UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F
(Mark One)
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016
 
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________
 
OR
¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report _________________
 

Commission file number: 001-34677
 
SCORPIO TANKERS INC.
(Exact name of Registrant as specified in its charter)
 
(Translation of Registrant’s name into English)
 
Republic of the Marshall Islands
(Jurisdiction of incorporation or organization)
 
9, Boulevard Charles III Monaco 98000
(Address of principal executive offices)
 
Mr. Emanuele Lauro
+377-9798-5716
info@scorpiotankers.com
9, Boulevard Charles III Monaco 98000
(Name, Telephone, E-mail and/or Facsimile, and address of Company Contact Person)
 
Securities registered or to be registered pursuant to section 12(b) of the Act.
 


Title of each class
 
Name of each exchange on which registered
Common stock, par value $0.01 per share
 
New York Stock Exchange
7.50% Senior Notes due 2017
 
New York Stock Exchange
6.75% Senior Notes due 2020
 
New York Stock Exchange
 

Securities registered or to be registered pursuant to section 12(g) of the Act.
 
NONE
(Title of class)
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
 
NONE
(Title of class)
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
 
As of December 31, 2016, there were 174,629,755 outstanding shares of common stock, par value $0.01 per share.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Yes
X
 
No
 
 
 
 
 
 
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes
 
 
No
X
 
 
 
 
 
 
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes
X
 
No
 
 
 
 
 
 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
Yes
X
 
No
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definitions of “large accelerated filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


 
Large accelerated filer   x
 
Accelerated filer   ¨
 
Non-accelerated filer   ¨
 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 
 
U.S. GAAP
X
 
International Financial Reporting Standards as issued by the International Accounting Standards Board
 
 
Other
 
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

 
Item 17
 
 
Item 18
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes
 
 
No
X
 
 
 
 
 


TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. This document includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as “forward-looking statements.” We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are including this cautionary statement in connection therewith. This report and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance, and are not intended to give any assurance as to future results. We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. When used in this document, the words “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “project,” “likely,” “may,” “will,” “would,” “could” and similar expressions, terms, or phrases may identify forward-looking statements.
The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
In addition to important factors and matters discussed elsewhere in this report, and in the documents incorporated by reference herein, important factors that, in our view, could cause our actual results to differ materially from those discussed in the forward-looking statements include:
•
the strength of world economies and currencies;
•
general market conditions, including the market for our vessels, fluctuations in spot and charter rates and vessel values;
•
availability of financing and refinancing;
•
potential liability from pending or future litigation;
•
general domestic and international political conditions;
•
potential disruption of shipping routes due to accidents or political events;
•
vessels breakdowns and instances of off-hires;
•
competition within our industry;
•
the supply of and demand for vessels comparable to ours;
•
corruption, piracy, militant activities, political instability, terrorism, ethnic unrest in locations where we may operate;
•
delays and cost overruns in construction projects;
•
our level of indebtedness;
•
our ability to obtain financing and to comply with the restrictive and other covenants in our financing arrangements;
•
our need for cash to meet our debt service obligations;
•
our levels of operating and maintenance costs, including bunker prices, drydocking and insurance costs;
•
availability of skilled workers and the related labor costs;
•
compliance with governmental, tax, environmental and safety regulation;
•
any non-compliance with the U.S. Foreign Corrupt Practices Act of 1977 (FCPA) or other applicable regulations relating to bribery;
•
general economic conditions and conditions in the oil and natural gas industry;
•
effects of new products and new technology in our industry;
•
the failure of counterparties to fully perform their contracts with us;
•
our dependence on key personnel;
•
adequacy of insurance coverage;
•
our ability to obtain indemnities from customers;
•
changes in laws, treaties or regulations;
•
the volatility of the price of our common shares and our other securities; and
•
other factors described from time to time in the report we file and furnish with the U.S. Securities and Exchange Commission, or the SEC.



These factors and the other risk factors described in this report are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. These forward looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward looking statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation, and specifically decline any obligation, except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please see our Risk Factors in "Item 3. Key Information - D. Risk Factors" of this annual report for a more complete discussion of these and other risks and uncertainties.



Table of Contents

PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.

1

Table of Contents

ITEM 3. KEY INFORMATION
Unless the context otherwise requires, when used in this annual report, the terms “Scorpio Tankers,” the “Company,” “we,” “our” and “us” refer to Scorpio Tankers Inc. and its subsidiaries. “Scorpio Tankers Inc.” refers only to Scorpio Tankers Inc. and not its subsidiaries. Unless otherwise indicated, all references to “dollars,” “US dollars” and “$” in this annual report are to the lawful currency of the United States. We use the term deadweight tons, or dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, in describing the size of tankers.
As used herein, “SLR2P” refers to the Scorpio LR2 Pool, “SPTP” refers to the Scorpio Panamax Tanker Pool, “SMRP” refers to the Scorpio MR Pool, and “SHTP” refers to the Scorpio Handymax Tanker Pool, which are spot market-oriented tanker pools in which certain of our vessels operate. In addition, “HMD” refers to Hyundai Mipo Dockyard Co. Ltd. of South Korea and “SSME” refers to Sungdong Shipbuilding & Marine Engineering Co. Ltd.
A. Selected Financial Data
The following tables set forth our selected consolidated financial data and other operating data as of and for the years ended December 31, 2016, 2015, 2014, 2013 and 2012. The selected data is derived from our audited consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Our audited consolidated financial statements for the years ended December 31, 2016, 2015 and 2014 and our consolidated balance sheets as of December 31, 2016 and 2015, together with the notes thereto, are included herein. Our audited consolidated financial statements for the years ended December 31, 2013 and 2012 and our consolidated balance sheets as of December 31, 2014, 2013 and 2012, and the notes thereto, are not included herein.


2

Table of Contents

 
For the year ended December 31,
In thousands of U.S. dollars except per share and share data
2016
 
2015
 
2014
 
2013
 
2012
Consolidated income statement data
 

 
 

 
 

 
 

 
 

Revenue
 

 
 

 
 

 
 

 
 

Vessel revenue
$
522,747

 
$
755,711

 
$
342,807

 
$
207,580

 
$
115,381

Operating expenses
 
 
 

 
 

 
 

 
 

Vessel operating costs
(187,120
)
 
(174,556
)
 
(78,823
)
 
(40,204
)
 
(30,353
)
Voyage expenses
(1,578
)
 
(4,432
)
 
(7,533
)
 
(4,846
)
 
(21,744
)
Charterhire
(78,862
)
 
(96,865
)
 
(139,168
)
 
(115,543
)
 
(43,701
)
Depreciation
(121,461
)
 
(107,356
)
 
(42,617
)
 
(23,595
)
 
(14,818
)
General and administrative expenses
(54,899
)
 
(65,831
)
 
(48,129
)
 
(25,788
)
 
(11,536
)
Write down of vessels held for sale and net loss on sales of vessels
(2,078
)
 
(35
)
 
(3,978
)
 
(21,187
)
 
(10,404
)
Write-off of vessel purchase options
—

 
(731
)
 
—

 
—

 
—

Gain on sale of VLGCs
—

 
—

 
—

 
41,375

 
—

Gain on sale of VLCCs
—

 
—

 
51,419

 
—

 
—

Gain on sale of Dorian shares
—

 
1,179

 
10,924

 
—

 
—

Re-measurement of investment in Dorian
—

 
—

 
(13,895
)
 
—

 
—

Total operating expenses
(445,998
)
 
(448,627
)
 
(271,800
)
 
(189,788
)
 
(132,556
)
Operating income / (loss)
76,749

 
307,084

 
71,007

 
17,792

 
(17,175
)
Other (expense) and income, net
 
 
 

 
 

 
 

 
 

Financial expenses
(104,048
)
 
(89,596
)
 
$
(20,770
)
 
(2,705
)
 
(8,512
)
Realized gain on derivative financial instruments
—

 
55

 
17

 
3

 
443

Unrealized gain / (loss) on derivative financial instruments
1,371

 
(1,255
)
 
264

 
567

 
(1,231
)
Financial income
1,213

 
145

 
203

 
1,147

 
35

Share of income from associate
—

 
—

 
1,473

 
369

 
—

Other expenses, net
(188
)
 
1,316

 
(103
)
 
(158
)
 
(97
)
Total other expense, net
(101,652
)
 
(89,335
)
 
(18,916
)
 
(777
)
 
(9,362
)
Net (loss) / income
$
(24,903
)
 
$
217,749

 
$
52,091

 
$
17,015

 
$
(26,537
)
(Loss) / earnings per common share: (1)
 

 
 

 
 

 
 

 
 

Basic (loss) / earnings per share
$
(0.15
)
 
$
1.35

 
$
0.30

 
$
0.12

 
$
(0.64
)
Diluted (loss) / earnings per share
$
(0.15
)
 
$
1.20

 
$
0.30

 
$
0.11

 
$
(0.64
)
Cash dividends declared per common share
$
0.500

 
$
0.495

 
$
0.390

 
$
0.130

 
—

Basic weighted average shares outstanding
161,118,654

 
161,436,449

 
171,851,061

 
146,504,055

 
41,413,339

Diluted weighted average shares outstanding
161,118,654

 
199,739,326

 
176,292,802

 
148,339,378

 
41,413,339

  

3

Table of Contents

 
As of December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
 
2013
 
2012
Balance sheet data
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
99,887

 
$
200,970

 
$
116,143

 
$
78,845

 
$
87,165

Vessels and drydock
2,913,254

 
3,087,753

 
1,971,878

 
530,270

 
395,412

Vessels under construction
137,917

 
132,218

 
404,877

 
649,526

 
50,251

Total assets
3,230,187

 
3,523,455

 
2,804,643

 
1,646,676

 
573,280

Current and non-current debt (2)
1,882,681

 
2,049,989

 
1,571,522

 
167,129

 
142,459

Shareholders’ equity
1,315,200

 
1,413,885

 
1,162,848

 
1,450,723

 
414,790

 
 
 
For the year ended December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
 
2013
 
2012
Cash flow data
 

 
 

 
 

 
 

 
 

Net cash inflow/(outflow)
 

 
 

 
 

 
 

 
 

Operating activities
$
178,511

 
$
391,975

 
$
93,916

 
$
(5,655
)
 
$
(1,928
)
Investing activities
31,333

 
(703,418
)
 
(1,158,234
)
 
(935,101
)
 
(90,155
)
Financing activities
(310,927
)
 
396,270

 
1,101,616

 
932,436

 
142,415

 
(1)
Basic (loss) / earnings per share is calculated by dividing the net (loss) / income attributable to equity holders of the parent by the weighted average number of common shares outstanding. Diluted earnings per share is calculated by adjusting the net (loss) / income attributable to equity holders of the parent and the weighted average number of common shares used for calculating basic earnings per share for the effects of all potentially dilutive shares. Such potentially dilutive common shares are excluded when the effect would be to increase earnings per share or reduce a loss per share.
(2)
Current and non-current debt as of December 31, 2016, 2015, 2014, 2013 and 2012 is shown net of deferred financing fees of $37.4 million, $55.8 million, $47.1 million, $2.4 million and $3.5 million, respectively.


4

Table of Contents

The following table sets forth our other operating data. This data should be read in conjunction with “Item 5. Operating and Financial Review and Prospects.”
 
 
For the year ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
Average Daily Results
 

 
 

 
 

 
 

 
 

TCE per day (1)
$
15,783

 
$
23,163

 
$
15,935

 
$
14,369

 
$
12,960

Vessel operating costs per day (2)
6,576

 
6,564

 
6,802

 
6,781

 
7,605

Aframax/LR2
 
 
 
 
 
 
 

 
 

TCE per revenue day (1)
20,280

 
30,544

 
18,621

 
12,718

 
10,201

Vessel operating costs per day (2)
6,734

 
6,865

 
6,789

 
8,203

 
8,436

LR1/Panamax
 
 
 
 
 
 
 

 
 

TCE per revenue day  (1)
17,277

 
21,804

 
16,857

 
12,599

 
14,264

Vessel operating costs per day (2)(4)
—

 
8,440

 
8,332

 
7,756

 
7,714

MR
 
 
 
 
 
 
 

 
 

TCE per revenue day (1)
14,898

 
21,803

 
15,297

 
16,546

 
12,289

Vessel operating costs per day (2)
6,555

 
6,461

 
6,580

 
6,069

 
6,770

Handymax
 
 
 
 
 
 
 

 
 

TCE per revenue day (1)
12,615

 
19,686

 
14,528

 
12,862

 
13,069

Vessel operating costs per day (2)
6,404

 
6,473

 
6,704

 
6,852

 
7,594

Fleet data
 
 
 
 
 
 
 

 
 

Average number of owned vessels (3)
77.7

 
72.7

 
31.6

 
15.9

 
10.8

Average number of time chartered-in vessels  (3)
12.7

 
16.9

 
26.3

 
22.9

 
9.2

Drydock
 
 
 
 
 
 
 

 
 

Expenditures for drydock (in thousands of U.S. dollars)
$
—

 
$
—

 
$
1,290

 
$
—

 
$
2,869

 
(1)
Freight rates are commonly measured in the shipping industry in terms of time charter equivalent, or TCE (a non-IFRS measure), per revenue day. Vessels in the pool and on time charter do not incur significant voyage expenses; therefore, the revenue for pool vessels and time charter vessels is approximately the same as their TCE revenue. Please see “Item 5. Operating and Financial Review and Prospects- Important Financial and Operational Terms and Concepts” for a discussion of TCE revenue, revenue days and voyage expenses and "Item 5. Operating and Financial Review and Prospects - A. Operating Results" for a reconciliation of TCE revenue to vessel revenue.
(2)
Vessel operating costs per day represent vessel operating costs, as such term is defined in “Item 5. Operating and Financial Review and Prospects-Important Financial and Operational Terms and Concepts,” divided by the number of days the vessel is owned during the period.
(3)
For a definition of items listed under “Fleet Data,” please see the section of this annual report entitled “Item 5. Operating and Financial Review and Prospects.”
(4)
We did not own or bareboat charter-in any LR1/Panamax vessels in 2016.

B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.

5

Table of Contents

D. Risk Factors
The following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the securities market and ownership of our securities. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results or cash available for the payment of dividends on our common shares and interest on our debt securities, or the trading price of our securities.
RISKS RELATED TO OUR INDUSTRY
The tanker industry is cyclical and volatile, which may adversely affect our earnings and available cash flow.
The tanker industry is both cyclical and volatile in terms of charter rates and profitability. A worsening of current global economic conditions may cause tanker charter rates to decline and thereby adversely affect our ability to charter or re-charter our vessels or to sell them on the expiration or termination of their charters, and the rates payable in respect of our vessels currently operating in tanker pools, or any renewal or replacement charters that we enter into, may not be sufficient to allow us to operate our vessels profitably. Fluctuations in charter rates and vessel values result from changes in the supply and demand for tanker capacity and changes in the supply and demand for oil and oil products. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable.
The factors that influence demand for tanker capacity include:
•
supply and demand for energy resources and oil and petroleum products;
•
regional availability of refining capacity and inventories;
•
global and regional economic and political conditions, including armed conflicts, terrorist activities, and strikes;
•
the distance over which oil and oil products are to be moved by sea;
•
changes in seaborne and other transportation patterns;
•
environmental and other legal and regulatory developments;
•
weather and natural disasters;
•
competition from alternative sources of energy; and
•
international sanctions, embargoes, import and export restrictions, nationalizations and wars.
The factors that influence the supply of tanker capacity include:
•
supply and demand for energy resources and oil and petroleum products;
•
the number of newbuilding orders and deliveries, including slippage in deliveries;
•
the number of shipyards and ability of shipyards to deliver vessels;
•
the scrapping rate of older vessels;
•
conversion of tankers to other uses;
•
the number of product tankers trading crude or "dirty" oil products (such as fuel oil);
•
the number of vessels that are out of service, namely those that are laid up, drydocked, awaiting repairs
or otherwise not available for hire;
•
environmental concerns and regulations;
•
product imbalances (affecting the level of trading activity);
•
developments in international trade, including refinery additions and closures;
•
port or canal congestion; and
•
speed of vessel operation.
In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and laying-up, include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance costs, insurance coverage costs, the efficiency and age profile of the existing tanker fleet in the market, and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations.  These factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions.
We anticipate that the future demand for our tankers will be dependent upon economic growth in the world’s economies, seasonal and regional changes in demand, changes in the capacity of the global tanker fleet and the sources and supply of oil and petroleum products to be transported by sea.  Given the number of new tankers currently on order with the shipyards, the capacity of the global tanker fleet seems likely to increase and there can be no assurance as to the timing or extent of future economic growth.  Adverse economic, political, social or other developments could have a material adverse effect on our business and operating results.

6

Table of Contents

We are dependent on spot-oriented pools and spot charters and any decrease in spot charter rates in the future may adversely affect our earnings.
As of March 15, 2017, all except five of our vessels were employed in either the spot market or in spot market-oriented tanker pools such as the SLR2P, SPTP, SMRP or SHTP, which we refer to collectively as the Scorpio Group Pools and which are managed by companies, which are members of the Scorpio Group, exposing us to fluctuations in spot market charter rates. The spot charter market may fluctuate significantly based upon tanker and oil supply and demand. The successful operation of our vessels in the competitive spot charter market, including within the Scorpio Group Pools, depends on, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. The spot market is very volatile, and, in the past, there have been periods when spot charter rates have declined below the operating cost of vessels. If future spot charter rates decline, then we may be unable to operate our vessels trading in the spot market profitably, meet our obligations, including payments on indebtedness, or pay dividends in the future. Furthermore, as charter rates for spot charters are fixed for a single voyage which may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases.
Our ability to renew expiring charters or obtain new charters will depend on the prevailing market conditions at the time. If we are not able to obtain new charters in direct continuation with existing charters or upon taking delivery of a newly acquired vessel, or if new charters are entered into at charter rates substantially below the existing charter rates or on terms otherwise less favorable compared to existing charter terms, our revenues and profitability could be adversely affected.
An over-supply of tanker capacity may lead to a reduction in charter rates, vessel values, and profitability.
The market supply of tankers is affected by a number of factors, such as supply and demand for energy resources, including oil and petroleum products, supply and demand for seaborne transportation of such energy resources, and the current and expected purchase orders for newbuildings. If the capacity of new tankers delivered exceeds the capacity of tankers being scrapped and converted to non-trading tankers, tanker capacity will increase. According to Drewry Shipping Consultants Ltd., or Drewry, as of March 1, 2017, the newbuilding order book, which extends to 2020 and beyond, equaled approximately 12.4% of the existing world tanker fleet and the order book may increase further in proportion to the existing fleet. If the supply of tanker capacity increases and if the demand for tanker capacity does not increase correspondingly or declines, charter rates could materially decline. A reduction in charter rates and the value of our vessels may have a material adverse effect on our results of operations and available cash.
In addition, product tankers may be "cleaned up" from "dirty/crude" trades and swapped back into the product tanker market which would increase the available product tanker tonnage which may affect the supply and demand balance for product tankers. This could have an adverse effect on our future performance, results of operations, cash flows and financial position.
Acts of piracy on ocean-going vessels could adversely affect our business.
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean, the Gulf of Guinea, the Gulf of Aden and the Sulu Sea. Sea piracy incidents continue to occur, with drybulk vessels and tankers particularly vulnerable to such attacks. If these piracy attacks result in regions in which our vessels are deployed being characterized by insurers as “war risk” zones by insurers or Joint War Committee “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including costs which may be incurred to the extent we employ onboard security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, results of operations, cash flows and financial condition and may result in loss of revenues, increased costs and decreased cash flows to our customers, which could impair their ability to make payments to us under our charters.
Changes in fuel, or bunkers, prices may adversely affect our profits.
Fuel, or bunkers, is typically the largest expense in our shipping operations for our vessels and changes in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future, which may adversely affect the competitiveness of our business compared to other forms of transportation and reduce our profitability.
Tanker rates also fluctuate based on seasonal variations in demand.

7

Table of Contents

Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and refinery maintenance that is typically conducted in the summer months. In addition, unpredictable weather patterns during the winter months in the northern hemisphere tend to disrupt vessel routing and scheduling. The oil price volatility resulting from these factors has historically led to increased oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger in the quarters ended March 31 and December 31.
A shift in consumer demand from oil towards other energy sources or changes to trade patterns for refined oil products may have a material adverse effect on our business.
A significant portion of our earnings are related to the oil industry.  A shift in the consumer demand from oil towards other energy resources such as wind energy, solar energy, or water energy will potentially affect the demand for our product tankers.  This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Seaborne trading and distribution patterns are primarily influenced by the relative advantage of the various sources of production, locations of consumption, pricing differentials and seasonality. Changes to the trade patterns of refined oil products may have a significant negative or positive impact on the ton-mile and therefore the demand for our product tankers. This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
An inability to effectively time investments in and divestments of vessels could prevent the implementation of our business strategy and negatively impact our results of operations and financial condition.
Our strategy is to own and operate a fleet large enough to provide global coverage, but no larger than what the demand for our services can support over a longer period by both contracting newbuildings and through acquisitions and disposals in the second-hand market. Our business is greatly influenced by the timing of investments and/or divestments and contracting of newbuildings. If we are unable able to identify the optimal timing of such investments, divestments or contracting of newbuildings in relation to the shipping value cycle due to capital restraints, this could have a material adverse effect on our competitive position, future performance, results of operations, cash flows and financial position.
If economic conditions throughout the world continue to be volatile, it could impede our operations.
Negative trends in the global economy that emerged in 2008 continue to adversely affect global economic conditions. In addition, the world economy continues to face a number of new challenges, including the effects of lower oil prices, continuing turmoil and hostilities in the Middle East, North Africa, and other geographic areas and countries, continuing economic weakness in the European Union and softening growth in China. There has historically been a strong link between the development of the world economy and demand for energy, including oil and gas. An extended period of deterioration in the outlook for the world economy could reduce the overall demand for oil and gas and for our services. Such changes could adversely affect our future performance, results of operations, cash flows and financial position.
The economies of the United States, the European Union and other parts of the world continue to experience relatively slow growth and exhibit weak economic trends. The credit markets in the United States and Europe have experienced significant contraction, de-leveraging and reduced liquidity, and the U.S. federal government and state governments and European authorities continue to implement a broad variety of governmental action and/or new regulation of the financial markets. Global financial markets and economic conditions have been, and continue to be, severely disrupted and volatile.
We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors may have a material adverse effect on our results of operations and financial condition and may cause the price of our common shares to decline.
Continued economic slowdown in the Asia Pacific region, particularly in China, may exacerbate the effect on us. Before the global economic financial crisis that began in 2008, China had one of the world's fastest growing economies in terms of GDP, which had a significant impact on shipping demand. According to the International Monetary Fund, the growth rate of China's GDP decreased to approximately 6.7% for the year ended December 31, 2016 and is expected to decrease to 6.5% for the year ended December 31, 2017, which is China's lowest growth rate for the past five years, and continues to remain below pre-2008 levels. While the recent slow-down in China's economy has been without significant immediate impact on product tanker freight rates, it is possible that China and other countries in the Asia Pacific region will continue to experience slowed or even negative economic growth in the near future. Moreover, the current economic slowdown in the economies of the United States, the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. Our business, financial condition and results of operations, ability to pay dividends, if any, as well as our future prospects, may be materially adversely affected by a further economic downturn in any of these countries.

8

Table of Contents

If we cannot meet our customers' quality and compliance requirements we may not be able to operate our vessels profitably which could have an adverse effect on our future performance, results of operations, cash flows and financial position.
Customers, and in particular those in the oil industry, have a high and increasing focus on quality and compliance standards with their suppliers across the entire value chain, including the shipping and transportation segment. Our continuous compliance with these standards and quality requirements is vital for our operations. Related risks could materialize in multiple ways, including a sudden and unexpected breach in quality and/or compliance concerning one or more vessels, a continuous decrease in the quality concerning one or more vessels occurring over time. Moreover, continuous increasing requirements from oil industry constituents can further complicate our ability to meet the standards. Any noncompliance by us, either suddenly or over a period of time, on one or more vessels, or an increase in requirements by oil operators above and beyond what we deliver, may have a material adverse effect on our future performance, results of operations, cash flows and financial position.
We may be required to make significant investments in ballast water management which may have a material adverse effect on our future performance, results of operations, and financial position.
The International Convention for the Control and Management of Vessels' Ballast Water and Sediments, or the BWM Convention, aims to prevent the spread of harmful aquatic organisms from one region to another, by establishing standards and procedures for the management and control of ships' ballast water and sediments. The BWM Convention calls for a phased introduction of mandatory ballast water exchange requirements to be replaced in time with mandatory concentration limits.  The BWM Convention was ratified in September 2016 and enters in force in September 2017. The BWM convention requires that ballast water treatment systems be installed on vessels at the first renewal survey following its entry into force. Investments in ballast water treatment equipment may have a material adverse effect on our future performance, results of operations, cash flows, financial condition and available cash. Please also see "-We are subject to complex laws and regulations, including environmental laws and regulations that can adversely affect our business, results of operations, cash flows and financial condition, and our available cash" below for further information on these requirements.
We are subject to complex laws and regulations, including environmental laws and regulations that can adversely affect our business, results of operations, cash flows and financial condition, and our available cash.
Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, requirements of the U.S. Coast Guard or the USCG, and the U.S. Environmental Protection Agency, or EPA, the U.S. Clean Air Act, or the CAA, the U.S. Clean Water Act, or the CWA and the U.S. Marine Transportation Security Act of 2002, or the MTSA, European Union regulations, and regulations of the International Maritime Organization, or the IMO, including the International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended and generally referred to as MARPOL including the designation of Emission Control Areas, or ECAs, thereunder, the IMO International Convention for the Safety of Life at Sea of 1974, as from time to time amended and generally referred to as SOLAS, the International Convention on Load Lines of 1966, as from time to time amended, or the LL Convention, the International Convention of Civil Liability for Oil Pollution Damage of 1969, as from time to time amended and generally referred to as CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, and the International Ship and Port Facility Security Code, or the ISPS code.

9

Table of Contents

Compliance with such laws and regulations, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast and bilge waters, maintenance and inspection, elimination of tin-based paint, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. For example, as discussed above, the BWM Convention aims to prevent the spread of harmful aquatic organisms from one region to another, by establishing standards and procedures for the management and control of ships' ballast water and sediments. The BWM Convention calls for a phased introduction of mandatory ballast water exchange requirements to be replaced in time with mandatory concentration limits. In order to comply with these living organism limits, vessel owners may have to install expensive ballast water treatment systems or make port facility disposal arrangements and modify existing vessels to accommodate those systems. The BWM Convention enters into force on September 8, 2017 and vessel owners must demonstrate compliance with the BWM Convention at each vessel's first International Oil Pollution Prevention survey occurring after such date. These surveys are required every five years. 16 of the vessels in our owned fleet currently have ballast water treatment systems installed, however we cannot be assured that these systems will be approved by the regulatory bodies of every jurisdiction in which we may wish to conduct our business. Accordingly, we may have to make additional investments in these vessels and we will have to make initial investments for the remaining vessels in our fleet that do not carry such equipment. The investment in ballast water treatment systems could have an adverse material impact on our business, financial condition, and results of operations depending on the available ballast water treatment systems and the extent to which existing vessels must be modified to accommodate such systems.
Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-nautical mile exclusive economic zone around the United States (unless the spill results solely from, under certain limited circumstances, the act or omission of a third party, an act of God or an act of war). An oil spill could result in significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages under other international and U.S. federal, state and local laws, as well as third-party damages, including punitive damages, and could harm our reputation with current or potential charterers of our tankers.
We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition and available cash.
Recent action by the IMO's Maritime Safety Committee and United States agencies indicate that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. This might cause companies to cultivate additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. However, the impact of such regulations is hard to predict at this time.
If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.
The operation of our vessels is affected by the requirements set forth in the IMO’s International Management Code for the Safe Operation of Ships and for Pollution Prevention, or the ISM Code, promulgated by the IMO under SOLAS. The ISM Code requires the party with operational control of a vessel to develop and maintain an extensive “Safety Management System” that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. Failure to comply with the ISM code may subject us to increased liability and may invalidate existing insurance or decrease available insurance coverage for our affected vessels and such failure may result in a denial of access to, or detention in, certain ports.
We operate tankers worldwide, and as a result, we are exposed to inherent operational and international risks, which may adversely affect our business and financial condition.

10

Table of Contents

The operation of an ocean-going vessel carries inherent risks. Our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad weather, and other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances or events. Changing economic, regulatory and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. These hazards may result in death or injury to persons, loss of revenues or property, payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships, market disruptions, and interference with shipping routes (such as delay or rerouting), which may reduce our revenue or increase our expenses and also subject us to litigation. In addition, the operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage, and the associated costs could exceed the insurance coverage available to us. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tankers.
If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover in full. The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located to our vessels’ positions. The loss of earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities may adversely affect our business and financial condition. Further, the total loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs, or loss which could negatively impact our business, financial condition, results of operations and available cash.
Increased inspection procedures could increase costs and disrupt our business.
International shipping is subject to various security and customs inspection and related procedures in countries of origin and destination and trans-shipment points. Inspection procedures can result in the seizure of the cargo and/or our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us. It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.
Political instability, terrorist or other attacks, war or international hostilities can affect the tanker industry, which may adversely affect our business.
We conduct most of our operations outside of the United States, and our business, results of operations, cash flows, financial condition and available cash may be adversely affected by the effects of political instability, terrorist or other attacks, war or international hostilities. Continuing conflicts and recent developments in North Korea, Russia, and the Middle East, including Iran, Iraq, Syria, Egypt, and North Africa, including Libya, and the presence of the United States and other armed forces in these regions may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further world economic instability and uncertainty in global financial markets. As a result of the above, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. Future terrorist attacks could result in increased volatility of the financial markets and negatively impact the U.S. and global economy. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all.
In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea, the Gulf of Guinea off the coast of West Africa, and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our business, results of operations, cash flows, financial condition and available cash.
If our vessels call on ports located in countries that are subject to sanctions and embargos imposed by the U.S. or other governments, our reputation and the market for our securities may be adversely affected.

11

Table of Contents

Although no vessels owned or operated by us have called on ports located in countries subject to sanctions and embargoes imposed by the U.S. government and other authorities or countries identified by the U.S. government or other authorities as state sponsors of terrorism, such as Cuba, Iran, Sudan, and Syria, in the future, our vessels may call on ports in these countries from time to time on charterers’ instructions. Sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. In 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act, or CISADA, which expanded the scope of the Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions of companies, such as ours, and introduces limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export of refined petroleum or petroleum products.
In 2012, President Obama signed Executive Order 13608 which prohibits foreign persons from violating or attempting to violate, or causing a violation of any sanctions in effect against Iran or facilitating any deceptive transactions for or on behalf of any person subject to U.S. sanctions. Any persons found to be in violation of Executive Order 13608 will be deemed a foreign sanctions evader and will be banned from all contacts with the United States, including conducting business in US dollars. Also in 2012, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012, or the Iran Threat Reduction Act, which created new sanctions and strengthened existing sanctions. Among other things, the Iran Threat Reduction Act intensifies existing sanctions regarding the provision of goods, services, infrastructure or technology to Iran’s petroleum or petrochemical sector. The Iran Threat Reduction Act also includes a provision requiring the President of the United States to impose five or more sanctions from Section 6(a) of the Iran Sanctions Act, as amended, on a person the President determines is a controlling beneficial owner of, or otherwise owns, operates, or controls or insures a vessel that was used to transport crude oil from Iran to another country and (1) if the person is a controlling beneficial owner of the vessel, the person had actual knowledge the vessel was so used or (2) if the person otherwise owns, operates, or controls, or insures the vessel, the person knew or should have known the vessel was so used. Such a person could be subject to a variety of sanctions, including exclusion from U.S. capital markets, exclusion from financial transactions subject to U.S. jurisdiction, and exclusion of that person’s vessels from U.S. ports for up to two years.
On November 24, 2013, the P5+1 (the United States, United Kingdom, Germany, France, Russia and China) entered into an interim agreement with Iran entitled the “Joint Plan of Action,” or the JPOA. Under the JPOA it was agreed that, in exchange for Iran taking certain voluntary measures to ensure that its nuclear program is used only for peaceful purposes, the U.S. and E.U. would voluntarily suspend certain sanctions for a period of six months. On January 20, 2014, the U.S. and E.U. indicated that they would begin implementing the temporary relief measures provided for under the JPOA. These measures included, among other things, the suspension of certain sanctions on the Iranian petrochemicals, precious metals, and automotive industries from January 20, 2014 until July 20, 2014. The JPOA was subsequently extended twice.
On July 14, 2015, the P5+1 and the EU announced that they reached a landmark agreement with Iran titled the Joint Comprehensive Plan of Action regarding the Islamic Republic of Iran’s Nuclear Program, or the JCPOA, which is intended to significantly restrict Iran’s ability to develop and produce nuclear weapons for ten years while simultaneously easing sanctions directed toward non-U.S. persons for conduct involving Iran, but taking place outside of U.S. jurisdiction and does not involve U.S. persons. On January 16, 2016, which we refer to as Implementation Day, the United States joined the EU and the UN in lifting a significant number of their nuclear-related sanctions on Iran following an announcement by the International Atomic Energy Agency, or the IAEA, that Iran had satisfied its respective obligations under the JCPOA.
Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our securities may adversely affect the price at which our securities trade. Additionally, some investors may decide to divest their interest, or not to invest, in our company simply because we do business with companies that do business in sanctioned countries. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third parties that are unrelated to those countries or entities controlled by their governments. Investor perception of the value of our securities may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

12

Table of Contents

We expect that our vessels will call in ports where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
Maritime claimants could arrest or attach our vessels, which would have a negative effect on our cash flows.
Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders, and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our business or require us to pay large sums of money to have the arrest lifted, which would have a negative effect on our cash flows.
In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet for claims relating to another of our ships.
Governments could requisition our vessels during a period of war or emergency, which may negatively impact our business, financial condition, results of operations and available cash.
A government could requisition one or more of our vessels for title or hire. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels may negatively impact our business, financial condition, results of operations and available cash.
Technological innovation could reduce our charterhire income and the value of our vessels.
The charterhire rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new tankers are built that are more efficient or more flexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charterhire payments we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our available cash could be adversely affected.
If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.
We, indirectly through Scorpio Ship Management S.A.M., or SSM, our technical manager, employ masters, officers and crews to man our vessels. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.
RISKS RELATED TO OUR COMPANY
Newbuilding projects are subject to risks that could cause delays, cost overruns or cancellation of our newbuilding contracts.
As of March 15, 2017, we were party to newbuilding contracts with HMD and SSME for the construction of nine newbuilding vessels, of which eight are expected to be delivered to us throughout 2017 and one is expected to be delivered to us during the first quarter of 2018. As of the same date, we have made total yard payments with respect to these vessels in the amount of $109.6 million . We are obligated to pay remaining yard installments in the amount of $229.0 million before we take possession of all of these vessels. If we fail to make any or all of these installment payments, we may not take delivery of these vessels and we may forfeit all or a portion of the down payments we have already made under such contracts, and we may be sued for, among other things, any outstanding balances we are obligated to pay and other damages.
The delivery of such vessels or vessels that we may acquire in the future could be delayed, not completed or cancelled, which would delay or eliminate our expected receipt of revenues from the employment of such vessels. In addition, the yards or a seller could fail to deliver vessels to us as agreed, or we could cancel a purchase contract because such yard or seller has not met its obligations.

13

Table of Contents

If the delivery of any vessel is materially delayed or cancelled, especially if we have committed the vessel to a charter for which we become responsible for substantial liquidated damages to the customer as a result of the delay or cancellation, our business, financial condition and results of operations could be adversely affected.
In addition, in the event that HMD or SSME do not perform under their respective contracts and we are unable to enforce certain refund guarantees with third party banks for any reason, we may lose all or part of our investment, which would have a material adverse effect on our results of operations, financial condition and cash flows. Please also see “-We are subject to certain risks with respect to our counterparties on contracts, including, without limitation, our vessel employment arrangements and newbuilding contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact our results of operations and cash flows.”
We cannot assure you that our internal controls and procedures over financial reporting will be sufficient.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the other rules and regulations of the SEC, including the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley. Section 404 of Sarbanes-Oxley requires that we evaluate and determine the effectiveness of our internal controls over financial reporting. If we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We dedicate a significant amount of time and resources to ensure compliance with these regulatory requirements. We will continue to evaluate areas such as corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We will make changes in any of these and other areas, including our internal control over financial reporting, which we believe are necessary. However, these and other measures we may take may not be sufficient to allow us to satisfy our obligations as a public company on a timely and reliable basis.
We may have difficulty managing our planned growth properly.
We may continue to grow by expanding our operations and adding to our fleet. Our future growth will primarily depend upon a number of factors, some of which may not be within our control, including our ability to effectively identify, purchase, finance, develop and integrate any tankers or businesses. Furthermore, the number of employees that perform services for us and our current operating and financial systems may not be adequate as we expand the size of our fleet, and we may not be able to effectively hire more employees or adequately improve those systems. Finally, acquisitions may require additional equity issuances or debt issuances (with amortization payments), both of which could lower our available cash. If any such events occur, our business, financial condition and results of operations may be adversely affected and the amount of cash available for distribution as dividends to our shareholders may be reduced.
Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified personnel and managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. The expansion of our fleet may impose significant additional responsibilities on our management and staff, and the management and staff of our commercial and technical managers, and may necessitate that we, and they, increase the number of personnel. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection with our future growth.
If we purchase and operate secondhand vessels, we will be exposed to increased operating costs which could adversely affect our earnings and, as our fleet ages, the risks associated with older vessels could adversely affect our ability to obtain profitable charters.
Our current business strategy includes potential growth through the acquisition of new and secondhand vessels. To the extent we decide to purchase secondhand vessels, we would be entitled to inspect them prior to purchase and this would not provide us with the same knowledge about their condition that we would have had if these vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties from the builders for the secondhand vessels that we acquire.
In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.
Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.
An increase in operating costs would decrease earnings and available cash.

14

Table of Contents

Under time charter agreements, the charterer is responsible for voyage costs and the owner is responsible for the vessel operating costs. We currently have five vessels on long-term time charter-out agreements (with initial terms of one year or greater) and 19 vessels on time or bareboat charter-in agreements. When our owned vessels are employed in one of the Scorpio Group Pools, the pool is responsible for voyage expenses and we are responsible for vessel costs. As of March 15, 2017, all of our owned vessels and 16 of our time or bareboat chartered-in vessels were employed through the Scorpio Group Pools. We had three bareboat chartered-in vessels operating directly in the spot market as of March 15, 2017, which are expected to join the Scorpio Handymax Pool prior to June 2017. When our vessels operate directly in the spot market, we are responsible for both voyage expenses and vessel operating costs. Our vessel operating costs include the costs of crew, fuel (for spot chartered vessels), provisions, deck and engine stores, insurance and maintenance and repairs, which depend on a variety of factors, many of which are beyond our control. Further, if our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydocking repairs are unpredictable and can be substantial. Increases in any of these expenses would decrease earnings and available cash. Please see “-We will be required to make additional capital expenditures to expand the number of vessels in our fleet and to maintain all our vessels.”
We will be required to make additional capital expenditures to expand the number of vessels in our fleet and to maintain all our vessels.
Our business strategy is based in part upon the expansion of our fleet through the purchase of additional vessels. If we are unable to fulfill our obligations under any memorandum of agreement for future vessel acquisitions, the sellers of such vessels may be permitted to terminate such contracts and we may forfeit all or a portion of the down payments we have already made under such contracts, and we may be sued for, among other things, any outstanding balances we are obligated to pay and other damages.
In addition, we will incur significant maintenance costs for our existing and any newly-acquired vessels. A newbuilding vessel must be drydocked within five years of its delivery from a shipyard, and vessels are typically drydocked every 30 months thereafter, not including any unexpected repairs. We estimate the cost to drydock a vessel to be between $500,000 and $1,000,000, depending on the size and condition of the vessel and the location of drydocking.
If we do not generate or reserve enough cash flow from operations to pay for our capital expenditures, we may need to incur additional indebtedness or enter into alternative financing arrangements, which may be on terms that are unfavorable to us. If we are unable to fund our obligations or to secure financing, it would have a material adverse effect on our results of operations.
Please also see "We are subject to complex laws and regulations, including environmental laws and regulations that can adversely affect our business, results of operations, cash flows and financial conditions, and our available cash."
Declines in charter rates and other market deterioration could cause us to incur impairment charges.
We evaluate the carrying amounts of our vessels to determine if events have occurred that would require an impairment of their carrying amounts. The recoverable amount of vessels is reviewed based on events and changes in circumstances that would indicate that the carrying amount of the assets might not be recovered. The review for potential impairment indicators and projection of future cash flows related to the vessels is complex and requires us to make various estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been historically volatile.
We evaluate the recoverable amount as the higher of fair value less costs to sell and value in use. If the recoverable amount is less than the carrying amount of the vessel, the vessel is deemed impaired. The carrying values of our vessels may not represent their fair market value at any point in time because the new market prices of secondhand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. For the year ended December 31, 2016, we evaluated the recoverable amount of our vessels and we did not recognize an impairment loss, however we recorded a $2.1 million aggregate loss as a result of the sales of STI Lexington, STI Mythos, STI Chelsea , STI Powai and STI Olivia during the year. For the year ended December 31, 2015, we evaluated the recoverable amount of our vessels and we did not recognize an impairment loss, however we recorded a $2.1 million loss as a result of the sale of STI Highlander during the year. We cannot assure you that there will not be further impairments in future years. Any additional impairment charges incurred as a result of further declines in charter rates could negatively affect our business, financial condition, operating results or the trading price of our securities.
Please see “Item 5. Operating and Financial Review and Prospects-Critical Accounting Policies-Vessel Impairment.”
The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financial covenants under our current or future debt facilities and we may incur a loss if we sell vessels following a decline in their market value.

15

Table of Contents

The fair market values of our vessels have generally experienced high volatility. The fair market values for tankers declined significantly from historically high levels reached in 2008, and remain at relatively low levels. Such prices may fluctuate depending on a number of factors including, but not limited to, the prevailing level of charter rates and day rates, general economic and market conditions affecting the international shipping industry, types, sizes and ages of vessels, supply and demand for vessels, availability of or developments in other modes of transportation, competition from other tanker companies, cost of newbuildings, applicable governmental or other regulations and technological advances. In addition, as vessels grow older, they generally decline in value. If the fair market values of our vessels decline, or decline further, the amount of funds we may draw down under our secured credit facilities may be limited and we may not be in compliance with certain covenants contained in our secured credit facilities, which may result in an event of default. In such circumstances, we may not be able to refinance our debt, obtain additional financing or make distributions to our shareholders and our subsidiaries may not be able to make distributions to us. The prepayment of certain debt facilities may be necessary to cause us to maintain compliance with certain covenants in the event that the value of the vessels falls below certain levels. If we are not able to comply with the covenants in our secured credit facilities, and are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on our fleet.
Additionally, if we sell one or more of our vessels at a time when vessel prices have fallen, the sale price may be less than the vessel’s carrying value on our consolidated financial statements, resulting in a loss on sale or an impairment loss being recognized, ultimately leading to a reduction in earnings. Furthermore, if vessel values fall significantly, this could indicate a decrease in the recoverable amount for the vessel which may result in an impairment adjustment in our financial statements, which could adversely affect our financial results and condition.
For further information, please see “Item 5. Operating and Financial Review and Prospects.”
If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive international tanker market, which would negatively affect our financial condition and our ability to expand our business.
The operation of tanker vessels and transportation of crude and petroleum products is extremely competitive, in an industry that is capital intensive and highly fragmented. Demand for transportation of oil and oil products has declined, and could continue to decline, which could lead to increased competition. Competition arises primarily from other tanker owners, including major oil companies as well as independent tanker companies, some of whom have substantially greater resources than we do. Competition for the transportation of oil and oil products can be intense and depends on price, location, size, age, condition and the acceptability of the tanker and its operators to the charterers. We will have to compete with other tanker owners, including major oil companies as well as independent tanker companies.
Our market share may decrease in the future. We may not be able to compete profitably as we expand our business into new geographic regions or provide new services. New markets may require different skills, knowledge or strategies than we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than we do.
If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, at the end of a vessel’s useful life our revenue will decline, which would adversely affect our business, results of operations, financial condition, and available cash.
If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives, which we expect to occur between 2037 and 2043, depending on the vessel. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations, financial condition, and available cash per share would be adversely affected. Any funds set aside for vessel replacement will reduce available cash.
Our ability to obtain additional financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers.
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 vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost may materially affect our results of operations and our ability to implement our business strategy.
We cannot guarantee that our Board of Directors will declare dividends.
Our Board of Directors may, in its sole discretion, from time to time, declare and pay cash dividends in accordance with our organizational documents and applicable law.  Our Board of Directors makes determinations regarding the payment of dividends in its sole discretion, and there is no guarantee that we will continue to pay dividends in the future.  

16

Table of Contents

In addition, the markets in which we operate our vessels are volatile and we cannot predict with certainty the amount of cash, if any, that will be available for distribution as dividends in any period. We may also incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have available for distribution as dividends, including as a result of the risks described herein. If additional financing is not available to us on acceptable terms, our Board of Directors may determine to finance or refinance asset acquisitions with cash from operations, which would reduce the amount of any cash available for the payment of dividends.
United States tax authorities could treat us as a “passive foreign investment company,” which could have adverse United States federal income tax consequences to United States shareholders.
A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which 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.” United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.
Based on our current and proposed method of operation, we do not believe that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, our income from our time and voyage chartering activities should not constitute “passive income,” and the assets that we own and operate in connection with the production of that income should not constitute assets that produce or are held for the production of “passive income.”
There is substantial legal authority supporting this position, consisting of case law and United States Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should be noted that there is also authority that characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if the nature and extent of our operations change.
If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders would face adverse United States federal income tax consequences and incur certain information reporting obligations. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, or the Code (which election could itself have adverse consequences for such shareholders), such shareholders would be subject to United States federal income tax at the then prevailing rates on ordinary income plus interest, in respect of excess distributions and upon any gain from the disposition of their common shares, as if the excess distribution or gain had been recognized ratably over the shareholder’s holding period of the common shares. See “Taxation-Passive Foreign Investment Company Status and Significant Tax Consequences” for a more comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are treated as a PFIC.
We may have to pay tax on United States source shipping income, which would reduce our earnings.
Under the Code, 50% of the gross shipping income of a corporation that owns or charters vessels, as we and our subsidiaries do, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% United States federal income tax without allowance for deductions, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the regulations promulgated thereunder by the United States Department of the Treasury.
We and our subsidiaries intend to take the position that we qualify for this statutory tax exemption for United States federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption and thereby become subject to United States federal income tax on our United States source shipping income. For example, we may no longer qualify for exemption under Section 883 of the Code for a particular taxable year if shareholders with a five percent or greater interest in our common shares, or 5% Shareholders, owned, in the aggregate, 50% or more of our outstanding common shares for more than half the days during the taxable year, and there do not exist sufficient 5% Shareholders that are qualified shareholders for purposes of Section 883 of the Code to preclude nonqualified 5% Shareholders from owning 50% or more of our common shares for more than half the number of days during such taxable year or we are unable to satisfy certain substantiation requirements with regard to our 5% Shareholders. Due to the factual nature of the issues involved, there can be no assurances on the tax-exempt status of us or any of our subsidiaries.

17

Table of Contents

If we or our subsidiaries were not entitled to exemption under Section 883 of the Code for any taxable year, we or our subsidiaries could be subject for such year to an effective 2% United States federal income tax on the shipping income we or they derive during such year which is attributable to the transport of cargoes to or from the United States. The imposition of this tax would have a negative effect on our business and would decrease our earnings available for distribution to our shareholders.
We are subject to certain risks with respect to our counterparties on contracts, including, without limitation, our vessel employment arrangements and newbuilding contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact our results of operations and cash flows.
We have entered into, and may enter into in the future, various contracts, including, without limitation, charter and pooling agreements relating to the employment of our vessels, newbuilding contracts, debt facilities, and other agreements. Such agreements subject us to counterparty risks. The ability and willingness of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, and the overall financial condition of the counterparty.
In addition, with respect to our charter arrangements, in depressed market conditions, our charterers may no longer need a vessel that is then under charter or may be able to obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those contracts. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot market or on time charters may be at lower rates. As a result, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to pay dividends on our common shares and interest on our debt securities and comply with covenants in our credit facilities.
Our insurance may not be adequate to cover our losses that may result from our operations due to the inherent operational risks of the tanker industry.
We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull and machinery insurance, protection and indemnity insurance, which include pollution risks, crew insurance and war risk insurance. However, we may not be adequately insured to cover losses from our operational risks, which could have a material adverse effect on us. Additionally, our insurers may refuse to pay particular claims and our insurance may be voidable by the insurers if we take, or fail to take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any significant uninsured or under-insured loss or liability could have a material adverse effect on our business, results of operations, cash flows and financial condition and our available cash. In addition, we may not be able to obtain adequate insurance coverage at reasonable rates in the future during adverse insurance market conditions.
Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain due to increased premiums or reduced or restricted coverage for losses caused by terrorist acts generally.
Because we obtain some of our insurance through protection and indemnity associations, which result in significant expenses to us, we may be required to make additional premium payments.
We may be subject to increased premium payments, or calls, in amounts based on our claim records, the claim records of our managers, as well as the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. In addition, our protection and indemnity associations may not have enough resources to cover claims made against them. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.
Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties, contract terminations and an adverse effect on our business.
We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977, 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 and 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.

18

Table of Contents

We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law and, as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States.
Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Shareholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.
It may be difficult to serve process on or enforce a United States judgment against us, our officers and our directors because we are a foreign corporation.
We are a corporation formed in the Republic of the Marshall Islands, and some of our directors and officers and certain of the experts named in this offering are located outside the United States. In addition, a substantial portion of our assets and the assets of our directors, officers and experts are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in U.S. courts against us or any of these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws. Furthermore, there is substantial doubt that the courts of the Republic of the Marshall Islands or of the non-U.S. jurisdictions in which our offices are located would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws.
The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.
We are incorporated under the laws of the Republic of the Marshall Islands and we conduct operations in countries around the world. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United States could apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.
RISKS RELATED TO OUR RELATIONSHIP WITH SCORPIO GROUP AND ITS AFFILIATES
We are dependent on our managers and their ability to hire and retain key personnel, and there may be conflicts of interest between us and our managers that may not be resolved in our favor.
Our success depends to a significant extent upon the abilities and efforts of our technical manager, SSM, our commercial manager, Scorpio Commercial Management S.A.M., or SCM, and our management team. Our success will depend upon our and our managers’ ability to hire and retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition.
In addition, difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not maintain “key man” life insurance on any of our officers.
Our technical and commercial managers are members of the Scorpio Group, which is owned and controlled by the Lolli-Ghetti family, of which our founder, Chairman and Chief Executive Officer, Mr. Emanuele Lauro, and our Vice President, Mr. Filippo Lauro, are members. In addition, all of our executive officers serve in similar management positions in certain other companies within the Scorpio Group. These relationships may create conflicts of interest in matters involving or affecting us and our customers, including in the chartering, purchase, sale and operation of the vessels in our fleet versus vessels managed by other members of the Scorpio Group. Conflicts of interest may arise between us, on the one hand, and our commercial and technical managers, on the other hand. As a result of these conflicts, our commercial and technical managers, who have limited contractual duties, may favor their own or other owner’s interests over our interests. These conflicts may have unfavorable results for us.
Our founder, Chairman and Chief Executive Officer, and Vice President have affiliations with our administrator and commercial and technical managers which may create conflicts of interest.


19

Table of Contents

Emanuele Lauro, our founder, Chairman and Chief Executive Officer, and Filippo Lauro, our Vice President, are members of the Lolli-Ghetti family, which owns and controls our administrator and commercial and technical managers. These responsibilities and relationships could create conflicts of interest between us, on the one hand, and our administrator and/or commercial and technical managers, on the other hand. These conflicts may arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus vessels managed by other companies affiliated with our commercial or technical managers. Our commercial and technical managers may give preferential treatment to vessels that are time chartered-in by related parties because our founder, Chairman and Chief Executive Officer and members of his family may receive greater economic benefits. In particular, as of the date of this annual report, our commercial and technical managers provide commercial and technical management services to approximately 127 and 76 vessels respectively, other than the vessels in our fleet, that are owned, operated or managed by entities affiliated with Messrs. Lauro, and such entities may acquire additional vessels that will compete with our vessels in the future. Such conflicts may have an adverse effect on our results of operations. In addition, certain members of the Scorpio Group may benefit from economies of scale all of which may not be passed along to us.
Certain of our officers do not devote all of their time to our business, which may hinder our ability to operate successfully.
Certain of our officers participate in business activities not associated with us, and as a result, they may devote less time to us than if they were not engaged in other business activities and may owe fiduciary duties to the shareholders of both us as well as shareholders of other companies which they may be affiliated, including other companies within the Scorpio Group. This may create conflicts of interest in matters involving or affecting us and our customers and it is not certain that any of these conflicts of interest will be resolved in our favor. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our commercial and technical managers are each privately held companies and there is little or no publicly available information about them.
SCM is our commercial manager and SSM is our technical manager. SCM’s and SSM’s ability to render management services will depend in part on their own financial strength. Circumstances beyond our control could impair our commercial manager’s or technical manager’s financial strength, and because each is a privately held company, information about the financial strength of our commercial manager and technical manager is not available. As a result, we and our shareholders might have little advance warning of financial or other problems affecting our commercial manager or technical manager even though their financial or other problems could have a material adverse effect on us.
RISKS RELATED TO OUR INDEBTEDNESS
Servicing our current or future indebtedness limits funds available for other purposes and if we cannot service our debt, we may lose our vessels.
Borrowing under our debt facilities requires us to dedicate a part of our cash flow from operations to paying interest on our indebtedness. These payments limit funds available for working capital, capital expenditures and other purposes, including further equity or debt financing in the future. Amounts borrowed under our secured debt facilities bear interest at variable rates. Increases in prevailing rates could increase the amounts that we would have to pay to our lenders, even though the outstanding principal amount remains the same, and our net income and cash flows would decrease. We expect our earnings and cash flow to vary from year to year due to the cyclical nature of the tanker industry. If we do not generate or reserve enough cash flow from operations to satisfy our debt obligations, we may have to undertake alternative financing plans, such as seeking to raise additional capital, refinancing or restructuring our debt, selling tankers, or reducing or delaying capital investments. However, these alternative financing plans, if necessary, may not be sufficient to allow us to meet our debt obligations.
If we are unable to meet our debt obligations or if some other default occurs under our debt facilities, our lenders could elect to declare that debt, together with accrued interest and fees, to be immediately due and payable and proceed against the collateral vessels securing that debt even though the majority of the proceeds used to purchase the collateral vessels did not come from our debt facilities.
Our debt agreements contain restrictive and financial covenants which may limit our ability to conduct certain activities, and further, we may be unable to comply with such covenants, which could result in a default under the terms of such agreements.
Our debt facilities impose operating and financial restrictions on us. These restrictions may limit our ability, or the ability of our subsidiaries party thereto to, among other things:

20

Table of Contents

•
\ pay dividends and make capital expenditures if we do not repay amounts drawn under our debt facilities or if there is another default under our debt facilities;
•
incur additional indebtedness, including the issuance of guarantees;
•
create liens on our assets;
•
change the flag, class or management of our vessels or terminate or materially amend the management agreement relating to each vessel;
•
sell our vessels;
•
merge or consolidate with, or transfer all or substantially all our assets to, another person; or
•
enter into a new line of business.

Therefore, we will need to seek permission from our lenders in order to engage in some corporate actions. Our lenders’ interests may be different from ours and we may not be able to obtain our lenders’ permission when needed. This may limit our ability to pay dividends to you if we determine to do so in the future, finance our future operations or capital requirements, make acquisitions or pursue business opportunities.
In addition, our secured credit facilities require us to maintain specified financial ratios and satisfy financial covenants, including ratios and covenants based on the market value of the vessels in our fleet. Should our charter rates or vessel values materially decline in the future, we may seek to obtain waivers or amendments from our lenders with respect to such financial ratios and covenants, or we may be required to take action to reduce our debt or to act in a manner contrary to our business objectives to meet any such financial ratios and satisfy any such financial covenants. Events beyond our control, including changes in the economic and business conditions in the shipping markets in which we operate, may affect our ability to comply with these covenants. We cannot assure you that we will meet these ratios or satisfy these covenants or that our lenders will waive any failure to do so or amend these requirements. A breach of any of the covenants in, or our inability to maintain the required financial ratios under, our credit facilities would prevent us from borrowing additional money under our credit facilities and could result in a default under our credit facilities. If a default occurs under our credit facilities, the lenders could elect to declare the outstanding debt, together with accrued interest and other fees, to be immediately due and payable and foreclose on the collateral securing that debt, which could constitute all or substantially all of our assets. Moreover, in connection with any waivers or amendments to our credit facilities that we may obtain, our lenders may impose additional operating and financial restrictions on us or modify the terms of our existing credit facilities. These restrictions may further restrict our ability to, among other things, pay dividends, repurchase our common shares, make capital expenditures, or incur additional indebtedness.
Furthermore, our debt agreements contain cross-default provisions that may be triggered if we default under the terms of any one of our financing agreements. In the event of default by us under one of our debt agreements, the lenders under our other debt agreements could determine that we are in default under such other financing agreements. Such cross defaults could result in the acceleration of the maturity of such debt under these agreements and the lenders thereunder may foreclose upon any collateral securing that debt, including our vessels, even if we were to subsequently cure such default. In the event of such acceleration or foreclosure, we might not have sufficient funds or other assets to satisfy all of our obligations, which would have a material adverse effect on our business, results of operations and financial condition.

ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Scorpio Tankers Inc. was incorporated in the Republic of the Marshall Islands pursuant to the BCA on July 1, 2009. We provide seaborne transportation of refined petroleum products worldwide. We began our operations in October 2009 with three vessels and in April 2010, we completed our initial public offering and commenced trading on the New York Stock Exchange, or NYSE, under the symbol “STNG.” We have since expanded our fleet and as of March 15, 2017, our fleet consisted of 78 wholly owned tankers (22 LR2, 14 Handymax and 42 MR) with a weighted average age of approximately 2.3 years, and 19 time or bareboat chartered-in tankers which we operate (one LR2, one LR1, eight MR and nine Handymax), which we refer to collectively as our Operating Fleet. In addition, we currently have contracts for the construction of nine newbuilding product tankers, eight MR and one LR2, which we refer to as our Newbuilding Program. The LR2 is expected to be delivered to us before the end of March 2017 and the eight MRs are expected to be delivered to us throughout the remainder of 2017 and the first quarter of 2018.
Our principal executive offices are located at 9, Boulevard Charles III, Monaco 98000 and our telephone number at that address is +377-9798-5716.

21

Table of Contents

Fleet Development
For information regarding the development of our fleet, including vessel acquisitions and dispositions and the status of our Newbuilding Program, please see “Item 5. Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Capital Expenditures-Vessel Acquisitions and Dispositions.”
Recent Developments
Vessel Deliveries and Related Debt Drawdowns
In February 2017, we took delivery of STI Selatar , an LR2 product tanker that was under construction, from SSME and drew down $29.4 million from our Credit Suisse Credit Facility to partially finance the purchase of this vessel. Additionally, in March 2017, we drew down $29.0 million from our Credit Suisse Credit Facility to partially finance the purchase of STI Rambla, an LR2 product tanker that is currently under construction at SSME and is expected to be delivered before the end of March 2017. The drawdowns are summarized as follows:
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
29.4

 
February 2017
 
STI Selatar
 
29.0

 
March 2017
 
STI Rambla
(1)  
(1) Amount drawn to partially finance the expected delivery of this vessel from SSME, which is scheduled to occur before the end of March 2017.
Time and Bareboat Chartered-in Vessels (see definitions in Item 5)
In December 2016, we entered into agreements to bareboat-in seven Handymax ice-class 1A product tankers. The agreements include purchase options which can be exercised through December 31, 2018. If we do not exercise the purchase options, the bareboat-in agreements expire on March 31, 2019. Three of the vessels were previously time chartered-in by us for $15,600 per day. These time charter-in contracts were canceled in January 2017 and replaced by the new bareboat contracts at a rate of $7,500 per day. The remaining four vessels were chartered-in, on a bareboat basis, for $6,000 per day. These vessels were delivered in February 2017.
In February 2017, we entered into a new time charter agreement on a 2013 built, LR2 product tanker, which we then time chartered-in, for an additional six months at $14,360 per day effective February 2017. We also have the option to extend the charter for an additional six months at $15,385 per day.
In February 2017, we entered into new time charter agreements on two 2007-built ice-class 1B Handymax product tankers, which we then time chartered-in, each for one year at $11,250 per day. One agreement is effective in March 2017 and the other is effective in May 2017. We also have options to extend these charters for an additional year at $13,250 per day each.
New Credit Facilities
2017 Credit Facility
In March 2017, we executed a senior secured term loan facility with a group of financial institutions led by Macquarie Bank Limited (London Branch) for a loan facility of up to $172.0 million, or the 2017 Credit Facility. The 2017 Credit Facility consists of five tranches; including two commercial tranches of $15.0 million and $25.0 million, a KEXIM Guaranteed Tranche of $48.0 million, a KEXIM Funded Tranche of $52.0 million, and a GIEK Guaranteed Tranche of $32.0 million.
The 2017 Credit Facility is expected to be used to partially finance the purchase of eight MR product tankers that are currently under construction at HMD. Drawdowns are available at an amount equal to the lower of 60% of the contract price and 60% of the fair market value of each respective vessel. Other key terms are as follows:

22

Table of Contents

•
The first commercial tranche of $15.0 million has a final maturity of six years from the drawdown date of each vessel, bears interest at LIBOR plus a margin of 2.25% per annum, and has a 15 year repayment profile.
•
The second commercial tranche of $25.0 million has a final maturity of nine years from the drawdown date of each vessel (assuming KEXIM or GIEK have not exercised their option to call for prepayment of the KEXIM and GIEK funded and guaranteed tranches by the date falling two months prior to the maturity of the first commercial tranche and in the event that the first commercial tranche has not been extended), bears interest at LIBOR plus a margin of 2.25% per annum, and has a 15 year repayment profile.
•
The KEXIM Funded Tranche and GIEK Guaranteed Tranche have a final maturity of 12 years from the drawdown date of each vessel (assuming the commercial tranches are refinanced through that date), bear interest at LIBOR plus a margin of 2.15% per annum, and have a 12 year repayment profile.
•
The KEXIM Guaranteed Tranche has a final maturity of 12 years from the drawdown date of each vessel (assuming the commercial tranches are refinanced through that date), bears interest at LIBOR plus a margin of 1.60% per annum, and has a 12 year repayment profile.
The remaining terms and conditions, including financial covenants, are similar to those in our existing credit facilities.
BNP Paribas Credit Facility
In January 2017, we refinanced the outstanding indebtedness related to STI Sapphire and STI Emerald by repaying an aggregate of $26.3 million on our 2011 Credit Facility and drawing down an aggregate amount of $27.6 million under our BNP Paribas Credit Facility. The drawdown amounts and dates were as follows:     
Drawdown amount
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
$
13.8

 
January 2017
 
STI Sapphire
13.8

 
February 2017
 
STI Emerald
HSH Nordbank Credit Facility
In January 2017, we entered into a senior secured term loan facility agreement with HSH Nordbank AG for $31.1 million, or the HSH Nordbank Credit Facility. In February 2017, we refinanced the outstanding indebtedness related to STI Duchessa and STI Onyx by repaying an aggregate of $23.7 million on our 2011 Credit Facility and drawing down an aggregate of $31.1 million under this facility as follows:
Drawdown amount
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
$
16.5

 
February 2017
 
STI Duchessa
14.6

 
February 2017
 
STI Onyx
Repayments on all borrowings under the HSH Nordbank Credit Facility are scheduled to be made in 20 consecutive quarterly installments. The first eight repayment installments shall be $745,669 each and the next 12 repayment installments shall be $648,408 each, the last of which shall be payable together with an additional balloon installment equal to the then outstanding balance of the loan. The facility has a final maturity of five years from the first drawdown date, and bears interest at LIBOR plus a margin of 2.50% per annum. The remaining terms and conditions, including financial covenants, are similar to those in our existing credit facilities.
DVB 2017 Credit Facility
In January 2017, we received a commitment for a credit facility of up to $81.4 million from DVB Bank SE, or the DVB 2017 Credit Facility, to refinance our previous facility with DVB Bank SE. The DVB 2017 Credit Facility is expected to be used to refinance the existing indebtedness on four product tankers, have a final maturity of December 2021, and bear interest at LIBOR plus a margin of 2.75% per annum. The available borrowings may be used to finance up to 63% of the fair market value of the respective vessels.
The remaining terms and conditions, including financial covenants, are expected to be similar to those in our existing credit facilities. The DVB 2017 Credit Facility is subject to customary conditions precedent and the execution of definitive documentation.

23

Table of Contents

For further information about these credit facilities, please see "Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Long -Term Debt Obligations and Credit Agreements."
Convertible Senior Notes Due 2019
On February 23, 2017, the conversion rate of our convertible senior notes due 2019, or the Convertible Notes, was adjusted to reflect a cash dividend with respect to our common shares. The new conversion rate for the Convertible Notes was adjusted to 97.9316 of our common shares per $1,000 principal amount of the Convertible Notes, representing an increase of the prior conversion rate of 0.2277 shares per $1,000 principal amount of the Convertible Notes.
Dividend Declaration
On February 13, 2017, our Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on or about March 30, 2017 to all shareholders of record as of February 23, 2017.

B. Business Overview
We provide seaborne transportation of refined petroleum products worldwide. As of March 15, 2017, our fleet consisted of 78 wholly owned tankers ( 22 LR2, 14 Handymax and 42 MR) with a weighted average age of approximately 2.3 years, and 19 time or bareboat chartered-in tankers which we operate (nine Handymax, eight MR, one LR1 and one LR2), which we refer to collectively as our Operating Fleet. In addition, we currently have contracts for the construction of one LR2 tanker and eight MR tankers, which we refer to as our Newbuilding Program. The LR2 is expected to be delivered to us before the end of March 2017 and the eight MRs are expected to be delivered to us throughout the remainder of 2017 and first quarter of 2018.
The following table sets forth certain information regarding our fleet as of March 15, 2017:
 
Vessel Name
 
Year Built
 
DWT
 
Ice class
 
Employment
 
Vessel type
 
 
 
 
 
Owned vessels
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1

STI Brixton
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
2

STI Comandante
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
3

STI Pimlico
 
2014
 
38,734

 
1A
 
Time Charter (5)
 
Handymax
 
 
 
 
4

STI Hackney
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
5

STI Acton
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
6

STI Fulham
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
7

STI Camden
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
8

STI Battersea
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
9

STI Wembley
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
10

STI Finchley
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
11

STI Clapham
 
2014
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
12

STI Poplar
 
2014
 
38,734

 
1A
 
Time Charter (5)
 
Handymax
 
 
 
 
13

STI Hammersmith
 
2015
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
14

STI Rotherhithe
 
2015
 
38,734

 
1A
 
 SHTP (1)
 
Handymax
 
 
 
 
15

STI Amber
 
2012
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
16

STI Topaz
 
2012
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
17

STI Ruby
 
2012
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
18

STI Garnet
 
2012
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
19

STI Onyx
 
2012
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
20

STI Sapphire
 
2013
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
21

STI Emerald
 
2013
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
22

STI Beryl
 
2013
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
23

STI Le Rocher
 
2013
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
24

STI Larvotto
 
2013
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
25

STI Fontvieille
 
2013
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 

24

Table of Contents

26

STI Ville
 
2013
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
27

STI Duchessa
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
28

STI Opera
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
29

STI Texas City
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
30

STI Meraux
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
31

STI San Antonio
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
32

STI Venere
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
33

STI Virtus
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
34

STI Aqua
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
35

STI Dama
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
36

STI Benicia
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
37

STI Regina
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
38

STI St. Charles
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
39

STI Mayfair
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
40

STI Yorkville
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
41

STI Milwaukee
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
42

STI Battery
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
43

STI Soho
 
2014
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
44

STI Memphis
 
2014
 
49,995

 
—
 
SMRP(2)
 
MR
 
 
 
 
45

STI Tribeca
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
46

STI Gramercy
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
47

STI Bronx
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
48

STI Pontiac
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
49

STI Manhattan
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
50

STI Queens
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
51

STI Osceola
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
52

STI Notting Hill
 
2015
 
49,687

 
1B
 
Time Charter (6)
 
MR
 
 
 
 
53

STI Seneca
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
54

STI Westminster
 
2015
 
49,687

 
1B
 
Time Charter (6)
 
MR
 
 
 
 
55

STI Brooklyn
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
56

STI Black Hawk
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
 
 
 
 
57

STI Elysees
 
2014
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
58

STI Madison
 
2014
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
59

STI Park
 
2014
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
60

STI Orchard
 
2014
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
61

STI Sloane
 
2014
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
62

STI Broadway
 
2014
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
63

STI Condotti
 
2014
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
64

STI Rose
 
2015
 
109,999

 
—
 
Time Charter (7)
 
LR2
 
 
 
 
65

STI Veneto
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
66

STI Alexis
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
67

STI Winnie
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
68

STI Oxford
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
69

STI Lauren
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
70

STI Connaught
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 

25

Table of Contents

71

STI Spiga
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
72

STI Savile Row
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
73

STI Kingsway
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
74

STI Carnaby
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
75

STI Lombard
 
2015
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
76

STI Grace
 
2016
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
77

STI Jermyn
 
2016
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
78

STI Selatar
 
2017
 
109,999

 
—
 
SLR2P (4)
 
LR2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total owned DWT
 
 
 
5,061,233

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vessel Name
 
Year Built
 
DWT
 
Ice class
 
Employment
 
Vessel type
Daily Base Rate
 
Expiry (8)
 
 
Time or bareboat chartered-in vessels
 
 
 
 
 
 
 
 
 
 
 
 
 
 
79

Kraslava
 
2007
 
37,258

 
1B
 
 SHTP (1)
 
Handymax
$
17,000

 
13-May-18
(9)
80

Krisjanis Valdemars
 
2007
 
37,266

 
1B
 
 SHTP (1)
 
Handymax
$
11,250

 
13-Mar-18
(10)
81

Silent
 
2007
 
37,847

 
1A
 
 SHTP (1)
 
Handymax
$
7,500

 
31-Mar-19
(11)
82

Single
 
2007
 
37,847

 
1A
 
 SHTP (1)
 
Handymax
$
7,500

 
31-Mar-19
(11)
83

Star I
 
2007
 
37,847

 
1A
 
 SHTP (1)
 
Handymax
$
7,500

 
31-Mar-19
(11)
84

Sky
 
2007
 
37,847

 
1A
 
 SHTP (1)
 
Handymax
$
6,000

 
31-Mar-19
(12)
85

Steel
 
2008
 
37,847

 
1A
 
 SHTP (1)
 
Handymax
$
6,000

 
31-Mar-19
(12)
86

Stone I
 
2008
 
37,847

 
1A
 
 SHTP (1)
 
Handymax
$
6,000

 
31-Mar-19
(12)
87

Style
 
2008
 
37,847

 
1A
 
 SHTP (1)
 
Handymax
$
6,000

 
31-Mar-19
(12)
88

Miss Mariarosaria
 
2011
 
47,499

 
—
 
SMRP(2)
 
MR
$
16,350

 
26-May-17
 
89

Vukovar
 
2015
 
49,990

 
—
 
SMRP(2)
 
MR
$
17,034

 
01-May-18
 
90

Targale
 
2007
 
49,999

 
—
 
SMRP(2)
 
MR
$
16,200

 
17-May-17
 
91

Zefyros
 
2013
 
49,999

 
—
 
SMRP(2)
 
MR
$
15,800

 
08-Jul-17
(13)
92

Gan-Trust
 
2013
 
51,561

 
—
 
SMRP(2)
 
MR
$
13,050

 
06-Jan-18
(14)
93

CPO New Zealand
 
2011
 
51,717

 
—
 
SMRP(2)
 
MR
$
15,250

 
12-Sep-18
(15)
94

CPO Australia
 
2011
 
51,763

 
—
 
SMRP(2)
 
MR
$
15,250

 
01-Sep-18
(15)
95

Ance
 
2006
 
52,622

 
—
 
SMRP(2)
 
MR
$
13,500

 
12-Oct-17
(16)
96

Hellespont Progress
 
2006
 
73,728

 
—
 
 SPTP (3)
 
LR1
$
17,250

 
13-Apr-17
 
97

Densa Alligator
 
2013
 
105,708

 
—
 
SLR2P (4)
 
LR2
$
14,360

 
17-Aug-17
(17)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total time or bareboat chartered-in DWT
 
 
 
924,039

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Newbuildings currently under construction
 
 
 
 
 
 
 
 
 
 
 
 
 
Vessel Name
 
Yard
 
DWT
 
 
 
Vessel type
 
 
 
 
 
 
98

Hull 2601 - TBN STI Galata
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 
99

Hull 2602 - TBN STI Bosphorus
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 
100

Hull 2603 - TBN STI Leblon
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 
101

Hull 2604 - TBN STI La Boca
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 
102

Hull 2605 - TBN STI San Telmo
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 
103

Hull 2606 - TBN STI Donald C Trauscht
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 

26

Table of Contents

104

Hull 2607 - TBN STI Esles II
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 
105

Hull 2608 - TBN STI Jardins
 
HMD
(18)
52,000

 
 
 
MR
 
 
 
 
 
 
106

Hull S3121 - TBN STI Rambla
 
SSME
(19)
109,999

 
 
 
LR2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total newbuilding product tankers DWT
 
525,999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Fleet DWT
 
 
 
6,511,271

 
 
 
 
 
 
 
 
 
 
(1)
This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial Management (SCM). SHTP and SCM are related parties to the Company.
(2)
This vessel operates in or is expected to operate in the Scorpio MR Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the Company.
(3)
This vessel operates in or is expected to operate in the Scorpio Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related party to the Company.
(4)
This vessel operates in or is expected to operate in the Scorpio LR2 Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the Company
(5)
This vessel is currently time chartered-out to an unrelated third-party for three years at $18,000 per day. This time charter is scheduled to expire in January 2019.
(6)
This vessel is currently time chartered-out to an unrelated third-party for three years at $20,500 per day. This time charter is scheduled to expire in December 2018.
(7)
This vessel is currently time chartered-out to an unrelated third-party for three years at $28,000 per day. This time charter is scheduled to expire in February 2019.
(8)
Redelivery from the charterer is plus or minus 30 days from the expiry date.
(9)
In February 2017, we entered into a new charter agreement for one year at $11,250 per day effective May 2017. We have an option to extend the charter for an additional year at $13,250 per day.
(10)
In February 2017, we entered into a new charter agreement for one year at $11,250 per day effective March 2017. We have an option to extend the charter for an additional year at $13,250 per day.
(11)
In December 2016, we entered into an agreement to bareboat-in this vessel, which was previously time chartered-in by the Company for $15,600 per day. The time charter-in contract was cancelled in January 2017 and replaced by the new bareboat contract at a rate of $7,500 per day. The agreement includes a purchase option which can be exercised through December 31, 2018. If the purchase option is not exercised, the bareboat-in agreement will expire on March 31, 2019.
(12)
In December 2016, we entered into an agreement to bareboat-in this vessel at a rate of $6,000 per day. The agreement includes a purchase option which can be exercised through December 31, 2018. If the purchase option is not exercised, the bareboat-in agreement will expire on March 31, 2019.
(13)
We have an option to extend the charter for an additional year at $17,000 per day.
(14)
In November 2016, we entered into a new charter agreement for one year at $13,050 per day effective January 2017. We have an option to extend the charter for an additional year at $15,000 per day.
(15)
We have an option to extend the charter for an additional year at $16,000 per day.
(16)
We have an option to extend the charter for an additional year at $15,000 per day.
(17)
In February 2017, we entered into a new charter agreement for six months at $14,360 per day. We have an option to extend the charter for an additional six months at $15,385 per day.
(18)
These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). Seven vessels are expected to be delivered throughout the remainder of 2017 and one vessel is expected to be delivered in the first quarter of 2018.
(19)
This newbuilding vessel was constructed at SSME (Sungdong Shipbuilding & Marine Engineering Co., Ltd) and is expected to be delivered before the end of March 2017.



Chartering Strategy

Generally, we operate our vessels in commercial pools, on time charters or in the spot market.
Commercial Pools

To increase vessel utilization and thereby revenues, we participate in commercial pools with other shipowners of similar modern, well-maintained vessels. As of March 15, 2017, 92 of the vessels in our Operating Fleet operate in, or are expected to operate in, one of the Scorpio Group Pools. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial managers and operators who have close working relationships with customers and brokers, while

27

Table of Contents

technical management is performed by each shipowner. Pools negotiate charters with customers primarily in the spot market, but may also arrange time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and contracts of affreightment, or COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market.
Time Charters
Time charters give us a fixed and stable cash flow for a known period of time. Time charters also mitigate in part the seasonality of the spot market business, which is generally weaker in the second and third quarters of the year. In the future, we may opportunistically look to enter our vessels into time charter contracts. We may also enter into time charter contracts with profit sharing agreements, which enable us to benefit if the spot market increases. As of the date of this annual report, five of the vessels in our Operating Fleet are employed under long-term time charters (with initial terms of one year or greater).
Spot Market
A spot market voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed freight per ton of cargo or a specified total amount. Under spot market voyage charters, we pay voyage expenses such as port, canal and bunker costs. Spot charter rates are volatile and fluctuate on a seasonal and year-to-year basis. Fluctuations derive from imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes. Vessels operating in the spot market generate revenue that is less predictable, but may enable us to capture increased profit margins during periods of improvements in tanker rates. As of March 15, 2017, three of the bareboat chartered-in vessels in our Operating Fleet were operating directly in the spot market. These vessels are temporarily operating in the spot market prior to their expected entrance into the Scorpio Handymax Tanker Pool.
Management of our Fleet
On September 29, 2016, we agreed to amend our administrative services agreement, or the Administrative Services Agreement, with Scorpio Services Holding Limited, or SSH, and our master agreement, or the Master Agreement, with SCM and SSM under a deed of amendment, or the Deed of Amendment.  Pursuant to the terms of the Deed of Amendment, on November 15, 2016, we entered into definitive documentation to memorialize the agreed amendments to the Master Agreement, or the Amended and Restated Master Agreement. The Amended and Restated Master Agreement and the Administrative Services Agreement as amended by the Deed of Amendment, or the Amended Administrative Services Agreement, are effective as from September 29, 2016. Under the terms of the amendments, (i) the fee of 1% payable to SSH upon any future vessel sale or purchase was eliminated and (ii) in the event of the sale of one or more vessels, a notice period of three months and a payment equal to three months of management fees will apply, provided that the termination does not amount to a change of control, including a sale of all or substantially all of our vessels, in which case a payment equal to 24 months of management fees will apply. There was no consideration paid by us for these amendments. 
Commercial and Technical Management
Our vessels are commercially managed by SCM and technically managed by SSM pursuant to the Amended and Restated Master Agreement, which may be terminated by either party upon 24 months’ notice, unless terminated earlier in accordance with the provisions of the Amended and Restated Master Agreement. In the event of the sale of one or more vessels, a notice period of three months and a payment equal to three months of management fees will apply, provided that the termination does not amount to a change in control, including a sale of all or substantially all of our vessels, in which case a payment equal to 24 months of management fees will apply. SCM and SSM are related parties of ours. We expect that additional vessels that we may acquire in the future will also be managed under the Amended and Restated Master Agreement or on substantially similar terms.

28

Table of Contents

SCM’s services include securing employment, in the spot market and on time charters, for our vessels. SCM also manages the Scorpio Group Pools. When our vessels are operating in one of the Scorpio Group Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to our LR1/Panamax vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per day with respect to each of our Handymax and MR vessels, plus 1.50% commission on gross revenues per charter fixture.  These are the same fees that SCM charges other vessel owners in these pools, including third-party owned vessels. For commercial management of our vessels that are not operating in any of the Scorpio Group Pools, we pay SCM a fee of $250 per vessel per day for each LR1/Panamax and LR2 vessel and $300 per vessel per day for each Handymax and MR vessel, plus 1.25% commission on gross revenues per charter fixture.
SSM’s services include day-to-day vessel operations, performing general maintenance, monitoring regulatory and classification society compliance, customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing technical support. We currently pay SSM $685 per vessel per day to provide technical management services for each of our vessels. This fee is based on contracted rates that were the same as those charged to other, third party vessels managed by SSM at the time the management agreements were entered into. 
During 2016, we paid a termination fee in the aggregate amount of $2.7 million under our commercial management agreement with SCM and a termination fee in the aggregate amount of $2.5 million under our technical management agreement with SSM, as a result of the sales of STI Lexington, STI Mythos, STI Chelsea, STI Powai and STI Olivia.
Amended Administrative Services Agreement
We have an Amended Administrative Services Agreement with SSH, or our Administrator, for the provision of administrative staff and office space, and administrative services, including accounting, legal compliance, financial and information technology services. SSH is a related party of us. We reimburse our Administrator for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described above. The services provided to us by our Administrator may be sub-contracted to other entities within the Scorpio Group.
Prior to September 29, 2016, we paid SSH a fee for arranging vessel purchases and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. As described above, this fee was eliminated for all vessel purchase or sale agreements entered into after September 29, 2016. For the year ended December 31, 2016 , we paid our Administrator $1.7 million, in aggregate, in connection with the sales of five MRs.
Further, pursuant to our Amended Administrative Services Agreement, our Administrator, on behalf of itself and other members of the Scorpio Group, has agreed that it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt.
Our Amended Administrative Services Agreement may be terminated by us upon two years notice.
The International Oil Tanker Shipping Industry
All the information and data presented in this section, including the analysis of the oil tanker shipping industry, has been provided by Drewry. The statistical and graphical information contained herein is drawn from Drewry’s database and other sources. According to Drewry: (i) certain information in Drewry’s 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 Drewry’s database; and (iii) while Drewry has taken reasonable care in the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures.
Oil Tanker Demand
In broad terms, demand for oil products traded by sea is principally affected by global and regional economic conditions, as well as other factors such as changes in the location of productive capacity, and variations in regional prices. Demand for shipping capacity is a product of the physical quantity of the cargo (measured, depending on the cargo in terms of tons or cubic metrics) together with the distance the cargo is carried. Demand cycles move broadly in line with developments in global economy, with demand for products slowing significantly in the period immediately after the onset of the global economic downturn in late 2008, before recovering gradually from 2011 onwards with the general improvement in the macro-economic environment.
In 2016, 3.2 billion tons of crude oil, products and vegetable oils/chemicals were moved by sea. Of this, crude shipments constituted 2.0 billion tons of cargo, products 1.0 billion tons, with the balance made up of other bulk liquids, including vegetable oils, chemicals and associated products.


29

Table of Contents

World Seaborne Tanker Trade

 
 
Crude Oil
 
Products
 
Veg Oils/
Chemicals
 
Total
Year
 
Mill T
 
% Y-o-Y

 
Mill T
 
% Y-o-Y

 
Mill T
 
% Y-o-Y
 
Mill T
 
% Y-o-Y
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2001
 
1,751
 
3.2
 %
 
518
 
3.0
 %
 
121
 
3.5
 %
 
2,390
 
3.2
 %
2002
 
1,756
 
0.3
 %
 
519
 
0.3
 %
 
129
 
6.6
 %
 
2,404
 
0.6
 %
2003
 
1,860
 
5.9
 %
 
550
 
6.0
 %
 
136
 
4.9
 %
 
2,545
 
5.9
 %
2004
 
1,963
 
5.6
 %
 
599
 
8.8
 %
 
146
 
7.2
 %
 
2,707
 
6.4
 %
2005
 
1,994
 
1.6
 %
 
646
 
8.0
 %
 
161
 
10.3
 %
 
2,801
 
3.5
 %
2006
 
1,996
 
0.1
 %
 
677
 
4.7
 %
 
171
 
6.3
 %
 
2,844
 
1.5
 %
2007
 
2,008
 
0.6
 %
 
723
 
6.8
 %
 
175
 
2.8
 %
 
2,907
 
2.2
 %
2008
 
2,014
 
0.3
 %
 
765
 
5.8
 %
 
178
 
1.5
 %
 
2,956
 
1.7
 %
2009
 
1,928
 
(4.2
)%
 
777
 
1.6
 %
 
184
 
3.2
 %
 
2,888
 
(2.3
)%
2010
 
1,997
 
3.6
 %
 
810
 
4.2
 %
 
196
 
6.4
 %
 
3,002
 
3.9
 %
2011
 
1,941
 
(2.8
)%
 
860
 
6.3
 %
 
205
 
4.9
 %
 
3,007
 
0.1
 %
2012
 
1,988
 
2.4
 %
 
859
 
(0.2
)%
 
210
 
2.5
 %
 
3,057
 
1.7
 %
2013
 
1,918
 
(3.5
)%
 
904
 
5.3
 %
 
217
 
3.3
 %
 
3,040
 
(0.6
)%
2014
 
1,895
 
(1.2
)%
 
912
 
0.8
 %
 
221
 
1.6
 %
 
3,027
 
(0.4
)%
2015
 
1,957
 
3.3
 %
 
953
 
4.5
 %
 
231
 
4.8
 %
 
3,142
 
3.8
 %
2016 *
 
2,016
 
3.0
 %
 
987
 
3.6
 %
 
229
 
(0.8
)%
 
3,233
 
2.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CAGR (2011-2016)
0.8%
 
 
 
2.8%
 
 
 
2.3%
 
 
 
1.5%
 
 
CAGR (2006-2016)
0.1%
 
 
 
3.8%
 
 
 
3.0%
 
 
 
1.3%
 
 

* Provisional assessment
Source: Drewry

The volume of oil moved by sea was affected by the economic recession in 2008 and 2009, but since then renewed growth in the world economy and in oil demand has had a positive impact on seaborne trade. Oil demand has benefited from economic growth in Asia, especially in China, where oil consumption increased by a compound average growth rate (CAGR) of 5.4% to 11.9 million barrels per day (mbpd) between 2006 and 2016. Low per capita oil consumption in developing countries such as China and India compared to the developed world provides scope for higher oil consumption in these economies. Conversely, oil consumption in developed OECD economies has been in decline for much of the last decade, although provisional data for the United States (U.S.) and some European countries indicates that this trend was reversed in 2015 and 2016. This was almost certainly due to the positive impact of lower oil prices on demand for products such as gasoline.


