to the definition of “ Creditor Parties ”, “ Confirmation ”, “ Designated Transaction ”, “ Finance Documents ”, “ Majority Lenders ”, “ Master Agreement ”, “ Secured Liabilities ”, “ Swap Bank ”, “ Swap Counterparty ”, “ Swap Exposure ” or “ Transaction ”; |
(f) | a change to Clause 3 or this Clause 27; |
(g) | any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; |
(h) | a change to any of the consent rights granted to the Swap Banks under the Finance Documents; and |
(i) | any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s and Swap Bank’s consent is required. |
27.3 | FATCA. |
(a) | If the Agent or a Lender reasonably believes that an amendment or waiver to any term of this Agreement, may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a party to a Finance Document being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Borrower and the Agent accordingly, that amendment or waiver may not be effected without the consent of the Agent or that Lender (as the case may be). The consent of a Lender shall not be required pursuant to this Clause 27.3(a) if that Lender is a FATCA Protected Lender. |
(b) | No amendment or waiver may be made before the date falling 10 Business Days after the terms of an amendment or waiver have been notified by the Agent to the Lenders, unless each Lender is a FATCA Protected Lender. The Agent shall notify the Lenders reasonably promptly of any amendments or waivers proposed by the Borrower. |
27.4 | Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1, 27.2 and 27.3, 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, another Finance Document or a Master Agreement; or |
(b) | an Event of Default; or |
(c) | a breach by the Borrower or a Security Party of an obligation under a Finance Document, a Master Agreement or the general law; or |
(d) | any right or remedy conferred by any Finance Document, by a Master Agreement or by the general law; |
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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.
28 | NOTICES |
28.1 | General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter 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: |
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 Borrower, the Lenders, the Swap Banks 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; |
(b) | a notice which is sent by fax 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; |
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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 1 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: |
(a) | 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 |
(b) | 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. Any communication to be made between the Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender: |
(a) | agree that, unless and until notified to the contrary, this is to be an accepted form of communication; |
(b) | 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 |
(c) | notify each other of any change to their respective addresses or any other such information supplied to them. |
Any electronic communication made between the Agent and a Lender will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender to the Agent, only if it is addressed in such a manner as the Agent 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 28, “ 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 |
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(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 | Counterparts. A Finance Document may be executed in any number of counterparts. |
29.4 | 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. |
30 | LAW AND JURISDICTION |
30.1 | 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. |
30.2 | Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any Dispute. |
30.3 | Choice of forum for the exclusive benefit of the Creditor Parties. Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right: |
(a) | to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; 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. |
The Borrower shall not commence any proceedings in any country other than England in relation to a Dispute.
30.4 | Process agent. The Borrower irrevocably appoints Unisea Maritime Limited at its office for the time being, presently at 14 Headfort Place, London SW1X 7DH, 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 a Dispute. |
30.5 | Creditor Party rights unaffected. Nothing in this Clause 30 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. |
30.6 | Meaning of “proceedings”. In this Clause 30, “ proceedings ” means proceedings of any kind, including an application for a provisional or protective measure and a “ Dispute ” means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement. |
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THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement and amended, supplemented and (if applicable) restated on the date of each Amending Agreement.