30

Table of Contents

World Oil Consumption: 1991-2016
(Million bpd)


WORLDOILCONSUMPTION19912016.JPG
* Provisional estimate
Source: Drewry

Provisional estimates suggest that world oil demand in 2016 was 96.5 million bpd, an increase of 1.5% from 2015, and between 2006 and 2016, world oil demand grew by a CAGR of 1.3%.

Oil Product Exports & Imports

Product trades have increased in the last decade as a result of developments in the U.S. energy economy. In the U.S., as a result of the development of shale oil deposits, domestic crude oil production increased by a CAGR of 10.2% between 2008 and 2015 to reach just in excess of 9.0 million bpd, however provisional estimates suggest a marginal decline to 8.9 million bpd in 2016. Horizontal drilling and hydraulic fracturing have triggered a shale oil revolution and rising crude oil production has also ensured the availability of cheaper feedstocks to local refineries. As a result, the U.S. has become a major net exporter of products (see chart below).


31

Table of Contents

Oil Product Exports - Major Growth Regions

(Million Bpd)

OILPRODUCTEXPORTS2016.JPG

Source: Drewry


In a short span of time, the U.S. has become the largest exporter of refined products in the world, with supplies from U.S. Gulf Coast terminals heading to most parts of the globe. By way of illustration, U.S. product exports to South America were close to 8.8 million tons in 2006, but had increased to 63.2 million tons by 2016, owing to strong import demand and the growth in U.S. products availability. Most of these exports were carried by MR product tankers, which constitute approximately 58% of global product tanker fleet capacity and have been the mainstay of seaborne trade in refined petroleum products. However, lower crude oil prices in 2015 and 2016 have adversely impacted U.S. shale oil producers and accordingly crude production in the region has been declining since May 2015. In November 2016 U.S. crude oil production was 8.9 million bpd, compared with 9.3 million bpd in November 2015. Declining crude oil production in addition to the lifting of the ban on crude oil exports in December 2015 has limited the availability of feedstocks to domestic refineries and in turn may limit the export of refined products from the U.S.
  
The shift in the location of global oil production is also being accompanied by a shift in the location of global refinery capacity and throughput. In short, capacity and throughput are moving from the developed to the developing world. Between 2006 and 2016 total OECD refining throughput declined by 4.3%, largely as a result of cutbacks in OECD Europe and OECD Asia Oceania. On the other hand, throughput in the OECD Americas in the same period was up by 1.9% to 18.9 million bpd. In 2016, refining throughput of OECD countries stood at 37.6 million bpd and accounted for 47.5% of global refinery throughput.

Asia (excluding China) and the Middle East added over 0.9 million bpd of export-oriented refinery capacity in 2015 whereas 0.4 million bpd new capacity came online in the U.S. during the year. For 2016, approximately 0.4 million bpd of new refining capacity was scheduled to be added in the U.S. and another 0.3 million bpd in Middle East. As a result of these developments countries such as India, Saudi Arabia and the U.S. have become major exporters of refined products.

Export-oriented refineries in India and the Middle East, coupled with the closure of refining capacity in the developed world, have prompted longer-haul shipments to meet product demand.


32

Table of Contents

Oil Product Imports - Major Growth Regions
(Million bpd)

OILPRODUCTIMPORTS2016.JPG

Source: Drewry
Current Tanker Fleet
Crude oil is transported in uncoated vessels, which range upwards in size from 55,000 dwt. Products are carried predominately in coated ships and include commodities such as fuel oil and vacuum gas oil (often referred to as “dirty products”), gas oil, gasoline, jet fuel, kerosene and naphtha (often referred to as “clean products”). In addition, some product tankers are also able to carry bulk liquid chemicals and edible oils and fats if they have the appropriate International Maritime Organization (IMO) certification. These vessels are classified as product/chemical tankers and as such they represent a swing element in supply, having the ability to move between trades depending on market conditions. Clean petroleum products are therefore carried by non-IMO product tankers and IMO certified product/chemical tankers. IMO tankers will also carry, depending on their tank coatings, a range of other products including organic and inorganic bulk liquid chemicals, vegetable oils and animal fats and special products such as molasses.
As of March 1, 2017, the total oil tanker fleet (crude, products and product/chemical tankers) consisted of 4,754 ships with a combined capacity of 525.9 million dwt.

33

Table of Contents

The Oil Tanker Fleet - March 1, 2017
Vessel Type
Deadweight Tons
Number of
% of Fleet
Capacity
% of Fleet
 
(Dwt)
Vessels
 
(m Dwt )
 
 
 
 
 
 
 
Crude Tankers (1)
 
 
 
 
 
VLCC/ULCC
200,000+
712
35.1
218.9
58.1
Suezmax
120-199,999
517
25.5
80.3
21.3
Aframax
80-119,999
649
32.0
70.0
18.6
Panamax
55-79,999
87
4.3
6.0
1.6
Handymax
40-54,999
17
0.8
0.8
0.2
Handy
25-39,999
12
0.6
0.4
0.1
Handy
10-24,999
36
1.8
0.6
0.2
Total Fleet
 
2,030
100.0
377.0
100.0
 
 
 
 
 
 
Product Tankers
 
 
 
 
 
Long Range 3 (LR3)
120-199,999
16
1.2
2.5
2.9
Long Range 2 (LR2)
80,000-119,999
319
23.8
34.5
40.0
Long Range 1 (LR1)
55-79,999
318
23.8
23.3
27.0
Medium Range 2 (MR2)
40-54,999
429
32.1
20.1
23.3
Medium Range 1 (MR1)
25-39,999
114
8.5
3.9
4.5
Handy
10-24,999
142
10.6
2.0
2.3
Total Fleet
 
1,338
100.0
86.3
100.0
 
 
 
 
 
 
Product/Chemical Tankers (2)
 
 
 
 
Long Range 3 (LR3)
120-199,999
—
—
—
—
Long Range 2 (LR2)
80,000-119,999
3
0.2
—
—
Long Range 1 (LR1)
55-79,999
25
1.8
1.8
2.9
Medium Range 2 (MR2)
40-54,999
1,004
72.4
48.5
77.4
Medium Range 1 (MR1)
25-39,999
315
22.7
11.7
18.7
Handy
10-24,999
39
2.8
0.6
1.0
Total Fleet
 
1,386
100.0
62.6
100.0
 
 
 
 
 
 
Product & Product/Chemical Fleet
 
 
 
 
Long Range 3 (LR3)
120-199,999
16
0.6
2.5
1.7
Long Range 2 (LR2)
80,000-119,999
322
11.8
34.5
23.2
Long Range 1 (LR1)
55-79,999
343
12.6
25.1
16.9
Medium Range 2 (MR2)
40-54,999
1,433
52.6
68.6
46.1
Medium Range 1 (MR1)
25-39,999
429
15.7
15.6
10.5
Handy
10-24,999
181
6.6
2.6
1.7
Total Fleet
 
2,724
100.0
148.9
100.0
 
 
 
 
 
 
Crude, Product and Product/Chemical Tanker Fleet
 
 
 
VLCC/ULCC
200,000+
712
15.0
218.9
41.6
Suezmax/LR3
120-199,999
533
11.2
82.8
15.7
Aframax/LR2
80-119,999
971
20.4
104.5
19.9
Panamax/LR1
55-79,999
430
9.0
31.1
5.9
Handy/Medium Range
40-54,999
1450
30.5
69.4
13.2
Handy/Medium Range
25-39,999
441
9.3
16.0
3.0
Handy/Handymax
10-54,999
217
4.6
3.2
0.6
Total Fleet
 
4,754
100.0
525.9
100.0

(1)
Included shuttle tankers and tankers on storage duties

34

Table of Contents

(2)
Includes product and product/chemical tankers, excludes chemical tankers

Source: Drewry

The world product tanker fleet as of March 1, 2017 consisted of 2,724 ships with a combined capacity of 148.9 million dwt. The breakdown of the fleet by type (product and product/chemical) and by size together with the orderbook for newbuilding tankers as of March 1, 2017, is illustrated in the table below.


The World Tanker Fleet (1) & Orderbook - March 1, 2017
Vessel Type
 
Existing
Fleet
 
Orderbook
 
Orderbook % Fleet
2017
2018
2019
2020+
 
(Dwt)
No
M Dwt
 
No
M Dwt
 
No
Dwt
No
M Dwt
No
M Dwt
No
M Dwt
No
M Dwt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crude Tankers (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VLCC/ULCC
200,000+
712
218.9
 
86.0
26.6
 
12.1
12.2
36.0
11.0
47.0
14.6
3.0
1.0
—
—
Suezmax
120-199,999
517
80.3
 
79.0
12.4
 
15.3
15.4
60.0
9.4
19.0
3.0
—
—
—
—
Aframax
80-119,999
649
70.0
 
89.0
10.1
 
13.7
14.4
38.0
4.3
38.0
4.3
9.0
1.0
4.0
0.5
Panamax
55-79,999
87
6.0
 
6.0
0.4
 
6.9
6.7
6.0
0.4
—
—
—
—
—
—
Handymax
40-54,999
17
0.8
 
2.0
0.1
 
11.8
12.5
2.0
0.1
—
—
—
—
—
—
Handy
25-39,999
12
0.4
 
—
—
 
—
—
—
—
—
—
—
—
—
—
Handy
10-24,999
36
0.6
 
4.0
0.1
 
11.1
16.7
4.0
0.1
—
—
—
—
—
—
Total Fleet
 
2,030
377.0
 
266.0
49.7
 
13.1
13.2
146.0
25.3
104.0
21.9
12.0
2.0
4.0
0.5
Product Tankers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long Range 3 (LR3)
120-199,999
16
2.5
 
4.0
0.6
 
25.0
24.0
2.0
0.3
2.0
0.3
—
—
—
—
Long Range 2 (LR2)
80,000-119,999
319
34.5
 
46.0
5.2
 
14.4
15.1
29.0
3.2
11.0
1.3
6.0
0.7
—
—
Long Range 1 (LR1)
55-79,999
318
23.3
 
42.0
3.1
 
13.2
13.3
25.0
1.8
14.0
1.0
1.0
0.1
2.0
0.2
Medium Range 2 (MR2)
40-54,999
429
20.1
 
38.0
1.9
 
8.9
9.5
4.0
0.2
9.0
0.4
18.0
0.9
7.0
0.4
Medium Range 1 (MR1)
25-39,999
114
3.9
 
—
—
 
—
—
—
—
—
—
—
—
—
—
Handy
10-24,999
142
2.0
 
8.0
0.2
 
5.6
10.0
5.0
0.1
3.0
0.1
—
—
—
—
Total Fleet
 
1,338
86.3
 
138.0
11.0
 
10.3
12.7
65.0
5.6
39.0
3.1
25.0
1.7
9.0
0.6
Product/Chemical Tankers (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long Range 3 (LR3)
120-199,999
—
—
 
—
—
 
—
—
—
—
—
—
—
—
—
—
Long Range 2 (LR2)
80,000-119,999
3
—
 
—
—
 
—
—
—
—
—
—
—
—
—
—
Long Range 1 (LR1)
55-79,999
25
1.8
 
—
—
 
—
—
—
—
—
—
—
—
—
—

35

Table of Contents

Medium Range 2 (MR2)
40-54,999
1,004
48.5
 
81.0
4.0
 
8.1
8.2
56.0
2.8
19.0
0.9
6.0
0.3
—
—
Medium Range 1 (MR1)
25-39,999
315
11.7
 
13.0
0.5
 
4.1
4.3
12.0
0.4
1.0
0.1
—
—
—
—
Handy
10-24,999
39
0.6
 
—
—
 
—
—
—
—
—
—
—
—
—
—
Total Fleet
 
1,386
62.6
 
94.0
4.5
 
6.8
7.2
68.0
3.2
20.0
1.0
6.0
0.3
—
—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Product & Product/Chemical Fleet
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long Range 3 (LR3)
120-199,999
16
2.5
 
4.0
0.6
 
25.0
24.0
2.0
0.3
2.0
0.3
—
—
—
—
Long Range 2 (LR2)
80,000-119,999
322
34.5
 
46.0
5.2
 
14.3
15.1
29.0
3.2
11.0
1.3
6.0
0.7
—
—
Long Range 1 (LR1)
55-79,999
343
25.1
 
42.0
3.1
 
12.2
12.4
25.0
1.8
14.0
1.0
1.0
0.1
2.0
0.2
Medium Range 2 (MR2)
40-54,999
1,433
68.6
 
119.0
5.9
 
8.3
8.6
60.0
3.0
28.0
1.3
24.0
1.2
7.0
0.4
Medium Range 1 (MR1)
25-39,999
429
15.6
 
13.0
0.5
 
3.0
3.2
12.0
0.4
1.0
0.1
—
—
—
—
Handy
10-24,999
181
2.6
 
8.0
0.2
 
4.4
7.7
5.0
0.1
3.0
0.1
—
—
—
—
Total Fleet
 
2,724
148.9
 
232.0
15.5
 
8.5
10.4
133.0
8.8
59.0
4.1
31.0
2.0
9.0
0.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crude, Product and Product/Chemical Tanker Fleet
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VLCC/ULCC
200,000+
712
218.9
 
86.0
26.6
 
12.1
12.2
36.0
11.0
47.0
14.6
3.0
1.0
—
—
Suezmax/LR3
120-199,999
533
82.8
 
83.0
13.0
 
15.6
15.7
62.0
9.7
21.0
3.3
—
—
—
—
Aframax/LR2
80-119,999
971
104.5
 
135.0
15.3
 
13.9
14.6
67.0
7.5
49.0
5.6
15.0
1.7
4.0
0.5
Panamax/LR1
55-79,999
430
31.1
 
48.0
3.5
 
11.2
11.2
31.0
2.2
14.0
1.0
1.0
0.1
2.0
0.2
Handy/Medium Range
40-54,999
1,450
69.4
 
121.0
6.0
 
8.3
8.6
62.0
3.1
28.0
1.3
24.0
1.2
7.0
0.4
Handy/Medium Range
25-39,999
441
16.0
 
13.0
0.5
 
2.9
3.1
12.0
0.4
1.0
0.1
—
—
—
—
Handy/Handymax
10-54,999
217
3.2
 
12.0
0.3
 
5.5
9.4
9.0
0.2
3.0
0.1
—
—
—
—
Total Fleet
 
4,754
525.9
 
498.0
65.2
 
10.5
12.4
279.0
34.1
163.0
26.0
43.0
4.0
13.0
1.1

(1) Included shuttle tankers and tankers on storage duties
(2) Product and product/chemical tankers only, excludes pure chemical tankers
Source: Drewry

As of March 1, 2017, the orderbook for product and product/chemical tankers for vessels above 10,000 dwt comprised 232 ships with a combined capacity of 15.5 million dwt, equivalent to 10.4% of the existing fleet. Based on the total orderbook and scheduled deliveries, approximately 8.8 million dwt is expected to be delivered in 2017, followed by 4.1 million dwt in 2018 and the remaining 2.6 million dwt will be delivered in 2019 and beyond. In recent years, however, the orderbook has been affected by the non-delivery of vessels (sometimes referred to as ‘‘slippage’’). Some of this slippage resulted from delays, either through mutual agreement or through shipyard problems, while some was due to vessel cancellations. Slippage is likely to remain an issue going forward and, as such, it will have a moderating effect over product tanker fleet growth in 2017 and 2018.

36

Table of Contents


The Oil Tanker Freight Market

Tanker charter hire rates and vessel values for all tankers are influenced by the supply and demand for tanker capacity. Also, in general terms, time charter rates are less volatile than spot rates, because they reflect the fact that the vessel is fixed for a longer period of time. In the spot market, rates will reflect the immediate underlying conditions in vessel supply and demand and are thus prone to more volatility. The trend in spot rates since 2001 for the main vessel classes is shown in the table below.


Oil Tanker - Spot (TCE) Rates: 2001-2017
(US$/Day)

Year
Caribs
NW Europe
West Africa
AG
 
USAC
NW Europe
Caribs/USES
Japan
 
40-70,000 DWT
70-100,000 DWT
150-160,000 DWT
280-300,000 DWT
 
 
 
 
 
2001
26,300
35,308
31,992
36,891
2002
16,567
22,800
19,325
21,667
2003
28,833
41,883
37,367
49,342
2004
42,158
55,408
64,792
95,258
2005
34,933
57,517
40,883
59,125
2006
28,792
47,067
40,142
51,142
2007
30,100
41,975
35,392
45,475
2008
36,992
56,408
52,650
89,300
2009
13,450
19,883
20,242
29,483
2010
17,950
27,825
19,658
40,408
2011
5,558
12,183
12,508
10,100
2012
9,042
10,617
13,825
12,775
2013
10,417
12,908
12,900
12,325
2014
18,217
33,075
21,200
24,892
2015
28,533
44,567
40,942
68,600
2016
16,633
32,875
23,433
41,792
Feb-17
14,500
38,200
11,300
28,500

Source: Drewry

After a period of favorable market conditions between 2004 and 2008, demand for products fell as the world economy went into recession in the latter half of 2008 and there was a negative impact on product tanker demand. With supply at the same time increasing at a fast pace, falling utilization levels pushed tanker freight rates downwards in 2009. A modest recovery took place in the early part of 2010, but this was short-lived and rates started to fall once more in mid-2012 before rebounding in 2014.

Freight rates in the tanker sector started to improve in the second half of 2014 as result of low growth in vessel supply and rising vessel demand. In the products sector a number of factors combined to push up rates, including:
•
Increased trade due to higher stocking activity and improved demand for oil products
•
Longer voyage distances because of refining capacity additions in Asia
•
Product tankers also carrying crude encouraged by firm freight rates for dirty tankers
•
Lower bunker prices contributing to higher net earnings

Freight rates remained firm throughout 2015 and first half of 2016 and this led to greater revenue and improved profitability for ship-owners. However, in the second half of 2016 tanker freight rates declined sharply as a result of the increase tanker supply outweighing the demand for tankers.

Oil Tanker Newbuilding Prices


37

Table of Contents

Newbuilding prices increased significantly between 2003 and 2007 primarily as a result of increased tanker demand. Thereafter prices weakened in the face of a poor freight market and lower levels of new ordering. In late 2013, prices started to recover and they continued to edge up slowly during 2014 before falling marginally in late 2015. Moreover, newbuilding prices fell further in 2016 because of excess capacity available at shipyards accompanied with low steel prices. New orders declined on account of diminishing earnings potential of oil tankers, and mandatory compliance to Tier III emission for ships ordered on or after January 1, 2016.

For most oil tanker sizes, newbuilding prices are well below the peaks reported at the height of the market boom in 2007-08 and also below long-term averages.

Oil Tankers: Newbuilding Prices: 2001-2017
(In millions of U.S. Dollars)

Year End
30,000
50,000
75,000
110,000
160,000
300,000
 
DWT
DWT
DWT
DWT
DWT
DWT
 
 
 
 
 
 
 
2001
25.0
27.0
33.5
38.0
47.0
72.0
2002
24.5
26.5
31.0
36.0
44.0
66.0
2003
28.5
30.5
34.5
40.0
52.0
73.0
2004
34.0
39.0
41.0
57.0
68.0
105.0
2005
37.5
42.0
43.0
59.0
71.0
120.0
2006
40.5
47.5
50.0
65.0
78.0
128.0
2007
46.0
54.0
64.0
78.0
90.0
146.0
2008
40.0
46.5
57.0
71.5
87.0
142.0
2009
31.0
36.0
42.5
52.0
62.0
101.0
2010
33.0
36.0
46.0
57.0
67.0
105.0
2011
31.5
36.0
44.0
52.8
61.7
99.0
2012
30.0
33.0
42.0
48.0
56.5
92.0
2013
31.0
35.0
43.0
51.5
59.0
93.5
2014
33.0
37.0
45.5
54.0
65.0
97.0
2015
32.0
35.5
45.0
51.5
63.0
94.0
2016
24.0
32.0
39.0
45.0
54.0
83.0
Feb-17
21.0
32.0
39.0
43.0
55.0
81.0
 
 
 
 
 
 
 
Long-term average
32.6
37.1
43.8
53.5
64.1
101.0

Source: Drewry
Secondhand Prices

Secondhand values primarily, albeit with a lag, reflect prevailing and expected charter rates. During extended periods of high charter rates vessel values tend to appreciate and vice versa. However vessel values are also influenced by other factors, including the age of the vessel. Prices for young vessels, those approximately up to five years old, are also influenced by newbuilding prices while prices for old vessels, near the end of their useful economic life, those approximately at or in excess of 25 years, are influenced by the value of scrap steel.

The table below illustrates the movements of prices for secondhand oil tankers from 2001 to January 2017. In late 2013, prices for all modern tankers increased as a result of improvement in freight rates and positive market sentiment and further gains were recorded in 2014 and 2015. However in 2016, second hand prices saw a double-digit decline on weakening freight rates. For example, the secondhand price of a five year old LR vessel of 95,000 dwt capacity fell by 35% from $46 million in 2015 to $30 million in 2016. As of February 2017 secondhand prices for oil tankers were also still well below their long-term averages for every vessel class.


38

Table of Contents

Oil Tanker Secondhand Prices: 2001-2017
(In millions of U.S. Dollars)

Year End
30,000
45,000
75,000
95,000
150,000
300,000
 
DWT
DWT
DWT
DWT
DWT
DWT
Age
5 Yrs
5 Yrs
 5 Yrs
5 Yrs
5 Yrs
5 Yrs
2001
25.0
25.0
25.5
34.5
41.5
63.0
2002
21.5
21.5
21.0
29.5
39.0
55.0
2003
29.5
29.5
24.0
37.0
47.0
70.0
2004
42.0
42.0
38.0
57.0
73.0
112.0
2005
40.0
45.5
46.5
58.0
75.0
110.0
2006
42.0
47.5
48.0
63.0
77.0
115.0
2007
40.5
52.0
59.0
68.5
87.0
130.0
2008
36.5
42.0
46.0
55.0
77.0
110.0
2009
20.5
24.0
32.5
38.0
53.0
77.5
2010
21.5
24.0
35.0
42.0
58.0
85.5
2011
22.5
27.0
32.0
33.5
45.5
58.0
2012
20.0
24.0
25.0
27.5
40.0
57.0
2013
25.0
29.0
31.0
33.0
42.0
60.0
2014
20.0
24.0
33.5
42.0
57.0
76.0
2015
23.0
27.0
36.0
46.0
60.0
80.0
2016
15.0
22.0
28.0
30.0
42.0
60.0
Feb-21
15.0
22.0
28.0
29.0
40.0
60.0
 
 
 
 
 
 
 
Long-term average
27.8
31.6
35.1
43.4
57.1
82.4

Source: Drewry

Environmental and Other Regulations

Government laws and regulations significantly affect the ownership and operation of our vessels. We are subject to various international conventions, laws and regulations in force in the countries in which our vessels may operate or are registered. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modification and implementation costs.

A variety of government, quasi-governmental and private organizations subject our vessels to both scheduled and unscheduled inspections. These organizations include the local port authorities, national authorities, harbor masters or equivalent entities, classification societies, relevant flag state (country of registry) and charterers, particularly terminal operators and oil companies. Some of these entities require us to obtain permits, licenses, certificates and approvals for the operation of our vessels. Our failure to maintain necessary permits, licenses, certificates or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of the vessels in our fleet, or lead to the invalidation or reduction of our insurance coverage.


39

Table of Contents

We believe that the heightened levels of environmental and quality concerns among insurance underwriters, regulators and charterers have led to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for tankers that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with applicable local, national and international environmental laws and regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations; however, because such laws and regulations are frequently changed and may impose increasingly strict requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that results in significant oil pollution, release of hazardous substances, loss of life, or otherwise causes significant adverse environmental impact, such as the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, could result in additional legislation, regulation, or other requirements that could negatively affect our profitability.

International Maritime Organization

The IMO is the United Nations agency for maritime safety and the prevention of pollution by ships. The IMO has adopted several international conventions that regulate the international shipping industry, including but not limited to the CLC, the Bunker Convention and MARPOL. MARPOL is broken into six Annexes, each of which establishes environmental standards relating to different sources of pollution: Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried, in bulk, in liquid or packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, adopted by the IMO in September of 1997, relates to air emissions.

In 2012, the IMO Marine Environment Protection Committee, or the MEPC, adopted by resolution amendments to the International Code for the Construction and Equipment of Ships carrying Dangerous Chemicals in Bulk, or the IBC Code. The provisions of the IBC Code are mandatory under MARPOL and SOLAS.  These amendments, which entered into force in June 2014, pertain to revised international certificates of fitness for the carriage of dangerous chemicals in bulk and identifying new products that fall under the IBC Code. We may need to make certain financial expenditures to comply with these amendments.  As of January 1, 2016, amendments to Annex I, the IBC Code, requires that all chemical tankers must be fitted with approved stability instruments capable of verifying compliance with both intact and damage stability.

 In 2013, the MEPC adopted by resolution amendments to the MARPOL Annex I Condition Assessment Scheme, or CAS. The amendments, which became effective on October 1, 2014 are intended to complement inspections for bulk carriers and tankers set forth in the 2011 International Code, on the Enhanced Programme of Inspections during Surveys of Bulk Carriers and Oil Tankers and enhances the program of inspection for certain tankers. We may need to make certain financial expenditures to comply with these amendments.

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution. Effective May 2005, Annex VI sets limits on nitrogen oxide emissions from ships whose diesel engines were constructed (or underwent major conversions) on or after January 1, 2000. It also prohibits “deliberate emissions” of “ozone depleting substances,” defined to include certain halons and chlorofluorocarbons. “Deliberate emissions” are not limited to times when the ship is at sea; they can for example include discharges occurring in the course of the ship’s repair and maintenance. Emissions of “volatile organic compounds” from certain tankers, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls) are also prohibited. 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 of sulfur emissions known in ECAs.

The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships. As of January 1, 2012, the amended Annex VI requires that fuel oil contain no more than 3.5% sulfur. On October 27, 2016, at its 70th session, MEPC 70, MEPC announced its decision concerning the implementation of regulations mandating a reduction in sulfur emissions from the current 3.5% to 0.5% as of the beginning of 2020 rather than pushing the deadline back to 2025. By 2020 ships will now have to either reduce sulfur from emissions through the installation and use of emission scrubbers or buy fuel with lower sulfur content.  Consequently, complying with MEPC 70 could result in a significant capital expenditure or a significant increase in the cost of bunkers.  The Company is currently reviewing alternatives to comply with MEPC 70 when it enters into force.

Sulfur content standards are even stricter within certain ECAs. As of January 1, 2015, ships operating within an ECA were not permitted to use fuel with sulfur content of 0.10%. Amended Annex VI establishes procedures for designating new ECAs.

40

Table of Contents

Currently, the Baltic Sea and the North Sea have been so designated. On August 1, 2012, certain coastal areas of North America were designated ECAs and effective January 1, 2014, the applicable areas of the U.S. Caribbean Sea were designated ECAs. If other ECAs are approved by the IMO or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the EPA or the states where we operate, compliance with these regulations could entail significant capital expenditures, operational changes, or otherwise increase the costs of our operations.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. At MEPC 70, MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxides, effective January 1, 2021. It is expected that these areas will be formally designated after draft amendments are presented at MEPC's next session. The EPA promulgated equivalent (and in some senses stricter) emissions standards in late 2009. As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.
Ballast Water Management
The IMO adopted the BWM Convention, in February 2004. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits. All ships will also have to carry a ballast water record book and an International Ballast Water Management Certificate. The BWM Convention enters into force 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping. On September 8, 2016, this threshold was met (with 52 contracting parties making up 35.14%). Thus, the BWM Convention will enter into force on September 8, 2017. Many of the implementation dates in the BWM Convention have already passed, so that once the BWM Convention enters into force, the period of installation of mandatory ballast water exchange requirements would be extremely short, with several thousand ships a year needing to install ballast water management systems, or BWMS. For this reason, on December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that they are triggered by the entry into force date and not the dates originally in the BWM Convention. This, in effect, makes all vessels constructed before the entry into force date “existing vessels” and allows for the installation of a BWMS on such vessels at the first renewal survey following entry into force of the convention. At MEPC 70, MEPC adopted updated “guidelines for approval of ballast water managements systems (G8).” G8 updates previous guidelines concerning procedures to approve BWMS. Once mid-ocean ballast exchange or ballast water treatment requirements become mandatory, the cost of compliance could increase for ocean carriers and the costs of ballast water treatments may be material. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The United States for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements. Although we do not believe that the costs of such compliance would be material, it is difficult to predict the overall impact of such a requirement on our operations.
Safety Management System Requirements
The IMO also adopted SOLAS and the LL Convention, which impose a variety of standards that regulate the design and operational features of ships. The IMO periodically revises the SOLAS and LL standards. May 2012 SOLAS amendments entered into force as of January 1, 2014. The Convention on Limitation for Maritime Claims of 1976 as amended, or LLMC, was recently amended and the amendments went into effect on June 8, 2015. The amendments alter the limits of liability for a loss of life or personal injury claim and a property claim against ship owners.
Our operations are also subject to environmental standards and requirements contained in the ISM Code promulgated by the IMO under Chapter IX of SOLAS. The ISM Code requires the owner of a vessel, or any person who has taken responsibility for operation of a vessel, to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that has been developed for our vessels for compliance with the ISM Code. The failure of a ship-owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.
The ISM Code requires that vessel operators also obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. Our managers have obtained documents of compliance for their offices and safety management certificates for all of our vessels for which the certificates are required by the ISM Code. These documents of compliance and safety management certificates are renewed as required.


41

Table of Contents

Non-compliance with the ISM Code and other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in, or invalidation of, available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatory nations to such conventions. For example, many countries have ratified and follow the liability plan adopted by the IMO and set out in the CLC of 1969, as amended by different Protocols in 1976, 1984, and 1992, and amended in 2000. Under the CLC and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol changed certain limits on liability, expressed using the International Monetary Fund currency unit of Special Drawing Rights. The limits on liability have since been amended so that compensation limits on liability were raised. The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s personal fault and under the 1992 Protocol where the spill is caused by the shipowner’s personal act or omission by intentional or reckless conduct where the shipowner knew pollution damage would probably result. The CLC requires ships covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a single incident. We believe that our protection and indemnity insurance will cover the liability under the plan adopted by the IMO.

The IMO adopted the Bunker Convention to impose strict liability on shipowners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention 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 (but not exceeding the amount calculated in accordance with the LLMC. With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

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

United States Regulations

OPA established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all “owners and operators” whose vessels trade in the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S. territorial sea and its 200 nautical mile exclusive economic zone. The U.S. has also enacted the CERCLA, which applies to the discharge of hazardous substances (including certain forms of oil) whether on land or at sea. OPA and CERCLA both define “owner and operator” “in the case of a vessel, as any person owning, operating or chartering by demise, the vessel.” Accordingly, both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are “responsible parties” and 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 discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to include:
•
injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
•
injury to, or economic losses resulting from, the destruction of real and personal property;
•
net loss of taxes, royalties, rents, fees or net profits resulting from injury, destruction or loss of real or personal property, or natural resources;
•
loss of subsistence use of natural resources that are injured, destroyed or lost;
•
lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and
•
net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.
OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective December 21, 2015, the USCG adjusted the limits of OPA liability to the greater of $2,200 per gross ton or $18,796,800 (subject to periodic adjustment for inflation) for tankers greater than 3,000 gross tons, other than a single hull tanker, such as double hull tankers, and our fleet is entirely composed of vessels of this size class. These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident

42

Table of Contents

where the responsibility party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.
CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damage for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third-party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million for vessels carrying a hazardous substance as cargo or residue and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.
OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law.
OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We have provided such evidence and received certificates of financial responsibility from the USCG for each of our vessels that is required to have one.
OPA permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA. Some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, however, in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining tanker owners’ responsibilities under these laws.
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico may also result in additional regulatory initiatives or statutes, including the raising of liability caps under OPA. For example, on August 15, 2012, the U.S. Bureau of Safety and Environmental Enforcement, or the BSEE, issued a final drilling safety rule for offshore oil and gas operations that strengthens the requirements for safety equipment, well control systems, and blowout prevention practices. A new rule issued by the U.S. Bureau of Ocean Energy Management that increased the limits of liability of damages for offshore facilities under OPA based on inflation took effect in January 2015. In April 2015, it was announced that new regulations are expected to be imposed in the U.S. regarding offshore oil and gas drilling and the BSEE announced a new Well Control Rule in April 2016. In December 2015, the BSEE announced a new pilot inspection program for offshore facilities. Compliance with any new requirements of OPA may substantially impact our cost of operations or require us to incur additional expenses to comply with any new regulatory initiatives or statutes.
Through our P&I Club membership, we expect to maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The 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, many in the U.S. 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 EPA and USCG have enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering United States waters.

The EPA regulates the discharge of ballast and bilge water and other substances in U.S. waters under the CWA. The EPA regulations require vessels 79 feet in length or longer (other than commercial fishing vessels and recreational vessels) to comply with a Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, or the VGP, authorizing ballast and bilge water discharges and other discharges incidental to the operation of vessels. For a new vessel delivered to an owner or operator after September 19, 2009 to be covered by the VGP, the owner must submit a Notice of Intent at least 30 days before the vessel operates in U.S. waters. The VGP imposes technology and water-quality based effluent limits for certain types of discharges and establishes specific inspection, monitoring, record-keeping and reporting requirements to ensure the effluent limits are met. On March 28, 2013, the EPA re-issued the VGP for another five years, effective from December 19, 2013. The new VGP focuses

43

Table of Contents

on authorizing discharges incidental to operations of commercial vessels, and contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in U.S. waters, more stringent requirements for exhaust gas scrubbers, and the use of environmentally acceptable lubricants.
In addition, under Section 401 of the CWA, the VGP must be certified by the state where the discharge is to take place. Certain states have enacted additional discharge standards as conditions to their certification of the VGP. These local standards bring the VGP into compliance with more stringent state requirements, such as those further restricting ballast water discharges and preventing the introduction of non-indigenous species considered to be invasive. The VGP and its state-specific regulations and any similar restrictions enacted in the future will increase the costs of operating in the relevant waters.

USCG regulations adopted under the U.S. National Invasive Species Act also impose mandatory ballast water management practices for all vessels equipped with ballast water tanks entering or operating in U.S. waters that require the installation of equipment to treat ballast water before it is discharged in U.S. waters or, in the alternative, the implementation of other port facility disposal arrangements or procedures. Vessels not complying with these regulations are restricted from entering U.S. waters. As of June 21, 2012, the USCG implemented revised regulations on ballast water management by establishing standards on the allowable concentration of living organisms in ballast water discharged from ships in U.S. waters. The USCG must approve any technology before it is placed on a vessel.

As of January 1, 2014, vessels are technically subject to the phasing-in of these standards. However, it was not until December 2016 that the USCG first approved technology to treat ballast water. The USCG previously provided waivers to vessels that could not install the as-yet unapproved technology and vessels now requiring a waiver will need to show why they cannot install the approved technology. The EPA, on the other hand, has taken a different approach to enforcing ballast discharge standards under the VGP. On December 27, 2013, the EPA issued an enforcement response policy in connection with the new VGP in which the EPA indicated that it would take into account the reasons why vessels do not have the requisite technology installed, but will not grant any waivers.

It should also be noted that in October 2015, the Second Circuit Court of Appeals issued a ruling that directed the EPA to redraft the sections of the 2013 VGP that address ballast water. However, the Second Circuit stated that 2013 VGP will remain in effect until the EPA issues a new VGP. In the fall of 2016, sources reported that the EPA indicated it was working on a new VGP. It presently remains unclear how the ballast water requirements set forth by the EPA, the USCG, and IMO BWM Convention, some of which are in effect and some which are pending, will co-exist.

The CAA, requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels will be subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas. Our vessels that operate in such port areas with restricted cargoes will be equipped with vapor recovery systems that satisfy these requirements. 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 vessel loading and unloading operations by requiring the installation of vapor control equipment. As indicated above, our vessels operating in covered port areas will be equipped with vapor recovery systems that satisfy these existing requirements.

Compliance with the EPA and the USCG regulations could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering U.S. waters.

European Union Regulations

In October 2009, the EU amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. Member States were required to enact laws or regulations to comply with the directive by the end of 2010. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

The EU has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age, flag, and the number of times the ship has been detained. The EU also adopted and then extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses. The regulation also provided the EU with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply.

44

Table of Contents


Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions. The 2015 United Nations Convention on Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016. The Paris Agreement does not result in an agreement that directly limited greenhouse gas emissions for ships. As of January 1, 2013, all new ships must comply with new sets of mandatory requirements to address greenhouse gas emissions from ships adopted by MEPC, in July 2011 relating to greenhouse gas emissions. Under those measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014. All ships are required to develop and follow a Ship Energy Efficiency Management Plans, and minimum energy efficiency levels per capacity mile, outlined in the Energy Efficiency Design Index, will apply to new ships. These requirements could cause us to incur additional compliance costs. The IMO is also planning to implement market-based mechanisms to reduce greenhouse gas emissions from ships at an upcoming MEPC session. The EU has indicated that it intends to propose an expansion of the existing EU emissions trading scheme to include emissions of greenhouse gases from marine vessels, and in January 2012, the EU launched a public consultation on possible measures to reduce greenhouse gas emissions from ships. In April 2015, a regulation was adopted requiring that large ships (over 5,000 gross tons) calling at EU ports from January 2018 collect and publish data on carbon dioxide emissions and other information. For 2020, the EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period, from 2013 to 2020. In the U.S., the EPA has issued a finding that greenhouse gases endanger the public health and safety and has adopted regulations to limit greenhouse gas emissions from certain mobile sources and large stationary sources. Although the mobile source emissions regulations do not apply to greenhouse gas emissions from vessels, such regulation of vessels is foreseeable, and the EPA has received petitions from the California Attorney General and various environmental groups seeking such regulation. Moreover, in the U.S. individual states can also enact environmental regulations. For example, California has introduced caps for greenhouse gas emissions and, in the end of 2016, signaled it may take additional action regarding climate change. Any passage of climate control legislation or other regulatory initiatives by the IMO, EU, the U.S. or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restrict emissions of greenhouse gases could require us to make significant financial expenditures, including capital expenditures to upgrade our vessels, which we cannot predict with certainty at this time.
International Labour Organization

The International Labour Organization, or the ILO, is a specialized agency of the UN with headquarters in Geneva, Switzerland. The ILO has adopted the Maritime Labor Convention 2006, or the MLC 2006. A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance will be required to ensure compliance with the MLC 2006 for all ships above 500 gross tons in international trade. The MLC 2006 entered into force on August 20, 2013. Amendments to MLC 2006 were adopted in 2014 and 2016. The MLC 2006 requires us to develop new procedures to ensure full compliance with its requirements.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the MTSA came into effect. To implement certain portions of the MTSA, in July 2003, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the U.S. The regulations also impose requirements on certain ports and facilities, some of which are regulated by the EPA.

Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new Chapter XI-2 became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, and mandates compliance with the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against terrorism.

To trade internationally, a vessel must attain an ISSC from a recognized security organization approved by the vessel’s flag state. The following are among the various requirements some of which are found in SOLAS:
•
on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status;
•
on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore;
•
the development of vessel security plans;

45

Table of Contents

•
ship identification number to be permanently marked on a vessel’s hull;
•
a continuous synopsis record kept onboard showing a vessel’s history, including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and
•
compliance with flag state security certification requirements.

Ships operating without a valid certificate, may be detained at port until it obtains an ISSC, or it may be expelled from port, or refused entry at port.

The USCG regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures non U.S. vessels provided that such vessels have on board a valid ISSC that attests to the vessel’s compliance with SOLAS security requirements and the ISPS Code. We have implemented the various security measures addressed by MTSA, SOLAS and the ISPS Code, and our fleet is in compliance with applicable security requirements.

Inspection by classification societies

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

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.

For maintenance of the class, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed are required to be performed as follows:
•
Annual Surveys. For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable for special equipment classed, within three months before or after each anniversary date of the date of commencement of the class period indicated in the certificate.
•
Intermediate Surveys. Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys are to be carried out at or between the occasion of the second or third annual survey.
•
Class Renewal Surveys. Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a vessel owner has the option of arranging with the classification society for the vessel’s hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle.

At an owner’s application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal.

All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not exceed five years.

Most vessels are also dry-docked every 30 to 36 months for inspection of the 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.


46

Table of Contents

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in-class” by a classification society which is a member of the International Association of Classification Societies, or IACS. In December 2013 the IACS adopted new harmonized Common Structure Rules which will apply to oil tankers and bulk carriers to be constructed on or after July 1, 2015. All our vessels are certified as being “in-class” by American Bureau of Shipping or Det Norske Veritas or Lloyds Register. All new and secondhand vessels that we purchase must be certified prior to their delivery under our standard purchase contracts and memoranda of agreement. If the vessel is not certified on the scheduled date of closing, we have no obligation to take delivery of the vessel.

In addition to the classification inspections, many of our customers regularly inspect our vessels as a precondition to chartering them for voyages. We believe that our well-maintained, high-quality vessels provide us with a competitive advantage in the current environment of increasing regulation and customer emphasis on quality.

Risk of Loss and Liability Insurance
General
The operation of any cargo vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which in certain circumstances imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economic zone for certain oil pollution accidents in the U.S., has made liability insurance more expensive for vessel-owners and operators trading in the U.S. market. While we believe that our present insurance coverage is adequate, not all risks can be insured against, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.
Marine and War Risks Insurance
We have in force marine and war risks insurance for all of our vessels. Our marine hull and machinery insurance covers risks of particular average and actual or constructive total loss from collision, fire, grounding, engine breakdown and other insured named perils up to an agreed amount per vessel. Our war risks insurance covers the risks of particular average and actual or constructive total loss from confiscation, seizure, capture, vandalism, sabotage, and other war-related named perils. Each vessel is covered up to at least its fair market value at the time of the insurance attachment and subject to a fixed deductible per each single accident or occurrence, but excluding actual or constructive total loss.
Protection and Indemnity Insurance
Protection and indemnity (P&I) insurance is provided by mutual protection and indemnity associations, commonly referred to as P&I Clubs, and provides unlimited coverage, except for pollution which is capped as discussed below. P&I insurance covers our third-party liabilities in connection with our shipping activities. This includes liability and other related expenses resulting from injury, illness or death of crew, passengers and other third parties, loss of or damage to cargo, claims arising from collisions with other vessels, damage to third-party property including piers and other fixed or floating objects, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal.
 
As a member of a P&I Club that is, in turn, a member of the International Group of P&I Clubs we carry protection and indemnity insurance coverage for pollution of $1 billion per vessel per incident. The P&I Clubs that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each Club’s liabilities. Although the P&I Clubs compete with each other for business, they have found it beneficial to pool their larger risks under the auspices of the International Group. This pooling is regulated by a contractual agreement which defines the risks that are to be pooled and exactly how these risks are to be shared by the participating P&I Clubs. We are subject to calls payable to the Clubs of which we are members based on its claim records as well as the claim records of all other members of the individual Clubs and members of the pool of P&I Clubs comprising the International Group.
C. Organizational Structure
Please see Exhibit 8.1 to this annual report for a list of our current significant subsidiaries.
D. Property, Plants and Equipment

47

Table of Contents

For a description of our fleet, see “Item 4. Information on the Company—B. Business Overview.”
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following presentation of management’s discussion and analysis of results of operations and financial condition should be read in conjunction with our consolidated financial statements, accompanying notes thereto and other financial information appearing in Item 18. “Financial Statements.” You should also carefully read the following discussion with the sections of this annual report entitled “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company—B. Business Overview—The International Oil Tanker Shipping Industry,” and “Cautionary Statement Regarding Forward-Looking Statements.” Our consolidated financial statements as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 have been prepared in accordance with IFRS as issued by the IASB. Our consolidated financial statements are presented in U.S. dollars ($) unless otherwise indicated. Any amounts converted from another non-U.S. currency to U.S. dollars in this annual report are at the rate applicable at the relevant date, or the average rate during the applicable period.
We generate revenues by charging customers for the transportation of their refined oil and other petroleum products using our vessels. Historically, these services generally have been provided under the following basic types of contractual relationships:
•
Voyage charters , which are charters for short intervals that are priced on current, or “spot,” market rates.
•
Time charters , which are chartered to customers for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates.
•
Commercial Pools , whereby we participate with other shipowners to operate a large number of vessels as an integrated transportation system, which offers customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools negotiate charters primarily in the spot market, but may also arrange time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs (described below), thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market.
•
For all types of vessels in contractual relationships, we are responsible for crewing and other vessel operating costs for our owned vessels and the charterhire expense for vessels that we time charter-in.

The table below illustrates the primary distinctions among these different employment arrangements:
 
Voyage Charter
 
Time Charter
 
Commercial Pool
Typical contract length
Single voyage
 
One year or more
 
Varies
Hire rate basis (1)
Varies
 
Daily
 
Varies
Voyage expenses (2)
We pay
 
Customer pays
 
Pool pays
Vessel operating costs for owned vessels or bareboat chartered-in (3)
We pay
 
We pay
 
We pay
Charterhire expense for vessels time or bareboat chartered-in (3)
We pay
 
We pay
 
We pay
Off-hire (4)
Customer does not pay
 
Customer does not pay
 
Pool does not pay

(1)
“Hire rate” refers to the basic payment from the charterer for the use of the vessel.
(2)
“Voyage expenses” refers to expenses incurred due to a vessel’s traveling from a loading port to a discharging port, such as fuel (bunker) cost, port expenses, agent’s fees, canal dues and extra war risk insurance, as well as commissions.
(3)
“Vessel operating costs” and "Charterhire expens e " are defined below under “—Important Financial and Operational Terms and Concepts.”
(4)
“Off-hire” refers to the time a vessel is not available for service due primarily to scheduled and unscheduled repairs or drydockings. For time chartered-in vessels, we do not pay the charterhire expense when the vessel is off-hire.

48

Table of Contents

As of March 15, 2017, all of our owned vessels were operating in the Scorpio Group Pools except STI Notting Hill, STI Westminster, STI Poplar, STI Pimlico and STI Rose. These vessels are on time charter-out agreements that are scheduled to expire in the fourth quarter of 2018 and the first quarter of 2019. Furthermore, all of our time or bareboat chartered-in vessels were operating in the Scorpio Group Pools except Steel, Stone I and Style , which are currently operating in the spot market and are expected to join the Scorpio Handymax Tanker Pool before June 2017.
Important Financial and Operational Terms and Concepts
We use a variety of financial and operational terms and concepts. These include the following:
Vessel revenues. Vessel revenues primarily include revenues from time charters, pool revenues and voyage charters (in the spot market). Vessel revenues are affected by hire rates and the number of days a vessel operates. Vessel revenues are also affected by the mix of business between vessels on time charter, vessels in pools and vessels operating on voyage charter. Revenues from vessels in pools and on voyage charter are more volatile, as they are typically tied to prevailing market rates.
Voyage charters. Voyage charters or spot voyages are charters under which the customer pays a transportation charge for the movement of a specific cargo between two or more specified ports. We pay all of the voyage expenses under these charters.
Voyage expenses. Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage commissions paid by us under voyage charters. These expenses are subtracted from voyage charter revenues to calculate TCE revenues.
Vessel operating costs. For our owned and bareboat chartered-in vessels, we are responsible for vessel operating costs, which include crewing, repairs and maintenance, insurance, spares and stores, lube oils, communication expenses, and technical management fees. The three largest components of our vessel operating costs are crewing, spares and stores and repairs and maintenance. Expenses for repairs and maintenance tend to fluctuate from period to period because most repairs and maintenance typically occur during periodic drydocking. Please read “Drydocking” below. We expect these expenses to increase as our fleet matures and to the extent that it expands.
Additionally, these costs include technical management fees that we paid to SSM, which is controlled by the Lolli-Ghetti family. Pursuant to our Amended and Restated Master Agreement, SSM provides us with technical services, and we provide them with the ability to subcontract technical management of our vessels with our approval.
Charterhire. Charterhire is the amount we pay the owner for time or bareboat chartered-in vessels. The amount is usually for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates.
• Time chartered-in vessels. The vessel's owner is responsible for the vessel operating costs.
• Bareboat chartered-in vessels. The charterer is responsible for the vessel operating costs.
Drydocking. We periodically drydock each of our owned vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Generally, each vessel is drydocked every 30 months to 60 months. We capitalize a substantial portion of the costs incurred during drydocking and amortize those costs on a straight-line basis from the completion of a drydocking to the estimated completion of the next drydocking. We immediately expense costs for routine repairs and maintenance performed during drydocking that do not improve or extend the useful lives of the assets. The number of drydockings undertaken in a given period and the nature of the work performed determine the level of drydocking expenditures.
Depreciation. Depreciation expense typically consists of:
•
charges related to the depreciation of the historical cost of our owned vessels (less an estimated residual value) over the estimated useful lives of the vessels; and
•
charges related to the amortization of drydocking expenditures over the estimated number of years to the next scheduled drydocking.
Time charter equivalent (TCE) revenue or rates. We report TCE revenues, a non-IFRS measure, because (i) we believe it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most directly comparable IFRS measure, (ii) it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance, (iii) it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods, and (iv) we believe that it presents useful information to investors. TCE revenue is vessel revenue less voyage expenses, including bunkers and port charges. The TCE rate achieved on a given voyage is expressed in U.S. dollars/day and is generally calculated by taking TCE revenue and dividing that figure by the number of revenue days in the period. For a reconciliation of TCE revenue, deduct voyage expenses from revenue on our consolidated statements of income or loss.

49

Table of Contents

Revenue days. Revenue days are the total number of calendar days our vessels were in our possession during a period, less the total number of off-hire days during the period associated with major repairs or drydockings. Consequently, revenue days represent the total number of days available for the vessel to earn revenue. Idle days, which are days when a vessel is available to earn revenue, yet is not employed, are included in revenue days. We use revenue days to show changes in net vessel revenues between periods.
Average number of vessels. Historical average number of owned vessels consists of the average number of vessels that were in our possession during a period. We use average number of vessels primarily to highlight changes in vessel operating costs and depreciation and amortization.
Contract of affreightment. A contract of affreightment, or COA, relates to the carriage of specific quantities of cargo with multiple voyages over the same route and over a specific period of time which usually spans a number of years. A COA does not designate the specific vessels or voyage schedules that will transport the cargo, thereby providing both the charterer and shipowner greater operating flexibility than with voyage charters alone. The charterer has the flexibility to determine the individual voyage scheduling at a future date while the shipowner may use different vessels to perform these individual voyages. As a result, COAs are mostly entered into by large fleet operators, such as pools or shipowners with large fleets of the same vessel type. We pay the voyage expenses while the freight rate normally is agreed on a per cargo ton basis.
Commercial pools. To increase vessel utilization and revenues, we participate in commercial pools with other shipowners and operators of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators who have close working relationships with customers and brokers, while technical management is performed by each shipowner. Pools negotiate charters with customers primarily in the spot market, but may also arrange time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher level of service offerings to customers.
Operating days . Operating days are the total number of available days in a period with respect to the owned or bareboat chartered-in vessels, before deducting available days due to off-hire days and days in drydock. Operating days is a measurement that is only applicable to our owned or bareboat chartered-in vessels, not our time chartered-in vessels.
Items You Should Consider When Evaluating Our Results
You should consider the following factors when evaluating our historical financial performance and assessing our future prospects:
Our vessel revenues are affected by cyclicality in the tanker markets . The cyclical nature of the tanker industry causes significant increases or decreases in the revenue we earn from our vessels, particularly those vessels we trade in the spot market or in spot market oriented pools. We employ a chartering strategy to capture upside opportunities in the spot market while using fixed-rate time charters to reduce downside risks, depending on SCM’s outlook for freight rates, oil tanker market conditions and global economic conditions. Historically, the tanker industry has been cyclical, experiencing volatility in profitability due to changes in the supply of, and demand for, tanker capacity. The supply of tanker capacity is influenced by the number and size of new vessels built, vessels scrapped, converted and lost, the number of vessels that are out of service, and regulations that may effectively cause early obsolescence of tonnage. The demand for tanker capacity is influenced by, among other factors:
•
global and regional economic and political conditions;
•
increases and decreases in production of and demand for crude oil and petroleum products;
•
increases and decreases in OPEC oil production quotas;
•
the distance crude oil and petroleum products need to be transported by sea; and
•
developments in international trade and changes in seaborne and other transportation patterns.
Tanker rates also fluctuate based on seasonal variations in demand. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and refinery maintenance that is typically conducted in the summer months. In addition, unpredictable weather patterns during the winter months in the northern hemisphere tend to disrupt vessel routing and scheduling. The oil price volatility resulting from these factors has historically led to increased oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger in the quarters ended March 31 and December 31.

50

Table of Contents

Our expenses were affected by the fees we pay SCM, SSM, and SSH for commercial management, technical management and administrative services, respectively. SCM, SSM and SSH, companies controlled by the Lolli-Ghetti family of which our founder, Chairman and Chief Executive Officer and our Vice President are members, provide commercial, technical and administrative management services to us, respectively. We pay fees under our Master Agreement with SCM and SSM (which was amended and restated effective September 29, 2016, as described below), for our vessels that operate both within and outside of the Scorpio Group Pools.  The fees charged to our vessels operating within the Scorpio Group Pools are identical to what SCM charges third-party owned vessels operating within the Scorpio Group Pools. The fees charged to our vessels for technical management services provided by SSM are $685 per vessel per day, which are the same as those charged to other vessels managed by SSM at the time the management agreements were entered into. We also reimburse our Administrator for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described in "Item 4 - Information on the Company".
On September 29, 2016, we agreed to amend our administrative services agreement, or the Administrative Services Agreement, with SSH, and our master agreement, or the Master Agreement, with SCM and SSM under a deed of amendment, or the Deed of Amendment.  Pursuant to the terms of the Deed of Amendment, on November 15, 2016, we entered into definitive documentation to memorialize the agreed amendments to the Master Agreement, or the Amended and Restated Master Agreement. The Amended and Restated Master Agreement and the Administrative Services Agreement as amended by the Deed of Amendment, or the Amended Administrative Services Agreement, are effective as from September 29, 2016. Under the terms of the amendments, (i) the fee of 1% payable to SSH upon any future vessel sale or purchase was eliminated and (ii) in the event of the sale of one or more vessels, a notice period of three months and a payment equal to three months of management fees will apply, provided that the termination does not amount to a change of control, including a sale of substantially all vessels, in which case a payment equal to 24 months of management fees will apply. There was no consideration paid by us for these amendments. 
Critical Accounting Policies
In the application of the accounting policies, we are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The significant judgments and estimates are as follows:
Revenue recognition
We currently generate most of our revenue from vessels operating in pools or on long-term time charters. Revenue recognition for time charters and pools is generally not as complex or as subjective as voyage charters (spot voyages). Time charters are for a specific period of time at a specific rate per day. For long-term time charters, revenue is recognized on a straight-line basis over the term of the charter. Pool revenues are determined by the pool managers from the total revenues and expenses of the pool and allocated to pool participants using a mechanism set out in the pool agreement.
We did not generate revenue from spot voyages during the year ended December 31, 2016 . Within the shipping industry, there are two methods used to account for spot voyage revenue: (1) ratably over the estimated length of each voyage or (2) completed voyage. The recognition of voyage revenues ratably over the estimated length of each voyage is the most prevalent method of accounting for voyage revenues and the method used by us. Under each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis. In applying our revenue recognition method, we believe that the discharge-to-discharge basis of calculating voyages more accurately estimates voyage results than the load-to-load basis. In the application of this policy, we do not begin recognizing revenue until (i) the amount of revenue can be measured reliably, (ii) it is probable that the economic benefits associated with the transaction will flow to the entity, (iii) the transactions stage of completion at the balance sheet date can be measured reliably and (iv) the costs incurred and the costs to complete the transaction can be measured reliably.
Vessel impairment
Impairment methodology
The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels fluctuate with changes in charter rates and the cost of constructing new vessels. At each reporting period end date, we review the carrying amounts of our vessels to determine whether there is any indication that those vessels may have suffered an impairment loss. In this regard, fluctuations in market values below carrying values are considered to represent an impairment triggering event that necessitates performance of a full impairment review.
Impairment losses are calculated as the excess of a vessel’s carrying amount over its recoverable amount. Under IFRS, the recoverable amount is the higher of an asset’s (i) fair value less costs to sell and (ii) value in use. Fair value less costs to sell is defined by IFRS as “the amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction between knowledgeable,

51

Table of Contents

willing parties, less the costs of disposal.” When we calculate value in use, we discount the expected future cash flows to be generated by our vessels to their net present value.
Our impairment evaluation is performed on an individual vessel basis when there are indications of impairments. First, we assess the fair value less the cost to sell our vessels taking into consideration vessel valuations from leading, independent and internationally recognized ship brokers. We then compare that estimate of market values (less an estimate of selling costs) to each vessel’s carrying value and, if the carrying value exceeds the vessel’s market value, an indicator of impairment exists. The indicator of impairment prompts us to perform a calculation of the potentially impaired vessel’s value in use, in order to appropriately determine the ‘higher of’ the two values.
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. In developing estimates of future cash flows, we make assumptions about future charter rates, vessel operating expenses, the estimated remaining useful lives of the vessels and the discount rate. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. Reasonable changes in the assumptions for the discount rate or future charter rates could lead to a value in use for some of our vessels that is equal to or less than the carrying amount for such vessels. All of the aforementioned assumptions have been highly volatile in both the current market and historically.
At December 31, 2016, we had 77 vessels in our fleet and ten vessels under construction:
•
All of our 77 owned vessels had fair values less costs to sell less than their carrying amount. We prepared a value in use calculation for each these vessels which resulted in no impairment being recognized.
•
We did not obtain independent broker valuations for our ten vessels under construction. To assess their carrying values for impairment, we prepared value in use calculations which resulted in no impairment being recognized.
At December 31, 2015, we had 80 vessels in our fleet (including STI Lombard, which was bareboat chartered-in under a finance lease arrangement) and 12 vessels under construction:
•
50 vessels had fair values less costs to sell in excess of their carrying amount.
•
30 vessels had fair values less costs to sell less than their carrying amount. We prepared a value in use calculation for each these vessels which resulted in no impairment being recognized.
•
We did not obtain independent broker valuations for our 12 vessels under construction. To assess their carrying values for impairment, we prepared value in use calculations which resulted in no impairment being recognized.
Our Fleet—Illustrative comparison of excess of carrying amounts over estimated charter-free market value of certain vessels
During the past few years, the market values of vessels have experienced particular volatility and as a result, the charter-free market value, or basic market value, of certain of our vessels may have declined below the carrying amounts of those vessels. After undergoing the impairment analysis discussed above, we have concluded that no impairment is required at December 31, 2016.
The table set forth below indicates the carrying amount of each of our vessels as of December 31, 2016 and December 31, 2015 and the aggregate difference between the carrying amount and the market value represented by such vessels (see footnotes to the table set forth below). This aggregate difference represents the approximate analysis of the amount by which we believe we would record a loss if we sold those vessels, in the current environment, on industry standard terms, in cash transactions and to a willing buyer where we are not under any compulsion to sell, and where the buyer is not under any compulsion to buy. For purposes of this calculation, we have assumed that the vessels would be sold at a price that reflects our estimate of their basic market values.
Our estimate of basic market value assumes that our vessels are all in good and seaworthy condition without need for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on information available from various industry sources, including:
•
reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;
•
news and industry reports of similar vessel sales;
•
news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;
•
approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;
•
offers that we may have received from potential purchasers of our vessels; and
•
vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.


52

Table of Contents

As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain. In addition, vessel values and revenues are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.
 
 
 
 
 
Carrying value as of,
 
 
Vessel Name
Year Built
 
December 31, 2016
 
December 31, 2015
 
1

STI Amber
2012
 
32.5

(1)  
34.0

 
2

STI Topaz
2012
 
32.6

(1)  
34.1

 
3

STI Ruby
2012
 
32.7

(1)  
34.2

 
4

STI Garnet
2012
 
32.7

(1)  
34.3

 
5

STI Onyx
2012
 
32.7

(1)  
34.3

 
6

STI Sapphire
2013
 
32.6

(1)  
34.1

 
7

STI Emerald
2013
 
32.5

(1)  
34.0

 
8

STI Beryl
2013
 
31.7

(1)  
33.2

 
9

STI Le Rocher
2013
 
32.2

(1)  
33.7

 
10

STI Larvotto
2013
 
32.2

(1)  
33.7

 
11

STI Fontvieille
2013
 
32.3

(1)  
33.7

 
12

STI Ville
2013
 
32.5

(1)  
34.0

 
13

STI Duchessa
2014
 
30.8

(1)  
32.2

 
14

STI Wembley
2014
 
30.2

(1)  
31.5

 
15

STI Opera
2014
 
30.6

(1)  
32.0

 
16

STI Texas City
2014
 
34.9

(1)  
36.4

 
17

STI Meraux
2014
 
35.3

(1)  
36.8

 
18

STI San Antonio
2014
 
35.3

(1)  
36.9

 
19

STI Venere
2014
 
30.7

(1)  
32.0

 
20

STI Virtus
2014
 
30.8

(1)  
32.1

 
21

STI Aqua
2014
 
31.0

(1)  
32.3

 
22

STI Dama
2014
 
31.0

(1)  
32.3

 
23

STI Mythos
2014
 
N/A

(3)  
32.0

 
24

STI Benicia
2014
 
36.2

(1)  
37.7

 
25

STI Regina
2014
 
31.2

(1)  
32.5

 
26

STI St. Charles
2014
 
34.8

(1)  
36.3

 
27

STI Yorkville
2014
 
31.6

(1)  
32.9

 
28

STI Milwaukee
2014
 
37.3

(1)  
38.9

 
29

STI Battery
2014
 
31.8

(1)  
33.1

 
30

STI Brixton
2014
 
29.6

(1)  
30.9

 
31

STI Comandante
2014
 
29.5

(1)  
30.7

 
32

STI Pimlico
2014
 
29.7

(1)  
31.0

 
33

STI Hackney
2014
 
29.6

(1)  
30.9

 
34

STI Acton
2014
 
30.2

(1)  
31.5

 
35

STI Fulham
2014
 
30.0

(1)  
31.2

 
36

STI Camden
2014
 
29.8

(1)  
31.1

 
37

STI Finchley
2014
 
30.1

(1)  
31.4

 
38

STI Clapham
2014
 
30.4

(1)  
31.7

 
39

STI Poplar
2014
 
30.4

(1)  
31.7

 
40

STI Elysees
2014
 
48.1

(1)  
50.1

 
41

STI Madison
2014
 
48.5

(1)  
50.4

 

53

Table of Contents

42

STI Park
2014
 
48.5

(1)  
50.4

 
43

STI Orchard
2014
 
48.1

(1)  
50.0

 
44

STI Sloane
2014
 
49.0

(1)  
50.9

 
45

STI Broadway
2014
 
48.0

(1)  
49.9

 
46

STI Condotti
2014
 
49.0

(1)  
50.9

 
47

STI Battersea
2014
 
30.0

(1)  
31.2

 
48

STI Chelsea
2014
 
N/A

(3)  
32.2

 
49

STI Lexington
2014
 
N/A

(3)  
32.2

 
50

STI Memphis
2014
 
35.6

(1)  
37.1

 
51

STI Powai
2014
 
N/A

(3)  
32.2

 
52

STI Mayfair
2014
 
32.1

(1)  
33.5

 
53

STI Soho
2014
 
31.7

(1)  
33.0

 
54

STI Olivia
2014
 
N/A

(3)  
32.3

 
55

STI Tribeca
2015
 
32.6

(1)  
34.0


56

STI Hammersmith
2015
 
30.8

(1)  
32.1


57

STI Rotherhithe
2015
 
30.9

(1)  
32.2


58

STI Rose
2015
 
56.7

(1)  
59.1


59

STI Gramercy
2015
 
31.8

(1)  
33.2


60

STI Veneto
2015
 
49.2

(1)  
51.1


61

STI Alexis
2015
 
57.0

(1)  
59.3


62

STI Bronx
2015
 
32.6

(1)  
34.0


63

STI Pontiac
2015
 
37.4

(1)  
38.9


64

STI Manhattan
2015
 
32.6

(1)  
33.9


65

STI Winnie
2015
 
50.2

(1)  
52.1


66

STI Oxford
2015
 
50.3

(1)  
52.3


67

STI Queens
2015
 
32.6

(1)  
33.9


68

STI Osceola
2015
 
37.7

(1)  
39.3


69

STI Lauren
2015
 
50.3

(1)  
52.3


70

STI Connaught
2015
 
50.0

(1)  
52.0


71

STI Notting Hill
2015
 
36.2

(1)  
37.7


72

STI Spiga
2015
 
56.1

(1)  
58.3


73

STI Seneca
2015
 
37.8

(1)  
39.4


74

STI Savile Row
2015
 
57.2

(1)  
59.5


75

STI Westminster
2015
 
36.4

(1)  
37.9


76

STI Brooklyn
2015
 
32.7

(1)  
34.1


77

STI Kingsway
2015
 
57.5

(1)  
59.8


78

STI Lombard
2015
 
58.4

(1)  
60.1


79

STI Carnaby
2015
 
57.7

(1)  
60.1


80

STI Black Hawk
2015
 
36.0

(1)  
37.5


81

STI Grace
2016
 
51.5

(1)  
N/A

(2)  
82

STI Jermyn
2016
 
52.5

(1)  
N/A

(2)  
 
 
 
 
 
 
 
 
 
 
 
 
$
2,913.3

 
$
3,087.7

 

(1) As of December 31, 2016 , the basic charter-free market value is lower than each vessel’s carrying value. We believe that the aggregate carrying value of these vessels exceeds their aggregate basic charter-free market value by approximately $312.7 million.
(2) These vessels were acquired during the year ended December 31, 2016 .

54

Table of Contents

(3) These vessels were sold during the year ended December 31, 2016 .
The impairment test that we conduct is most sensitive to variances in the discount rate and future time charter rates. Based on the sensitivity analysis performed for December 31, 2016 , a 1.0% increase in the discount rate would result in an impairment of $20.2 million being recognized. Alternatively, a 5% decrease in forecasted time charter rates would result in an impairment of $22.4 million being recognized.
We refer you to the discussion herein under “Item 3. Key Information—D. Risk Factors—Risks Related to our Industry,” including the risk factor entitled “Declines in charter rates and other market deterioration could cause us to incur impairment charges."
Vessel lives and residual value
The carrying value of each of our vessels represents its original cost at the time it was delivered or purchased less depreciation and impairment. We depreciate our vessels to their residual value on a straight-line basis over their estimated useful lives of 25 years. The estimated useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels. The residual value is estimated as the lightweight tonnage of each vessel multiplied by a forecast scrap value per ton. The scrap value per ton is estimated by taking into consideration the historical four year scrap market rate average, which we update annually.
An increase in the estimated useful life of a vessel or in its scrap value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of a vessel or scrap 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 vessel’s useful life is adjusted to end at the date such regulations become effective. No such regulations have been identified that would have impacted the estimated useful life of our vessels. The estimated salvage value of the vessels may not represent the fair market value at any one time since market prices of scrap values tend to fluctuate.
Deferred drydock cost
We recognize drydock costs as a separate component of the vessels’ carrying amounts and amortize the drydock cost on a straight-line basis over the estimated period until the next drydock. We use judgment when estimating the period between which drydocks are performed, which can result in adjustments to the estimated amortization of the drydock expense. If the vessel is disposed of before the next drydock, the remaining balance of the deferred drydock is written-off and forms part of the gain or loss recognized upon disposal of vessels in the period when contracted. We expect that our vessels will be required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. Costs capitalized as part of the drydock include actual costs incurred at the drydock yard and parts and supplies used in making such repairs. We only include in deferred drydocking costs those direct costs that are incurred as part of the drydocking to meet regulatory requirements, or are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs include shipyard costs as well as the costs of placing the vessel in the shipyard. Expenditures for normal maintenance and repairs, whether incurred as part of the drydocking or not, are expensed as incurred.

55

Table of Contents

A. Operating Results


Results of Operations for the year ended December 31, 2016 compared to the year ended December 31, 2015
 
 
For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
 Change
Vessel revenue
 
$
522,747

 
$
755,711

 
$
(232,964
)
 
(31
)%
Vessel operating costs
 
(187,120
)
 
(174,556
)
 
(12,564
)
 
(7
)%
Voyage expenses
 
(1,578
)
 
(4,432
)
 
2,854

 
64
 %
Charterhire
 
(78,862
)
 
(96,865
)
 
18,003

 
19
 %
Depreciation
 
(121,461
)
 
(107,356
)
 
(14,105
)
 
(13
)%
General and administrative expenses
 
(54,899
)
 
(65,831
)
 
10,932

 
17
 %
Loss on sales of vessels
 
(2,078
)
 
(35
)
 
(2,043
)
 
(5,837
)%
Write-off of vessel purchase options
 
—

 
(731
)
 
731

 
100
 %
Gain on sale of Dorian shares
 
—

 
1,179

 
(1,179
)
 
(100
)%
Financial expenses
 
(104,048
)
 
(89,596
)
 
(14,452
)
 
(16
)%
Realized gain on derivative financial instruments
 
—

 
55

 
(55
)
 
(100
)%
Unrealized gain / (loss) on derivative financial instruments
 
1,371

 
(1,255
)
 
2,626

 
209
 %
Financial income
 
1,213

 
145

 
1,068

 
737
 %
Other expenses, net
 
(188
)
 
1,316

 
(1,504
)
 
(114
)%
Net (loss) / income
 
$
(24,903
)
 
$
217,749

 
$
(242,652
)
 
(111
)%
Net (loss) / income. Net loss for the year ended December 31, 2016 was $ 24.9 million , a decrease of $ 242.7 million , or 111% , from net income of $ 217.7 million for the year ended December 31, 2015 . The differences between the two periods are discussed below.

56

Table of Contents

Vessel revenue . Vessel revenue for the year ended December 31, 2016 was $ 522.7 million , a decrease of $233.0 million , or 31% , from vessel revenue of $ 755.7 million for the year ended December 31, 2015 . Overall revenue decreases were driven by a decrease in overall TCE revenue per day to $15,783 per day during the year ended December 31, 2016 from $23,163 per day during the year ended December 31, 2015. This decrease is discussed below by operating segment.
The following is a summary of our consolidated revenue by revenue type, in addition to TCE revenue per day and total revenue days.
 
 
For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
 Change
Pool revenue by operating segment
 
 
 
 
 
 
 
 
MR
 
$
248,974

 
$
315,925

 
$
(66,951
)
 
(21
)%
LR2
 
156,503

 
208,132

 
(51,629
)
 
(25
)%
Handymax
 
73,683

 
138,736

 
(65,053
)
 
(47
)%
LR1/Panamax
 
5,843

 
34,613

 
(28,770
)
 
(83
)%
Total pool revenue
 
485,003

 
697,406

 
(212,403
)
 
(30
)%
Voyage revenue (spot market)
 
—

 
38,441

 
(38,441
)
 
(100
)%
Time charter-out revenue
 
36,694

 
19,714

 
16,980

 
86
 %
Other revenue
 
1,050

 
150

 
900

 
600
 %
Gross revenue
 
522,747

 
755,711

 
(232,964
)
 
(31
)%
Voyage expenses
 
(1,578
)
 
(4,432
)
 
2,854

 
64
 %
TCE revenue (1)
 
$
521,169


$
751,279

 
$
(230,110
)
 
(31
)%
 
 
 
 
 
 
 
 
 
Daily pool TCE by operating segment: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MR pool
 
$
14,711

 
$
22,400

 
$
(7,689
)
 
(34
)%
LR2 pool
 
20,019

 
30,611

 
(10,592
)
 
(35
)%
Handymax pool
 
12,101

 
19,902

 
(7,801
)
 
(39
)%
LR1/Panamax pool
 
17,277

 
21,991

 
(4,714
)
 
(21
)%
Consolidated daily pool TCE
 
15,561

 
23,689

 
(8,128
)
 
(34
)%
Voyage (spot market) - daily TCE
 
—

 
17,596

 
(17,596
)
 
(100
)%
Time charter-out - daily TCE
 
19,599

 
18,553

 
1,046

 
6
 %
Consolidated daily TCE
 
15,783

 
23,163

 
(7,380
)
 
(32
)%
 
 
 
 
 
 
 
 
 
Pool revenue days per operating segment
 
 
 
 
 
 
 
 
MR
 
16,915

 
14,104

 
2,811

 
20
 %
LR2
 
7,814

 
6,800

 
1,014

 
15
 %
Handymax
 
6,079

 
6,971

 
(892
)
 
(13
)%
LR1/Panamax
 
337

 
1,574

 
(1,237
)
 
(79
)%
Total pool revenue days
 
31,145

 
29,449

 
1,696

 
6
 %
Voyage (spot market) revenue days
 
—

 
1,967

 
(1,967
)
 
(100
)%
Time charter-out revenue days
 
1,810

 
1,027

 
783

 
76
 %
Total revenue days
 
32,955

 
32,443

 
512

 
2
 %
(1) We report TCE revenues, a non-IFRS measure, because (i) we believe it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most directly comparable IFRS measure, (ii) it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance, (iii) it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance

57

Table of Contents

irrespective of changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods, and (iv) we believe that it presents useful information to investors.
Pool revenue . Pool revenue for the year ended December 31, 2016 was $485.0 million , a decrease of $212.4 million , or 30% from $697.4 million for the year ended December 31, 2015 . The decrease in pool revenue was due to a decrease in pool TCE per day across all of our operating segments. Global product tanker demand declined during 2016 as the robust refinery margins that occurred during 2015 resulted in the build-up of product inventories and the deferral of refinery maintenance into 2016, which has led to low refining margins and a lack of arbitrage opportunities, negatively impacting the demand for our vessels.
MR pool revenue. MR pool revenue for the year ended December 31, 2016 was $249.0 million , a decrease of $67.0 million , or 21% , from $315.9 million for the year ended December 31, 2015 . The decrease in pool revenue was driven by a decrease in daily TCE revenue to $14,711 per day from $22,400 per day during the year ended December 31, 2016 and 2015, respectively. This was the result of the decline in global product tanker demand during 2016 as mentioned above. In particular, refinery utilization in the U.S. Gulf Coast refineries decreased during the year ended December 31, 2016 as overdue maintenance was performed, which had a corresponding negative impact on MR product tankers trading in the Atlantic Basin (one of the primary trading areas for MR product tankers).
The decrease in pool revenue was offset by an increase in pool revenue days to 16,915 from 14,104 days during the years ended December 31, 2016 and 2015, respectively. 24 of our MR tankers joined the MR pool during the year ended December 31, 2015 and thus operated in the pool for a portion of that period. In addition, five of our MR tankers joined the MR pool during the year ended December 31, 2016 . These additions were offset by the exit of two vessels from the MR pool to commence long-term time charters during the fourth quarter of 2015, in addition to the sales of five MRs during the year ended December 31, 2016 .
LR2 pool revenue. Pool revenue from LR2 vessels for the year ended December 31, 2016 was $156.5 million , a decrease of $51.6 million , or 25% from $208.1 million for the year ended December 31, 2015 . The decrease in pool revenue was primarily driven by a decrease in daily TCE revenue to $20,019 per day from $30,611 per day during the years ended December 31, 2016 and 2015, respectively. This decrease was the result of the decline in global product tanker demand as described above, particularly driven by a reduced naphtha trade on Middle East to Far East voyages, which had a consequential impact on global ton-mile demand for LR2 tankers.
The decrease in pool TCE revenue was offset by an increase in pool revenue days to 7,814 from 6,800 days during the years ended December 31, 2016 and 2015, respectively. The increase in pool revenue days was the result of the delivery of 15 vessels into the LR2 pool, consisting of 13 during the year ended December 31, 2015 and two during the year ended December 31, 2016 . This increase was partially offset by a reduction in the average number of time chartered-in LR2 vessels to 2.0 from 4.0 during the years ended December 31, 2016 and 2015, respectively, in addition to one LR2 commencing a time charter in the first quarter of 2016.
Handymax pool revenue. Handymax pool revenue for the year ended December 31, 2016 was $73.7 million , a decrease of $65.1 million , or 47% from $138.7 million for the year ended December 31, 2015 . The decrease in pool revenue was driven by a decrease in daily TCE revenue to $12,101 per day from $19,902 per day during the years ended December 31, 2016 and 2015, respectively. In addition to the reduction in global product tanker demand described above for the year ended December 31, 2016 , this decrease was also due to the mild winter in the northern hemisphere, which dampened demand for ice-class Handymax tankers.
The decrease in pool revenue was also driven by a decrease in pool revenue days to 6,079 from 6,971 during the years ended December 31, 2016 and 2015, respectively. This decrease was the result of a reduction in the number of time chartered-in Handymax tankers to an average of 4.6 from 5.4 during the years ended December 31, 2016 and 2015, respectively, two Handymaxes commencing long term time charter contracts in the first quarter of 2016, and the sale of STI Highlander in October 2015.
LR1/Panamax pool revenue. Pool revenue from LR1/Panamax vessels for the year ended December 31, 2016 was $5.8 million , a decrease of $28.8 million , or 83% from $34.6 million for the year ended December 31, 2015 . The decrease in pool revenue was primarily due to a decrease in pool revenue days to 337 days from 1,574 days during the years ended December 31, 2016 and 2015, respectively. The decrease in pool revenue days was the result of the sales of three vessels in 2015, in addition to a reduction in the average number of time chartered-in vessels to 0.9 from 3.9 during the years ended December 31, 2016 and 2015, respectively.

58

Table of Contents

Voyage revenue (spot market) . Voyage revenue (spot revenue) for the year ended December 31, 2015 was $38.4 million . This revenue can be broken down as follows:
 
 
 For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
 Change
MR
 
$
—

 
$
32,564

 
$
(32,564
)
 
(100
)%
LR2
 
—

 
122

 
(122
)
 
(100
)%
Handymax
 
—

 
3,693

 
(3,693
)
 
(100
)%
LR1/Panamax
 
—

 
2,062

 
(2,062
)
 
(100
)%
Total voyage revenue (spot market)
 
$
—

 
$
38,441

 
$
(38,441
)
 
(100
)%
•
Short-term time charters: We consider short-term time charters (less than one year) as spot market voyages. Most of our vessels delivered under our Newbuilding Program and one of our time chartered-in vessels were employed on short-term time charters (ranging from 45 to 120 days) upon delivery from the shipyards. These short-term time charters accounted for 1,914 revenue days during the year ended December 31, 2015 . There were no vessels employed on short-term time charters during the year ended December 31, 2016.
•
Spot market voyages: One of our time chartered-in vessels operated in the spot market for 53 days during the year ended December 31, 2015 . There were no vessels employed in the spot market during the year ended December 31, 2016.
Time charter-out revenue . Time charter-out revenue (representing time charters with initial terms of one year or greater) for the year ended December 31, 2016 was $36.7 million , an increase of $17.0 million , or 86% , from $19.7 million for the year ended December 31, 2015 . The increase in time charter-out revenue is the result of an increase in time charter-out revenue days to 1,810 days from 1,027 days and an increase in the overall daily TCE revenue earned on these time charters to $19,599 per day from $18,553 per day for the years ended December 31, 2016 and 2015, respectively. Time charter-out revenue, by operating segment, consists of the following:
 
 
 For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
 Change
MR
 
$
16,046

 
$
19,714

 
$
(3,668
)
 
(19
)%
Handymax
 
11,895

 
—

 
11,895

 
N/A

LR2
 
8,753

 
—

 
8,753

 
N/A

LR1/Panamax
 
—

 
—

 
—

 
N/A

 
 
 
 
 
 
 
 
 
Total time charter-out revenue
 
$
36,694

 
$
19,714

 
$
16,980

 
86
 %

59

Table of Contents

The following table summarizes the terms of our time chartered-out vessels during the years ended December 31, 2016 and 2015, respectively.
 
Name
 
Year built
 
Type
 
Delivery Date to the Charterer
 
Charter Expiration
 
Rate ($/ day)
 
1

STI Pimlico
 
2014
 
Handymax
 
February-16
 
February-19
(1)  
$
18,000

 
2

STI Poplar
 
2014
 
Handymax
 
January-16
 
January-19
(1)  
$
18,000

 
3

STI Notting Hill
 
2015
 
MR
 
November-15
 
November-18
(2)  
$
20,500

 
4

STI Westminster
 
2015
 
MR
 
December-15
 
December-18
(2)  
$
20,500

 
5

STI Rose
 
2015
 
LR2
 
February-16
 
February-19
(2)  
$
28,000

 
6

STI Benicia
 
2014
 
MR
 
September-14
 
September-15
 
$
15,500

(3)  
7

STI Meraux
 
2014
 
MR
 
May-14
 
May-15
 
$
15,500

(3)  
8

STI San Antonio
 
2014
 
MR
 
June-15
 
June-15
 
$
15,500

(3)  
9

STI Texas City
 
2014
 
MR
 
March-14
 
April-16
 
$
16,000

(3)  
(1) Redelivery is plus 30 days or minus 10 days from the expiry date.  
(2) Redelivery is plus or minus 30 days from the expiry date.
(3) The charter had a 50% profit sharing provision whereby we received 50% of the vessel's profits above the daily base rate from the charterer.
Vessel operating costs. Vessel operating costs for the year ended December 31, 2016 were $ 187.1 million , an increase of $12.6 million , or 7% , from $ 174.6 million for the year ended December 31, 2015 . Vessel operating days increased to 28,454 days from 26,547 days for the years ended December 31, 2016 and 2015, respectively.
The following table is a summary of our vessel operating costs by operating segment:

 
 
 For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
 change
Vessel operating costs
 
 
 
 
 
 
 
 
MR
 
$
104,242

 
$
100,477

 
$
(3,765
)
 
(4
)%
LR2
 
50,028

 
36,681

 
(13,347
)
 
(36
)%
Handymax
 
32,817

 
35,254

 
2,437

 
7
 %
LR1/Panamax
 
33

 
2,144

 
2,111

 
98
 %
Total vessel operating costs
 
$
187,120

 
$
174,556

 
$
(12,564
)
 
(7
)%
 
 
 
 
 
 
 
 
 
Vessel operating costs per day
 
 
 
 
 
 
 
 
MR
 
$
6,555

 
$
6,461

 
$
(94
)
 
(1
)%
LR2
 
6,734

 
6,865

 
131

 
2
 %
Handymax
 
6,404

 
6,473

 
69

 
1
 %
LR1/Panamax
 
—

(1)  
8,440

 
8,440

 
100
 %
Consolidated vessel operating costs per day
 
6,576
 
6,564
 
(12
)
 
—
 %
 
 
 
 
 
 
 
 
 
Operating days
 
 
 
 
 
 
 
 
MR
 
15,900

 
15,550

 
350

 
2
 %
LR2
 
7,430

 
5,343

 
2,087

 
39
 %
Handymax
 
5,124

 
5,400

 
(276
)
 
(5
)%
LR1/Panamax
 
—

 
254

 
(254
)
 
(100
)%
Total operating days
 
28,454

 
26,547

 
1,907

 
7
 %


60

Table of Contents

(1) We did not own or bareboat charter-in any LR1/Panamax vessels in 2016.
MR vessel operating costs. Vessel operating costs for our MR segment for the year ended December 31, 2016 were $104.2 million , an increase of $3.8 million , or 4% , from $100.5 million for the year ended December 31, 2015 . This was primarily driven by an increase in operating days to 15,900 days from 15,550 days during the year ended December 31, 2016 and 2015, respectively. We took delivery of 13 MRs during the year ended December 31, 2015 , which operated for the entire year ended December 31, 2016 as compared to the partial period during the year ended December 31, 2015 . This was offset by the sales of five MRs during the year ended December 31, 2016 .
LR2 vessel operating costs. Vessel operating costs for our LR2 segment for the year ended December 31, 2016 were $50.0 million , an increase of $13.3 million , or 36% from $36.7 million for the year ended December 31, 2015 . The increase in operating costs was driven by an increase of 2,087 operating days. We took delivery of 11 LR2 vessels during the year ended December 31, 2015 , which operated for the entire year ended December 31, 2016 as compared to the partial period during the year ended December 31, 2015. In addition, we also took delivery of two LR2 vessels, STI Grace and STI Jermyn, during 2016.
Handymax vessel operating costs. Vessel operating costs for our Handymax segment for the year ended December 31, 2016 were $32.8 million , a decrease of $2.4 million , or 7% , from $35.3 million for the year ended December 31, 2015 . Vessel operating days decreased to 5,124 days from 5,400 days during the year ended December 31, 2016 and 2015, respectively, due to the sale of STI Highlander in October 2015.
LR1/Panamax vessel operating costs. Vessel operating costs for our LR1/Panamax segment for the year ended December 31, 2015 were $2.1 million . We sold three LR1/Panamax vessels during the year ended December 31, 2015 , and we did not own or bareboat charter-in any vessels in this operating segment during the year ended December 31, 2016 .
Voyage expenses . Voyage expenses for the year ended December 31, 2016 were $ 1.6 million , a decrease of $ 2.9 million , or 64% , from $ 4.4 million during the year ended December 31, 2015 . This reduction was the result of a decrease in the number of days our vessels operated in the spot market to zero from 1,967 days during the years ended December 31, 2016 and 2015, respectively. Voyage expenses during the year ended December 31, 2016 relate to broker commissions and commercial management fees incurred on vessels time chartered-out during this period.
Charterhire. Charterhire expense for the year ended December 31, 2016 was $ 78.9 million , a decrease of $ 18.0 million , or 19% , from $ 96.9 million during the year ended December 31, 2015 . This decrease was the result of a decrease in the average number of time chartered-in vessels to 12.7 from 16.9 during the years ended December 31, 2016 and 2015, respectively.
Depreciation. Depreciation expense for the year ended December 31, 2016 was $ 121.5 million , an increase of $ 14.1 million , or 13% , from $ 107.4 million during the year ended December 31, 2015 . The increase was the result of an increase in the average number of owned vessels to 77.7 from 72.7 vessels for the years ended December 31, 2016 and 2015, respectively. This increase was partially offset by the sales of five MRs during the year ended December 31, 2016.
General and administrative expenses. General and administrative expenses for the year ended December 31, 2016 were $ 54.9 million , a decrease of $10.9 million , or 17% , from $ 65.8 million during the year ended December 31, 2015 . The change was primarily driven by reductions in compensation expense, which includes a $3.5 million reduction in restricted stock amortization.
Loss on sales of vessels. Loss on sales of vessels for the year ended December 31, 2016 was $2.1 million , an increase of $2.0 million from $35,000 during the year ended December 31, 2015 .
•
During the year ended December 31, 2016 , we recorded an aggregate loss of $2.1 million on the sales of STI Lexington, STI Mythos, STI Chelsea, STI Powai and STI Olivia. Two of these sales closed in March 2016, one in April 2016 and two in May 2016.
•
During the year ended December 31, 2015 , we recorded a loss of $2.1 million on the sale of STI Highlander in October 2015. This loss was offset by an aggregate gain of $2.0 million recorded for the sales of Venice , STI Harmony and STI Heritage, which were sold in March 2015, April 2015 and April 2015, respectively.
Write-off of vessel purchase options. Write-off of vessel purchase options of $0.7 million during the year ended December 31, 2015 was the result of the write-off of deposits made for options to construct MR product tankers that expired unexercised in December 2015. 
Gain on sale of Dorian shares. Gain on sale of shares held in Dorian of $1.2 million during the year ended December 31, 2015 relates to the sale of our investment in Dorian LPG Ltd., or Dorian, to two unrelated third parties in July 2015.
Financial expenses. Financial expenses for the year ended December 31, 2016 were $104.0 million , an increase of $14.5 million , or 16% , from $89.6 million during the year ended December 31, 2015 . The change was driven by:
•
an aggregate write-off of $14.5 million of deferred financing fees as a result of (i) $3.2 million for the sales and corresponding debt repayments on the amounts borrowed for STI Lexington, STI Mythos, STI Chelsea, STI Olivia and STI Powai , which were

61

Table of Contents

sold during 2016, (ii) $11.1 million for the refinancing of the amounts borrowed for 24 vessels and (iii) $0.2 million for the repurchase of $10.0 million aggregate principal amount of Convertible Notes.
•
an increase in average debt outstanding to $2.0 billion from $1.9 billion for the years ended December 31, 2016 and 2015, respectively, in addition to an increase in LIBOR rates over those same periods.
Financial expenses for the year ended December 31, 2016 primarily consisted of interest expense of $75.4 million, amortization of loan fees of $14.1 million and the write-off of deferred financing fees of $14.5 million.
Financial expenses for the year ended December 31, 2015 primarily consisted of interest expense of $72.2 million, amortization of loan fees $14.7 million and the write-off of deferred financing fees of $2.7 million.
Unrealized gain / (loss) on derivative financial instruments. Unrealized gain on derivative financial instruments for the year ended December 31, 2016 was $1.4 million , an increase of $2.6 million , or 209% from an unrealized loss of $1.2 million during the year ended December 31, 2015 . Unrealized gain / (loss) on derivative financial instruments relates to the change in the fair value of the profit or loss agreement on Densa Crocodile , with a third party who neither owns nor operates this vessel.
Financial income. Financial income for the year ended December 31, 2016 was $1.2 million , an increase of $1.1 million , or 737% from $0.1 million during the year ended December 31, 2015 . This primarily relates to the gains recorded on the repurchase of $10.0 million aggregate principal amount of our Convertible Notes for an average price of $839.28 per $1,000 principal amount during the year ended December 31, 2016 .
Other expenses, net. Other expenses, net, for the year ended December 31, 2016 was a loss of $0.2 million , a decrease of $1.5 million , or 114% from other income of $1.3 million during the year ended December 31, 2015 . This primarily relates to a $1.4 million gain recorded as a result of a termination fee received when the owner of one of the Company's time chartered-in vessels canceled the contract prior to its expiration date during the year ended December 31, 2015 .


62

Table of Contents

Results of Operations for the year ended December 31, 2015 compared to the year ended December 31, 2014

 
 
For the year ended December 31,
 
 Change
 
Percentage
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)
 
Change
Vessel revenue
 
$
755,711

 
$
342,807

 
$
412,904

 
120
 %
Vessel operating costs
 
(174,556
)
 
(78,823
)
 
(95,733
)
 
(121
)%
Voyage expenses
 
(4,432
)
 
(7,533
)
 
3,101

 
41
 %
Charterhire
 
(96,865
)
 
(139,168
)
 
42,303

 
30
 %
Depreciation
 
(107,356
)
 
(42,617
)
 
(64,739
)
 
(152
)%
General and administrative expenses
 
(65,831
)
 
(48,129
)
 
(17,702
)
 
(37
)%
Write down of vessels held for sale and net loss from sales of vessels
 
(35
)
 
(3,978
)
 
3,943

 
99
 %
Write-off of vessel purchase options
 
(731
)
 
—

 
(731
)
 
N/A

Gain on sale of VLCCs
 
—

 
51,419

 
(51,419
)
 
(100
)%
Gain on sale of Dorian shares
 
1,179

 
10,924

 
(9,745
)
 
(89
)%
Re-measurement of investment in Dorian
 
—

 
(13,895
)
 
13,895

 
100
 %
Financial expenses
 
(89,596
)
 
(20,770
)
 
(68,826
)
 
(331
)%
Realized gain on derivative financial instruments
 
55

 
17

 
38

 
224
 %
Unrealized (loss) / gain on derivative financial instruments
 
(1,255
)
 
264

 
(1,519
)
 
(575
)%
Financial income
 
145

 
203

 
(58
)
 
(29
)%
Share of income from associate
 
—

 
1,473

 
(1,473
)
 
(100
)%
Other income (expenses), net
 
1,316

 
(103
)
 
1,419

 
1,378
 %
Net income
 
$
217,749

 
$
52,091

 
$
165,658

 
318
 %

Net income. Net income for the year ended December 31, 2015 was $217.7 million, an increase of $165.7 million, or 318%, from net income of $52.1 million for the year ended December 31, 2014. The differences between the two periods are discussed below.

63

Table of Contents

Vessel revenue . Vessel revenue for the year ended December 31, 2015 was $755.7 million, an increase of $412.9 million, or 120%, from vessel revenue of $342.8 million for the year ended December 31, 2014. Overall revenue increases were driven by an increase in the average number of operating vessels (owned and time chartered-in) to 89.6 from 57.9 vessels in addition to an increase in overall TCE revenue per day to $23,163 per day from $15,935 per day during the years ended December 31, 2015 and 2014, respectively.
The following is a summary of our consolidated revenue by revenue type, in addition to TCE revenue per day and total revenue days.
 
 
For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)
 
 Change
Pool revenue by operating segment
 
 
 
 
 
 
 
 
MR
 
$
315,925

 
$
112,826

 
$
203,099

 
180
 %
LR2
 
208,132

 
67,054

 
141,078

 
210
 %
Handymax
 
138,736

 
54,052

 
84,684

 
157
 %
LR1/Panamax
 
34,613

 
46,925

 
(12,312
)
 
(26
)%
Total pool revenue
 
$
697,406

 
$
280,857

 
$
416,549

 
148
 %
Voyage (spot market)
 
38,441

 
48,112

 
(9,671
)
 
(20
)%
Time charter-out
 
19,714

 
13,538

 
6,176

 
46
 %
Other revenue
 
150

 
300

 
(150
)
 
(50
)%
Gross revenue
 
755,711

 
342,807

 
412,904

 
120
 %
Voyage expenses
 
(4,432
)
 
(7,533
)
 
(3,101
)
 
(41
)%
TCE revenue (1)
 
$
751,279

 
$
335,274

 
$
416,005

 
124
 %
 
 
 
 
 
 
 
 
 
Daily pool TCE by operating segment: (1)
 
 
 
 
 
 
 
 
MR pool
 
$
22,400

 
$
14,897

 
$
7,503

 
50
 %
LR2 pool
 
30,611

 
18,621

 
11,990

 
64
 %
Handymax pool
 
19,902

 
14,737

 
5,165

 
35
 %
LR1/Panamax pool
 
21,991

 
16,201

 
5,790

 
36
 %
Consolidated daily pool TCE
 
23,689

 
15,837

 
7,852

 
50
 %
Voyage (spot market) - daily TCE
 
17,596

 
16,798

 
798

 
5
 %
Time charter-out - daily TCE
 
18,553

 
15,194

 
3,359

 
22
 %
Consolidated daily TCE
 
23,163

 
15,935

 
7,228

 
45
 %
 
 
 
 
 
 
 
 
 
Pool revenue days per operating segment
 
 
 
 
 
 
 
 
MR
 
14,104

 
7,573

 
6,531

 
86
 %
LR2
 
6,800

 
3,601

 
3,199

 
89
 %
Handymax
 
6,971

 
3,668

 
3,303

 
90
 %
LR1/Panamax
 
1,574

 
2,892

 
(1,318
)
 
(46
)%
Total pool revenue days
 
29,449

 
17,734

 
11,715

 
66
 %
Voyage (spot market) revenue days
 
1,967

 
2,451

 
(484
)
 
(20
)%
Time charter-out revenue days
 
1,027

 
852

 
175

 
21
 %
Total revenue days
 
32,443

 
21,037

 
11,406

 
54
 %
(1) We report TCE revenues, a non-IFRS measure, because (i) we believe it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most directly comparable IFRS measure, (ii) it assists our management in

64

Table of Contents

making decisions regarding the deployment and use of our vessels and in evaluating their financial performance, (iii) it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods, and (iv) we believe that it presents useful information to investors.
Pool revenue . Pool revenue for the year ended December 31, 2015 was $697.4 million, an increase of $416.5 million, or 148% from $280.9 million for the year ended December 31, 2014. The increase in pool revenue was due to the growth of our fleet and improved market conditions across all of our operating segments. 27 vessels were delivered in 2015 (including 26 delivered under our Newbuilding Program) which resulted in our average number of owned vessels increasing to 72.7 from 31.6 vessels during the years ended December 31, 2015 and 2014, respectively. The growth of our owned fleet was offset by a decrease in the size of our time chartered-in fleet to an average of 16.9 from 26.3 vessels during the years ended December 31, 2015 and 2014, respectively. Furthermore, pool TCE revenue per day also improved to $23,689 per day from $15,837 per day, during the years ended December 31, 2015 and 2014, respectively, as we experienced improved market conditions in each of our vessel classes throughout 2015. The drivers of these improvements are discussed below.
MR pool revenue. MR pool revenue for the year ended December 31, 2015 was $315.9 million , an increase of $203.1 million , or 180% , from $112.8 million for the year ended December 31, 2014. The increase in pool revenue was driven by an increase in pool revenue days to 14,104 from 7,573 during the years ended December 31, 2015 and 2014, respectively. The increase in pool revenue days was due to an increase in the average number of owned vessels to 42.6 from 21.8 during the years ended December 31, 2015 and 2014, respectively. The MRs that were delivered during 2015 were as follows:
 
 Name
 
Delivery Date
1

STI Tribeca
 
January 2015
2

STI Gramercy
 
January 2015
3

STI Bronx
 
February 2015
4

STI Pontiac
 
March 2015
5

STI Manhattan
 
March 2015
6

STI Queens
 
April 2015
7

STI Osceola
 
April 2015
8

STI Notting Hill
 
May 2015
9

STI Seneca
 
June 2015
10

STI Westminster
 
June 2015
11

STI Brooklyn
 
July 2015
12

STI Memphis
 
August 2015
13

STI Black Hawk
 
September 2015
The increase in pool revenue was also driven by an increase in pool TCE per revenue day to $22,400 from $14,897 during the years ended December 31, 2015 and 2014, respectively. This increase was the result of improvements in the worldwide demand for our vessels. During 2015, the glut of crude oil supplies led to lower worldwide oil prices and thus higher demand for refined products. As such, export oriented refineries, particularly in the U.S. Gulf Coast, operated at higher utilization rates which led to increased demand for our vessels in that region and within the broader Atlantic Basin (one of the primary trading areas for MR product tankers). This had a consequent impact on the demand for MRs throughout the world. Additionally, all of our operating segments benefited from a decrease in bunker prices as a result of the decline in oil prices, which had a positive impact on TCE revenue earned from our vessels operating in the Scorpio Group pools.

65

Table of Contents

LR2 pool revenue. Pool revenue from LR2 vessels for the year ended December 31, 2015 was $208.1 million , an increase of $141.1 million , or 210% from $67.1 million for the year ended December 31, 2014. The increase was due to both an increase in TCE revenue per day and an increase in revenue days as a result of the growth in our LR2 fleet. We took delivery of the following LR2 product tankers under our Newbuilding Program during 2015:
 
 Name
 
Delivery Date
 
1

STI Rose
 
January 2015
 
2

STI Veneto
 
February 2015
 
3

STI Alexis
 
February 2015
 
4

STI Winnie
 
March 2015
 
5

STI Oxford
 
April 2015
 
6

STI Lauren
 
May 2015
 
7

STI Connaught
 
May 2015
 
8

STI Spiga
 
June 2015
 
9

STI Savile Row
 
June 2015
 
10

STI Kingsway
 
August 2015
 
11

STI Lombard
 
August 2015
(1)  
12

STI Carnaby
 
September 2015
 
(1)
STI Lombard was delivered in August 2015 under a bareboat charter-in agreement for up to nine months at $10,000 per day. We purchased the vessel at the conclusion of the bareboat charter in April 2016 and paid the remaining 90% of the contract price, or $53.1 million.
TCE revenue per day increased to $30,611 from $18,621 per day during the years ended December 31, 2015 and 2014, respectively. This improvement was driven by an increase in worldwide demand for larger product tankers such as LR2s and LR1s as new refinery openings in the Middle East and India resulted in longer haul voyages from those regions thus increasing overall ton-mile demand. Additionally, all of our operating segments benefited from a decrease in bunker prices as a result of the decline in oil prices, which had a positive impact on TCE revenue earned from our vessels operating in the Scorpio Group pools.
Handymax pool revenue. Handymax pool revenue for the year ended December 31, 2015 was $138.7 million , an increase of $84.7 million , or 157% from $54.1 million for the year ended December 31, 2014. The increase was driven by an increase in the number of pool revenue days to 6,971 from 3,668 days during the years ended December 31, 2015 and 2014, respectively. Two Handymax ice-class 1A product tankers were delivered during the year ended December 31, 2015 and 12 were delivered during the year ended December 31, 2014. The Handymax ice class 1A vessels delivered during 2015 were as follows:
 
 Name
 
Delivery Date
1

STI Hammersmith
 
January 2015
2

STI Rotherhithe
 
January 2015
Pool TCE revenue per day increased to $19,902 from $14,737 per day during the years ended December 31, 2015 and 2014, respectively. This increase was the result of increases in demand for our Handymax ice class 1A vessels across most trading routes as these vessels benefited from the aforementioned improvement in global product tanker demand and lower bunker costs during 2015.
LR1/Panamax pool revenue. Pool revenue from LR1/Panamax vessels for the year ended December 31, 2015 was $34.6 million , a decrease of $12.3 million , or 26% from $46.9 million for the year ended December 31, 2014. The decrease in pool revenue was primarily due to a decrease in pool revenue days to 1,574 from 2,892 days during the years ended December 31, 2015 and 2014, respectively. The decrease in pool revenue days was the result of the sales of three vessels in 2015, in addition to a reduction in the average number of time chartered-in vessels to 3.9 from 5.3 during the years ended December 31, 2015 and 2014, respectively. The decrease in pool revenue was offset by an increase in pool TCE revenue per day to $21,991 from $16,201 during the years ended December 31, 2015 and 2014, respectively.
Voyage revenue (spot market) . Voyage revenue (spot revenue) for the year ended December 31, 2015 was $38.4 million, a decrease of $9.7 million, or 20%, from $48.1 million for the year ended December 31, 2014. This revenue can be broken down as follows:


66

Table of Contents

 
 
 For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)
 
 Change
MR
 
$
32,564

 
$
25,353

 
$
7,211

 
28
 %
LR2
 
122

 
70

 
52

 
74
 %
Handymax
 
3,693

 
11,715

 
(8,022
)
 
(68
)%
LR1/Panamax
 
2,062

 
10,974

 
(8,912
)
 
(81
)%
Total voyage revenue (spot market)
 
$
38,441

 
$
48,112

 
$
(9,671
)
 
(20
)%
Voyage (spot) market revenue consists of the following:
•
Short-term time charters: We consider short-term time charters (less than one year) as spot market voyages. Vessels delivered under our Newbuilding Program during 2015 and one of our time chartered-in vessels were employed on short-term time charters (up to 120 days) for a total of 1,914 days during the year ended December 31, 2015 and earned TCE revenues of $18,124 per day. Vessels delivered under our Newbuilding Program were employed on similar short-term time charters for a total of 2,177 days during the year ended December 31, 2014 and earned TCE revenues of $16,089 per day.

•
Spot market voyages: One vessel operated in the spot voyage for 53 days during the year ended December 31, 2015 and three vessels operated in the spot market for a total of 274 days during the year ended December 31, 2014.

Time charter-out revenue . Time charter-out revenue (representing time charters with initial terms of one year or greater) for the year ended December 31, 2015 was $19.7 million, an increase of $6.2 million, or 46%, from $13.5 million for the year ended December 31, 2014. The increase in time charter-out revenue was the result of an increase in time charter-out revenue days to 1,027 days from 852 days and an increase in the TCE revenue earned to $18,553 per day from $15,194 per day for the years ended December 31, 2015 and 2014, respectively. Our time charter-out revenue is summarized as follows:
 
 
 For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)
 
 Change
MR
 
$
19,714

 
$
13,538

 
$
6,176

 
46
%
LR2
 
—

 
—

 
—

 
N/A

Handymax
 
—

 
—

 
—

 
N/A

LR1/Panamax
 
—

 
—

 
—

 
N/A

Total time charter-out revenue
 
$
19,714

 
$
13,538

 
$
6,176

 
46
%

67

Table of Contents

The following table summarizes the terms of our time chartered-out vessels during the years ended December 31, 2015 and 2014, respectively.
 
Name
 
Year built
 
Type
 
Delivery Date to the Charterer
 
Charter Expiration
 
Rate ($/ day)
 
1

STI Notting Hill
 
2015
 
MR
 
November-15
 
November-18
(1)  
$
20,500

 
2

STI Westminster
 
2015
 
MR
 
December-15
 
December-18
(1)  
$
20,500

 
3

STI Benicia
 
2014
 
MR
 
September-14
 
September-15
 
$
15,500

(2)  
4

STI Meraux
 
2014
 
MR
 
May-14
 
May-15
 
$
15,500

(2)  
5

STI San Antonio
 
2014
 
MR
 
June-15
 
June-15
 
$
15,500

(2)  
6

STI Texas City
 
2014
 
MR
 
March-14
 
April-16
 
$
16,000

(2)  
(1) Redelivery is plus or minus 30 days from the expiry date.
(2) The charter had a 50% profit sharing provision whereby we received 50% of the vessel's profits above the daily base rate from the charterer.
Vessel operating costs. Vessel operating costs for the year ended December 31, 2015 were $174.6 million, an increase of $95.8 million, or 121%, from $78.8 million for the year ended December 31, 2014. Vessel operating days increased to 26,547 days from 11,548 days for the years ended December 31, 2015 and 2014, respectively. The increase in vessel operating days was offset by a decrease in vessel operating costs per day to $6,564 per day compared to $6,802 per day for the years ended December 31, 2015 and 2014, respectively. The increase in operating days was the result of the deliveries of 27 vessels (including 26 under our Newbuilding Program) throughout 2015 and 41 vessels throughout 2014, which operated for a full year during 2015.
 
 
 For the year ended December 31,
 
 Change
 
 Percentage
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)
 
 Change
Vessel operating costs
 
 
 
 
 
 
 
 
MR
 
$
100,477

 
$
52,561

 
$
(47,916
)
 
(91
)%
LR2
 
36,681

 
4,830

 
(31,851
)
 
(659
)%
Handymax
 
35,254

 
10,902

 
(24,352
)
 
(223
)%
LR1/Panamax
 
2,144

 
10,530

 
8,386

 
80
 %
Total vessel operating costs
 
$
174,556

 
$
78,823

 
$
(95,733
)
 
(121
)%
 
 
 
 
 
 
 
 
 
Vessel operating costs per day
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MR
 
$
6,461

 
$
6,580

 
$
119

 
2
 %
LR2
 
6,865

 
6,789

 
(76
)
 
(1
)%
Handymax
 
6,473

 
6,706

 
233

 
3
 %
LR1/Panamax
 
8,440

 
8,332

 
(108
)
 
(1
)%
Consolidated vessel operating costs per day
 
6,564

 
6,802

 
238

 
3
 %
 
 
 
 
 
 
 
 
 
Operating days
 
 
 
 
 
 
 
 
MR
 
15,550

 
7,957

 
7,593

 
95
 %
LR2
 
5,343

 
707

 
4,636

 
656
 %
Handymax
 
5,400

 
1,620

 
3,780

 
233
 %
LR1/Panamax
 
254

 
1,264

 
(1,010
)
 
(80
)%
Total operating days
 
26,547

 
11,548

 
14,999

 
130
 %

68

Table of Contents

MR vessel operating costs. Vessel operating costs for the MR segment for the year ended December 31, 2015 were $100.5 million, an increase of $47.9 million, or 91%, from the year ended December 31, 2014. This was primarily due to an increase in operating days to 15,550 days from 7,957 days during the years ended December 31, 2015 and 2014, respectively, as we took delivery of 13 MRs throughout 2015 and 22 MRs throughout 2014.
LR2 vessel operating costs. Vessel operating costs for the LR2 segment for the year ended December 31, 2015 were $36.7 million, an increase of $31.9 million, or 659%, from the year ended December 31, 2014. The increase was primarily due to an increase of operating days to 5,343 from 707 operating days for the years ended December 31, 2015 and 2014, respectively, which was the result of the delivery of 12 LR2s throughout 2015 and seven LR2s throughout 2014.
Handymax vessel operating costs. Vessel operating costs for the Handymax segment for the year ended December 31, 2015 were $35.3 million, an increase of $24.4 million, or 223%, from the year ended December 31, 2014. This increase was primarily due to an increase in vessel operating days to 5,400 from 1,620 days during the years ended December 31, 2015 and 2014, respectively which was due to the delivery of two Handymax ice class 1A product tankers throughout 2015 and 12 throughout 2014.
LR1/Panamax vessel operating costs. Vessel operating costs for the LR1/Panamax segment for the year ended December 31, 2015 were $2.1 million, a decrease of $8.4 million, or 80%, from the year ended December 31, 2014. This decrease was due to a decrease in vessel operating days to 254 days from 1,264 days for the years ended December 31, 2015 and 2014, respectively. This was the result of the sales of Noemi and Senatore in March and April 2014, respectively and the sales of Venice, STI Harmony and STI Heritage in March 2015, April 2015 and April 2015, respectively.
Voyage expenses . Voyage expenses for the year ended December 31, 2015 were $4.4 million, a decrease of $3.1 million, or 41%, from $7.5 million during the year ended December 31, 2014. The decrease in voyage expenses is primarily the result of the following:
•
A reduction in the number of days for vessels employed on short-term time charter-out arrangements to 1,914 days from 2,177 days for the years ended December 31, 2015 and 2014, respectively. Newbuilding vessels delivered (including vessels under our Newbuilding Program and one time chartered-in vessel) commenced short-term time charters (less than 120 days) upon their deliveries from the shipyard during 2015 and 2014. While these time charters are agreed to at fixed TCE rates, they incurred voyage costs prior to their entry into the Scorpio Group Pools for items such as bunker expenses (to their first port of loading) and tank cleaning costs.
•
A decrease in the number of days vessels operated in the spot market (excluding short term time charters) to 53 days from 274 days during the years ended December 31, 2015 and 2014, respectively.
•
These decreases were offset by an increase in commercial management fees paid to SCM, a related party, for vessels employed on long-term time charters (with initial terms of one year or greater) to $0.7 million from $0.3 million during the years ended December 31, 2015 and 2014, respectively.
Charterhire. Charterhire expense for the year ended December 31, 2015 was $96.9 million, a decrease of $42.3 million, or 30%, from $139.2 million during the year ended December 31, 2014. This decrease was the result of a decrease in the average number of time chartered-in vessels to 16.9 from 26.3 during the years ended December 31, 2015 and 2014, respectively.
Depreciation. Depreciation expense for the year ended December 31, 2015 was $107.4 million, an increase of $64.7 million, or 152%, from $42.6 million during the year ended December 31, 2014. The increase was the result of an increase in the average number of owned vessels to 72.7 from 31.6 for the years ended December 31, 2015 and 2014, respectively.
General and administrative expenses. General and administrative expenses for the year ended December 31, 2015 were $65.8 million, an increase of $17.7 million, or 37%, from $48.1 million during the year ended December 31, 2014. The change was primarily driven by the growth of our fleet to an average of 89.6 owned and time chartered-in vessels from an average of 57.9 owned and time chartered-in vessels for the years ended December 31, 2015 and 2014, respectively.
Write down of vessels held for sale and net loss from sales of vessels. Write down of vessels held for sale and loss from sales of vessels for the year ended December 31, 2015 was $35,000, a decrease of $4.0 million, or 99%, from $4.0 million during the year ended December 31, 2014.
•
During the year ended December 31, 2015, we recorded a loss of $2.1 million on the sale of STI Highlander in October 2015. This loss was offset by an aggregate gain of $2.0 million recorded for the sales of Venice , STI Harmony and STI Heritage, which were sold in March 2015, April 2015 and April 2015, respectively.
•
During the year ended December 31, 2014, we recorded a $4.0 million write-down as a result of the designation of STI Heritage and STI Harmony as held for sale and the corresponding write-down to the lower of their carrying value and fair value less estimated costs to sell at that date.
Write-off of vessel purchase options. Write-off of vessel purchase options of $0.7 million during the year ended December 31, 2015 was the result of the write-off of deposits made for options to construct MR product tankers that expired unexercised in December 2015. 

69

Table of Contents

Gain on sale of VLCCs. Gain on sale of VLCCs of $51.4 million during the year ended December 31, 2014 was the result of the sale of our seven VLCCs under construction in March 2014. As a result of the sale, we received net proceeds in cash of $141.7 million and the book value of these assets at the time of sale (primarily consisting of installment payments made to date) was $90.3 million.
Gain on sale of Dorian shares. Gain on sale of Dorian shares for the year ended December 31, 2015 was $1.2 million, a decrease of $9.7 million or 89% from $10.9 million during the year ended December 31, 2014.
•
In July 2015, we sold our investment in Dorian to two unrelated third parties and recorded an aggregate gain of $1.2 million.
•
In June 2014, we acquired 7,500,000 of our common shares from an existing shareholder in exchange for 3,422,665 common shares of Dorian in a privately negotiated transaction. As a result of the disposal of the Dorian shares, we recognized a gain of $10.9 million.
Re-measurement of investment in Dorian . Re-measurement of our investment in Dorian of $13.9 million during the year ended December 31, 2014 relates to a change in the accounting method for our investment in Dorian from the equity method to the available for sale method. On October 29, 2014, Robert Bugbee, our President, resigned from Dorian's board of directors. Accordingly, we determined that we no longer had significant influence over Dorian's financial and operating decisions as of that date. As such, we remeasured our investment to its fair market value on October 29, 2014, which resulted in a write down of $13.9 million.
Financial expenses. Financial expenses for the year ended December 31, 2015 were $89.6 million, an increase of $68.8 million, or 331%, from $20.8 million during the year ended December 31, 2014. The change was primarily due to an increase in our average debt outstanding which increased to $1.9 billion from $783.9 million for the years ended December 31, 2015 and 2014, respectively. Additionally, the amount of interest capitalized decreased to $5.6 million from $17.5 million for the years ended December 31, 2015 and 2014, respectively, as a result of the decrease in the number of vessels under construction under our Newbuilding Program during those years.
•
Financial expenses for the year ended December 31, 2015 primarily consisted of interest expense of $72.2 million and amortization of loan fees of $17.4 million.
•
Financial expenses for the year ended December 31, 2014 primarily consisted of interest expense of $15.9 million and amortization of loan fees of $4.8 million.
Unrealized (loss) / gain on derivative financial instruments. Unrealized (loss) / gain on derivative financial instruments was a loss of $1.3 million for the year ended December 31, 2015 and a gain of $0.3 million for the year ended December 31, 2014.
•
The unrealized loss for the year ended December 31, 2015 results from the unrealized loss recorded on a profit and loss sharing arrangement whereby 50% of the profits and losses above or below the charterhire rate relating to an LR2 vessel that was time chartered-in by us, were shared with a third-party that neither owns nor operates this vessel. This agreement was recorded as a derivative, recorded at fair value, with any resultant gain or loss recognized in the consolidated statement of income.
•
The unrealized gain for the year ended December 31, 2014 relates to the adjustment to record interest rate swaps that did not qualify for hedge accounting, to their fair market value. These swaps were terminated in March 2015.
Share of income from associate. Share of income from associate for the year ended December 31, 2014 of $1.5 million represents our share of Dorian's income from January 1, 2014 through October 29, 2014, which is the date we lost significant influence of Dorian's financial and operating decisions and changed the accounting for this investment to the available for sale method from the equity method.
Other expenses, net. Other expenses, net, representing income of $1.3 million during the year ended December 31, 2015, was primarily the result of a $1.4 million gain recorded as a result of a termination fee received when the owner of one of the Company's time chartered-in vessels cancelled the contract prior to its expiration date.
B. Liquidity and Capital Resources
Our primary source of funds for our short-term and long-term liquidity needs will be the cash flows generated from our vessels, which primarily operate in Scorpio Group Pools, in the spot market or on time charter, in addition to availability under our secured credit facilities with existing drawdown availability and cash on hand. We believe that the Scorpio Group Pools reduce volatility because (i) they aggregate the revenues and expenses of all pool participants and distribute net earnings to the participants based on an agreed upon formula and (ii) some of the vessels in the pool are on time charter. Furthermore, spot charters provide flexibility and allow us to fix vessels at prevailing rates.
Current economic conditions make forecasting difficult, and there is the possibility that our actual trading performance during the coming year may be materially different from expectations.  As described below, our 2011 Credit Facility and our DVB Credit Facility are scheduled to mature in May 2017 and August 2017, respectively.  In 2017, we refinanced four of the seven vessels collateralized under the 2011 Credit Facility. In addition, we received an offer to refinance the remaining amounts under the 2011 Credit Facility (via the non-binding offer to sell and leaseback three vessels as described further below) and a commitment to refinance our DVB Credit Facility which remain subject to the execution of definitive documentation and customary conditions

70

Table of Contents

precedent.  Furthermore, it is also likely that additional, currently uncommitted sources of financing will be required to meet the financial commitment relating to the scheduled maturity of our Senior Unsecured Notes Due 2017, which are scheduled to mature in October 2017.  We could also pursue other means to raise liquidity, such as through the sale of vessels, to meet our obligations however there can be no assurance that these or other measures will be successful.
Assuming we successfully refinance the aforementioned debt that is maturing in 2017, we believe that our cash flows from operations, amounts available for borrowing under our various credit facilities and our cash balance will be sufficient to meet our existing liquidity needs for the next 12 months from the date of this annual report. A deterioration in economic conditions or a failure to refinance our debt that is maturing could cause us to breach our debt covenants and could have a material adverse effect on our business, results of operations, cash flows and financial condition.  A discussion and analysis of our key risks, including sensitivities thereto, can be found in "Item 3. Key Information - D. Risk Factors" and "Item 11 - Quantitative and Qualitative Disclosures About Market Risk".
We continuously monitor the market for transactions that may add value for our shareholders, including the acquisition or disposition of vessels and other entities. In connection with any transaction, we may enter into additional financing arrangements, refinance existing arrangements or, subject to favorable market conditions, raise capital through public or private debt or equity offerings of our securities. There is no guarantee that we will grow the size of our fleet or enter into transactions that are accretive to our shareholders.
As of December 31, 2016 , our cash balance was $99.9 million , which was less than our cash balance of $201.0 million as of December 31, 2015 .    As of March 15, 2017 and December 31, 2016 , we had $2.0 billion and $2.0 billion in aggregate outstanding indebtedness, respectively, and $172.0 million and $88.8 million in availability under our secured credit facilities, respectively. All of our credit facilities are described below under Long-Term Debt Obligations and Credit Arrangements.
As of December 31, 2016 , our long-term liquidity needs were comprised of our debt repayment obligations for our secured credit facilities, Senior Unsecured Notes Due 2020 and 2017 (defined below), Convertible Notes (defined below), our obligations under construction contracts related to the vessels in our Newbuilding Program, and obligations under our time and bareboat charter-in arrangements.
We have drawn $117.1 million from our secured credit facilities in 2017 as follows:
 
 
 
Drawdown amount
 
 
 
 
 
 
Credit Facility
 
(in millions of U.S. Dollars)
 
Drawdown date
 
Collateral
 
1

BNP Paribas Credit Facility
 
$
13.8

 
January 2017
 
STI Sapphire
(1)  
2

Credit Suisse Credit Facility
 
29.4

 
February 2017
 
STI Selatar
(2)  
3

BNP Paribas Credit Facility
 
13.8

 
February 2017
 
STI Emerald
(3)  
4

HSH Credit Facility
 
16.5

 
February 2017
 
STI Duchessa
(4)  
5

HSH Credit Facility
 
14.6

 
February 2017
 
STI Onyx
(4)  
6

Credit Suisse Credit Facility
 
29.0

 
March 2017
 
STI Rambla
(5)  
(1) We refinanced the outstanding indebtedness related to STI Sapphire by repaying $13.0 million on our 2011 Credit Facility in January 2017 and drawing down $13.8 million from our BNP Paribas Credit Facility.
(2) In February 2017, we drew down $29.4 million from our Credit Suisse Credit Facility to partially finance the purchase of STI Selatar .
(3) We refinanced the outstanding indebtedness related to STI Emerald by repaying $13.3 million on our 2011 Credit Facility in February 2017 and drawing down $13.8 million from our BNP Paribas Credit Facility.
(4) We refinanced the outstanding indebtedness related to STI Duchessa and STI Onyx by repaying an aggregate amount of $23.7 million on our 2011 Credit Facility in February 2017 and drawing down $31.1 million from our HSH Credit Facility.     
(5) In March 2017, we drew down $29.0 million on our Credit Suisse Credit Facility to partially finance the purchase of STI Rambla, which is scheduled to be delivered before the end of March 2017.

71

Table of Contents

Cash Flows
The table below summarizes our sources and uses of cash for the periods presented:
 
For the year ended December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
Cash flow data
 

 
 

 
 

Net cash inflow/(outflow)
 

 
 

 
 

Operating activities
$
178,511

 
$
391,975

 
$
93,916

Investing activities
31,333

 
(703,418
)
 
(1,158,234
)
Financing activities
(310,927
)
 
396,270

 
1,101,616


Cash flow from operating activities
Fiscal year ended December 31, 2016 compared to fiscal year ended December 31, 2015     
Operating cash flows are driven by our results of operations along with movements in working capital. Both of these components were driven by our growth during 2016 and 2015. The following table sets forth the components of our operating cash flow for the years ended December 31, 2016 and December 31, 2015 :
 
 
For the year ended December 31,
 
 Change
 
Percentage
 
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
 Change
 
Vessel revenue
 
$
522,747

 
$
755,711

 
$
(232,964
)
 
(31
)%
(1)
Vessel operating costs
 
(187,120
)
 
(174,556
)
 
(12,564
)
 
(7
)%
(1)
Voyage expenses
 
(1,578
)
 
(4,432
)
 
2,854

 
64
 %
(1)
Charterhire
 
(78,862
)
 
(96,865
)
 
18,003

 
19
 %
(1)
General and administrative expenses - cash
 
(24,692
)
 
(32,144
)
 
7,452

 
23
 %
(1) (2)
Financial expenses - cash
 
(63,858
)
 
(61,082
)
 
(2,776
)
 
(5
)%
(1) (3)
Change in working capital
 
11,778

 
3,360

 
8,418

 
251
 %
(4)
Other
 
96

 
1,983

 
(1,887
)
 
(95
)%
 
Operating cash flow
 
$
178,511

 
$
391,975

 
$
(213,464
)
 
(54
)%
 

(1) See “ Item 5. Operating and Financial Review and Prospects- A. Operating Results” for information on these variations for the years ended December 31, 2016 and 2015.
(2) Cash general and administrative expenses are general and administrative expenses from our consolidated statements of income or loss excluding the amortization of restricted stock of $30.2 million and $33.7 million for the years ended December 31, 2016 and 2015, respectively.
(3) Cash financial expenses are financial expenses from our consolidated statements of income or loss excluding the amortization of deferred financing fees of $28.6 million and $17.4 million for the years ended December 31, 2016 and 2015, respectively, and the accretion of our Convertible Notes of $11.6 million and $11.1 million over these same periods. The amortization of deferred financing fees in the years ended December 31, 2016 and 2015 included charges of $14.4 million and $2.7 million, respectively, for the write-offs of deferred financing fees during those periods.
(4) The change in working capital in 2016 was primarily driven by a decrease in accounts receivable offset by an increase in prepaid expense and other current assets and a decrease in accrued expenses. The decrease in accounts receivable was driven by an overall decrease in revenue across all of our operating segments. The increase in prepaid expense was driven by advances made for vessel operating expenses (such as crew wages) and the increase in other assets was driven by working capital contributions to the Scorpio Group Pools. The decrease in accrued expenses was driven by an overall decline in accrued short-term employee benefits. The change in working capital in 2015 was primarily driven by an increase in accrued expenses and a decrease in accounts receivable, offset by increases in inventory, other current assets and non-current assets.


72

Table of Contents

Fiscal year ended December 31, 2015 compared to fiscal year ended December 31, 2014
The following table sets forth the components of our operating cash flows for the years ended December 31, 2015 and December 31, 2014 :
 
 
For the year ended December 31,
 
 Change
 
Percentage
 
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)
 
 Change
 
Vessel revenue
 
$
755,711

 
$
342,807

 
$
412,904

 
120
 %
(1)
Vessel operating costs
 
(174,556
)
 
(78,823
)
 
(95,733
)
 
(121
)%
(1)
Voyage expenses
 
(4,432
)
 
(7,533
)
 
3,101

 
41
 %
(1)
Charterhire
 
(96,865
)
 
(139,168
)
 
42,303

 
30
 %
(1)
General and administrative expenses - cash
 
(32,144
)
 
(18,403
)
 
(13,741
)
 
(75
)%
(1) (2)
Financial expenses - cash
 
(61,082
)
 
(10,606
)
 
(50,476
)
 
(476
)%
(1) (3)
Drydock payments
 
—

 
(1,290
)
 
1,290

 
100
 %
 
Change in working capital
 
3,360

 
6,334

 
(2,974
)
 
(47
)%
(4)
Other
 
1,983

 
598

 
1,385

 
232
 %
(5)
Operating cash flow
 
$
391,975

 
$
93,916

 
$
298,059

 
317
 %
 
(1) See “ Item 5. Operating and Financial Review and Prospects- A. Operating Results” for information on these variations for the years ended December 31, 2015 and 2014.
(2) Cash general and administrative expenses are general and administrative expenses from our consolidated statements of income or loss excluding the amortization of restricted stock of $33.7 million and $29.7 million for the years ended December 31, 2015 and 2014, respectively.
(3) Cash financial expenses are financial expenses from our consolidated statements of income or loss excluding the amortization of deferred financing fees of $17.4 million and $4.8 million for the years ended December 31, 2015 and 2014, respectively, and the accretion of our Convertible Notes of $11.1 million and $5.3 million for the years ended December 31, 2015 and 2014, respectively. The amortization of deferred financing fees in the years ended December 31, 2015 and 2014 included charges of $2.7 million and $0.5 million, respectively, for the write-offs of deferred financing fees during those periods.
(4) The change in working capital in 2015 was primarily driven by the growth in accrued expenses and the decrease of accounts receivable, which were driven by growth in accrued short-term employee benefits and the timing of receipt of payments from the Scorpio Group Pools, respectively. These movements were offset by increases in inventory, other current assets and non-current assets which were impacted by working capital contributions made for our vessels operating in the Scorpio Group Pools. The change in working capital in 2014 was primarily driven by growth in accrued expenses and accounts payable which were impacted by the timing of payments to suppliers and growth in accrued interest.
(5) The increase in other operating cash flows in 2015 was primarily related to a $1.4 million gain recorded as a result of a termination fee received when the owner of one of the Company's time chartered-in vessels cancelled the contract prior to its expiration date.


73

Table of Contents

Cash flow from investing activities
 
The following table sets forth the components of our investing cash flows for the years ended December 31, 2016 and December 31, 2015 :

 
For the year ended December 31,
 
 Change
 
Percentage
 
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
Change
 
Cash inflows
 

 

 

 

 
Net proceeds from the sales of vessels
 
$
158,175

 
$
90,820

 
$
67,355

 
74
 %
(1)  
Net proceeds from the sale of our shares in Dorian
 
—

 
142,436

 
(142,436
)
 
(100
)%
(2)  
Investing cash inflows total
 
158,175

 
233,256

 
(75,081
)
 
(32
)%
 

 
 
 
 
 
 
 
 
 
Cash outflows
 
 
 
 
 
 
 
 
 
Acquisition of vessels and payments for vessels under construction
 
(126,842
)
 
(905,397
)
 
778,555

 
86
 %
(3)  
Deposit returned for vessel purchases
 
—

 
(31,277
)
 
31,277

 
100
 %
(4)  
Total investing cash outflows
 
(126,842
)
 
(936,674
)
 
809,832

 
86
 %
 
 
 
 
 
 
 
 
 
 
 
Net cash inflow / (outflow) from investing activities
 
$
31,333

 
$
(703,418
)
 
$
734,751

 
104
 %
 

(1) Net proceeds from the sales of vessels in 2016 represents the net proceeds received for the sales of STI Chelsea, STI Lexington, STI Powai, STI Olivia and STI Mythos. Net proceeds from the sales of vessels in 2015 represents the net proceeds received for the sales of Venice , STI Harmony , STI Heritage and STI Highlander.
(2) In July 2015, we sold our investment in Dorian to two unrelated third parties for aggregate net proceeds of $142.4 million. As a result of these sales, we recognized a gain of $1.2 million during the year ended December 31, 2015.
(3) Represents installment payments and other capitalized costs (including capitalized interest) associated with vessels that were under construction and/or delivered during the years ended December 31, 2016 and 2015.
(4) In 2014, we received a $31.3 million deposit pursuant to an agreement to purchase four LR2 tankers from Scorpio Bulkers Inc., a related party. We received this deposit as security for the scheduled installment payments that were expected to occur prior to the closing date of the transaction. The transaction closed, and the deposit was returned, in July 2015.


74

Table of Contents

The following table sets forth the components of our investing cash flows for the years ended December 31, 2015 and December 31, 2014 :

 
For the year ended December 31,
 
 Change

Percentage
 
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)

Change
 
Cash inflows
 
 
 
 
 
 
 
 
 
Net proceeds from the sale of our shares held in Dorian
 
$
142,436

 
$
—

 
$
142,436

 
N/A

(1)  
Net proceeds from the sale of our seven VLCCs under construction
 
—

 
141,710

 
(141,710
)
 
(100
)%
(2)  
Net proceeds from the sales of vessels
 
90,820

 
71,960

 
18,860

 
26
 %
(3)  
Deposits received for vessel purchases
 
—

 
31,277

 
(31,277
)
 
(100
)%
(5)  
Total investing cash inflows
 
233,256

 
244,947

 
(11,691
)
 
(5
)%
 
 
 
 
 
 
 
 
 
 
 
Cash outflows
 
 
 
 
 
 
 
 
 
Acquisition of vessels and payments for vessels under construction
 
(905,397
)
 
(1,403,181
)
 
497,784

 
35
 %
(4)  
Deposit returned for vessel purchases
 
(31,277
)
 
—

 
(31,277
)
 
N/A

(5)  
 
 
 
 
 
 
 
 
 
 
Total investing cash outflows
 
(936,674
)
 
(1,403,181
)
 
466,507

 
33
 %
 
 
 
 
 
 
 
 
 
 
 
Net cash outflow from investing activities
 
$
(703,418
)
 
$
(1,158,234
)
 
$
454,816

 
39
 %
 

(1) In July 2015, we sold our investment in Dorian to two unrelated third parties for aggregate net proceeds of $142.4 million. As a result of these sales, we recognized a gain of $1.2 million during the year ended December 31, 2015.
(2) Represents the net proceeds received from the sale of our seven VLCCs under construction in March 2014. We received net proceeds in cash of $141.7 million and the book value of these assets at the time of sale (primarily consisting of installment payments made to date) was $90.3 million.
(3) Net proceeds received from the sales of vessels in 2015 represents the net proceeds received from the sales of Venice , STI Harmony , STI Heritage and STI Highlander. Net proceeds from the sales of vessels in 2014 represents the net proceeds received from the sales of Noemi , Senatore and STI Spirit .
(4) Represents installment payments and other capitalized costs (including capitalized interest) associated with vessels that were under construction and/or delivered during the years ended December 31, 2015 and 2014.
(5) In 2014, we received a $31.3 million deposit pursuant to an agreement to purchase four LR2 tankers from Scorpio Bulkers Inc., a related party. We received this deposit as security for the scheduled installment payments that were expected to occur prior to the closing date of the transaction. The transaction closed, and the deposit was returned, in July 2015.



75

Table of Contents

Cash flow from financing activities
Cash flows from financing activities primarily consist of the issuance, repayment and costs related to our secured and unsecured debt, the issuance and costs related to our common stock, the payment of dividends to our common shareholders and activity within our Securities Repurchase Program. The following table sets forth the components of our financing cash flows for the years ended December 31, 2016 and December 31, 2015 :

 
For the year ended December 31,
 
 Change
 
Percentage
 
In thousands of U.S. dollars
 
2016
 
2015
 
 favorable / (unfavorable)
 
Change
 
Cash inflows
 
 
 
 
 
 
 
 
 
Drawdowns from our secured credit facilities
 
$
565,028

 
$
643,550

 
$
(78,522
)
 
(12
)%
(1)  
Gross proceeds from the issuance of common stock
 
—

 
159,747

 
(159,747
)
 
(100
)%
(2)  
Total financing cash inflows
 
565,028

 
803,297

 
(238,269
)
 
(30
)%
 

 
 
 
 
 
 
 
 
 
Cash outflows
 
 
 
 
 
 
 
 
 
Repayments on our secured credit facilities
 
(753,431
)
 
(226,260
)
 
(527,171
)
 
(233
)%
(1)  
Dividend payments
 
(86,923
)
 
(87,056
)
 
133

 
—
 %
(3)  
Common stock repurchases
 
(16,505
)
 
(76,028
)
 
59,523

 
78
 %
(4)  
Debt issuance costs
 
(10,679
)
 
(8,497
)
 
(2,182
)
 
(26
)%
(5)  
Repurchase of Convertible Notes
 
(8,393
)
 
(1,632
)
 
(6,761
)
 
(414
)%
(6)  
Equity issuance costs
 
(24
)
 
(7,554
)
 
7,530

 
100
 %
(2)  
Total financing cash outflows
 
(875,955
)
 
(407,027
)
 
(468,928
)
 
(115
)%
 

 
 
 
 
 
 
 
 
 
Net cash (outflow) / inflow from financing activities
 
$
(310,927
)

$
396,270


$
(707,197
)
 
(178
)%
 




76

Table of Contents

(1) Drawdowns from and repayments on our secured credit facilities in 2016 and 2015 consisted of:

 
2016
 
2015

 
Drawdowns
 
Repayments
 
Drawdowns
 
Repayments
In thousands of U.S. dollars
 

 

 

 

2010 Revolving Credit Facility
 
$
—

 
$
—

 
$
—

 
$
(41,456
)
2011 Credit Facility
 
—

 
(7,935
)
 
—

 
(7,935
)
Newbuilding Credit Facility
 
—

 
(71,843
)
 
—

 
(5,998
)
2013 Credit Facility
 
—

 
(428,253
)
 
127,700

 
(83,970
)
K-Sure Credit Facility
 
—

 
(125,968
)
 
261,100

 
(18,261
)
KEXIM Credit Facility
 
—

 
(33,650
)
 
30,300

 
(29,350
)
Nomura Term Margin Loan Facility
 
—

 
—

 
30,000

 
(30,000
)
ABN AMRO Credit Facility
 
—

 
(13,480
)
 
142,200

 
(2,370
)
ING Credit Facility
 
95,640

 
(6,058
)
 
35,000

 
(292
)
BNP Paribas Credit Facility
 
17,250

 
(2,300
)
 
17,250

 
—

Scotiabank Credit Facility
 
33,300

 
(1,110
)
 
—

 
—

NIBC Credit Facility
 
40,838

 
(1,021
)
 
—

 
—

2016 Credit Facility
 
288,000

 
(6,816
)
 
—

 
—

DVB Credit Facility
 
90,000

 
(1,625
)
 
—

 
—

Finance lease payments -  STI Lombard
 
—

 
(53,372
)
 
—

 
(6,628
)

 
$
565,028

 
$
(753,431
)
 
$
643,550

 
$
(226,260
)


(2) In May 2015, we closed on the sale of 15,000,000 newly issued shares of common stock in an underwritten offering of common shares at an offering price of $9.30 per share. In addition, the underwriters also exercised a portion of their over-allotment option to purchase 2,177,123 additional common shares at the public offering price. Gross proceeds from the issuance were $159.7 million and associated equity issuance costs were $7.6 million.
(3) Dividend payments to shareholders were $86.9 million and $87.1 million for the years ended December 31, 2016 and 2015, respectively. These dividends represent total dividends of $0.50 and $0.495 per share for the years ended December 31, 2016 and 2015, respectively.
(4) Common stock repurchases in 2016 included the purchase of 2,956,760 common shares in the open market at an average price of $5.58 per share. Common stock repurchase in 2015 included the purchase of 8,273,709 common shares in the open market at an average price of $9.19 per share.
(5) Debt issuance costs relates to costs incurred for our secured credit facilities.
(6) During the year ended December 31, 2016, we repurchased an aggregate of $10.0 million aggregate principal amount of our Convertible Notes at an average price of $839.28 per $1,000 principal amount. During the year ended December 31, 2015, we repurchased an aggregate of $1.5 million aggregate principal amount of our Convertible Notes at $1,088.10 per $1,000 principal amount.


77

Table of Contents

The following table sets forth the components of our financing cash flows for the years ended December 31, 2015 and December 31, 2014:


 
For the year ended December 31,
 
 Change
 
Percentage
 
In thousands of U.S. dollars
 
2015
 
2014
 
 favorable / (unfavorable)
 
Change
 
Cash inflows
 
 
 
 
 

 

 
Drawdowns from our secured credit facilities
 
$
643,550

 
$
1,114,284

 
$
(470,734
)
 
(42
)%
(1)  
Gross proceeds from the issuance of our Convertible Notes
 
—

 
360,000

 
(360,000
)
 
(100
)%
(2)  
Gross proceeds from the issuance of our senior unsecured notes due 2020 and 2017
 
—

 
105,500

 
(105,500
)
 
(100
)%
(3)  
Gross proceeds from the issuance of common stock
 
159,747

 
—

 
159,747

 
N/A

(4)  
Total financing cash inflows
 
803,297

 
1,579,784

 
(776,487
)
 
(49
)%
 

 
 
 
 
 
 
 
 
 
Cash outflows
 
 
 
 
 
 
 
 
 
Repayments on our secured credit facilities
 
(226,260
)
 
(74,674
)
 
(151,586
)
 
(203
)%
(1)  
Dividend payments
 
(87,056
)
 
(70,495
)
 
(16,561
)
 
(23
)%
(5)  
Common stock repurchases
 
(76,028
)
 
(276,294
)
 
200,266

 
72
 %
(6)  
Debt issuance costs
 
(8,497
)
 
(45,670
)
 
37,173

 
81
 %
(7)  
Equity issuance costs
 
(7,554
)
 
(42
)
 
(7,512
)
 
(17,886
)%
(4)  
Repurchase of our Convertible Notes
 
(1,632
)
 
—

 
(1,632
)
 
N/A

(8)  
Convertible Notes issuance costs
 
—

 
(10,993
)
 
10,993

 
100
 %
(2)  
Total financing cash outflows
 
(407,027
)
 
(478,168
)
 
71,141

 
15
 %
 

 
 
 
 
 
 
 
 
 
Net cash inflow from financing activities
 
$
396,270

 
$
1,101,616

 
$
(705,346
)
 
(64
)%
 

(1) Drawdowns from and repayments on our secured facilities in 2015 and 2014 consisted of:
 
 
2015
 
2014
 
 
Drawdowns
 
Repayments
 
Drawdowns
 
Repayments
In thousands of U.S. dollars
 

 

 

 

2010 Revolving Credit Facility
 
$
—

 
$
(41,456
)
 
$
72,416

 
$
(30,960
)
2011 Credit Facility
 
—

 
(7,935
)
 
52,008

 
(7,103
)
STI Spirit Credit Facility
 
—

 
—

 
—

 
(21,736
)
Newbuilding Credit Facility
 
—

 
(5,998
)
 
—

 
(5,998
)
2013 Credit Facility
 
127,700

 
(83,970
)
 
393,400

 
(8,877
)
K-Sure Credit Facility
 
261,100

 
(18,261
)
 
197,160

 
—

KEXIM Credit Facility
 
30,300

 
(29,350
)
 
399,300

 
—

Nomura Term Margin Loan Facility
 
30,000

 
(30,000
)
 
—

 
—

ABN AMRO Credit Facility
 
142,200

 
(2,370
)
 
—

 
—

ING Credit Facility
 
35,000

 
(292
)
 
—

 
—

BNP Paribas Credit Facility
 
17,250

 
—

 
—

 
—

Finance lease payments - STI Lombard
 
—

 
(6,628
)
 
—

 
—


 
$
643,550

 
$
(226,260
)
 
$
1,114,284

 
$
(74,674
)

(2) In June 2014, we issued $360.0 million in aggregate principal amount of convertible senior notes due 2019, or the Convertible Notes, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. This amount includes the

78

Table of Contents

full exercise of the initial purchasers’ option to purchase an additional $60.0 million in aggregate principal amount of the Convertible Notes in connection with the offering. Initial purchasers' discounts, commissions and offering expenses for the Convertible Notes were $11.0 million.
(3) We issued $53.75 million of Unsecured Senior Notes in May 2014 and $51.75 million of Unsecured Senior Notes in October 2014.
(4) In May 2015, we closed on the sale of 15,000,000 newly issued shares of common stock in an underwritten offering of common shares at an offering price of $9.30 per share. In addition, the underwriters also exercised a portion of their over-allotment option to purchase 2,177,123 additional common shares at the public offering price. Gross proceeds from the issuance were $159.7 million and associated equity issuance costs were $7.6 million.
(5) Dividend payments to shareholders were $87.1 million and $75.0 million for the years ended December 31, 2015 and 2014, respectively. These dividends represent total dividends of $0.495 and $0.39 per share for the years ended December 31, 2015 and 2014, respectively.
(6) Common stock repurchases in 2015 included the purchase of 8,273,709 common shares in the open market at an average price of $9.19 per share. Common stock repurchases in 2014 included the purchase of 19,951,536 common shares in the open market at an average price of $9.09 per share and the purchase of 10,127,600 common shares at $9.38 per share using a portion of the proceeds of our Convertible Notes.
(7) Debt issuance costs relates to costs incurred for our secured credit facilities and senior unsecured notes due 2020 and 2017.
(8) During the year ended December 31, 2015, we repurchased an aggregate of $1.5 million aggregate principal amount of our Convertible Notes at $1,088.10 per $1,000 principal amount.


79

Table of Contents

Long-Term Debt Obligations and Credit Arrangements
The following is a discussion of the key terms and conditions of our secured credit facilities, unsecured senior notes, finance lease and our Convertible Notes. Our secured credit facilities may be secured by, among other things:
•
a first priority mortgage over the relevant collateralized vessels;
•
a first priority assignment of earnings, insurances and charters from the mortgaged vessels for the specific facility;
•
a pledge of earnings generated by the mortgaged vessels for the specific facility; and
•
a pledge of the equity interests of each vessel owning subsidiary under the specific facility.
Our credit facilities require us to comply with a number of covenants, including financial covenants related to liquidity, consolidated net worth, minimum interest coverage, maximum leverage ratios, loan to value ratios and collateral maintenance; delivery of quarterly and annual financial statements and annual projections; maintenance of adequate insurances; compliance with laws (including environmental); compliance with the Employee Retirement Income and Security Act, or ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the manager of the vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.
The following is a table summarizing our indebtedness as of December 31, 2016 and March 15, 2017:
 In thousands of U.S. dollars
 
Amount outstanding at December 31, 2016
 
Amount Outstanding at March 15, 2017
 
Availability as of March 15, 2017
 
2011 Credit Facility (1)
 
$
93,041

 
$
43,006

 
$
—

 
K-Sure Credit Facility
 
314,032

 
299,104

 
—

 
KEXIM Credit Facility
 
366,600

 
349,775

 
—

 
Credit Suisse Credit Facility  (2)
 
—

 
58,350

 
—

 
ABN AMRO Credit Facility
 
126,350

 
124,053

 
—

 
ING Credit Facility
 
124,290

 
122,353

 
—

 
BNP Paribas Credit Facility (3)
 
32,200

 
59,800

 
—

 
Scotiabank Credit Facility
 
32,190

 
31,635

 
—

 
NIBC Credit Facility
 
39,817

 
38,796

 
—

 
2016 Credit Facility
 
281,184

 
274,368

 
—

 
DVB Credit Facility
 
88,375

 
88,375

 
—

 
HSH Nordbank Credit Facility (4)
 
—

 
31,125

 
—

 
2017 Credit Facility (5)
 
—

 
—

 
172,000

 
Senior unsecured notes
 
105,500

 
105,500

 
—

 
Convertible Notes
 
348,500

 
348,500

 
—

 
Total
 
$
1,952,079


$
1,974,740

 
$
172,000

 
(1) Activity for the 2011 Credit Facility includes the following repayments in connection with the refinancing of outstanding borrowings thereunder (i) $13.0 million related to STI Sapphire, which was refinanced in January 2017, (ii) $13.3 million related to STI Emerald , which was refinanced in February 2017, (iii) $13.7 million related to STI Duchessa, which was refinanced in February 2017, and (iv) $10.1 million related to STI Onyx, which was refinanced in February 2017.
(2) In February and March 2017, we drew down an aggregate $58.4 million from this credit facility to partially finance the delivery of STI Selatar and upcoming delivery of STI Rambla, LR2 product tankers from SSME. STI Rambla is expected to be delivered before the end of March 2017.

80

Table of Contents

(3) In December 2016, we upsized our existing credit facility with BNP Paribas by $27.6 million. The upsized loan facility was fully drawn in January and February 2017, and the aggregate proceeds of $27.6 million were used to refinance the existing indebtedness on STI Sapphire and STI Emerald , which were previously financed under the 2011 Credit Facility.
(4) In January 2017, we executed a loan facility with HSH Nordbank AG. The facility has a maturity of five years from the agreement date and bears interest at LIBOR plus a margin of 2.50% per annum. This facility was fully drawn in February 2017, and the proceeds were used to refinance the existing indebtedness on STI Duchessa and STI Onyx , which were previously financed under the 2011 Credit Facility.
(5) In March 2017, we executed a senior secured term loan facility with a group of financial institutions led by Macquarie Bank Limited (London Branch) for up to $172.0 million, or the 2017 Credit Facility. The 2017 Credit Facility consists of five tranches; including two commercial tranches of $15.0 million and $25.0 million each, a KEXIM Guaranteed Tranche of $48.0 million, a KEXIM Funded Tranche of $52.0 million, and a GIEK Guaranteed Tranche of $32.0 million. The 2017 Credit Facility is expected to be used to partially finance the purchase of eight MR product tankers that are currently under construction at HMD. Drawdowns are available at an amount equal to the lower of 60% of the contract price and 60% of the fair market value of each respective vessel. The remaining terms and conditions, including financial covenants, are similar to those in our existing credit facilities.
2011 Credit Facility
On May 3, 2011, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DNB Bank ASA, acting through its New York branch, and ABN AMRO Bank N.V., for a senior secured term loan facility of up to $150.0 million.
This credit facility bears interest at LIBOR plus an applicable margin of (i) 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and (ii) 3.50% per annum when our debt to capitalization ratio is greater than 50%. The credit facility matures on May 3, 2017, and the availability under this credit facility expired on January 31, 2014.
Borrowings for each vessel financed under this facility represent a separate tranche, with repayment terms dependent on the age of the vessel at acquisition. Each tranche under the credit facility is repayable in equal quarterly installments, with a lump sum payment at maturity, based on a full repayment of such tranche when the vessel to which it relates is 16 years of age. Our subsidiaries, which may at any time, own one or more of our vessels, act as guarantors under the credit facility.
In July 2016, we amended certain of the financial covenants under the 2011 Credit Facility. These financial covenants require us to maintain:
•
The ratio of net debt to capitalization shall be no greater than 0.60 to 1.00.
•
Consolidated tangible net worth was revised to no less than $1.0 billion plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from January 1, 2016 going forward and 50% of the net proceeds of any new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to interest expense (excluding non-cash items) shall be no less than 2.00 to 1.00. Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends unless our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.
•
Consolidated liquidity (defined as cash and cash equivalents) was revised to less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The aggregate fair market value of the collateral vessels shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.
The outstanding balances at December 31, 2016 and December 31, 2015 were $93.0 million and $101.0 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
Newbuilding Credit Facility
On December 21, 2011, we executed a credit facility agreement with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB for a senior secured term loan facility of up to $92.0 million.
In September 2016, we refinanced all the amounts borrowed under the Newbuilding Credit Facility by repaying an aggregate of $68.8 million. The vessels previously financed under this facility, STI Amber, STI Topaz, STI Ruby, and STI Garnet, were refinanced under our 2016 Credit Facility, which is described below.
This transaction was accounted for as a debt extinguishment. As a result, the Newbuilding Credit Facility was fully repaid and an aggregate of $1.1 million of deferred financing fees was written off during the year ended December 31, 2016 .

81

Table of Contents

2013 Credit Facility  
On July 2, 2013, we entered into a senior secured revolving credit facility and term loan facility with Nordea Bank Finland plc and the other lenders named therein of up to $525.0 million to finance the acquisition of certain vessels for which we previously entered into newbuilding contracts.  
During the year ended December 31, 2016 , we refinanced all amounts outstanding under the 2013 Credit Facility by repaying an aggregate of $414.9 million. Of the total repayments, the borrowings related to 21 vessels were refinanced into other credit facilities and the borrowings related to one vessel, STI Mythos , was repaid as a result of the sale of that vessel. The repayments are summarized as follows:
 
 
 
Repayment amount
 
 
 
 
Collateral
 
(in millions of U.S. dollars)
 
Repayment date
 
1
STI Battery
 
$
18.2

 
January 2016
 
2
STI Mythos
 
17.9

 
March 2016
(1)  
3
STI Osceola
 
18.3

 
April 2016
 
4
STI Rose
 
32.5

 
June 2016
 
5
STI Fontvieille
 
18.4

 
July 2016
 
6
STI Ville
 
18.5

 
July 2016
 
7
STI Opera
 
17.4

 
September 2016
 
8
STI Texas City
 
17.4

 
September 2016
 
9
STI Meraux
 
16.7

 
September 2016
 
10
STI San Antonio
 
16.7

 
September 2016
 
11
STI Virtus
 
17.2

 
September 2016
 
12
STI Venere
 
16.9

 
September 2016
 
13
STI Aqua
 
17.5

 
September 2016
 
14
STI Dama
 
17.5

 
September 2016
 
15
STI Benicia
 
17.2

 
September 2016
 
16
STI Regina
 
17.5

 
September 2016
 
17
STI St. Charles
 
17.2

 
September 2016
 
18
STI Yorkville
 
17.6

 
September 2016
 
19
STI Wembley
 
16.2

 
September 2016
 
20
STI Alexis
 
32.5

 
September 2016
 
21
STI Milwaukee
 
18.4

 
September 2016
 
22
STI Seneca
 
17.2

 
September 2016
 
(1) STI Mythos was sold in March 2016.
All of these transactions were accounted for as debt extinguishments. As a result, the 2013 Credit Facility was fully repaid and an aggregate of $10.4 million of deferred financing fees was written off during the year ended December 31, 2016 .
K-Sure Credit Facility
In February 2014, we entered into a $458.3 million senior secured term loan facility which consists of a $358.3 million tranche with a group of financial institutions that is being 95% covered by Korea Trade Insurance Corporation, or the K-Sure Tranche, and a $100.0 million commercial tranche with a group of financial institutions led by DNB Bank ASA, or the Commercial Tranche. We refer to this credit facility as our K-Sure Credit Facility.
Drawdowns under the K-Sure Credit Facility occurred in connection with the delivery of certain of our newbuilding vessels as specified in the agreement.
Repayments will be made in equal consecutive six month repayment installments in accordance with a 15 year repayment profile under the Commercial Tranche and a 12 year repayment profile under the K-Sure Tranche. Repayments commenced in July 2015 for the K-Sure Tranche and September 2015 for the Commercial Tranche. The Commercial Tranche matures in July 2021, and the K-Sure Tranche matures in January 2027 assuming the Commercial Tranche is refinanced through that date.

82

Table of Contents

Borrowings under the K-Sure tranche bear interest at LIBOR plus an applicable margin of 2.25%. Borrowings under the Commercial Tranche bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75% thereafter until the maturity date in respect of the Commercial Tranche. A commitment fee equal to 40% of the applicable margin was payable on the unused daily portion of the credit facility. 
In July 2016, we amended certain of the financial covenants under the K-Sure Credit Facility. These financial covenants require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth was revised to no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity was revised to not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The minimum threshold for the aggregate fair market value of the vessels as a percentage of the then aggregate principal amount in each facility was also revised and shall at all times be no less than the following:
From
 
To
 
Minimum ratio
01-Jan-16
 
31-Dec-16
 
165%
01-Jan-17
 
31-Dec-17
 
160%
01-Jan-18
 
31-Dec-18
 
155%
01-Jan-19
 
31-Dec-19
 
150%
01-Jan-20
 
Thereafter
 
145%
These amendments were accounted for as a debt modification and accordingly, no deferred financing fees were written off as a result.
During the year ended December 31, 2016 , we made scheduled principal payments of $36.5 million on the K-Sure Credit Facility. Additionally, we made an aggregate payment of $73.5 million as part of the sales of STI Chelsea, STI Lexington, STI Powai, and STI Olivia and an unscheduled repayment of $16.0 million as a result of amendments made to certain financial covenants as described above. We wrote off an aggregate of $2.7 million of deferred financing fees as a result of the vessel sales.
The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $314.0 million and $440.0 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
KEXIM Credit Facility  
In February 2014, we executed a senior secured term loan facility for $429.6 million, or the KEXIM Credit Facility, with a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea, or KEXIM, a statutory juridical entity established under The Export-Import Bank of Korea Act of 1969, as amended, in the Republic of Korea.  This KEXIM Credit Facility includes commitments from KEXIM of $300.6 million, or the KEXIM Tranche, and a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) of $129.0 million, or the Commercial Tranche.
Drawdowns under the KEXIM Credit Facility occurred in connection with the delivery of 18 vessels under our Newbuilding Program as specified in the loan agreement.
In addition to KEXIM’s commitment of up to $300.6 million, KEXIM also provided an optional guarantee for a five year amortizing note of $125.25 million, the proceeds of which reduced the $300.6 million KEXIM Tranche. These notes were issued on July 18, 2014 when Seven and Seven Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands, or the Issuer, completed an offering of $125,250,000 in aggregate principal amount of floating rate guaranteed notes due 2019, or the KEXIM Notes, in a private offering to qualified institutional buyers pursuant to the Securities Act and in offshore transactions complying with Regulation S under the Securities Act. The KEXIM Notes were issued in connection with the KEXIM Tranche and reduced KEXIM's funding obligations and our borrowing costs under the KEXIM Tranche by 1.55% per year. Seven and Seven Ltd. is an unaffiliated company that was incorporated for the purpose of facilitating this transaction and servicing the bonds until maturity.

83

Table of Contents

Payment of 100% of all regularly scheduled installments of principal of, and interest on, the KEXIM Notes are guaranteed by KEXIM. The vessels in the loan are the collateral for the KEXIM Credit Facility, which includes the KEXIM Notes. The KEXIM Notes are currently listed to the Singapore Exchange Securities Trading Limited. The KEXIM Notes are not listed on any other securities exchange, listing authority or quotation system.
The Commercial Tranche matures on the sixth anniversary of the delivery date of the last vessel specified under the loan (January 2021), and the KEXIM Tranche matures on the 12th anniversary of the weighted average delivery date of the vessels specified under the loan assuming the Commercial Tranche is refinanced through that date (September 2026).
Repayments will be made in equal consecutive semi-annual repayment installments in accordance with a 15 year repayment profile under the Commercial Tranche and a 12 year repayment profile under the KEXIM Tranche (which includes the KEXIM Notes). Repayments under the KEXIM Tranche will first be applied to the KEXIM Notes until the maturity of those notes in September 2019 and all subsequent repayments will be applied to the remaining amounts outstanding under KEXIM Tranche until the maturity of that tranche in September 2026 (assuming the Commercial Tranche is refinanced through that date). Repayments commenced in March 2015 for the KEXIM Tranche and in July 2015 for the Commercial Tranche.
Borrowings under the KEXIM Tranche bear interest at LIBOR plus an applicable margin of 3.25%. Borrowings under the Commercial Tranche bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75% thereafter until the maturity date in respect of the Commercial Tranche.
In June 2016, we amended certain of the financial covenants under the KEXIM Credit Facility. These financial covenants require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth was revised to no less than $1.0 billion plus (i) 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of any new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity was revised to not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The minimum threshold for the aggregate fair market value of the vessels as a percentage of the then aggregate principal amount in each facility was revised and shall at all times be no less than the following:
From
 
To
 
Minimum ratio
01-Jan-16
 
31-Dec-16
 
165%
01-Jan-17
 
31-Dec-17
 
160%
01-Jan-18
 
31-Dec-18
 
155%
01-Jan-19
 
31-Dec-19
 
150%
01-Jan-20
 
Thereafter
 
145%

These amendments were accounted for as a debt modification and accordingly, no deferred financing fees were written off as a result.
The amounts outstanding relating to this facility (which includes the KEXIM Notes) as of December 31, 2016 and 2015 were $366.6 million and $400.3 million respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .

84

Table of Contents

ABN AMRO Credit Facility
In July 2015, we executed a senior secured term loan facility with ABN AMRO Bank N.V. and DVB Bank SE for up to $142.2 million. This facility was fully drawn in 2015 to partially finance the purchases of STI Savile Row, STI Kingsway and STI Carnaby and to refinance the existing indebtedness on STI Spiga. We refer to this credit facility as our ABN AMRO Credit Facility.
Repayments under the ABN AMRO Credit Facility will be made in equal consecutive quarterly repayment installments in accordance with a 15 year repayment profile. Repayments commenced three months after the drawdown date of each vessel. Each tranche matures on the fifth anniversary of the initial drawdown date and a balloon installment payment is due on the maturity date of each tranche. Borrowings under the ABN AMRO Credit Facility bear interest at LIBOR plus an applicable margin of 2.15%.
Our ABN AMRO Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
During the year ended December 31, 2016 , we made scheduled principal payments of $9.5 million and an unscheduled prepayment of $4.0 million on this credit facility. The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $126.4 million and $139.8 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
ING Credit Facility
In June 2015, we executed a senior secured term loan facility with ING Bank N.V., London Branch for a credit facility of up to $52.0 million. In September 2015, we amended and restated the facility to increase the borrowing capacity to $87.0 million, and in March 2016, we amended and restated the facility to further increase the borrowing capacity to $132.5 million.
We made the following drawdowns from our ING Credit Facility during the year ended December 31, 2016 :
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
26.0

 
March 2016
 
STI Grace
 
26.5

 
April 2016
 
STI Lombard
 
17.1

 
April 2016
 
STI Osceola
(1)  
26.0

 
June 2016
 
STI Jermyn
 

(1) In April 2016, we refinanced the amount borrowed relating to STI Osceola by repaying $18.3 million on our 2013 Credit Facility and drawing down $17.1 million from our ING Credit Facility.
Repayments on all borrowings will be made in equal consecutive quarterly installments, in accordance with a 15 year repayment profile with the first installment falling due three calendar months after the drawdown date and a balloon installment payment, which is due on the maturity dates of March 4, 2021 for STI Lombard and STI Osceola and June 24, 2022 for STI Grace, STI Jermyn, STI Black Hawk and STI Pontiac .
Borrowings under the ING Credit Facility bear interest at LIBOR plus a margin of 1.95% per annum. A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the credit facility.
Our ING Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization not more than 0.60 to 1:00.

85

Table of Contents

•
Consolidated tangible net worth of not less than $677.3 million plus (a) 25% of the positive consolidated net income for each fiscal quarter commencing on or after October 1, 2013 and (b) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount of the loans under the credit facility.
The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $124.3 million and $34.7 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
Credit Suisse Credit Facility
In October 2015, we executed a senior secured term loan facility with Credit Suisse AG, Switzerland. The proceeds of this facility of $58.4 million were used to finance a portion of the purchase price of STI Selatar and STI Rambla . These vessels are owned individually by certain of our subsidiaries, who together are the borrowers under this credit facility, and Scorpio Tankers Inc. is the guarantor. We refer to this facility as our Credit Suisse Credit Facility.
Repayments will be made in accordance with a 15 year repayment profile and will commence three calendar months after the drawdown date in respect of each tranche with subsequent installments falling due at consecutive intervals of three calendar months thereafter. A balloon payment is due on the maturity date of five years from the date of delivery of each vessel.
The facility will bear interest at LIBOR plus a margin of 2.40% per annum and a commitment fee equal to 1% of the amounts available was payable on the unused daily portion of this facility.
Our Credit Suisse Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount of the loans under the credit facility.
There were no amounts borrowed as of December 31, 2016 . We were in compliance with the financial covenants relating to this facility as of December 31, 2016. In February and March 2017, we drew down a total of $29.4 million and $29.0 million, respectively, from this facility to partially finance the deliveries of STI Selatar in February 2017 and STI Rambla which is expected to be delivered before the end of March 2017.
BNP Paribas Credit Facility
In December 2015, we executed a senior secured term loan facility with BNP Paribas SA for up to $34.5 million, and in December 2016, we amended and restated the facility to increase the borrowing capacity by a further $27.6 million to $62.1 million. These vessels are owned individually by certain of our subsidiaries, who together are the borrowers under this credit facility, and Scorpio Tankers Inc. is the guarantor. We refer to this facility as our BNP Paribas Credit Facility.
Repayments on all borrowings will be made in ten equal consecutive semi-annual installments of $0.6 million per tranche, in accordance with a 15 year repayment profile with the first installment falling due on June 15, 2017 and subsequent installments falling due at consecutive intervals of six calendar months thereafter. A final balloon payment of $38.0 million is due on the maturity date of December 15, 2021. The original facility of $34.5 million bears interest at LIBOR plus a margin of 1.95% per annum, and the upsized facility of $27.6 million bears interest at LIBOR plus a margin of 2.30% per annum. A commitment fee equal to 40% of the applicable margin was payable on the unused daily portion of the credit facility.
Our BNP Paribas Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

86

Table of Contents

•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
We made the following drawdown from our BNP Paribas Credit Facility during the year ended December 31, 2016 :
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
17.3

 
February 2016
 
STI Battery
(1)  
    (1) In February 2016, we refinanced the amount borrowed relating to STI Battery by repaying $18.2 million on our 2013 Credit Facility and drawing down $17.3 million from our BNP Paribas Credit Facility.
The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $32.2 million and $17.3 million respectively, and there was $27.6 million available to draw as of that date. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
Furthermore, in January and February 2017, we refinanced the outstanding indebtedness related to STI Sapphire and STI Emerald by repaying an aggregate of $26.3 million on our 2011 Credit Facility and drawing down $27.6 million from our BNP Paribas Credit Facility.
Scotiabank Credit Facility
In June 2016, we executed a senior secured term loan facility with Scotiabank Europe plc. The loan facility was fully drawn in June 2016, and the proceeds of $33.3 million were used to refinance the existing indebtedness on STI Rose, which was previously financed under the 2013 Credit Facility . We refer to this facility as our Scotiabank Credit Facility.
Repayments on all borrowings will be made in 12 equal consecutive quarterly installments of $0.6 million each with the first installment paid on September 7, 2016 and subsequent installments falling due at consecutive intervals of three calendar months thereafter. A final balloon payment is due on the maturity date of June 7, 2019. The facility bears interest at LIBOR plus a margin of 1.50% per annum, and a commitment fee equal to 35% of the applicable margin was payable on the unused daily portion of the credit facility.
Our Scotiabank Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times be no less than 125% of the then aggregate outstanding principal amount of the loans under the credit facility.
As of December 31, 2016 , the outstanding balance was $32.2 million , and we were in compliance with the financial covenants relating to this facility as of that date.
NIBC Credit Facility
In June 2016, we executed a senior secured term loan facility with NIBC Bank N.V. This facility was fully drawn in July 2016, and the aggregate proceeds of $40.8 million were used to refinance the existing indebtedness on STI Ville and STI Fontvieille , which were previously financed under our 2013 Credit Facility. We refer to this facility as our NIBC Credit Facility.

87

Table of Contents

The facility is separated into two tranches (one per vessel), and the repayment of the tranche relating to the respective vessel will commence three calendar months after the respective drawdown date. Repayments will be made in equal, consecutive quarterly installments of $0.5 million per tranche through July 2018 and $0.4 million per tranche for each quarter thereafter with a final balloon payment due at the maturity date of June 2021. The facility bears interest at LIBOR plus a margin of 2.50% per annum. A commitment fee equal to 35% of the applicable margin was payable on the unused daily portion of the credit facility.
Our NIBC Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 130% from the first drawdown date and ending on the second anniversary of the first drawdown date; 135% from the second anniversary of the first drawdown date and expiring on the fourth anniversary of the first drawdown date; and 140% at all times thereafter.     
We made the following drawdowns from our NIBC Credit Facility during the year ended December 31, 2016 :
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
20.4

 
July 2016
 
STI Fontvieille
(1)  
20.4

 
July 2016
 
STI Ville
(1)  
(1) In July 2016, we refinanced the amounts borrowed relating to STI Fontvieille and STI Ville by repaying an aggregate of $36.9 million on our 2013 Credit Facility and drawing down $40.8 million from our NIBC Credit Facility.
As of December 31, 2016 , the outstanding balance was $39.8 million , and we were in compliance with the financial covenants relating to this facility as of that date.
2016 Credit Facility
In August 2016, we executed a senior secured loan facility with ABN AMRO Bank N.V., Nordea Bank Finland plc, acting through its New York branch, and Skandinaviska Enskilda Banken AB. The loan facility was fully drawn in September 2016, and the aggregate proceeds of $288.0 million were used to refinance the existing indebtedness on 16 MR product tankers, which were previously financed under the 2013 Credit Facility ( STI Opera, STI Texas City, STI Meraux, STI San Antonio, STI Virtus, STI Venere, STI Aqua, STI Dama, STI Benicia, STI Regina, STI St. Charles, and STI Yorkville ) and Newbuilding Credit Facility ( STI Amber, STI Topaz, STI Ruby and STI Garnet). This credit facility is comprised of a term loan up to $192.0 million and a revolver up to $96.0 million. We refer to this credit facility as our 2016 Credit Facility.
Repayments on the term loan facility will be made in equal, consecutive quarterly installments of $6.8 million through September 2018 and $6.0 million for each quarter thereafter with a final balloon payment due at the maturity date of September 2021. All amounts borrowed under the revolving credit facility are due at the maturity date of September 2021. The facility bears interest at LIBOR plus a margin of 2.50% per annum, and a commitment fee equal to 40% of the applicable margin was payable on the unused daily portion of the credit facility.
Our 2016 Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.

88

Table of Contents

•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
We made the following drawdowns from our 2016 Credit Facility during the year ended December 31, 2016 :

Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
18.5

 
September 2016
 
STI Opera
(1)  
18.5

 
September 2016
 
STI Texas City
(1)  
18.5

 
September 2016
 
STI Meraux
(1)  
18.5

 
September 2016
 
STI San Antonio
(1)  
18.5

 
September 2016
 
STI Virtus
(1)  
18.5

 
September 2016
 
STI Venere
(1)  
18.5

 
September 2016
 
STI Aqua
(1)  
18.5

 
September 2016
 
STI Dama
(1)  
18.5

 
September 2016
 
STI Benicia
(1)  
18.5

 
September 2016
 
STI Regina
(1)  
18.5

 
September 2016
 
STI St. Charles
(1)  
18.5

 
September 2016
 
STI Yorkville
(1)  
16.7

 
September 2016
 
STI Amber
(2)  
16.7

 
September 2016
 
STI Topaz
(2)  
16.7

 
September 2016
 
STI Ruby
(2)  
16.7

 
September 2016
 
STI Garnet
(2)  

(1) In September 2016, we refinanced the amounts borrowed on the 12 MR product tankers listed above by repaying an aggregate of $206.8 million on our 2013 Credit Facility and drawing down $221.4 million from our 2016 Credit Facility.
(2) In September 2016, we refinanced the amounts borrowed on the four MR product tankers listed above by repaying an aggregate of $68.8 million on our Newbuilding Credit Facility and drawing down $66.6 million from our 2016 Credit Facility.
As of December 31, 2016 , the outstanding balance was $281.2 million , and we were in compliance with the financial covenants relating to this facility as of that date.
DVB Credit Facility
In September 2016, we executed a senior secured term loan facility with DVB Bank SE. The loan facility was fully drawn in September 2016, and the proceeds of $90.0 million were used to refinance the existing indebtedness on four product tankers ( STI Alexis, STI Milwaukee, STI Seneca, and STI Wembley ), which were previously financed under the 2013 Credit Facility. We refer to this credit facility as our DVB Credit Facility.
The facility will be repaid in equal, quarterly principal repayments of $1.6 million, has a final maturity of August 2017, and bears interest at LIBOR plus a margin of 1.60% per annum.
Our DVB Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.

89

Table of Contents

•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
We made the following drawdowns from our DVB Credit Facility during the year ended December 31, 2016 :
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
18.5

 
September 2016
 
STI Wembley
(1)  
19.5

 
September 2016
 
STI Milwaukee
(1)  
20.5

 
September 2016
 
STI Seneca
(1)  
31.5

 
September 2016
 
STI Alexis
(1)  
(1) In September 2016, we refinanced the amounts borrowed on the four product tankers listed above by repaying an aggregate of $84.3 million into our 2013 Credit Facility and drawing down $90.0 million from our DVB Credit Facility.
As of December 31, 2016 , the outstanding balance was $88.4 million , and we were in compliance with the financial covenants relating to this facility as of that date.
2017 Credit Facility
In March 2017, we executed a senior secured term loan facility with a group of financial institutions led by Macquarie Bank Limited (London Branch) for up to $172.0 million, or the 2017 Credit Facility. The 2017 Credit Facility consists of five tranches; including two commercial tranches of $15.0 million and $25.0 million, a KEXIM Guaranteed Tranche of $48.0 million, a KEXIM Funded Tranche of $52.0 million, and a GIEK Guaranteed Tranche of $32.0 million.
The 2017 Credit Facility is expected to be used to partially finance the purchase of eight MR product tankers that are currently under construction at HMD. Drawdowns will be available at an amount equal to the lower of 60% of the contract price and 60% of the fair market value of each respective vessel. Other key terms are as follows:
•
The first commercial tranche of $15.0 million has a final maturity of six years from the drawdown date of each vessel, bears interest at LIBOR plus a margin of 2.25% per annum, and has a 15 year repayment profile.
•
The second commercial tranche of $25.0 million has a final maturity of nine years from the drawdown date of each vessel (assuming KEXIM or GIEK have not exercised their option to call for prepayment of the KEXIM and GIEK funded and guaranteed tranches by the date falling two months prior to the maturity of the first commercial tranche and in the event that the first commercial tranche has not been extended), bears interest at LIBOR plus a margin of 2.25% per annum, and has a 15 year repayment profile.
•
The KEXIM Funded Tranche and GIEK Guaranteed Tranche have a final maturity of 12 years from the drawdown date of each vessel (assuming the commercial tranches are refinanced through that date), bear interest at LIBOR plus a margin of 2.15% per annum, and have a 12 year repayment profile.
•
The KEXIM Guaranteed Tranche has a final maturity of 12 years from the drawdown date of each vessel (assuming the commercial tranches are refinanced through that date), bears interest at LIBOR plus a margin of 1.60% per annum, and has a 12 year repayment profile.
The credit facility contains financial and restrictive covenants, which require us to, among other things, comply with certain financial tests (described below); deliver quarterly and annual financial statements and annual projections; maintain adequate insurances; comply with laws (including environmental laws and ERISA); maintain flag and class of our vessels. Other such covenants may, among other things, restrict consolidations, mergers or sales of our assets; require us to obtain lender approval on changes in our vessel manager; limit our ability to place liens on our assets; limit our ability to incur additional indebtedness; prohibit us from paying dividends if there is a covenant breach under the loan or an event of default has occurred or would occur as a result of payment of such dividend; prohibit our transactions with affiliates.
Our 2017 Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.