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SCHEDULE
1
LENDERS AND COMMITMENTS
Lender | Lending Office |
Commitment
(US Dollars) |
Nordea Bank Finland Plc,
London Branch |
8th Floor
City Place House 55 Basinghall Street London EC2V 5NB |
$92,333,333.34 |
ABN AMRO Bank N.V. |
Coolsingel 93
3012 AE Rotterdam The Netherlands |
$92,333,333.33 |
Citibank International Plc,
London Branch |
Citigroup Centre
33 Canada Square Canary Wharf London E14 5LB |
$92,333,333.33 |
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SCHEDULE
2
SWAP BANKS
Swap Bank | Booking Office |
Nordea Bank Finland Plc |
Aleksanterinkatu 36
(FIN-00020 NORDEA) 00100 Helsinki Finland |
ABN AMRO Bank N.V. |
Coolsingel 93
3012 AE Rotterdam The Netherlands |
Citibank N.A., London Branch |
Citigroup Centre
33 Canada Square Canary Wharf London E14 5LB |
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SCHEDULE
3
DRAWDOWN NOTICE
To: | Nordea Bank Finland Plc, London Branch |
8th Floor | |
City Place House | |
55 Basinghall Street | |
London EC2V 5NB | |
Attn: | Loans Administration |
[ date ]
DRAWDOWN NOTICE
1 | We refer to the loan agreement (the “ Loan Agreement ”) dated [ l ] 2011 and made between ourselves, as Borrower, the Lenders referred to therein, yourselves, ABN AMRO Bank N.V. and Citibank International Plc, London Branch as Joint Lead Arrangers and yourselves as Agent and as Security Trustee in connection with a facility of up to (originally) US$277,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice. |
2 | We request to borrow as follows: |
(a) | Amount: US$[ l ]; |
(b) | Drawdown Date: [ l ]; |
(c) | Duration of the first Interest Period shall be [ l ] months; and |
(d) | Payment instructions: account of [ l ] and numbered [ l ] with [ l ] of [ l ]. |
3 | We represent and warrant that: |
(a) | the representations and warranties in Clause 10 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing; |
(b) | no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Loan. |
4 | This notice cannot be revoked without the prior consent of the Majority Lenders. |
[Name of Signatory]
for and on behalf of
GAS-six Ltd.
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SCHEDULE
4
CONDITION PRECEDENT DOCUMENTS
PART A
The following are the documents referred to in Clause 9.1(a).
1 | A duly executed original of each Finance Document (and of each document required to be delivered by each Finance Document) other than those referred to in Part B. |
2 | Copies of the constitutional documents of the Borrower and each Security Party. |
3 | Copies of resolutions of the shareholders (only if required to obtain a satisfactory legal opinion from the lawyers referred to in paragraph 10 below) and directors of the Borrower and each Security Party authorising the execution of each of the Finance Documents to which the Borrower or that Security Party is a party and, in the case of the Borrower, authorising named officers to give the Drawdown Notice and other notices under this Agreement. |
4 | The original of any power of attorney under which any Finance Document is executed on behalf of the Borrower or a Security Party. |
5 | Copies of all consents which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document or the Shipbuilding Contract. |
6 | Signed copies of the Shipbuilding Contract and of all documents signed or issued by the Borrower or the Builder under or in connection with it. |
7 | The originals of any mandates or other documents (including, without limitation, any document necessary for electronic banking purposes) required in connection with the opening or operation of the Earnings Account. |
8 | Documentary evidence that the agent for service of process named in Clause 30 has accepted its appointment. |
9 | Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of Bermuda and such other relevant jurisdictions as the Agent may require. |
10 | Receipt of all documentation required by any Creditor Party in respect of the Borrower or any Security Party pursuant to that Creditor Party’s “Know your client” requirements. |
11 | A letter from (amongst others) the Borrower to the Agent confirming as at the Original Loan Agreement Date: |
(a) | the identity of the company which is the legal holder and direct beneficial owner of 91.3 per cent. of the entire authorised and issued share capital of GasLog; |
(b) | the identity of the company which (together with its affiliate(s)) is the legal holder and direct beneficial owner of 40 per cent. of the entire authorised and issued share capital of the company referred to in paragraph (a) above; and |
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(c) | the identity of the company which (together with its affiliate(s)) is the legal holder and direct beneficial owner of 60 per cent. of the entire authorised and issued share capital of the company referred to in paragraph (a) above, |
and confirmation by the Agent that such companies are acceptable to the Lenders in their sole discretion.