90

Table of Contents

•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and $250,000 each time chartered-in vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount of the loans under the credit facility.
HSH Nordbank Credit Facility
In January 2017, we entered into a senior secured credit facility agreement with HSH Nordbank AG for $31.1 million, or the HSH Nordbank Credit Facility. In February 2017, we refinanced the outstanding indebtedness related to STI Duchessa and STI Onyx by repaying an aggregate of $23.7 million on our 2011 Credit Facility and drawing down an aggregate of $31.1 million from this facility as follows:
Drawdown amount
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
$
16.5

 
February 2017
 
STI Duchessa
14.6

 
February 2017
 
STI Onyx
Repayments on all borrowings under the HSH Nordbank Credit Facility are scheduled to be made in 20 consecutive quarterly installments. The first eight repayment installments shall be $745,669 each and the next 12 repayment installments shall be $648,408 each, the last of which shall be payable together with an additional balloon installment equal to the then outstanding balance of the loan. The facility has a final maturity of five years from the first drawdown date, and bears interest at LIBOR plus a margin of 2.50% per annum.
The credit facility contains financial and restrictive covenants, which require us to, among other things, comply with certain financial tests (described below); deliver quarterly and annual financial statements and annual projections; maintain adequate insurances; comply with laws (including environmental laws and ERISA); maintain flag and class of our vessels. Other such covenants may, among other things, restrict consolidations, mergers or sales of our assets; require us to obtain lender approval on changes in our vessel manager; limit our ability to place liens on our assets; limit our ability to incur additional indebtedness; prohibit us from paying dividends if there is a covenant breach under the loan or an event of default has occurred or would occur as a result of payment of such dividend; prohibit our transactions with affiliates.
Our HSH Nordbank Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and $250,000 each time chartered-in vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
Unsecured Senior Notes Due 2020
On May 12, 2014, we issued $50.0 million in aggregate principal amount of 6.75% Senior Notes due May 2020, or our Senior Notes Due 2020, and on June 9, 2014, we issued an additional $3.75 million aggregate principal amount of Senior Notes Due 2020 when the underwriters partially exercised their option to purchase additional Senior Notes Due 2020 on the same terms and conditions. The net proceeds from the issuance of the Senior Notes Due 2020 were $51.8 million after deducting the underwriters’ discounts, commissions and offering expenses.
The Senior Notes Due 2020 bear interest at a coupon rate of 6.75% per year, payable quarterly in arrears on the 15th day of February, May, August and November of each year. Coupon payments commenced on August 15, 2014. The Senior Notes Due 2020 are redeemable at our option, in whole or in part, at any time on or after May 15, 2017 at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The Senior Notes Due 2020 are our senior unsecured obligations and rank equally with all of our existing and future senior unsecured and unsubordinated debt and are effectively subordinated to our existing and future secured debt, to the extent of the value of the assets securing such debt, and will be structurally subordinated to all existing and future debt and other liabilities of our subsidiaries. No sinking fund is provided for the Senior Notes Due 2020. The Senior Notes Due 2020 were issued in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof and are listed on the NYSE under the symbol “SBNA.”

91

Table of Contents

The Senior Notes Due 2020 require us to comply with certain covenants, including financial covenants; restrictions on consolidations, mergers or sales of assets and prohibitions on paying dividends or returning capital to equity holders if a covenant breach or an event of default has occurred or would occur as a result of such payment. If we undergo a change of control, holders may require us to repurchase for cash all or any portion of their notes at a change of control repurchase price equal to 101% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the change of control purchase date.
The financial covenants under our Senior Notes Due 2020 include:
•
Net borrowings shall not equal or exceed 70% of total assets.
•
Net worth shall always exceed $650.0 million.
The outstanding balance was $53.75 million as of December 31, 2016 and December 31, 2015, and we were in compliance with the financial covenants relating to the Senior Notes Due 2020 as of that date.
Convertible Senior Notes Due 2019
In June 2014, we issued $360.0 million in aggregate principal amount of convertible senior notes due 2019, or the Convertible Notes, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. This amount includes the full exercise of the initial purchasers’ option to purchase an additional $60.0 million in aggregate principal amount of the Convertible Notes in connection with the offering. The net proceeds we received from the issuance of the Convertible Notes after the exercise of the initial purchasers’ option to purchase additional Convertible Notes were $349.0 million after deducting the initial purchasers’ discounts, commissions and offering expenses of $11.0 million. As part of the transaction, we used a portion of the net proceeds to repurchase $95.0 million of our common stock, or 10,127,600 shares, at $9.38 per share in a privately negotiated transaction.
The Convertible Notes bear interest at a coupon rate of 2.375% per annum, and are payable semi-annually in arrears on January 1 and July 1 of each year beginning on January 1, 2015. The Convertible Notes will mature on July 1, 2019, unless earlier converted, redeemed or repurchased. At issuance, the Convertible Notes were convertible in certain circumstances and during certain periods at an initial conversion rate of 82.0075 shares of common stock per $1,000 (which represents an initial conversion price of approximately $12.19 per share of common stock), subject to adjustment in certain circumstances as set forth in the indenture governing the Convertible Notes. Adjustments were made during years ended December 31, 2016 and 2015 to the initial conversion rate as a result of the issuance of dividends to our common stockholders. The table below details the dividends declared from the issuance of the Convertible Notes through March 15, 2017 and their corresponding effect to the conversion rate of the Convertible Notes. The conversion rate as of December 31, 2016 was 97.7039 .
Record Date
 
Dividends per share
 
Share Adjusted Conversion Rate  (1)
August 22, 2014
 
$
0.100

 
82.8556
November 25, 2014
 
$
0.120

 
84.0184
March 13, 2015
 
$
0.120

 
85.2216
May 21, 2015
 
$
0.125

 
86.3738
August 14, 2015
 
$
0.125

 
87.4349
November 24, 2015
 
$
0.125

 
88.6790
March 10, 2016
 
$
0.125

 
90.5311
May 11, 2016
 
$
0.125

 
92.5323
September 15, 2016
 
$
0.125

 
94.9345
November 25, 2016
 
$
0.125

 
97.7039
February 23, 2017
 
$
0.010

 
97.9316
(1)  Per $1,000 principal amount.
Holders may convert their notes at their option at any time prior to the close of business on the business day immediately preceding January 1, 2019 only under the following circumstances:
•
during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 15 trading days (whether or not consecutive) during a period of 25 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

92

Table of Contents

•
during the five business day period after any five consecutive trading day period, or the Measurement Period, in which the trading price (as defined below) per $1,000 principal amount of Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
•
if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
•
upon the occurrence of specified corporate events as defined in the indenture (e.g. consolidations, mergers, a binding share exchange or the transfer or lease of all or substantially all of our assets).
We may not redeem the Convertible Notes prior to July 6, 2017. We may redeem for cash all or any portion of the notes, at our option, on or after July 6, 2017 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 15 trading days (whether or not consecutive) during any 25 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes.
The Convertible Notes require us to comply with certain covenants such as restrictions on consolidations, mergers or sales of assets. Additionally, if we undergo a fundamental change, holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
We determined the initial carrying value of the liability component of the Convertible Notes to be $298.7 million based on the fair value of a similar liability that does not have any associated conversion feature. We used our Senior Notes Due 2020 issued in May 2014 as the basis for this determination. The difference between the fair value of the liability component and the face value of the Convertible Notes is being amortized over the term of the Convertible Notes under the effective interest method and recorded as part of financial expenses. The residual value of $61.3 million (the conversion feature) was recorded to additional paid-in capital.
In July 2015, we repurchased $1.5 million face value of our Convertible Notes at an average price of $1,088.10 per $1,000 principal amount. As a result of this transaction, we reduced the liability and equity components of the Convertible Notes by $1.3 million and $0.4 million, respectively and recorded a gain of $46,273. We also wrote off $30,880 of deferred financing fees as a result of this transaction.
In March 2016, we repurchased $5.0 million face value of our Convertible Notes at an average price of $831.05 per $1,000 principal amount, or $4.2 million. As a result of this transaction, we reduced the liability and equity components of the Convertible Notes by $4.4 million and $0.3 million, respectively and we recorded a gain of $0.6 million, which is recorded within financial income of the consolidated statement of income or loss. We also wrote off $0.1 million of deferred financing fees as a result of this transaction.
In May 2016, we repurchased $5.0 million face value of our Convertible Notes at an average price of $847.50 per $1,000 principal amount, or $4.2 million. As a result of this transaction, we reduced the liability and equity components of the Convertible Notes by $4.4 million and $0.2 million, respectively and we recorded a gain of $0.4 million, which is recorded within financial income of the consolidated statement of income or loss. We also wrote off $0.1 million of deferred financing fees as a result of this transaction.
The carrying values of the liability component of the Convertible Notes as of December 31, 2016 and 2015, were $316.5 million and $313.8 million, respectively. We incurred $8.3 million of coupon interest and $11.6 million of non-cash accretion of our Convertible Notes during the year ended December 31, 2016 . We incurred $8.5 million of coupon interest and $11.1 million of non-cash accretion of our Convertible Notes during the year ended December 31, 2015.
We were in compliance with the covenants related to the Convertible Notes as of December 31, 2016 .

93

Table of Contents

Unsecured Senior Notes Due 2017
On October 31, 2014, we issued $45.0 million aggregate principal amount of 7.50% Unsecured Senior Notes due October 15, 2017, or the Senior Notes Due 2017, and on November 17, 2014, we issued an additional $6.75 million aggregate principal amount of Senior Notes Due 2017 when the underwriters exercised their option to purchase additional Senior Notes Due 2017 on the same terms and conditions. The net proceeds from the issuance of the Senior Notes Due 2017 were approximately $49.9 million after deducting the underwriters’ discounts, commissions and offering expenses.
All terms mentioned are defined in the indenture.
The Senior Notes Due 2017 bear interest at a coupon rate of 7.50% per year, payable quarterly in arrears on the 15th day of January, April, July and October of each year, commencing on January 15, 2015.
The Senior Notes Due 2017 are our senior unsecured obligations and rank equally with all of our existing and future senior unsecured and unsubordinated debt. The Senior Notes Due 2017 are effectively subordinated to our existing and future secured debt, to the extent of the value of the assets securing such debt, and structurally subordinated to all existing and future debt and other liabilities of our subsidiaries. The Senior Notes Due 2017 were issued in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof and are listed on the NYSE under the symbol “SBNB.”
The Senior Notes Due 2017 require us to comply with certain covenants, including financial covenants; restrictions on consolidations, mergers or sales of assets and prohibitions on paying dividends or returning capital to equity holders if a covenant breach or an event of default has occurred or would occur as a result of such payment. If we undergo a change of control, holders may require us to repurchase for cash all or any portion of their notes at a change of control repurchase price equal to 101% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the change of control purchase date.
The financial covenants include:
•
Net borrowings shall not equal or exceed 70% of total assets.
•
Net worth shall always exceed $650.0 million.
The outstanding balance was $51.75 million as of December 31, 2016 and December 31, 2015 and we were in compliance with the financial covenants as of those dates.
Finance Lease Accounting
In July 2015, we entered into an agreement with an unrelated third-party to purchase STI Lombard , an LR2 product tanker, which was under construction at DSME, for approximately $59.0 million. As part of this agreement, we agreed to make a deposit of $5.9 million and to bareboat charter-in the vessel for up to nine months, at $10,000 per day. STI Lombard was delivered to us under the bareboat agreement in August 2015. This transaction was accounted for as a finance lease as of December 31, 2015 and the finance lease liability was $53.4 million at that date. In April 2016, we took ownership of this vessel at the conclusion of the bareboat agreement and paid the remaining 90% of the purchase price, or $53.1 million, as part of this transaction. Accordingly, all amounts due under the finance lease were settled at that date.
Capital Expenditures
Vessel Acquisitions and Dispositions
Newbuilding vessel acquisitions
In March and June 2016, we took delivery of two LR2 product tankers under our Newbuilding Program, STI Grace and STI Jermyn , respectively, and reclassified $106.7 million, in aggregate, from “Vessels under construction” to “Vessels”.
In April 2016, we took ownership of STI Lombard, an LR2 product tanker that was previously bareboat chartered-in, and paid the remaining 90% of the purchase price, or $53.1 million, upon delivery. We drew down $26.5 million from our ING Credit Facility to partially finance this transaction.

94

Table of Contents

As of March 15, 2017, we had nine newbuilding vessels under construction, of which eight MRs are expected to be delivered throughout the remainder of 2017 and the first quarter of 2018 and one LR2 is expected to be delivered in the first quarter of 2017. These nine newbuilding vessels under construction have an aggregate purchase price of $338.5 million . Of this amount, $109.6 million has been paid as of March 15, 2017.
The following table is a timeline of future expected payments and dates for our vessels under construction as of as of March 15, 2017*
 
In millions of U.S. Dollars
Q1 2017 - installment payments made
$
29.2

Q1 2017 - remaining installment payments
52.7

Q2 2017
35.9

Q3 2017
68.2

Q4 2017
50.5

Q1 2018
21.6

 
 
Total
$
258.1

* These are estimates only and are subject to change as construction progresses.
Sale of vessels
In February 2016, we reached an agreement with an unrelated third party to sell five 2014 built MR product tankers; STI Lexington, STI Mythos, STI Chelsea, STI Olivia,  and  STI Powai . Two vessels were sold in March 2016, one vessel was sold in April 2016 and two vessels were sold in May 2016. The aggregate net proceeds were $158.2 million and we recorded an aggregate loss of $2.1 million as part of these sales.
As part of these sales of STI Lexington, STI Chelsea, STI Olivia  and  STI Powai , we made an aggregate repayment of $73.5 million on our K-Sure Credit Facility, and as part of the sale of STI Mythos, we repaid $17.9 million on our 2013 Credit Facility. We also wrote off an aggregate of $3.2 million of deferred financing fees as part of these repayments.
In December 2016, we signed a non-binding term sheet with an unaffiliated third party to sell and leaseback, on a bareboat basis, three 2013 built MR product tankers. The selling price is $29.0 million per vessel and we expect to bareboat-in the vessels for a period of up to eight years for $8,800 per day per vessel. Upon completion, our liquidity is expected to increase by approximately $29.0 million after the repayment of debt. We expect to have the option to repurchase these vessels beginning at the end of the fifth year of the agreement through the end of the eighth year of the agreement. This transaction is subject customary conditions precedent and the execution of definitive documentation.
Drydock
During 2015 and 2016, none of our vessels were drydocked.
As our fleet matures and expands, our drydock expenses will likely increase. Ongoing costs for compliance with environmental regulations and society classification survey costs are a component of our vessel operating costs. With the exception of the recent ratification of the ballast water treatment convention as described in "Item 3. Key Information - D. Risk Factors", we are not currently aware of any regulatory changes or environmental liabilities that we anticipate will have a material impact on our results of operations or financial condition.
C. Research and Development, Patents and Licenses, Etc.
Not applicable.
D. Trend Information
See “Item 4. Information on the Company—B. Business Overview—The International Oil Tanker Shipping Industry.”
E. Off-Balance Sheet Arrangements
As of December 31, 2016 , we were committed to make charter-hire payments to third parties for certain chartered-in vessels. These arrangements are accounted for as operating leases. Additionally, we are committed to make payments on our newbuilding vessel orders. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources” for further information.

95

Table of Contents

F. Tabular Disclosure of Contractual Obligations
The following table sets forth our total contractual obligations at December 31, 2016 :
 
Less than
 
1 to 3
 
3 to 5
 
More than
In thousands of U.S. dollars
1 year
 
years
 
years
 
5 years
Secured bank loans (1)
$
305,562

 
$
268,434

 
$
870,874

 
$
53,208

Estimated interest payments on secured bank loans (2)
56,215

 
97,396

 
58,758

 
1,122

Bank loans - commitment fees (3)
200

 
—

 
—

 
—

Time and bareboat charter-in commitments (4)
57,018

 
30,933

 
—

 
—

Technical management fees (5)
10,727

 
—

 
—

 
—

Commercial management fees (6)
10,149

 
—

 
—

 
—

Newbuilding installments (7)
236,483

 
21,638

 
—

 
—

Convertible Notes (8)
—

 
348,500

 
—

 
—

Convertible Notes - estimated interest payments (9)
8,277

 
16,554

 
—

 
—

Senior unsecured notes (10)
51,750

 
—

 
53,750

 
—

Senior unsecured notes - estimated interest payments (11)
7,509

 
7,256

 
1,784

 
—

Total
$
743,890

 
$
790,711

 
$
985,166

 
$
54,330


(1)
Represents principal payments due on our secured credit facilities, as described above in "Item 5B. Liquidity and Capital Resources - Long-Term Debt Obligations and Credit Arrangements". These payments are based on our outstanding borrowings as of December 31, 2016 .
(2)
Represents estimated interest payments on our secured credit facilities. These payments were estimated by taking into consideration: (i) the margin on each credit facility and (ii) the forward interest rate curve calculated from interest swap rates, as published by a third party, as of December 31, 2016 .
The forward curve was calculated as follows as of December 31, 2016 :     
Year 1
1.19
%
 
Year 2
1.75
%
 
Year 3
2.15
%
 
Year 4
2.34
%
 
Year 5
2.44
%
 
Year 6
2.51
%
(1)
Year 7
2.69
%
 

(1)
Third party published six year interest swap rates were unavailable. As such, we interpolated the year six forward rate using an average of the five and seven year published swap rates from the third party.

96

Table of Contents

The margins on each credit facility that have amounts outstanding at December 31, 2016 are as follows:
Facility
Margin
 
2011 Credit Facility
3.50
%
 
KEXIM
3.25
%
 
KEXIM Commercial Tranche
3.25
%
(1)  
KEXIM Guarantee Notes
1.70
%
 
K-Sure
2.25
%
 
K-Sure Commercial Tranche
3.25
%
(2)  
ABN AMRO Credit Facility
2.15
%
 
ING Credit Facility
1.95
%
 
BNP Paribas Credit Facility
1.95
%
 
Scotiabank Credit Facility
1.50
%
 
NIBC Credit Facility
2.50
%
 
2016 Credit Facility
2.50
%
 
DVB Credit Facility
1.60
%
 

(1)
Borrowings under the KEXIM Commercial Tranche bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75% thereafter until the maturity date.
(2)  
Borrowings under the K-Sure Commercial Tranche bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75% thereafter until the maturity date in respect of the Commercial Tranche.
Interest was then estimated using the above mentioned rates multiplied by the amounts outstanding under our various credit facilities using the balance as of December 31, 2016 and taking into consideration the scheduled amortization of such facilities going forward until their respective maturities.
(3)
As of December 31, 2016 , a commitment fee equal to 40% of the applicable margin was payable on the unused daily portion of our BNP Paribas Credit Facility (which was upsized in December 2016) and a commitment fee equal to 1% of the amounts available was payable on the unused daily portion of our Credit Suisse Credit Facility. Our 2011 Credit Facility, KEXIM Credit Facility, K-Sure Credit Facility ING Credit Facility, ABN AMRO Credit Facility, 2016 Credit Facility, Scotiabank Credit Facility, NIBC Credit Facility and DVB Credit Facility were fully drawn as of December 31, 2016 .
(4)
Represents amounts due under our time and bareboat charter-in agreements as of December 31, 2016 .
(5)
We pay our technical manager, SSM, $685 per day per owned vessel. These fees are subject to a notice period of three months and a payment equal to three months of management fees which would be due and payable upon the sale of a vessel, so long as such termination does not amount to a change of control of the Company, including a sale of all or substantially all vessels, in which case, a payment equal to 24 months of management fees will apply.
(6)
We pay our commercial manager, SCM, $250 per vessel per day for LR2 vessels, $300 per vessel per day for LR1 vessels, $325 per vessel per day for MR and Handymax vessels plus a 1.50% commission on gross revenue for vessels that are in one of the Scorpio Group Pools. When the vessels are not in the pools, SCM charges fees of $250 per vessel per day for the LR1 and LR2 vessels, $300 per vessel per day for the Handymax and MR vessels plus a 1.25% commission on gross revenue. These fees are subject to a notice period of three months and a payment equal to three months of management fees which would be due and payable upon the sale of a vessel, so long as such termination does not amount to a change of control of the Company, including a sale of all or substantially all vessels, in which case, a payment equal to 24 months of management fees will apply.
(7)
Represents obligations under our agreements with HMD for the construction of eight MRs and with SSME for the construction of two LR2s under our Newbuilding Program as of December 31, 2016 .
(8)
Represents the principal due at maturity on our Convertible Notes as of December 31, 2016 .
(9)
Represents estimated coupon interest payments on our Convertible Notes. The Convertible Notes bear interest at a coupon rate of 2.375% per annum and mature in July 2019.

97

Table of Contents

(10)
Represents the principal due at maturity on our Senior Unsecured Notes Due 2020 and our Senior Unsecured Notes Due 2017 as of December 31, 2016 .
(11)
Represents estimated coupon interest payments on our Senior Unsecured Notes Due 2020 and our Senior Unsecured Notes Due 2017 as of December 31, 2016 . These notes bear interest at coupon rates of 6.75% and 7.50%, respectively.

G. Safe Harbor
See “Cautionary Statement Regarding Forward-Looking Statements” at the beginning of this annual report.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Set forth below are the names, ages and positions of our directors and executive officers as of the date of this annual report. Our board of directors is elected annually, and each director elected holds office for a three-year term or until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office. The terms of our Class I directors expire at the 2017 annual meeting of shareholders, the terms of our Class II directors expire at the 2018 annual meeting of shareholders, and the terms of our Class III directors expire at the 2019 annual meeting of shareholders. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected. The business address for each director and executive officer is the address of our principal executive office which is Scorpio Tankers Inc., 9, Boulevard Charles III, Monaco 98000.
Certain of our officers participate in business activities not associated with us. As a result, they may devote less time to us than if they were not engaged in other business activities and may owe fiduciary duties to the shareholders of both us as well as shareholders of other companies which they may be affiliated, including other Scorpio Group companies. This may create conflicts of interest in matters involving or affecting us and our customers and it is not certain that any of these conflicts of interest will be resolved in our favor. While there will be no formal requirements or guidelines for the allocation of their time between our business and the business of members of the Scorpio Group, their performance of their duties will be subject to the ongoing oversight of our board of directors.
Name
 
Age
 
Position
Emanuele A. Lauro
 
38
 
Chairman, Class I Director, and Chief Executive Officer
Robert Bugbee
 
56
 
President and Class II Director
Cameron Mackey
 
48
 
Chief Operating Officer and Class III Director
Brian Lee
 
50
 
Chief Financial Officer
Filippo Lauro
 
40
 
Vice President
Luca Forgione
 
40
 
General Counsel
Anoushka Kachelo
 
37
 
Secretary
Alexandre Albertini
 
40
 
Class III Director
Ademaro Lanzara
 
74
 
Class I Director
Marianne Økland
 
54
 
Class III Director
Jose Tarruella
 
45
 
Class II Director
Reidar Brekke
 
55
 
Class II Director
 
On March 9, 2016, Mr. Sergio Gianfranchi retired from his position as Vice President, Vessel Operations of the Company.
On November 13, 2016, Mr. Donald C. Trauscht, an independent member of the Company's board of directors and a member of the Company's Audit Committee, passed away.
Effective as of December 16, 2016, the Board of Directors of the Company unanimously appointed Reidar C. Brekke to serve as a Class II Director to fill the vacancy resulting from the death of Mr. Donald Trauscht. Mr. Brekke was also appointed to the Company’s Audit Committee and as Chairman of the Compensation Committee, effective December 19, 2016. The Board has determined that Mr. Brekke is an “independent director” as such term is defined under the Securities Exchange Act of 1934, as amended, and the New York Exchange Listing Manual.

98

Table of Contents

Biographical information concerning the directors and executive officers listed above is set forth below.
Emanuele A. Lauro, Chairman and Chief Executive Officer
Emanuele A. Lauro, the Company's founder, serves and has served as Chairman, and Chief Executive Officer since the closing of our initial public offering in April 2010. Mr. Lauro also co-founded and serves as Chairman and Chief Executive Officer of Scorpio Bulkers (NYSE: SALT), which was formed in 2013. He joined the Scorpio group of companies, or the Scorpio Group, in 2003 and has continued to serve there in a senior management position since 2004. Under Mr. Lauro’s leadership, Scorpio Group has grown from an owner of three vessels in 2003 to become a leading operator and manager of over 210 vessels in 2016. Over the course of the last several years, Mr. Lauro has founded and developed all of the Scorpio Group Pools in addition to several other ventures such as Scorpio Logistics, which owns and operates specialized assets engaged in the transshipment of dry cargo commodities and invests in coastal transportation and port infrastructure developments in Asia and Africa since 2007. Mr. Lauro has a degree in international business from the European Business School, London. Mr. Lauro is the brother of our Vice President, Mr. Filippo Lauro.
Robert Bugbee, President and Director
Robert Bugbee serves and has served as a Director and President since the closing of our initial public offering in April 2010. He has more than 30 years of experience in the shipping industry. Mr. Bugbee also co-founded and serves as President and Director of Scorpio Bulkers. He joined the Scorpio Group in February 2009 and has continued to serve there in a senior management position. Prior to joining Scorpio Group, Mr. Bugbee was a partner at Ospraie Management LLP between 2007 and 2008, a company which advises and invests in commodities and basic industry. From 1995 to 2007, Mr. Bugbee was employed at OMI Corporation, or OMI, a NYSE-listed tanker company which was sold in 2007. While at OMI, Mr. Bugbee served as President from January 2002 until the sale of the company, and before that served as Executive Vice President since January 2001, Chief Operating Officer since March 2000, and Senior Vice President from August 1995 to June 1998. Mr. Bugbee joined OMI in February 1995. Prior to this, he was employed by Gotaas-Larsen Shipping Corporation since 1984. During this time he took a two year sabbatical beginning 1987 for the M.I.B. Program at the Norwegian School for Economics and Business administration in Bergen. He has a B.A. (Honors) from London University.
Cameron Mackey, Chief Operating Officer and Director
Cameron Mackey serves and has served as our Chief Operating Officer since the closing of our initial public offering in April 2010 and as a Director since May 2013. Mr. Mackey also serves as Chief Operating Officer of Scorpio Bulkers. He joined Scorpio Group in March 2009, where he continues to serve in a senior management position. Prior to joining Scorpio Group, he was an equity and commodity analyst at Ospraie Management LLC from 2007 to 2008. Prior to that, he was Senior Vice President of OMI Marine Services LLC from 2004 to 2007, where he was also in Business Development from 2002 to 2004. He has been employed in the shipping industry since 1994 and, earlier in his career, was employed in unlicensed and licensed positions in the merchant navy, primarily on tankers in the international fleet of Mobil Oil Corporation, where he held the qualification of Master Mariner. He has an M.B.A. from the Sloan School of Management at the Massachusetts Institute of Technology, a B.S. from the Massachusetts Maritime Academy and a B.A. from Princeton University.
Brian Lee, Chief Financial Officer
Brian Lee serves and has served as Chief Financial Officer since the closing of our initial public offering in April 2010. He joined Scorpio Group in April 2009 where he continues to serve in a senior management position. He has been employed in the shipping industry since 1998. Prior to joining Scorpio Group, he was the Controller of OMI from 2001 until the sale of the company in 2007. Mr. Lee has an M.B.A. from the University of Connecticut and has a B.S. in Business Administration from the University at Buffalo, State University of New York.
Filippo Lauro, Vice President
Mr. Filippo Lauro serves and has served as an executive officer of the Company with the title of Vice President since May 27, 2015. Mr. Lauro also serves as Vice President of Scorpio Bulkers. He joined Scorpio Group in 2010 and has continued to serve there in a senior management position. Prior to joining Scorpio Group, Mr. Lauro was the founder of and held senior executive roles in several private companies, primarily active in real estate, golf courses and resorts development. Mr. Lauro is the brother of our Chairman and Chief Executive Officer, Mr. Emanuele Lauro.


99

Table of Contents

Luca Forgione, General Counsel
Luca Forgione serves and has served as General Counsel since the closing of our initial public offering in April 2010 and has served as Secretary until December 2, 2013. Mr. Forgione also serves as General Counsel of Scorpio Bulkers. He joined Scorpio Group in August 2009 where he continues to serve as General Counsel. He is licensed as a lawyer in his native Italy and as a Solicitor of the Supreme Court of England & Wales. Mr. Forgione has more than ten years of shipping industry experience and has worked in the fields of shipping, offshore logistics, commodity trading and energy since the beginning of his in-house career, most recently with Constellation Energy Commodities Group Ltd. in London, and now part of Exelon (NYSE: EXC) from 2007 to 2009, and previously with Coeclerici S.p.a. in Milan from 2004 to 2007. He has experience with all aspects of the supply chain of drybulk and energy commodities (upstream and downstream), and has developed considerable understanding of the regulatory and compliance regimes surrounding the trading of physical and financial commodities as well as the owning, managing and chartering of vessels. Mr. Forgione was a Tutor in International Trade Law and Admiralty Law at University College London (U.K.) and more recently a Visiting Lecturer in International Trade Law at King’s College (U.K.). He has a Master’s Degree in Maritime Law from the University of Southampton (U.K.) and a Law Degree from the University of Genoa (Italy).
Anoushka Kachelo, Secretary
Anoushka Kachelo serves and has served as our Secretary since December 2, 2013. Mrs. Kachelo also serves as Secretary of Scorpio Bulkers. She joined Scorpio Group in September 2010 as Senior Legal Counsel. Mrs. Kachelo is a Solicitor of the Supreme Court of England & Wales and has worked in the fields of commodity trading, energy and asset finance. Prior to joining the Scorpio Group, Mrs. Kachelo was Legal Counsel for the Commodities Team at JPMorgan (London) and prior to that in private practice for the London office of McDermott Will & Emery and Linklaters. She has a BA in Jurisprudence from the University of Oxford (U.K.).
Ademaro Lanzara, Director
Ademaro Lanzara serves and has served on our board of directors since the closing of our initial public offering in April 2010. Mr. Lanzara serves and has served as Chairman of BPV Finance (International) Plc Dublin since 2008. He also serves and has served as the deputy Chairman and Chairman of the Audit Committee of Cattolica Life Inc. Dublin since 2011, and as Chairman of NEM Sgr SpA Vicenza since November 2013. Mr. Lanzara previously served as Chairman of BPVI Fondi Sgr SpA, Milano from April 2012 until November 2013. From 1963 to 2006, Mr. Lanzara held a number of positions with BNL spa Rome, a leading Italian banking group, including Deputy Group CEO, acting as the Chairman of the Credit Committee and Chairman of the Finance Committee. He also served as Chairman and/or director of a number of BNL controlled banks or financial companies in Europe, the United States and South America. He formerly served as a director of each of Istituto dell’Enciclopedia Italiana fondata da Giovanni Treccani Spa, Rome, Italy, the Institute of International Finance Inc. in Washington DC, Compagnie Financiere Edmond de Rothschild Banque, in Paris, France, ABI-Italian Banking Association in Rome, Italy, FITD-Interbank deposit Protection Fund, in Rome, Italy, ICC International Chamber of Commerce Italian section, Rome, Italy and Co-Chairman Round Table of Bankers and Small and Medium Enterprises, European Commission, in Brussels, Belgium. Mr. Lanzara has an economics degree (graduated magna cum laude) from the University of Naples, a law degree from the University of Naples and completed the Program for Management Development (PMD) at Harvard Business School.
Alexandre Albertini, Director
Alexandre Albertini serves and has served on our board of directors since the closing of our initial public offering in April 2010. Mr. Albertini has more than 20 years of experience in the shipping industry. He has been employed by Marfin Management SAM, a drybulk ship management company, since 1997 and has served as its CEO since October 2010. Marfin operates 13 vessels, providing services such as technical, commercial, and crew management as well as insurance, legal, financial, and information technology. He also serves as President of Ant. Topic srl, a vessel and crewing agent based in Trieste, Italy. Mr. Albertini serves on the board of a private company in addition to various trade associations; BIMCO, Monaco Chamber of Shipping, Intermanager, FEDEM and was recently appointed as a Director of The Steamship Mutual Underwriting Association (Bermuda) Limited.
Marianne Økland, Director

100

Table of Contents

Marianne Økland serves and has served on our board of directors since April 2013. Ms. Økland is also a Managing Director of Avista Partners, a London based consultancy company that provides advisory services and raises capital. In addition, she is a non-executive director at each of IDFC Limited, IDFC NOFHC, IDFC Alternatives (India), and the National Bank of Greece. She also serves on the Audit Committees of IDFC Limited and the National Bank of Greece. Previously, she was a non-executive director at NLB (Slovenia) and Islandsbanki (Iceland). Between 1993 and 2008, Ms. Økland held various investment banking positions at JP Morgan Chase & Co. and UBS where she focused on debt capital raising and structuring. Ms. Økland has led many transactions for large Nordic banks and insurance companies, including some of the most significant mergers and acquisitions in these sectors. Between 1988 and 1993, Ms. Økland headed European operations of Marsoft, a Boston, Oslo and London based consulting firm that advises banks and large shipping, oil and raw material companies on shipping strategies and investments. Ms. Økland holds a M.Sc. degree in Finance and Economics from the Norwegian School of Economics and Business Administration where she also worked as a researcher and taught mathematics and statistics.
Jose Tarruella, Director
Jose Tarruella serves and has served on our board of directors since May 2013. Mr. Tarruella is also the founder and Chairman of Camino de Esles s.l., a high-end restaurant chain with franchises throughout Madrid, Spain, since 2007. Prior to forming Camino de Esles, Mr. Tarruella was a Director in Group Tragaluz, which owns and operates restaurants throughout Spain. Mr. Tarruella also acted as a consultant for the Spanish interests of Rank Group plc (LSE: RNK.L) a leading European gaming-based entertainment business. He has been involved in corporate relations for Esade Business School in Madrid. He earned an International MBA from Esade Business School in Barcelona and an MA from the University of Navarre in Spain.
Reidar C. Brekke, Director
Reidar C. Brekke serves and has served on our board of directors since December 2016. Mr. Brekke has over 20 years’ experience in the international energy, container logistics and transportation sector. He also serves as a member of the board of directors of Diana Containerships Inc. (NASDAQ: DCIX), a position he has held since June 2010. Mr. Brekke has served as a board member and President of Intermodal Holdings LP, a New York based portfolio company that invests in and operates marine containers, since 2012, and is currently a board member of two other privately-held companies involved in container logistics and drybulk shipping. From 2008 to 2012, Mr. Brekke served as President of Energy Capital Solution Inc., a company that provides strategic and financial advisory services to international shipping, logistics and energy related companies. From 2003 to 2008, he served as Manager of Poten Capital Services LLC, a registered broker-dealer specialized in the maritime sector. Prior to 2003, Mr. Brekke served as Chief Financial Officer, then President and Chief Operating Officer, of SynchroNet Marine, a logistics service provider to the global container transportation industry. He also held various senior positions with AMA Capital Partners LLC (formerly American Marine Advisers), a merchant banking firm focused on the maritime and energy industries. Furthermore, Mr. Brekke has been an adjunct professor at Columbia University’s School of International and Public Affairs - Center for Energy, Marine Transportation and Public Policy. Mr. Brekke graduated from the New Mexico Military Institute in 1986 and has an MBA from the University of Nevada, Reno.
B. Compensation
We paid an aggregate compensation of $34.4 million , $42.5 million and $31.0 million to our senior executive officers in 2016, 2015, and 2014, respectively. Executive management remuneration was as follows during these periods:
 
For the year ended December 31,
In thousands of US dollars
2016
 
2015
 
2014
Short-term employee benefits (salaries)
$
8,786

 
$
15,601

 
$
7,454

Share-based compensation (1)
25,575

 
26,911

 
23,553

Total
$
34,361

 
$
42,512

 
$
31,007


(1)
Represents the amortization of restricted stock issued under our equity incentive plans. See Note 14 to our Consolidated Financial Statements included herein for further description. 
Each of our non-employee directors receive cash compensation in the aggregate amount of $60,000 annually, plus an additional fee of $10,000 for each committee on which a director serves plus an additional fee of $25,000 for each committee for which a director serves as Chairman, per year, plus an additional fee of $35,000 to the lead independent director, plus $2,000 for each meeting, plus reimbursements for actual expenses incurred while acting in their capacity as a director. During the year ended December 31, 2016 and 2015, we paid an aggregate compensation of $0.8 million and $0.8 million to our directors, respectively. Our officers and directors are eligible to receive awards under our equity incentive plan which is described below under “—2010 Equity Incentive Plan and 2013 Equity Incentive Plan.”

101

Table of Contents

We believe that it is important to align the interests of our directors and management with that of our shareholders. In this regard, we have determined that it will generally be beneficial to us and to our shareholders for our directors and management to have a stake in our long-term performance. We expect to have a meaningful component of our compensation package for our directors and management consisted of equity interests in us in order to provide them on an on-going basis with a meaningful percentage of ownership in us.
We do not have a retirement plan for our officers or directors.
2010 Equity Incentive Plan
In 2010, we adopted an equity incentive plan, which we refer to as the 2010 Equity Incentive Plan, under which directors, officers, employees, consultants and service providers of us and our subsidiaries and affiliates were eligible to receive incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted common stock. The 2010 Equity Incentive Plan was administered by our compensation committee. We reserved a total of 1,148,916 common shares for issuance under the 2010 Equity Incentive Plan and no shares remain available for issuance.
Under the terms of the 2010 Equity Incentive Plan, stock options and stock appreciation rights granted under the 2010 Equity Incentive Plan have an exercise price equal to the fair market value of a common share on the date of grant, unless otherwise determined by the plan administrator, but in no event will the exercise price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights are exercisable at times and under conditions as determined by the plan administrator, but in no event will they be exercisable later than ten years from the date of grant.
The restricted shares granted under the 2010 Equity Incentive Plan were subject to vesting, forfeiture and other terms and conditions as determined by the plan administrator. Adjustments would have been made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In the event of a “change in control” (as defined in the 2010 Equity Incentive Plan), unless otherwise provided by the plan administrator in an award agreement, awards then outstanding would have become fully vested and exercisable in full.
Our board of directors may amend or terminate the 2010 Equity Incentive Plan and may have amended outstanding awards, provided that no such amendment or termination would have been made that would materially impair any rights, or materially increase any obligations, of a grantee under an outstanding award. Shareholder approval of plan amendments would have been required under certain circumstances. Unless terminated earlier by our board of directors, the 2010 Equity Incentive Plan expires ten years from the date it was adopted.
2013 Equity Incentive Plan
In April 2013, we adopted an equity incentive plan, which was amended in March 2014 and which we refer to as the 2013 Equity Incentive Plan, under which directors, officers, employees, consultants and service providers of us and our subsidiaries and affiliates are eligible to receive incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted common stock. We initially reserved a total of 5,000,000 common shares for issuance under the 2013 Equity Incentive Plan which was subsequently revised as follows:
•
In October 2013, we reserved an additional 6,376,044 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In September 2014, we reserved an additional 1,088,131 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In May 2015, we reserved an additional 1,755,443 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In June 2016, we reserved an additional 2,301,115 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In December 2016, we reserved an additional 1,348,992 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
 Under the terms of the 2013 Equity Incentive Plan, stock options and stock appreciation rights granted under the 2013 Equity Incentive Plan will have an exercise price equal to the fair market value of a common share on the date of grant, unless otherwise determined by the plan administrator, but in no event will the exercise price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights will be exercisable at times and under conditions as determined by the plan administrator, but in no event will they be exercisable later than ten years from the date of grant.
 The plan administrator may grant shares of restricted stock and awards of restricted stock units subject to vesting, forfeiture and other terms and conditions as determined by the plan administrator. Following the vesting of a restricted stock unit, the award recipient will be paid an amount equal to the number of vested restricted stock units multiplied by the fair market value of a common share on the date of vesting, which payment may be paid in the form of cash or common shares or a combination

102

Table of Contents

of both, as determined by the plan administrator. The plan administrator may grant dividend equivalents with respect to grants of restricted stock units.
 Adjustments may be made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In the event of a “change in control” (as defined in the 2013 Equity Incentive Plan), unless otherwise provided by the plan administrator in an award agreement, awards then outstanding will become fully vested and exercisable in full.
 Our board of directors may amend or terminate the 2013 Equity Incentive Plan and may amend outstanding awards, provided that no such amendment or termination may be made that would materially impair any rights, or materially increase any obligations, of a grantee under an outstanding award. Shareholder approval of plan amendments will be required under certain circumstances. Unless terminated earlier by our board of directors, the 2013 Equity Incentive Plan will expire ten years from the date the plan is adopted.
In the second quarter of 2013, we issued 4,610,000 shares of restricted stock to our employees and 390,000 shares to our independent directors for no cash consideration. The weighted average share price on the issuance dates was $8.69 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vested on March 10, 2016, (ii) one-third of the shares vest on March 10, 2017, and (iii) one-third of the shares vest on March 10, 2018. The vesting schedule of the restricted stock to our independent directors is (i) one-third of the shares vested on March 10, 2014, (ii) one-third of the shares vested on March 10, 2015, and (iii) one-third of the shares vested on March 10, 2016.
In October 2013, we issued 3,749,998 shares of restricted stock to our employees and 250,000 shares to our independent directors for no cash consideration. The weighted average share price on the issuance date was $9.85 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vested on October 11, 2016, (ii) one-third of the shares vest on October 11, 2017, and (iii) one-third of the shares vest on October 11, 2018. The vesting schedule of the restricted stock to our independent directors is (i) one-half of the shares vested on October 11, 2014 and (ii) one-half of the shares vested on October 11, 2015.
In February 2014, we issued 2,011,000 shares of restricted stock to our employees and 145,045 shares to our independent directors for no cash consideration. The weighted average share price on the issuance date was $9.30 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vested on February 21, 2017, (ii) one-third of the shares vest on February 21, 2018, and (iii) one-third of the shares vest on February 21, 2019. The vesting schedule of the restricted stock to our independent directors is (i) one-third of the shares vested on February 21, 2015, (ii) one-third of the shares vested on February 21, 2016, and (iii) one-third of the shares vested on February 21, 2017.
In May and September 2014, we issued 213,000 and 5,000 shares of restricted stock to SSH employees, respectively, for no cash consideration. The share prices on the issuance dates were $8.89 per share and $9.13 per share, respectively. The vesting schedule of the restricted stock to SSH employees is (i) one-third of the shares vested on February 21, 2017, (ii) one-third of the shares vest on February 21, 2018, and (iii) one-third of the shares vest on February 21, 2019.
In November 2014, we issued 938,131 shares of restricted stock to our employees and 50,000 shares to our independent directors for no cash consideration. The share price on the issuance date was $8.57 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vest on November 18, 2017, (ii) one-third of the shares vest on November 18, 2018, and (iii) one-third of the shares vest on November 18, 2019. The restricted shares issued to our independent directors vested on November 18, 2015.
In July 2015, we issued 1,466,944 shares of restricted stock to our employees, 100,000 shares to our directors and 290,500 to SSH employees for no cash consideration. The share price on the issuance date was $10.32 per share. The vesting schedule of the restricted stock issued to our employees and SSH employees is (i) one-third of the shares vest on June 4, 2018, (ii) one-third of the shares vest on June 4, 2019, and (iii) one-third of the shares vest on June 4, 2020. The restricted shares issued to our directors vested on June 4, 2016.
In July 2016, we issued 1,864,615 shares of restricted stock to our employees, 150,000 shares to our directors and 286,500 shares to SSH employees for no cash consideration. The share price on the issuance date was $4.74 per share. The vesting schedule of the restricted stock issued to our employees and SSH employees is (i) one-third of the shares vest on June 5, 2019, (ii) one-third of the shares vest on June 5, 2020, and (iii) one-third of the shares vest on June 5, 2021. The restricted shares issued to our directors vest on June 5, 2017.
1,398,992 shares remained eligible for issuance under the 2013 Equity Incentive Plan as of December 31, 2016.

103

Table of Contents

Employment Agreements
We have entered into employment agreements with the majority of our executives. These employment agreements remain in effect until terminated in accordance with their terms upon not less than between 24 months and 36 months prior written notice, depending on the terms of the employment agreement applicable to each executive. Pursuant to the terms of their respective employment agreements, our executives are prohibited from disclosing or unlawfully using any of our material confidential information.
Upon a change in control of us, the annual bonus provided under the employment agreement becomes a fixed bonus of between 150% and 250% of the executive’s base salary and the executive may receive an assurance bonus equal to the fixed bonus, depending on the terms of the employment agreement applicable to each executive.
Any such executive may be entitled to receive upon termination an assurance bonus equal to such fixed bonus and an immediate lump-sum payment in an amount equal to three times the sum of the executive’s then current base salary and the assurance bonus, and he will continue to receive all salary, compensation payment and benefits, including additional bonus payments, otherwise due to him, to the extent permitted by applicable law, for the remaining balance of his then-existing employment period. If an executive’s employment is terminated for cause or voluntarily by the employee, he shall not be entitled to any salary, benefits or reimbursements beyond those accrued through the date of his termination, unless he voluntarily terminated his employment in connection with certain conditions. Those conditions include a change in control combined with a significant geographic relocation of his office, a material diminution of his duties and responsibilities, and other conditions identified in the employment agreement.
C. Board Practices
Our board of directors currently consists of eight directors, five of whom have been determined by our board of directors to be independent under the rules of the NYSE and the rules and regulations of the SEC. Our board of directors has an Audit Committee, a Nominating and Corporate Governance Committee, a Compensation Committee and a Regulatory and Compliance Committee, each of which is comprised of certain of our independent directors, who are Messrs. Alexandre Albertini, Ademaro Lanzara, Jose Tarruella, Reidar Brekke and Mrs. Marianne Økland. The Audit Committee, among other things, reviews our external financial reporting, engages our external auditors and oversees our internal audit activities, procedures and the adequacy of our internal controls. In addition, provided that no member of the Audit Committee has a material interest in such transaction, the Audit Committee is responsible for reviewing transactions that we may enter into in the future with other members of the Scorpio Group that our board believes may present potential conflicts of interests between us and the Scorpio Group. The Nominating and Corporate Governance Committee is responsible for recommending to the board of directors nominees for director and directors for appointment to board committees and advising the board with regard to corporate governance practices. The Compensation Committee oversees our equity incentive plan and recommends director and senior employee compensation. The Regulatory and Compliance Committee oversees our operations to minimize the environmental impact by the constant monitoring and measuring progress of our vessels. Our shareholders may also nominate directors in accordance with procedures set forth in our bylaws.
D. Employees
As of December 31, 2016 and 2015, we had 19 and 17 shore based employees, respectively. SSM and SCM were responsible for our commercial and technical management.
E. Share Ownership
The following table sets forth information regarding the share ownership of our common stock as of March 15, 2017 by our directors and executive officers, including the restricted shares issued to our executive officers and to our independent directors as well as shares purchased in the open market.
Name
 
No. of Shares
 
% Owned (5)
Emanuele A. Lauro (1)
 
3,464,086

 
1.98
%
Robert Bugbee (2)
 
3,097,419

 
1.77
%
Cameron Mackey (3)
 
2,749,376

 
1.57
%
Brian M. Lee (4)
 
2,088,399

 
1.20
%
All other executive officers and directors individually
 
*

 
*

 
(1)
Includes 2,507,988 shares of restricted stock from the 2013 Equity Incentive Plan.
(2)
Includes 2,507,988 shares of restricted stock from the 2013 Equity Incentive Plan.
(3)
Includes 1,702,314 shares of restricted stock from the 2013 Equity Incentive Plan.
(4)
Includes 1,229,351 shares of restricted stock from the 2013 Equity Incentive Plan.

104

Table of Contents

(5)
Based on 174,629,755 common shares outstanding as of March 15, 2017.
* The remaining executive officers and directors individually each own less than 1% of our outstanding shares of common stock.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
A. Major shareholders.
The following table sets forth information regarding beneficial ownership of our common stock for owners of more than five percent of our common stock, of which we are aware as of March 15, 2017.
Name
 
No. of Shares
 
% Owned (4)
Wellington Management Group LLP *
 
19,248,982

(1)  
11.0
%
FMR LLC
 
18,696,116

(2)  
10.7
%
Dimensional Fund Advisors LP *
 
14,273,545

(3)  
8.2
%
 
(1) This information is derived from Schedule 13G/A filed with the SEC on February 9, 2017.
(2) This information is derived from Schedule 13G/A filed with the SEC on February 14, 2017.
(3) This information is derived from Schedule 13G filed with the SEC on February 9, 2017.
(4) Based on 174,629,755 common shares outstanding as of March 15, 2017.
*Includes certain funds managed thereby.
**On behalf of itself and certain investment advisers and funds.
As of March 15, 2017, we had 65 shareholders of record, 17 of which were located in the United States and held an aggregate of 169,362,155 shares of our common stock, representing 96.9% of our outstanding shares of common stock. However, one of the U.S. shareholders of record is Cede & Co., a nominee of The Depository Trust Company, which held 161,212,252 shares of our common stock, as of March 15, 2017.
Additionally, SSH currently owns 1,975,000 common shares of the Company, which it purchased through open market transactions between November 2016 and March 2017.
B. Related Party Transactions
Management of Our Fleet 
On September 29, 2016, we agreed to amend our administrative services agreement, or the Administrative Services Agreement, with SSH, and our master agreement, or the Master Agreement, with SCM and SSM under a deed of amendment, or the Deed of Amendment.  Pursuant to the terms of the Deed of Amendment, on November 15, 2016, we entered into definitive documentation to memorialize the agreed amendments to the Master Agreement, or the Amended and Restated Master Agreement. The Amended and Restated Master Agreement and the Administrative Services Agreement as amended by the Deed of Amendment, or the Amended Administrative Services Agreement, are effective as from September 29, 2016. Under the terms of the amendments, (i) the fee of 1% payable to SSH upon any future vessel sale or purchase was eliminated and (ii) in the event of the sale of one or more vessels, a notice period of three months and a payment equal to three months of management fees will apply, provided that the termination does not amount to a change of control, including a sale of all or substantially all of our vessels, in which case a payment equal to 24 months of management fees will apply. There was no consideration paid by us for these amendments. 
The independent members of our Board of Directors unanimously approved the Amended Administrative Services Agreement and Amended and Restated Master Agreement described in the preceding paragraph.
    

105

Table of Contents

Commercial and Technical Management
Our vessels are commercially managed by SCM and technically managed by SSM pursuant to the aforementioned Amended and Restated Master Agreement, which may be terminated by either party upon 24 months' notice, unless terminated earlier in accordance with the provisions of the Amended and Restated Master Agreement. In the event of the sale of one or more vessels, a notice period of three months and a payment equal to three months of management fees will apply, provided that the termination does not amount to a change in control, including a sale of all or substantially all of our vessels, in which case a payment equal to 24 months of management fees will apply. SCM and SSM are related parties of ours. We expect that additional vessels that we may acquire in the future will also be managed under the Amended and Restated Master Agreement or on substantially similar terms.
SCM’s services include securing employment, in the spot market and on time charters, for our vessels. SCM also manages the Scorpio Group Pools. When our vessels are in the Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to our LR1/Panamax vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per day with respect to each of our Handymax and MR vessels, plus 1.50% commission on gross revenues per charter fixture.  These are the same fees that SCM charges other vessels in these pools, including third-party owned vessels. For commercial management of our vessels that do not operate in any of the Scorpio Group Pools, we pay SCM a fee of $250 per vessel per day for each LR1/Panamax and LR2 vessel and $300 per vessel per day for each Handymax and MR vessel, plus 1.25% commission on gross revenues per charter fixture.
SSM’s services include day-to-day vessel operation, performing general maintenance, monitoring regulatory and classification society compliance, customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing technical support. We currently pay SSM $685 per vessel per day to provide technical management services for each of our vessels. This fee is based on contracted rates that were the same as those charged to other, third party vessels managed by SSM at the time the management agreements were entered into. 
In 2016, we paid a termination fee in the aggregate amount of $2.7 million under our commercial management agreement with SCM and a termination fee in the aggregate amount of $2.5 million under our technical management agreement with SSM as a result of the sales of STI Lexington, STI Mythos, STI Chelsea, STI Powai and STI Olivia , which occurred prior to the September 2016 amendments to the Amended and Restated Master Agreement.
Amended Administrative Services Agreement
We have an Amended Administrative Services Agreement with SSH or our Administrator, for the provision of administrative staff and office space, and administrative services, including accounting, legal compliance, financial and information technology services. SSH is a related party of ours. We reimburse our current Administrator for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described above. The services provided to us by our Administrator may be sub-contracted to other entities within the Scorpio Group.
Prior to September 29, 2016, we paid SSH a fee for arranging vessel purchases and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. As described above, this fee was eliminated for all vessel purchase or sale agreements entered into after September 29, 2016. For the year ended December 31, 2016 , we paid our Administrator $1.7 million in connection with the sales of S TI Lexington, STI Mythos, STI Chelsea, STI Powai and STI Olivia and a fee of $0.6 million for the purchase and delivery of STI Lombard . For the year ended December 31, 2015, we paid our Administrator $12.6 million in connection with our purchase and taking delivery of 29 vessels and our sale of four vessels.
Further, pursuant to our Amended Administrative Services Agreement, our Administrator, on behalf of itself and other members of the Scorpio Group, has agreed that it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt.

106

Table of Contents

Tanker pools
To increase vessel utilization and thereby revenues, we participate in commercial pools with other shipowners of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators who have close working relationships with customers and brokers, while technical management is performed by each shipowner. The managers of the pools negotiate charters with customers primarily in the spot market, but may also arrange time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher level of service offerings to customers. When we employ a vessel in the spot charter market, we generally place such vessel in a tanker pool managed by our commercial manager that pertains to that vessel’s size class. The earnings allocated to vessels (charterhire expense for the pool) are aggregated and divided on the basis of a weighted scale, or Pool Points, which reflect comparative voyage results on hypothetical benchmark routes. The Pool Point system generally favors those vessels with greater cargo-carrying capacity and those with better fuel consumption. Pool Points are also awarded to vessels capable of carrying clean products and to vessels capable of trading in certain ice conditions. We currently participate in four pools: the Scorpio LR2 Pool, the Scorpio Panamax Tanker Pool, the Scorpio MR Pool and the Scorpio Handymax Tanker Pool.
SCM is responsible for the commercial management of participating vessels in the pools, including the marketing, chartering, operating and bunker (fuel oil) purchases of the vessels. The Scorpio LR2 Pool is administered by Scorpio LR2 Pool Ltd., the Scorpio Panamax Tanker Pool is administered by Scorpio Panamax Tanker Pool Ltd., the Scorpio MR Pool is administered by Scorpio MR Pool Ltd. and the Scorpio Handymax Tanker Pool is administered by Scorpio Handymax Tanker Pool Ltd. Our founder, Chairman and Chief Executive Officer and Vice President are members of the Lolli-Ghetti family which owns all issued and outstanding stock of Scorpio LR2 Pool Ltd., Scorpio Panamax Tanker Pool Ltd., Scorpio MR Pool Ltd., and Scorpio Handymax Tanker Pool Ltd., or the Pool Entities. Taking into account the recommendations of a pool committee and a technical committee, each of which is comprised of representatives of each pool participant, the Pool Entities set the respective pool policies and issue directives to the pool participants and SCM. The pool participants remain responsible for all other costs including the financing, insurance, manning and technical management of their vessels. The earnings of all of the vessels are aggregated and divided according to the relative performance capabilities of the vessel and the actual earning days for which each vessel is available.
Our Relationship with the Scorpio Group and its Affiliates
The Scorpio Group is owned and controlled by the Lolli-Ghetti family, of which Messrs. Emanuele Lauro and Filippo Lauro are members. We are not affiliated with any other entities in the shipping industry other than those that are members of the Scorpio Group.
In addition, Mr. Emanuele Lauro, Mr. Bugbee and other members of our senior management have a minority equity interest in SSH, our Administrator, a member of the Scorpio Group.
SCM and SSM, our commercial manager and technical manager, respectively, are also members of the Scorpio Group. For information regarding the details regarding our relationship with SCM, SSM and SSH, please see “– Management of our Fleet.”
Our board of directors consists of eight individuals, five of whom are independent directors. Three of the independent directors form the board’s Audit Committee and, pursuant to the Audit Committee charter, are required to review all potential conflicts of interest between us and related parties, including the Scorpio Group. Our three non-independent directors and all of our executive officers serve in senior management positions in certain other companies within the Scorpio Group.
Transactions with Related Parties
Transactions with entities controlled by the Lolli-Ghetti family (herein referred to as related party affiliates) in the consolidated statements of income and balance sheet are as follows:

107

Table of Contents

 
 
For the year ended December 31,
In thousands of U.S. dollars
 
2016
 
2015
 
2014
Pool revenue (1)
 
 

 
 

 
 

Scorpio MR Pool Limited
 
$
248,974

 
$
315,925

 
$
112,826

Scorpio LR2 Pool Limited
 
156,503

 
208,132

 
67,054

Scorpio Handymax Tanker Pool Limited

73,683

 
138,736

 
54,052

Scorpio Panamax Tanker Pool Limited
 
5,843

 
34,613

 
46,925

Voyage expenses (2)
 
(1,128
)
 
(2,127
)
 
(2,052
)
Vessel operating costs (3)
 
(19,484
)
 
(18,393
)
 
(7,947
)
Administrative expenses (4)
 
(9,462
)
 
(7,950
)
 
(3,542
)


(1)
These transactions relate to revenue earned in the Scorpio Group Pools. The Scorpio Group Pools are related party affiliates. When our vessels are in the Scorpio Group Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to our LR1/Panamax vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per day with respect to each of our Handymax and MR vessels, plus a commission of 1.50% on gross revenue per charter fixture.  These are the same fees that SCM charges other vessels in these pools, including third party owned vessels.

(2)
These transactions represent the expense due to SCM, a related party affiliate, for commissions related to the commercial management services provided by SCM under the Commercial Management Agreement for vessels that are not in one of the Scorpio Group Pools. When not in one of the Scorpio Group Pools, each vessel pays (i) flat fees of $250 per day for LR1/Panamax and LR2 vessels and $300 per day for Handymax and MR vessels and (ii) commissions of 1.25% of their gross revenue.  These expenses are included in voyage expenses in the consolidated statements of income or loss.

(3)
These transactions represent technical management fees charged by SSM, a related party affiliate, which are included in vessel operating costs in the consolidated statements of income or loss. We believe our technical management fees are at arms-length rates as they were based on contracted rates that were the same as those charged to other vessels managed by SSM at the time the management agreements were entered into. This fee is $685 per vessel per day.

(4)
We have an Amended Administrative Services Agreement with SSH, for the provision of administrative staff and office space, and administrative services, including accounting, legal compliance, financial and information technology services. SSH is a related party to us. We reimburse SSH for the reasonable direct or indirect expenses that are incurred on our behalf. SSH also arranges vessel sales and purchases for us. The services provided to us by SSH may be sub-contracted to other entities within the Scorpio Group. The expenses incurred under this agreement were as follows, and were recorded in general and administrative expenses in the consolidated statements of income or loss.

•
The expense for the year ended December 31, 2016 of $9.5 million included (i) administrative fees of $7.3 million charged by SSH, (ii) restricted stock amortization of $1.6 million , which relates to the issuance of an aggregate of 795,000 shares of restricted stock to SSH employees for no cash consideration in May 2014, September 2014, July 2015 and July 2016, and (iii) the reimbursement of expenses of $0.6 million .
•
The expense for the year ended December 31, 2015 of $7.9 million included (i) administrative fees of $6.8 million charged by SSH, (ii) restricted stock amortization of $0.9 million, which relates to the issuance of an aggregate of 508,500 shares of restricted stock to SSH employees for no cash consideration in May 2014, September 2014 and July 2015 and (iv) the reimbursement expenses of $0.2 million.
•
The expense for the year ended December 31, 2014 of $3.5 million included (i) administrative fees of $3.1 million charged by SSH, (ii) restricted stock amortization of $0.3 million, which relates to the issuance of an aggregate 218,000 shares of restricted stock to SSH employees for no cash consideration in May and September 2014 and (iii) the reimbursement of expenses of $0.1 million.
We had the following balances with related parties, which have been included in the consolidated balance sheets:
 

108

Table of Contents

 
As of December 31,
In thousands of U.S. dollars
2016
 
2015
Assets:
 

 
 

Accounts receivable (due from the Scorpio Group Pools) (1)
$
40,680

 
$
59,475

Accounts receivable and prepaid expenses (SSM) (2)
4,233

 
2,348

Other assets (pool working capital contributions) (3)
19,217

 
19,256

Liabilities:
 

 
 

 Accounts payable and accrued expenses (SSM)
653

 
484

 Accounts payable and accrued expenses (SSH)
90

 
77

Accounts payable and accrued expenses (SCM)
53

 
175

Accounts payable and accrued expenses (owed to the Scorpio Group Pools)
15

 
610

 
(1)
Accounts receivable due from the Scorpio Group Pools relate to hire receivables for revenues earned and receivables from working capital contributions. The amounts as of December 2016 and 2015 include $24.1 million and $8.6 million , respectively, of working capital contributions made on behalf of our vessels to the Scorpio Group Pools. Upon entrance into such pools, all vessels are required to make working capital contributions of both cash and bunkers. Additional working capital contributions can be made from time to time based on the operating needs of the pools. These amounts are accounted for and repaid as follows:

•
For vessels in the Scorpio Handymax Tanker Pool, the initial contribution amount is repaid, without interest, upon a vessel’s exit from each pool no later than six months after the exit date. Bunkers on board a vessel exiting the pool are credited against such repayment at the actual invoice price of the bunkers. For all owned vessels we assume that these contributions will not be repaid within 12 months and are thus classified as non-current within other assets on the consolidated balance sheets. For time chartered-in vessels we classify the initial contributions as current (within accounts receivable) or non-current (within other assets) according to the expiration of the contract. Any additional working capital contributions are repaid when sufficient net revenues become available to cover such amounts.
 
•
For vessels in the Scorpio MR Pool and Scorpio Panamax Tanker Pool, any contributions are repaid, without interest, when such vessel has earned sufficient net revenues to cover the value of such working capital contributed.  Accordingly, we classify such amounts as current (within accounts receivable).

•
For vessels in the Scorpio LR2 Pool, the initial contribution amount is repaid, without interest, upon a vessel’s exit from each pool. Bunkers on board a vessel exiting the pool are credited against such repayment at the actual invoice price of the bunkers. For all owned vessels we assume that these contributions will not be repaid within 12 months and are thus classified as non-current within other assets on the consolidated balance sheets. For time chartered-in vessels we classify the initial contributions as current (within accounts receivable) or non-current (within other assets) according to the expiration of the contract. Any additional working capital contributions are repaid when sufficient net revenues become available to cover such amounts.

(2)
Accounts receivable and prepaid expenses from SSM relate to advances made for vessel operating expenses (such as crew wages) that will either be reimbursed or applied against future costs.
(3)
Represents the non-current portion of working capital receivables as described above.
Prior to September 29, 2016, we paid SSH a fee for arranging vessel purchases and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. As described above, this fee was eliminated for all vessel purchase or sale agreements entered into after September 29, 2016. These fees are capitalized as part of the carrying value of the related vessel for a vessel purchase and are included as part of the gain or loss on sale for a vessel disposal.

109

Table of Contents

•
During the year ended December 31, 2016, we paid SSH an aggregate fee of $1.7 million in connection with the sales of STI Lexington, STI Mythos, STI Chelsea , STI Powai , and STI Olivia and a fee of $0.6 million for the purchase and delivery of S TI Lombard . Additionally, we paid SCM an aggregate termination fee of $2.7 million that was due under the commercial management agreements and we paid SSM an aggregate termination fee of $2.5 million that was due under the technical management agreements as a result of the aforementioned vessel sales. The agreements to sell and acquire the aforementioned vessels were entered into prior to the September 29, 2016 amendments to the Master Agreement and Administrative Service Agreement. The aggregate fees paid to SCM, SSH and SSM are recorded within loss on sales of the vessels within the consolidated statements of income or loss.
•
During the year ended December 31, 2015, we paid SSH an aggregate fee of $12.6 million in connection with the purchase and delivery of 29 vessels and the sales of four vessels. Additionally, as a result of the sale of STI Highlander in 2015, we paid a $0.5 million termination fee due under the vessel's commercial management agreement with SCM and a $0.5 million termination fee due under the vessel's technical management agreement with SSM.
•
During the year ended December 31, 2014, we paid SSH an aggregate fee of $26.1 million, which consisted of $11.7 million related to the purchase and delivery of 33 vessels under our Newbuilding Program, $14.0 million relating to the purchase and sale of our seven VLCCs under construction, and $0.4 million relating to the sales of two vessels.
In 2011, we also entered into an agreement to reimburse costs to SSM as part of its supervision agreement for vessels under our Newbuilding Program. During the years ended December 31, 2014, we were charged $0.02 million under this agreement. There were no costs incurred under this agreement during the years ended December 31, 2016 and 2015. Please see "Item 3. Key Information - D. Risk Factors - Risks Related to our Relationship with the Scorpio Group and its Affiliates."
C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.

ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements.”
Legal Proceedings
To our knowledge, we are not currently a party to any lawsuit that, if adversely determined, would have a material adverse effect on our financial position, results of operations or liquidity. As such, we do not believe that pending legal proceedings, taken as a whole, should have any significant impact on our financial statements. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. While we expect that these claims would be covered by our existing insurance policies, those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We have not been involved in any legal proceedings which may have, or have had, a significant effect on our financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position, results of operations or liquidity.
Dividend Policy
The declaration and payment of dividends is subject at all times to the discretion of our board of directors. The timing and amount of dividends, if any, depends on, among other things, our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.
We are a holding company with no material assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to pay dividends, if any, depends on our subsidiaries and their ability to distribute funds to us. Our credit facilities have restrictions on our ability, and the ability of certain of our subsidiaries, to pay dividends in the event of a default or breach of covenants under the credit facility agreement. Under such circumstances, we or our subsidiaries may not be able to pay dividends so long as we are in default or have breached certain covenants of the credit facility without our lender’s consent or waiver of the default or breach. In addition, Marshall Islands law generally prohibits the payment of dividends (i) other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares) or (ii) when a company is insolvent or (iii) if the payment of the dividend would render the company insolvent.

110

Table of Contents

In addition, we may incur expenses or liabilities, including extraordinary expenses, decreases in revenues, including as a result of unanticipated off-hire days or loss of a vessel, or increased cash needs that could reduce or eliminate the amount of cash that we have available for distribution as dividends.
Any dividends paid by us will be income to a United States shareholder. Please see “Item 10. Additional Information - E. Taxation” for additional information relating to the United States federal income tax treatment of our dividend payments, if any are declared in the future.
During the period from our initial public offering in April 2010 through April 2013, we did not declare or pay any dividends to our shareholders. For the years ended December 31, 2016 , 2015 and 2014, we paid aggregate dividends to our shareholders in the amount of $86.9 million , $87.1 million and $70.5 million , respectively. We have paid the following dividends per share in respect of the periods set forth below:
Date Paid
 
Dividends per Share
March 26, 2014
 
$0.080
June 12, 2014
 
$0.090
September 10, 2014
 
$0.100
December 12, 2014
 
$0.120
March 30, 2015
 
$0.120
June 10, 2015
 
$0.125
September 4, 2015
 
$0.125
December 11, 2015
 
$0.125
March 30, 2016
 
$0.125
June 24, 2016
 
$0.125
September 29, 2016
 
$0.125
December 22, 2016
 
$0.125
March 30, 2017*
 
$0.01

*Dividend is scheduled to be paid on or about March 30, 2017.
B. Significant Changes
There have been no significant changes since the date of the annual consolidated financial statements included in this report, other than as described in Note 23-Subsequent Events to our consolidated financial statements included herein.
ITEM 9. OFFER AND THE LISTING
A. Offer and Listing Details
Since our initial public offering, our shares of common stock have traded on the NYSE under the symbol “STNG”. The high and low market prices for our shares of common stock on the NYSE are presented for the periods listed below:
 

111

Table of Contents

For the Year Ended
 
High
 
Low
December 31, 2012
 
$7.50
 
$4.93
December 31, 2013
 
12.48
 
6.92
December 31, 2014
 
11.91
 
6.48
December 31, 2015
 
11.64
 
7.50
December 31, 2016
 
7.99
 
3.61
 
 
 
 
 
For the Quarter Ended:
 
High
 
Low
March 31, 2015
 
$9.64
 
$7.64
June 30, 2015
 
10.51
 
8.92
September 30, 2015
 
11.64
 
8.34
December 31, 2015
 
10.33
 
7.50
March 31, 2016
 
7.99
 
4.66
June 30, 2016
 
6.70
 
4.10
September 30, 2016
 
5.53
 
4.05
December 31, 2016
 
5.00
 
3.61
March 31, 2017 (through and including March 15, 2017)
 
4.93
 
3.50
 
 
 
 
 
Most Recent Six Months:
 
High
 
Low
September 2016
 
$5.33
 
$4.51
October 2016
 
5.00
 
3.68
November 2016
 
4.63
 
3.61
December 2016
 
4.82
 
3.92
January 2017
 
4.93
 
3.66
February 2017
 
4.48
 
3.50
March 2017 (through and including March 15, 2017)
 
4.17
 
3.73
B. Plan of Distribution
Not applicable
C. Markets
Our common shares are listed for trading on the NYSE under the symbol “STNG.” In addition, our Senior Notes Due 2020 are listed for trading on the NYSE under the symbol “SBNA”, and our Senior Notes Due 2017 are listed for trading on the NYSE under the symbol “SBNB.”

D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association

112

Table of Contents

Our amended and restated articles of incorporation have been filed as Exhibit 3.1 to Amendment No. 2 to our Registration Statement on Form F-1 (Registration No. 333-164940), filed with the SEC on March 18, 2010. Our amended and restated bylaws are filed as Exhibit 1.2 to our Annual Report on Form 20-F filed with the SEC on June 29, 2010. In June 2014, after receiving shareholder approval, we amended our Amended and Restated Articles of Incorporation to increase our authorized common stock to 400,000,000 from 250,000,000. This amendment to our Amended and Restated Articles of Incorporation is filed as Exhibit 1.3 to our Annual Report on Form 20-F filed with the SEC on March 31, 2015. The information contained in these exhibits is incorporated by reference herein.
Below is a summary of the description of our capital stock, including the rights, preferences and restrictions attaching to each class of stock. Because the following is a summary, it does not contain all information that you may find useful. For more complete information, you should read our amended and restated articles of incorporation and amended and restated bylaws, which are incorporated by reference herein.
Purpose
Our purpose, as stated in our amended and restated articles of incorporation, is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA. Our amended and restated articles of incorporation and amended and restated bylaws do not impose any limitations on the ownership rights of our shareholders.
Authorized capitalization
Under our amended and restated articles of incorporation, as amended, we have authorized 425,000,000 registered shares, consisting of 400,000,000 common shares, par value $0.01 per share, of which 174,629,755 shares were issued and outstanding as of March 15, 2017, and 25,000,000 preferred shares, par value $0.01 per share, of which no shares are issued and outstanding.
Description of Common Shares
Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding preferred shares, holders of our common shares are entitled to receive ratably all dividends, if any, declared by our board of directors out of funds legally available for dividends. Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our common shares are entitled to receive pro rata our remaining assets available for distribution. Holders of our common shares do not have conversion, redemption or pre-emptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of our common shares are subject to the rights of the holders of any preferred shares, which we may issue in the future.
Description of Preferred Shares
Our amended and restated articles of incorporation authorize our board of directors to establish one or more series of preferred stock and to determine, with respect to any series of preferred stock, the terms and rights of that series, including the designation of the series, the number of shares of the series, the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of such series, and the voting rights, if any, of the holders of the series.
Directors
Our directors are elected by a plurality of the votes cast by shareholders entitled to vote. There is no provision for cumulative voting.
Our amended and restated articles of incorporation require our board of directors to consist of at least one member. Our board of directors consists of eight members. Our amended and restated bylaws may be amended by the vote of a majority of our entire board of directors.
Directors are elected annually on a staggered basis, and each shall serve for a three year term and until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. Our board of directors, as advised by our Compensation Committee, has the authority to fix the amounts which shall be payable to the members of the board of directors for attendance at any meeting or for services rendered to us.
Shareholder Meetings
Under our amended and restated bylaws, annual meetings of shareholders will be held at a time and place selected by our board of directors. The meetings may be held in or outside of the Republic of the Marshall Islands. Special meetings may be called at any time by a majority of our board of directors, the chairman of our board of directors or an officer of the Company who is also a director. Our board of directors may set a record date between 15 and 60 days before the date of any meeting to determine the shareholders that will be eligible to receive notice and vote at the meeting. One or more shareholders representing

113

Table of Contents

at least one-third of the total voting rights of our total issued and outstanding shares present in person or by proxy at a shareholder meeting shall constitute a quorum for the purposes of the meeting.
Dissenters’ Rights of Appraisal and Payment
Under the BCA, our shareholders have the right to dissent from various corporate actions, and receive payment of the fair market value of their shares. In the event of any further amendment of our amended and restated articles of incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which our shares are primarily traded on a local or national securities exchange.
Shareholders’ Derivative Actions
Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a holder of common shares both at the time the derivative action is commenced and at the time of the transaction to which the action relates.
Limitations on Liability and Indemnification of Officers and Directors
The BCA authorizes corporations to limit or eliminate the personal liability of directors to corporations and their shareholders for monetary damages for certain breaches of directors' fiduciary duties. Our amended and restated bylaws include a provision that eliminates the personal liability of directors for actions taken as a director to the fullest extent permitted by law.
Our amended and restated bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly authorized to advance certain expenses (including attorney's fees and disbursements and court costs) to our directors and officers and carry directors' and officers' insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and this insurance are useful to attract and retain qualified directors and executive officers.
The limitation of liability and indemnification provisions in our amended and restated bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.
Anti-Takeover Effect of Certain Provisions of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws
Several provisions of our amended and restated articles of incorporation and amended and restated bylaws, which are summarized below, may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (i) the merger or acquisition of us by means of a tender offer, a proxy contest or otherwise that a shareholder may consider in its best interest and (ii) the removal of incumbent officers and directors.
Blank Check Preferred Stock
Under the terms of our amended and restated articles of incorporation, our board of directors has authority, without any further vote or action by our shareholders, to issue up to 25 million shares of blank check preferred stock. Our board of directors may issue preferred shares on terms calculated to discourage, delay or prevent a change of control of us or the removal of our management.
Election and Removal of Directors
Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our amended and restated bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our amended and restated articles of incorporation also provide that our directors may be removed for cause upon

114

Table of Contents

the affirmative vote of not less than two-thirds of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
Limited Actions by Shareholders
Our amended and restated articles of incorporation and our amended and restated bylaws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our amended and restated bylaws provide that, unless otherwise prescribed by law, only a majority of our board of directors, the chairman of our board of directors or an officer of the Company who is also a director may call special meetings of our shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly, a shareholder may be prevented from calling a special meeting for shareholder consideration of a proposal over the opposition of our board of directors and shareholder consideration of a proposal may be delayed until the next annual meeting.
Advance notice requirements for shareholder proposals and director nominations
Our amended and restated bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder's notice must be received at our principal executive offices not less than 150 days nor more than 180 days prior to the one year anniversary of the immediately preceding annual meeting of shareholders. Our amended and restated bylaws also specify requirements as to the form and content of a shareholder's notice. These provisions may impede shareholders' ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.
Classified board of directors
As described above, our amended and restated articles of incorporation provide for the division of our board of directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered three year terms. Accordingly, approximately one-third of our board of directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our board of directors from removing a majority of our board of directors for two years.
Business combinations
Although the BCA does not contain specific provisions regarding "business combinations" between companies organized under the laws of the Marshall Islands and "interested shareholders," we have included these provisions in our amended and restated articles of incorporation. Specifically, our amended and restated articles of incorporation prohibit us from engaging in a "business combination" with certain persons for three years following the date the person becomes an interested shareholder. Interested shareholders generally include:
•
any person who is the beneficial owner of 15% or more of our outstanding voting stock; or
•
any person who is our affiliate or associate and who held 15% or more of our outstanding voting stock at any time within three years before the date on which the person's status as an interested shareholder is determined, and the affiliates and associates of such person.
Subject to certain exceptions, a business combination includes, among other things:
•
certain mergers or consolidations of us or any direct or indirect majority-owned subsidiary of ours;
•
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of our assets or of any subsidiary of ours having an aggregate fair market value equal to 10% or more of either the aggregate fair market value of all of our assets, determined on a combined basis, or the aggregate value of all of our outstanding stock;
•
certain transactions that result in the issuance or transfer by us of any stock of ours to the interested shareholder;
•
any transaction involving us or any of our subsidiaries that has the effect of increasing the proportionate share of any class or series of stock, or securities convertible into any class or series of stock, of ours or any such subsidiary that is owned directly or indirectly by the interested shareholder or any affiliate or associate of the interested shareholder; and
•
any receipt by the interested shareholder of the benefit directly or indirectly (except proportionately as a shareholder) of any loans, advances, guarantees, pledges or other financial benefits provided by or through us.
These provisions of our amended and restated articles of incorporation do not apply to a business combination if:
•
before a person became an interested shareholder, our board of directors approved either the business combination or the transaction in which the shareholder became an interested shareholder;

115

Table of Contents

•
upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than certain excluded shares;
•
at or following the transaction in which the person became an interested shareholder, the business combination is approved by our board of directors and authorized at an annual or special meeting of shareholders, and not by written consent, by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock that is not owned by the interest shareholder;
•
the shareholder was or became an interested shareholder prior to the closing of our initial public offering in 2010;
•
a shareholder became an interested shareholder inadvertently and (i) as soon as practicable divested itself of ownership of sufficient shares so that the shareholder ceased to be an interested shareholder; and (ii) would not, at any time within the three-year period immediately prior to a business combination between us and such shareholder, have been an interested shareholder but for the inadvertent acquisition of ownership; or
•
the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required under our amended and restated articles of incorporation which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an interested shareholder during the previous three years or who became an interested shareholder with the approval of the board; and (iii) is approved or not opposed by a majority of the members of the board of directors then in office (but not less than one) who were directors prior to any person becoming an interested shareholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to:
(i)
a merger or consolidation of us (except for a merger in respect of which, pursuant to the BCA, no vote of our shareholders is required);
(ii)
a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of us or of any direct or indirect majority-owned subsidiary of ours (other than to any direct or indirect wholly-owned subsidiary or to us) having an aggregate fair market value equal to 50% or more of either the aggregate fair market value of all of our assets determined on a consolidated basis or the aggregate fair market value of all the outstanding shares; or
(iii)
a proposed tender or exchange offer for 50% or more of our outstanding voting stock.
Registrar and Transfer Agent
The registrar and transfer agent for our common shares is Computershare Trust Company, N.A.
Listing
Our common shares are listed on the New York Stock Exchange under the symbol “STNG.”
C. Material Contracts
Attached as exhibits to this annual report are the contracts we consider to be both material and outside the ordinary course of business during the two-year period immediately preceding the date of this annual report. We refer you to “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Long-Term Debt Obligations and Credit Arrangements” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” for a discussion of these agreements.
Other than as set forth above, there were no material contracts, other than contracts entered into in the ordinary course of business, to which we were a party during the two year period immediately preceding the date of this annual report.
D. Exchange Controls
Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our common shares.

116

Table of Contents

E. Taxation
United States Federal Income Tax Considerations
In the opinion of Seward & Kissel LLP, the following are the material United States federal income tax consequences to us of our activities and to United States Holders and Non-United States Holders, each as defined below, of the ownership of common shares. The following discussion of United States federal income tax matters is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, or the Treasury Regulations, all of which are subject to change, possibly with retroactive effect. The discussion below is based, in part, on the description of our business in this Report and assumes that we conduct our business as described herein. References in the following discussion to the “Company,” “we,” “our” and “us” are to Scorpio Tankers Inc. and its subsidiaries on a consolidated basis.
United States Federal Income Taxation of Operating Income: In General
We earn and anticipate that we will continue to earn substantially all our income from the hiring or leasing of vessels for use on a time charter basis, from participation in a pool or from the performance of services directly related to those uses, all of which we refer to as Shipping Income.
Unless exempt from United States federal income taxation under the rules of Section 883 of the Code, or Section 883, as discussed below, a foreign corporation such as us will be subject to United States federal income taxation on its Shipping Income that is treated as derived from sources within the United States, which we refer to as “United States Source Shipping Income.” For United States federal income tax purposes, “United States Source Shipping Income” includes 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
Shipping Income attributable to transportation exclusively between non-United States ports will be considered to be 100% derived from sources entirely outside the United States. Shipping Income derived from sources outside the United States will not be subject to any United States federal income tax.
Shipping Income attributable to transportation exclusively between United States ports is considered to be 100% derived from United States sources. However, we are not permitted by United States law to engage in the transportation of cargoes that produces 100% United States Source Shipping Income.
Unless exempt from tax under Section 883, our gross United States Source Shipping Income would be subject to a 4% tax imposed without allowance for deductions, as described more fully below.
Exemption of Operating Income from United States Federal Income Taxation
Under Section 883 and the Treasury Regulations thereunder, a foreign corporation will be exempt from United States federal income taxation on its United States Source Shipping Income if:
(1) it is organized in a “qualified foreign country,” which is one that grants an “equivalent exemption” from tax to corporations organized in the United States in respect of each category of shipping income for which exemption is being claimed under Section 883; and
(2) one of the following tests is met:
(A) more than 50% of the value of its shares is beneficially owned, directly or indirectly, by “qualified shareholders,” which as defined includes individuals who are “residents” of a qualified foreign country, which we refer to as the “50% Ownership Test”; or
(B) its shares are “primarily and regularly traded on an established securities market” in a qualified foreign country or in the United States, to which we refer as the “Publicly-Traded Test”.
The Republic of the Marshall Islands, the jurisdiction where we and our ship-owning subsidiaries are incorporated, has been officially recognized by the IRS as a qualified foreign country that grants the requisite “equivalent exemption” from tax in respect of each category of shipping income we earn and currently expect to earn in the future. Therefore, we will be exempt from United States federal income taxation with respect to our United States Source Shipping Income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.
For our 2016 taxable tax year, we intend to take the position that we satisfy the Publicly-Traded Test and we anticipate that we will continue to satisfy the Publicly-Traded Test for future taxable years. However, as discussed below, this is a factual determination made on an annual basis. We do not currently anticipate a circumstance under which we would be able to satisfy the 50% Ownership Test.

117

Table of Contents

Publicly-Traded Test
The Treasury Regulations under Section 883 provide, in pertinent part, that shares of a foreign corporation will be considered to be “primarily traded” on an established securities market in a country if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Our common shares, which constitute our sole class of issued and outstanding stock, are “primarily traded” on the NYSE.
Under the Treasury Regulations, our common shares will be considered to be “regularly traded” on an established securities market if one or more classes of our stock representing more than 50% of our outstanding stock, by both total combined voting power of all classes of stock entitled to vote and total value, are listed on such market, to which we refer as the “Listing Threshold.” Since our common shares are listed on the NYSE, we expect to satisfy the Listing Threshold.
It is further required that with respect to each class of stock relied upon to meet the Listing Threshold, (i) such class of stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year, or the “Trading Frequency Test”; and (ii) the aggregate number of shares of such class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year, or the “Trading Volume Test.” We currently satisfy and anticipate that we will continue to satisfy the Trading Frequency Test and Trading Volume Test. Even if this were not the case, the Treasury Regulations provide that the Trading Frequency Test and Trading Volume Tests will be deemed satisfied if, as is the case with our common shares, such class of stock is traded on an established securities market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.
Notwithstanding the foregoing, the Treasury Regulations provide, in pertinent part, that a class of stock will not be considered to be “regularly traded” on an established securities market for any taxable year during which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the vote and value of such class of outstanding shares, to which we refer as the “5% Override Rule.”
For purposes of being able to determine the persons who actually or constructively own 5% or more of the vote and value of our common shares, or “5% Shareholders,” the Treasury Regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the SEC as owning 5% or more of our common shares. The Treasury Regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.
In the event the 5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will nevertheless not apply if we can establish that within the group of 5% Shareholders, there are sufficient qualified shareholders for purposes of Section 883 to preclude non-qualified shareholders in such group from owning 50% or more of our common shares for more than half the number of days during the taxable year. In order to benefit from this exception to the 5% Override Rule, we must satisfy certain substantiation requirements in regards to the identity of its 5% Shareholders.
We believe that we currently satisfy the Publicly-Traded Test and intend to take this position on our United States federal income tax return for the 2016 taxable year. However, there are factual circumstances beyond our control that could cause us to lose the benefit of the Section 883 exemption. For example, if we trigger the 5% Override Rule for any future taxable year, there is no assurance that we will have sufficient qualified 5% Shareholders to preclude nonqualified 5% Shareholders from owning 50% or more of our common shares for more than half the number of days during such taxable year, or that we will be able to satisfy the substantiation requirements in regards to our 5% Shareholders.
United States Federal Income Taxation in Absence of Section 883 Exemption
If the benefits of Section 883 are unavailable, our United States source shipping income would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions, which we refer to as the “4% Gross Basis Tax Regime,” to the extent that such income is not considered to be “effectively connected” with the conduct of a United States trade or business, as described below. Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being United States source shipping income, the maximum effective rate of United States federal income tax on our shipping income would never exceed 2% under the 4% Gross Basis Tax Regime.
To the extent our United States source shipping income is considered to be “effectively connected” with the conduct of a United States trade or business, as described below, any such “effectively connected” United States source shipping income, net of applicable deductions, would be subject to United States federal income tax, currently imposed at rates of up to 35%. In addition, we would generally be subject to the 30% “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 United States trade or business.