12 | If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent. |
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PART B
The following are the documents referred to in Clause 9.1(b) required before the drawdown of the Advance to be made on or before the Delivery Date.
1 | A duly executed original of the Mortgage, the Deed of Covenant, the Management Agreement Assignment, the General Assignment and the Charter Assignment relating to the Ship (and of each document to be delivered by each of them). |
2 | Signed copies of the Master Charterparty Agreement and the Charter. |
3 | Documentary evidence that and/or the Agent being satisfied that: |
(a) | the Ship on the Delivery Date will be unconditionally delivered by the Builder to, and accepted by, the Borrower under the Shipbuilding Contract, and the full purchase price payable under the Shipbuilding Contract (in addition to the part to be financed by the Advance) shall have been duly paid; |
(b) | the Ship on the Delivery Date will be definitively and permanently registered in the name of the Borrower under Bermudan flag; |
(c) | the Ship on the Delivery Date will be in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents; |
(d) | the Ship on the Delivery Date will maintain highest notation with its classification society free of all recommendations and conditions of such classification society; |
(e) | the Mortgage on the Delivery Date will be duly registered against the Ship as a valid first preferred Bermudan ship mortgage in accordance with the laws of Bermuda; and |
(f) | the Ship on the Delivery Date will be insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances shall have been complied with. |
4 | Documents establishing that the Ship will, as from the Drawdown Date, be managed by each Approved Manager on terms acceptable to the Lenders and in accordance with the ISM Code and the ISPS Code, together with: |
(a) | a letter of undertaking executed by each Approved Manager in favour of the Agent in the terms required by the Agent agreeing certain matters in relation to the management of the Ship and subordinating the rights of that Approved Manager against the Borrower and the Ship to the rights of the Creditor Parties under the Finance Documents; and |
(b) | copies of the technical Approved Manager’s Document of Compliance and of the Ship’s Safety Management Certificate (together with any other details of the applicable safety management system which the Agent requires). |
5 | Confirmation by the Borrower to the Agent that on the Delivery Date the Ship will comply in all respects with the description and Condition on Delivery of the Ship as set out in the Charter. |
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6 | A favourable opinion from an independent insurance consultant acceptable to the Agent (at the Borrower’s cost) on such matters relating to the insurances for each Ship as the Agent may require. |
7 | Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the law of Bermuda and such other relevant jurisdictions as the Agent may require. |
8 | A valuation of the Ship addressed to the Agent and dated not earlier than 1 month before the Drawdown Date which evidences compliance with Clause 15.1 immediately after the Drawdown Date. |
9 | If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent. |
Each of the documents specified in paragraphs 2, 3, 5 and 6 of Part A and every other copy document delivered under this Schedule shall be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of the Borrower or, as the case may be, a Security Party.
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SCHEDULE
5
TRANSFER CERTIFICATE
The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.
To: | Nordea Bank Finland Plc, London Branch for itself and for and on behalf of the Borrower, each Security Party, the Security Trustee, each Lender, each Arranger and each Swap Bank, as defined in the Loan Agreement referred to below. |
1 | This Certificate relates to a loan agreement dated [ l ] 2011 (as amended, supplemented and/or restated from time to time, the “ Loan Agreement ”) and made between (1) GAS-six Ltd. as borrower (the “ Borrower ”), (2) the banks and financial institutions named therein as Lenders, (3) the banks and financial institutions named therein as Swap Banks, (4) Nordea Bank Finland Plc, London Branch, ABN AMRO Bank N.V. and Citibank International Plc, London Branch as Joint Lead Arrangers and (5) Nordea Bank Finland Plc, London Branch as Agent and as Security Trustee for a loan facility of up to (originally) US$277,000,000. |
2 | In this Certificate, terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings and: |
“ Relevant Parties ” means the Agent, the Borrower, each Security Party, the Security Trustee, each Lender, each Joint Lead Arrangers and each Swap Bank;
“ Transferor ” means [ full name ] of [ lending office ]; and
“ Transferee ” means [ full name ] of [ lending office ].
3 | The effective date of this Certificate is [ l ] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date. |
4 | The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [ l ] per cent. of its Contribution, which percentage represents $[ l ]. |
5 | By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[ l ]] [from [ l ] per cent. of its Commitment, which percentage represents $[ l ]] and the Transferee acquires a Commitment of $[ l ]. |
6 | The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect. |
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7 | The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement. |
8 | The Transferor: |
(a) | warrants to the Transferee and each Relevant Party that: |
(i) | the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and |
(ii) | this Certificate is valid and binding as regards the Transferor; |
(b) | warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4; and |
(c) | undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee’s title under this Certificate or for a similar purpose. |
9 | The Transferee: |
(a) | confirms that it has received a copy of the Loan Agreement and each other Finance Document; |
(b) | agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Security Trustee, any Lender or any Swap Bank in the event that: |
(i) | any of the Finance Documents prove to be invalid or ineffective, |
(ii) | the Borrower or any Security Party fails to observe or perform its obligations, or to discharge its liabilities, under any of the Finance Documents; |
(iii) | it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrower or Security Party under the Finance Documents; |
(c) | agrees that it will have no rights of recourse on any ground against the Agent, the Security Trustee, any Lender or any Swap Bank in the event that this Certificate proves to be invalid or ineffective; |
(d) | warrants to the Transferor and each Relevant Party that: |
(i) | it has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which it needs to take or obtain in connection with this transaction; and |
(ii) | this Certificate is valid and binding as regards the Transferee; and |
(e) | confirms the accuracy of the administrative details set out below regarding the Transferee. |
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10 | The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent’s or the Security Trustee’s own officers or employees. |
11 | The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it. |
[ Name of Transferor ] | [ Name of Transferee ] |
By: | By: |
Date: | Date: |
Agent
Signed for itself and for and on behalf of itself
as Agent and for every other Relevant Party
NORDEA BANK FINLAND PLC, LONDON BRANCH
By:
Date:
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Administrative Details of Transferee
Name of Transferee:
Lending Office:
Contact Person
(Loan Administration Department):
Telephone:
Fax:
Contact Person
(Credit Administration Department):
Telephone:
Fax:
Account for payments:
Note : | This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor’s interest in the security constituted by the Finance Documents in the Transferor’s or Transferee’s jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose. |
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SCHEDULE
6
DESIGNATION NOTICE
To: |
Nordea Bank Finland Plc, London Branch
8th Floor City Place House 55 Basinghall Street London EC2V 5NB |
Attn: | Loans Administration |
[ date ]
Dear Sirs
Loan Agreement dated [ l ] 2011 (as amended, supplemented and/or restated from time to time, the “Loan Agreement”) and made between (i) ourselves as Borrower, (ii) the Lenders, (iii) the Swap Banks, (iv) yourselves, ABN AMRO Bank N.V. and Citibank International Plc, London Branch as Joint Lead Arrangers and (v) yourselves as Agent and Security Trustee
We refer to:
1 | the Loan Agreement; |
2 | the Master Agreement dated as of [ l ] made between ourselves and [ l ]; and |
3 | a Confirmation delivered pursuant to the said Master Agreement dated [ l ] and addressed by [ l ] to us. |
In accordance with the terms of the Loan Agreement, we hereby give you notice of the said Confirmation and hereby confirm that the Transaction evidenced by it will be designated as a “Designated Transaction” for the purposes of the Loan Agreement and the Finance Documents.