118

Table of Contents

Our United States Source Shipping Income would be considered “effectively connected” with the conduct of a United States trade or business only if:
•
we have, or are considered to have, a fixed place of business in the United States involved in the earning of United States Source Shipping Income; and
•
substantially all of our United States Source Shipping Income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.
We do not currently have, intend to have, or permit circumstances that would result in having, any vessel sailing to or from the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, it is anticipated that none of our United States source shipping income will be “effectively connected” with the conduct of a United States trade or business.
United States Federal Income Taxation of Gain on Sale of Vessels
If we qualify for exemption from tax under Section 883 in respect of the shipping income derived from the international operation of our vessels, then a gain from the sale of any such vessel should likewise be exempt from United States federal income tax under Section 883. If, however, our shipping income from such vessels does not for whatever reason qualify for exemption under Section 883, then any gain on the sale of a vessel will be subject to United States federal income tax if such sale occurs in the United States. To the extent possible, we intend to structure the sales of our vessels so that the gain therefrom is not subject to United States federal income tax. However, there is no assurance we will be able to do so.
United States Federal Income Taxation of United States Holders
The following is a discussion of the material United States federal income tax considerations relevant to an investment decision by a United States Holder, as defined below, with respect to our common shares. This discussion does not purport to deal with the tax consequences of owning common shares to all categories of investors, some of which may be subject to special rules. This discussion only addresses considerations relevant to those United States Holders who hold the common shares as capital assets, that is, generally for investment purposes. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal, state, local or foreign law of the ownership of common shares.
As used herein, the term United States Holder means a beneficial owner of common shares that is an individual United States citizen or resident, a United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.
If a partnership holds our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding common shares, you are encouraged to consult your tax advisor.
Distributions
Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common shares to a United States Holder will generally constitute dividends to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of such earnings and profits will be treated first as a nontaxable return of capital to the extent of the United States Holder’s tax basis in his common shares on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United States corporation, United States Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common shares will generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.
Dividends paid on our common shares to a United States Holder who is an individual, trust or estate, or a United States Non-Corporate Holder, will generally be treated as “qualified dividend income” that is taxable to such United States Non-Corporate Holder at preferential tax rates provided that (1) the common shares are readily tradable on an established securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which, as discussed below, we believe we have not been, we believe we are not and do not anticipate being in the future); (3) the United States Non-Corporate Holder has owned the common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the common shares become ex-dividend; and (4) the United States Non-Corporate Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. Any distributions out of earnings and profits we pay which are not eligible for these preferential rates will be taxed as ordinary income to a United States Non-Corporate Holder.

119

Table of Contents

Special rules may apply to any “extraordinary dividend”—generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder’s adjusted tax basis in his common shares—paid by us. If we pay an “extraordinary dividend” on our common shares that is treated as “qualified dividend income,” then any loss derived by a United States Non-Corporate Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.
Sale, Exchange or Other Disposition of Common Shares
Assuming we do not constitute a passive foreign investment company for any taxable year, a United States Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common shares in an amount equal to the difference between the amount realized by the United States Holder from such sale, exchange or other disposition and the United States Holder’s tax basis in such shares. Such gain or loss will be treated as long-term capital gain or loss if the United States Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as United States source income or loss, as applicable, for United States foreign tax credit purposes. Long-term capital gains of United States Non-Corporate Holders are currently eligible for reduced rates of taxation. A United States Holder’s ability to deduct capital losses is subject to certain limitations.
Passive Foreign Investment Company Status and Significant Tax Consequences
Special United States federal income tax rules apply to a United States Holder that holds shares in a foreign corporation classified as a “passive foreign investment company”, or a PFIC, for United States federal income tax purposes. In general, we will be treated as a PFIC with respect to a United States Holder if, for any taxable year in which such Holder holds our common shares, either:
•
at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or
•
at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income.
For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.
Based on our current operations and future projections, we do not believe that we have been, are, nor do we expect to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point, our belief is based principally on the position that, for purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Accordingly, such income should not constitute passive income, and the assets that we own and operate in connection with the production of such income, in particular, the vessels, should not constitute assets that produce or are held for the production of passive income for purposes of determining whether we are a PFIC. Therefore, based on our current operations and future projections, we should not be treated as a PFIC with respect to any taxable year. There is substantial legal authority supporting this position, consisting of case law and IRS pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority that characterizes time charter income as rental income rather than services income for other tax purposes. It should be noted that in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position. Furthermore, 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 you that the nature of our operations will not change in the future.
As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a United States Holder would be subject to different United States federal income taxation rules depending on whether the United States Holder makes an election to treat us as a “Qualified Electing Fund,” which election we refer to as a “QEF election.” As an alternative to making a QEF election, a United States Holder should be able to make a “mark-to-market” election with respect to our common shares, as discussed below. In addition, if we were to be treated as a PFIC for any taxable year, a United States Holder will generally be required to file an annual report with the IRS for that year with respect to such Holder’s common shares.
Taxation of United States Holders Making a Timely QEF Election
If a United States Holder makes a timely QEF election, which United States Holder we refer to as an Electing Holder, the Electing Holder must report for United States federal income tax purposes his pro rata share of our ordinary earnings and net capital gain, if any, for each of our taxable years during which we are a PFIC that ends with or within the taxable year of the Electing Holder, regardless of whether distributions were received from us by the Electing Holder. No portion of any such inclusions of ordinary earnings will be treated as “qualified dividend income.” Net capital gain inclusions of United States Non-Corporate

120

Table of Contents

Holders would be eligible for preferential capital gain tax rates. The Electing Holder’s adjusted tax basis in the common shares will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common shares and will not be taxed again once distributed. An Electing Holder would not, however, be entitled to a deduction for its pro rata share of any losses that we incur with respect to any taxable year. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common shares. A United States Holder would make a timely QEF election for our shares by filing one copy of IRS Form 8621 with his United States federal income tax return for the first year in which he held such shares when we were a PFIC. If we were to be treated as a PFIC for any taxable year, we would provide each United States Holder with all necessary information in order to make the QEF election described above.
Taxation of United States Holders Making a “Mark-to-Market” Election
Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate will be the case, our common shares are treated as “marketable stock,” a United States Holder would be allowed to make a “mark-to-market” election with respect to our common shares, provided the United States Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the United States Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common shares at the end of the taxable year over such Holder’s adjusted tax basis in the common shares. The United States Holder would also be permitted an ordinary loss in respect of the excess, if any, of the United States Holder’s adjusted tax basis in the common shares over its fair market value 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 United States Holder’s tax basis in his common shares would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common shares would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the United States Holder.
Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election
  Finally, if we were to be treated as a PFIC for any taxable year, a United States Holder who does not make either a QEF election or a “mark-to-market” election for that year, whom we refer to as a Non-Electing Holder, would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on the common shares in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common shares), and (2) any gain realized on the sale, exchange or other disposition of our common shares. Under these special rules:
•
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common shares;
•
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, would be taxed as ordinary income and would not be “qualified dividend 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 taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
United States Federal Income Taxation of Non-United States Holders
  A beneficial owner of common shares (other than a partnership) that is not a United States Holder is referred to herein as a Non-United States Holder.
If a partnership holds common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding common shares, you are encouraged to consult your tax advisor.
Dividends on Common Stock
A Non-United States Holder generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to his common shares, unless that income is effectively connected with the Non-United States Holder’s conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is subject to United Stated federal income tax only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States.
Sale, Exchange or Other Disposition of Common Shares
Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common shares, unless:

121

Table of Contents

•
the gain is effectively connected with the Non-United States Holder’s conduct of a trade or business in the United States (and, if the Non-United States Holder is entitled to the benefits of a United States income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by the Non-United States Holder in the United States); or
•
the Non-United States Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.
If the Non-United States Holder is engaged in a United States trade or business for United States federal income tax purposes, dividends on the common shares, and gains from the sale, exchange or other disposition of such shares, that are effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of United States Holders. In addition, if you are a corporate Non-United States Holder, your earnings and profits that are attributable to the effectively connected income, subject to certain adjustments, may be subject to an additional “branch profits” tax at a rate of 30%, or at a lower rate as may be specified by an applicable United States income tax treaty.
Backup Withholding and Information Reporting
In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements if you are a non-corporate United States Holder. Such payments or distributions may also be subject to backup withholding if you are a non-corporate United States Holder and you:
•
fail to provide an accurate taxpayer identification number;
•
are notified by the IRS that you have failed to report all interest or dividends required to be shown on your United States federal income tax returns; or
•
in certain circumstances, fail to comply with applicable certification requirements.
Non-United States Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on an appropriate IRS Form W-8.
If you are a Non-United States Holder and you sell your common shares to or through a United States office of a broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless you certify that you are a non-United States person, under penalties of perjury, or you otherwise establish an exemption. If you sell your common shares through a non-United States office of a non-United States broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your common shares through a non-United States office of a broker that is a United States person or has some other contacts with the United States. Such information reporting requirements will not apply, however, if the broker has documentary evidence in its records that you are a non-United States person and certain other conditions are met, or you otherwise establish an exemption.
Backup withholding is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your United States federal income tax liability by filing a refund claim with the IRS.
Individuals who are United States Holders (and to the extent specified in applicable Treasury Regulations, certain individuals who are Non- United States Holders and certain United States entities) who hold “specified foreign financial assets” (as defined in Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amount as prescribed by applicable Treasury regulations). Specified foreign financial assets would include, among other assets, our common shares, unless the shares are held through an account maintained with a United States financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event an individual United States Holder (and to the extent specified in applicable Treasury Regulations, an individual Non- United States Holder or a United States entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of United States federal income taxes of such holder for the related tax year may not close until three years after the date that the required IRS Form 8938 is filed. United States Holders (including United States entities) and Non- United States Holders are encouraged consult their own tax advisors regarding their reporting obligations under this legislation.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts

122

Table of Contents

Not applicable.
H. Documents on Display
We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E. Washington, D.C. 20549, or from its website http://www.sec.gov . You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates.
Shareholders may also visit the Investor Relations section of our website at www.scorpiotankers.com or request a copy of our filings at no cost, by writing or telephoning us at the following address: Scorpio Tankers Inc., 9, Boulevard Charles III Monaco 98000, +377-9898-5716.
I. Subsidiary Information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We are exposed to the impact of interest rate changes primarily through our unhedged variable-rate borrowings. Significant increases in interest rates could adversely affect our operating margins, results of operations and our ability to service our debt. From time to time, we will use interest rate swaps to reduce our exposure to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costs associated with our variable-rate debt and are not for speculative or trading purposes.
Based on the floating rate debt at December 31, 2016 and 2015, a one-percentage point increase in the floating interest rate would increase interest expense by $15.0 million and $16.3 million per year, respectively. The following table presents the due dates for the principal payments on our fixed and floating rate debt:
 
 
As of December 31,
 In thousands of U.S. dollars
 
2017
 
2018 - 2019
 
2020 - 2021
 
Thereafter
Principal payments floating rate debt (unhedged)
 
$
305,562

 
$
268,434

 
$
870,874

 
$
53,208

Principal payments fixed rate debt
 
51,750

 
348,500

 
53,750

 
—

Total principal payments on outstanding debt
 
$
357,312

 
$
616,934

 
$
924,624

 
$
53,208

Spot Market Rate Risk
The cyclical nature of the tanker industry causes significant increases or decreases in the revenue that we earn from our vessels, particularly those vessels that operate in the spot market or participate in pools that are concentrated in the spot market such as the Scorpio Group Pools. We currently have five vessels on time charter contracts. Additionally, we have the ability to remove our vessels from the pools on relatively short notice if attractive time charter opportunities arise. A $1,000 per day increase or decrease in spot rates for all of our vessel classes would have increased or decreased our operating income by $31.1 million an d $31.4 million for the years ended December 31, 2016 and 2015, respectively.
Foreign Exchange Rate Risk
Our primary economic environment is the international shipping market. This market utilizes the US dollar as its functional currency. Consequently, virtually all of our revenues and the majority of our operating expenses are in US dollars. However, we incur some of our combined expenses in other currencies, particularly the Euro. The amount and frequency of some of these expenses (such as vessel repairs, supplies and stores) may fluctuate from period to period. Depreciation in the value of the US dollar relative to other currencies will increase the US dollar cost of us paying such expenses. The portion of our business conducted in other currencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations.
There is a risk that currency fluctuations will have a negative effect on our cash flows. We have not entered into any hedging contracts to protect against currency fluctuations. However, we have some ability to shift the purchase of goods and services from one country to another and, thus, from one currency to another, on relatively short notice. We may seek to hedge this currency fluctuation risk in the future.

123

Table of Contents

Bunker Price Risk
Our operating results are affected by movement in the price of fuel oil consumed by the vessels – known in the industry as bunkers. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability. We do not hedge our exposure to bunker price risk.
Inflation
We do not expect inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.

124

Table of Contents

PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
A. Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our controls and procedures are designed to provide reasonable assurance of achieving their objectives.
We carried out an evaluation under the supervision, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15e ) as of December 31, 2016 . Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2016 to provide reasonable assurance that (1) information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
B. Management’s Annual Report on Internal Control Over Financial Reporting
In accordance with Rule 13a-15(f) of the Exchange Act, the management of the Company is responsible for the establishment and maintenance of adequate internal controls over financial reporting for the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Management has performed an assessment of the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2016 based on the provisions of Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in 2013. Based on our assessment, management determined that the Company’s internal controls over financial reporting was effective as of December 31, 2016 based on the criteria in Internal Control—Integrated Framework issued by COSO (2013).
The Company’s internal control over financial reporting, at December 31, 2016 , has been audited by PricewaterhouseCoopers Audit, an independent registered public accounting firm, who also audited the Company’s consolidated financial statements for that year. Their audit report on the effectiveness of internal control over financial reporting is presented in “Item 18. Financial Statements.”
C. Attestation Report of the Registered Public Accounting Firm
The attestation report of the Registered Public Accounting Firm is presented on page F-2 of the Financial Statements filed as part of this annual report.
D. Changes in Internal Control Over Financial Reporting
None

125

Table of Contents

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Mr. Ademaro Lanzara, who serves on the Audit Committee, qualifies as an “audit committee financial expert” and that he is “independent” in accordance with SEC rules.
ITEM 16B. CODE OF ETHICS
We have adopted a code of ethics applicable to our officers, directors, employees and agents, which complies with applicable guidelines issued by the SEC. Our code of ethics as in effect on the date hereof, has been filed as an exhibit to this annual report and is also available on our website at www.scorpiotankers.com.
ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES
A. Audit Fees
Our principal accountant for fiscal years ended December 31, 2016 and 2015 was PricewaterhouseCoopers Audit (Marseille, France) and the audit fee for those periods was $601,037 and $553,000, respectively.
During 2015, our principal accountant, PricewaterhouseCoopers Audit, provided additional services related to our May 2015 underwritten offering of common stock. The fee for this service was $47,189.
B. Audit-Related Fees
None
C. Tax Fees
None
D. All Other Fees
None
E. Audit Committee’s Pre-Approval Policies and Procedures
Our Audit Committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent auditors and associated fees prior to the engagement of the independent auditor with respect to such services.
F. Audit Work Performed by Other Than Principal Accountant if Greater Than 50%
Not applicable.
ITEM 16D. EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
In May 2015, our Board of Directors authorized a new Securities Repurchase Program to purchase up to an aggregate of $250 million of our common stock and bonds, which currently consist of our (i) Convertible Notes (ii) Senior Notes Due 2020 (NYSE: SBNA), and (iii) Senior Notes Due 2017 (NYSE: SBNB). This program replaced our stock buyback program that was previously announced in July 2014 and was terminated in conjunction with this new repurchase program.
During the year ended December 31, 2016 , we have repurchased the following:
•
an aggregate of 2,956,760 of our common shares that are being held as treasury shares at an average price of $5.58 per share. 
•
$10.0 million aggregate principal amount of our Convertible Notes at an average price of $839.28 per $1,000 principal amount.  

126

Table of Contents

The amounts of our common shares purchased in 2016 by month, including commissions, are set out in the table below:
    
Period
 
Total number of shares purchased
 
Average price paid per share
 
Total number of shares purchased as part of publicly announced program
 
Maximum amount that may yet be expected on share repurchases under program
 
January 2016
 
2,299,606

 
$
5.96

 
2,299,606

 
$
164,539,494


July 2016
 
657,154

 
$
4.26

 
657,154

 
$
153,348,320

(1)  
Total
 
2,956,760

 
$
5.58

 
2,956,760

 
$
153,348,320

 

(1) The amount authorized for repurchase was reduced by $8.4 million as we repurchased $10.0 million face value of our Convertible Notes in March 2016 and June 2016 at an average price of $839.28 per $1,000 principal amount under this program. This repurchase is not reflected in the above table.
We had $153.3 million remaining available under our Securities Repurchase Program as of March 15, 2017. We expect to repurchase any securities in the open market, at times and prices that are considered to be appropriate, but we are not obligated under the terms of the program to repurchase any securities.
There were 174,629,755 common shares outstanding as of March 15, 2017.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
None.
ITEM 16G. CORPORATE GOVERNANCE
Pursuant to an exception for foreign private issuers, we, as a Marshall Islands company, are not required to comply with the corporate governance practices followed by U.S. companies under the NYSE listing standards. We believe that our established practices in the area of corporate governance are in line with the spirit of the NYSE standards and provide adequate protection to our shareholders. In this respect, we have voluntarily adopted NYSE required practices, such as (i) having a majority of independent directors, (ii) establishing audit, compensation and nominating committees and (iii) adopting a Code of Ethics.
There are two significant differences between our corporate governance practices and the practices required by the NYSE. The NYSE requires that non-management directors meet regularly in executive sessions without management. The NYSE also requires that all independent directors meet in an executive session at least once a year. The Marshall Islands law and our bylaws do not require our non-management directors to regularly hold executive sessions without management. During 2016 and through the date of this annual report, our non-management directors met in executive session five times. The NYSE requires companies to adopt and disclose corporate governance guidelines. The guidelines must address, among other things: director qualification standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession and an annual performance evaluation. We are not required to adopt such guidelines under Marshall Islands law and we have not adopted such guidelines.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.

127

Table of Contents

PART III
ITEM 17. FINANCIAL STATEMENTS
See “Item 18. Financial Statements.”
ITEM 18. FINANCIAL STATEMENTS
The financial information required by this Item is set forth beginning on page F-1 and is filed as part of this annual report.

128

Table of Contents

ITEM 19. EXHIBITS
Exhibit
Number
Description
1.1
Amended and Restated Articles of Incorporation of the Company (1)
1.2
Amended and Restated Bylaws of the Company (3)
1.3
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company (11)
2.1
Form of Stock Certificate (1)
2.3
Form of Senior Debt Securities Indenture (5)
2.4
Form of Subordinated Debt Securities Indenture (5)
2.5
Base Indenture, dated May 12, 2014, by and between the Company and Deutsche Bank Trust Company (9)
2.6
Supplemental Indenture to the Base Indenture, dated May 12, 2014, by and between the Company and Deutsche Bank Trust Company Americas, as trustee, relating to the Company’s 6.75% Senior Notes due 2020 (9)
2.7
Indenture, dated June 30, 2014, by and between the Company and Deutsche Bank Trust Company Americas, as trustee, relating to the Company’s 2.375% Convertible Notes due 2019 (11)
2.8
Second Supplemental Indenture to the Base Indenture, dated October 31, 2014, by and between the Company and Deutsche Bank Trust Company Americas, as trustee, relating to the Company’s 7.50% Senior Notes due 2017 (10)
4.1
2010 Revolving Credit Facility, as amended and restated on July 12, 2011 (6)
4.2
Letter Agreement to 2010 Revolving Credit Facility (as amended and restated on July 12, 2011), dated September 22, 2011 (6)
4.3
First Amendatory Agreement to 2010 Revolving Credit Facility (as amended and restated on July 12, 2011), dated December 22, 2011 (6)
4.4
2010 Equity Incentive Plan (3)
4.5
2013 Amended and Restated Equity Incentive Plan (8)
4.6
Administrative Services Agreement between the Company and Liberty Holding Company Ltd. (2)
4.6(a)
Deed of Amendment between the Company, SSH, SCM and SSM dated September 29, 2016
4.7
Master Agreement between the Company, SSM and SCM dated January 24, 2013 (7)
4.7(a)
Amended and Restated Master Agreement between the Company, SSM and SCM dated November 15, 2016
4.8
STI Spirit Credit Facility, dated March 9, 2011 (4)
4.9
Letter Agreement to STI Spirit Credit Facility, dated September 28, 2011 (6)
4.10
First Amendatory Agreement to STI Spirit Credit Facility, dated December 30, 2011 (6)
4.11
2011 Credit Facility, dated May 3, 2011 (6)
4.12
Letter Agreement to 2011 Credit Facility, dated September 22, 2011 (6)
4.12(a)
Letter Agreement to 2011 Credit Facility, dated August 9, 2016
4.13
First Amendatory Agreement to 2011 Credit Facility, dated June 27, 2011 (6)
4.14
Second Amendatory Agreement to 2011 Credit Facility, dated December 22, 2011 (6)
4.15
Newbuilding Credit Facility, dated December 21, 2011 (6)
4.16
2013 Credit Facility, dated July 2, 2013 (8)
4.17
KEXIM Credit Facility, dated February 28, 2014 (8)
4.17(a)
Second Amendment Agreement to KEXIM Credit Facility, dated June 1, 2016
4.18
K-Sure Credit Facility, dated February 24, 2014 (8)
4.18(a)
Letter Agreement to KSURE Credit Facility, dated July 15, 2016
4.19
Second Supplemental Agreement to ING Credit Facility, dated February 29, 2016 (12)
4.20
ABN AMRO Credit Facility, dated July 16, 2015 (12)
4.21
First Amendment Agreement to ABN AMRO Credit Facility, dated September 15, 2015 (12)
4.22
Second Amendment Agreement to ABN AMRO Credit Facility, dated October 20, 2015 (12)
4.23
Credit Suisse Credit Facility, dated October 30, 2015 (12)
4.24
BNP Paribas Credit Facility, dated December 18, 2015 (12)
4.24(a)
Amendment and Restatement to BNP Paribas Credit Facility, dated December 29, 2016

129

Table of Contents

4.25
Scotiabank Credit Facility, dated June 2, 2016
4.25(a)
Guarantee, dated June 2, 2016, relating to the Scotiabank Credit Facility
4.26
NIBC Credit Facility, dated June 30, 2016
4.26(a)
Guarantee, dated June 30, 2016, relating to the NIBC Credit Facility
4.27
2016 Credit Facility, dated August 30, 2016
4.28
DVB Credit Facility, dated September 8, 2016
4.29
HSH Nordbank Credit Facility, dated January 26, 2017
4.30
2017 Credit Facility, dated March 10, 2017
8.1
Subsidiaries of the Company
11.1
Code of Ethics
11.2
Whistleblower Policy (8)
11.3
Whistleblower Policy - Environmental (8)
12.1
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
12.2
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
13.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1
Consent of Independent Registered Public Accounting Firm
15.2
Consent of Drewry Shipping Consultants, Ltd.

(1)
Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 1) (File No. 333-164940) on March 10, 2010, and incorporated by reference herein.
(2)
Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 2) (File No. 333-164940) on March 18, 2010, and incorporated by reference herein.
(3)
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on June 29, 2010, and incorporated by reference herein.
(4)
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on April 21, 2011, and incorporated by reference herein.
(5)
Filed as an Exhibit to the Company’s Registration Statement on Form F-3 (File No. 333-173929) on May 4, 2011, and incorporated by reference herein.
(6)
Filed as an Exhibit to the Company’s Annual Report on Form 20-F on April 13, 2012, as amended, and incorporated by reference herein.
(7)
Filed as an Exhibit to the Company’s Annual Report on Form 20-F on March 29, 2013, and incorporated by reference herein.
(8)
Filed as an Exhibit to the Company's Annual Report on Form 20-F on March 31, 2014, and incorporated by reference herein.
(9)
Filed as an Exhibit to the Company’s Report on Form 6-K on May 13, 2014, and incorporated by reference herein.
(10)
Filed as an Exhibit to the Company’s Report on Form 6-K on October 31, 2014, and incorporated by reference herein.
(11)
Filed as an Exhibit to the Company's Annual Report on Form 20-F on March 31, 2015, and incorporated by reference herein.
(12)
Filed as an Exhibit to the Company's Annual Report on Form 20-F on March 18, 2016, and incorporated by reference herein.


130

Table of Contents

SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.
Dated March 16, 2017

Scorpio Tankers Inc.
(Registrant)
 
/s/ Emanuele Lauro
Emanuele Lauro
Chief Executive Officer


131


SCORPIO TANKERS INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
Page


F-1
Table of Contents


Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Scorpio Tankers Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Scorpio Tankers Inc. and its subsidiaries at December 31, 2016 and December 31, 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, appearing under Item 15. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Monaco, Principality of Monaco

March 16, 2017


/s/ PricewaterhouseCoopers Audit




F-2

Table of Contents

Scorpio Tankers Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2016 and 2015
 
 
 
As of
In thousands of U.S. dollars
Notes
 
December 31, 2016
 
December 31, 2015
Assets
 
 

 
 

Current assets
 
 
 
 
 

Cash and cash equivalents
2
 
$
99,887

 
$
200,970

Accounts receivable
3
 
42,329

 
69,017

Prepaid expenses and other current assets
 
 
9,067

 
3,585

Derivative financial instruments
12
 
116

 
—

Inventories
 
 
6,122

 
6,575

Total current assets
 
 
157,521

 
280,147

Non-current assets
 
 
 
 
 

Vessels and drydock
4/6
 
2,913,254

 
3,087,753

Vessels under construction
5/6
 
137,917

 
132,218

Other assets
7
 
21,495

 
23,337

Total non-current assets
 
 
3,072,666

 
3,243,308

Total assets
 
 
$
3,230,187

 
$
3,523,455

Current liabilities
 
 
 
 
 

Current portion of long-term debt
11
 
353,012

 
124,503

Finance lease liability
11
 
—

 
53,372

Accounts payable
9
 
9,282

 
25,683

Accrued expenses
10
 
23,024

 
32,643

Derivative financial instruments
12
 
—

 
1,175

Total current liabilities
 
 
385,318

 
237,376

Non-current liabilities
 
 
 
 
 

Long-term debt
11
 
1,529,669

 
1,872,114

Derivative financial instruments
12
 
—

 
80

Total non-current liabilities
 
 
1,529,669

 
1,872,194

Total liabilities
 
 
1,914,987

 
2,109,570

Shareholders’ equity
 
 
 
 
 

Issued, authorized and fully paid-in share capital:
 
 
 
 
 

Common stock, $0.01 par value per share; 400,000,000 shares authorized; 174,629,755 and 175,335,400 issued and outstanding shares as of December 31, 2016 and December 31, 2015, respectively.
14
 
2,247

 
2,224

Additional paid-in capital
14
 
1,756,769

 
1,729,314

Treasury shares
14
 
(443,816
)
 
(427,311
)
Retained earnings
 
 
—

 
109,658

Total shareholders’ equity
 
 
1,315,200

 
1,413,885

Total liabilities and shareholders’ equity
 
 
$
3,230,187

 
$
3,523,455


The accompanying notes are an integral part of these consolidated financial statements.

F-3

Table of Contents

Scorpio Tankers Inc. and Subsidiaries
Consolidated Statements of Income or Loss
For the years ended December 31, 2016 , 2015 and 2014

 
 
 
 
For the year ended December 31,
In thousands of U.S. dollars except per share and share data
 
Notes
 
2016
 
2015
 
2014
Revenue
 
 
 
 

 
 

 
 

Vessel revenue
 
16
 
$
522,747

 
$
755,711

 
$
342,807

Operating expenses
 
 
 
 

 
 

 
 

Vessel operating costs
 
 
 
(187,120
)
 
(174,556
)
 
(78,823
)
Voyage expenses
 
 
 
(1,578
)
 
(4,432
)
 
(7,533
)
Charterhire
 
17
 
(78,862
)
 
(96,865
)
 
(139,168
)
Depreciation
 
4
 
(121,461
)
 
(107,356
)
 
(42,617
)
General and administrative expenses
 
18
 
(54,899
)
 
(65,831
)
 
(48,129
)
Write down of vessels held for sale and net loss on sales of vessels
 
4
 
(2,078
)
 
(35
)
 
(3,978
)
Write-off of vessel purchase options
 
5
 
—

 
(731
)
 
—

Gain on sale of VLCCs
 
5
 
—

 
—

 
51,419

Gain on sale of Dorian shares
 
8
 
—

 
1,179

 
10,924

Re-measurement of investment in Dorian
 
8
 
—

 
—

 
(13,895
)
Total operating expenses
 
 
 
(445,998
)
 
(448,627
)
 
(271,800
)
Operating income
 
 
 
76,749

 
307,084

 
71,007

Other (expense) and income, net
 
 
 
 
 
 
 
 
Financial expenses
 
19
 
(104,048
)
 
(89,596
)
 
(20,770
)
Realized gain on derivative financial instruments
 
12
 
—

 
55

 
17

Unrealized gain / (loss) on derivative financial instruments
 
12
 
1,371

 
(1,255
)
 
264

Financial income
 
 
 
1,213

 
145

 
203

Share of income from associate
 
8
 
—

 
—

 
1,473

Other expenses, net
 
 
 
(188
)
 
1,316

 
(103
)
Total other expense, net
 
 
 
(101,652
)
 
(89,335
)
 
(18,916
)
Net (loss) / income
 
 
 
$
(24,903
)
 
$
217,749

 
$
52,091

Attributable to:
 
 
 
 

 
 

 
 

Equity holders of the parent
 
 
 
$
(24,903
)
 
$
217,749

 
$
52,091

(Loss) / earnings per share
 
 
 
 

 
 

 
 

Basic
 
21
 
$
(0.15
)
 
$
1.35

 
$
0.30

Diluted
 
21
 
$
(0.15
)
 
$
1.20

 
$
0.30

Basic weighted average shares outstanding
 
21
 
161,118,654

 
161,436,449

 
171,851,061

Diluted weighted average shares outstanding
 
21
 
161,118,654

 
199,739,326

 
176,292,802


The accompanying notes are an integral part of these consolidated financial statements.


F-4

Table of Contents

Scorpio Tankers Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income or Loss
For the years ended December 31, 2016 , 2015 and 2014
 
 
 
 
For the year ended December 31,
In thousands of U.S. dollars
 
Notes
 
2016
 
2015
 
2014
Net (loss) / income
 
 
 
$
(24,903
)
 
$
217,749

 
$
52,091

Other comprehensive income / (loss):
 
 
 
 

 
 

 
 

Items that may be reclassified subsequently to profit or loss
 
 
 
 

 
 

 
 

Change in value of available for sale investment
 
8
 
—

 
10,801

 
(10,801
)
Cash flow hedges
 
 
 
 

 
 

 
 

Unrealized gain on derivative financial instruments
 
12
 
—

 
77

 
135

Other comprehensive income / (loss)
 
 
 
—

 
10,878

 
(10,666
)
Total comprehensive (loss) / income
 
 
 
$
(24,903
)
 
$
228,627

 
$
41,425

Attributable to:
 
 
 
 

 
 

 
 

Equity holders of the parent
 
 
 
$
(24,903
)
 
$
228,627

 
$
41,425


The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

Scorpio Tankers Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
For the years ended December 31, 2016 , 2015 and 2014
In thousands of U.S. dollars except share data
Number of shares outstanding
 
Share capital
 
Additional paid-in capital
 
Treasury shares
 
(Accumulated deficit) / retained earnings
 
Accumulated other comprehensive (loss) / income
 
Total
Balance as of January 1, 2014
198,791,502

 
$
1,999

 
$
1,536,945

 
$
(7,938
)
 
$
(80,071
)
 
$
(212
)
 
$
1,450,723

Net income for the period
—

 
—

 
—

 
—

 
52,091

 
—

 
52,091

Other comprehensive loss
—

 
—

 
—

 
—

 
—

 
(10,666
)
 
(10,666
)
Issuance of restricted stock
3,362,176

 
34

 
(34
)
 
—

 
—

 
—

 
—

Amortization of restricted stock
—

 
—

 
29,726

 
—

 
—

 
—

 
29,726

Dividends paid, $0.39 per share (1)
—

 
—

 
(70,495
)
 
—

 
—

 
—

 
(70,495
)
Purchase of treasury shares
(37,579,136
)
 
—

 
—

 
(343,345
)
 
—

 
—

 
(343,345
)
Equity component of the Convertible Notes, net of issuance costs (see Note 11)
—

 
—

 
59,464

 
—

 
—

 
 

 
59,464

Shares issued for acquisition of vessels
—

 
—

 
(4,650
)
 
—

 
—

 
—

 
(4,650
)
Balance as of December 31, 2014
164,574,542

 
$
2,033

 
$
1,550,956

 
$
(351,283
)
 
$
(27,980
)
 
$
(10,878
)
 
$
1,162,848

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2015
164,574,542

 
$
2,033

 
$
1,550,956

 
$
(351,283
)
 
$
(27,980
)
 
$
(10,878
)
 
$
1,162,848

Net income for the period
—

 
—

 
—

 
—

 
217,749

 
—

 
217,749

Other comprehensive income
—

 
—

 
—

 
—

 
—

 
10,878

 
10,878

Net proceeds from follow on offerings
17,177,123

 
172

 
152,022

 
—

 
—

 
—

 
152,194

Issuance of restricted stock
1,857,444

 
19

 
(19
)
 
—

 
—

 
—

 
—

Amortization of restricted stock
—

 
—

 
33,687

 
—

 
—

 
—

 
33,687

Dividends paid, $0.495 per share (1)
—

 
—

 
(6,945
)
 
—

 
(80,111
)
 
—

 
(87,056
)
Purchase of treasury shares
(8,273,709
)
 
—

 
—

 
(76,028
)
 
—

 
—

 
(76,028
)
Equity component of repurchase of the Convertible Notes (see Note 11)
—

 
—

 
(387
)
 
—

 
—

 
—

 
(387
)
Balance as of Balance as of December 31, 2015
175,335,400

 
$
2,224

 
$
1,729,314

 
$
(427,311
)
 
$
109,658

 
$
—

 
$
1,413,885

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of January 1, 2016
175,335,400

 
$
2,224

 
$
1,729,314

 
$
(427,311
)
 
$
109,658

 
$
—

 
$
1,413,885

Net loss for the period
—

 
—

 
—

 
—

 
(24,903
)
 
—

 
(24,903
)
Issuance of restricted stock, net of forfeitures
2,251,115

 
23

 
(23
)
 
—

 
—

 
—

 
—

Amortization of restricted stock, net of forfeitures
—

 
—

 
30,207

 
—

 
—

 
—

 
30,207

Dividends paid, $0.50 per share (1)
—

 
—

 
(2,168
)
 
—

 
(84,755
)
 
—

 
(86,923
)
Purchase of treasury shares
(2,956,760
)
 
—

 
—

 
(16,505
)
 
—

 
—

 
(16,505
)
Equity issuance costs
—

 
—

 
(24
)
 
—

 
—

 
—

 
(24
)
Equity component of repurchase of the Convertible Notes (see Note 11)
—

 
—

 
(537
)
 
—

 
—

 
—

 
(537
)
Balance as of December 31, 2016
174,629,755

 
$
2,247

 
$
1,756,769

 
$
(443,816
)
 
$
—

 
$
—

 
$
1,315,200

(1) The Company's policy is to distribute dividends from available retained earnings first and then from additional paid in capital.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Table of Contents

Scorpio Tankers Inc. and Subsidiaries
Consolidated Cash Flow Statements
For the years ended December 31, 2016 , 2015 and 2014

 
 
 
For the year ended December 31,
In thousands of U.S. dollars
Notes
 
2016
 
2015
 
2014
Operating activities
 
 
 
 
 

 
 

Net (loss) / income
 
 
$
(24,903
)
 
$
217,749

 
$
52,091

Gain on sale of VLCCs

 
—

 
—

 
(51,419
)
Gain on sale of Dorian Shares
8
 
—

 
(1,179
)
 
(10,924
)
Re-measurement of investment in Dorian
8
 
—

 
—

 
13,895

Loss from sales of vessels
4
 
2,078

 
35

 
3,978

Write-off of vessel purchase options
5
 
—

 
731

 
—

Depreciation
4
 
121,461

 
107,356

 
42,617

Amortization of restricted stock
14
 
30,207

 
33,687

 
29,726

Amortization of deferred financing fees
 
 
14,149

 
14,688

 
4,362

Write-off of deferred financing fees
 
 
14,479

 
2,730

 
472

Straight-line adjustment for charterhire expense
 
 
—

 
—

 
3

Share of profit from associate
8
 
—

 
—

 
(1,473
)
Unrealized (gain) / loss on derivative financial instruments
12
 
(1,371
)
 
1,255

 
(264
)
Amortization of acquired time charter contracts
 
 
65

 
513

 
478

Accretion of Convertible Notes
11
 
11,562

 
11,096

 
5,330

Gain on repurchase of Convertible Notes
 
 
(994
)
 
(46
)
 
—

 
 
 
166,733

 
388,615

 
88,872

Changes in assets and liabilities:
 
 
 
 
 

 
 

Drydock payments
 
 
—

 
—

 
(1,290
)
Decrease / (increase) in inventories
 
 
564

 
(1,909
)
 
(3,218
)
Decrease / (increase) in accounts receivable
 
 
26,688

 
9,184

 
(5,660
)
Increase in prepaid expenses and other current assets
 
 
(5,546
)
 
(1,615
)
 
(154
)
Decrease / (increase) in other assets
 
 
2,045

 
(14,153
)
 
(2,901
)
(Decrease) / increase in accounts payable
 
 
(2,487
)
 
775

 
6,471

(Decrease) / increase in accrued expenses
 
 
(9,486
)
 
11,206

 
12,070

Interest rate swap termination payment
 
 
—

 
(128
)
 
(274
)
 
 
 
11,778

 
3,360

 
5,044

Net cash inflow from operating activities
 
 
178,511

 
391,975

 
93,916

Investing activities
 
 
 
 
 

 
 

Acquisition of vessels and payments for vessels under construction
 
 
(126,842
)
 
(905,397
)
 
(1,403,181
)
Proceeds from disposal of vessels
 
 
158,175

 
90,820

 
213,670

Proceeds from sale of Dorian shares
 
 
—

 
142,436

 
—

Deposit (returned)/received for vessel purchases
 
 
—

 
(31,277
)
 
31,277

Net cash inflow / (outflow) from investing activities
 
 
31,333

 
(703,418
)
 
(1,158,234
)
Financing activities
 
 
 
 
 

 
 

Debt repayments
 
 
(753,431
)
 
(226,260
)
 
(74,674
)
Issuance of debt
 
 
565,028

 
643,550

 
1,219,784

Debt issuance costs
 
 
(10,679
)
 
(8,497
)
 
(45,670
)
(Repayment) / proceeds of Convertible Notes
 
 
(8,393
)
 
(1,632
)
 
360,000

Convertible Notes issuance costs
 
 
—

 
—

 
(10,993
)

F-7

Table of Contents

Gross proceeds from issuance of common stock
 
 
—

 
159,747

 
—

Equity issuance costs
 
 
(24
)
 
(7,554
)
 
(42
)
Dividends paid
 
 
(86,923
)
 
(87,056
)
 
(70,495
)
Repurchase of common stock
 
 
(16,505
)
 
(76,028
)
 
(276,294
)
Net cash (outflow) / inflow from financing activities
 
 
(310,927
)
 
396,270

 
1,101,616

(Decrease) / increase in cash and cash equivalents
 
 
(101,083
)
 
84,827

 
37,298

Cash and cash equivalents at January 1,
 
 
200,970

 
116,143

 
78,845

Cash and cash equivalents at December 31,
 
 
$
99,887

 
$
200,970

 
$
116,143

Supplemental information:
 
 
 
 
 

 
 

Interest paid
 
 
$
69,008

 
$
63,418

 
$
24,507



As of December 31, 2015, we accrued $13.8 million for installment payments on vessels under our Newbuilding Program. These payments were made in January 2016.

In May 2014, we acquired 7,500,000 of our common shares from an existing shareholder in exchange for the sale to said shareholder of 3,422,665 common shares in Dorian LPG Ltd., or Dorian, in a privately negotiated transaction. The value of the acquired shares was $67.1 million, and we recognized a gain of $10.9 million.
 
These items represent significant non-cash transactions incurred during the years ended December 31, 2016, 2015 and 2014. 
The accompanying notes are an integral part of these consolidated financial statements

F-8

Table of Contents

Notes to the consolidated financial statements
 
1.
General information and significant accounting policies
Company
 Scorpio Tankers Inc. and its subsidiaries (together “we”, “our” or the “Company”) are engaged in the seaborne transportation of refined petroleum products in the international shipping markets. Scorpio Tankers Inc. was incorporated in the Republic of the Marshall Islands on July 1, 2009. On April 6, 2010, we closed on our initial public offering, and the common stock currently trades on the New York Stock Exchange under the symbol STNG.
Our fleet at December 31, 2016 consisted of 77 product tankers (14 Handymax, 42 MR and 21 LR2), 16 time chartered-in product tankers (five Handymax, eight MR, one LR1 and two LR2) and ten product tankers under construction (two LR2 and eight MR).
Our vessels are commercially managed by Scorpio Commercial Management S.A.M., or SCM, which is majority owned by the Lolli-Ghetti family of which, Mr. Emanuele Lauro, our Chairman and Chief Executive Officer, and Mr. Filippo Lauro, our Vice President, are members. SCM’s services include securing employment, in pools, in the spot market, and on time charters.
Our vessels are technically managed by Scorpio Ship Management S.A.M., or SSM, which is majority owned by the Lolli-Ghetti family. SSM facilitates vessel support such as crew, provisions, deck and engine stores, insurance, maintenance and repairs, and other services necessary to operate the vessels such as drydocks and vetting/inspection under a technical management agreement.
We also have an administrative services agreement with Scorpio Services Holding Limited, or SSH, which is majority owned by the Lolli-Ghetti family. The administrative services provided under this agreement primarily include accounting, legal compliance, financial, information technology services, and the provision of administrative staff and office space, which are contracted to subsidiaries of SSH. We pay our managers fees for these services and reimburse them for direct or indirect expenses that they incur in providing these services. 
Basis of accounting
The consolidated financial statements incorporate the financial statements of Scorpio Tankers Inc. and its subsidiaries. The consolidated financial statements have been presented in United States dollars, or USD or $, which is the functional currency of Scorpio Tankers Inc. and all its subsidiaries, and have been authorized for issue by the Board of Directors on March 16, 2017. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRSs, as issued by the International Accounting Standards Board and on a historical cost basis, except for the revaluation of certain financial instruments.
All inter-company transactions, balances, income and expenses were eliminated on consolidation.
Going concern
The financial statements have been prepared in accordance with the going concern basis of accounting as described further in the “Liquidity risk” section of Note 22.
Significant Accounting Policies
Revenue recognition
Vessel revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, and other sales-related or value added taxes.
Vessel revenue is comprised of time charter revenue, voyage revenue, and pool revenue.
(1)
Pool revenue for each vessel is determined in accordance with the profit sharing terms specified within each pool agreement. In particular, the pool manager aggregates the revenues and expenses of all of the pool participants and distributes the net earnings to participants based on:
•
the pool points (vessel attributes such as cargo carrying capacity, fuel consumption, and construction characteristics are taken into consideration); and
•
the number of days the vessel participated in the pool in the period . We recognize pool revenue on a monthly basis, when the vessel has participated in a pool during the period and the amount of pool revenue for the month can be estimated reliably. We receive estimated vessel earnings based on the known number of days the vessel has participated in the pool, the contract terms, and the estimated monthly pool revenue. On a quarterly basis, we receive a report from the pool which identifies the number of days the vessel participated in the pool, the

F-9

Table of Contents

total pool points for the period, the total pool revenue for the period, and the calculated share of pool revenue for the vessel. We review the quarterly report for consistency with each vessel’s pool agreement and vessel management records. The estimated pool revenue is reconciled quarterly, coinciding with our external reporting periods, to the actual pool revenue earned, per the pool report. Consequently, in our financial statements, reported revenues represent actual pooled revenues. While differences do arise in the performance of these quarterly reconciliations, such differences are not material to total reported revenues.
(2)
Time charter revenue is recognized as services are performed based on the daily rates specified in the time charter contract.
(3)
Voyage charter agreements are charter hires, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate. Revenue from voyage charter agreements is recognized as voyage revenue on a pro-rata basis over the duration of the voyage on a discharge to discharge basis. In the application of this policy, we do not begin recognizing revenue until (i) the amount of revenue can be measured reliably, (ii) it is probable that the economic benefits associated with the transaction will flow to the entity, (iii) the transactions stage of completion at the balance sheet date can be measured reliably and (iv) the costs incurred and the costs to complete the transaction can be measured reliably.
Acquired time charter contracts
When a time charter contract is acquired along with a vessel, the cost of the acquisition is determined based on the relative fair values of each element acquired. Amortization expense is recognized on a straight line basis over the useful life of the asset, which has been determined to be the remaining contract life at the date of acquisition. The useful life and amortization method are reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense related to the assets is recognized as an offset to revenue, and the book value of the acquired contract is stated at the cost of the contract less accumulated amortization.
Voyage expenses
Voyage expenses, which primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage commissions paid by us under voyage charters are expensed ratably over the estimated length of each voyage, which can be allocated between reporting periods based on the timing of the voyage. The impact of recognizing voyage expenses ratably over the length of each voyage is not materially different on a quarterly and annual basis from a method of recognizing such costs as incurred. Consistent with our revenue recognition for voyage charters, voyage expenses are calculated on a discharge-to-discharge basis. The procurement of these services is managed on our behalf by our commercial manager, SCM (see Note 15).
Vessel operating costs
Vessel operating costs, which include crewing, repairs and maintenance, insurance, stores, lubricating oil consumption, communication expenses, and technical management fees, are expensed as incurred. The procurement of these services is managed on our behalf by our technical manager, SSM (see Note 15).
(Loss) / earnings per share
Basic (loss) / earnings per share is calculated by dividing net (loss) / income attributable to equity holders of the parent by the weighted average number of common shares outstanding. Diluted (loss) / earnings per share is calculated by adjusting the net (loss) / income attributable to equity holders of the parent and the weighted average number of common shares used for calculating basic per share for the effects of all potentially dilutive shares. Such dilutive common shares are excluded when the effect would be to reduce a loss per share or increase earnings per share.
In the years ended December 31, 2016, 2015 and 2014, there were potentially dilutive items as a result of our Equity Incentive Plans (see Note 14) and our convertible senior notes due 2019, or the Convertible Notes, (as described in Note 11). Potentially dilutive items related to our Equity Incentive Plans were excluded from the composition of diluted earnings per share for the year ended December 31, 2016 because their effect would have been anti-dilutive. Potentially dilutive items related to our Convertible Notes were excluded from the composition of diluted earnings per share for the years ended December 31, 2016 and December 31, 2014 because their effect would have been anti-dilutive.
We apply the if-converted method when determining diluted (loss) / earnings per share. This requires the assumption that all potential ordinary shares have been converted into ordinary shares at the beginning of the period or, if not in existence at the beginning of the period, the date of the issue of the financial instrument or the granting of the rights by which they are granted. Under this method, once potential ordinary shares are converted into ordinary shares during the period, the dividends, interest and other expense associated with those potential ordinary shares will no longer be incurred. The effect of conversion, therefore, is to increase income (or reduce losses) attributable to ordinary equity holders as well as the number of shares in issue. Conversion will not be assumed for purposes of computing diluted earnings per share if the effect would be anti-dilutive.

F-10

Table of Contents

Charterhire expense
Charterhire expense is the amount we pay to vessel owners to time or bareboat charter-in vessels.  The amount is usually for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, profit sharing or current market rates.  In a time charter-in arrangement, the vessel’s owner is responsible for crewing and other vessel operating costs, whereas these costs are the responsibility of the charterer in a bareboat charter-in arrangement. Charterhire expense is recognized ratably over the charterhire period.
Operating leases
Costs in respect of operating leases are charged to the consolidated statement of income or loss on a straight line basis over the lease term.
Foreign currencies
The individual financial statements of Scorpio Tankers Inc. and each of its subsidiaries are presented in the currency of the primary economic environment in which we operate (its functional currency), which in all cases is U.S. dollars. For the purpose of the consolidated financial statements, our results and financial position are also expressed in U.S. dollars.
In preparing the financial statements of Scorpio Tankers Inc. and each of its subsidiaries, transactions in currencies other than the U.S. dollar are recorded at the rate of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in other currencies are retranslated into the functional currency at rates ruling at that date. All resultant exchange differences have been recognized in the consolidated statements of income or loss. The amounts charged to the consolidated statements of income or loss during the years ended December 31, 2016, 2015 and 2014 were not material.
Segment reporting
During the years ended December 31, 2016 , 2015 and 2014, we owned or chartered-in vessels spanning four different vessel classes, Handymax, MR, LR1/Panamax, and LR2, all of which earn revenues in the seaborne transportation of refined petroleum products in the international shipping markets. Each vessel within its respective class qualifies as an operating segment under IFRS. However, each vessel also exhibits similar long-term financial performance and similar economic characteristics to the other vessels within the respective vessel class, thereby meeting the aggregation criteria in IFRS. We have therefore chosen to present our segment information by vessel class using the aggregated information from the individual vessels.
Segment results are evaluated based on reported income or loss from each segment. The accounting policies applied to the reportable segments are the same as those used in the preparation of our consolidated financial statements.
It is not practical to report revenue or non-current assets on a geographical basis due to the international nature of the shipping market.
Vessels held for sale
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When we have committed to a sale plan involving the loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether we will retain a non-controlling interest in our former subsidiary after the sale.
Vessels under construction
As of December 31, 2016 and 2015, we had ten and 12 vessels under construction, respectively. Vessels under construction are measured at cost and include costs incurred that are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. These costs include installment payments made to the shipyards, directly attributable financing costs, professional fees and other costs deemed directly attributable to the construction of the asset.
Vessels and drydock
Our fleet is measured at cost, which includes directly attributable financing costs and the cost of work undertaken to enhance the capabilities of the vessels, less accumulated depreciation and impairment losses.

F-11

Table of Contents

Depreciation is calculated on a straight-line basis to the estimated residual value over the anticipated useful life of the vessel from date of delivery. Vessels under construction are not depreciated until such time as they are ready for use. The residual value is estimated as the lightweight tonnage of each vessel multiplied by scrap value per ton. The scrap value per ton is estimated taking into consideration the historical four year average scrap market rates available at the balance sheet date with changes accounted for in the period of change and in future periods.
The vessels are required to undergo planned drydocks for replacement of certain components, major repairs and maintenance of other components, which cannot be carried out while the vessels are operating, approximately every 30 months or 60 months depending on the nature of work and external requirements. These drydock costs are capitalized and depreciated on a straight-line basis over the estimated period until the next drydock. In deferred drydocking, we only include direct costs that are incurred as part of the drydocking to meet regulatory requirements, or are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs include shipyard costs as well as the costs of placing the vessel in the shipyard. Expenditures for normal maintenance and repairs, whether incurred as part of the drydocking or not, are expensed as incurred.
For an acquired or newly built vessel, a notional drydock component is allocated from the vessel’s cost. The notional drydock cost is estimated by us, based on the expected costs related to the next drydock, which is based on experience and past history of similar vessels, and carried separately from the cost of the vessel. Subsequent drydocks are recorded at actual cost incurred. The drydock component is depreciated on a straight-line basis to the next estimated drydock. The estimated amortization period for a drydock is based on the estimated period between drydocks. When the drydock expenditure is incurred prior to the expiry of the period, the remaining balance is expensed.
Impairment of vessels, drydock and vessels under construction
At each balance sheet date, we review the carrying amount of our vessels and drydock and vessels under construction to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the vessels and drydock and vessels under construction is estimated in order to determine the extent of the impairment loss (if any). We treat each vessel and the related drydock as a cash generating unit.
Recoverable amount is the higher of the fair value less cost 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.
If the recoverable amount of the cash generating unit is estimated to be less than its carrying amount, the carrying amount of the cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the cash generating unit in the prior years. A reversal of impairment is recognized as income immediately.
Inventories
Inventories consist of lubricating oils and other items including stock provisions, and are stated at the lower of cost and net realizable value. Cost is determined using the first in first out method. Stores and spares are charged to vessel operating costs when purchased.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time (for example, the time period necessary to construct a vessel) to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
To the extent that variable rate borrowings are used to finance a qualifying asset and are hedged in an effective cash flow hedge of interest rate risk, the effective portion of the derivative is recognized in other comprehensive income and released to income or loss when the qualifying asset impacts income or loss. To the extent that fixed rate borrowings are used to finance a qualifying asset and are hedged in an effective fair value hedge of interest rate risk, the capitalized borrowing costs reflect the hedged interest rate.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in the consolidated statement of income or loss in the period in which they are incurred.

F-12

Table of Contents

Equity method investments
We use the equity method to account for investments in associates over which we otherwise have significant influence (generally defined as investments in companies that correspond to holdings of between 20% and 50% of voting shares). Under the equity method, the investment is initially recognized at cost, and this amount will be adjusted in each subsequent period for the Company’s share of income or loss (adjusted for any fair value adjustments made upon initial recognition) and reduced by any distributions received. Investments in associates include goodwill identified on acquisition, if applicable.
 We consider investments in associates for impairment testing whenever there is a quoted share price and when this has a fair value less than the carrying value per share for the investment. For unquoted investments in associates, the company's recent financial information is taken into account to assess whether impairment testing is necessary. In a situation in which, based on the quoted share price, the fair value less cost to sell is considered to be below the carrying amount, the value in use is determined in order to test the investment for impairment. If the value in use is also below the carrying amount, an impairment loss is recognized for the difference between carrying amount and the higher of “value in use” or “fair value less costs to sell”.
 We accounted for our investment in Dorian under the equity method from the date of our initial investment in November 2013 through October 29, 2014, the date we lost significant influence over Dorian's financial and operating policy decisions. Subsequent to that date, we accounted for this investment as an available for sale financial asset. This investment was sold in July 2015.
Financial instruments
Financial assets and financial liabilities are recognized in our balance sheet when we become a party to the contractual provisions of the instrument.
Financial assets
All financial assets are recognized and derecognized on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets "at fair value through profit or loss", or FVTPL, "available-for-sale" and "loans and receivables". The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
Financial assets at FVTPL
Financial assets are classified as at FVTPL where the financial asset is held for trading.
A financial asset is classified as held for trading if:
•
it has been acquired principally for the purpose of selling in the near future; or
•
it is a part of an identified portfolio of financial instruments that we manage together and has a recent actual pattern of short-term profit-taking; or
•
it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in the statement of income or loss. The net gain or loss recognized in income or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 22.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified as "loans and receivables," "held-to-maturity" or FVTPL. Available-for-sale financial assets are recognized initially at fair value. Subsequent to initial recognition, any change in fair value is recorded in other comprehensive income or loss. Any dividends received or impairment losses are recorded directly in income or loss. Upon the sale of the assets, the difference between the carrying amount and the sum of (i) the consideration received and (ii) any cumulative gain / loss that had been recognized in other comprehensive income or loss will be recognized in the statement of income or loss.
Available for sale financial assets consisted of our investment in Dorian during the years ending December 31, 2015 and 2014. This investment was sold in July 2015.
Loans and receivables

F-13

Table of Contents

Amounts due from the Scorpio Group Pools and other receivables that have fixed or determinable payments and are not quoted in an active market are classified as accounts receivable. Accounts receivable are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
Objective evidence of impairment of financial assets could include:
•
significant financial difficulty of the issuer or counterparty; or
•
default or delinquency in interest or principal payments; or
•
it becomes probable that the borrower will enter bankruptcy or financial re-organization.
Cash and cash equivalents  
      Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly-liquid investments with original maturities of three months or less, that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.
  Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or ‘other financial liabilities’.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is held for trading, using the criteria set out above for financial assets.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognized in the statement of income or loss. The net gain or loss recognized in the statement of income or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in Note 22.
Other financial liabilities
     Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method.
Effective interest method
      The effective interest method is a method of calculating the amortized cost of a financial asset and a financial liability. It allocates interest income and interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash flows (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) over the expected life of the financial asset and financial liability, or, where appropriate, a shorter period.
Convertible debt instruments
In June 2014, we completed an offering for $360.0 million in aggregate principal amount of convertible senior notes due 2019, or the Convertible Notes, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities’ Act of 1933 (as further described in Note 11). Under International Accounting Standard 32, or IAS 32, we must separately account for the liability and equity components of convertible debt instruments (such as the Convertible Notes) in a manner that reflects the issuer’s economic interest cost. Under this methodology, the instrument is split between its liability and equity components upon initial recognition. The fair value of the liability is measured first, by estimating the fair value of a similar liability that does not have any associated equity conversion option. This becomes the liability’s carrying amount at initial recognition, which is recorded as part of Debt on the consolidated balance sheet. The equity component (the conversion feature) is assigned the residual amount after deducting the amount separately determined for the liability component from the fair value of the instrument as a whole and is recorded as part of Additional paid-in capital within stockholders’ equity on the consolidated balance sheet. Issuance costs are allocated proportionately between the liability and equity components.
The value of the equity component is treated as an original issue discount for purposes of accounting for the liability component of the Convertible Notes. Accordingly, we are required to record non-cash interest expense as a result of the amortization of the discounted carrying value of the Convertible Notes to their face amount over the term of the Convertible Notes. IAS 32

F-14

Table of Contents

therefore requires interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest.    
Derivative financial instruments
Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. The resulting gain or loss is recognized in income or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in income or loss depends on the nature of the hedging relationship. During the years ended December 31, 2015 and 2014, we designated certain derivatives as hedges of highly probable forecast transactions (cash flow hedges) as described further below.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months, and it is not expected to be realized or settled within 12 months.
Our derivative financial instruments for the years ended December 31, 2016, 2015 and 2014 consisted of interest rate swaps and/or profit or loss sharing arrangements on time chartered-in vessels with third parties. See Note 12 for further description of these instruments.
Hedge accounting
Our policy is to designate certain hedging instruments, which can include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. At the inception of the hedge relationship, we document the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, we document whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.
Derivative financial instruments are initially recognized on the balance sheet at fair value at the date the derivative contract is entered into and are subsequently measured at their fair value as derivative assets or derivative liabilities, respectively. Changes in fair value of derivative financial instruments, which are designated as cash flow hedges and deemed to be effective, are recognized directly in other comprehensive income. Changes in fair value of a portion of a hedge deemed to be ineffective are recognized in income or loss. Hedge effectiveness is measured quarterly.
Amounts previously recognized in other comprehensive income or loss are reclassified to income or loss in the periods when the hedged item is recognized in income or loss, in the same line of the statement of income or loss as the recognized hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when we revoke the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income or loss at that time is accumulated and recognized when the forecast transaction is ultimately recognized in income or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in other comprehensive income or loss is recognized immediately in the statement of income or loss.
For the years ended December 31, 2015 and 2014, we were party to derivative financial instruments to manage our exposure to interest rate fluctuations on our 2011 Credit Facility and 2010 Revolving Credit Facility. The interest rate swaps relating to the 2011 Credit Facility were designated and accounted for as cash flow hedges, and the interest rate swaps relating to the 2010 Revolving Credit Facility were designated at fair value through profit or loss for the years ended December 31, 2015, and 2014. The interest rate swaps under our 2010 Revolving Credit Facility were terminated in March 2015 and the interest rate swaps under our 2011 Credit Facility expired in June 2015 as further described in Note 12.
Finance Lease
In July 2015, we reached an agreement to purchase an LR2 product tanker that was then under construction at Daewoo Shipbuilding and Marine Engineering, or DSME, for a purchase price of $59.0 million. As part of this agreement, we agreed to bareboat charter-in the vessel for up to nine months at $10,000 per day with a purchase obligation at the conclusion of the bareboat charter, which expired in April 2016. This bareboat charter-in agreement was accounted for as a finance lease. Finance leases are recognized as an asset and as a liability in the amount equal to the fair market value of the leased vessel or if lower, the present value of the minimum lease payments. Any initial direct costs to us are added to the amount recognized as an asset. The bareboat charter payments were allocated between the finance charge and the reduction of the outstanding liability. The interest element of the bareboat charter payment was recorded within "Financial Expenses" on the consolidated statements of income or loss.

F-15

Table of Contents


Equity instruments
An equity instrument is any contract that evidences a residual interest in our assets after deducting all of its liabilities. Equity instruments issued by us are recorded at the proceeds received, net of direct issue costs.
We had 174,629,755 and 175,335,400 registered shares authorized, issued and outstanding with a par value of $0.01 per share at December 31, 2016 and December 31, 2015 , respectively. These shares provide the holders with the same rights to dividends and voting rights.
Provisions
Provisions are recognized when we have a present obligation as a result of a past event, and it is probable that we will be required to settle that obligation. Provisions are measured at our best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.
Dividends
A provision for dividends payable is recognized when the dividend has been declared in accordance with the terms of the shareholder agreement.
Dividends per share presented in these consolidated financial statements are calculated by dividing the aggregate dividends declared by all of our subsidiaries by the number of our shares assuming these shares have been outstanding throughout the periods presented.
Restricted stock
The restricted stock awards granted under our equity incentive plans as described in Note 14 contain only service conditions and are classified as equity settled. Accordingly, the fair value of our restricted stock awards was calculated by multiplying the average of the high and low share price on the grant date and the number of restricted stock shares granted that are expected to vest.  In accordance with IFRS 2 “Share Based Payment,” the share price at the grant date serves as a proxy for the fair value of services to be provided by the individual under the plan.
Compensation expense related to the awards is recognized ratably over the vesting period, based on our estimate of the number of awards that will eventually vest. The vesting period is the period during which an individual is required to provide service in exchange for an award and is updated at each balance sheet date to reflect any revisions in estimates of the number of awards expected to vest as a result of the effect of service vesting conditions. The impact of the revision of the original estimate, if any, is recognized in the consolidated statement of income or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
Critical accounting judgments and key sources of estimation uncertainty
In the application of the accounting policies, we are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The significant judgments and estimates are as follows:
Revenue recognition
Our revenue is primarily generated from time charters, spot voyages, or pools (see Note 16 for the components of our revenue generated during the years ended December 31, 2016, 2015 and 2014). Revenue recognition for time charters and pools is generally not as complex or as subjective as voyage charters (spot voyages). Time charters are for a specific period of time at a specific rate per day. For long-term time charters, revenue is recognized on a straight-line basis over the term of the charter. Pool revenues are determined by the pool managers from the total revenues and expenses of the pool and allocated to pool participants using a mechanism set out in the pool agreement.
We generated revenue from spot voyages during the years ended December 31, 2015 and 2014. Within the shipping industry, there are two methods used to account for spot voyage revenue: (1) ratably over the estimated length of each voyage or (2) completed voyage. The recognition of voyage revenues ratably over the estimated length of each voyage is the most prevalent method of accounting for voyage revenues and the method used by us. Under each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis. In applying our revenue recognition method, we believe that the discharge-to-discharge basis of calculating voyages more accurately estimates voyage results than the load-to-load basis. In the application of

F-16

Table of Contents

this policy, we do not begin recognizing revenue until (i) the amount of revenue can be measured reliably, (ii) it is probable that the economic benefits associated with the transaction will flow to the entity, (iii) the transactions stage of completion at the balance sheet date can be measured reliably and (iv) the costs incurred and the costs to complete the transaction can be measured reliably.
Vessel impairment  
We evaluate the carrying amounts of our vessels and vessels under construction 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 us to make various estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been historically volatile. As part of our process of assessing fair value less costs to sell of the vessel, we obtain vessel valuations for our operating vessels from leading, independent and internationally recognized ship brokers on an annual basis or when there is an indication that an asset or assets may be impaired. We generally do not obtain vessel valuations for vessels under construction. 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 costs to sell and the value in use. Likewise, if there is an indication that an impairment loss recognized in prior periods no longer exists or may have decreased, the need for recognizing an impairment reversal is assessed by comparing the carrying amount of the vessels to the latest estimate of recoverable amount.
For the period ended December 31, 2016, we reviewed the carrying amount of our vessels to determine whether there was an indication that these assets had suffered an impairment. First, we compared the carrying amount of our vessels to their fair values less costs to sell (determined by taking into consideration two independent broker valuations). If the carrying amount of our vessels was greater than the fair values less costs to sell, we prepared a value in use calculation where we estimated the vessel’s future cash flows based on a combination of the latest, published, forecast time charter rates for the next three years, a growth rate of 2.29% in freight rates in each period thereafter (which is based off of historical and forecast inflation rates) and our best estimates of vessel operating expenses and drydock costs. These cash flows were then discounted to their present value, using a pre-tax discount rate of 8.70%.
At December 31, 2016, we had 77 vessels in our fleet and ten vessels under construction. The results of our impairment test were as follows:
•
All 77 vessels had fair values less costs to sell that were less than their carrying amount. Accordingly, we prepared a value in use calculation for each of these vessels which resulted in no impairment being recognized.
•
We did not obtain independent broker valuations for our ten vessels under construction. To assess their carrying values for impairment, we prepared value in use calculations which resulted in no impairment being recognized.
Vessel lives and residual value
The carrying value of each of our vessels represents its original cost at the time it was delivered or purchased less depreciation and impairment. We depreciate our vessels to their residual value on a straight-line basis over their estimated useful lives of 25 years. The estimated useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels. The residual value is estimated as the lightweight tonnage of each vessel multiplied by a forecast scrap value per ton. The scrap value per ton is estimated taking into consideration the historical four year scrap market rate average at the balance sheet date.
An increase in the estimated useful life of a vessel or in its scrap value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of a vessel or scrap 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 vessel’s useful life is adjusted to end at the date such regulations become effective. No such regulations have been identified that would have impacted the estimated useful life of our vessels. The estimated salvage value of the vessels may not represent the fair market value at any one time since market prices of scrap values tend to fluctuate.

F-17

Table of Contents

Deferred drydock cost
We recognize drydock costs as a separate component of each vessel’s carrying amount and amortize the drydock cost on a straight-line basis over the estimated period until the next drydock. We use judgment when estimating the period between drydocks performed, which can result in adjustments to the estimated amortization of the drydock expense. If the vessel is disposed of before the next drydock, the remaining balance of the deferred drydock is written-off and forms part of the gain or loss recognized upon disposal of vessels in the period when contracted. We expect that our vessels will be required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. Costs capitalized as part of the drydock include actual costs incurred at the drydock yard and parts and supplies used in making such repairs.
Adoption of new and amended IFRS and IFRIC interpretations from January 1, 2016
Standards and interpretations adopted during the period
•
IFRS 14 - Regulatory deferral accounts
•
Amendment to IFRS 11 - Joint arrangements
•
Amendment to IAS 16 & IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortization
•
Amendment to IAS 16 & IAS 41 - Agriculture: Bearer Plants
•
Amendment to IAS 27 - Equity Method in Separate Financial Statements
•
Amendment to IFRS 10, IFRS 12 and IAS 28 - Investment entities: Applying the Consolidation Exception
•
Amendment to IAS 1 - Disclosure Initiative
•
Annual improvements for IFRS Standards 2012-2014 cycle
The adoption of these standards did not have a material impact on these consolidated financial statements.

F-18

Table of Contents

Standards and Interpretations issued not yet adopted
IFRS 15, Revenue from Contracts with Customers, was issued by the International Accounting Standards Board on May 28, 2014. IFRS 15 amends the existing accounting standards for revenue recognition and is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products or services are transferred to customers. IFRS 15 applies to an entity's first annual IFRS financial statements for a period beginning on or after January 1, 2018. Early adoption is permitted and the standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. We have not yet selected a transition method.
The adoption of this standard is not expected to have a material impact on the revenue recognized for our vessels that operate in pools or on time charter.  These arrangements qualify as single performance obligations that meet the criteria to recognize revenue ‘over time’ as the customer (i.e. the pool or the charterer) is simultaneously receiving and consuming the benefits of the vessel.  This method of revenue recognition is identical to our current accounting policy for these types of employment arrangements.  For vessels operating in the spot market, we also expect to recognize revenue over time however, the time period over which revenue is recognized is still being determined. 
IFRS 16, Leases, was issued by the International Accounting Standards Board on January 13, 2016. IFRS 16 amends the existing accounting standards to require lessees to recognize, on a discounted basis, the rights and obligations created by the commitment to lease assets on the balance sheet, unless the term of the lease is 12 months or less. The accounting for leases by lessors remains substantially unchanged from the existing standard under IAS 17. IFRS 16 applies to an entity's first annual IFRS financial statements for a period beginning on or after January 1, 2019.
Based on our operating fleet as of December 31, 2016, the standard will result in the recognition of right-of-use assets and corresponding liabilities, on the basis of the discounted remaining future minimum lease payments, relating to all or part of our existing bareboat chartered-in vessel commitments which are scheduled to expire in March 2019 and are currently reported as operating leases. We do not expect this standard to impact the accounting for our existing time chartered-out vessels which are scheduled to expire in the first quarter of 2019. Furthermore, the eventual expected impact of this standard cannot be estimated as we are unable to predict what our lease commitments will be at the end of 2018.
Additionally, at the date of authorization of these consolidated financial statements, the following Standards which have not been applied in these consolidated financial statements were issued but not yet effective. We do not expect that the adoption of these standards in future periods will have a material impact on our financial statements.
•
Annual improvements for IFRS Standards 2014 - 2016 cycle - Effective for annual periods beginning on or after January 1, 2017.
•
IFRS 9 - Financial Instruments - The standard reduces the number of categories of financial assets to three and simplifies the rules regarding hedge accounting. This standard is effective for annual periods beginning on or after January 1, 2018.
•
IAS 12 - Recognition of deferred tax assets for unrealized losses - clarifies certain aspects of IAS 12, Income Taxes. Effective for annual periods beginning on or after January 1, 2017.
•
IAS 7 - Disclosure initiative - statement of cash flows - requires disclosures on reconciliation of net interest-bearing debt. Effective for annual periods beginning on or after January 1, 2017.
•
Amendment to IFRS 2 - Share Based Payment Transactions - clarifies the standard in relation to the accounting for cash settled share based payment transactions that include a performance condition, the classification of share based payment transactions with net settlement features and the accounting for modifications of share based payment transactions from cash settled to equity settled. Effective for annual periods beginning on or after January 1, 2018.
•
IFRIC 22 - Foreign Currency Transactions and Advance Consideration - establishes the date for which to determine the exchange rate to use on the date of initial recognition of a non-monetary prepayment asset or deferred income liability. Effective for annual periods beginning on or after January 1, 2018.
•
Amendment to IAS 40 - Investment Property - Amends IAS 40 paragraph 57 to state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. Effective for annual periods beginning on or after January 1, 2018.
•
Amendment to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. Clarifies the recognition of gains and losses arising on the sale or contribution of assets that constitute a business and assets do not constitute a business. The effective date is pending.


F-19

Table of Contents

2.
Cash and cash equivalents
The following table depicts the components of our cash as of December 31, 2016 and 2015:
 
At December 31,
In thousands of U.S. dollars
2016
 
2015
Cash at banks
$
99,053

 
$
200,187

Cash on vessels
834

 
783

 
$
99,887

 
$
200,970


3.
Accounts receivable
 
The following table depicts the components of our accounts receivable as of December 31, 2016 and 2015:
 
At December 31,
In thousands of U.S. dollars
2016
 
2015
Scorpio MR Pool Limited
$
28,611

 
$
35,238

Scorpio LR2 Pool Limited
7,552

 
15,301

Scorpio Panamax Tanker Pool Limited
1,392

 
4,459

Scorpio Handymax Tanker Pool Limited
3,125

 
4,477

Receivables from the Scorpio Group Pools
40,680

 
59,475

 
 
 
 
SSM
—

 
2,346

Freight and time charter receivables
—

 
498

Insurance receivables
1,362

 
3,012

Other receivables
287

 
3,686

 
$
42,329

 
$
69,017

 
Scorpio MR Pool Limited, Scorpio LR2 Pool Limited, Scorpio Panamax Tanker Pool Limited, Scorpio Handymax Tanker Pool Limited and SSM are related parties, as described in Note 15. Amounts due from the pools relate to income receivables and receivables for working capital contributions which are expected to be collected within one year.

Freight and time charter receivables at December 31, 2015 represent amounts collectible from customers for our vessels operating in the spot market or on time charter.
 
Insurance receivables primarily represent amounts collectible on our insurance policies in relation to vessel repairs.
 
We consider that the carrying amount of accounts receivable approximates their fair value due to the short maturity thereof. Accounts receivable are non-interest bearing. At December 31, 2016 and December 31, 2015, no material receivable balances were either past due or impaired.


F-20

Table of Contents

4.
Vessels
 
Operating vessels and drydock
 
 In thousands of U.S. dollars
 Vessels
 
 Drydock
 
 Total
 Cost
 
 
 
 
 
 
 
As of January 1, 2016
$
3,188,367

 
$
62,039

 
$
3,250,406

 
Additions  (1)
105,415

 
1,800

 
107,215

 
Disposal of vessels (2)
(166,992
)
 
(3,750
)
 
(170,742
)
 
As of December 31, 2016
3,126,790

 
60,089

 
3,186,879

 
 
 
 
 
 
 
 Accumulated depreciation and impairment
 
 
 
 
 
 
As of January 1, 2016
(146,063
)
 
(16,590
)
 
(162,653
)
 
Charge for the period
(109,433
)
 
(12,028
)
 
(121,461
)
 
Disposal of vessels (2)
9,286

 
1,203

 
10,489

 
As of December 31, 2016
(246,210
)
 
(27,415
)
 
(273,625
)
 Net book value
 
 
 
 
 
 
As of December 31, 2016
$
2,880,580

 
$
32,674

 
$
2,913,254

 
 
 
 
 
 
 
 Cost
 
 
 
 
 
 
 
As of January 1, 2015
$
1,992,229

 
$
41,012

 
$
2,033,241

 
Additions  (3)
1,221,361

 
21,838

 
1,243,199

 
Disposal of vessel (4)
(25,223
)
 
(811
)
 
(26,034
)
 
As of December 31, 2015
3,188,367

 
62,039

 
3,250,406

 
 
 
 
 
 
 
 Accumulated depreciation and impairment
 
 
 
 
 
 
As of January 1, 2015
(54,928
)
 
(6,435
)
 
(61,363
)
 
Charge for the period
(96,390
)
 
(10,966
)
 
(107,356
)
 
Disposal of vessel (4)
5,255

 
811

 
6,066

 
As of December 31, 2015
(146,063
)
 
(16,590
)
 
(162,653
)
 Net book value
 
 
 
 
 
 
As of December 31, 2015
$
3,042,304

 
$
45,449

 
$
3,087,753

 
(1)
Additions in 2016 primarily relate to the deliveries of STI Grace and STI Jermyn and the corresponding calculation of notional drydock on these vessels.
(2)
Represents the net book value of STI Chelsea, STI Lexington, STI Powai, STI Olivia and STI Mythos , which were sold during the year ended December 31, 2016.
(3)
Additions in 2015 primarily relate to the deliveries of 27 vessels and corresponding calculations of notional drydock on these vessels.
(4)
Represents the net book value of STI Highlander , which was sold in October 2015.
Vessel deliveries
2016 Activity
We took delivery of the following vessels under our Newbuilding Program during the year ended December 31, 2016 resulting in an increase of $107.2 million in vessels from December 31, 2015:
 
 
 
 Month
 
 Vessel
 
 Name
 
 Delivered
 
 Type
1

STI Grace
 
March 2016
 
LR2
2

STI Jermyn
 
June 2016
 
LR2
Additionally, in April 2016, we took ownership of  STI Lombard, an LR2 product tanker that was previously bareboat chartered-in, and paid the remaining 90% of the purchase price, or $53.1 million, upon delivery. This bareboat charter-in agreement was accounted for as a finance lease in July 2015 and the vessel's carrying value was recorded at that date. Accordingly, the

F-21

Table of Contents

delivery of this vessel in April 2016 is not reflected as an addition in the above table. We drew down $26.5 million from our ING Credit Facility in April 2016 to partially finance this transaction.
2015 Activity
We took delivery of the following vessels during the year ended December 31, 2015, resulting in an increase of $1,243.2 million in vessels from December 31, 2014:
 
 
 
 Month
 
 Vessel
 
 
 Name
 
 Delivered
 
 Type
 
1

STI Tribeca
 
January 2015
 
MR
 
2

STI Hammersmith
 
January 2015
 
Handymax
 
3

STI Rotherhithe
 
January 2015
 
Handymax
 
4

STI Rose
 
January 2015
 
LR2
 
5

STI Gramercy
 
January 2015
 
MR
 
6

STI Veneto
 
February 2015
 
LR2
 
7

STI Alexis
 
February 2015
 
LR2
 
8

STI Bronx
 
February 2015
 
MR
 
9

STI Pontiac
 
March 2015
 
MR
 
10

STI Manhattan
 
March 2015
 
MR
 
11

STI Winnie
 
March 2015
 
LR2
 
12

STI Oxford
 
April 2015
 
LR2
 
13

STI Queens
 
April 2015
 
MR
 
14

STI Osceola
 
April 2015
 
MR
 
15

STI Lauren
 
May 2015
 
LR2
 
16

STI Connaught
 
May 2015
 
LR2
 
17

STI Notting Hill
 
May 2015
 
MR
 
18

STI Spiga
 
June 2015
 
LR2
 
19

STI Seneca
 
June 2015
 
MR
 
20

STI Savile Row
 
June 2015
 
LR2
 
21

STI Westminster
 
June 2015
 
MR
 
22

STI Brooklyn
 
July 2015
 
MR
 
23

STI Kingsway
 
August 2015
 
LR2
 
24

STI Memphis
 
August 2015
 
MR
 
25

STI Lombard
 
August 2015
 
LR2
(1)  
26

STI Carnaby
 
September 2015
 
LR2
 
27

STI Black Hawk
 
September 2015
 
MR
 
(1)     STI Lombard was delivered in August 2015 under a bareboat charter-in agreement for up to nine months at $10,000 per day. In April 2016, we took ownership of  STI Lombard, at the conclusion of the bareboat agreement, and paid the remaining 90% of the purchase price, or $53.1 million, upon delivery.
Vessel Sales
In March 2015, we sold Venice to an unrelated third-party for net proceeds of $12.6 million and recognized a gain of $0.7 million. As a result of this sale, we repaid $6.1 million on our 2010 Credit Facility and wrote-off $4,850 of deferred financing fees.
In April 2015, we sold STI Heritage and STI Harmony to an unrelated third-party for aggregate net proceeds of $60.3 million and recognized an aggregate gain of $1.3 million. As a result of these sales, we made an aggregate repayment of $25.6 million on our 2010 Revolving Credit Facility and wrote-off a total of $21,564 of deferred financing fees.
In October 2015, we sold STI Highlander for net proceeds of $17.9 million and recognized a loss of $2.1 million. There was no debt repayment and no write-off of deferred financing fees from this transaction as this vessel was not collateralized under any of our credit facilities at the time of sale.

F-22

Table of Contents

In February 2016, we reached an agreement with an unrelated third party to sell five 2014 built MR product tankers; STI Lexington, STI Mythos, STI Chelsea, STI Olivia,  and  STI Powai . Two vessels were sold in March 2016, one vessel was sold in April 2016 and two vessels were sold in May 2016. The aggregate net proceeds were $158.1 million, and we recognized an aggregate loss of $2.1 million as part of these sales.
As part of these sales of STI Lexington, STI Chelsea, STI Olivia,  and  STI Powai , we made an aggregate repayment of $73.5 million into our K-Sure Credit Facility, and as part of the sale of STI Mythos , we repaid $17.9 million on our 2013 Credit Facility. We also wrote off an aggregate of $3.2 million of deferred financing fees as part of these repayments.
In December 2016, we signed a non-binding term sheet with an unaffiliated third party to sell and leaseback, on a bareboat basis, three 2013 built MR product tankers. The selling price is $29.0 million per vessel and we expect to bareboat-in the vessels for a period of up to eight years for $8,800 per day per vessel. Upon completion, our liquidity is expected to increase by approximately $29.0 million after the repayment of debt. We expect to have the option to repurchase these vessels beginning at the end of the fifth year of the agreement through the end of the eighth year of the agreement. This transaction is subject customary conditions precedent and the execution of definitive documentation. Furthermore, this transaction did not meet the criteria set forth under IFRS 5 as 'held for sale' as of December 31, 2016 as the sale was not considered highly probable at that date.
Collateral agreements
The following table represents vessels provided as collateral under our secured loan agreements (which are described in Note 11) as of December 31, 2016 :
Credit Facility
 
Vessel Name
 
Net Book Value
(In millions of U.S. dollars)
 
2011 Credit Facility
 
STI Beryl
 
$
31.7

 
2011 Credit Facility
 
STI Duchessa
 
30.8

 
2011 Credit Facility
 
STI Emerald
 
32.5

 
2011 Credit Facility
 
STI Larvotto
 
32.2

 
2011 Credit Facility
 
STI Le Rocher
 
32.2

 
2011 Credit Facility
 
STI Onyx
 
32.7

 
2011 Credit Facility
 
STI Sapphire
 
32.6

 
2016 Credit Facility
 
STI Amber
 
32.5

 
2016 Credit Facility
 
STI Aqua
 
31.0

 
2016 Credit Facility
 
STI Benicia
 
36.2

 
2016 Credit Facility
 
STI Dama
 
31.0

 
2016 Credit Facility
 
STI Garnet
 
32.7

 
2016 Credit Facility
 
STI Meraux
 
35.3

 
2016 Credit Facility
 
STI Opera
 
30.6

 
2016 Credit Facility
 
STI Regina
 
31.2

 
2016 Credit Facility
 
STI Ruby
 
32.7

 
2016 Credit Facility
 
STI San Antonio
 
35.3

 
2016 Credit Facility
 
STI St. Charles
 
34.8

 
2016 Credit Facility
 
STI Texas City
 
34.9

 
2016 Credit Facility
 
STI Topaz
 
32.6

 
2016 Credit Facility
 
STI Venere
 
30.7

 
2016 Credit Facility
 
STI Virtus
 
30.8

 
2016 Credit Facility
 
STI Yorkville
 
31.6

 
ABN AMRO Credit Facility
 
STI Carnaby
 
57.7

 
ABN AMRO Credit Facility
 
STI Kingsway
 
57.5

 
ABN AMRO Credit Facility
 
STI Savile Row
 
57.2

 
ABN AMRO Credit Facility
 
STI Spiga
 
56.1

 
BNP Paribas Credit Facility
 
STI Battery
 
31.8

 

F-23

Table of Contents

BNP Paribas Credit Facility
 
STI Memphis
 
35.6

 
DVB Credit Facility
 
STI Alexis
 
57.0

 
DVB Credit Facility
 
STI Milwaukee
 
37.3

 
DVB Credit Facility
 
STI Seneca
 
37.8

 
DVB Credit Facility
 
STI Wembley
 
30.2

 
ING Credit Facility
 
STI Black Hawk
 
36.0

 
ING Credit Facility
 
STI Grace
 
51.5

 
ING Credit Facility
 
STI Jermyn
 
52.5

 
ING Credit Facility
 
STI Lombard
 
58.4

 
ING Credit Facility
 
STI Osceola
 
37.7

 
ING Credit Facility
 
STI Pontiac
 
37.4

 
KEXIM Credit Facility
 
STI Acton
 
30.2

 
KEXIM Credit Facility
 
STI Brixton
 
29.6

 
KEXIM Credit Facility
 
STI Broadway
 
48.0

 
KEXIM Credit Facility
 
STI Camden
 
29.8

 
KEXIM Credit Facility
 
STI Clapham
 
30.4

 
KEXIM Credit Facility
 
STI Comandante
 
29.5

 
KEXIM Credit Facility
 
STI Condotti
 
49.0

 
KEXIM Credit Facility
 
STI Elysees
 
48.1

 
KEXIM Credit Facility
 
STI Finchley
 
30.1

 
KEXIM Credit Facility
 
STI Fulham
 
30.0

 
KEXIM Credit Facility
 
STI Hackney
 
29.6

 
KEXIM Credit Facility
 
STI Madison
 
48.5

 
KEXIM Credit Facility
 
STI Orchard
 
48.1

 
KEXIM Credit Facility
 
STI Park
 
48.5

 
KEXIM Credit Facility
 
STI Pimlico
 
29.7

 
KEXIM Credit Facility
 
STI Poplar
 
30.4

 
KEXIM Credit Facility
 
STI Sloane
 
49.0

 
KEXIM Credit Facility
 
STI Veneto
 
49.2

 
K-Sure Credit Facility
 
STI Battersea
 
30.0

 
K-Sure Credit Facility
 
STI Bronx
 
32.6

 
K-Sure Credit Facility
 
STI Brooklyn
 
32.7

 
K-Sure Credit Facility
 
STI Connaught
 
50.0

 
K-Sure Credit Facility
 
STI Gramercy
 
31.8

 
K-Sure Credit Facility
 
STI Hammersmith
 
30.8

 
K-Sure Credit Facility
 
STI Lauren
 
50.3

 
K-Sure Credit Facility
 
STI Manhattan
 
32.6

 
K-Sure Credit Facility
 
STI Mayfair
 
32.1

 
K-Sure Credit Facility
 
STI Notting Hill
 
36.2

 
K-Sure Credit Facility
 
STI Oxford
 
50.3

 
K-Sure Credit Facility
 
STI Queens
 
32.6

 
K-Sure Credit Facility
 
STI Rotherhithe
 
30.9

 
K-Sure Credit Facility
 
STI Soho
 
31.7

 
K-Sure Credit Facility
 
STI Tribeca
 
32.6

 
K-Sure Credit Facility
 
STI Westminster
 
36.4

 
K-Sure Credit Facility
 
STI Winnie
 
50.2

 

F-24

Table of Contents

NIBC Credit Facility
 
STI Fontvieille
 
32.3

 
NIBC Credit Facility
 
STI Ville
 
32.5

 
Scotiabank Credit Facility
 
STI Rose
 
56.7

 
 
 
 
 
 
 
 
 
Total
 
$
2,913.3

 

5.
Vessels under construction
2015 Activity
In May 2015, we reached agreements with two unrelated third parties to purchase an aggregate of four LR2 product tankers, which were under construction at Sungdong Shipbuilding & Marine Engineering, or SSME, and Daehan Shipbuilding Company, or DHSC, for $60.0 million each.   STI Spiga and  STI Savile Row were delivered in June 2015, STI Kingsway and STI Carnaby were delivered in August and September 2015, respectively.
In July 2015, we reached an agreement with an unrelated third party to purchase an MR product tanker, which was built in 2014 at SPP Shipbuilding Co. Ltd., or SPP, for $37.1 million. This vessel, STI Memphis , was delivered in August 2015.
In July 2015, we reached an agreement to purchase an LR2 product tanker, which was under construction at DSME, for $59.0 million. As part of this agreement, we agreed to make a deposit of $5.9 million and to bareboat charter-in the vessel for up to nine months at $10,000 per day. This vessel, STI Lombard , was delivered under the bareboat agreement in August 2015 and was accounted for as a finance lease. In April 2016, at the conclusion of the bareboat agreement, we took ownership of STI Lombard and paid the remaining purchase price of $53.1 million.
In July 2015, we purchased an MR product tanker from an unrelated third party, which was under construction at Hyundai Mipo Dockyard Co. Ltd., or HMD, for $37.0 million. This vessel, STI Black Hawk , was delivered in September 2015.
In August 2015, we signed contracts with HMD to construct four MR product tankers for $35.8 million per vessel with deliveries scheduled in the first, second and third quarters of 2017. As part of this agreement, we received options to construct up to ten additional MR product tankers with fixed delivery dates and at fixed prices.
In October 2015, we exercised four of the options received from HMD and signed agreements to construct four MR product tankers for $36.0 million each with deliveries scheduled in the third and fourth quarters of 2017 and first quarter of 2018.
In December 2015, four options to construct MR product tankers with HMD expired unexercised. As a result, we wrote-off $0.7 million for deposits made on these vessels during the year ended December 31, 2015.
During 2015, we were still party to the performance guarantees under the construction contracts with the shipyards for seven Very Large Crude Carriers, or VLCCs, under construction that we sold in March 2014. In September 2015, one of the shipyards novated the construction contracts for five of these vessels, and in January 2016, the other shipyard novated the construction contracts for the remaining two vessels thus releasing the Company from all guarantees.
No new vessels were ordered during 2016.
As of December 31, 2016 , we had a total of ten newbuilding product tanker orders with HMD and SSME, which include eight MRs and two LR2s, for an aggregate purchase price of $387.4 million, of which $129.3 million in cash has been paid as of that date.
Capitalized interest
 
In accordance with IAS 23 “Borrowing Costs,” applicable interest costs are capitalized during the period that vessels are under construction. For the years ended December 31, 2016 and 2015, we capitalized interest expense for the vessels under construction of $6.3 million and $5.6 million, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization was 4.7% and 4.7% for the years ended December 31, 2016 and 2015, respectively. We cease capitalizing interest when the vessels reach the location and condition necessary to operate in the manner intended by management.