Yours faithfully
for and on behalf of | |
GAS-SIX LTD. |
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SCHEDULE
7
FORM OF COMPLIANCE CERTIFICATE
To: |
Nordea Bank Finland Plc, London Branch
8th Floor, City Place House 55 Basinghall Street London EC2V 5NB |
From: |
GasLog Ltd. and
GAS-six Ltd. |
[Date]
OFFICER’S CERTIFICATE
This Certificate is rendered pursuant to:
(a) | clause [11.7(e)] of the loan agreement dated [ l ] 2011 (as amended, supplemented and/or restated from time to time, the “ Loan Agreement ”) and made between (i) GAS-six Ltd., as borrower (the “ Borrower ”), (ii) certain banks and financial institutions, as lenders, (iii) certain banks and financial institutions, as swap banks, (iv) Nordea Bank Finland Plc, ABN AMRO Bank N.V. and Citibank International Plc, London Branch, as joint lead arrangers, (v) Nordea Bank Finland Plc, London Branch, as agent and as security trustee; and |
(b) | clause [11.3(c)] of the guarantee dated [ l ] 2011 (as amended and/or supplemented from time to time, the “ GasLog Guarantee ”) and executed by GasLog Ltd. (“ GasLog ”), in favour of Nordea Bank Finland Plc, London Branch, as Security Trustee. |
Words and expressions defined in the Loan Agreement (including, without limitation, in clause 11.25 thereof) shall have the same meanings when used herein.
We, the Chief Financial Officers of GasLog Ltd. and GAS-six Ltd., hereby certify that:
1 | Attached to this Certificate [are][is] the latest [audited consolidated accounts of GasLog and its subsidiaries for the financial year ending on [ l ]] [unaudited consolidated accounts of GasLog and its subsidiaries in relation to the first six months of the financial year ending on [ l ]]. |
2 | Attached also to this Certificate [are][is] the latest [audited accounts of the Borrower for the financial year ending on [ l ]] [unaudited accounts of the Borrower in relation to the first six months of the financial year ending on [ l ]]. |
3 | As at the date of this Certificate the financial covenants set out in clause 11.25 of the Loan Agreement [are] [are not] complied with, in that as at [ l ]: |
(a) | GasLog Group’s Working Capital [is][is not] less than $0; |
(b) | the aggregate amount of GasLog Group’s Cash and GasLog Group’s Cash Equivalents is [ l ] and GasLog Group’s Total Interest Bearing Debt is [ l ]; |
(c) | the ratio of GasLog Group’s Total Debt to GasLog Group’s Total Capitalisation is [ l ] : [ l ]; |
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(d) | GasLog Group’s Market Adjusted Net Worth is [ l ]; |
(e) | the ratio of GasLog Group’s EBITDA to GasLog Group’s Debt Service is [ l ] : [ l ]; and |
(f) | for GAS-six Ltd., the aggregate amount of Borrower’s Cash and Borrower’s Cash Equivalents is [ l ]. |
[ or, as the case may be, specify in what respect any of the financial covenants are not complied with. ]
4 | Attached also to this Certificate are our calculations evidencing the statements set out in paragraph 3 above. |
5 | Attached also to this Certificate are valuations evidencing the Fair Market Value of the Ship as at the date of this Certificate. |
6 | As at [ l ] no Potential Event of Default or Event of Default has occurred and is continuing. |
[ or, specify/identify any Potential Event of Default or Event of Default ]
7 | This Certificate shall be governed by, and construed in accordance with, English law. |
Chief Financial Officer | |
GASLOG LTD. | |
Chief Financial Officer | |
GAS-SIX LTD. |
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EXECUTION PAGE
BORROWER | |
SIGNED by | ) |
) | |
for and on behalf of | ) |
GAS-SIX LTD. | ) |
in the presence of: | ) |
LENDERS | |
SIGNED by | ) |
) | |
for and on behalf of | ) |
NORDEA BANK FINLAND PLC, | ) |
LONDON BRANCH | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
ABN AMRO BANK N.V. | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
Citibank International | ) |
Plc , LONDON BRANCH | ) |
in the presence of: | ) |
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JOINT LEAD ARRANGERS | |
SIGNED by | ) |
) | |
for and on behalf of | ) |
NORDEA BANK FINLAND PLC, | ) |
LONDON BRANCH | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
ABN AMRO BANK N.V. | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
Citibank International | ) |
Plc , LONDON BRANCH | ) |
in the presence of: | ) |
SWAP BANKS | |
SIGNED by | ) |
) | |
for and on behalf of | ) |
NORDEA BANK FINLAND PLC | ) |
in the presence of: | ) |
SIGNED by | ) |
) | |
for and on behalf of | ) |
ABN AMRO BANK N.V. | ) |
in the presence of: | ) |
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Exhibit 16.1
April 25, 2014
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-7561
Dear Sirs/Madams:
We have read the section "Experts—Change in Certifying Accountant" included in Amendment No.1 to Registration Statement No. 333-195109 on Form F-1 of Gaslog Partners LP dated April 21, 2014, and we agree with the statements made therein.
Yours truly,
/s/ Deloitte Hadjipavlou, Sofianos & Cambanis S.A
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Amendment No. 2 to Registration Statement No 333-195109 on Form F-1 of our report dated March 13, 2014, relating to the combined carve-out financial statements of GasLog Partners LP Predecessor, appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading “Experts” in such Prospectus.
/s/ Deloitte Hadjipavlou Sofianos & Cambanis S.A.
Athens, Greece
April 25, 2014
|
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Amendment No. 2 to Registration Statement No 333-195109 on Form F-1 of our report dated February 3, 2014, relating to the statement of financial position as of January 23, 2014 (date of incorporation) of GasLog Partners LP, appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading “Experts” in such Prospectus.
/s/ Deloitte Hadjipavlou Sofianos & Cambanis S.A.
Athens, Greece
April 25, 2014
|
Exhibit 23.4
CLARKSON
RESEARCH SERVICES LIMITED
St. Magnus House 3 Lower Thames Street London EC3R 6HE Tele: +(0)20 7334 3134 Web: www.crsl.com |
GasLog Partners LP
c/o GasLog Monaco SAM
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
April 25, 2014
Ladies and Gentlemen:
Reference is made to the Form F-1 registration statement, as the same may be amended from time to time (collectively, the “Registration Statement”), of GasLog Partners LP (the “Company”), to be filed with the United States Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), relating to the public offering of the Company’s common units.
We have reviewed the section in the Registration Statement entitled “The LNG Shipping Industry” and confirm that it accurately describes the international LNG shipping market. We further advise the Company that our role has been limited to the review of the section referenced above and the provision of the information set forth in the section of the Registration Statement entitled “The LNG Shipping Industry,” including, but not limited to, the statistical data, graphs and tables that appear in that section (collectively, the Shipping Information”). With respect to the Shipping Information supplied by us, we advise you that:
• | some industry data included in this discussion is derived from estimates or subjective judgments; | |
• | the published information of other maritime data collection agencies may differ from this data; and | |
• | while we have taken reasonable care in the compilation of the Shipping Information and believe it to be accurate and correct, data compilation is subject to limited audit and validation procedures. |
We hereby consent to (i) the use of the graphical and statistical information supplied by us as set forth in Registration Statement, including, without limitation, such information contained under the section of the Registration Statement entitled “The LNG Shipping Industry”, (ii) the references to our company in the Registration Statement, (iii) the naming of our company as an expert in the Registration Statement, and (iv) the filing of this letter as an exhibit to the Registration Statement to be filed with the United States Securities and Exchange Commission pursuant to the Securities Act.
/s/ Stephen James Gordon | /s/ Trevor John Crowe | ||
For and on behalf of | For and on behalf of | ||
Clarkson Research Services Limited | Clarkson Research Services Limited | ||
Name: Stephen James Gordon | Name: Trevor John Crowe | ||
Designation: Managing Director | Designation: Director |
Clarkson Research Services Limited England No 1944749: Registered Office as above