F-25

Table of Contents

A rollforward of activity within vessels under construction is as follows:

In thousands of U.S. dollars
 
Balance as of January 1, 2015
$
404,877

Installment payments and other capitalized expenses
873,179

Capitalized interest
5,571

Transferred to operating vessels and drydock
(1,150,678
)
Write-off of vessel purchase options
(731
)
Balance as of December 31, 2015
$
132,218

 
 
Installment payments and other capitalized expenses
106,034

Capitalized interest
6,274

Transferred to operating vessels and drydock
(106,609
)
Balance as of December 31, 2016
$
137,917


The following table is a timeline of future expected payments and dates for our vessels under construction as of December 31, 2016 :*

 
In millions of U.S. dollars
Q1 2017 - installment payments made
$
29.2

Q1 2017 - remaining installment payments
52.7

Q2 2017
35.9

Q3 2017
68.2

Q4 2017
50.5

Q1 2018
21.6

Total
$
258.1


* These are estimates only and are subject to change as construction progresses.

6.
Carrying values of vessels and vessels under construction
At each balance sheet date, we review the carrying amounts of our vessels and related drydock costs to determine if there is any indication that those vessels and related drydock costs have suffered an impairment loss. If such indication exists, the recoverable amount of the vessels and related drydock costs 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. As part of this evaluation, we consider certain indicators of potential impairment, such as market conditions including forecast time charter rates and values for second hand product tankers, discounted projected vessel operating cash flows and the Company’s overall business plans.
At December 31, 2016 , we reviewed the carrying amount of our vessels to determine whether there was an indication that these assets had suffered an impairment. First, we compared the carrying amount of our vessels to their fair values less costs to sell (determined by taking into consideration two independent broker valuations). If the carrying amount of our vessels was greater than the fair values less costs to sell, we prepared a value in use calculation where we estimated each vessel’s future cash flows. These estimates were primarily based on (i) a combination of the latest forecast, published time charter rates for the next three years and a 2.29% growth rate (which is based on published historical and forecast inflation rates) in freight rates in each period thereafter and (ii) our best estimate of vessel operating expenses and drydock costs, which are based on our most recent forecasts for the next three years and a 2.29% growth rate in each period thereafter. These cash flows were then discounted to their present value using a pre-tax discount rate of 8.70%. The results of these tests were as follows:
At December 31, 2016 , we had 77 vessels in our fleet and ten vessels under construction:
•
77 vessels in our fleet had fair values less costs to sell less than their carrying amount. We prepared a value in use calculation for each these vessels which resulted in no impairment being recognized.

F-26

Table of Contents

•
We did not obtain independent broker valuations for our ten vessels under construction. To assess their carrying values for impairment, we prepared value in use calculations for each vessel which resulted in no impairment being recognized.
At December 31, 2015 , we had 80 vessels in our fleet (including STI Lombard, which was bareboat chartered-in under a finance lease arrangement) and 12 vessels under construction:
•
50 vessels had fair values less costs to sell in excess of their carrying amount.
•
30 vessels had fair values less costs to sell less than their carrying amount. We prepared a value in use calculation for each these vessels which resulted in no impairment being recognized.
•
We did not obtain independent broker valuations for our 12 vessels under construction. To assess their carrying values for impairment, we prepared value in use calculations for each vessel which resulted in no impairment being recognized.
The impairment test that we conduct is most sensitive to variances in the discount rate and future time charter rates.
•
Based on the sensitivity analysis performed for December 31, 2016 , a 1.0% increase in the discount rate would result in an impairment of $20.2 million being recognized. Alternatively, a 5% decrease in forecasted time charter rates would result in an impairment of $22.4 million being recognized.
•
Based on the sensitivity analysis performed for December 31, 2015 , a 1.0% increase in the discount rate would result in no impairment being recognized. Alternatively, a 5% decrease in forecasted time charter rates would also result in no impairment being recognized.
 
7.
Other non-current assets

 
At December 31,
In thousands of U.S. dollars
2016
 
2015
Scorpio LR2 Tanker Pool Ltd. pool working capital contributions (1)
$
13,600

 
$
13,600

Scorpio Handymax Tanker Pool Ltd. pool working capital contributions (2)
5,617

 
5,656

Working capital contributions to Scorpio Group Pools
19,217

 
19,256

 
 
 
 
Capitalized loan fees (3)
2,278

 
2,527

Security deposits for vessel claims (4)
—

 
1,554

 
$
21,495

 
$
23,337

 
(1)
Upon entrance into the Scorpio LR2 Tanker Pool, all vessels are required to make initial working capital contributions of both cash and bunkers. Initial working capital contributions are repaid, without interest, upon a vessel’s exit from the pool. Bunkers on board a vessel exiting the pool are credited against such repayment at the actual invoice price of the bunkers. For all owned vessels we assume that these contributions will not be repaid within 12 months and are thus classified as non-current within other assets on the consolidated balance sheets. For time chartered-in vessels we classify the amounts as current (within accounts receivable) or non-current (within other assets) according to the expiration of the contract.
(2)
Upon entrance into the Scorpio Handymax Tanker Pool, all vessels are required to make initial working capital contributions of both cash and bunkers. Initial working capital contributions are repaid, without interest, upon a vessel's exit from each pool no later than six months after the exit date. Bunkers on board a vessel exiting the pool are credited against such repayment at the actual invoice price of the bunkers. For all owned vessels we assume that these contributions will not be repaid within 12 months and are thus classified as non-current within other assets on the consolidated balance sheets. For time chartered-in vessels we classify the amounts as current (within accounts receivable) or non-current (within other assets) according to the expiration of the contract.
(3)
Primarily represents upfront loan fees on our credit facilities that are expected to be used to finance vessels under our Newbuilding Program. These are reclassified to debt when the tranche of the loan to which the vessel relates is drawn.
(4)
Represents security deposits paid in 2015 in order for two of our vessels to be promptly released from the arrest instigated by an unpaid bunkers supplier. These vessels were on time charter to an unrelated third party when the bunkers in question were purchased. These security deposits were repaid in June and August of 2016.


F-27

Table of Contents

8.
Investment in Dorian

In November 2013, we contributed our VLGC business, which included 11 VLGC newbuilding contracts, options to purchase two additional VLGCs and a cash payment of $1.9 million to Dorian in exchange for newly issued shares representing 30% of Dorian’s outstanding shares immediately following the transaction. As of the closing date of the transaction, we paid $83.1 million in installment payments for the 11 VLGC contracts. Additionally, in November 2013, we purchased new shares of Dorian’s common stock as part of a private placement of shares for total consideration of $75.0 million.
In May 2014, Dorian completed its initial public offering of common shares in the United States and commenced trading on the NYSE under the symbol “LPG.”
In June 2014, we acquired 7,500,000 of our common shares from an existing shareholder in exchange for 3,422,665 common shares of Dorian in a privately negotiated transaction. As a result, we recognized a gain of $10.9 million.
On October 29, 2014, Robert Bugbee, our President, resigned from the board of directors of Dorian. Accordingly, we determined that we no longer had significant influence over Dorian’s financial and operating decisions, and we therefore ceased accounting of this investment under the equity method as of that date. As a result, we remeasured our investment in Dorian to its fair market value as of October 29, 2014, resulting in a write-down of $13.9 million.
Subsequent to October 29, 2014, our investment in Dorian was accounted for as “available for sale” with changes in fair market value recorded within equity, through other comprehensive income or loss.
In July 2015, we sold our investment in Dorian to two unrelated third parties for aggregate net proceeds of $142.4 million. As a result of these sales, we recognized a gain of $1.2 million during the year ended December 31, 2015. All shares were sold pursuant to an effective resale registration statement filed by Dorian on July 8, 2015.
The following is a rollforward of the carrying value of our investment in Dorian during the years ended December 31, 2015 and 2014:
In thousands of U.S. dollars
Rollforward of carrying value of investment in Dorian
 
Carrying value at January 1, 2014
$
209,803

 
Disposal of shares
(56,124
)
(1)  
Our share of net income through October 29, 2014
1,473

 
Loss recognized upon change in accounting method
(13,895
)
(2)  
Carrying value at October 29, 2014
141,257

 
Other comprehensive loss
(10,801
)
(3)  
Carrying value at December 31, 2014
$
130,456

 
Other comprehensive income
10,801

 
Carrying value at date of sales, July 2015
$
141,257

 
Net proceeds from sales
142,436

 
Gain on disposal
$
1,179

 
 
(1)
In May 2014, we acquired 7,500,000 of our common shares from an existing shareholder in exchange for the sale to said shareholder of 3,422,665 common shares in Dorian in a privately negotiated transaction. As a result, we recognized a gain of $10.9 million.
(2)
Calculated based on the difference between the carrying value as of October 28, 2014 and the opening share price on October 29, 2014.
(3)
Amount recorded within equity, through other comprehensive income. Calculated based on the difference between the carrying value as of October 29, 2014 and closing share price on December 31, 2014.


F-28

Table of Contents

Our share of Dorian's results prior to the discontinuation of equity method accounting in October 2014
 
Dorian's results for 2014 included herein are derived from Dorian’s unaudited financial statements for the three months ended March 31, 2014 and the nine months ended December 31, 2014. Furthermore, Dorian prepares its financial statements in accordance with Generally Accepted Accounting Principles in the United States, or US GAAP. As such, adjustments were made to convert our share of Dorian’s results from US GAAP to IFRS.
 
 
 
 
Adjustments
 
 
 In thousands of U.S. dollars
 
Dorian for the calendar year ended December 31, 2014  (1)
 
Impact of conversion to IFRS  (2)
 
Adjusted Dorian for the calendar year ended December 31, 2014
Revenue
 
$
78,575

 
—

 
$
78,575

Operating income
 
20,712

 
(614
)
 
20,098

Net income
 
15,459

 
(614
)
 
14,845

 
 
 
 
 
 
 
Our share of net income (3)
 
$
1,604

 
$
(131
)
 
$
1,473


(1)
Prepared in accordance with US GAAP using Dorian's unaudited financial statements for the three months ended March 31, 2014 and the nine months ended December 31, 2014.
(2)
This represents the (i) excess depreciation calculated as a result of our stepped up basis recorded upon our initial investment and (ii) our conversion of depreciation expense from US GAAP to IFRS.
(3)
Our share of net income captures Dorian's financial results from January 1, 2014 through October 29, 2014, the date we ceased equity method accounting.

9.
Accounts payable
The following table depicts the components of our accounts payable as of December 31, 2016 and 2015:
 
At December 31,
In thousands of U.S. dollars
2016
 
2015
Accounts payable to SSM
$
653

 
$
484

Accounts payable to SSH
90

 
—

Accounts payable to Scorpio LR2 Pool Ltd
15

 
63

Accounts payable to Scorpio MR Pool Ltd
—

 
175

Accounts payable to SCM
—

 
170

Accounts payable to Scorpio Handymax Pool Ltd
—

 
167

 
758

 
1,059

 
 
 
 
Suppliers
8,524

 
10,874

Progress payments due for vessels under construction
—

 
13,750

 
$
9,282

 
$
25,683

The majority of accounts payable are settled with a cash payment within 90 days. No interest is charged on accounts payable. We consider that the carrying amount of accounts payable approximates fair value.
 
10. Accrued expenses
The following table depicts the components of our accrued expenses as of December 31, 2016 and 2015:


F-29

Table of Contents

 
At December 31,
In thousands of U.S. dollars
2016
 
2015
Accrued expenses to Scorpio Handymax Tanker Pool Ltd.
$
—

 
$
205

Accrued expenses to SSH
—

 
77

Accrued expenses to SCM
53

 
5

 
53

 
287

 
 
 
 
Accrued interest
$
11,216

 
$
11,154

Suppliers
5,745

 
5,696

Accrued short-term employee benefits
5,487

 
13,738

Other accrued expenses
523

 
1,768

 
$
23,024

 
$
32,643


11.
Current and long-term debt
The following is a breakdown of the current and non-current portion of our debt outstanding as of December 31, 2016 and December 31, 2015 :
 
As of December 31,
In thousands of U.S. dollars
2016
 
2015
Current portion (1)
$
353,012

 
$
124,503

Finance lease
—

 
53,372

Current portion of long-term debt
353,012

 
177,875

 
 
 
 
Non-current portion  (2)
1,529,669

 
1,872,114

 
$
1,882,681

 
$
2,049,989

(1)
The current portion at December 31, 2016 was net of unamortized deferred financing fees of $4.3 million . The current portion at December 31, 2015 was net of unamortized deferred financing fees of $3.8 million.
(2)
The non-current portion at December 31, 2016 was net of unamortized deferred financing fees of $33.1 million . The non-current portion at December 31, 2015 was net of unamortized deferred financing fees of $52.0 million.

F-30

Table of Contents

The following is a table summarizing our current debt, non-current debt and available debt, by facility, as of December 31, 2016 . Interest accrued on our outstanding indebtedness has been recorded with accrued expenses on our consolidated balance sheets and is summarized in Note 10.

 
As of December 31, 2016
 
In thousands of U.S. dollars
Current
 
Non-Current
 
Total outstanding
 
Available
 
2011 Credit Facility
$
93,041

 
$
—

 
$
93,041

 
—

 
K-Sure Credit Facility
36,522

 
277,510

 
314,032

 
—

 
KEXIM Credit Facility
33,650

 
332,950

 
366,600

 
—

 
Credit Suisse Credit Facility
—

 
—

 
—

 
61,200

(1)  
ABN AMRO Credit Facility
9,189

 
117,161

 
126,350

 
—

 
ING Credit Facility
8,917

 
115,373

 
124,290

 
—

 
BNP Paribas Credit Facility
2,300

 
29,900

 
32,200

 
27,600

(2)  
Scotiabank Credit Facility
2,220

 
29,970

 
32,190

 
—

 
NIBC Credit Facility
4,084

 
35,733

 
39,817

 
—

 
2016 Credit Facility
27,264

 
253,920

 
281,184

 
—

 
DVB Credit Facility
88,375

 
—

 
88,375

 
—

 
Senior Notes Due 2020
—

 
53,750

 
53,750

 
—

 
Senior Notes Due 2017
51,750

 
—

 
51,750

 
—

 
Convertible Notes
—

 
316,507

 
316,507

 
—

 
 
357,312

 
1,562,774

 
1,920,086

 
88,800

 
Less: deferred financing fees
(4,300
)
 
(33,105
)
 
(37,405
)
 
—

 
 
$
353,012

 
$
1,529,669

 
$
1,882,681

 
$
88,800

 

(1)
Availability can be used to finance the lesser of $30.6 million and 60% of the fair market value of each vessel that is expected to be collateralized under this facility, STI Selatar and STI Rambla .
(2)
Availability can be used to finance the lesser of $13.8 million and 48% of the fair market value of each vessel that is expected to be collateralized under this facility, STI Emerald and STI Sapphire .

F-31

Table of Contents

The following is a rollforward of the activity within debt (current and non-current), by facility, for the year ended December 31, 2016 :
 
 
 
 
Activity
 
 
In thousands of U.S. dollars
 
Outstanding balance as of December 31, 2015
 
Drawdowns
 
Repayments
 
Other Activity
 
Outstanding balance as of December 31, 2016
2011 Credit Facility
 
$
100,976

 
$
—

 
$
(7,935
)
 
$
—

 
$
93,041

Newbuilding Credit Facility
 
71,843

 
—

 
(71,843
)
 
—

 
—

2013 Credit Facility
 
428,253

 
—

 
(428,253
)
 
—

 
—

K-Sure Credit Facility
 
440,000

 
—

 
(125,968
)
 
—

 
314,032

KEXIM Credit Facility
 
400,250

 
—

 
(33,650
)
 
—

 
366,600

ABN AMRO Credit Facility
 
139,830

 
—

 
(13,480
)
 
—

 
126,350

ING Credit Facility
 
34,708

 
95,640

 
(6,058
)
 
—

 
124,290

BNP Paribas Credit Facility
 
17,250

 
17,250

 
(2,300
)
 
—

 
32,200

Scotiabank Credit Facility
 
—

 
33,300

 
(1,110
)
 
—

 
32,190

NIBC Credit Facility
 
—

 
40,838

 
(1,021
)
 
—

 
39,817

2016 Credit Facility
 
—

 
288,000

 
(6,816
)
 
—

 
281,184

DVB Credit Facility
 
—

 
90,000

 
(1,625
)
 
—

 
88,375

Unsecured Senior Notes Due 2020
 
53,750

 
—

 
—

 
—

 
53,750

Unsecured Senior Notes Due 2017
 
51,750

 
—

 
—

 
—

 
51,750

Convertible Notes
 
313,793

 
—

 
—

 
2,714

(1)  
316,507

Finance lease
 
53,372

 
—

 
(53,372
)
 
—

 
—

 
 
$
2,105,775

 
$
565,028

 
$
(753,431
)
 
$
2,714

 
$
1,920,086


(1) Represents non-cash accretion recorded during the year ended December 31, 2016.
Secured Credit Facilities Overview
Each of our secured credit facilities contains financial and restrictive covenants, which require us to, among other things, comply with certain financial tests (described below); deliver quarterly and annual financial statements and annual projections; maintain adequate insurances; comply with laws (including environmental laws and ERISA); and maintain flag and class of our vessels. Other such covenants may, among other things, restrict consolidations, mergers or sales of our assets; require us to obtain lender approval on changes in our vessel manager; limit our ability to place liens on our assets; limit our ability to incur additional indebtedness; prohibit us from paying dividends if there is a covenant breach under the loan or an event of default has occurred or would occur as a result of payment of such dividend; prohibit our transactions with affiliates.
These secured credit facilities may be secured by, among other things:
•
a first priority mortgage over the relevant collateralized vessels;
•
a first priority assignment of earnings, insurances and charters from the mortgaged vessels for the specific facility;
•
a pledge of earnings generated by the mortgaged vessels for the specific facility; and
•
a pledge of the equity interests of each vessel owning subsidiary under the specific facility.
Each of our secured credit facilities are described below.
2011 Credit Facility
On May 3, 2011, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DNB Bank ASA, acting through its New York branch, and ABN AMRO Bank N.V., for a senior secured term loan facility of up to $150.0 million.

F-32

Table of Contents

This credit facility bears interest at LIBOR plus an applicable margin of (i) 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and (ii) 3.50% per annum when our debt to capitalization ratio is greater than 50%. The credit facility matures on May 3, 2017, and the availability under this credit facility expired on January 31, 2014.
Borrowings for each vessel financed under this facility represent a separate tranche, with repayment terms dependent on the age of the vessel at acquisition. Each tranche under the credit facility is repayable in equal quarterly installments, with a lump sum payment at maturity, based on a full repayment of such tranche when the vessel to which it relates is 16 years of age. Our subsidiaries, which may at any time, own one or more of our vessels, act as guarantors under the credit facility.
In July 2016, we amended certain of the financial covenants under the 2011 Credit Facility. These financial covenants require us to maintain:
•
The ratio of net debt to capitalization shall be no greater than 0.60 to 1.00.
•
Consolidated tangible net worth was revised to no less than $1.0 billion plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from January 1, 2016 going forward and 50% of the net proceeds of any new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to interest expense (excluding non-cash items) shall be no less than 2.00 to 1.00. Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends unless our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.
•
Consolidated liquidity (defined as cash and cash equivalents) was revised to less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The aggregate fair market value of the collateral vessels shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.
The outstanding balances at December 31, 2016 and December 31, 2015 were $93.0 million and $101.0 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
Newbuilding Credit Facility
On December 21, 2011, we executed a credit facility agreement with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB for a senior secured term loan facility of up to $92.0 million.
In September 2016, we refinanced all of the amounts borrowed under the Newbuilding Credit Facility by repaying an aggregate of $68.8 million. The vessels previously financed under this facility, STI Amber, STI Topaz, STI Ruby, and STI Garnet, were refinanced under our 2016 Credit Facility, which is described below.
This transaction was accounted for as a debt extinguishment. As a result, the Newbuilding Credit Facility was fully repaid and an aggregate of $1.1 million of deferred financing fees was written off during the year ended December 31, 2016 .
2013 Credit Facility  
On July 2, 2013, we entered into a senior secured revolving credit facility and term loan facility with Nordea Bank Finland plc and the other lenders named therein of up to $525.0 million to finance the acquisition of certain vessels for which we previously entered into newbuilding contracts.  

F-33

Table of Contents

During the year ended December 31, 2016 , we refinanced all amounts outstanding under the 2013 Credit Facility by repaying an aggregate of $414.9 million. Of the total repayments, the borrowings related to 21 vessels were refinanced into other credit facilities and the borrowings related to one vessel, STI Mythos , was repaid as a result of the sale of that vessel. The repayments are summarized as follows:
 
 
 
Repayment amount
 
 
 
 
Collateral
 
(in millions of U.S. dollars)
 
Repayment date
 
1
STI Battery
 
$
18.2

 
January 2016
 
2
STI Mythos
 
17.9

 
March 2016
(1)  
3
STI Osceola
 
18.3

 
April 2016
 
4
STI Rose
 
32.5

 
June 2016
 
5
STI Fontvieille
 
18.4

 
July 2016
 
6
STI Ville
 
18.5

 
July 2016
 
7
STI Opera
 
17.4

 
September 2016
 
8
STI Texas City
 
17.4

 
September 2016
 
9
STI Meraux
 
16.7

 
September 2016
 
10
STI San Antonio
 
16.7

 
September 2016
 
11
STI Virtus
 
17.2

 
September 2016
 
12
STI Venere
 
16.9

 
September 2016
 
13
STI Aqua
 
17.5

 
September 2016
 
14
STI Dama
 
17.5

 
September 2016
 
15
STI Benicia
 
17.2

 
September 2016
 
16
STI Regina
 
17.5

 
September 2016
 
17
STI St. Charles
 
17.2

 
September 2016
 
18
STI Yorkville
 
17.6

 
September 2016
 
19
STI Wembley
 
16.2

 
September 2016
 
20
STI Alexis
 
32.5

 
September 2016
 
21
STI Milwaukee
 
18.4

 
September 2016
 
22
STI Seneca
 
17.2

 
September 2016
 
(1) STI Mythos was sold in March 2016.
All of these transactions were accounted for as debt extinguishments. As a result, the 2013 Credit Facility was fully repaid and an aggregate of $10.4 million of deferred financing fees was written off during the year ended December 31, 2016 .
K-Sure Credit Facility
In February 2014, we entered into a $458.3 million senior secured term loan facility which consists of a $358.3 million tranche with a group of financial institutions that is being 95% covered by Korea Trade Insurance Corporation, or the K-Sure Tranche , and a $100.0 million commercial tranche with a group of financial institutions led by DNB Bank ASA, or the Commercial Tranche. We refer to this credit facility as our K-Sure Credit Facility.
Drawdowns under the K-Sure Credit Facility occurred in connection with the delivery of certain of our newbuilding vessels as specified in the agreement.
Repayments will be made in equal consecutive six month repayment installments in accordance with a 15 year repayment profile under the Commercial Tranche and a 12 year repayment profile under the K-Sure Tranche. Repayments commenced in July 2015 for the K-Sure Tranche and September 2015 for the Commercial Tranche. The Commercial Tranche matures in July 2021, and the K-Sure Tranche matures in January 2027 assuming the Commercial Tranche is refinanced through that date.
Borrowings under the K-Sure tranche bear interest at LIBOR plus an applicable margin of 2.25%. Borrowings under the Commercial Tranche bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75% thereafter until the maturity date in respect of the Commercial Tranche. A commitment fee equal to 40% of the applicable margin was payable on the unused daily portion of the credit facility. 

F-34

Table of Contents

In July 2016, we amended certain of the financial covenants under the K-Sure Credit Facility. These financial covenants require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth was revised to no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity was revised to not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The minimum threshold for the aggregate fair market value of the vessels as a percentage of the then aggregate principal amount in each facility was also revised and shall at all times be no less than the following:
From
 
To
 
Minimum ratio
01-Jan-16
 
31-Dec-16
 
165%
01-Jan-17
 
31-Dec-17
 
160%
01-Jan-18
 
31-Dec-18
 
155%
01-Jan-19
 
31-Dec-19
 
150%
01-Jan-20
 
Thereafter
 
145%
These amendments were accounted for as a debt modification and accordingly, no deferred financing fees were written off as a result.
During the year ended December 31, 2016 , we made scheduled principal payments of $36.5 million on the K-Sure Credit Facility. Additionally, we made an aggregate payment of $73.5 million as part of the sales of STI Chelsea, STI Lexington, STI Powai, and STI Olivia and an unscheduled repayment of $16.0 million as a result of amendments made to certain financial covenants as described above. We wrote off an aggregate of $2.7 million of deferred financing fees as a result of the vessel sales.
The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $314.0 million and $440.0 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
KEXIM Credit Facility  
In February 2014, we executed a senior secured term loan facility for $429.6 million, or the KEXIM Credit Facility, with a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea, or KEXIM, a statutory juridical entity established under The Export-Import Bank of Korea Act of 1969, as amended, in the Republic of Korea.  This KEXIM Credit Facility includes commitments from KEXIM of $300.6 million, or the KEXIM Tranche, and a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) of $129.0 million, or the Commercial Tranche.
Drawdowns under the KEXIM Credit Facility occurred in connection with the delivery of 18 vessels under our Newbuilding Program as specified in the loan agreement.
In addition to KEXIM’s commitment of up to $300.6 million, KEXIM also provided an optional guarantee for a five year amortizing note of $125.25 million, the proceeds of which reduced the $300.6 million KEXIM Tranche. These notes were issued on July 18, 2014 when Seven and Seven Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands, or the Issuer, completed an offering of $125,250,000 in aggregate principal amount of floating rate guaranteed notes due 2019, or the KEXIM Notes, in a private offering to qualified institutional buyers pursuant to the Securities Act and in offshore transactions complying with Regulation S under the Securities Act. The KEXIM Notes were issued in connection with the KEXIM Tranche and reduced KEXIM's funding obligations and our borrowing costs under the KEXIM Tranche by 1.55% per year. Seven and Seven Ltd. is an unaffiliated company that was incorporated for the purpose of facilitating this transaction and servicing the bonds until maturity.
Payment of 100% of all regularly scheduled installments of principal of, and interest on, the KEXIM Notes are guaranteed by KEXIM. The vessels in the loan are the collateral for the KEXIM Credit Facility, which includes the KEXIM Notes. The KEXIM Notes are currently listed to the Singapore Exchange Securities Trading Limited. The KEXIM Notes are not listed on any other securities exchange, listing authority or quotation system.

F-35

Table of Contents

The Commercial Tranche matures on the sixth anniversary of the delivery date of the last vessel specified under the loan (January 2021), and the KEXIM Tranche matures on the 12th anniversary of the weighted average delivery date of the vessels specified under the loan assuming the Commercial Tranche is refinanced through that date (September 2026).
Repayments will be made in ten equal consecutive semi-annual repayment installments in accordance with a 15 year repayment profile under the Commercial Tranche and a 12 year repayment profile under the KEXIM Tranche (which includes the KEXIM Notes). Repayments under the KEXIM Tranche will first be applied to the KEXIM Notes until the maturity of those notes in September 2019 and all subsequent repayments will be applied to the remaining amounts outstanding under KEXIM Tranche until the maturity of that tranche in September 2026 (assuming the Commercial Tranche is refinanced through that date). Repayments commenced in March 2015 for the KEXIM Tranche and in July 2015 for the Commercial Tranche.
Borrowings under the KEXIM Tranche bear interest at LIBOR plus an applicable margin of 3.25%. Borrowings under the Commercial Tranche bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75% thereafter until the maturity date in respect of the Commercial Tranche.
In June 2016, we amended certain of the financial covenants under the KEXIM Credit Facility. These financial covenants require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth was revised to no less than $1.0 billion plus (i) 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of any new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity was revised to not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The minimum threshold for the aggregate fair market value of the vessels as a percentage of the then aggregate principal amount in each facility was revised and shall at all times be no less than the following:
From
 
To
 
Minimum ratio
01-Jan-16
 
31-Dec-16
 
165%
01-Jan-17
 
31-Dec-17
 
160%
01-Jan-18
 
31-Dec-18
 
155%
01-Jan-19
 
31-Dec-19
 
150%
01-Jan-20
 
Thereafter
 
145%

These amendments were accounted for as a debt modification and accordingly, no deferred financing fees were written off as a result.
The amounts outstanding relating to this facility (which includes the KEXIM Notes) as of December 31, 2016 and 2015 were $366.6 million and $400.3 million respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
ABN AMRO Credit Facility
In July 2015, we executed a senior secured term loan facility with ABN AMRO Bank N.V. and DVB Bank SE for up to $142.2 million. This facility was fully drawn in 2015 to partially finance the purchases of STI Savile Row, STI Kingsway and STI Carnaby and to refinance the existing indebtedness on STI Spiga. We refer to this credit facility as our ABN AMRO Credit Facility.
Repayments under the ABN AMRO Credit Facility will be made in equal consecutive quarterly repayment installments in accordance with a 15 year repayment profile. Repayments commenced three months after the drawdown date of each vessel. Each tranche matures on the fifth anniversary of the initial drawdown date and a balloon installment payment is due on the maturity date of each tranche. Borrowings under the ABN AMRO Credit Facility bear interest at LIBOR plus an applicable margin of 2.15%.
Our ABN AMRO Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

F-36

Table of Contents

•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
During the year ended December 31, 2016 , we made scheduled principal payments of $9.5 million and an unscheduled prepayment of $4.0 million on this credit facility. The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $126.4 million and $139.8 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
ING Credit Facility
In June 2015, we executed a senior secured term loan facility with ING Bank N.V., London Branch for a credit facility of up to $52.0 million. In September 2015, we amended and restated the facility to increase the borrowing capacity to $87.0 million, and in March 2016, we amended and restated the facility to further increase the borrowing capacity to $132.5 million.
We made the following drawdowns from our ING Credit Facility during the year ended December 31, 2016 :
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
26.0

 
March 2016
 
STI Grace
 
26.5

 
April 2016
 
STI Lombard
 
17.1

 
April 2016
 
STI Osceola
(1)  
26.0

 
June 2016
 
STI Jermyn
 

(1) In April 2016, we refinanced the amount borrowed relating to STI Osceola by repaying $18.3 million on our 2013 Credit Facility and drawing down $17.1 million from our ING Credit Facility.
Repayments on all borrowings will be made in equal consecutive quarterly installments, in accordance with a 15 year repayment profile with the first installment falling due three calendar months after the drawdown date and a balloon installment payment, which is due on the maturity dates of March 4, 2021 for STI Lombard and STI Osceola and June 24, 2022 for STI Grace, STI Jermyn, STI Black Hawk and STI Pontiac .
Borrowings under the ING Credit Facility bear interest at LIBOR plus a margin of 1.95% per annum. A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the credit facility.
Our ING Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization not more than 0.60 to 1:00.
•
Consolidated tangible net worth of not less than $677.3 million plus (a) 25% of the positive consolidated net income for each fiscal quarter commencing on or after October 1, 2013 and (b) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount of the loans under the credit facility.

F-37

Table of Contents

The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $124.3 million and $34.7 million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
Credit Suisse Credit Facility
In October 2015, we executed a senior secured term loan facility with Credit Suisse AG, Switzerland to finance a portion of the purchase price of two LR2 product tankers that were under construction at SSME with deliveries in the first quarter of 2017. These vessels are owned individually by certain of our subsidiaries, who together are the borrowers under this credit facility, and Scorpio Tankers Inc. is the guarantor. We refer to this facility as our Credit Suisse Credit Facility.
Repayments will be made in accordance with a 15 year repayment profile and will commence three calendar months after the drawdown date in respect of each tranche with subsequent installments falling due at consecutive intervals of three calendar months thereafter. A balloon payment is due on the maturity date of five years from the date of delivery of each vessel.
The facility will bear interest at LIBOR plus a margin of 2.40% per annum. A commitment fee equal to 1% of the amounts available is payable on the unused daily portion of this facility.
Our Credit Suisse Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount of the loans under the credit facility.
There were no amounts borrowed as of December 31, 2016 . We were in compliance with the financial covenants relating to this facility as of December 31, 2016 . In February 2017 and March 2017, we drew down a total of $58.4 million from this facility to partially finance the deliveries of STI Selatar and STI Rambla as further described in Note 23.
BNP Paribas Credit Facility
In December 2015, we executed a senior secured term loan facility with BNP Paribas SA for up to $34.5 million, and in December 2016, we amended and restated the facility to increase the borrowing capacity by a further $27.6 million to $62.1 million. These vessels are owned individually by certain of our subsidiaries, who together are the borrowers under this credit facility, and Scorpio Tankers Inc. is the guarantor. We refer to this facility as our BNP Paribas Credit Facility.
Repayments on all borrowings will be made in ten equal consecutive semi-annual installments of $0.6 million per tranche, in accordance with a 15 year repayment profile with the first installment falling due on June 15, 2017 and subsequent installments falling due at consecutive intervals of six calendar months thereafter. A final balloon payment of $38.0 million is due on the maturity date of December 15, 2021. The original facility of $34.5 million bears interest at LIBOR plus a margin of 1.95% per annum, and the upsized facility of $27.6 million bears interest at LIBOR plus a margin of 2.30% per annum. A commitment fee equal to 40% of the applicable margin was payable on the unused daily portion of the credit facility.
Our BNP Paribas Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
We made the following drawdown from our BNP Paribas Credit Facility during the year ended December 31, 2016 :

F-38

Table of Contents

Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
17.3

 
February 2016
 
STI Battery
(1)  
(1) In February 2016, we refinanced the amount borrowed relating to STI Battery by repaying $18.2 million on our 2013 Credit Facility and drawing down $17.3 million from our BNP Paribas Credit Facility.
The amounts outstanding relating to this facility as of December 31, 2016 and 2015 were $32.2 million and $17.3 million respectively, and there was $27.6 million available to draw as of that date. We were in compliance with the financial covenants relating to this facility as of December 31, 2016 .
Furthermore, in January and February 2017, we refinanced the outstanding indebtedness related to STI Sapphire and STI Emerald by repaying an aggregate of $26.3 million on our 2011 Credit Facility and drawing down $27.6 million from our BNP Paribas Credit Facility (as further described in Note 23).
Scotiabank Credit Facility
In June 2016, we executed a senior secured term loan facility with Scotiabank Europe plc. The loan facility was fully drawn in June 2016, and the proceeds of $33.3 million were used to refinance the existing indebtedness on STI Rose, which was previously financed under the 2013 Credit Facility . We refer to this facility as our Scotiabank Credit Facility.
Repayments on all borrowings will be made in 12 equal consecutive quarterly installments of $0.6 million each with the first installment falling due on September 7, 2016 and subsequent installments falling due at consecutive intervals of three calendar months thereafter. A final balloon payment is due on the maturity date of June 7, 2019. The facility bears interest at LIBOR plus a margin of 1.50% per annum, and a commitment fee equal to 35% of the applicable margin was payable on the unused daily portion of the credit facility.
Our Scotiabank Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times be no less than 125% of the then aggregate outstanding principal amount of the loans under the credit facility.
As of December 31, 2016 , the outstanding balance was $32.2 million , and we were in compliance with the financial covenants relating to this facility as of that date.
NIBC Credit Facility
In June 2016, we executed a senior secured term loan facility with NIBC Bank N.V. This facility was fully drawn in July 2016, and the aggregate proceeds of $40.8 million were used to refinance the existing indebtedness on STI Ville and STI Fontvieille , which were previously financed under our 2013 Credit Facility. We refer to this facility as our NIBC Credit Facility.
The facility is separated into two tranches (one per vessel), and the repayment of the tranche relating to the respective vessel will commence three calendar months after the respective drawdown date. Repayments will be made in equal, consecutive quarterly installments of $0.5 million per tranche through July 2018 and $0.4 million per tranche for each quarter thereafter with a final balloon payment due at the maturity date of June 2021. The facility bears interest at LIBOR plus a margin of 2.50% per annum. A commitment fee equal to 35% of the applicable margin was payable on the unused daily portion of the credit facility.
Our NIBC Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.

F-39

Table of Contents

•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 130% from the first drawdown date and ending on the second anniversary of the first drawdown date; 135% from the second anniversary of the first drawdown date and expiring on the fourth anniversary of the first drawdown date; and 140% at all times thereafter.     
We made the following drawdowns from our NIBC Credit Facility during the year ended December 31, 2016 :
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
20.4

 
July 2016
 
STI Fontvieille
(1)  
20.4

 
July 2016
 
STI Ville
(1)  
(1) In July 2016, we refinanced the amounts borrowed relating to STI Fontvieille and STI Ville by repaying an aggregate of $36.9 million on our 2013 Credit Facility and drawing down $40.8 million from our NIBC Credit Facility.
As of December 31, 2016 , the outstanding balance was $39.8 million , and we were in compliance with the financial covenants relating to this facility as of that date.
2016 Credit Facility
In August 2016, we executed a senior secured loan facility with ABN AMRO Bank N.V., Nordea Bank Finland plc, acting through its New York branch, and Skandinaviska Enskilda Banken AB. The loan facility was fully drawn in September 2016, and the aggregate proceeds of $288.0 million were used to refinance the existing indebtedness on 16 MR product tankers, which were previously financed under the 2013 Credit Facility ( STI Opera, STI Texas City, STI Meraux, STI San Antonio, STI Virtus, STI Venere, STI Aqua, STI Dama, STI Benicia, STI Regina, STI St. Charles, and STI Yorkville ) and Newbuilding Credit Facility ( STI Amber, STI Topaz, STI Ruby and STI Garnet). This credit facility is comprised of a term loan up to $192.0 million and a revolver up to $96.0 million. We refer to this credit facility as our 2016 Credit Facility.
Repayments on the term loan facility will be made in equal, consecutive quarterly installments of $6.8 million through September 2018 and $6.0 million for each quarter thereafter with a final balloon payment due at the maturity date of September 2021. All amounts borrowed under the revolving credit facility are due at the maturity date of September 2021. The facility bears interest at LIBOR plus a margin of 2.50% per annum, and a commitment fee equal to 40% of the applicable margin was payable on the unused daily portion of the credit facility.
Our 2016 Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus $250,000 per each time chartered-in vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
We made the following drawdowns from our 2016 Credit Facility during the year ended December 31, 2016 :


F-40

Table of Contents

Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
18.5

 
September 2016
 
STI Opera
(1)  
18.5

 
September 2016
 
STI Texas City
(1)  
18.5

 
September 2016
 
STI Meraux
(1)  
18.5

 
September 2016
 
STI San Antonio
(1)  
18.5

 
September 2016
 
STI Virtus
(1)  
18.5

 
September 2016
 
STI Venere
(1)  
18.5

 
September 2016
 
STI Aqua
(1)  
18.5

 
September 2016
 
STI Dama
(1)  
18.5

 
September 2016
 
STI Benicia
(1)  
18.5

 
September 2016
 
STI Regina
(1)  
18.5

 
September 2016
 
STI St. Charles
(1)  
18.5

 
September 2016
 
STI Yorkville
(1)  
16.7

 
September 2016
 
STI Amber
(2)  
16.7

 
September 2016
 
STI Topaz
(2)  
16.7

 
September 2016
 
STI Ruby
(2)  
16.7

 
September 2016
 
STI Garnet
(2)  

(1) In September 2016, we refinanced the amounts borrowed on the 12 MR product tankers listed above by repaying an aggregate of $206.8 million on our 2013 Credit Facility and drawing down $221.4 million from our 2016 Credit Facility.
(2) In September 2016, we refinanced the amounts borrowed on the four MR product tankers listed above by repaying an aggregate of $68.8 million on our Newbuilding Credit Facility and drawing down $66.6 million from our 2016 Credit Facility.
As of December 31, 2016 , the outstanding balance was $281.2 million , and we were in compliance with the financial covenants relating to this facility as of that date.
DVB Credit Facility
In September 2016, we executed a senior secured term loan facility with DVB Bank SE. The loan facility was fully drawn in September 2016, and the proceeds of $90.0 million were used to refinance the existing indebtedness on four product tankers ( STI Alexis, STI Milwaukee, STI Seneca, and STI Wembley ), which were previously financed under the 2013 Credit Facility. We refer to this credit facility as our DVB Credit Facility.
The facility will be repaid in equal, quarterly principal repayments of $1.6 million, has a final maturity of August 2017, and bears interest at LIBOR plus a margin of 1.60% per annum.
Our DVB Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $677.3 million plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the net proceeds of new equity issues occurring on or after October 1, 2013.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel.
•
The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.
We made the following drawdowns from our DVB Credit Facility during the year ended December 31, 2016 :

F-41

Table of Contents

Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
18.5

 
September 2016
 
STI Wembley
(1)  
19.5

 
September 2016
 
STI Milwaukee
(1)  
20.5

 
September 2016
 
STI Seneca
(1)  
31.5

 
September 2016
 
STI Alexis
(1)  

(1) In September 2016, we refinanced the amounts borrowed on the four product tankers listed above by repaying an aggregate of $84.3 million into our 2013 Credit Facility and drawing down $90.0 million from our DVB Credit Facility.
As of December 31, 2016 , the outstanding balance was $88.4 million , and we were in compliance with the financial covenants relating to this facility as of that date.
Unsecured Senior Notes Due 2020
On May 12, 2014, we issued $50.0 million in aggregate principal amount of 6.75% Senior Notes due May 2020, or our Senior Notes Due 2020, and on June 9, 2014, we issued an additional $3.75 million aggregate principal amount of Senior Notes Due 2020 when the underwriters partially exercised their option to purchase additional Senior Notes Due 2020 on the same terms and conditions. The net proceeds from the issuance of the Senior Notes Due 2020 were $51.8 million after deducting the underwriters’ discounts, commissions and offering expenses.
The Senior Notes Due 2020 bear interest at a coupon rate of 6.75% per year, payable quarterly in arrears on the 15th day of February, May, August and November of each year. Coupon payments commenced on August 15, 2014. The Senior Notes Due 2020 are redeemable at our option, in whole or in part, at any time on or after May 15, 2017 at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The Senior Notes Due 2020 are our senior unsecured obligations and rank equally with all of our existing and future senior unsecured and unsubordinated debt and are effectively subordinated to our existing and future secured debt, to the extent of the value of the assets securing such debt, and will be structurally subordinated to all existing and future debt and other liabilities of our subsidiaries. No sinking fund is provided for the Senior Notes Due 2020. The Senior Notes Due 2020 were issued in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof and are listed on the NYSE under the symbol “SBNA.”
The Senior Notes Due 2020 require us to comply with certain covenants, including financial covenants; restrictions on consolidations, mergers or sales of assets and prohibitions on paying dividends or returning capital to equity holders if a covenant breach or an event of default has occurred or would occur as a result of such payment. If we undergo a change of control, holders may require us to repurchase for cash all or any portion of their notes at a change of control repurchase price equal to 101% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the change of control purchase date.
The financial covenants under our Senior Notes Due 2020 include:
•
Net borrowings shall not equal or exceed 70% of total assets.
•
Net worth shall always exceed $650.0 million.
The outstanding balance was $53.75 million as of December 31, 2016 and December 31, 2015, and we were in compliance with the financial covenants relating to the Senior Notes Due 2020 as of that date.
Convertible Senior Notes Due 2019
In June 2014, we issued $360.0 million in aggregate principal amount of convertible senior notes due 2019, or the Convertible Notes, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. This amount includes the full exercise of the initial purchasers’ option to purchase an additional $60.0 million in aggregate principal amount of the Convertible Notes in connection with the offering. The net proceeds we received from the issuance of the Convertible Notes after the exercise of the initial purchasers’ option to purchase additional Convertible Notes were $349.0 million after deducting the initial purchasers’ discounts, commissions and offering expenses of $11.0 million. As part of the transaction, we used a portion of the net proceeds to repurchase $95.0 million of our common stock, or 10,127,600 shares, at $9.38 per share in a privately negotiated transaction.

F-42

Table of Contents

The Convertible Notes bear interest at a coupon rate of 2.375% per annum, and are payable semi-annually in arrears on January 1 and July 1 of each year beginning on January 1, 2015. The Convertible Notes will mature on July 1, 2019, unless earlier converted, redeemed or repurchased. At issuance, the Convertible Notes were convertible in certain circumstances and during certain periods at an initial conversion rate of 82.0075 shares of common stock per $1,000 (which represents an initial conversion price of approximately $12.19 per share of common stock), subject to adjustment in certain circumstances as set forth in the indenture governing the Convertible Notes. Adjustments were made during years ended December 31, 2016 and 2015 to the initial conversion rate as a result of the issuance of dividends to our common stockholders. The table below details the dividends declared from the issuance of the Convertible Notes through December 31, 2016 and their corresponding effect to the conversion rate of the Convertible Notes. The conversion rate as of December 31, 2016 was 97.7039 .
Record Date
 
Dividends per share
 
Share Adjusted Conversion Rate  (1)
August 22, 2014
 
$
0.100

 
82.8556
November 25, 2014
 
$
0.120

 
84.0184
March 13, 2015
 
$
0.120

 
85.2216
May 21, 2015
 
$
0.125

 
86.3738
August 14, 2015
 
$
0.125

 
87.4349
November 24, 2015
 
$
0.125

 
88.6790
March 10, 2016
 
$
0.125

 
90.5311
May 11, 2016
 
$
0.125

 
92.5323
September 15, 2016
 
$
0.125

 
94.9345
November 25, 2016
 
$
0.125

 
97.7039
(1)  Per $1,000 principal amount.

Holders may convert their notes at their option at any time prior to the close of business on the business day immediately preceding January 1, 2019 only under the following circumstances:
•
during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 15 trading days (whether or not consecutive) during a period of 25 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•
during the five business day period after any five consecutive trading day period, or the Measurement Period, in which the trading price (as defined below) per $1,000 principal amount of Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
•
if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
•
upon the occurrence of specified corporate events as defined in the indenture (e.g. consolidations, mergers, a binding share exchange or the transfer or lease of all or substantially all of our assets).
We may not redeem the Convertible Notes prior to July 6, 2017. We may redeem for cash all or any portion of the notes, at our option, on or after July 6, 2017 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 15 trading days (whether or not consecutive) during any 25 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes.
The Convertible Notes require us to comply with certain covenants such as restrictions on consolidations, mergers or sales of assets. Additionally, if we undergo a fundamental change, holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
We determined the initial carrying value of the liability component of the Convertible Notes to be $298.7 million based on the fair value of a similar liability that does not have any associated conversion feature. We used our Senior Notes Due 2020 issued in May 2014 as the basis for this determination. The difference between the fair value of the liability component and the

F-43

Table of Contents

face value of the Convertible Notes is being amortized over the term of the Convertible Notes under the effective interest method and recorded as part of financial expenses. The residual value of $61.3 million (the conversion feature) was recorded to Additional paid-in capital.
In July 2015, we repurchased $1.5 million face value of our Convertible Notes at an average price of $1,088.10 per $1,000 principal amount. As a result of this transaction, we reduced the liability and equity components of the Convertible Notes by $1.3 million and $0.4 million, respectively and we recorded a gain of $46,273, which is recorded within financial income of consolidated statement of income or loss. We also wrote off $30,880 of deferred financing fees as a result of this transaction.
In March 2016, we repurchased $5.0 million face value of our Convertible Notes at an average price of $831.05 per $1,000 principal amount, or $4.2 million. As a result of this transaction, we reduced the liability and equity components of the Convertible Notes by $4.4 million and $0.3 million, respectively and we recorded a gain of $0.6 million, which is recorded within financial income of the consolidated statement of income or loss. We also wrote off $0.1 million of deferred financing fees as a result of this transaction.
In May 2016, we repurchased $5.0 million face value of our Convertible Notes at an average price of $847.50 per $1,000 principal amount, or $4.2 million. As a result of this transaction, we reduced the liability and equity components of the Convertible Notes by $4.4 million and $0.2 million, respectively and we recorded a gain of $0.4 million, which is recorded within financial income of the consolidated statement of income or loss. We also wrote off $0.1 million of deferred financing fees as a result of this transaction.
The carrying values of the liability component of the Convertible Notes as of December 31, 2016 and 2015, was $316.5 million and $313.8 million, respectively. We incurred $8.3 million of coupon interest and $11.6 million of non-cash accretion of our Convertible Notes during the year ended December 31, 2016 . We incurred $8.5 million of coupon interest and $11.1 million of non-cash accretion of our Convertible Notes during the year ended December 31, 2015.
We were in compliance with the covenants related to the Convertible Notes as of December 31, 2016 .
Unsecured Senior Notes Due 2017
On October 31, 2014, we issued $45.0 million aggregate principal amount of 7.50% Unsecured Senior Notes due October 15, 2017, or the Senior Notes Due 2017, and on November 17, 2014, we issued an additional $6.75 million aggregate principal amount of Senior Notes Due 2017 when the underwriters exercised their option to purchase additional Senior Notes Due 2017 on the same terms and conditions. The net proceeds from the issuance of the Senior Notes Due 2017 were approximately $49.9 million after deducting the underwriters’ discounts, commissions and offering expenses.
All terms mentioned are defined in the indenture.
The Senior Notes Due 2017 bear interest at a coupon rate of 7.50% per year, payable quarterly in arrears on the 15th day of January, April, July and October of each year, commencing on January 15, 2015.
The Senior Notes Due 2017 are our senior unsecured obligations and rank equally with all of our existing and future senior unsecured and unsubordinated debt. The Senior Notes Due 2017 are effectively subordinated to our existing and future secured debt, to the extent of the value of the assets securing such debt, and structurally subordinated to all existing and future debt and other liabilities of our subsidiaries. The Senior Notes Due 2017 were issued in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof and are listed on the NYSE under the symbol “SBNB.”
The Senior Notes Due 2017 require us to comply with certain covenants, including financial covenants; restrictions on consolidations, mergers or sales of assets and prohibitions on paying dividends or returning capital to equity holders if a covenant breach or an event of default has occurred or would occur as a result of such payment. If we undergo a change of control, holders may require us to repurchase for cash all or any portion of their notes at a change of control repurchase price equal to 101% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the change of control purchase date.
The financial covenants include:
•
Net borrowings shall not equal or exceed 70% of total assets.
•
Net worth shall always exceed $650.0 million.
The outstanding balance was $51.75 million as of December 31, 2016 and December 31, 2015 and we were in compliance with the financial covenants as of those dates.
Finance Lease Accounting
In July 2015, we entered into an agreement with an unrelated third-party to purchase STI Lombard , an LR2 product tanker, which was under construction at DSME, for approximately $59.0 million. As part of this agreement, we agreed to make a deposit

F-44

Table of Contents

of $5.9 million and to bareboat charter-in the vessel for up to nine months, at $10,000 per day. STI Lombard was delivered to us under the bareboat charter-in agreement in August 2015. This transaction was accounted for as a finance lease as of December 31, 2015 and the finance lease liability was $53.4 million at that date. In April 2016, we took ownership of this vessel at the conclusion of the bareboat charter-in agreement and paid the remaining 90% of the purchase price, or $53.1 million, as part of this transaction. Accordingly, all amounts due under the finance lease were settled at that date.

12.
Derivative financial instruments
Interest rate swaps
In August 2011, we entered into six interest rate swap agreements to manage interest costs and the risk associated with changing interest rates on our 2011 Credit Facility and 2010 Revolving Credit Facility with three different banks. Pursuant to these interest rate swap contracts, we agreed to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts.
In March 2014, as a result of the sales of Noemi and Senatore and corresponding debt repayment, we reduced the notional amount on three interest rate swaps relating to the 2010 Revolving Credit Facility to $30.0 million from $51.0 million. As a result of the reduction, we made a repayment of $0.3 million to settle the liability outstanding as of the date of settlement, and we recognized a realized gain on derivative financial instruments of $0.02 million.
The interest rate swaps relating to the 2011 Credit Facility qualified for hedge accounting during the years ended December 31, 2015 and 2014. Accordingly, changes in their fair value, which the hedge is deemed to be effective, were recognized directly in other comprehensive income or loss. Changes in their fair value for any portion deemed to be ineffective were recognized in the consolidated statements of income or loss. The interest rate swaps relating to the 2010 Revolving Credit Facility were accounted for at fair value with any resultant gains or losses recognized in the consolidated statements of income or loss during the years ended December 31, 2015 and 2014.
In March 2015, we terminated the three interest rate swaps under our 2010 Revolving Credit Facility. As a result, we made a repayment of $0.1 million to settle the liability and recognized a realized gain of $0.1 million during the year ended December 31, 2015. Additionally, the three interest rate swaps under our 2011 Credit Facility expired in June 2015.
Profit or loss sharing agreements

In February 2015, we took delivery of an LR2 product tanker, Densa Crocodile , on a time charter-in arrangement for one year at $21,050 per day with an option to extend the charter for an additional year at $22,600 per day. We also entered into a profit and loss sharing agreement whereby 50% of the profits and losses relating to this vessel above or below the charterhire rate will be shared with a third party who neither owns nor operates this vessel. The option to extend the charter was declared in February 2016, and the profit and loss agreement was also extended for the optional period.
This profit and loss agreement has been recorded as a derivative, recorded at fair value through profit or loss, with any resultant gain or loss recognized in the consolidated statement of income or loss. Changes in fair value are recorded as unrealized gains or losses and actual earnings are recorded as realized gains or losses on derivative financial instruments within the consolidated statement of income or loss. The fair value of this instrument is determined by comparing published time charter rates to the charter rate in the agreement and discounting these cash flows to their present value.


F-45

Table of Contents

The following table summarizes the fair value of our derivative financial instruments as of December 31, 2016 and 2015, which are included in the consolidated balance sheets:

 
 As of December 31,
 In thousands of U.S. dollars
2016
 
2015
Assets
 
 
 
 Derivative financial instrument (profit and loss agreement - current)
$
116

 
$
—

 
 
 
 
 Liabilities
 
 
 
 Derivative financial instrument (profit and loss agreement - current)
—

 
(1,175
)
 Derivative financial instrument (profit and loss agreement - non-current)
—

 
(80
)
 Total liabilities
$
—

 
$
(1,255
)
The following has been recorded as realized and unrealized gains or losses on our derivative financial instruments during the years ended December 31, 2016 , 2015 and 2014:
 
 Fair value adjustments
 
 Statement of income
 
 
 Amounts in thousands of U.S. dollars
 Realized gain
 
 Unrealized gain/ (loss)
 
 Recognized in equity
 
 
 
 
 
 
 Profit and loss agreement
$
—

 
$
1,371

 
$
—

 
 
 
 
 
 
 Total year ended December 31, 2016
$
—

 
$
1,371

 
$
—

 
 
 
 
 
 
 Profit and loss agreement
$
—

 
$
(1,255
)
 
$
—

 Interest rate swaps
55

 
—

 
77

 
 
 
 
 
 
 Total year ended December 31, 2015
$
55

 
$
(1.255
)
 
$
77

 
 
 
 
 
 
 Interest rate swaps
17

 
264

 
135

 
 
 
 
 
 
 Total year ended December 31, 2014
$
17

 
$
264

 
$
135




F-46

Table of Contents

13.
Segment reporting
Information about our reportable segments for the years ended December 31, 2016 , 2015 and 2014 is as a follows:

For the year ended December 31, 2016
 In thousands of U.S. dollars
 
LR1/Panamax
 
 Handymax
 
LR2
 
 MR
 
 Reportable segments subtotal
 
 Corporate and eliminations
 
 Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Vessel revenue
 
$
5,843

 
$
85,578

 
$
165,256

 
$
265,020

 
$
521,697

 
$
1,050

 
$
522,747

 Vessel operating costs
 
(33
)
 
(32,817
)
 
(50,028
)
 
(104,242
)
 
(187,120
)
 
—

 
(187,120
)
 Voyage expenses
 
(19
)
 
(479
)
 
(375
)
 
(705
)
 
(1,578
)
 
—

 
(1,578
)
 Charterhire
 
(5,657
)
 
(26,292
)
 
(16,025
)
 
(30,888
)
 
(78,862
)
 
—

 
(78,862
)
 Depreciation
 
—

 
(18,014
)
 
(41,900
)
 
(61,547
)
 
(121,461
)
 
—

 
(121,461
)
 General and administrative expenses
 
(7
)
 
(1,410
)
 
(1,983
)
 
(4,485
)
 
(7,885
)
 
(47,014
)
 
(54,899
)
 Loss on sales of vessels
 
—

 
—

 
—

 
(2,078
)
 
(2,078
)
 
—

 
(2,078
)
 Financial expenses
 
—

 
—

 
—

 
—

 
—

 
(104,048
)
 
(104,048
)
 Unrealized gain on derivative financial instruments
 
—

 
—

 
1,371

 
—

 
1,371

 
—

 
1,371

 Financial income
 
—

 
6

 
37

 
47

 
90

 
1,123

 
1,213

 Other expenses, net
 
—

 
—

 
—

 
(9
)
 
(9
)
 
(179
)
 
(188
)
 Segment income or loss
 
$
127

 
$
6,572

 
$
56,353

 
$
61,113

 
$
124,165

 
$
(149,068
)
 
$
(24,903
)



F-47

Table of Contents

For the year ended December 31, 2015

 In thousands of U.S. dollars
LR1/Panamax
 
 Handymax
 
LR2
 
 MR
 
 Reportable segments subtotal
 
 Corporate and eliminations
 
 Total
 Vessel revenue
$
36,679

 
$
142,429

 
$
208,250

 
$
368,203

 
$
755,561

 
$
150

 
$
755,711

 Vessel operating costs
(2,144
)
 
(35,254
)
 
(36,682
)
 
(100,476
)
 
(174,556
)
 
—

 
(174,556
)
 Voyage expenses
(1,186
)
 
(536
)
 
(194
)
 
(2,516
)
 
(4,432
)
 
—

 
(4,432
)
 Charterhire
(21,616
)
 
(26,755
)
 
(27,816
)
 
(20,678
)
 
(96,865
)
 
—

 
(96,865
)
 Depreciation
—

 
(18,372
)
 
(29,125
)
 
(59,859
)
 
(107,356
)
 
—

 
(107,356
)
 General and administrative expenses
(96
)
 
(1,390
)
 
(1,456
)
 
(4,329
)
 
(7,271
)
 
(58,560
)
 
(65,831
)
Write down of vessels held for sale and gain / (loss) from sales of vessels
2,019

 
(2,054
)
 
—

 
—

 
(35
)
 
—

 
(35
)
 Write-off of vessel purchase options
—

 
—

 
—

 
(731
)
 
(731
)
 
—

 
(731
)
 Gain on sale of Dorian shares
—

 
—

 
—

 
—

 
—

 
1,179

 
1,179

 Financial expenses
—

 
—

 
—

 
—

 
—

 
(89,596
)
 
(89,596
)
 Realized gain on derivative financial instruments
—

 
—

 
—

 
—

 
—

 
55

 
55

 Unrealized loss on derivative financial instruments
—

 
—

 
(1,255
)
 
—

 
(1,255
)
 
—

 
(1,255
)
 Financial income
—

 
7

 
12

 
27

 
46

 
99

 
145

 Other expenses, net (1)
1,397

 
—

 
—

 
(20
)
 
1,377

 
(61
)
 
1,316

 Segment income or loss
$
15,053

 
$
58,075

 
$
111,734

 
$
179,621

 
$
364,483

 
$
(146,734
)
 
$
217,749


(1) In September 2015, we received a payment of $1.4 million as a result of a termination fee received when the owner of one of our time chartered-in vessels canceled the contract prior to its expiration date.

 


F-48

Table of Contents

For the year ended December 31, 2014
 
 
In thousands of U.S. dollars
LR1/Panamax
 
Handymax
 
LR2
 
MR
 
Reportable segments subtotal
 
Corporate and eliminations
 
Total
 Vessel revenue
$
57,901

 
$
65,766

 
$
67,124

 
$
151,716

 
$
342,507

 
$
300

 
$
342,807

 Vessel operating costs
(10,530
)
 
(10,902
)
 
(4,830
)
 
(52,561
)
 
(78,823
)
 
—

 
(78,823
)
 Voyage expenses
(4,826
)
 
(671
)
 
(73
)
 
(1,963
)
 
(7,533
)
 
—

 
(7,533
)
 Charterhire
(27,250
)
 
(38,390
)
 
(45,756
)
 
(27,772
)
 
(139,168
)
 
—

 
(139,168
)
 Depreciation
(3,194
)
 
(5,436
)
 
(3,067
)
 
(30,920
)
 
(42,617
)
 
—

 
(42,617
)
 General and administrative expenses
(409
)
 
(450
)
 
(237
)
 
(2,315
)
 
(3,411
)
 
(44,718
)
 
(48,129
)
 Write down of vessels held for sale
(3,978
)
 
—

 
—

 
—

 
(3,978
)
 
—

 
(3,978
)
 Gain on sale of VLCCs
—

 
—

 
—

 
—

 
—

 
51,419

 
51,419

 Gain on sale of Dorian shares
—

 
—

 
—

 
—

 
—

 
10,924

 
10,924

 Re-measurement of investment in Dorian
—

 
—

 
—

 
—

 
—

 
(13,895
)
 
(13,895
)
 Financial expenses
—

 
—

 
(509
)
 
—

 
(509
)
 
(20,261
)
 
(20,770
)
 Realized gain on derivative financial instruments
—

 
—

 
—

 
—

 
—

 
17

 
17

 Unrealized gain on derivative financial instruments
—

 
—

 
—

 
—

 
—

 
264

 
264

 Financial income
—

 
2

 
1

 
8

 
11

 
192

 
203

 Share of income from associate
—

 
—

 
—

 
—

 
—

 
1,473

 
1,473

 Other expenses, net
—

 
—

 
—

 
(51
)
 
(51
)
 
(52
)
 
(103
)
Segment income or loss
$
7,714

 
$
9,919

 
$
12,653

 
$
36,142

 
$
66,428

 
$
(14,337
)
 
$
52,091



 








F-49

Table of Contents

All of our operating segments earned revenue from at least one major customer representing greater than 10% of total revenue during the years ended December 31, 2015 and 2014. During the year ended December 31, 2016, the LR1/Panamax segment only had one customer generating revenue. The revenue from those customers within their respective segments was as follows:
 
In thousands of U.S. dollars
 
 
 
For the year ended December 31,
 Segment
 
 Customer
 
2016
 
2015
 
2014
 MR
 
Scorpio MR Pool Limited (1)
 
$
248,974

 
$
315,925

 
$
112,826

 LR2
 
Scorpio LR2 Pool Limited (1)
 
156,503

 
208,132

 
67,054

 Handymax
 
Scorpio Handymax Tanker Pool Limited (1)
 
73,683

 
138,736

 
54,052

 LR1/Panamax
 
Scorpio Panamax Tanker Pool Limited  (1)
 
5,843

 
34,613

 
46,925

 
 
 
 
$
485,003

 
$
697,406

 
$
280,857


(1)
These customers are related parties as described in Note 15.

F-50

Table of Contents

14.
Common shares
 
Follow-on Offering of Common Shares
In May 2015, we closed on the sale of 17,177,123 newly issued shares of our common stock in an underwritten offering at an offering price of $9.30 per share. We received aggregate net proceeds of $152.1 million, after deducting the underwriters’ discounts and offering expenses of $7.6 million.
2010 Equity Incentive Plan Issuances
The following activity has occurred under our 2010 Equity Incentive Plan during the years ending December 31, 2015 and 2014:      
•
On June 18, 2010, we issued 559,458 shares of restricted stock to our employees for no cash consideration. The share price at the date of issue was $10.99 per share. One-third of these shares vested on April 6, 2013, one-third vested on April 6, 2014, and one-third vested on April 6, 2015.
•
On January 31, 2011, we issued 281,000 shares of restricted stock to our employees for no cash consideration. The share price at the date of issue was $9.83 per share. One-third of these shares vested on January 31, 2012, one-third vested on January 31, 2013, and one-third vested on January 31, 2014.
•
On January 31, 2012, we issued 281,000 shares of restricted stock to employees for no cash consideration. The share price at the date of issue was $5.65 per share. One-third of the shares vested on January 31, 2013, one-third vested on January 31, 2014, and one-third vested on January 31, 2015.
There are no remaining shares available for issuance under the 2010 Equity Incentive Plan.
2013 Equity Incentive Plan
     In April 2013, we adopted an equity incentive plan, which was amended in March 2014 and which we refer to as the 2013 Equity Incentive Plan, under which directors, officers, employees, consultants and service providers of us and our subsidiaries and affiliates are eligible to receive incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted common stock. We initially reserved a total of 5,000,000 common shares for issuance under the 2013 Equity Issuance Plan which was subsequently revised as follows:
•
In October 2013, we reserved an additional 6,376,044 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In September 2014, we reserved an additional 1,088,131 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In May 2015, we reserved an additional 1,755,443 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In June 2016, we reserved an additional 2,301,115 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
•
In December 2016, we reserved an additional 1,348,992 common shares, par value $0.01 per share, for issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained unchanged.
Under the terms of the 2013 Equity Incentive Plan, stock options and stock appreciation rights granted under the 2013 Equity Incentive Plan will have an exercise price equal to the fair market value of a common share on the date of grant, unless otherwise determined by the plan administrator, but in no event will the exercise price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights will be exercisable at times and under conditions as determined by the plan administrator, but in no event will they be exercisable later than ten years from the date of grant.
The plan administrator may grant shares of restricted stock and awards of restricted stock units subject to vesting, forfeiture and other terms and conditions as determined by the plan administrator. Following the vesting of a restricted stock unit, the award recipient will be paid an amount equal to the number of vested restricted stock units multiplied by the fair market value of a common share on the date of vesting, which payment may be paid in the form of cash or common shares or a combination of both, as determined by the plan administrator. The plan administrator may grant dividend equivalents with respect to grants of restricted stock units.
 Adjustments may be made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In the event of a “change in control” (as defined in the 2013 Equity Incentive Plan), unless otherwise provided by the plan administrator in an award agreement, awards then outstanding will become fully vested and exercisable in full.
 Our board of directors may amend or terminate the 2013 Equity Incentive Plan and may amend outstanding awards, provided that no such amendment or termination may be made that would materially impair any rights, or materially increase any

F-51

Table of Contents

obligations, of a grantee under an outstanding award. Shareholder approval of plan amendments will be required under certain circumstances. Unless terminated earlier by our board of directors, the 2013 Equity Incentive Plan will expire ten years from the date the plan is adopted.
In the second quarter of 2013, we issued 4,610,000 shares of restricted stock to our employees and 390,000 shares to our independent directors for no cash consideration. The weighted average share price on the issuance dates was $8.69 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vested on March 10, 2016, (ii) one-third of the shares vested on March 10, 2017, and (iii) one-third of the shares vest on March 10, 2018. The vesting schedule of the restricted stock to our independent directors is (i) one-third of the shares vested on March 10, 2014, (ii) one-third of the shares vested on March 10, 2015, and (iii) one-third of the shares vested on March 10, 2016.
In October 2013, we issued 3,749,998 shares of restricted stock to our employees and 250,000 shares to our independent directors for no cash consideration. The weighted average share price on the issuance date was $9.85 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vested on October 11, 2016, (ii) one-third of the shares vest on October 11, 2017, and (iii) one-third of the shares vest on October 11, 2018. The vesting schedule of the restricted stock to our independent directors is (i) one-half of the shares vested on October 11, 2014 and (ii) one-half of the shares vested on October 11, 2015.
In February 2014, we issued 2,011,000 shares of restricted stock to our employees and 145,045 shares to our independent directors for no cash consideration. The weighted average share price on the issuance date was $9.30 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vested on February 21, 2017, (ii) one-third of the shares vest on February 21, 2018, and (iii) one-third of the shares vest on February 21, 2019. The vesting schedule of the restricted stock to our independent directors is (i) one-third of the shares vested on February 21, 2015, (ii) one-third of the shares vested on February 21, 2016, and (iii) one-third of the shares vested on February 21, 2017.
In May and September 2014, we issued 213,000 and 5,000 shares of restricted stock to SSH employees, respectively, for no cash consideration. The share prices on the issuance dates were $8.89 per share and $9.13 per share, respectively. The vesting schedule of the restricted stock to SSH employees is (i) one-third of the shares vested on February 21, 2017, (ii) one-third of the shares vest on February 21, 2018, and (iii) one-third of the shares vest on February 21, 2019.
In November 2014, we issued 938,131 shares of restricted stock to our employees and 50,000 shares to our independent directors for no cash consideration. The share price on the issuance date was $8.57 per share. The vesting schedule of the restricted stock to our employees is (i) one-third of the shares vest on November 18, 2017, (ii) one-third of the shares vest on November 18, 2018, and (iii) one-third of the shares vest on November 18, 2019. The restricted shares issued to our independent directors vested on November 18, 2015.
In July 2015, we issued 1,466,944 shares of restricted stock to our employees, 100,000 shares to our directors and 290,500 to SSH employees for no cash consideration. The share price on the issuance date was $10.32 per share. The vesting schedule of the restricted stock issued to our employees and SSH employees is (i) one-third of the shares vest on June 4, 2018, (ii) one-third of the shares vest on June 4, 2019, and (iii) one-third of the shares vest on June 4, 2020. The restricted shares issued to our directors vested on June 4, 2016.
In July 2016, we issued 1,864,615 shares of restricted stock to our employees, 150,000 shares to our directors and 286,500 shares to SSH employees for no cash consideration. The share price on the issuance date was $4.74 per share. The vesting schedule of the restricted stock issued to our employees and SSH employees is (i) one-third of the shares vest on June 5, 2019, (ii) one-third of the shares vest on June 5, 2020, and (iii) one-third of the shares vest on June 5, 2021. The restricted shares issued to our directors vest on June 5, 2017.
1,398,992 shares remained eligible for issuance under the 2013 Equity Incentive Plan as of December 31, 2016.


F-52

Table of Contents

The following is a summary of activity for awards of restricted stock during the years ended December 31, 2016 and 2015:
 
 
 
 Number of Shares
 
 Weighted Average Grant Date Fair Value
 Outstanding and non-vested, December 31, 2014
 
12,387,327

 
$
9.16

 
 Granted
 
1,857,444

 
10.32

 
 Vested
 
(633,501
)
 
9.19

 Outstanding and non-vested, December 31, 2015
 
13,611,270

 
9.32

 
 Granted
 
2,301,115

 
4.74

 
 Vested
 
(3,248,800
)
 
9.19

 
 Forfeited
 
(50,000
)
 
7.80

 Outstanding and non-vested, December 31, 2016
 
12,613,585

 
$
8.52

Compensation expense is recognized ratably over the vesting periods for each tranche using the straight-line method.
Assuming that all the restricted stock will vest, the stock compensation expense in future periods, including that related to restricted stock issued in prior periods will be:
In thousands of U.S. dollars
 
Employees
 
Directors
 
Total
For the year ending December 31, 2017
 
$
20,980

 
$
302

 
$
21,282

For the year ending December 31, 2018
 
11,390

 
—

 
11,390

For the year ending December 31, 2019
 
4,549

 
—

 
4,549

For the year ending December 31, 2020
 
1,570

 
—

 
1,570

For the year ending December 31, 2021
 
293

 
—

 
293

 
 
$
38,782

 
$
302

 
$
39,084

  Dividend Payments
The following dividends were paid during the years ended December 31, 2016, 2015 and 2014.
 
Dividends
 
Date
per share
 
Paid
$0.08
 
March 26, 2014
$0.09
 
June 12, 2014
$0.10
 
September 10, 2014
$0.12
 
December 12, 2014
$0.12
 
March 30, 2015
$0.125
 
June 10, 2015
$0.125
 
September 4, 2015
$0.125
 
December 11, 2015
$0.125
 
March 30, 2016
$0.125
 
June 24, 2016
$0.125
 
September 29, 2016
$0.125
 
December 22, 2016


F-53

Table of Contents

2014 Stock Buyback Program
 In April 2014, we resumed purchasing shares under our stock buyback program that was authorized in July 2010. Additionally, in April 2014, our board of directors approved a new stock buyback program with authorization to purchase up to $100.0 million of shares of our common stock, replacing the program announced in July 2010.
In June 2014, our board of directors approved a new stock buyback program with authorization to purchase up to $150 million of shares of our common stock. This program replaced our stock buyback program that was approved in April 2014.
In July 2014, our board of directors approved a new stock buyback program with authorization to purchase up to $150 million of shares of our common stock. This program replaced our stock buyback program that was approved in June 2014.
During 2014, we acquired an aggregate of 37,579,136 of our common shares that are being held as treasury shares, which include (i) 19,951,536 common shares that were purchased in the open market at an average price of $9.09 per share, (ii) 7,500,000 common shares that were acquired in exchange for 3,422,665 shares in Dorian and (iii) 10,127,600 common shares that were acquired using part of the proceeds we received from the issuance of our Convertible Notes in June 2014.
2015 Securities Repurchase Program
In May 2015, our Board of Directors authorized a new Securities Repurchase Program to purchase up to an aggregate of $250 million of our common stock and bonds, which currently consist of our (i) Convertible Notes, (ii) Senior Notes Due 2020 (NYSE: SBNA), and (iii) Senior Notes Due 2017 (NYSE: SBNB). This program replaces our stock buyback program that was previously announced in July 2014 and was terminated in conjunction with this new repurchase program.
During the year ended December 31, 2016, we acquired the following:
•
an aggregate of 2,956,760 of our common shares that are being held as treasury shares at an average price of $5.58 per share.
•
$10.0 million aggregate principal amount of our Convertible Notes at an average price of $839.28 per $1,000 principal amount.
We had $153.3 million remaining under our Securities Repurchase Program as of December 31, 2016.  We expect to repurchase any securities in the open market, at times and prices that are considered to be appropriate, but we are not obligated under the terms of the program to repurchase any securities.
As of December 31, 2016 and 2015, there were 49,980,592 and 47,023,832 common shares held in treasury, respectively.
Shares outstanding  
We currently have 425,000,000 registered shares of which 400,000,000 are designated as common shares with a par value of $0.01 and 25,000,000 designated as preferred shares with a par value of $0.01.
As of December 31, 2016 , we had 174,629,755 common shares outstanding. These shares provide the holders with rights to dividends and voting rights.

15.
Related party transactions  
On September 29, 2016, we agreed to amend our administrative services agreement, or the Administrative Services Agreement, with Scorpio Services Holding Limited, or SSH, and our master agreement, or the Master Agreement, with SCM and SSM under a deed of amendment, or the Deed of Amendment.  Pursuant to the terms of the Deed of Amendment, on November 15, 2016, we entered into definitive documentation to memorialize the agreed amendments to the Master Agreement, or the Amended and Restated Master Agreement. The Amended and Restated Master Agreement and the Administrative Services Agreement as amended by the Deed of Amendment, or the Amended Administrative Services Agreement, are effective as from September 29, 2016. Under the terms of the amendments, (i) the fee of 1% payable to SSH upon any future vessel sale or purchase was eliminated and (ii) in the event of the sale of one or more vessels, a notice period of three months and a payment equal to three months of management fees will apply, provided that the termination does not amount to a change of control, including a sale of all or substantially all of our vessels, in which case a payment equal to 24 months of management fees will apply. There was no consideration paid by us for these amendments. 
The independent members of the Company's Board of Directors unanimously approved the Amended Administrative Services Agreement and Amended and Restated Master Agreement described in the preceding paragraph.
Transactions with entities controlled by the Lolli-Ghetti family (herein referred to as related party affiliates) in the consolidated statement of income or loss and balance sheet are as follows:

F-54

Table of Contents

    
 
For the year ended December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
Pool revenue (1)
 

 
 

 
 

Scorpio MR Pool Limited
$
248,974

 
$
315,925

 
$
112,826

Scorpio LR2 Pool Limited
156,503

 
208,132

 
67,054

Scorpio Handymax Tanker Pool Limited
73,683

 
138,736

 
54,052

Scorpio Panamax Tanker Pool Limited
5,843

 
34,613

 
46,925

Voyage expenses (2)
(1,128
)
 
(2,127
)
 
(2,052
)
Vessel operating costs (3)
(19,484
)
 
(18,393
)
 
(7,947
)
Administrative expenses (4)
(9,462
)
 
(7,950
)
 
(3,542
)
 
(1)
These transactions relate to revenue earned in the Scorpio Group Pools. The Scorpio Group Pools are related party affiliates. When our vessels are in the Scorpio Group Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to our LR1/Panamax vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per day with respect to each of our Handymax and MR vessels, plus a commission of 1.50% on gross revenue per charter fixture.  These are the same fees that SCM charges other vessels in these pools, including third party owned vessels.

(2)
These transactions represent the expense due to SCM, a related party affiliate, for commissions related to the commercial management services provided by SCM under the commercial management agreement for vessels that are not in one of the Scorpio Group Pools. SCM’s services include securing employment, in the spot market and on time charters, for our vessels. When not in one of the Scorpio Group Pools, each vessel pays (i) flat fees of $250 per day for LR1/Panamax and LR2 vessels and $300 per day for Handymax and MR vessels and (ii) commissions of 1.25% of their gross revenue.  These expenses are included in voyage expenses in the consolidated statements of income or loss.

(3)
These transactions represent technical management fees charged by SSM, a related party affiliate, which are included in vessel operating costs in the consolidated statements of income or loss. SSM’s services include day-to-day vessel operation, performing general maintenance, monitoring regulatory and classification society compliance, customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing technical support. We believe our technical management fees are at arms-length rates as they are based on contracted rates that were the same as those charged to other vessels managed by SSM at the time the management agreements were entered into. This fee is $685 per vessel per day.

(4)
We have an Amended Administrative Services Agreement with SSH, for the provision of administrative staff and office space, and administrative services, including accounting, legal compliance, financial and information technology services. SSH is a related party to us. We reimburse SSH for the reasonable direct or indirect expenses that are incurred on our behalf. SSH also arranges vessel sales and purchases for us. The services provided to us by SSH may be sub-contracted to other entities within the Scorpio Group. The expenses incurred under this agreement were as follows, and were recorded in general and administrative expenses in the consolidated statement of income or loss.
•
The expense for the year ended December 31, 2016 of $9.5 million included (i) administrative fees of $7.3 million charged by SSH, (ii) restricted stock amortization of $1.6 million , which relates to the issuance of an aggregate of 795,000 shares of restricted stock to SSH employees for no cash consideration in May 2014, September 2014, July 2015 and July 2016, and (iii) the reimbursement of expenses of 0.6 million .
•
The expense for the year ended December 31, 2015 of $7.9 million included (i) administrative fees of $6.8 million charged by SSH, (ii) restricted stock amortization of $0.9 million, which relates to the issuance of an aggregate 508,500 shares of restricted stock to SSH employees for no cash consideration in May 2014, September 2014 and July 2015 and (iii) the reimbursement expenses of $0.2 million.
•
The expense for the year ended December 31, 2014 of $3.5 million included (i) administrative fees of $3.1 million charged by SSH, (ii) restricted stock amortization of $0.3 million, which relates to the issuance of an aggregate 218,000 shares of restricted stock to SSH employees for no cash consideration in May and September 2014 and (iii) the reimbursement of expenses of $0.1 million.

F-55

Table of Contents

We had the following balances with related parties, which have been included in the consolidated balance sheets:
 
 
As of December 31,
In thousands of U.S. dollars
2016
 
2015
Assets:
 

 
 

Accounts receivable (due from the Scorpio Group Pools) (1)
$
40,680

 
$
59,475

Accounts receivable and prepaid expenses (SSM) (2)
4,233

 
2,348

Other assets (pool working capital contributions) (3)
19,217

 
19,256

Liabilities:
 

 
 

 Accounts payable and accrued expenses (SSM)
653

 
484

 Accounts payable and accrued expenses (SSH)
90

 
77

Accounts payable and accrued expenses (SCM)
53

 
175

Accounts payable and accrued expenses (owed to the Scorpio Group Pools)
15

 
610


(1)
Accounts receivable due from the Scorpio Group Pools relate to hire receivables for revenues earned and receivables from working capital contributions. The amounts as of December 2016 and 2015 include $24.1 million and $8.6 million, respectively, of working capital contributions made on behalf of our vessels to the Scorpio Group Pools. Upon entrance into such pools, all vessels are required to make working capital contributions of both cash and bunkers. Additional working capital contributions can be made from time to time based on the operating needs of the pools. These amounts are accounted for and repaid as follows:
•
For vessels in the Scorpio Handymax Tanker Pool, the initial contribution amount is repaid, without interest, upon a vessel’s exit from each pool no later than six months after the exit date. Bunkers on board a vessel exiting the pool are credited against such repayment at the actual invoice price of the bunkers. For all owned vessels we assume that these contributions will not be repaid within 12 months and are thus classified as non-current within other assets on the consolidated balance sheets. For time chartered-in vessels we classify the initial contributions as current (within accounts receivable) or non-current (within other assets) according to the expiration of the contract. Any additional working capital contributions are repaid when sufficient net revenues become available to cover such amounts.
•
For vessels in the Scorpio MR Pool and Scorpio Panamax Tanker Pool, any contributions are repaid, without interest, when such vessel has earned sufficient net revenues to cover the value of such working capital contributed.  Accordingly, we classify such amounts as current (within accounts receivable).
•
For vessels in the Scorpio LR2 Pool, the initial contribution amount is repaid, without interest, upon a vessel’s exit from each pool. Bunkers on board a vessel exiting the pool are credited against such repayment at the actual invoice price of the bunkers. For all owned vessels we assume that these contributions will not be repaid within 12 months and are thus classified as non-current within other assets on the consolidated balance sheets. For time chartered-in vessels we classify the initial contributions as current (within accounts receivable) or non-current (within other assets) according to the expiration of the contract. Any additional working capital contributions are repaid when sufficient net revenues become available to cover such amounts.
(2)
Accounts receivable and prepaid expenses from SSM relate to advances made for vessel operating expenses (such as crew wages) that will either be reimbursed or applied against future costs.
(3)
Represents the non-current portion of working capital receivables as described above.
Prior to September 29, 2016, we paid SSH a fee for arranging vessel purchases and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. As described above, this fee was eliminated for all vessel purchase or sale agreements entered into after September 29, 2016. These fees are capitalized as part of the carrying value of the related vessel for a vessel purchase and are included as part of the gain or loss on sale for a vessel disposal.

F-56

Table of Contents

•
During the year ended December 31, 2016, we paid SSH an aggregate fee of $1.7 million in connection with the sales of STI Lexington, STI Mythos, STI Chelsea , STI Powai , and STI Olivia and a fee of $0.6 million for the purchase and delivery of S TI Lombard . Additionally, we paid SCM an aggregate termination fee of $2.7 million that was due under the commercial management agreements and we paid SSM an aggregate termination fee of $2.5 million that was due under the technical management agreements as a result of the aforementioned vessel sales. The agreements to sell and acquire the aforementioned vessels were entered into prior to the September 29, 2016 amendments to the Master Agreement and Administrative Service Agreement. The aggregate fees paid to SCM, SSH and SSM are recorded within write down of vessels held for sale and net loss on sales of vessels within the consolidated statement of income or loss.
•
During the year ended December 31, 2015, we paid SSH an aggregate fee of $12.6 million in connection with the purchase and delivery of 29 vessels and the sales of four vessels. Additionally, as a result of the sale of STI Highlander in 2015, we paid a $0.5 million termination fee due under the vessel's commercial management agreement with SCM and a $0.5 million termination fee due under the vessel's technical management agreement with SSM.
•
During the year ended December 31, 2014, we paid SSH an aggregate fee of $26.1 million, which consisted of $11.7 million related to the purchase and delivery of 33 vessels under our Newbuilding Program, $14.0 million relating to the purchase and sale of our seven VLCCs under construction, and $0.4 million relating to the sales of two vessels.
In 2011, we also entered into an agreement to reimburse costs to SSM as part of its supervision agreement for vessels under our Newbuilding Program. During the year ended December 31, 2014, we were charged $0.02 million under this agreement. There were no costs incurred under this agreement during the years ended December 31, 2016 and 2015.
  Key management remuneration
The table below shows key management remuneration for the years ended December 31, 2016, 2015 and 2014:
 
For the year ended December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
Short-term employee benefits (salaries)
$
8,786

 
$
15,601

 
$
7,454

Share-based compensation (1)
25,575

 
26,911

 
23,553

Total
$
34,361

 
$
42,512

 
$
31,007


(1)  
Represents the amortization of restricted stock issued under our equity incentive plans as described in Note 14.
For the purpose of the table above, key management are those persons who have authority and responsibility for making strategic decisions, and managing operating, financial and legal activities.
There are no post-employment benefits.

16.
Vessel revenue
 
During the year ended December 31, 2016 , 2015 and 2014, we had six, six, and four vessels that earned revenue through long-term time-charter contracts (with initial terms of one year or greater), respectively. The remaining vessels earned revenue from the Scorpio Group Pools or in the spot market.
 
Revenue Sources
 
For the year ended December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
Pool revenue
$
485,003

 
$
697,406

 
$
280,857

Voyage revenue (spot market)
—

 
38,441

 
48,112

Time charter revenue
36,694

 
19,714

 
13,538

Other revenue
1,050

 
150

 
300

 
$
522,747

 
$
755,711

 
$
342,807


 

F-57

Table of Contents

17.
Charterhire
 
The following table depicts our time or bareboat chartered-in vessel commitments during the year ended December 31, 2016 :
 
Name
 
Year built
 
Vessel class
 
Charter type
 
Delivery  (1)
 
Charter Expiration
 
Rate ($/ day)
 
 
Active as of December 31, 2016
 
1

Kraslava
 
2007
 
Handymax
 
Time Charter
 
January-11
 
June-17
 
17,000

 
2

Krisjanis Valdemars
 
2007
 
Handymax
 
Time Charter
 
February-11
 
April-17
 
17,000

 
3

Silent
 
2007
 
Handymax
 
Time Charter
 
March-16
 
March-19
 
15,600

(2)  
4

Single
 
2007
 
Handymax
 
Time Charter
 
March-16
 
March-19
 
15,600

(2)  
5

Star I
 
2007
 
Handymax
 
Time Charter
 
March-16
 
March-19
 
15,600

(2)  
6

Steel
 
2008
 
Handymax
 
Bareboat
 
January-17
 
March-19
 
6,000

(3)  
7

Sky
 
2008
 
Handymax
 
Bareboat
 
January-17
 
March-19
 
6,000

(3)  
8

Stone I
 
2008
 
Handymax
 
Bareboat
 
January-17
 
March-19
 
6,000

(3)  
9

Style
 
2008
 
Handymax
 
Bareboat
 
January-17
 
March-19
 
6,000

(3)  
10

Miss Mariarosaria
 
2011
 
MR
 
Time Charter
 
May-15
 
May-17
 
16,350

 
11

Vukovar
 
2015
 
MR
 
Time Charter
 
May-15
 
May-18
 
17,034

 
12

Targale
 
2007
 
MR
 
Time Charter
 
May-12
 
May-17
 
16,200

 
13

Zefyros
 
2013
 
MR
 
Time Charter
 
July-16
 
July-17
 
15,800

(4)  
14

Gan-Trust
 
2013
 
MR
 
Time Charter
 
January-13
 
January-18
 
17,500

(5)  
15

CPO New Zealand
 
2011
 
MR
 
Time Charter
 
September-16
 
September-18
 
15,250

(6)  
16

CPO Australia
 
2011
 
MR
 
Time Charter
 
September-16
 
September-18
 
15,250

(6)  
17

Ance
 
2006
 
MR
 
Time Charter
 
October-16
 
October-17
 
13,500

(7)  
18

Hellespont Progress
 
2006
 
LR1
 
Time Charter
 
March-14
 
March-17
 
17,250

 
19

Densa Crocodile
 
2015
 
LR2
 
Time Charter
 
February-15
 
February-17
 
22,600

(8)  
20

Densa Alligator
 
2013
 
LR2
 
Time Charter
 
September-13
 
March-17
 
18,500

(9)  
 
Bareboat or Time charters That Expired In 2016
 
1

King Douglas
 
2008
 
LR1
 
Time Charter
 
August-13
 
January-16
 
15,000

 
2

STI Lombard
 
2013
 
LR2
 
Bareboat
 
August-15
 
April-16
 
10,000

(10)  
3

Iver Prosperity
 
2007
 
Handymax
 
Time Charter
 
September-13
 
April-16
 
13,500

 




F-58

Table of Contents

(1)
Represents delivery date or estimated delivery date.
(2)
In December 2016, we entered into an agreement to cancel the time charter agreement for this vessel and enter into a new bareboat charter agreement. The time charter-in contract was cancelled in January 2017 and replaced by the new bareboat contract at a rate of $7,500 per day. The agreement includes a purchase option which can be exercised through December 31, 2018. If the purchase option is not exercised, the bareboat-in agreement will expire on March 31, 2019.
(3)
In December 2016, we entered into an agreement to bareboat-in this vessel at a rate of $6,000 per day. The agreement includes a purchase option which can be exercised through December 31, 2018. If the purchase option is not exercised, the bareboat-in agreement will expire on March 31, 2019.
(4)
We have an option to extend the charter for an additional year at $17,000 per day.
(5)
In November 2016, we entered into a new charter agreement for a year at $13,050 per day effective January 2017. We have an option to extend the charter for an additional year at $15,000 per day.
(6)
We have an option to extend the charter for an additional year at $16,000 per day.
(7)
We have an option to extend the charter for an additional one year at $15,000 per day.
(8)
We have entered into an agreement with a third party whereby we split all of the vessel's profits and losses above or below the daily base rate. This agreement is being accounted for as derivative financial instrument as described in Note 12.
(9)
In February 2017, we entered into a new charter agreement for six months at $14,360 per day. We have an option to extend the charter for an additional six months at $15,385 per day.
(10)
In April 2016, we took delivery of STI Lombard , an LR2 product tanker that was previously bareboat chartered-in under a finance lease arrangement, and paid the remaining 90% of the purchase price or $53.1 million.

The undiscounted remaining future minimum lease payments under these arrangements as of December 31, 2016 are $88.0 million . The obligations under these agreements will be repaid as follows:
 
 
As of December 31,
In thousands of U.S. dollars
2016
 
2015
Less than 1 year
$
57,018

 
$
38,033

1 - 5 years
30,933

 
9,399

Total
$
87,951

 
$
47,432

During the years ended December 31, 2016, 2015 and 2014, our charterhire expense was $ 78.9 million , $96.9 million and $139.2 million, respectively.
Other income from chartered-in vessel
In September 2015, we received a payment of $1.4 million as compensation for the early termination a time charter-in vessel from the vessel owner.

18.
General and administrative expenses
 
General and administrative expenses primarily represent employee benefit expenses, professional fees and administrative fees payable to SSH under our administrative services agreement (as described in Note 15).
 
Employee benefit expenses consist of:
 
For the year ended December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
Short term employee benefits (salaries)
$
12,330

 
$
19,978

 
$
9,268

Share based compensation (see Note 14)
30,207

 
33,687

 
29,726

 
$
42,537

 
$
53,665

 
$
38,994

 

F-59

Table of Contents

19.
Financial expenses
 
Financial expenses consist of:
 
For the year ended December 31,
In thousands of U.S. dollars
2016
 
2015
 
2014
Interest payable on debt (1)
$
75,420

 
$
72,178

 
$
15,888

Amortization of deferred financing fees (2)
28,628

 
17,418

 
4,834

Commitment fees on undrawn portions of debt
—

 
—

 
48

Total financial expenses
$
104,048

 
$
89,596

 
$
20,770

 
(1)
The increase in interest payable in each year is primarily attributable to increases in the Company’s debt balance. Average debt outstanding during the years ended December 31, 2016, 2015 and 2014 was $1,986.6 million, $1,941.0 million and $783.9 million, respectively. Interest payable during those periods was offset by interest capitalized as part of our Newbuilding Program (as described in Note 5) of $6.3 million, $5.6 million and $16.6 million, respectively.

(2)
The amortization of deferred financing fees in the years ended December 31, 2016, 2015 and 2014 included charges of $14.4 million, $2.7 million and $0.5 million, respectively for the write-offs of deferred financing fees during those periods. The write-off of deferred financing fees in the year ended December 31, 2016 includes $3.2 million related to the repayment of debt as a result of the sales of five vessels and $11.2 million related to the refinancing of outstanding borrowings under various credit facilities and the repurchase of our Convertible Notes as described in Note 11. The write-off of deferred financing fees in the year ended December 31, 2015 relates to the refinancing of outstanding indebtedness. The write-off of deferred financing fees in the year ended December 31, 2014 relates to the repayment of debt as a result of the sales of four vessels . Amortization of deferred financing fees was reduced by the capitalization of deferred financing fee amortization as part of our Newbuilding Program of $0.8 million during the year ended December 31, 2014. No deferred financing amortization was capitalized during the years ended December 31, 2016 and 2015.
 
20.
Tax
 
Scorpio Tankers Inc. and its subsidiaries are incorporated in the Republic of the Marshall Islands, and in accordance with the income tax laws of the Marshall Islands, are not subject to Marshall Islands’ income tax. Based upon review of applicable laws and regulations, and after consultation with counsel, we do not believe we are subject to material income taxes in any jurisdiction, including the United States of America. Therefore, we did not have any tax charges, benefits, or balances as of or for the periods ended December 31, 2016 , 2015 and 2014.


F-60

Table of Contents

21.
(Loss) / earnings per share
 
The calculation of both basic and diluted (loss) / earnings per share is based on net income or loss attributable to equity holders of the parent and weighted average outstanding shares of:
 
 
For the year ended December 31,
In thousands of U.S. dollars except for share data
2016
 
2015
 
2014
Net (loss) or income attributable to equity holders of the parent - basic
$
(24,903
)
 
$
217,749

 
$
52,091

    Convertible Notes interest expense
—

 
19,630

 
—

    Convertible Notes deferred financing amortization
—

 
1,756

 
—

 Net (loss) or income attributable to equity holders of the parent - diluted
$
(24,903
)
 
$
239,135

 
$
52,091

 
 
 
 
 
 
Basic weighted average number of shares
161,118,654

 
161,436,449

 
171,851,061

Effect of dilutive potential basic shares:
 
 
 

 
 

Restricted stock
—

 
7,323,894

 
4,441,741

Convertible Notes
—

 
30,978,983

 
—

 
—

 
38,302,877

 
4,441,741

Diluted weighted average number of shares
161,118,654

 
199,739,326

 
176,292,802

 
 
 
 
 
 
(Loss) / Earnings Per Share:
 
 
 
 
 
    Basic
$
(0.15
)
 
$
1.35

 
$
0.30

    Diluted
$
(0.15
)
 
$
1.20

 
$
0.30

 
During the year ended December 31, 2016, we incurred a net loss and as a result, the inclusion of potentially dilutive shares relating to unvested shares of restricted stock and our Convertible Notes were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.  Accordingly, Convertible Notes interest expense, deferred financing amortization and the potentially dilutive securities relating to the conversion of the Convertible Notes (representing 34,049,792 shares of common stock) along with the potentially dilutive impact of 12,613,585 unvested shares of restricted stock were excluded from the computation of diluted earnings per share.
The dilutive effect of 38,302,877 shares for the year ended December 31, 2015 relates to 31,791,435 potentially dilutive shares relating to our Convertible Notes and 13,611,270 unvested shares of restricted stock.
Convertible Notes interest expense, deferred financing amortization and the potentially dilutive securities relating to the conversion of the Convertible Notes (representing 15,015,451 shares of common stock) were excluded from the computation of diluted earnings per share during the year ended December 31, 2014 because their effect would have been anti-dilutive under the if-converted method. The dilutive effect of 4,441,741 shares of restricted stock for the year ended December 31, 2014 related to 12,387,327 unvested restricted shares of restricted stock.

22.
Financial instruments - financial and other risks
Funding and capital risk management
We manage our funding and capital resources to ensure our ability to continue as a going concern while maximizing the return to the shareholder through optimization of the debt and equity balance.
IFRS 13 requires classifications of fair value measures into Levels 1, 2 and 3. Level 1 fair value measurements are those derived from quoted prices (unadjusted) 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). 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).
The fair values and carrying values of our financial instruments at December 31, 2016 and 2015, respectively, are shown in the table below.

F-61


Categories of Financial Instruments
 
 
 As of December 31, 2016
 
 As of December 31, 2015
 Amounts in thousands of U.S. dollars
 
Fair value
Carrying Value
 
Fair value
Carrying Value
Financial assets
 
 
 
 
 
 
Cash and cash equivalents  (1)
 
$
99,887

$
99,887

 
$
200,970

$
200,970

Loans and receivables (2)
 
42,329

42,329

 
69,017

69,017

Derivatives at fair value through profit or loss  (3)
 
116

116

 
—

—

 
 
 
 
 
 
 
Financial liabilities
 
 
 
 
 
 
Accounts payable (4)
 
$
9,282

$
9,282

 
$
25,683

$
25,683

Accrued expenses (4)
 
23,024

23,024

 
32,643

32,643

Derivatives at fair value through profit or loss (3)
 
—

—

 
1,255

1,255

Secured bank loans (5)
 
1,466,940

1,466,940

 
1,586,396

1,586,396

Finance lease  (6)
 
—

—

 
53,372

53,372

Unsecured Senior Notes Due 2020  (7)
 
48,252

53,750

 
47,300

53,750

Unsecured Senior Notes Due 2017 (7)
 
52,330

51,750

 
51,129

51,750

Convertible Notes  (8)
 
286,321

348,500

 
334,301

358,500

(1)
Cash and cash equivalents are considered Level 1 items as they represent liquid assets with short-term maturities.
(2)
We consider that the carrying amount of accounts receivable approximate their fair value due to the relative short maturity of these instruments.
(3)
The derivative financial instrument at December 31, 2016 and December 31, 2015 consists of the profit or loss agreement relating to Densa Crocodile whereby the profits or losses above or below the daily time charter rate are shared with a third party who neither owns nor operates the vessel. This instrument is recorded at the present value of estimated future cash flows which are derived from observable time charter rates and discounted based on the applicable yield curves to determine the fair value. As such, we classify this liability as a Level 2 fair value measurement.
(4)
We consider that the carrying amount of accounts payable and accrued expenses approximate the fair value due to the relative short maturity of these instruments.
(5)
The carrying value of our secured bank loans are measured at amortized cost using the effective interest method. We consider that their carrying value approximates fair value because the interest rates on these instruments change with, or approximate, market interest rates. Accordingly, we consider its fair value to be a Level 2 measurement. These amounts are shown net of $31.1 million and $46.7 million of unamortized deferred financing fees as of December 31, 2016 and 2015, respectively.
(6)
We considered that the carrying value of our finance lease approximated fair value due to the relative short maturity of the instrument.
(7)
The carrying value of our Unsecured Senior Notes Due 2020 and 2017 are measured at amortized cost using the effective interest method. The carrying values shown in the table are the face value of the notes. These notes are shown net of $0.5 million and $1.1 million of unamortized deferred financing fees, respectively, on our consolidated balance sheet as of December 31, 2016 . Our Senior Notes Due 2020 and 2017 are quoted on the New York Stock Exchange under the symbols 'SBNA' and 'SBNB', respectively. We consider their fair values to be Level 1 measurements due to their quotation on an active exchange.
(8)
The carrying value of our Convertible Notes shown in the table above is its face value. The liability component of the Convertible Notes has been recorded within Long-term debt on the consolidated balance sheet as of December 31, 2016 , net of $4.6 million of unamortized deferred financing fees. The equity component of the Convertible Notes has been recorded within Additional paid-in capital on the consolidated balance sheet, net of $1.9 million of deferred financing fees. We consider its fair value to be a Level 2 measurement.
Financial risk management objectives
We identify and evaluate significant risks on an ongoing basis with the objective of managing the sensitivity of our results and financial position to those risks. These risks include market risk, credit risk, liquidity risk and foreign exchange risk.

F-62


The use of financial derivatives is governed by our policies as approved by the board of directors.
Market risk
Our activities expose us to the risks inherent with the tanker industry, which has historically been volatile, and financial risks of changes in interest rates.
Spot market rate risk
The cyclical nature of the tanker industry causes significant increases or decreases in the revenue that we earn from our vessels, particularly those vessels that operate in the spot market or participate in pools that are concentrated in the spot market such as the Scorpio Group Pools. We currently have five vessels on time charter contracts. Additionally, we have the ability to remove our vessels from the pools on relatively short notice if attractive time charter opportunities arise. A $1,000 per day increase or decrease in spot rates for all of our vessel classes would have increased or decreased our operating income by $31.1 million, $31.4 million and $20.2 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Interest rate risk
The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the entire year.
If interest rates had been 1% higher/lower and all other variables were held constant, our net loss for the year ended December 31, 2016 would have decreased/increased by $14.8 million. This is mainly attributable to our exposure to interest rate movements on our variable interest rate credit facilities as described in Note 11.
If interest rates had been 1% higher/lower and all other variables were held constant, our net income for the year ended December 31, 2015 would have decreased/increased by $13.9 million. This is mainly attributable to our exposure to interest rate movements on our variable interest rate credit facilities as described in Note 11.
If interest rates had been 1% higher/lower and all other variables were held constant, our net income for the year ended December 31, 2014 would have decreased/increased by $2.5 million. This is mainly attributable to our exposure to interest rate movements on our variable interest rate credit facilities that were in place during that year.
Credit risk
Credit risk is the potential exposure of loss in the event of non-performance by customers and derivative instrument counterparties.
We only place cash deposits with major banks covered with strong and acceptable credit ratings.
Accounts receivable are generally not collateralized; however, we believe that the credit risk is partially offset by the creditworthiness of our counterparties including the commercial and technical managers. We did not experience material credit losses on our accounts receivables portfolio in the years ended December 31, 2016 , 2015, and 2014.
The carrying amount of financial assets recognized in our consolidated financial statements represents the maximum exposure to credit risk without taking account of the value of any collateral obtained. We did not experience any impairment losses on financial assets in the years ended December 31, 2016 , 2015, and 2014.
We monitor exposure to credit risk, and believe that there is no substantial credit risk arising from counterparties.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments.
We manage liquidity risk by maintaining adequate reserves and borrowing facilities and by continuously monitoring forecast and actual cash flows.
Current economic conditions make forecasting difficult, and there is the possibility that our actual trading performance during the coming year may be materially different from expectations.  As described in Note 11, our 2011 Credit Facility and our DVB Credit Facility are scheduled to mature in May 2017 and August 2017, respectively.  As described in Note 23, in 2017 we refinanced four of the seven vessels collateralized under the 2011 Credit Facility. Additionally, we received an offer to refinance the remaining amounts under the 2011 Credit Facility (via the non-binding offer to sell and leaseback three vessels as described in Note 4) and a commitment to refinance our DVB Credit Facility in 2017 (as described in Note 23) which remain subject to the execution of definitive documentation and customary conditions precedent.  It is also likely that additional, currently uncommitted sources of financing will be required to meet the financial commitment relating to the scheduled maturity of our Senior Unsecured Notes Due 2017, which are scheduled to mature in October 2017.  We could also pursue other means to raise liquidity, such as through the sale of vessels, to meet our obligations.

F-63


There can be no assurance that these or other measures will be successful and a deterioration in economic conditions or a failure to refinance our debt that is maturing could cause us to breach our debt covenants and could have a material adverse effect on our business, results of operations, cash flows and financial condition. 
Based on internal forecasts and projections, which assume the refinancing of the aforementioned debt that is maturing in 2017, and that take into account reasonably possible changes in our trading performance, we believe that we have adequate financial resources to continue in operation and meet our financial commitments (including but not limited to newbuilding installments, debt service obligations and charterhire commitments) for a period of at least twelve months from the date of approval of these consolidated financial statements. Accordingly, we continue to adopt the going concern basis in preparing our financial statements.
Remaining contractual maturity on secured and unsecured credit facilities
The following table details our remaining contractual maturity for our secured and unsecured credit facilities. The amounts represent the future undiscounted cash flows of the financial liability based on the earliest date on which we can be required to pay. The table includes both interest and principal cash flows and takes into consideration any amounts fixed via the interest rate swaps discussed above.
As the interest cash flows are not fixed, the interest amount included has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the reporting date.
To be repaid as follows:
 
As of December 31,
In thousands of U.S. dollars
2016
 
2015
Less than 1 month
$
32,997

 
$
28,065

1-3 months
41,577

 
41,901

3 months to 1 year
354,738

 
187,305

1-5 years
1,723,306

 
1,700,643

5+ years
54,330

 
525,888

Total
$
2,206,948

 
$
2,483,802

All other current liabilities fall due within less than one month.
The following table details our remaining contractual maturity for derivative financial instruments (which include the profit or loss sharing agreement and the interest rate swaps). The amounts represent the future undiscounted cash flows of the financial liability or asset based on the earliest date on which we can be required to pay or receive.
 
As of December 31,
In thousands of U.S. dollars
2016
 
2015
Asset
 
 
 
Less than 1 month
$
—

 
$
—

1-3 months
116

 
—

Liability
 
 
 
Less than 1 month
—

 
—

1-3 months
—

 
320

3 months to 1 year
—

 
880

1-5 years
—

 
84

Total
$
116

 
$
1,284

Foreign Exchange Rate Risk
Our primary economic environment is the international shipping market. This market utilizes the U.S. Dollar as its functional currency. Consequently, virtually all of our revenues and the majority of our operating expenses are in U.S. Dollars. However, we incur some of our combined expenses in other currencies, particularly the Euro. The amount and frequency of some of these expenses (such as vessel repairs, supplies and stores) may fluctuate from period to period. Depreciation in the value of the U.S. dollar relative to other currencies will increase the U.S. dollar cost of us paying such expenses. The portion of our business conducted in other currencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations.

F-64


There is a risk that currency fluctuations will have a negative effect on our cash flows. We have not entered into any hedging contracts to protect against currency fluctuations. However, we have some ability to shift the purchase of goods and services from one country to another and, thus, from one currency to another, on relatively short notice. We may seek to hedge this currency fluctuation risk in the future.

23.
Subsequent events
Vessel Deliveries and Related Debt Drawdowns
In February 2017, we took delivery of STI Selatar , an LR2 product tanker that was under construction, from SSME and drew down $29.4 million from our Credit Suisse Credit Facility to partially finance the purchase of this vessel. Additionally, in March 2017, we drew down $29.0 million from our Credit Suisse Credit Facility to partially finance the purchase of STI Rambla, an LR2 product tanker that is currently under construction at SSME and is expected to be delivered before the end of March 2017. The drawdowns are summarized as follows:
Drawdown amount
 
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
 
$
29.4

 
February 2017
 
STI Selatar
 
29.0

 
March 2017
 
STI Rambla
(1)  
(1) Amount drawn to partially finance the expected delivery of this vessel from SSME, which is scheduled to occur before the end of March 2017.
2017 Credit Facility
In March 2017, we executed a senior secured term loan facility with a group of financial institutions led by Macquarie Bank Limited (London Branch) for up to $172.0 million, or the 2017 Credit Facility. The 2017 Credit Facility consists of five tranches; including two commercial tranches of $15.0 million and $25.0 million, a KEXIM Guaranteed Tranche of $48.0 million, a KEXIM Funded Tranche of $52.0 million, and a GIEK Guaranteed Tranche of $32.0 million.
The 2017 Credit Facility is expected to be used to partially finance the purchase of eight MR product tankers that are currently under construction at HMD. Drawdowns will be available at an amount equal to the lower of 60% of the contract price and 60% of the fair market value of each respective vessel. Other key terms are as follows:
•
The first commercial tranche of $15.0 million has a final maturity of six years from the drawdown date of each vessel, bears interest at LIBOR plus a margin of 2.25% per annum, and has a 15 year repayment profile.
•
The second commercial tranche of $25.0 million has a final maturity of nine years from the drawdown date of each vessel (assuming KEXIM or GIEK have not exercised their option to call for prepayment of the KEXIM and GIEK funded and guaranteed tranches by the date falling two months prior to the maturity of the first commercial tranche and in the event that the first commercial tranche has not been extended), bears interest at LIBOR plus a margin of 2.25% per annum, and has a 15 year repayment profile.
•
The KEXIM Funded Tranche and GIEK Guaranteed Tranche have a final maturity of 12 years from the drawdown date of each vessel (assuming the commercial tranches are refinanced through that date), bear interest at LIBOR plus a margin of 2.15% per annum, and have a 12 year repayment profile.
•
The KEXIM Guaranteed Tranche has a final maturity of 12 years from the drawdown date of each vessel (assuming the commercial tranches are refinanced through that date), bears interest at LIBOR plus a margin of 1.60% per annum, and has a 12 year repayment profile.
The credit facility contains financial and restrictive covenants, which require us to, among other things, comply with certain financial tests (described below); deliver quarterly and annual financial statements and annual projections; maintain adequate insurances; comply with laws (including environmental laws and ERISA); maintain flag and class of our vessels. Other such covenants may, among other things, restrict consolidations, mergers or sales of our assets; require us to obtain lender approval on changes in our vessel manager; limit our ability to place liens on our assets; limit our ability to incur additional indebtedness; prohibit us from paying dividends if there is a covenant breach under the loan or an event of default has occurred or would occur as a result of payment of such dividend; prohibit our transactions with affiliates.
Our 2017 Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

F-65

Table of Contents

•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and $250,000 each time chartered-in vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount of the loans under the credit facility.
BNP Paribas Credit Facility
In January and February 2017, we refinanced the outstanding indebtedness related to STI Sapphire and STI Emerald by repaying an aggregate of $26.3 million on our 2011 Credit Facility and drawing down an aggregate amount of $27.6 million from our BNP Paribas Credit Facility. The drawdown amounts and dates were as follows:     
Drawdown amount
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
$
13.8

 
January 2017
 
STI Sapphire
13.8

 
February 2017
 
STI Emerald
HSH Nordbank Credit Facility
In January 2017, we entered into a senior secured credit facility agreement with HSH Nordbank AG for $31.1 million, or the HSH Nordbank Credit Facility. In February 2017, we refinanced the outstanding indebtedness related to STI Duchessa and STI Onyx by repaying an aggregate of $23.7 million on our 2011 Credit Facility and drawing down an aggregate of $31.1 million from this facility as follows:

Drawdown amount
 
 
 
 
(in millions of U.S. dollars)
 
Drawdown date
 
Collateral
$
16.5

 
February 2017
 
STI Duchessa
14.6

 
February 2017
 
STI Onyx
Repayments on all borrowings under the HSH Nordbank Credit Facility are scheduled to be made in 20 consecutive quarterly installments. The first eight repayment installments shall be $745,669 each and the next 12 repayment installments shall be $648,408 each, the last of which shall be payable together with an additional balloon installment equal to the then outstanding balance of the loan. The facility has a final maturity of five years from the first drawdown date, and bears interest at LIBOR plus a margin of 2.50% per annum.
The credit facility contains financial and restrictive covenants, which require us to, among other things, comply with certain financial tests (described below); deliver quarterly and annual financial statements and annual projections; maintain adequate insurances; comply with laws (including environmental laws and ERISA); maintain flag and class of our vessels. Other such covenants may, among other things, restrict consolidations, mergers or sales of our assets; require us to obtain lender approval on changes in our vessel manager; limit our ability to place liens on our assets; limit our ability to incur additional indebtedness; prohibit us from paying dividends if there is a covenant breach under the loan or an event of default has occurred or would occur as a result of payment of such dividend; prohibit our transactions with affiliates.
Our HSH Nordbank Credit Facility includes financial covenants that require us to maintain:
•
The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
•
Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of new equity issues occurring on or after January 1, 2016.
•
The ratio of EBITDA to net interest expense (excluding non-cash items) greater than 2.50 to 1.00 calculated on a trailing four quarter basis.

F-66

Table of Contents

•
Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and $250,000 each time chartered-in vessel.
•
The aggregate of the FMV of the vessels provided as collateral under the facility shall at all times be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.

DVB 2017 Credit Facility
In January 2017, we received a commitment for a credit facility of up to $81.4 million from DVB Bank SE, or the DVB 2017 Credit Facility, to refinance our previous facility with DVB Bank SE. The new credit facility is expected to be used to refinance the existing indebtedness on four product tankers, has a final maturity of December 2021, and bears interest at LIBOR plus a margin of 2.75% per annum. The available borrowings may be used to finance up to 63% of the fair market value of the respective vessels.
The remaining terms and conditions, including financial covenants, are similar to those set forth above in the Company's existing credit facilities. The loan facility is subject to customary conditions precedent and the execution of definitive documentation.
Dividend Declaration
On February 13, 2017, our Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on March 30, 2017 to all shareholders of record as of February 23, 2017.
Convertible Senior Notes due 2019
On February 23, 2017, the conversion rate of our Convertible Notes was adjusted to reflect a cash dividend with respect to our common shares. The new conversion rate for the Convertible Notes was adjusted to 97.9316 of our common shares per $1,000 principal amount of the Convertible Notes, representing an increase of the prior conversion rate of 0.2277 shares per $1,000 principal amount of the Convertible Notes.
Time and Bareboat Chartered-in Vessels
As described in Note 17, in December 2016, we entered into agreements to bareboat-in seven Handymax ice-class 1A product tankers. The agreements include purchase options, which can be exercised through December 31, 2018. If we do not exercise the purchase options, the bareboat-in agreements expire on March 31, 2019.
Three of the vessels were previously time chartered-in by us for $15,600 per day. These time charter-in contracts were canceled in January 2017 and replaced by the new bareboat contracts at a rate of $7,500 per day. The remaining four vessels were chartered-in, on a bareboat basis, at $6,000 per day. These vessels were delivered in February 2017.
In February 2017, we entered into a new time charter agreement on a 2013 built, LR2 product tanker, which we then time chartered-in, for an additional six months at $14,360 per day effective February 2017. We also have the option to extend the charter for an additional six months at $15,385 per day.
In February 2017, we entered into new time charter agreements on two 2007 built, ice-class 1B Handymax product tankers which we then time chartered-in, each for one year at $11,250 per day, one effective March 2017 and the other effective May 2017. We also have options to extend these charters, each for additional one year, each at $13,250 per day.


F-67

Execution Form




Exhibit 4.25
Dated 2 June 2016
STI ROSE SHIPPING COMPANY LIMITED
as Borrower
and
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
and
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 2
as Swap Banks
and
THE BANK OF NOVA SCOTIA
as Agent
and
SCOTIABANK EUROPE PLC
as Security Trustee


LOAN AGREEMENT
relating to
a US$36,000,000 facility to refinance existing indebtedness
in relation to "STI ROSE"


WATSONFARLEYWILLIAMS.JPG



Index
Clause    
1
Interpretation
2
Facility
3
Position of the Lenders
4
Drawdown
5
Interest
6
Interest Periods
7
Default Interest
8
Repayment, Prepayment and Reborrowing
9
Conditions Precedent
10
Representations and Warranties
11
General Undertakings
12
Corporate and Financial Undertakings
13
Insurance
14
Ship Covenants
15
Security Cover
16
Payments and Calculations
17
Application of Receipts
18
Application of Earnings
19
Events of Default
20
Fees and Expenses
21
Indemnities
22
No Set-Off or Tax Deduction
23
Illegality, etc.
24
Increased Costs
25
Set-Off
26
Transfers and Changes in Lending Offices
27
Variations and Waivers
28
Notices
29
Supplemental
30
Law and Jurisdiction

Schedules
Schedule 1 Lenders and Commitments
Schedule 2 Swap Banks
Schedule 3 Drawdown Notice
Schedule 4 Condition Precedent Documents
Part A
Part B
Schedule 5 Transfer Certificate
Schedule 6 Designation Notice
Schedule 7 Form of Compliance Certificate

    





Execution

Execution Page





    


THIS AGREEMENT is made on 2 June 2016
BETWEEN
(1)
STI ROSE SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (the " Borrower ")
(2)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as " Lenders "
(3)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2 , as " Swap Banks "
(4)
THE BANK OF NOVA SCOTIA , as " Agent "
(5)
SCOTIABANK EUROPE PLC , as " Security Trustee "
BACKGROUND
(A)
The Lenders have agreed to make available to the Borrower a facility of up to $36,000,000 for the purpose of refinancing existing indebtedness in relation to "STI ROSE".
(B)
The Swap Banks have agreed to enter into interest rate swap transactions with the Borrower from time to time to hedge the Borrower's exposure under this Agreement to interest rate fluctuations.
(C)
The Lenders and the Swap Banks have agreed to share pari passu in the security to be granted to the Security Trustee pursuant to this Agreement.
OPERATIVE PROVISIONS




1
INTERPRETATION
1.1
Definitions
Subject to Clause 1.5 ( General Interpretation ), in this Agreement:
" Account Bank " means ABN AMRO Bank N.V., acting through its office at Coolsingel 93, P.O. Box 749, 3000 AS Rotterdam, The Netherlands.
" Accounts Security Deed " means a deed creating security in respect of the Earnings Account in the Agreed Form.
" Affected Lender " has the meaning given in Clause 5.7 ( Market disruption ).
" Agency and Trust Agreement " means the agency and trust agreement dated the same date as this Agreement and made between the same parties.
" Agent " means The Bank of Nova Scotia, acting in such capacity through its office at 201 Bishopsgate, 6th Floor, London, England, EC2M 3NS, or any successor of it appointed under clause 5 of the Agency and Trust Agreement.
" 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), or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document.
" Approved Classification Society " means, in relation to a Ship, Lloyds Register, DNV GL, ABS, the Korean Register of Shipping, Bureau Veritas or any other generally recognised first class classification society that is a member of IACS that the Agent may approve in writing from time to time as an "Approved Classification Society" of that Ship for the purposes of this Agreement.
" Approved Flag " means, in relation to the Ship, as at the date of this Agreement, Marshall Islands, Singapore or such other flag approved in writing by the Agent acting with the authorisation of the Majority Lenders.
" Approved Manager " means:
(a)
in relation to the commercial management of the Ship, Scorpio Commercial Management s.a.m. of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or Subsidiary thereof);
(b)
in relation to the technical management of the Ship:
(i)
Scorpio Ship Management s.a.m. of 9, Rue du Gabian, Monte Carlo, the Principality of Monaco (or any Affiliate or Subsidiary thereof); or
(ii)
any of V. Ships Ship Management, D'Amico International Shipping, Hellespoint Shipping, Anglo-Eastern Ship Management, Univan Ship Management Limited, C. P. Offen, Optimum Ship Services Ltd. or Zenith Ship Management; and
(c)
in relation to either of the commercial or the technical management of the Ship, any other company proposed by the Guarantor which the Agent may (acting on the

2    


instructions of the Majority Lenders), approve from time to time as the technical and/or commercial manager of the Ship (such approval not to be unreasonably withheld or delayed).
" Approved Ship Manager's Undertaking " means, in relation to the Ship, the letter executed and delivered by an Approved Ship Manager and an Approved Sub-Manager, in the Agreed Form agreeing certain matters in relation to the management of the Ship and subordinating the rights of the Approved Managers and any applicable Approved Sub-Managers against the Ship and the Borrower to the rights of the Creditor Parties under the Finance Documents.
" Approved Sub-Manager " means any company falling within the definition of Approved Manager.
" Approved Valuer " means Affinity (Shipping) LLP, Braemar Shipping Services plc, Compass Maritime Services LLC, Galbraiths Ltd, Fearnleys AS, Clarksons Platou Securities AS and Arrow Sale & Purchase (UK) Limited (or any Affiliate of such person through which valuations are commonly issued) and any other firm or firms of independent sale and purchase shipbrokers approved in writing by the Agent, acting with the authorisation of the Lenders which authorisation no Lender shall unreasonably withhold or delay.
" Availability Period " means the period commencing on the date of this Agreement and ending on:
(a)
the date falling 30 days after the date of this Agreement (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrower); or
(b)
if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated.
" Bail-In Action " means the exercise of any Write-down and Conversion Powers.
" Bail-In Legislation " means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms , the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time ; and
(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
" Basel III " means, together:
(a)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
(b)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency

3    


requirement - Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
" Business Day " means a day on which banks are open in London and Toronto 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:
(a)
the Guarantor ceases to legally and/or beneficially, and either directly or indirectly, own 100 per cent. or more of the issued share capital or voting rights of the Borrower; or
(b)
2 or more persons acting in concert or any individual person other than the Guarantor 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 the Borrower.
" Charter " means the time charter dated 1 October 2015 and made between the Borrower and the Charterer in respect of the Ship for a period of three years +/- 30 days in the Charterer's option.
" Charterer " means STNGR Singapore (Pte.) Ltd, a company incorporated in Singapore and having its registered office at 80 Raffles Place, #25-01, UOB Plaza, Singapore (048624), Singapore.
" Code " means the US Internal Revenue Code of 1986.
" Commitment " means, in relation to a Lender, the amount set opposite its name in Schedule 1 ( Lenders and Commitments ), 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 ( Currency indemnity ).
" Contribution " means, in relation to a Lender, the part of the Loan which is owing to that Lender.
" Creditor Party " means the Agent, the Security Trustee, any Lender or any Swap Bank, whether as at the date of this Agreement or at any later time.
" 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;
(b)
its purpose is the hedging of the Borrower's exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the final Repayment Date; and

4    


(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 ( Designation Notice ), as a Designated Transaction for the purposes of the Finance Documents.
" Disruption Event " means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a party prevent that, or any other party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the party whose operations are disrupted.
" Dollars " and " $ " means the lawful currency for the time being of the United States of America.
" Drawdown Date " means the date requested by the Borrower for the Loan to be made, or (as the context requires) the date on which the Loan is actually made.
" Drawdown Notice " means a notice in the form set out in Schedule 3 ( Drawdown Notice ) (or in any other form which the Agent approves or reasonably requires).
" 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 Insurances in respect of loss of hire; and

5    


(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 Account Bank in the Netherlands designated "STI ROSE ‑ Earnings Account", or any other account (with that or another office of the Account Bank or the Agent or with a bank or financial institution other than the Account Bank or the Agent) which is designated by the Agent as the Earnings Account for the purposes of this Agreement.
" EEA Member Country " means any member state of the European Union, Iceland, Liechtenstein and Norway.
" 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.
" EU Bail-In Legislation Schedule " means the document described as such and published by the Loan Market Association (or any successor person) from time to time.

6    


" Event of Default " means any of the events or circumstances described in Clause 19.1 ( Events of Default ).
" Existing Loan Agreement " means the loan agreement dated 2 July 2013 and made between (amongst others) the Guarantor as borrower and Nordea Bank Finland plc, New York Branch as agent and security trustee.
" Fair Market Value " means, in relation to the Ship, a valuation determined in accordance with Clause 15.3 ( Valuation of Ship ).
" FATCA " means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;
(b)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
(c)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in 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 2019; 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 2019,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
" FATCA Deduction " means a deduction or withholding from a payment under a Finance Document required by FATCA.
" FATCA Exempt Party " means a party to this Agreement that is entitled to receive payments free from any FATCA Deduction.
" Finance Documents " means:
(a)
this Agreement;
(b)
the Agency and Trust Agreement;
(c)
the Guarantee;
(d)
the Mortgage;

7    


(e)
the General Assignment;
(f)
the Tripartite Assignment;
(g)
the Accounts Security Deed;
(h)
the Shares Security Deed;
(i)
the Master Agreement Assignment; and
(j)
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, with respect to any person (the " Debtor ") at any date of determination (without duplication):
(a)
all obligations of the Debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)
all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)
all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto) which in accordance with IFRS would be shown on the liability side of a balance sheet;
(d)
all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)
all capitalised lease obligations of the Debtor as lessee;
(f)
all Financial Indebtedness incurred under any guarantee, indemnity or similar obligation to the extent such Financial Indebtedness is guaranteed, secured, expressed to be indemnified by, or otherwise assured by the Debtor.
The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to the contingent obligations set out in paragraph (f) above, the maximum liability which would or might arise upon the occurrence of the contingency giving rise to the obligation, as determined in conformity with IFRS, provided that:
(i)
the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount shall be deemed to be the face amount of such Financial Indebtedness less the remaining unamortised portion of such original issue discount of such Financial Indebtedness at such time; and
(ii)
the calculation of Financial Indebtedness shall not take into account any liability of the Debtor for taxes.

8    


" General Assignment " means a general assignment of the Earnings, the Insurances and any Requisition Compensation in the Agreed Form.
" Guarantee " means a guarantee in the Agreed Form.
" Guarantor " means Scorpio Tankers Inc., a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands and whose principal office is at 9, Boulevard Charles III, Monaco, 98000.
" IACS " means the International Association of Classification Societies.
" 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, effected in respect of the Ship, the Earnings or otherwise in relation to the Ship 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.
" Interest Period " means a period determined in accordance with Clause 6 ( Interest Periods ).
" Interpolated Screen Rate " means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of the Loan or that part of the Loan; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of the Loan or that part of the Loan,
each as of the relevant time for dollars.
" 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.

9    


" Lender " means, subject to Clause 26.6 ( Lender re-organisation; waiver of Transfer Certificate ), a bank or financial institution listed in Part 1 of Schedule 1 ( Lenders and Commitments ) and acting through its branch indicated in Schedule 1 ( Lenders and Commitments ) (or through another branch notified to the Borrower under Clause 26.14 ( Change of lending office )) or its transferee, successor or assign.
" LIBOR " means, in relation to the Loan or any part of the Loan:
(a)
the applicable Screen Rate for dollars and for a period equal in length to the Interest Period of the Loan or that part of the Loan;
(b)
(if no Screen Rate is available for the Interest Period of that Advance, the Loan, that part of the Loan), the applicable Interpolated Screen Rate; or
(c)
if no Screen Rate is available for that period and it is not possible to calculate an Interpolated Screen Rate for the Loan or that part of the Loan, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards to 4 decimal places) of the rates, as supplied to the Agent at its request, quoted by each Reference Bank to leading banks in the London Interbank Market;
in each case 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, in either case, that rate is less than zero, LIBOR shall 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 $2,500,000 or the equivalent in any other currency.
" Majority Lenders " means:
(a)
before the Loan has been made, Lenders whose Commitments total 66.66 per cent. of the Total Commitments; and
(b)
after the Loan has been made, Lenders whose Contributions total 66.66 per cent. of the Loan.
" Margin " means 1.50 per cent. per annum.
" Master Agreement " means each master agreement (on the 2002 ISDA (Multicurrency - Crossborder) form) in the Agreed Form made between the Borrower and a Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement.
" Master Agreement Assignment " means, in relation to each Master Agreement, the assignment of the Master Agreement in the Agreed Form.
" Material Adverse Effect " means in the reasonable opinion of the Lenders a material adverse effect on:
(a)
the business, operations, property or condition (financial or otherwise) of the Borrower and/or the Guarantor; or

10    


(b)
the ability of the Borrower and/or the Guarantor to perform its obligations under any Finance Document; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or intended to be granted pursuant to any of, the Finance Documents (except for the Approved Ship Manager's Undertakings); or
(d)
the rights or remedies of any Creditor Party under any of the Finance Documents.
" Maturity Date " means the third anniversary of the Drawdown Date.
" Mortgage " means the first preferred ship mortgage in the Approved Flag on the Ship together with, if applicable under the relevant Approved Flag, a deed of covenants collateral thereto each in the Agreed Form.
" Notifying Lender " has the meaning given in Clause 23.1 ( Illegality ) or Clause 24.1 ( Increased costs ) as the context requires.
" Party " means a party to this Agreement.
" Payment Currency " has the meaning given in Clause 21.4 ( Currency indemnity ).
" Permitted Security Interests " means:
(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(a) (vii);
(f)
any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where 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 Clause 13 ( Insurance ) or any other provision of this Agreement or another Finance Document;

11    


(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, the Principality of Monaco and the State of New York;
(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 interests or in which the company's central management and control is or has recently been exercised; and
(d)
a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax.
" 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.
" Prohibited Person " means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
" 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 ( Replacement of Reference Bank ), the principal London offices of Scotiabank Europe plc and ING Bank N.V. or such other entities as separately appointed by the Agent in consultation with the Borrower.
" Relevant Person " has the meaning given in Clause 19.9 ( Relevant Persons ).
" Repayment Date " means a date on which a repayment is required to be made under Clause 8 ( Repayment and Prepayment ).
" Resolution Authority " means any body which has authority to exercise any Write-down and Conversion Powers.
" 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 ".

12    


" Sanctions " means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available:
(a)
imposed by law or regulation of the United Kingdom, Canada, the Council of the European Union, the United Nations or its Security Council or the United States of America regardless of whether the same is or is not binding on the Borrower or any Security Party; or
(b)
otherwise imposed by any law or regulation binding on the Borrower or any Security Party or to which the Borrower or any Security Party is subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).
" Screen Rate " means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed on page LIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower.
" 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 the Master Agreements or any judgment relating to any Finance Documents or the Master Agreements; 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 Guarantor, the Charterer and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of " Finance Documents " but always excluding (i) any Approved Manager and Approved Sub-Manager other than the Guarantor or Charterer that has not granted any Security Interest in connection with this Agreement and (ii) the Sub-Charterer and the Sub-Charter Guarantor.
" Security Period " means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the other Creditor Parties that:

13    


(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 ( Fees and Expenses ), 21 ( Indemnities ) or 22 ( No Set-Off or Tax Deduction ) 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 Scotiabank Europe plc, acting in such capacity through its office at 201 Bishopsgate, 6th Floor, London, England, EC2M 3NS, or any successor of it appointed under clause 5 of the Agency and Trust Agreement.
" Servicing Bank " means the Agent or the Security Trustee.
" Shares Security Deed " means a deed creating security over the share capital of the Borrower in the Agreed Form.
" Ship " means the LR2 product tanker type vessel of 115,000 DWT registered in the name of the Borrower under the Approved Flag with the name "STI ROSE".
" SMC " means a safety management certificate issued in respect of the Ship in accordance with Rule 13 of the ISM Code.
" Sub-Charter " the time charter dated 1 October 2015 and made between the Charterer and the Sub-Charterer in respect of the Ship for a period of three years +/- 30 days in the Sub-Charterer's option.
" Sub-Charterer " means Reliance Industries Limited, a company incorporated in India and having its registered office at Petroleum Business / Supply & Trading (Chartering), Reliance Corporate Park, Bldg. No. 6, 1 st Floor, ‘B’ Wing, Thane – Belapur Road, Ghansoli, Navi Mumbai – 400 701 India or such other person as may be nominated by it as charterer for the purposes of the Sub-Charter.
" Sub-Charter Guarantee " means, where a nomination has been made under the Sub-Charter, the guarantee by the Sub-Charter Guarantor in respect of the Sub-Charterer's Obligations under the Sub-Charter.
" Sub-Charter Guarantor " means Reliance Industries Limited, a company incorporated in India and having its registered office at Petroleum Business / Supply & Trading (Chartering), Reliance Corporate Park, Bldg. No. 6, 1 st Floor, ‘B’ Wing, Thane – Belapur Road, Ghansoli, Navi Mumbai – 400 701 India following its nomination of another person as charterer for the purposes of the Sub-Charter.

14    


" Swap Bank " means a bank or financial institution listed in Schedule 2 ( Swap Banks ) and acting through its branch indicated in Schedule 1 ( Lenders and Commitments ).
" 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.
" 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), unless it is within 1 month redelivered to the Borrower's full control; and
(c)
any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless it is within 1 month redelivered to the Borrower's full control.
" 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 ( Transfer by a Lender ).
" Tripartite Assignment " means an assignment of the Charter, the Sub-Charter and any Sub-Charter Guarantee in the Agreed Form.
" Trust Property " has the meaning given in clause 3.1 of the Agency and Trust Agreement.

15    


" US " means the United States of America.
" US Tax Obligor " means:
(a)
a Borrower which is resident for tax purposes in the US; or
(b)
an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
" Write-down and Conversion Powers " means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.
1.2
Construction of certain terms
In this Agreement:
" 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.
" affiliate " means, in relation to any person, a subsidiary of that person or a holding company of that person or any other subsidiary of that holding company.
" approved " means, for the purposes of Clause 13 ( Insurance ), approved in writing by the Agent.
" asset " includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment.
" company " includes any partnership, joint venture and unincorporated association.
" consent " includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation.
" contingent liability " means a liability which is not certain to arise and/or the amount of which remains unascertained.

16    


" document " includes a deed; also a letter or fax.
" excess risks " means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of 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.
" holding company " means, in relation to a person, any other person in relation to which it is a subsidiary.
" 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 of 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 ( Meaning of "month" ).
" obligatory insurances " means all insurances effected, or which the Borrower is obliged to effect, under Clause 13 ( Insurance ).
" parent company " has the meaning given in Clause 1.4 ( Meaning of "subsidiary" ).
" person " includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation.
" policy ", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
" protection and indemnity risks " means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) 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 body, intergovernmental or supranational, agency, department or regulatory, self‑regulatory or other authority or organisation.
" subsidiary " has the meaning given in Clause 1.4 ( Meaning of "subsidiary" ).
" 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.

17    


" war risks " includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
1.3
Meaning of "month"
A period of one or more " months " ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (the " numerically corresponding day "), but:
(a)
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
(b)
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
and " month " and " monthly " shall be construed accordingly.
1.4
Meaning of "subsidiary"
A company (S) is a subsidiary of another company (P) if:
(a)
a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
(b)
P has direct or indirect control over a majority of the voting rights 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 or supplemented, 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 ( Definitions ) to 1.5 ( General Interpretation ) apply unless the contrary intention appears.
1.6
Headings

18    


In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document 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 not exceeding the lesser of (i) $36,000,000 and (ii) 60 per cent of the Fair Market Value of the Ship as at the Drawdown Date available to the Borrower.
2.2
Lenders' participations in Loan
Subject to the other provisions of this Agreement, each Lender shall participate in the Loan in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.
2.3
Purpose of Loan
The Borrower undertakes with each Creditor Party to use the Loan only for the purpose stated in the preamble to this Agreement.
3
POSITION OF THE LENDERS AND SWAP BANKS
3.1
Interests several
The rights of the Lenders and of the Swap Banks under this Agreement and under the Master Agreements are several.
3.2
Individual 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 Lender or any other Swap Bank as additional parties in the proceedings.
3.3
Proceedings requiring Majority Lender consent
Except as provided in Clause 3.2 ( Individual right of action ), no Lender and no Swap Bank may commence proceedings against the Borrower or any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.
3.4
Obligations several
The obligations of the Lenders under this Agreement and of the Swap Banks under the Master Agreement to which each is a party are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of a Swap Bank to perform its obligations under the Master Agreement to which it is a party shall not result in:
(a)
the obligations of the other Lenders or Swap Banks being increased; nor
(b)
the Borrower, any Security Party, any other Lender or any other Swap Bank 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 Lender or a Swap Bank have any responsibility for a failure of another Lender or another Swap Bank to perform its obligations under this Agreement or a Master Agreement.
4
DRAWDOWN
4.1
Request for advance of Loan
Subject to the following conditions, the Borrower may request the Loan 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
Availability
The conditions referred to in Clause 14.1 ( General ) are that:
(a)
the Drawdown Date has to be a Business Day during the Availability Period; and
(b)
the Loan shall be made available in a single advance.
4.3
Notification to Lenders of receipt of a Drawdown Notice
The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:
(a)
the amount of the Loan and the Drawdown Date;
(b)
the amount of that Lender's participation in the Loan; and
(c)
the duration of the first Interest Period.
4.4
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 Agent, acting on the authority of the Majority Lenders.
4.5
Lenders to make available Contributions
Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender under Clause 2.2 ( Lenders' participations in Loan ).
4.6
Disbursement of Loan
Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5 ( Lenders to make available Contributions ); and that payment to the Borrower shall be made:
(a)
to the account which the Borrower specifies in the Drawdown Notice; and
(b)
in the like funds as the Agent received the payments from the Lenders.
5
INTEREST
5.1
Payment of normal interest
Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.
5.2
Normal rate of interest
Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period 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 6 months, accrued interest shall be paid every 6 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 Reference Bank which is a Lender 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 ( Interest ).
5.7
Market disruption
The following provisions of this Clause 5 ( Interest ) apply if:
(a)
no Screen Rate is available for an Interest Period and 2 or more of the Reference Banks do not, before 1.00 p.m. (London time) on the Quotation Date, provide quotations to the Agent in order to fix LIBOR; or
(b)
at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent. of the Loan (or, if the Loan has not been made, Commitments amounting to more than 50 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or

19    


(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 ( Market disruption ) which have caused its notice to be given.
5.9
Suspension of drawdown
If the Agent's notice under Clause 5.8 ( Notification of market disruption ) is served before the Loan is made:
(a)
in a case falling within paragraph (a) or (b) of Clause 5.7 ( Market disruption ), the Lenders' obligations to make the Loan; and
(b)
in a case falling within paragraph (c) Clause 5.7 ( Market disruption ), the Affected Lender's obligation to participate in the Loan,
shall be suspended while the circumstances referred to in the Agent's notice continue.
5.10
Rate of interest during market disruption
If the Agent's notice under Clause 5.8 ( Notification of market disruption ) is served after the Loan is made, 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 from whatever sources the Lenders or (as the case may be) the Affected Lenders may reasonably select plus the Margin; and the procedure provided for by this Clause 5.10 ( Rate of interest during market disruption )) shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.
5.11
Notice of prepayment
If the Borrower does not agree with an interest rate set by the Agent under Clause 5.10 ( Rate of interest during market disruption ), 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.
5.12
Prepayment; termination of Commitments
A notice under Clause 5.11 ( Notice of prepayment ) 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.
5.13
Application of prepayment

20    


The provisions of Clause 8 ( Repayment and Prepayment ) shall apply in relation to the prepayment.
6
INTEREST PERIODS
6.1
Commencement of Interest Periods
The first Interest Period shall commence on the Drawdown Date 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 ( Duration of Interest Periods for repayment instalments ) and 6.4 ( Non-availability of matching deposits for Interest Period selected ), each Interest Period shall be:
(a)
1, 3 or 6 months as notified by the Borrower to the Agent not later than 11.00 a.m. (London time) 5 Business Days before the commencement of the Interest Period; or
(b)
12 months or any other period that the Borrower may request not later than 11.00 a.m. (London time) 5 Business Days before the commencement of the Interest Period Provided that the Lenders shall only be obliged to agree to an Interest Period of such duration if each Lender is satisfied that deposits in Dollars for a period equal to the requested Interest Period will be available to it in the London Interbank Market when the Interest Period commences; or
(c)
3 months, if the Borrower fails to notify the Agent by the time specified in paragraphs (a) or (b); or
(d)
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 ( Repayment and Prepayment ) 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 or the Borrower has requested and the Lenders have agreed to an Interest Period pursuant to paragraph (b), 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 ( Default Interest ) 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 ( Acceleration of Loan ), the date on which it became immediately due and payable.
7.2
Default rate of interest
Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent. above:
(a)
in the case of an overdue amount of principal, the higher of the rates set out at paragraphs (a) and (b) of Clause 7.3 ( Calculation of default rate of interest ); or
(b)
in the case of any other overdue amount, the rate set out at paragraph (b) of Clause 7.3 ( Calculation of default rate of interest ).
7.3
Calculation of default rate of interest
The rates referred to in Clause 7.2 ( Default rate of interest ) 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 aggregate of 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 ( Calculation of default rate of interest ) 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 ( Default Interest ) does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transaction as to which the relevant sections of that Master Agreement shall apply.
8
REPAYMENT AND PREPAYMENT
8.1
Amount of repayment instalments
(a)
The Borrower shall repay the Loan by 12 equal consecutive quarterly instalments of $600,000.00 each together with a balloon instalment payable on the Maturity Date in an amount equal to the Loan then outstanding.
(b)
If the amount advanced in relation to the Loan is less than $36,000,000:
(i)
the repayment instalments referred to in this Clause (including the balloon) shall be reduced pro rata and the Agent shall provide the Borrowers and the other Creditor Parties with a repayment schedule for the Loan with the amended repayment instalments (and balloon); and
(ii)
the unutilised Commitment (if any) of each Lender shall be automatically cancelled at close of business on the Drawdown Date.
8.2
Repayment Dates
The first instalment shall be repaid on the date falling three months after the Drawdown Date and the last instalment 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.
8.5
Conditions for voluntary prepayment
The conditions referred to in Clause 8.4 ( Voluntary prepayment ) are that:
(a)
a partial prepayment shall be at least $1,000,000 or a higher integral multiple of $1,000,000 or such other amount as the Agent may approve;
(b)
the Agent has received from the Borrower at least 10 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 regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with; and
(d)
that the Borrower has complied with Clause 8.13 ( Unwinding of Designated Transactions ) 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 paragraph (c) of Clause 8.5 ( Conditions for voluntary prepayment ).
8.8
Mandatory prepayment on sale or Total Loss
The Borrower shall be obliged to prepay the whole of the Loan, and to comply with Clause 8.13 ( Unwinding of Designated Transactions ), if the Ship is sold or becomes a Total Loss:
(a)
in the case of a sale, on or before 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 the Loan and the Commitments shall terminate not later than 60 days following the occurrence of the Change of Control unless the Agent has approved the Change of Control (acting with the authorisation of the Majority Lenders).
8.10
Amounts payable on prepayment
A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 ( Indemnities ) 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 paragraph (b) of Clause 21.1 ( Indemnities regarding borrowing and repayment of Loan ) but without premium or penalty.
8.11
Application of partial prepayment
Each partial prepayment shall be applied pro rata against the repayment instalments specified in Clause 8.1 ( Amount of repayment instalments ).
8.12
No reborrowing
No amount prepaid may be reborrowed.
8.13
Unwinding of Designated Transactions
On or prior to any repayment or prepayment of the Loan under this Clause 8 ( Repayment and Prepayment ) 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 ( Amount of repayment instalments ).
9
CONDITIONS PRECEDENT
9.1
Documents, fees and no default
Each Lender's obligation to contribute to the Loan is subject to the following conditions precedent:
(a)
that, on or before the service of the Drawdown Notice, the Agent receives the documents described in Part A of Schedule 4 ( Condition Precedent Documents ) in form and substance satisfactory to the Agent and its lawyers;
(b)
that, on the Drawdown Date but prior to the advance of the Loan, the Agent receives or is satisfied that it will receive on the advance of the Loan the documents described in Part B of Schedule 4 ( Condition Precedent Documents ) in form and substance satisfactory to it and its lawyers;
(c)
that, on or before the service of the Drawdown Notice, the Agent receives the arrangement fee referred to in Clause 20.1 ( Arrangement, commitment, agency fees ), all accrued commitment fee payable pursuant to Clause 20.1 ( Arrangement, commitment, agency fees ) and has received payment of the expenses referred to in Clause 20.2 ( Costs of negotiation, preparation etc. ); and
(d)
that both at the date of the Drawdown Notice and at the Drawdown Date:
(i)
no Event of Default has occurred or would result from the borrowing of the Loan;
(ii)
the representations and warranties in Clause 10 ( Representations and Warranties ) 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
(iii)
none of the circumstances contemplated by Clause 5.7 ( Market disruption ) has occurred and is continuing;
(iv)
there has not occurred or developed since 20 October 2015 a change in the financial position, or state of affairs or prospects of the Borrower or any Security Party which, in the reasonable opinion of the Majority Lenders, has a Material Adverse Effect; and
(e)
that, if the ratio set out in Clause 15.1 ( Minimum required security cover ) were applied immediately following the making of the Loan, 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 the Loan to be borrowed before certain of the conditions referred to in Clause 9.1 ( Documents, fees and no default ) are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown 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 the Republic of the Marshall Islands.
10.3
Ownership
The Guarantor is the ultimate beneficial owner of all the issued share capital and voting rights in respect of the Borrower free of Security Interests save for the Security Interests created pursuant to the Finance Documents.
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 register the Ship in its name under the Approved 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, the 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 ( Corporate power ) 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 ( Legal validity; effective Security Interests ), at the time of the execution and delivery of each Finance Document:
(a)
the Borrower 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, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document and each Master Agreement 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 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 has occurred.
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 satisfied the requirements of Clause 11.5 ( Information provided to be accurate ); all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7 ( Form of financial statements ); and there has been no material adverse change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts.
10.12
No litigation
No legal or administrative action involving the Borrower (including action 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.
10.13
Compliance with certain undertakings
At the date of this Agreement, the Borrower is in compliance with Clauses 11.2 ( Title; negative pledge ), 11.4 ( No other liabilities or obligations to be incurred ), 11.9 ( Consents ), 11.13 ( Chief executive office ) and 14.9 ( Compliance with laws etc. ).
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 Manager, the Approved Sub-Manager (if applicable) and the Ship have been complied with.
10.16
No money laundering
Without prejudice to the generality of Clause 2.3 ( Purpose of Loan ), 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 transactions and other arrangements affected or contemplated by the Finance Documents 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
No immunity
The Borrower is not and no assets of the Borrower are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceedings (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
10.18
Pari passu
The obligations of the Borrower under the Finance Documents and any Master Agreement to which it is a party rank at least pari passu with all other unsecured indebtedness of the Borrower other than indebtedness mandatorily preferred by law.
10.19
Corrupt practices
The Borrower has not engaged in any activity or conduct which would violate any applicable anti-bribery or anti-corruption laws in any Pertinent Jurisdiction or otherwise.
10.20
Sanctions
(a)
Neither the Borrower nor any other Security Party:
(i)
is a Prohibited Person;
(ii)
to the best of the Borrower's knowledge is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person;
(iii)
owns or controls a Prohibited Person; or
(iv)
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee.
(b)
No proceeds of the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person in breach of applicable Sanctions nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose in breach of applicable Sanctions.
11
GENERAL UNDERTAKINGS
11.1
General
The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 ( General Undertakings ) at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.
11.2
Title; negative pledge
The Borrower will:
(a)
hold the legal title to, and own the entire beneficial interest in the Ship, the Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents and except for Permitted Security Interests; and
(b)
not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future (including, but not limited to, 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).
11.3
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,
but paragraph (a) does not apply to any charter of the Ship as to which Clause 14.3 ( Repair and classification ) applies.
11.4
No other liabilities or obligations to be incurred
The Borrower will not incur any liability or obligation except:
(a)
liabilities and obligations under the Finance Documents to which it is a party;
(b)
liabilities or obligations reasonably incurred in the ordinary course of operating and chartering the Ship; and
(c)
Designated Transactions.
11.5
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.
11.6
Provision of financial statements
The Borrower will send or will procure that the Guarantor sends to the Agent:
(a)
as soon as possible, but in no event later than 120 days after the end of each financial year of the Guarantor, the audited consolidated accounts of the Guarantor;
(b)
as soon as possible, but in no event later than 60 days after the end of each of the first three quarters in each financial year of the Guarantor, unaudited consolidated accounts of the Guarantor and which are certified as to their correctness by the chief financial officer of the Guarantor;
(c)
as soon as possible, but in no event later than 90 days after the end of each financial year of the Guarantor, consolidated cash flow projections for the following 3 years in a format approved by the Agent which shows balance sheets, statements of anticipated profit and loss and cash flow; and
(d)
together with the annual audited accounts referred to in paragraph (a) and with each set of quarterly unaudited accounts referred to in paragraph (b), a compliance certificate (together with supporting schedules, if any) signed by the chief financial officer of the Guarantor in the form attached as Schedule 7 ( Form of Compliance Certificate ) (or in any other format which the Agent may approve and with such other information as the Agent may require) evidencing compliance with the financial undertakings in clause 11 ( financial covenants ) of the Guarantee and, in the case of the compliance certificates provided together with the annual audited accounts referred to in paragraph (a) and with the second set of quarterly unaudited accounts of each financial year referred to in paragraph (b), also listing the Fair Market Value of the Ship.
11.7
Form of financial statements
All accounts (audited and unaudited) delivered under Clause 11.6 ( Provision of financial statements ) will:
(a)
be prepared in accordance with all applicable laws and IFRS consistently applied;
(b)
fairly represent the financial condition of the Borrower or the Guarantor and its subsidiaries (as the case may be) at the date of those accounts and of its profit for the period to which those accounts relate; and
(c)
fully disclose or provide for all significant liabilities of the Borrower or the Guarantor and its subsidiaries (as the case may be).
11.8
Creditor notices
The Borrower will send the Agent, at the same time as they are despatched, copies of all communications which are despatched to the Borrower's creditors or any class of them.
11.9
Consents
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 a 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.
11.10
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.
11.11
Notification of litigation
The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, any Security Party, the Approved Manager or the Ship, the Earnings or the Insurances as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.
11.12
No amendment to Master Agreements
The Borrower will not agree to any amendment or supplement to, or waive or fail to enforce, any Master Agreement or any of its provisions.
11.13
Chief executive office
The Borrower will maintain its chief executive office in the Principality of Monaco.
11.14
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 has occurred; or
(b)
states that no Event of Default has occurred, except for a specified event or matter, of which all material details are given.
The Agent may serve requests under this Clause 11.14 ( Confirmation of no default ) from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if the Loan has not been made) Commitments exceeding 10 per cent of the Total Commitments; and this Clause 11.14 ( Confirmation of no default ) does not affect the Borrower's obligations under Clause 11.15 ( Notification of default ).
11.15
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
(b)
any matter which indicates that an Event of Default may have occurred,
and will keep the Agent fully up‑to‑date with all developments.
11.16
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, 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 and including (where reasonably requested) details of all off-balance sheet and time charter hire commitments, annual budgets and projections.
11.17
Provision of copies and translation of documents
The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and 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.
11.18
"Know your customer" checks
If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(b)
any change in the status of the Borrower or any Security Party after the date of this Agreement; or
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender 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 the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
11.19
ERISA
The Borrower shall, and shall procure that the other Security Parties shall, comply with all requirements of the US Employee Retirement Income Security Act of 1974 as it relates to their respective businesses.
11.20
Taxation
(a)
The Borrower shall, and shall procure that each Security Party will, pay and discharge all taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
(i)
such payment is being contested in good faith;
(ii)
adequate reserves are maintained for those taxes and the costs required to contest them have been disclosed in its latest financial statements delivered to the Agent under Clause 11.6 (Provision of financial statements); and
(iii)
such payment can be lawfully withheld and failure to pay those taxes does not have or is not reasonably likely to have a Material Adverse Effect.
(b)
The Borrower shall not and the Borrower shall procure that no Security Party will, change its residence for tax purposes.
11.21
Documents required following execution of a Master Agreement
Promptly following the entry by the Borrower and the Swap Bank into any Master Agreement, the Borrower shall deliver to the Agent:
(a)
a duly executed Master Agreement Assignment in the Agreed Form (of each document required to be delivered by the Master Agreement Assignment);
(b)
a duly executed amendment to the Mortgage in the Agreed Form and making such amendments to the Mortgage as are required to ensure that it validly secures the Borrower's obligations under the Master Agreement.
12
CORPORATE UNDERTAKINGS
12.1
General
The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 ( Corporate Undertakings ) 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
(a)
The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands.
(b)
The Borrower shall procure that it shall not become a FATCA FFI or a US Tax Obligor.
12.3
Negative undertakings
The Borrower will not:
(a)
carry on any business other than the ownership, chartering and operation of the Ship; or
(b)
provide any form of credit or financial assistance to:
(i)
a person who is directly or indirectly interested in the Borrower's share or loan capital; or
(ii)
any company in or with which such a person is directly or indirectly interested or connected,
or enter into any transaction with or involving such a person or company 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;
(c)
open or maintain any account with any bank or financial institution except accounts with the Agent and the Security Trustee for the purposes of the Finance Documents;
(d)
issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;
(e)
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than Designated Transactions; or
(f)
enter into any form of amalgamation, consolidation, merger or de-merger or any form of reconstruction or reorganisation.
12.4
Dividends and distributions of share capital
The Borrower will not pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital unless, in the case of a dividend, no Event of Default has occurred or will occur as a result of the payment of such dividend.
12.5
No Change of Control
The Borrower shall procure that no Change of Control shall occur.
13
INSURANCE
13.1
General
The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 ( Insurance ) 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 and excess risks);
(b)
war risks (including terrorism, piracy and confiscation);
(c)
protection and indemnity risks; and
(d)
any other risks against which the Security Trustee considers, having regard to standard practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for the Borrower to insure and which are specified by the Security Trustee by written notice to the Borrower.
13.3
Terms of obligatory insurances
The Borrower shall effect such insurances:
(a)
in Dollars;
(b)
in the case of fire and usual marine risks and war risks, 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 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;
(d)
in relation to protection and indemnity risks in respect of the Ship's full tonnage;
(e)
on approved terms; and
(f)
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 ( Terms of obligatory insurances ), the Borrower shall procure that the obligatory insurances shall:
(a)
subject always to paragraph (b), name the Borrower as the sole named assured unless the interest of every other named assured is limited:
(i)
in respect of any obligatory insurances for hull and machinery and war risks;
(A)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
(ii)
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;
and every other named assured has undertaken in writing to the Security Trustee (in such form as it requires) that any deductible shall be apportioned between the Borrower and every other named assured in proportion to the gross claims made or paid by each of them and that it 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;
(b)
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 Lender, 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;
(c)
name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;
(d)
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;
(e)
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
(f)
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 14 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 7 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 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 ( Further protections for the Creditor Parties );
(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 7 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 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 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 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 neither 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 paragraph (c) of Clause 13.6 ( Copies of policies; letters of undertaking )) 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); and
(d)
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 neither make or agree to any 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 written communications between the Borrower and:
(a)
the approved brokers;
(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 the obligatory insurances including, without limitation, all requisite 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) 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 13.16 ( Mortgagee's interest and additional perils ) 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 reasonable fees and other reasonable expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).
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 marine insurance in such amounts (and on and from the Drawdown Date, it is expected that such amount will be 120 per cent of the Loan from time to time), on such terms, through such insurers and generally in such manner as the Security Trustee 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 ( Ship Covenants ) at all times during the Security Period 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 under the Approved Flag at its port of registration; 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 without the prior written approval of the Agent, such approval not to be unreasonably withheld.
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 class for the Ship with the relevant Approved Classification Society free of recommendations and conditions; and
(c)
so as to comply with all laws and regulations applicable to vessels registered under the Approved Flag on which the Ship is registered 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 the Ship 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 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 (by surveyors or other persons appointed by it for that purpose) 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.
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, all Environmental Laws and Sanctions (or which would be contrary to Sanctions if Sanctions were applicable to the Borrower); 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 unless the prior written consent of the Security Trustee has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.
14.10
Provision of information
The Borrower shall promptly provide the Security Trustee with any information which it requests regarding:
(a)
the Ship, its employment, position and engagements;
(b)
the Earnings and payments and amounts due to the Ship's master and crew;
(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; and
(e)
the Borrower's, the Approved Manager's, the Approved Sub-Manager's or the Ship's compliance 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, the Approved Manager's or the Approved Sub-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 condition 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 the 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, the Approved Manager, the Approved Sub-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, the Approved Manager's, the Approved Sub-Manager's or any other person's response to any of those events or matters.
14.12
Restrictions on chartering, appointment of managers etc.
(a)
The Borrower shall not:
(i)
let the Ship on demise charter for any period;
(ii)
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 other than the Charter;
(iii)
enter into any charter in relation to the Ship under which more than 2 months' hire (or the equivalent) is payable in advance other than the Charter;
(iv)
charter the Ship otherwise than on bona fide arm's length terms at the time when the Ship is fixed;
(v)
appoint a manager of the Ship other than an Approved Manager or agree to any material alteration to the terms of the relevant Approved Manager's appointment;
(vi)
de‑activate or lay up the Ship; or
(vii)
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 $2,500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or the Earnings for the cost of such work or for any other reason.
(b)
The Borrower shall procure that:
(i)
no Approved Manager other than Scorpio Commercial Management s.a.m. or Scorpio Ship Management s.a.m shall appoint a sub-manager in relation to the Ship; and
(ii)
neither Scorpio Commercial Management s.a.m. or Scorpio Ship Management s.a.m shall appoint a sub-manager of the Ship other than an Approved Sub-Manager or agree to any material alteration to the terms of the relevant Approved Sub-Manager's appointment.
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.
14.16
Sanctions and Ship trading
Without limiting Clause 14.9 ( Compliance with laws etc. ), the Borrower shall procure:
(a)
that the Ship shall not be used by or for the benefit of a Prohibited Person;
(b)
that such Ship shall not be used in trading in any manner contrary to Sanctions (or which could be contrary to Sanctions if Sanctions were applicable to the Borrower and each Security Party);
(c)
that such Ship shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances; and
(d)
that each charterparty in respect of that Ship shall contain, for the benefit of that Borrower, language which gives effect to the provisions of paragraph (b) of Clause 14.9 ( Compliance with laws etc. ) as regards Sanctions and of this Clause 14.16 ( Sanctions and Ship trading ) and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions (or which would result in a breach of Sanctions if Sanctions were applicable to the Borrower and each Security Party).
15
SECURITY COVER
15.1
Minimum required security cover
Clause 15.2 ( Provision of additional security; prepayment ) applies if the Agent notifies the Borrower that:
(a)
the Fair Market Value of the Ship; plus
(b)
the net realisable value of any additional security previously provided under this Clause 15 ( Security Cover ),
is below 125 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 ( Minimum required security cover ), the Borrower shall prepay such part (at least) of the Loan as will eliminate the shortfall on or before the date falling 7 days after the date on which the Agent's notice is served under Clause 15.1 ( Minimum required security cover ) (the " Prepayment Date ") unless at least 1 Business Day before the Prepayment Date it has provided, or ensured that a third party has provided, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which has been documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require.
15.3
Valuation of Ship
The Fair Market Value of the Ship at any date is that shown by the arithmetic mean of two valuations prepared:
(a)
as at a date not more than 30 days previously;
(b)
by an Approved Valuer;
(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; and
(e)
after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.
The Borrower shall procure that the Guarantor provides (at the Borrower's cost) the valuations of each Ship which are required to determine its Fair Market Value pursuant to this Clause 15.3 ( Valuation of Ship ) at the same time as it provides to the Agent the compliance certificates provided together with the annual audited accounts referred to in paragraph (a) of Clause 11.6 ( Provision of financial statements ) and with the second set of quarterly unaudited accounts of each financial year referred to in paragraph (b) of Clause 11.6 ( Provision of financial statements )and, after the occurrence of an Event of Default which is continuing, whenever requested by the Agent.
15.4
Value of additional vessel security
The net realisable value of any additional security which is provided under Clause 15.2 ( Provision of additional security; prepayment ) 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 ( Valuation of Ship ).
15.5
Valuations binding
Any valuation under Clause 15.2 ( Provision of additional security; prepayment ), 15.3 ( Valuation of Ship ) or 15.4 ( Value of additional vessel security ) 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 ( Valuation of Ship ) or 15.4 ( Value of additional vessel security ) with any information which the Agent or the shipbroker or expert may 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 ( Costs of negotiation, preparation etc. ), 20.3 ( Costs of variations, amendments, enforcement etc. ) and 21.3 ( Miscellaneous indemnities ), 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 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 ( Repayment and Prepayment ) shall apply in relation to any prepayment pursuant to Clause 15.2 ( Provision of additional security; prepayment ).
15.9
Release of Additional Security
It is agreed that where the Borrower or a third party has provided additional security pursuant to Clause 15.2 ( Provision of additional security; prepayment ), the Borrower is entitled to request the release of such additional security at its expense at any time following a two tests of compliance by the Borrower of the minimum required security cover under Clause 15.1 ( Minimum required security cover ) three months apart. Where the Borrower is shown to be in compliance with such minimum required security cover without including the additional security under both calculations and where the Borrower is in compliance with the minimum required security cover under Clause 15.1 ( Minimum required security cover ), such additional security shall be released at the Borrower's cost.
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. (London 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 the account of the Agent at The Bank of Nova Scotia, New York (Swift Code NOSCUS33 and Account No 0600830), or to such other account with such other 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.
16.4
Distribution of payments to Creditor Parties
Subject to Clauses 16.5 ( Permitted deductions by Agent ), 16.6 ( Agent only obliged to pay when monies received ) and 16.7 ( Refund to Agent of monies not received ):
(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 and the Swap Counterparty or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and
(b)
amounts to be applied in satisfying amounts of a particular category which are due to the Lenders 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 or 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 (as the case may be) the Lender or 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 ( Refund to Agent of monies not received ) 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 ( Creditor Party accounts ) and 16.10 ( Agent's memorandum account ) 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 satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreements in the following order and proportions:
(i)
first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrower under Clauses 20 ( Fees and Expenses ), 21 ( Indemnities ) and 22 ( No Set-Off or Tax Deduction ) of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document or in any Master Agreement);
(ii)
secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents and the Master Agreements (and, for this purpose, the expression " interest " shall include any net amount which the Borrower shall have become liable to pay or deliver under the applicable sections of any Master Agreement but shall have failed to pay or deliver to the relevant Swap Counterparty at the time of application or distribution under this Clause 17 ( Application of Receipts )); and
(iii)
thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure of each Swap Counterparty (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);
(b)
SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document or any Master Agreement 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 paragraph (a) of Clause 17.1 ( Normal order of application ); and
(c)
THIRDLY: 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 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 ( Normal order of application ) 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 ( Variation of order of application ) 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 ( Application of Receipts ) and any notice which the Agent gives under Clause 17.2 ( Variation of order of application ) shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.
18
APPLICATION OF EARNINGS; SWAP PAYMENTS
18.1
Payment of Earnings and Swap Payments
The Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period;
(a)
subject only to the provisions of the General Assignment and the Tripartite Assignment, all the Earnings are paid to the Earnings Account; and
(b)
all payments by the relevant Swap Counterparty to the Borrower under each Designated Transaction are paid to the Earnings Account.
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 ( Fees and Expenses ) or 21 ( Indemnities ) to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 ( Fees and Expenses ) or 21 ( Indemnities ).
18.4
Borrower's obligations unaffected
The provisions of this Clause 18 ( Application of Earnings; Swap Payments ) do not affect:
(a)
the liability of the Borrower to make payments of principal and interest on the due dates; or
(b)
any other liability or obligation of the Borrower or any Security Party under any Finance Document.
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 any sum payable under a Finance Document or under any document relating to a Finance Document unless its failure to pay is caused by:
(i)
an administrative or technical error; or
(ii)
a Disruption Event,
and payment is made within 3 Business Days of its due date; or
(b)
any breach occurs of Clause 9.2 ( Waiver of conditions precedent ), 11.2 ( Title; negative pledge ), 11.3 ( No disposal of assets ), 12 ( Corporate Undertakings ), 13 ( Insurance ), 14.16 ( Sanctions and Ship trading ) or 15.2 ( Provision of additional security; prepayment ) or Clause 11 ( Financial Covenants ) of the Guarantee; or
(c)
any breach occurs of Clause 14.9 ( Compliance with laws etc. ) insofar as it relates to Sanctions; or
(d)
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)) which, in the opinion of the Lenders, is capable of remedy, and such default continues unremedied 5 days after written notice from the Agent requesting action to remedy the same; or
(e)
(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 falling within paragraphs (a), (b) or (d)); or
(f)
any representation, warranty or statement made or repeated 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 repeated; or
(g)
any of the following occurs in relation to any Financial Indebtedness of a Relevant Person (in the case of the Guarantor on a consolidated basis or the Charterer exceeding $10,000,000 in aggregate or, in the case of any other Relevant Person, $2,500,000 in aggregate (or in either case, the equivalent in any other 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; or
(h)
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, $10,000,000 in the case of the Guarantor or the Charterer or $2,500,000 in the case of any other Relevant Person or more or the equivalent in another currency; or
(iii)
any administrative or other receiver is appointed over any asset of a Relevant Person; or
(iv)
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 of a Pertinent Jurisdiction 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 Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by all the 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 in any Pertinent Jurisdiction, 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
(xi)
in a Pertinent Jurisdiction other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Lenders acting reasonably is similar to any of the foregoing;
(i)
any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened against a Relevant Person or its assets which has, will have or may have a Material Adverse Effect;
(j)
a Finance Document is amended, terminated, cancelled or suspended for any reason except with the prior written consent of the Agent, acting with the authorisation of all the Lenders;
(k)
the Borrower ceases or suspends carrying on its business or a part of its business which is material in the context of this Agreement; or
(l)
it becomes unlawful in any Pertinent Jurisdiction 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 all the Lenders consider material under a Finance Document;
(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
(m)
any 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 all the Lenders consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or
(n)
any provision which all the 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 and, in each case, such default continues unremedied 15 days after written notice from the Agent requesting action to remedy the same; or
(o)
the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
(p)
an Event of Default (as defined in section 14 of a Master Agreement) occurs; or
(q)
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 all the Lenders; or
(r)
the Ship ceases to be employed by the relevant Approved Ship Manager on terms acceptable to the Agent or any of the circumstances described in paragraphs (h) or (k) of Clause 19.1 ( Events of Default ) occurs ( mutatis mutandis ) in relation to an Approved Manager or an Approved Manager or Approved Sub-Manager breaches any provision of its Approved Ship Manager's Undertaking which the Agent considers material and the Borrower fails within a period of 30 days of it becoming aware of the occurrence of such circumstance or breach or of the receipt of a written notification from the Agent requesting the Borrower to remedy such circumstances or breach either to remedy such circumstances or breach or to substitute the relevant Approved Ship Manager or Approved Sub-Manager with another Approved Ship Manager or Approved Sub-Manager which executes and delivers to the Security Trustee a replacement Approved Ship Manager's Undertaking; or
(s)
an event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
19.2
Actions following an Event of Default
On, or at any time after, the occurrence of an Event of Default:
(a)
the Agent may, and if so instructed by the Majority Lenders, the Agent shall:
(i)
serve on the Borrower a notice stating that all or part of the Commitments and of the other obligations of each Lender to the Borrower under this Agreement are cancelled; and/or
(ii)
serve on the Borrower a notice stating that all or part of the Loan together with 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 and/or 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 paragraph (a)(i) of Clause 19.2 ( Actions following an Event of Default ), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall be cancelled.
19.4
Acceleration of Loan
On the service of a notice under paragraph (a)(i) of Clause 19.2 ( Actions following an Event of Default ), all or, as the case may be, the part of the Loan specified in the notice together with 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 paragraphs (a)(i) and (ii) of Clause 19.2 ( Actions following an Event of Default ) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 ( Actions following an Event of Default ) 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 ( Actions following an Event of Default ); 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 Party 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 ( Interests several ).
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 ( Events of Default ), a " Relevant Person " means the Borrower or any Security Party.
19.10
Interpretation
In paragraph (g) of Clause 19.1 ( Events of Default ) 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 paragraph (h) of Clause 19.1 ( Events of Default ) " petition " includes an application.
19.11
Position of Swap Counterparties
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 ( Events of Default ), 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 date of this Agreement, an arrangement fee in an amount of $252,000, for distribution among the Lenders in the proportions agreed by the Agent and the Lenders; and
(b)
quarterly in arrears during the period from (and including) the date of this Agreement to the earlier of (i) the Drawdown Date and (ii) the last day 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 35 per cent. of the Margin per annum on the amount of the Total Commitments, for distribution among the Lenders pro rata to their Commitments.
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 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 ( Security Cover ) or any other matter relating to such security; or
(d)
any step taken by the Lender or the Swap Bank concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.
There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.
20.4
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 and Prudential Regulation Authority 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 it 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 the Prudential Regulation Authority (or other United Kingdom governmental authorities or agencies) of a requirement to pay fees to the Financial Conduct Authority and/or the Prudential Regulation Authority calculated by reference to liabilities used to fund its 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 ( Fees and Expenses ) and which indicates (without necessarily specifying a detailed breakdown) 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 Loan 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 ( Default Interest ));
(d)
the occurrence of an Event of Default and/or the acceleration of repayment of the Loan under Clause 19 ( Events of Default );
and in respect of any tax (other than tax on its overall net income under the law of the jurisdiction in which that Creditor Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Creditor Party is treated as resident for tax purposes or to the extent a claim, liability or loss relates to a FATCA Deduction required to be made by a party to this Agreement) 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 ( Indemnities regarding borrowing and repayment of Loan ) covers any claim, expense, liability or loss, including a loss of a 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:
(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 directly and mainly 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 ( Miscellaneous indemnities ) 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.
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 ( Currency indemnity ), 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 ( Currency indemnity ) 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 ( Currency indemnity ) 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 ( Indemnities ) and which indicates (without necessarily specifying a detailed breakdown) 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.
21.7
Sums deemed due to a Lender
For the purposes of this Clause 21 ( Indemnities ), 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.
22.2
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 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; and
(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 ( No Set-Off or Tax Deduction ) " tax deduction " means any deduction or withholding for or on account of any present or future tax, other than a FATCA Deduction.
22.5
Application to Master Agreements
For the avoidance of doubt, Clause 22 ( No Set-Off or Tax Deduction ) 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 information
(a)
Subject to paragraph (c) below, each party to this Agreement shall, within ten Business Days of a reasonable request by another party:
(i)
confirm to that other party whether it is:
(A)
a FATCA Exempt Party; or
(B)
not a FATCA Exempt Party;
(ii)
supply to that other party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA;
(iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation, or exchange of information regime.
(b)
If a party to this Agreement confirms to another party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that party shall notify that other party reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Creditor Party to do anything, and paragraph (a)(iii) above shall not oblige any other party to do anything, which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality.
(d)
If a party to this Agreement fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
22.7
FATCA Deduction
(a)
Each party to this Agreement 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 this Agreement 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.
(b)
Each party to this Agreement 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), and in any case at least three Business Days prior to making a FATCA Deduction, notify the party to whom it is making the payment and, on or prior to the day on which it notifies that party in addition, shall also notify the Borrowers and the Agent and the Agent shall notify the other Creditor Parties.
23
ILLEGALITY, ETC
23.1
Illegality
This Clause 23 ( Illegality, etc ) applies if a Lender (the " Notifying Lender ") notifies the Agent that it has become, or will with effect from a specified date, become:
(a)
unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
(b)
contrary to, or inconsistent with, any regulation,
for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.
23.2
Notification of illegality
The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 ( Illegality ) which the Agent receives from the Notifying Lender.
23.3
Prepayment; termination of Commitment
On the Agent notifying the Borrower under Clause 23.2 ( Notification of illegality ), 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 ( Illegality ) 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 ( Repayment and Prepayment ).
23.4
Mitigation
If circumstances arise which would result in a notification under Clause 23.1 ( Illegality ) then, without in any way limiting the rights of the Notifying Lender under Clause 23.3 ( Prepayment; termination of Commitment ), 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 ( Increased Costs ) 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 costs"
In this Clause 24 ( Increased Costs ), " increased costs " 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 having taken an assignment of rights under this Agreement, 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;
(e)
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 attributable to a FATCA Deduction required to be made by a party to this Agreement or an item covered by the indemnity for tax in Clause 21.1 ( Indemnities regarding borrowing and repayment of Loan ) or by Clause 22 ( No Set-Off or Tax Deduction ) 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 the exclusion in this paragraph shall not include Basel III irrespective of whether this is implemented or applied pursuant to Basel II.
For the purposes of this Clause 24.2 ( Meaning of "increased costs" ) 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 ( Increased costs ).
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 ( Payment of increased costs ), the Borrower may give the Agent not less than 14 days' notice of its 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 ( Notice of prepayment ) 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 ( Repayment and Prepayment ) 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; 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; and
(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 ( Application of credit balances ); 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 ( Set‑Off ), 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 ( Set‑Off ) 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
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 Clause 26.4 ( Effective Date of Transfer Certificate ), a Lender (the " Transferor Lender ") may at any time, without needing the consent of the Borrower or any Security Party, cause:
(a)
its rights in respect of all or part of its Contribution; or
(b)
its obligations in respect of all or part of its Commitment; or
(c)
a combination of (a) and (b),
to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution or trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in Loans, securities or other financial assets (a " Transferee Lender ") by delivering to the Agent a completed certificate in the form set out in Schedule 5 ( Transfer Certificate ) with any modifications approved or required by the Agent (a " Transfer Certificate ") executed by the Transferor Lender and the Transferee Lender.
However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust 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 the 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 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 signed by the Agent under Clause 26.3 ( Transfer Certificate, delivery and notification ) on or before that date.
26.5
No transfer without Transfer Certificate
Except as provided in Clause 26.17 ( Security over Lenders' rights ), 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 or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
26.6
Lender re-organisation; waiver of Transfer Certificate
However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in a 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 ( Market disruption ) and Clause 20 ( Fees and Expenses ), 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 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 ( Effective Date of Transfer Certificate )) 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 recover a registration fee of $5,000 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.
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 ( Interest ) 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 ( Transfers and Changes in Lending Offices ), 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 Clause 27.2 ( Variations, waivers etc. requiring agreement of all Lenders ), 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 and Swap Banks
However, as regards the following, Clause 27.1 ( Variations, waivers etc. by Majority Lenders ) 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 reduction in the Margin;
(b)
a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement;
(c)
an increase in any Lender's Commitment;
(d)
a change to the definition of " Majority Lenders ";
(e)
a change to Clause 3 ( Position of the Lenders and Swap Banks ) or this Clause 27 ( Variations and Waivers );
(f)
any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and
(g)
any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.
27.3
Exclusion of other or implied variations
Except for a document which satisfies the requirements of Clauses 27.1 ( Variations, waivers etc. by Majority Lenders ) and 27.2 ( Variations, waivers etc. requiring agreement of all Lenders ), no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
(a)
a provision of this Agreement or another Finance Document; or
(b)
an Event of Default; or
(c)
a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or
(d)
any right or remedy conferred by any Finance Document or by the general law,
and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.
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 by letter or fax shall be sent:
(a)
to the Borrower:        Scorpio Tankers Inc.
Le Millenium, 9 Boulevard Charles III,
98000 Monaco

Attn: Mr Luca Forgione - Legal Department

Fax No:     + 3 77 97 77 83 46

Email@ legal@scorpiogroup.net

(b)
to a Lender:
At the address below its name in Schedule 1 ( Lenders and Commitments ) or a Swap Bank in Schedule 2 ( Swap Banks ) or (as the case may require) in the relevant Transfer Certificate;
(c)
to the Agent:
The Bank of Nova Scotia
201 Bishopsgate
6th Floor
London

21    


England
EC2M 3NS
For credit matters:
Attention:    David Sparkes/Matt Tuskin/Julien Poisson
Fax no:    +44 207 638 8488
Email:    david.sparkes@scotiabank.com
matt.tuskin@scotiabank.com
julien.poisson@scotiabank.com
For administration matters:
Attention:    Tony Sposato/Savi Rampat
Fax no:        +44 207 826 5666
Email:        GWSLONDON_LOANOPS@scotiabank.com
(d)
to the Security Trustee:
Scotiabank Europe plc
201 Bishopsgate
6th Floor
London
England
EC2M 3NS
Attention:    David Sparkes/Matt Tuskin/Julien Poisson
Fax no:    +44 207 638 8488
Email:    david.sparkes@scotiabank.com
matt.tuskin@scotiabank.com

julien.poisson@scotiabank.com
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 ( Service outside business hours ) and 28.5 ( Illegible notices ):
(a)
a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and
(b)
a notice which is sent by fax 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 ( Effective date of notices ) a notice would be deemed to be served:
(a)
on a day which is not a business day in the place of receipt; or

22    


(b)
on such a business day, but after 5 p.m. local time,
the notice shall (subject to Clause 28.5 ( Illegible notices )) 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 ( Effective date of notices ) and 28.4 ( Service outside business hours ) 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 28.1 ( General ), " notice " includes any demand, consent, authorisation, approval, instruction, waiver or other communication.
29
SUPPLEMENTAL
29.1
Rights cumulative, non-exclusive
The rights and remedies which the Finance Documents give to each Creditor Party are:
(a)
cumulative;
(b)
may be exercised as often as appears expedient; and
(c)
shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.
29.2
Severability of provisions
If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.
29.3
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.
29.5
Contractual recognition of bail-in
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)    a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
29.6
Parallel liability
In this Clause 29.6 ( Parallel liability ):
" Corresponding Liabilities " means the Secured Liabilities of the Borrower under or in connection with this Agreement, the other Finance Documents and the Master Agreement, but excluding its Parallel Liability.
" Parallel Liability " means the Borrower’s undertaking pursuant to this Clause 29.6 ( Parallel liability ).
(a)
The Borrower irrevocably and unconditionally undertakes to pay to the Security Trustee an amount equal to the aggregate amount of its Corresponding Liabilities (as these may exist from time to time).
(b)
The Parties agree that:
(i)
the Borrower’s Parallel Liability is due and payable at the same time as, for the same amount of and in the same currency as its Corresponding Liabilities;
(ii)
the Borrower’s Parallel Liability is decreased to the extent that its Corresponding Liabilities have been irrevocably paid or discharged and its Corresponding Liabilities are decreased to the extent that its Parallel Liability has been irrevocably paid or discharged;
(iii)
the Borrower’s Parallel Liability is independent and separate from, and without prejudice to, its Corresponding Liabilities, and constitutes a single obligation of the Borrower to the Security Trustee (even though the Borrower may owe more than one Corresponding Liability to the Security Parties under the Finance Documents) and an independent and separate claim of the Security Agent to receive payment of that Parallel Liability (in its capacity as the independent and separate creditor of that Parallel Liability and not as a co-creditor in respect of the Corresponding Liabilities); and
(iv)
for purposes of this Clause 29.6 ( Parallel liability ), the Security Trustee acts in its own name and not as agent, representative or trustee of the Finance Parties and accordingly holds neither its claim resulting from the Parallel Liability nor any Security Interest securing the Parallel Liability on trust.
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 30.2 ( Exclusive English jurisdiction ), the courts of England shall have exclusive jurisdiction to settle any Dispute.
30.3
Choice of forum for the exclusive benefit of Creditor Parties
Clause 30.2 ( Exclusive English jurisdiction ) is for the exclusive benefit of the Creditor Parties, each of 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.
30.4
Process agent
The Borrower irrevocably appoints Scorpio UK Limited at its business address, presently at 10 Lower Grosvenor Place, London, SW1W 0EN (for the attention of the General Counsel), 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 provided that any communication is expressly marked on the outside as "for the immediate attention of the General Counsel".
30.5
Creditor Party rights unaffected
Nothing in this Clause 30 ( Law and Jurisdiction ) 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 ( Law and Jurisdiction ), " 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.

SCHEDULE 1

LENDERS AND COMMITMENTS

Lender
Lending Office
Commitment (US Dollars)
Scotiabank Europe plc
201 Bishopsgate
6th Floor
London
England
EC2M 3NS
36,000,000
 
Total:
36,000,000



SCHEDULE 2

SWAP BANKS

Swap Bank
Booking Office
The Bank of Nova Scotia
201 Bishopsgate
6th Floor
London
England
EC2M 3NS

Attention: David Sparkes / Priya Rai
Tel. no: +44 207 826 5635 /  
+44 207 826 5991
Fax no: +44 207 638 8488  
Email: david.sparkes@scotiabank.com  
             priya.rai@scotiabank.com
With copy to:
Attention: Matt Tuskin  
mail: matt.tuskin@scotiabank.com


SCHEDULE 3

DRAWDOWN NOTICE
To:    The Bank of Nova Scotia
201 Bishopsgate
6th Floor
London
England
EC2M 3NS
as Agent
Date: [ l ]
DRAWDOWN NOTICE
1
We refer to the loan agreement (the " Loan Agreement ") dated [ l ] 2016 and made between ourselves, as Borrower, the Lenders referred to therein, and yourselves as Agent and as Security Trustee in connection with a facility of up to US$36,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
2
We request to borrow as follows:‑
(a)
Amount: US$[ l ];
(b)
Drawdown Date: [ l ];
(c)
Duration of the first Interest Period shall be [ l ] months; and
(d)
Payment instruction: account in our name and numbered [ l ] with [ l ] of [ l ].
3
We represent and warrant that:
(a)
the representations and warranties in clause 10 ( Representations and warranties ) 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; and
(b)
no 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.
5
[We authorise you to deduct the arrangement fee referred to in Clause 20 ( Fees and Expenses ) from the amount of the Loan.]
[Name of Signatory]

____________________
Officer
for and on behalf of
STI ROSE SHIPPING COMPANY LIMITED

SCHEDULE 4

CONDITION PRECEDENT DOCUMENTS
PART A
The following are the documents referred to in paragraph (a) of Clause 9.1 ( Documents, fees and no default ).
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 certificate of incorporation and constitutional documents of the Borrower and each Security Party.
3
Copies of resolutions of directors of the Borrower and each Security Party and of the shareholders of the Borrower and each Security Party other than the Guarantor 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 and ratifying the execution of the Charter, the Sub-Charter and, if applicable, the Sub-Charter Guarantee.
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
Evidence that the Earnings Account has been opened and is operational.
7
Valuations addressed to the Agent and the Lenders, stated to be for the purposes of this Agreement and dated not earlier than 30 days before the date of this Agreement, from Approved Valuers.
8
Copies of the Charter, the Sub-Charter and, if a nomination has been made under the Sub-Charter, the Sub-Charter Guarantee.
9
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Republic of the Marshall Islands, the Netherlands and such other relevant jurisdictions as the Agent may require.
10
The Agent and Lenders have been provided with all information and documentation they have requested in order to carry out and be reasonably satisfied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated by this Agreement and to satisfy all internal compliance policies of the Agent and the Lenders in relation to "know you customer" requirements.
11
A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances for the Ships as the Agent may require.
12
Documentary evidence that the agent for service of process named in Clause 30 ( Law and Jurisdiction ) has accepted its appointment.
13
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.

PART B
The following are the documents referred to in paragraph (a) of Clause 9.1 ( Documents, fees and no default ).
1
A duly executed original of the Mortgage, the General Assignment and the Tripartite Assignment (and of each document to be delivered by each of them).
2
Evidence that all outstanding indebtedness under the Existing Loan Agreement relating to the Ship has been repaid and that all Security Interests granted by the Borrower and in respect of the Borrower's share capital in connection with the Existing Loan Agreement have been released.
3
Documentary evidence that:
(a)
the Ship is definitively and permanently registered in the name of the Borrower under the Approved 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 its class with the relevant Approved Classification Society free of all overdue recommendations and qualifications of such Classification Society;
(d)
the Mortgage has been duly recorded against the Ship as a valid first preferred ship mortgage in accordance with the laws of the Approved Flag; 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.
4
Documents establishing that the Ship will, as from the Drawdown Date, be managed by the Approved Manager and, if applicable, the Approved Sub-Manager on terms acceptable to the Lenders, together with:
(a)
Approved Ship Manager's Undertakings executed by each Approved Manager and any applicable Approved Sub-Manager; and
(b)
copies of the Approved Manager's (or, if applicable, the Approved Sub-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) and ISSC.
5
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Republic of the Marshall Islands, Singapore and such other relevant jurisdictions as the Agent may require.
6
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 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.

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:
[Name of Agent] for itself and for and on behalf of the Borrower, [each Security Party], the Security Trustee, each Lender and each Swap Bank, as defined in the Loan Agreement referred to below.
Date: [ l ]
1
This Certificate relates to a loan agreement ("the " Agreement ") dated [ l ] and made between (1) STI Rose Shipping Company Limited (the " Borrower "), (2) the banks and financial institutions named therein as Lenders, (3) the banks and financial institutions named therein as Swap Banks, (4) [ l ] as Agent and (5) [ l ] as Security Trustee for a loan facility of up to $36,000,000.
2
In this Certificate, terms defined in the Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate and:
" Relevant Parties " means the Agent, the Borrower, each Security Party, the Security Trustee, each Lender and each Swap Bank.
" Transferor " means [full name] of [lending office].
" 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 Agreement and every other Finance Document in relation to [ l ] per cent. of its Contribution, which percentage represents $[ l ].
5
[By virtue of this Certificate and Clause 26 ( Transfers and Changes in Lending Offices ) of the 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 ( Transfers and Changes in Lending Offices ) of the Agreement provides will become binding on it upon this Certificate taking effect.
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 ( Transfers and Changes in Lending Offices ) of the 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 required 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 Agreement and each of the other Finance Documents;
(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 any Security Party under any of 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)
that this Certificate is valid and binding as regards the Transferee;
(e)
confirms the accuracy of the administrative details set out below regarding the Transferee.
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 9 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

[Name of Agent]
By:
Date:

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.

SCHEDULE 6

DESIGNATION NOTICE
[Agent]
[                                   ]
[                                   ]
[                                   ]
[ l ]
Dear Sirs
Loan Agreement dated [ l ] made between (i) ourselves as Borrower, (ii) the Lenders, (iii) the Swap Banks, (iv) and (v) yourselves as Agent and Security Trustee (the "Loan Agreement").
We refer to:
1
the Loan Agreement;
2
the Master Agreement dated [ 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,

.................................................
STI ROSE SHIPPING COMPANY LIMITED



SCHEDULE 7

FORM OF COMPLIANCE CERTIFICATE
To:    The Bank of Nova Scotia
201 Bishopsgate
6th Floor
London
England
EC2M 3NS
From:     Scorpio Tankers Inc.
Date: [ l ]
OFFICER'S CERTIFICATE
This Certificate is rendered pursuant to clause 11.6(e) of the loan agreement dated [ l ] (the " Loan Agreement ") and entered into between (i) STI Rose Shipping Company Limited as borrower (the " Borrower "), (ii) the banks and financial institutions named therein as Lenders, (iii) the banks and financial institutions named therein as Swap Banks, (iv) The Bank of Nova Scotia as Agent and (v) Scotiabank Europe plc as Security Trustee for a facility of US$36,000,000 and clause 12.3(d) of the guarantee dated [ l ] 2016 (the " Guarantee ") and entered into between Scorpio Tankers Inc. as Guarantor and Scotiabank Europe plc as Security Trustee
Words and expressions defined in the Loan Agreement or the Guarantee shall have the same meanings when used herein.
I, the Chief Financial Officer of the Guarantor, hereby certify that:
1
Attached to this Certificate [are][is] the latest [audited consolidated accounts of the Guarantor for the financial year ending on [ l ]][unaudited quarterly consolidated accounts of the Guarantor in relation to the quarter ending on [ l ]] (the " Accounts ").

23    


2
Set out below are the respective amounts, in US Dollars, of the Minimum Tangible Net Worth, Net Income, Equity Proceeds, Minimum Liquidity, Net Debt, Consolidated Total Capitalisation, EBITDA and Consolidated Net Interest of the Guarantor as at [ l ]:
US Dollars
Consolidated Tangible Net Worth    [ l ]
Net Income    [ l ]
Equity Proceeds    [ l ]
Cash and Cash Equivalents    [ l ]
Net Debt    [ l ]
Consolidated Total Capitalisation    [ l ]
Consolidated EBITDA    [ l ]
Consolidated Net Interest    [ l ]
3
As at [ l ], the Guarantor and/or its subsidiaries own [ l ] Fleet Vessels.
4
Accordingly, as at the date of this Certificate the financial covenants set out in clause 11 ( financial covenants ) of the Guarantee [are] [are not] complied with, in that as at [ l ]:
4.1
Minimum Consolidated Tangible Net Worth exceeds $1,000,000,000 plus 25 per cent. of Net Income and 50 per cent. of Equity Proceeds by $[ l ];
4.2
Minimum Liquidity exceeds the greater of (i) $25,000,000 and (ii) $500,000 multiplied by the numbers of vessels referred to in paragraph 3 by $[ l ];
4.3
the ratio of Net Debt to Consolidated Total Capitalisation is [ l ]; and
4.4
the ratio of Consolidated EBITDA to Consolidated Net Interest is [ l ].
[ or, as the case may be, specify in what respect any of the financial covenants are not complied with. ]
5    As at [ l ] no Event of Default has occurred and is continuing.
[ or, specify/identify any Event of Default ]
[The Borrower is in compliance with clause 15.1 ( Minimum required security cover ) of the Loan Agreement.
[ If not, specify this and what is proposed as regards clause 15.2 ]
The Fair Market Value of the Ship is as follows as at [date]:

24    


Name of Ship
Name of first shipbroker providing valuation
Name of second shipbroker providing valuation
Average market value
[ l ]
[ l ]
[ l ]
[ l ]]
Note:    Valuations to be provided with annual audited accounts and the quarterly unaudited accounts in relation to the first six months of each financial year of the Guarantor.

…………………………………………
Chief Financial Officer
SCORPIO TANKERS INC.

Note: Supporting Schedules to be attached.

25    



EXECUTION PAGE

THE BORROWER
 
 
 
SIGNED  by
 
Brian M. Lee
/s/Brian M. Lee
for and on behalf of
 
STI ROSE SHIPPING
 
COMPANY LIMITED
 
in the presence of:
 
/s/ Vikram Hiranandani
 
 
 
 
 
THE LENDERS
 
 
 
SIGNED  by
/s/ Philippos Arcoumanis
 
Name: Philippos Arcoumanis
for and on behalf of
Title: Attorney-in-Fact
SCOTIABANK EUROPE PLC
 
in the presence of:
/s/ Tanpreet Rooprai
 
Name: Tanpreet Rooprai
 
Title: Trainee Solicitor
 
15 Appold Street
 
London EC2A 2HB
 
 
THE SWAP BANKS
 
 
 
SIGNED  by
/s/ Philippos Arcoumanis
 
Name: Philippos Arcoumanis
for and on behalf of
Title: Attorney-in-Fact
THE BANK OF NOVA SCOTIA
 
in the presence of:
/s/ Tanpreet Rooprai
 
Name: Tanpreet Rooprai
 
Title: Trainee Solicitor
 
15 Appold Street
 
London EC2A 2HB
 
 
THE AGENT
 
 
 
SIGNED  by
/s/ Philippos Arcoumanis
 
Name: Philippos Arcoumanis
for and on behalf of
Title: Attorney-in-Fact
THE BANK OF NOVA SCOTIA
 
in the presence of:
/s/ Tanpreet Rooprai

26    


 
Name: Tanpreet Rooprai
 
Title: Trainee Solicitor
 
15 Appold Street
 
London EC2A 2HB
 
 
THE SECURITY TRUSTEE
 
 
 
SIGNED  by
/s/ Philippos Arcoumanis
 
Name: Philippos Arcoumanis
for and on behalf of
Title: Attorney-in-Fact
SCOTIABANK EUROPE PLC
 
in the presence of:
/s/ Tanpreet Rooprai
 
Name: Tanpreet Rooprai
 
Title: Trainee Solicitor
 
15 Appold Street
 
London EC2A 2HB


27    
Execution Version

Exhibit 4.26
Date 30 June 2016



STI FONTVIEILLE SHIPPING COMPANY LIMITED
STI VILLE SHIPPING COMPANY LIMITED
as joint and several Borrowers
- and -
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
- and -
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 2
as Swap Banks
- and -
NIBC BANK N.V.
as Mandated Lead Arranger, Agent
and as Security Trustee



_________________________________________
LOAN AGREEMENT
_________________________________________
relating to
a term loan facility of up to $44,000,000 to refinance
the acquisition of m.v.s "STI FONTVIEILLE" and "STI VILLE"

WATSONFARLEYWILLIAMS.JPG





    



Index
Clause    
1
INTERPRETATION
2
FACILITY
3
POSITION OF THE LENDERS AND SWAP BANKS
4
DRAWDOWN
5
INTEREST
6
INTEREST PERIODS
7
DEFAULT INTEREST
8
REPAYMENT AND PREPAYMENT
9
CONDITIONS PRECEDENT
10
REPRESENTATIONS AND WARRANTIES
11
GENERAL UNDERTAKINGS
12
CORPORATE AND FINANCIAL UNDERTAKINGS
13
INSURANCE
14
SHIP COVENANTS
15
SECURITY COVER
16
PAYMENTS AND CALCULATIONS
17
APPLICATION OF RECEIPTS
18
APPLICATION OF EARNINGS
19
EVENTS OF DEFAULT
20
FEES AND EXPENSES
21
INDEMNITIES
22
NO SET-OFF OR TAX DEDUCTION
23
ILLEGALITY, ETC
24
INCREASED COSTS
25
SET0OFF
26
TRANSFERS AND CHANGES IN LENDING OFFICES
27
VARIATIONS AND WAIVERS
28
NOTICES
29
JOINT AND SEVERAL LIABILITY AND HEDge guarantee
30
SUPPLEMENTAL
31
LAW AND JURISDICTION
Schedule 1 LENDERS AND COMMITMENTS
Schedule 2 SWAP BANKS
Schedule 3 DRAWDOWN NOTICE
Schedule 4 CONDITION PRECEDENT DOCUMENTS
Schedule 5 TRANSFER CERTIFICATE
Schedule 6 DESIGNATION NOTICE
Schedule 7 LIST OF APPROVED BROKERS
Schedule 8 MANDATORY COST
EXECUTION PAGES



    


THIS AGREEMENT is made on 30 June 2016
BETWEEN
(1)
STI FONTVIEILLE SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (" Borrower A ");
(2)
STI VILLE SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (" Borrower B ");
(3)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders ;
(4)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2, as Swap Banks ;
(5)
NIBC BANK N.V. , as Mandated Lead Arranger ;
(6)
NIBC BANK N.V., as Agent ; and
(7)
NIBC BANK N.V., as Security Trustee .
BACKGROUND
(A)
The Lenders have agreed to make available to the Borrowers a facility of up to $44,000,000 in two tranches each of up to $22,000,000:
(i)
for the purpose of Borrower A refinancing up to 67.5 per cent. of the Fair Market Value of Ship A; and
(ii)
for the purpose of Borrower B refinancing up to 67.5 per cent. of the Fair Market Value of Ship B,
and for general corporate purposes and to provide working capital for the STI Group generally.
(B)
The Swap Banks may enter into interest rate swap transactions with the Borrowers from time to time to hedge the Borrowers' exposure under this Agreement to interest rate fluctuations.
(C)
The Lenders and the Swap Banks have agreed to share pari passu 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, in respect of each Earnings Account, a deed creating security in respect of that Earnings Account in the Agreed Form;
" Account Bank " means, in relation to each Earnings Account, ABN Amro Bank N.V., Rotterdam or a recognised international bank or financial institution proposed by the Borrowers and which the Agent may, with the authorisation of the Majority Lenders, approve from time to time as the account bank with which such Earnings Account shall be held;
" Accounting Information " means the annual audited consolidated accounts of the Guarantor or the quarterly unaudited consolidated accounts of the Guarantor, in each case, delivered to the Agent in accordance with Clause 11.6;
" Accounting Period " means each consecutive quarterly period during the Security Period ending 31 March, 30 June, 30 September and 31 December of each financial year of the Guarantor.
" Affected Lender " has the meaning given in Clause 5.7;
" Affiliate " means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for the purposes of this definition, the term “ control ” (including the terms “ controlling ”, “ controlled by ” and “ under common control with ”) of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise;
" Agency and Trust Deed " means the agency and trust deed dated the same date as this Agreement and made between the same parties;
" Agent " means NIBC Bank N.V., acting in its capacity as agent for the Lenders and the Swap Banks through its office at 4 Carnegieplein, 2517 KJ, The Hague, The Netherlands and includes its successor appointed under clause 5 of the Agency and Trust Deed and any transferee or assign;
" 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), or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document;
" Approved Broker " means any of the companies listed in Schedule 7 or such other company proposed by the Borrowers which the Agent may (acting on the instructions of the Majority Lenders and following consultation with the Borrowers) approve in writing from time to time to act as an " Approved Broker " under this Agreement;
" Approved Classification Society " means, in relation to a Ship, Lloyds Register, DNV-GL, ABS, Bureau Veritas or any other generally recognised first class classification society that is a member of IACS that the Agent may (acting on the authorisation of the Lenders), approve in writing from time to time as the " Approved Classification Society " of that Ship for the purposes of this Agreement;
" Approved Commercial Ship Manager " means, in relation to a Ship:

2    




(a)
Scorpio Commercial Management s.a.m. of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco or any of its Affiliates or any Affiliate of the Guarantor; or
(b)
any other company proposed by the Borrowers and/or the Guarantor which the Agent may (acting on the instructions of all the Lenders such instructions not to be unreasonably withheld or delayed), approve from time to time as the commercial manager of that Ship;
" Approved Flag " means, in relation to a Ship, the Republic of the Marshall Islands, Republic of Liberia, Singapore or such other flag as the Agent may (acting on the instructions of the Lenders) approve from time to time in writing as the flag on which such Ship shall be registered;
“ Approved Pooling Arrangement ” means, in relation to a Ship, the Scorpio MR Pool and any other pooling arrangement:
(a)
proposed by the Borrower of that Ship;
(b)
run by any Affiliate of the Approved Commercial Ship Manager of that Ship; and
(c)
approved in writing by the Agent (acting on the instructions of the Majority Lenders) prior to that Ship’s entry into pooling such arrangement;
" Approved Ship Manager " means, in respect of each Ship, the approved Commercial Ship Manager and the Approved Technical Ship Manager.
" Approved Ship Manager's Undertaking " means, in relation to a Ship, the letter executed and delivered by an Approved Ship Manager and an Approved Sub- Manager, in the Agreed Form;
“ Approved Sub-Manager ” means any company providing technical management services in respect of ships of the same type as the Ships and falling within the definition of "Approved Ship Manager".
" Approved Technical Ship Manager " means, in respect of each Ship:
(a)
as at the date of this Agreement, Scorpio Ship Management s.a.m. of 9, Rue du Gabian, MC 98000, the Principality of Monaco or any of its Affiliates or any Affiliate of the Guarantor;
(b)
any of Anglo-Eastern Ship Management (Singapore) Pte. Ltd. of 200, Cantonment Road, #16-02, Southpoint, Singapore, 089763, Hellespont Ship Management GmbH & Co. KG of Beim Strohhause 28, 20097 Hamburg, Germany, Fleet Management Ltd of 11/F Dah Sing Financial Centre, 108 Gloucester Road, Wanchai, Hong Kong, Univan Ship Management Limited of 35th Floor, Citicorp Centre 18, Whitfield Road, North Point, Hong Kong, Synergy Marine Pte. Ltd. of 1 Kim Seng Promenade, #10-11/12 Great World City West Tower, Singapore 237994, C.P. Offen Tankschiffreedrel (GmbH & Co.) KG of Blichenbruecke 10, 20354 Hamburg, Zenith Gemi Islemeciligi Anonim Sirketi of FSM Mahallesi, Poligon Caddesi, Buyaka 2/B Sitesi NO:8, c-Blok Kat, Umraniye, 34771 Istanbul, Turkey, d’Amico International Shipping of 20 Boulevard de Suisse, Montecarlo, MC 98000, Monaco or V. Ships Ship Management of 1 st Floor, 63 Queen Victoria Street, EC4N 4UA, London, United Kingdom; or

3    




(c)
any other company proposed by the Borrowers and/or the Guarantor which the Agent may (acting on the instructions of all the Lenders such instructions not to be unreasonably withheld or delayed), approve from time to time as the technical manager of that Ship;
" Authorisation " means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, legalisation or registration;
" Availability Period " means, in relation to each Tranche, the period commencing on the date of this Agreement and ending on:
(a)
30 days from the date of this Agreement (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrowers); or
(b)
if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;
" Bail-In Action " means the exercise of any Write-down and Conversion Powers;
" Bail-In Legislation " means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms , the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time ; and
(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation;
" Business Day " means a day on which banks are open in London and Amsterdam 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 the occurrence of any act, event or circumstances which results in:
(a)
100 per cent. of the Equity Interests of either Borrower ceasing to be ultimately owned and/or controlled by the Guarantor;
(b)
a person or group other than any holders of the Guarantor's Equity Interests as at the date of this Agreement, becoming the ultimate beneficial owner of the Guarantor including, without limitation, any change from the date of this Agreement in the ultimate beneficial owner of more than 35 per cent. of the total voting power of the voting stock of the Guarantor (calculated on a fully diluted basis); or
(c)
individuals who constitute the board of directors of the Guarantor at the beginning of any period of two consecutive calendar years and yet cease for any reason to constitute at least 50 per cent. of the total members of the Guarantor's board of directors at any time during such two year period;
" Charter " means, in relation to a Ship, any charterparty in respect of that Ship having a duration (including, without limitation, by virtue of any optional extensions) of more than 12 months entered or to be entered into by the Borrower which is the owner of that Ship with a charterer and, in each case other than a Charter where the charterer is a member and/or Affiliate of the

4    




STI Group or entered into pursuant to an Approved Pooling Arrangement, on terms and conditions acceptable to the Agent (acting on the instructions of all the Majority Lenders). The term of any Charter where the charterer is a member of and/or an Affiliate of the STI Group (except for any Charters entered into in connection with an Approved Pooling Arrangement) shall not extend (including, without limitation, by virtue of any optional extensions) beyond the Maturity Date without the Agent’s consent (acting on the instructions of the Majority Lenders, acting reasonably);
" Charterparty Assignment " means, in respect of a Charter (other than a Charter where the charterer is a member and/or Affiliate of the STI Group or entered into pursuant to an Approved Pooling Arrangement) and any guarantee of that Charter (to the extent that such guarantee is available), an assignment of the rights and interests of the Borrower which is party to that Charter in respect of that Charter and any related guarantee (to the extent that such guarantee is available) to be executed by that Borrower in favour of the Security Trustee in the Agreed Form;
" CISADA " means the United States Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 as it applies to non-US persons;
" Code " means the US Internal Revenue Code of 1986;
" Commitment " means, in relation to a Lender, the amount set opposite its name in Part 1 of 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);
" Compliance Certificate " means a certificate executed by the chief financial officer of the Guarantor in the form set out in schedule 1 of the Guarantee;
" Confidential Information " means all information relating to either Borrower, the Guarantor, any other Security Party, the Finance Documents or any Master Agreement of which a Creditor Party becomes aware in its capacity as, or for the purpose of becoming, a Creditor Party or which is received by a Creditor Party in relation to, or for the purpose of becoming a Creditor Party under, the Finance Documents or any Master Agreement from either:
(a)
either Borrower, the Guarantor or any other Security Party or any of their advisers; or
(b)
another Creditor Party, if the information was obtained by that Creditor Party directly or indirectly from the Guarantor, either Borrower or any other Security Party or any of their advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Creditor Party of Clause 26.13; or
(ii)
is identified in writing at the time of delivery as non-confidential by the Guarantor, either Borrower or any other Security Party or any of their advisers; or
(iii)
is known by that Creditor Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that

5    




Creditor Party after that date, from a source which is, as far as that Creditor Party is aware, unconnected with the Guarantor, either Borrower or any other Security Party and which, in either case, as far as that Creditor Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality;
" Confidentiality Undertaking " means a confidentiality undertaking in substantially the appropriate form recommended by the Loan Market Association from time to time or in any other form agreed between the Guarantor, the Borrowers and the Agent;
" 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;
" Creditor Party " means the Agent, the Security Trustee, the Mandated Lead Arranger, any Lender or any Swap Bank, whether as at the date of this Agreement or at any later time;
" Designated Transaction " means a Transaction which fulfils the following requirements:
(a)
it is entered into by a Borrower pursuant to a Master Agreement with a Swap Bank;
(b)
its purpose is the hedging of the Borrowers’ exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Maturity Date; and
(c)
it is designated by a Borrower, by delivery by a 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;
" Disruption Event " means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a party prevent that, or any other party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the party whose operations are disrupted;
" Dollars " and " $ " means the lawful currency for the time being of the United States of America;

6    




" Drawdown Date " means, in relation to a Tranche, the date requested by the Borrowers for such Tranche to be made, or (as the context requires) the date on which such Tranche 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);
" Earnings " means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):
(a)
except to the extent that they fall within paragraph (b):
(i)
all freight, hire and passage moneys;
(ii)
compensation payable to the relevant Borrower or the Security Trustee in the event of requisition of that 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 that Ship; and
(vi)
all moneys which are at any time payable under Insurances in respect of loss of hire; and
(b)
if and whenever that 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 that Ship;
" Earnings Account " means, in relation to a Ship, an account in the name of the Borrower owning that Ship with the relevant Account Bank designated as the Earnings Account in respect of such Ship, or any other account (with the relevant Account Bank, the Agent or with a bank or financial institution acceptable to the Majority Lenders) which is designated by the Agent as the Earnings Account for the purposes of this Agreement;
" EEA Member Country " means any member state of the European Union, Iceland, Liechtenstein and Norway;
" EU Bail-In Legislation Schedule " means the document described as such and published by the Loan Market Association (or any successor person) from time to time;
" Email " has the meaning given in Clause 28.1;
" 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

7    




(b)
any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,
and " claim " means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;
" Environmental Incident " means:
(a)
any release of Environmentally Sensitive Material from a Ship; or
(b)
any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which such Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or such Ship and/or the Borrower owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)
any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which such Ship is actually or potentially liable to be arrested and/or where the Borrower owning such Ship and/or any operator or manager of such 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;
" Equity Interests " of any person means:
(a)
any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)
all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person;
" Event of Default " means any of the events or circumstances described in 19.1;
" Existing Facility " means the existing $525,000,000 facility dated 2 July 2013 entered into between the Guarantor as borrower and NIBC Bank N.V. as, inter alia, lead arranger, lender and swap bank;
" Fair Market Value " means, in relation to a Ship, a valuation determined in accordance with Clause 15.3;
" FATCA " means:

8    




(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 Exempt Party " means a party to this Agreement that is entitled to receive payments free from any FATCA Deduction;
" FATCA Protected Lender " means any Lender irrevocably designated as a "FATCA Protected Lender" by the Borrowers 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 this Agreement to that Lender (or to the Agent for the account of that Lender);
“ Fee Letter ” means a fee letter dated on or about the date of this Agreement between the Agent and the Borrowers setting out any of the fees referred to in clause 20.1.
" Finance Documents " means:
(a)
this Agreement;
(b)
the Fee Letter;
(c)
the Agency and Trust Deed;
(d)
the Guarantee;
(e)
the Mortgages;
(f)
the General Assignments

9    




(g)
the Account Security Deeds;
(h)
any Charterparty Assignment;
(i)
any Intercompany Loan Assignment;
(j)
the Shares Pledge;
(k)
any Master Agreement Assignment; and
(l)
any other document (whether creating a Security Interest or not) which is executed at any time by the Borrowers, the Guarantor, any other Security Party 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 (provided always that the Approved Ship Manager Undertakings shall be excluded from this item (l));
" Financial Indebtedness " means, with respect to any person (the " Debtor ") at any date of determination (without duplication):
(a)
all obligations of the Debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)
all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)
all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto) which in accordance with IFRS would be shown on the liability side of a balance sheet;
(d)
all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)
all capitalised lease obligations of the Debtor as lessee; and
(f)
all Financial Indebtedness incurred under any guarantee, indemnity or similar obligation to the extent such Financial Indebtedness is guaranteed, secured, expressed to be indemnified by, or otherwise assured by the Debtor.
The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to the contingent obligations set out in paragraph (f) and (g) above, the maximum liability which would or might arise upon the occurrence of the contingency giving rise to the obligation, as determined in conformity with IFRS, provided that:
(i)
the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount shall be deemed to be the face amount of such Financial Indebtedness less the remaining unamortised portion of such original issue discount of such Financial Indebtedness at such time; and

10    




(ii)
the calculation of Financial Indebtedness shall not take into account any liability of the Debtor for taxes.
" Fiscal Year " means, in relation to any person, each period of 1 year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared;
" IFRS " means international accounting standards within the meaning of the IAS Regulations 1606/2002 to the extent applicable to the relevant financial statements;
" General Assignment " means, in relation to a Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation for that Ship in the Agreed Form;
" Green Passport " means, in relation to a Ship, a green passport statement of compliance issued by that Ship's classification society which includes a list of any and all materials known to be potentially hazardous utilised in the construction of that Ship;
" Guarantee " means a guarantee to be executed by the Guarantor in favour of the Security Trustee in the Agreed Form;
" Guarantor " means Scorpio Tankers Inc., a corporation incorporated in the Republic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands;
" Holding Company " means, in relation to a person, any other person in respect of which it is a subsidiary.
" IACS " means the International Association of Classification Societies;
" IFRS " means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
" Insurances " means, in relation to a Ship:
(a)
all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, its Earnings or otherwise in relation to that Ship whether before or on 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;
" Intercompany Loan " means any transaction constituting Financial Indebtedness entered into by the Guarantor as lender (" Party A ") with the Borrowers or either of them (" Party B ") as borrowers whereby Party A is entitled to receive any payment in cash or in kind from Party B;
" Intercompany Loan Assignment " means an assignment of each Intercompany Loan made or to be made by the person providing such Intercompany Loan in favour of the Security Trustee in the Agreed Form;
" Interest Period " means a period determined in accordance with Clause 6;

11    




" 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;
" Latent Event of Default " means an event or circumstance which, with the giving of any notice, the lapse of time, would constitute an Event of Default;
" 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 Part 1 of Schedule 1 (or through another branch notified to the Borrowers under Clause 26.14) or its transferee, successor or assign;
" LIBOR " means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document:
(a)
the applicable Screen Rate; or
(b)
if no Screen Rate is available for that period, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards to 4 decimal places) of the rates, as supplied to the Agent at its request, quoted by each Reference Bank to leading banks in the London Interbank Market;
as of 11 a.m. (London time) on the Quotation Date for that period for the offering of deposits in the relevant currency and for a period comparable to that period and, if any such rate is below zero, LIBOR shall be deemed to be zero;
" Loan " means the principal amount for the time being outstanding under this Agreement;
" Major Casualty " means, in relation to a Ship, any casualty to that 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 a Tranche has been made, Lenders whose Commitments total 66.66 per cent. of the Total Commitments; and
(b)
after a Tranche has been made, Lenders whose Contributions total 66.66 per cent. of the Loan;
" Mandated Lead Arranger " means NIBC Bank N.V., acting in its capacity as Mandated Lead Arranger through its office at 4 Carnegieplein, 2517 KJ, The Hague, The Netherlands and includes any transferee, assign or successor;
" Mandatory Cost " means the percentage rate, which represents the cost to the Lenders, relative to the Loan, of compliance with the requirements of the Bank of England, the Financial Services

12    




Authority or any other regulatory authority, as determined by the Agent in accordance with the formula detailed in Schedule 8;
" Margin " means 2.50 per cent. per annum, and that amount shall be increased by:
(a)
0.25 per cent. per annum in the event the principal amount outstanding and owed to NIBC Bank N.V. as one of the lenders under the Existing Facility exceeds $10,000,000 on 1 January 2017; and
(b)    
(i)
if (a) above applies, a further 0.25 per cent. per annum; and
(ii)
if (a) above does not apply, 0.25 per cent. per annum,
in each case in the event the principal amount outstanding and owed to NIBC Bank N.V. as one of the lenders under the Existing Facility exceeds zero on 1 April 2017;
" Master Agreement " means any master agreement (on the 2002 ISDA (Multicurrency - Crossborder) form) in the Agreed Form entered or to be entered into at the Borrowers' option between a Borrower and a Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement;
" Master Agreement Assignment " means, in relation to each Master Agreement, the assignment of the Master Agreement to be entered into between the Borrower which is a party to such Master Agreement and the Security Trustee in Agreed Form;
" Material Adverse Effect " means a material adverse effect on:
(a)
the business, operations, property, condition (financial or otherwise) or prospects of the Guarantors and the Borrowers taken as a whole; or
(b)
the ability of the Guarantor or either Borrower to perform its payment obligations under any Finance Documents; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.
" Maturity Date " means, in the case of each Tranche, the later of (i) the fifth anniversary of the date of this Agreement and (ii) 15 June 2021;
" Mortgage " means, in relation to a Ship the first priority or, as the case may be, preferred ship mortgage on the Ship under the applicable Approved Flag together with any deed of covenant collateral thereto, (if applicable) 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;
" Payment Currency " has the meaning given in Clause 21.4;
" Permitted Security Interests " means:

13    




(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 a Ship not prohibited by this Agreement or any other Finance Document;
(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 a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower that owns such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(a)(viii);
(f)
any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the Borrower that owns such Ship or the Guarantor, as the case may be, 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 Clause 13 or any other 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, the Principality of Monaco, New York State of the United States of America, The Netherlands and the Republic of the Marshall Islands;
(b)
if not within any of the jurisdictions referred to in (a) above, the country under the laws of which the company is incorporated or formed;
(c)
if not within any of the jurisdictions referred to in (a) above, a country in which the company has the centre of its main interests or in which the company's central management and control is or has recently been exercised;
" Pertinent Matter " means:

14    




(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;
" Prohibited Person " means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed;
" Qualifying Period " shall have the meaning given to that expression in Clause 8.11.
" Quotation Date " means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is 2 Business Days before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days);
" Rating Agency " means S&P, Moody's or, if both of them are not making ratings of securities publically available, an internationally recognised rating agency selected by the Agent which shall be substituted for S&P or Moody's;
" Reference Banks " means, subject to Clause 26.16, ABN Amro Bank N.V. and ING Bank N.V., and any other prime international banks selected by the Agent and notified to the Borrower;
" 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;
" 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 ";
" Resolution Authority " means any body which has authority to exercise any Write-down and Conversion Powers;
" Sanctions " means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a)
imposed by law or regulation of the Council of the European Union or any of its member states, the United Nations or its Security Council or the United Kingdom;
(b)
under CISADA;
(c)
in respect of (i) a "national" of any "designated foreign country", within the meaning of the Foreign Assets Control Regulations or the Cuban Asset Control Regulations of the United States Department of the Treasury, 31 C.F.R., Subtitle B, Chapter V, as amended, or (ii) a "specially designated national" listed by OFAC or any regulations or rulings issued thereunder; or

15    




(d)
otherwise imposed by any law or regulation or Executive Order by which any Creditor Party, the Guarantor, either Borrower or any Security Party is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Creditor Party, the Guarantor, either Borrower or any other Security Party, including without limitation laws or regulations or Executive Orders restricting loans to, investments in, or the export of assets to, foreign countries or entities doing business there;
" Screen Rate " means, in respect of LIBOR for any period, the 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 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 Borrowers and the Lenders;
" Secured Liabilities " means all liabilities which the Borrowers, the Guarantor, the other 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 the Master Agreements or any judgment relating to any Finance Documents or the Master Agreements; 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 Guarantor and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of " Finance Documents " (but for the avoidance of doubt shall not include the Approved Ship Managers or any Approved Sub-Manager);
" Security Period " means the period commencing on the date of this Agreement and ending on the date on which the Agent acting reasonably notifies the Borrowers, the Security Parties and the other Creditor Parties that:
(a)
all amounts which have become due for payment by the Borrowers 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;

16    




(c)
neither either 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 either 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 NIBC Bank N.V., acting in its capacity as Security Trustee for the Lenders and the Swap Banks through its office at 4 Carnegieplein, 2517 KJ, The Hague, The Netherlands and includes any transferee, assign 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 each Borrower in favour of the Security Trustee in the Agreed Form;
" Ship A " means the MR tanker type vessel of 52,000 DWT currently registered in the ownership of Borrower A under an Approved Flag with the name "STI FONTVIEILLE";
" Ship B " means the MR tanker type vessel of 52,000 DWT currently registered in the ownership of Borrower B under an Approved Flag with the name "STI VILLE";
" SMC " means a safety management certificate issued in respect of the Ship in accordance with Rule 13 of the ISM Code;
"STI Group" means the Guarantor and its subsidiaries from time to time;
" Swap Bank " means a bank or financial institution listed in Schedule 2 and acting through its branch indicated in Part 1 of Schedule 1;
" 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 a 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 a Borrower if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between a Borrower and the Swap Counterparty;
" Total Loss " means, in relation to a Ship:
(a)
actual, constructive, compromised, agreed or arranged total loss of that Ship;
(b)
any expropriation, confiscation, requisition or acquisition of that 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

17    




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), unless it is within 6 months redelivered to the full control of the Borrower owning that Ship;
(c)
any arrest, capture, seizure or detention of that Ship (including any theft) unless it is within 6 months redelivered to the full control of the Borrower owning that Ship; and
(d)
any hijacking of that ship unless it is within 6 months redelivered to the full control of the Borrower owning that Ship;
" Total Loss Date " means:
(a)
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
(b)
in the case of a constructive, compromised, agreed or arranged total loss of that 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 with that Ship's insurers in which the insurers agree to treat such Ship as a total loss; and
(c)
in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;
" Tranche " means the principal amount of each borrowing by the Borrowers under this Agreement comprising Tranche A and Tranche B;
" Tranche A " means an amount up to the lower of (i) $22,000,000 and (ii) 67.5 per cent. of the Fair Market Value of Ship A, to be advanced to the Borrowers (or to their order) to refinance the portion of the Existing Facility attributable to Ship A which the Guarantor has prepaid and to provide working capital generally for the STI Group and for general corporate purposes of the STI Group, as that amount may be reduced, cancelled or terminated in accordance with this Agreement;
" Tranche B " means an amount up to the lower of (i) $22,000,000 and (ii) 67.5 per cent. of the Fair Market Value of Ship B, to be advanced to the Borrowers (or to their order) to refinance the portion of the Existing Facility attributable to Ship B, which the Guarantor has prepaid and to provide working capital generally for the STI Group and for general corporate purposes of the STI Group, as that amount may be reduced, cancelled or terminated in accordance with this Agreement;
" 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:

18    




(a)
a person that is a "United States person" within the meaning of Section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended; or
(b)
a person some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
Voting Stock ” of any person as of any date means the Equity Interests of such person that are at the time entitled to vote in the election of the board of directors or similar governing body of such person.
" Write-down and Conversion Powers " means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.
1.2
Construction of certain terms. In this Agreement:
" 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;
" approved " means, for the purposes of Clause 13, approved in writing by the Agent;
" asset " includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
" company " includes any partnership, joint venture and unincorporated association;
" consent includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
" contingent liability " means a liability which is not certain to arise and/or the amount of which remains unascertained;
" document " includes a deed; also a letter or fax;

19    




" excess risks " means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which such 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 of 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 a Ship, all insurances effected, or which the Borrower owning that Ship 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;
" party " means any party to this Agreement;
" person " includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
" policy ", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
" protection and indemnity risks " means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) 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 body, intergovernmental or supranational, 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

20    




" war risks " includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
1.3
Meaning of "month". A period of one or more " months " ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (" the numerically corresponding day "), but:
(a)
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
(b)
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
and " month " and " monthly " shall be construed accordingly.
1.4
Meaning of "subsidiary". A company (S) is a subsidiary of another company (P) if:
(a)
a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
(b)
P has direct or indirect control over a majority of the voting rights 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 or supplemented, 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 any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
2
FACILITY
2.1
Amount of facility. Subject to the other provisions of this Agreement, the Lenders agree to make a loan facility not exceeding $44,000,000 available to the Borrowers in two Tranches.

21    




2.2
Lenders' participations in Tranches. Subject to the other provisions of this Agreement, each Lender shall participate in each Tranche in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments.
2.3
Purpose of each Tranche. The Borrowers undertake with each Creditor Party to use each Tranche only for the purpose stated in the preamble to this Agreement.
3
POSITION OF THE LENDERS AND SWAP BANKS
3.1
Interests several. The rights of the Lenders and of the Swap Banks under this Agreement and under the Master Agreements are several.
3.2
Individual 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 Borrowers to it under this Agreement or under a Master Agreement without joining the Agent, the Security Trustee, any other Lender or any other Swap Bank as additional parties in the proceedings.
3.3
Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2, no Lender and no Swap Bank may commence proceedings against any Borrower or any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.
3.4
Obligations several. The obligations of the Lenders under this Agreement and of the Swap Banks under the Master Agreement to which each is a party are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of a Swap Bank to perform its obligations under the Master Agreement to which it is a party shall not result in:
(a)
the obligations of the other Lenders or Swap Banks being increased; nor
(b)
any Borrower, any Security Party, any other Lender or any other Swap Bank 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 Lender or a Swap Bank have any responsibility for a failure of another Lender or another Swap Bank to perform its obligations under this Agreement or a Master Agreement.
4
DRAWDOWN
4.1
Request for advance of a Tranche. Subject to the following conditions, the Borrowers may request a Tranche 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
Availability. The conditions referred to in Clause 4.1 are that:
(a)
the Drawdown Date for each Tranche has to be a Business Day during the Availability Period applicable to such Tranche; and
(b)
each Tranche shall not exceed the lower of (i) $22,000,000 and (ii) 67.5 per cent. of the Fair Market Value of the Ship which is the subject of such Tranche;
(c)
each Tranche shall be made available in a single amount and any amount undrawn in respect of a Tranche shall be cancelled and may not be borrowed by the Borrowers at a later date;
(d)
the aggregate amount of the Tranches shall not exceed the Total Commitment; and

22    




(e)
the applicable conditions precedent stated in Clause 9 shall have been satisfied or waived as provided therein.
4.3
Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:
(a)
the amount of the Tranche requested and the Drawdown Date;
(b)
the amount of that Lender's participation in that Tranche; and
(c)
the duration of the first Interest Period applicable to that Tranche.
4.4
Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer or a duly authorised attorney-in-fact of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.
4.5
Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent the amount due from that Lender under Clause 2.2.
4.6
Disbursement of a Tranche. Subject to the provisions of this Agreement, the Agent shall on each Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrowers shall be made:
(a)
to the account which the Borrowers specify in the Drawdown Notice; and
(b)
in the like funds as the Agent received the payments from the Lenders.
4.7
Disbursement of a Tranche to third party. The payment of a Tranche by the Agent under Clause 4.6 to a third party shall constitute the making of that Tranche and the Borrowers shall at that time 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 Tranche in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.
5.2
Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Tranche in respect of an Interest Period shall be the aggregate of (i) the applicable Margin (ii) the Mandatory Costs (if any) and (iii) 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 Borrowers and each Lender of:
(a)
each rate of interest; and
(b)
the duration of each Interest Period,

23    




as soon as reasonably practicable after each is determined.
5.5
Obligation of Reference Banks to quote. A Reference Bank which is a Lender 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 available for an Interest Period and 2 or more of the Reference Banks do not, before 1.00 p.m. (London time) on the Quotation Date, provide quotations to the Agent in order to fix LIBOR; or
(b)
at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent. of the Loan (or, if the Loan has not been made, Commitments amounting to more than 50 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank 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 Borrowers, each of the Lenders and each of the Swap Banks 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 a Tranche is made:
(a)
in a case falling within Clauses 5.7(a) or (b), the Lenders' obligations to make that Tranche; and
(b)
in a case falling within Clause 5.7(c), the Affected Lender's obligation to participate in such Tranche,
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 a Tranche is made, the Borrowers, 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.

24    




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 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 applicable Margin and the Mandatory Costs (if any); 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 Borrowers do not agree with an interest rate set by the Agent under Clause 5.12, the Borrowers may give the Agent not less than 15 Business Days' notice of their 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 Borrowers' notice of intended prepayment; and:
(a)
on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and
(b)
on the last Business Day of the interest period set by the Agent, the Borrowers 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 applicable Margin and the Mandatory Costs (if any).
5.15
Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.
6
INTEREST PERIODS
6.1
Commencement of Interest Periods. The first Interest Period applicable to a Tranche shall commence on the Drawdown Date relating to that Tranche 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)
3 or 6 months as notified by the Borrowers to the Agent not later than 11.00 a.m. (London time) 5 Business Days before the commencement of the Interest Period; or
(b)
in the case of the first Interest Period applicable to each Tranche, a period ending on the first Repayment Date relating to that Tranche; or
(c)
3 months, if the Borrowers fail to notify the Agent by the time specified in paragraph (a); or
(d)
such other period as the Agent may, with the authorisation of all the Lenders, agree with the Borrowers.

25    




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 Borrowers have selected and the Lenders have agreed an Interest Period longer than 3 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 3 months.
7
DEFAULT INTEREST
7.1
Payment of default interest on overdue amounts. The Borrowers shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrowers under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:
(a)
the date on which the Finance Documents provide that such amount is due for payment; or
(b)
if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or
(c)
if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.
7.2
Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent. above:
(a)
in the case of an overdue amount of principal, the higher of the rates set out at 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 applicable Margin plus the Mandatory Cost (if any) plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may, with the consent of the Majority Lenders, 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 actual 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.

26    




7.4
Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrowers of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Agent's notification.
7.5
Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the 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 2(e) (Default Interest; Other Amounts) of that Master Agreement shall apply.
8
REPAYMENT AND PREPAYMENT
8.1
Amount of repayment instalments.
(a)
The Borrowers shall repay each Tranche by twenty consecutive quarterly repayment instalments:
(i)
the first eight of which shall be in an amount of $550,000 each; and
(ii)
the last twelve of which shall be in an amount of $435,000 each,
with the remainder of the Tranche then outstanding payable on the Maturity Date.
(b)
In case the amount drawn under a Tranche is less than the maximum amount available under this Agreement, each quarterly repayment instalment and the balloon instalment for the relevant Tranche referred to in (a) above shall be reduced pro rata.
8.2
Repayment Dates. The first instalments in respect of each Tranche shall be repaid on the date falling 3 months after the Drawdown Date relating to that Tranche and the last repayment instalment on the quarterly repayment date falling on or immediately prior to the Maturity Date with the balloon instalment payable on the Maturity Date.
8.3
Final Repayment Date. On the final Repayment Date, the Borrowers 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 and automatic cancellation.
(a)
The Borrowers may, if they give the Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of $1,000,000 of the Loan. Any cancellation under this Clause 8.4 shall reduce the Commitments of the Lenders rateably and the amount of the relevant Tranche(s).
(b)
The unutilised Commitment (if any) of each Lender shall be automatically cancelled at close of business on the date on which that Tranche is made.

27    




(c)
A voluntary cancellation under Clause 8.4(a) shall be made together with a prepayment fee of 1.00 per cent. of the cancelled amount in respect of any cancellation made during the Qualifying Period and such fee shall be payable by the Borrowers on the date of such voluntary cancellation, to the Agent for distribution to the Lenders.
8.5
Voluntary prepayment. Subject to the conditions set forth in Clause 8.6, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period without premium other than pursuant to Clause 8.11.
8.6
Conditions for voluntary prepayment. The conditions referred to in Clause 8.5 are that:
(a)
a partial prepayment shall be $1,000,000 or a higher integral multiple of $1,000,000 or such lower amount as the Agent may approve;
(b)
the Agent has received from the Borrowers 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; and
(c)
that the Borrowers have complied with Clause 8.14 on or prior to the date of prepayment.
8.7
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 Borrowers on the date for prepayment specified in the prepayment notice.
8.8
Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice.
8.9
Mandatory prepayment on sale or Total Loss. If a Ship is sold or becomes a Total Loss, the Borrowers shall prepay the Tranche related to that Ship and comply with Clause 8.14 :
(a)
in the case of a sale, on or before the date on which the sale is completed by delivery of the Ship to the relevant 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.
8.10
Mandatory repayment and cancellation of FATCA Protected Lenders.
(a)
If on the date falling six months before the earliest FATCA Application Date for any payment by any party to this Agreement 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 "):
(i)
that Lender shall, reasonably promptly after that date, notify the Agent of that FATCA Event and the relevant FATCA Application Date; and
(ii)
if, on the date falling one month before such FATCA Application Date, that FATCA Event is continuing:
(A)
that Lender may, at any time between one month and two weeks before such FATCA Application Date, notify the Agent;

28    




(B)
upon the Agent notifying the Borrowers, the Commitment of that Lender will be immediately cancelled; and
(C)
the Borrowers shall repay that Lender's Contribution on the last day of the Interest Period applicable to the relevant Tranche or Tranches to be repaid occurring after the Agent has notified the Borrowers or, if earlier, the last Business Day before the relevant FATCA Application Date.
8.11
Amounts payable on prepayment. A voluntary prepayment under Clause 8.5 and a mandatory prepayment under Clauses 8.9 and 8.10 shall be made together with:
(a)
accrued interest (and any other amount payable under Clause 21 or otherwise) in respect of the amount prepaid;
(b)
if the prepayment is not made on the last day of an Interest Period, any sums payable under Clause 21.1(b) ; and
(c)
if the prepayment is made within the Qualifying Period and:
(i)
relates to the entire Loan;
(ii)
relates to of 50 per cent. of the Loan or more;
(iii)
results from the sale of a Ship; or
(iv)
relates to a refinancing of the whole or part of the Loan where a Lender is not participating in such refinancing,
a prepayment fee of 1.00 per cent. of the amount prepaid in respect of such voluntary prepayment or, in the case of sub-paragraph (iv) above, 1.00 per cent. of the amount prepaid which is attributable to the Lender which is not participating in the refinancing,
provided that no prepayment fee shall be payable in respect of a mandatory prepayment under Clause 8.9(b) or Clause 8.10, a voluntary prepayment under Clause 15.2 or a cancellation of Commitment under Clause 8.4(b).
For the purposes of this Clause 8.11 and Clause 8.4, the " Qualifying Period " shall mean the period commencing on the date of this Agreement and ending on the first anniversary of the last Drawdown Date.
8.12
Application of partial prepayment. Each partial prepayment and each voluntary cancellation of part of the Loan shall be applied pro rata against each Tranche and, as regards each Tranche, pro rata against the scheduled repayment instalments including the balloon instalment specified in Clause 8.1.
8.13
No reborrowing. No amount prepaid may be reborrowed.
8.14
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 Borrowers shall unless otherwise agreed by all the Lenders 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.

29    




9
CONDITIONS PRECEDENT
9.1
Documents, fees and no default. Each Lender's obligation to contribute to the Loan 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 each Drawdown Date but prior to the advance of a Tranche, the Agent receives or is satisfied that it will receive on the making of such Tranche the documents described in Part B of Schedule 4 in form and substance satisfactory to it and its lawyers;
(c)
that, on or before the service of each Drawdown Notice, the Agent receives all accrued commitment fee payable pursuant to Clause 20.1(b) and the first instalment of the annual agency fee (if applicable) referred to in Clause 20.1 (c) and has received payment of the expenses referred to in Clause 20.2 ; and
(d)
that both at the date of each Drawdown Notice and at each Drawdown Date:
(i)
no Event of Default or Latent Event of Default has occurred or would result from the borrowing of the relevant Tranche;
(ii)
the representations and warranties in Clause 10.1 and those of the Guarantor, either 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;
(iii)
there has not been a change in the financial position, state of affairs or prospects of the Guarantor, either Borrower or any other Security Party which has a Material Adverse Effect;
(iv)
there has been no material change in the consolidated financial condition, operations or business prospects of the Guarantor or either Borrower since the date on which the Guarantor provided the Compliance Certificate and Accounting Information accompanying such Compliance Certificate or in respect of any of the information concerning those topics appended to the Compliance Certificate; and
(v)
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 Tranche, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and
(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 Borrowers prior to the relevant Drawdown Date.
9.2
Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit a Tranche to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date relating to that Tranche (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify).

30    




10
REPRESENTATIONS AND WARRANTIES
10.1
General. Each Borrower represents and warrants to each Creditor Party as follows.
10.2
Status. Each Borrower is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands.
10.3
Ownership of the Borrowers. The Guarantor is the direct legal and beneficial owner of all the issued share capital and voting rights in respect of each Borrower free of Security Interests save for the Security Interests created pursuant to the Finance Documents and the Existing Facility which, in the case of the Security Interests created pursuant to the Existing Facility shall be fully discharged in the case of Borrower A no later than the first Drawdown Date and, in the case of Borrower B, no later than the second Drawdown Date.
10.4
Corporate power. Each Borrower has the corporate capacity, and has taken all corporate action and obtained all Authorisations necessary for it:
(a)
to own and register its Ship in its name under the Approved Flag;
(b)
to execute the Finance Documents to which that Borrower is a party and the Master Agreements; and
(c)
to borrow under this Agreement, to enter into Designated Transactions under each Master Agreement and to make all the payments contemplated by, and to comply with, the Finance Documents to which that Borrower is a party and each Master Agreement.
10.5
Authorisations in force . All the Authorisations 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 that Borrower is a party and each Master Agreement, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):
(a)
constitute that Borrowers’ legal, valid and binding obligations enforceable against that 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 10.5, at the time of the execution and delivery of each Finance Document:
(a)
each 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 each Borrower of each Finance Document to which it is a party and each Master Agreement, and the borrowing by that Borrower of the Loan, and its compliance

31    




with each Finance Document and each Master Agreement will not involve or lead to a contravention of:
(a)
any law or regulation; or
(b)
the constitutional documents of that Borrower; or
(c)
any contractual or other obligation or restriction which is binding on that Borrower or any of its assets.
10.9
No withholding taxes. All payments which each Borrower is liable to make under the Finance Documents 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 Latent Event of Default has occurred.
10.11
Information. All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5 ; 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 either Borrower from that disclosed in the latest of those accounts.
10.12
No litigation. No legal or administrative action involving either Borrower or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to either Borrowers’ knowledge, is likely to be commenced or taken which, in either case, would be likely to have a Material Adverse Effect or which would prevent it from meeting its obligations under this Agreement.
10.13
Compliance with certain undertakings. At the date of this Agreement, each Borrower is in compliance with Clauses 11.2, 11.4, 11.8 and 11.13.
10.14
Taxes paid. Each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or the Ship owned by it.
10.15
ISM Code, ISPS Code and Environmental Laws compliance. All requirements of the ISM Code, the ISPS Code and all Environmental Laws as they relate to the Guarantor, the Borrowers, any Approved Ship Manager, any Approved Sub-Manager and the Ships have been complied with at all times.
10.16
No money laundering. Without prejudice to the generality of Clause 2.3 , in relation to the borrowing by the Borrowers of the Loan, the performance and discharge of their respective obligations and liabilities under the Finance Documents or any Master Agreement, and the transactions and other arrangements affected or contemplated by the Finance Documents or any Master Agreement to which a Borrower is a party, each 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
No immunity. Neither Borrower is and no assets of either Borrower are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceedings (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).

32    




10.18
Sanctions .
(a)
Neither Borrower:
(i)
is a Prohibited Person; and/or
(ii)
owns or controls a Prohibited Person; and
(b)
no proceeds of either Tranche or the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person in breach of Sanctions nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
10.19
Pari passu . The obligations of each Borrower under the Finance Documents and any Master Agreement to which it is a party rank at least pari passu with all other unsecured indebtedness of that Borrower other than indebtedness mandatorily preferred by law.
10.20
Validity and admissibility in evidence . All Authorisations required or desirable:
(a)
to enable each Borrower lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and
(b)
to make the Finance Documents to which each Borrower is a party admissible in evidence in its Pertinent Jurisdictions,
have been obtained or effected and are in full force and effect.
10.21
Insolvency . No corporate action, legal proceeding, creditors' process or other procedure or step described in paragraphs (g) and (h) of Clause 19.1 has been taken or, to its knowledge, threatened in relation to a Borrower or any Security Party.
10.22
No breach of laws . Neither Borrower has (and, to the best of its knowledge, no Security Party has) breached any law or regulation which breach has or, in the case of any breach by the Borrowers, is reasonably likely to, have a Material Adverse Effect.
10.23
Good title to assets . Each Borrower has good, title to its assets.
10.24
Anti-terrorism compliance. Each Borrower is in compliance with any and all anti-terrorism law applicable to it.
10.25
US Tax Obligor. Neither Borrower is a US Tax Obligor and each Borrower is in full compliance with FATCA to the extent applicable to it.
11
GENERAL UNDERTAKINGS
11.1
General. Each 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; negative pledge. Each Borrower will:
(a)
hold the legal title to, and own the entire beneficial interest in the Ship owned by it, the Insurances and Earnings relating to that Ship and the Earnings Account in its name, free from all Security Interests and other interests and rights of every kind, except for (i) those created by the Finance Documents and the effect of assignments contained in the Finance Documents, (ii) Permitted

33    




Security Interests and (iii) any Security Interests created pursuant to the Existing Facility which such Security Interests shall be discharged in full in the case of Ship A no later than the first Drawdown Date and, in the case of Ship B, no later than the second Drawdown Date; and
(b)
not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and
(c)
procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.
11.3
No disposal of assets. No Borrower will transfer, lease or otherwise dispose of:
(a)
all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or
(b)
any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation except for demurrage claims and otherwise in the ordinary course of conducting its business as a ship owner; or
(c)
make any substantial change to the nature of its business from that existing at the date of this Agreement,
but paragraph (a) does not apply to any charter of either Ship to which Clauses 14.13 and/or 14.17 apply or to the sale of a Ship on arm’s length for its Market Value if the Borrowers can demonstrate prior to such sale to the Agent's satisfaction that the net proceeds of such sale shall be sufficient to enable the relevant Borrower to comply with its mandatory prepayment obligation under Clause 8.9 and, upon such sale, the net proceeds of such sale are sufficient to enable the relevant Borrower to comply with its mandatory prepayment obligation under Clause 8.9.
11.4
No other liabilities or obligations to be incurred. No Borrower will incur any liability or obligation (including, without limitation, any contingent liability) except liabilities and obligations:
(a)
under the Finance Documents to which it is a party;
(b)
an Intercompany Loan complying with the requirements of Clause 11.20(b); or
(c)
reasonably incurred in the ordinary course of operating, upgrading, maintaining and chartering its Ship,
it being acknowledged that up to the first Drawdown Date, the Borrowers shall have obligations and liabilities under the Existing Facility and, in the case of Borrower B, those obligations and liabilities under the Existing Facility shall continue up to the second Drawdown Date.
11.5
Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of a Borrower or any Security Party under or in connection with any Finance Document will be true, complete and not misleading and will not omit any material fact or consideration.
11.6
Provision of financial statements. Each Borrower will procure that the following are sent to the Agent:

34    




(a)
as soon as possible, but in no event later than 120 days after the end of each financial year of the Guarantor, the audited consolidated accounts of the Guarantor and its subsidiaries;
(b)
as soon as possible, but in no event later than 60 days after the end of the first three Accounting Periods, unaudited consolidated accounts of the Guarantor and its subsidiaries which are certified as to their correctness by the chief financial officer of the Guarantor;
(c)
as soon as possible, but in no event later than 60 days of the commencement of each financial year of the Guarantor, an annual budget (including consolidated profit & loss, balance sheet and cash flow forecast) for the Guarantor and its subsidiaries for that financial year;
(d)
a Compliance Certificate together with the quarterly reports that the Guarantor delivers in (b) above each certified by the chief financial officer of the Guarantor; and
(e)
such other information and financial statements (including, without limitation, details of the operating performance, employment, positions and engagements of the Ships, annual budgets and projections) as may be requested by the Agent from time to time.
11.7
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 consistently applied;
(b)
fairly represent the financial condition of the Guarantor and its subsidiaries at the date of those accounts and of their profit for the period to which those accounts relate; and
(c)
fully disclose or provide for all significant liabilities of the Guarantor and its subsidiaries.
11.8
Authorisations. Each Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all Authorisations required:
(a)
for it to perform its obligations under any Finance Document to which it is a 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)
to continue to own and operate the Ship owned by it
and each Borrower will comply with the terms of all such Authorisations.
11.9
Maintenance of Security Interests. Each Borrower will:
(a)
at its own cost, do all that it reasonably can to ensure that any Finance Document and each Master Agreement 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 and any Master Agreement (if applicable) 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.

35    




11.10
Notification of litigation. The Borrowers will provide the Agent with details of any legal action involving either Borrower, any Security Party or either Ship, its Earnings or its Insurances as soon as such action is instituted unless it is clear that the legal action cannot be considered material in the context of any Finance Document.
11.11
No amendment to Master Agreements. Neither Borrower will agree to any amendment or supplement to, or waive or fail to enforce, any Master Agreement or any of its provisions.
11.12
Chief Executive Office. Each Borrower shall procure that the Guarantor will maintain its chief executive office in the Principality of Monaco.
11.13
Confirmation of no default. The Borrowers 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 each Borrower and which:
(a)
states that no Event of Default or Latent Event of Default has occurred; or
(b)
states that no Event of Default or Latent Event of Default has occurred, except for a specified event or matter, of which all material details are given.
The Agent may serve requests under this Clause 11.13 from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if the Loan has not been made) Commitments exceeding 10 per cent of the Total Commitments; and this Clause 11.13 does not affect the Borrowers’ obligations under Clause 11.14.
11.14
Notification of default. Each Borrower will notify the Agent as soon as that Borrower becomes aware of:
(a)
the occurrence of an Event of Default or a Latent Event of Default; or
(b)
any matter which indicates that an Event of Default or a Latent Event of Default may have occurred,
and will keep the Agent fully up‑to‑date with all developments.
11.15
Provision of further information. The Borrowers will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:
(a)
the financial condition, business and operations of either Borrower;
(b)
any Security Party, either Ship, its Earnings or its Insurances; or
(c)
any other matter relevant to, or to any provision of, a Finance Document and any Master Agreement,
which may be requested by the Agent, the Security Trustee, any Lender or any Swap Bank at any time and the Borrowers shall promptly, provide such further information and/or documents as any Creditor Party (through the Agent) may request so as to enable such Creditor Party to comply with any laws applicable to it (including, without limitation, compliance with FATCA).
11.16
Provision of copies and translation of documents. The Borrowers will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Borrowers will provide a certified English translation prepared by a translator approved by the Agent.

36    




11.17
"Know your customer" checks. Each Borrower shall notify the Agent immediately if it becomes aware of any actual or intended change in its status or the status of any Security Party after the date of this Agreement. If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(b)
any change in the status of either Borrower or any Security Party after the date of this Agreement; or
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrowers shall promptly upon the request of the Agent or the Lender 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 the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
11.18
Compliance with laws . Each Borrower shall comply and shall procure that the Guarantor shall comply in all material respects with all applicable laws, including, without limitation, all Environmental Laws, all Sanctions and regulations relating thereto.
11.19
Taxes . Each Borrower shall prepare and timely file all tax returns required to be filed by it and pay and discharge all taxes imposed upon it and its property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labour, materials and supplies) which, if unpaid, might become a lien or any part thereof, except in each case, for any such taxes (a) as are being contested in good faith by appropriate proceedings and for which adequate reserves have been established, (b) as to which such failure to have paid does not create any risk of sale, forfeiture, loss, confiscation or seizure of a Ship or criminal liability, or (c) the failure of which to pay or discharge would not be likely to have a Material Adverse Effect or to affect the legality, validity, binding effect or enforceability of the Finance Documents or any Master Agreement.
11.20
Use of proceeds and Intercompany Loans . The Borrowers shall:
(a)
use the proceeds of a Tranche solely to partially re-finance the cost of its acquisition of the Ship; and
(b)
not incur any liability or obligation under any Intercompany Loan the Guarantor provides unless such Intercompany Loan:
(i)
is fully subordinated to any and all obligations of the Borrowers and the rights of the Creditor Parties under the Finance Documents;
(ii)
does not require the payment of interest prior to expiry of the Maturity Date
(iii)
matures at least 1 year after the Maturity Date; and

37    




(iv)
is not secured by any asset which is already, or is to be, the subject of a Security Interest created by either Borrower or any Security Party pursuant to any Finance Document,
(c)
furnish promptly to the Agent a true and complete copy of any instrument evidencing any Intercompany Loan, all other documents related thereto and a true and complete copy of each material amendment or other modification thereof; and
(d)
in respect of any such Intercompany Loan, execute and deliver to the Agent an Intercompany Loan Assignment and deliver to the Agent such other documents equivalent to those referred to in paragraphs 4, 5 and 6 of Part A of Schedule 4 as the Agent may require.
11.21
Other swaps. Each Borrower may enter into other master agreements and/or derivative instruments with any third party swap provider for the purposes of hedging its exposure under this Agreement to interest rate fluctuations provided that:
(a)
the Swap Bank shall have a right of first refusal in respect of providing such swap/derivative lines to the Borrowers; and
(b)
in the event the Swap Bank is not the chosen provider of such swap/derivative lines to the Borrower,
such third party swap provider does not share in any Security Interest created under any Finance Document and is fully subordinated to the rights of the Creditor Parties under the Finance Documents.
11.22
Anti-corruption law
(a)
The Borrowers shall not directly or indirectly use the proceeds of the Loan for any purpose which would breach the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other jurisdictions.
(b)
Each Borrower shall:
(i)
conduct its business in compliance with applicable anti-corruption laws; and
(ii)
maintain policies and procedures designed to promote and achieve compliance with such laws.
12
CORPORATE AND FINANCIAL UNDERTAKINGS
12.1
General. Each 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. Each Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands.
12.3
Negative undertakings. Neither Borrower will:
(a)
carry on any business other than the ownership, chartering and operation of the Ship owned by it; or
(b)
provide any form of credit or financial assistance to:

38    




(i)
a person who is directly or indirectly interested in the Guarantor’ or either Borrower's share or loan capital; or
(ii)
any company in or with which such a person is directly or indirectly interested or connected,
or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the relevant Borrower than those which it could obtain in a bargain made at arms' length;
(c)
change its Fiscal Year;
(d)
issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;
(e)
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than Designated Transactions; or
(f)
enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.
13
INSURANCE
13.1
General. Each 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. Each Borrower shall keep the Ship owned by it insured at the expense of that Borrower against:
(a)
fire and usual marine risks (including hull and machinery plus hull interest and any other usual marine risks such as excess risks as applicable);
(b)
war risks (including the London Blocking and Trapping addendum or similar arrangement);
(c)
full protection and indemnity risks (including liability for oil pollution and excess war risk P&I cover) on standard club rules, covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Associations (or, if the International Group of Protection and Indemnity Associations ceases to exist, any other leading protection and indemnity association or other leading provider of protection and indemnity insurance) (including, without limitation, the proportion (if any) of any collision liability not covered under the terms of the hull cover), or other with written consent from the Agent;
(d)
freight, demurrage & defence risks;
(e)
any other risks against which the Security Trustee considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for that Borrower to insure and which are specified by the Security Trustee by notice to that Borrower.
13.3
Terms of obligatory insurances. Each Borrower shall effect such insurances in respect of the Ship owned by it:

39    




(a)
in Dollars;
(b)
in the case of the insurances described in 13.2(a) , (b) and, in the event such other risk is based on vessel value, (e) in an amount on an agreed value basis at least the greater of:
(i)
when aggregated with the insured values of the other Ship then financed under this Agreement, 120 per cent. of the aggregate amount of the Loan and the Swap Exposure (if any); and
(ii)
the Fair Market Value of the Ship owned by it;
(c)
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;
(d)
in relation to protection and indemnity risks in respect of the full tonnage of the Ship owned by it;
(e)
on approved terms; and
(f)
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 that are members of the International Group of Protection and Indemnity Clubs.
13.4
Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3 each Borrower shall procure that the obligatory insurances effected by it shall:
(a)
subject always to paragraph (b), name that Borrower as the sole named assured unless the interest of every other named assured is limited:
(i)
in respect of any obligatory insurances for hull and machinery and war risks;
(A)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
(ii)
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;
and, if and when requested by the Security Trustee (acting reasonably), obtain or procure that every other named assured has provided an undertaking in writing to the Security Trustee (in such form as it requires) that any deductible shall be apportioned between that Borrower and every other named assured in proportion to the gross claims made or paid by each of them and that it 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;
(b)
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

40    




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;
(c)
name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;
(d)
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;
(e)
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;
(f)
provide that the Security Trustee may make proof of loss if that Borrower fails to do so; and
(g)
provide that the deductible of the hull and machinery insurance is not higher than the amount agreed upon and stated in the loss payable clause.
13.5
Renewal of obligatory insurances. Each Borrower shall:
(a)
at least 14 days before the expiry of any obligatory insurance effected by it:
(i)
notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Borrower proposes to renew that 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 10 days before the expiry of any obligatory insurance effected by it, 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. Each Borrower shall ensure that all approved insurance 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 that

41    




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 owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that 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 that Ship forthwith upon being so requested by the Security Trustee.
13.7
Copies of certificates of entry. Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Security Trustee with:
(a)
a certified copy of the certificate of entry for that Ship;
(b)
a letter or letters of undertaking in such form as may be required by the Security Trustee; and
(c)
satisfactory evidence that each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material has been issued by the relevant certifying authority in relation to that Ship.
13.8
Deposit of original policies. Each Borrower shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.
13.9
Payment of premiums. Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by that Borrower and produce all relevant receipts when so required by the Security Trustee.
13.10
Guarantees. Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
13.11
Compliance with terms of insurances. No Borrower shall do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:
(a)
each Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(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)
neither Borrower shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;
(c)
each Borrower shall make (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 owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

42    




(d)
neither Borrower shall employ the Ship owned by it, or 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. Neither Borrower shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.
13.13
Settlement of claims. Neither Borrower shall settle, compromise or abandon any claim under any obligatory insurance effected by it 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. Each Borrower shall provide the Security Trustee, at the time of each such communication, copies of all material written communications between the relevant Borrower and:
(a)
the approved insurance brokers;
(b)
the approved protection and indemnity and/or war risks associations; and
(c)
the approved insurance companies and/or underwriters, which relate directly or indirectly to:
(i)
that Borrowers’ obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)
any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.
13.15
Provision of information. In addition, each 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) 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 by it; and/or
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such insurances;
and the Borrowers shall, forthwith upon demand, indemnify the Security Trustee in respect of all reasonable fees and other reasonable expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).
13.16
Mortgagee's interest, additional perils. The Security Trustee shall be entitled from time to time to effect, maintain and renew (i) mortgagee's interest additional perils insurance and (ii) mortgagee's interest marine insurance in such amounts, (and on the date of this Agreement, it is expected that such amount will be 120 per cent. of the Loan), on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the Borrowers shall upon demand fully indemnify the Security Trustee 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.

43    




14
SHIP COVENANTS
14.1
General. Each 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 (such authorisation not to be unreasonably withheld in the case of Clause 14.13(a) (v), may otherwise permit.
14.2
Ship's name and registration. Each Borrower shall keep the Ship owned by it registered in its name under an Approved Flag; 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 either Ship without the prior written approval of the Agent, such approval not to be unreasonably withheld.
14.3
Repair and classification. Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:
(a)
consistent with first‑class ship ownership and management practice;
(b)
so as to maintain the highest class for that Ship with the Approved Classification Society free of overdue recommendations and conditions affecting that Ship's class; and
(c)
so as to comply with all laws and regulations applicable to vessels registered under the law of the Approved Flag on which that Ship is registered or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.
14.4
Classification Society undertaking. Each Borrower shall instruct the Approved Classification Society:
(a)
to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the Approved Classification Society in relation to the Ship owned by it;
(b)
to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Borrower and the Ship owned by it at the offices of the Approved Classification Society and to take copies of them;
(c)
to notify the Security Trustee immediately in writing if the Approved Classification Society:
(i)
receives notification from that Borrower or any other person that its Ship's Approved Classification Society is to be changed; or
(ii)
becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of its Ship's class under the rules or terms and conditions of that Borrowers’ or its Ship's membership of the Approved Classification Society;
(d)
following receipt of a written request from the Security Trustee:
(i)
to confirm that such Borrower is not in default of any of its contractual obligations or liabilities to the Approved Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Approved Classification Society; or

44    




(ii)
if such Borrower is in default of any of its contractual obligations or liabilities to the Approved Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Approved Classification Society.
14.5
Modification. Neither Borrower shall make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on that Ship which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.
14.6
Removal of parts. Neither Borrower shall remove any material part of the Ship owned by it, or any item of equipment installed on, that 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 that Ship the property of that Borrower and subject to the security constituted by the Mortgage Provided that a Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.
14.7
Surveys. Each Borrower shall, at its expense submits the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes with copies of all technical survey reports in respect of surveys carried out by an Approved Ship Manager or other qualified expert duly appointed for such purpose.
14.8
Inspection. Each Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times always without interfering with the normal trading, running, management and operation of the Ship at that Borrowers’ expense to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections provided that unless an Event of Default has occurred or that Ship's Approved Classification Society has issued a recommendation or condition affecting that Ship's class, (i) there shall be not more than one such inspection per Ship in each calendar year and (ii) the Borrowers shall not have to pay for more than 1 inspection per Ship in such calendar year. The Security Trustee shall use reasonable efforts not to interfere with the operation of that Ship when exercising its rights under this Clause 14.8 .
14.9
Prevention of and release from arrest. Each Borrower shall promptly discharge:
(a)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, its Earnings or its Insurances;
(b)
all taxes, dues and other amounts charged in respect of the Ship owned by it, its Earnings or its Insurances; and
(c)
all other outgoings whatsoever in respect of the Ship owned by it, its Earnings or its Insurances,
and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, that Borrower shall procure its release by providing bail or otherwise as the circumstances may require.
14.10
Compliance with laws etc. Each Borrower shall:
(a)
comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Borrower;

45    




(b)
not employ the Ship owned by it 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, all Environmental Laws and Sanctions; 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 owned by it to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless the prior written consent of the Security Trustee has been given and that Borrower has or has procured that there is (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.
14.11
Provision of information. Each Borrower shall promptly provide the Security Trustee with any information which it requests regarding:
(a)
the Ship owned by it, its employment, position and engagements (including, without limitation, details of the operating performance, employment, positions and engagements of the Ships, annual budgets and projections);
(b)
the Earnings and payments and amounts due to the master and crew of the Ship owned by it;
(c)
any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship owned by it and any payments made in respect of that Ship;
(d)
any towages and salvages; and
(e)
its compliance, the Approved Ship Manager's, the Approved Sub-Manager's and the compliance by the Ship owned by it with the ISM Code, the ISPS Code, all Environmental Laws and Sanctions,
and, upon the Security Trustee's request, provide copies of any current charter relating to that Ship, of any current charter guarantee and copies of each Borrower or the Approved Ship Manager's or the Approved Sub-Manager’s Document of Compliance.
14.12
Notification of certain events. Each Borrower shall immediately notify the Security Trustee by fax or email, 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 owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)
any requirement or condition made by any insurer or the Approved Classification Society or by any competent authority which is not complied with within the specified time;
(d)
any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on that Ship or its Earnings or any requisition of that Ship for hire;
(e)
any intended dry docking of the Ship owned by it;
(f)
any Environmental Claim made against any Security Party or either Borrower or in connection with either Ship, or any Environmental Incident;
(g)
any claim for breach of the ISM Code, the ISPS Code, any Environmental Laws or Sanctions being made against that Borrower, the Approved Ship Manager, any Approved Sub-Manager or otherwise in connection with the Ship owned by it; or

46    




(h)
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code, the ISPS Code, any Environmental Laws or Sanctions not being complied with;
and that Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of either Borrowers’, the Approved Ship Manager's, the Approved Sub-Manager’s or any other person's response to any of those events or matters.
14.13
Restrictions on chartering, appointment of managers etc.
(a)
Neither Borrower shall, in relation to the Ship owned by it:
(i)
let that Ship on demise charter for any period;
(ii)
enter into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months other than Charters where the charterer is a member of and/or an Affiliate of the STI Group or entered into pursuant to an Approved Pooling Arrangement. The term of any Charter where the charterer is a member of and/or an Affiliate of the STI Group (except for any Charters entered into in connection with an Approved Pooling Arrangement) shall not extend (including, without limitation, by virtue of any optional extensions) beyond the Maturity Date without the Agent’s consent (acting on the instructions of the Majority Lenders, acting reasonably);
(iii)
enter into any charter in relation to that Ship under which more than 2 months' hire (or the equivalent) is payable in advance;
(iv)
charter that Ship otherwise than on bona fide arm's length terms at the time when such Ship is fixed;
(v)
appoint a manager of that Ship other than an Approved Ship Manager or agree to any material alteration to the terms of the Approved Ship Manager's appointment;
(vi)
appoint a classification society for that Ship other than an Approved Classification Society;
(vii)
de‑activate or layup that Ship; or
(viii)
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on such Ship or its Earnings for the cost of such work or for any other reason.
(b)
Each Borrower shall procure that, in relation to the Ship owned by it, an Approved Technical Ship Manager shall only appoint a sub-manager in relation to the technical management of that Ship provided that in the case of any such sub-management, the Approved Technical Ship Manager shall continue to remain primarily liable vis-à-vis the relevant Borrower to perform the technical management responsibilities in relation to that Ship and, if so appointed as technical manager of that Ship, such sub-manager shall be appointed on substantially the same terms as the Approved Technical Ship Manager and once appointed as an Approved Sub-Manager, the relevant Borrower shall not and shall procure that the relevant Approved Technical Ship Manager

47    




shall not agree to any material alteration to the terms of the relevant Approved Sub-Manager's appointment.
14.14
Notice of Mortgage. Each Borrower shall keep the Mortgage registered against the Ship owned by it as a valid first preferred or, as the case may be, priority mortgage, carry on board the Ship owned by it a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of that Ship a framed printed notice stating that such Ship is mortgaged by that Borrower to the Security Trustee.
14.15
Sharing of Earnings. Neither Borrower shall enter into any agreement or arrangement for the sharing of any Earnings of the Ship owned by it provided always that each Ship may be entered into any Approved Pooling Arrangement.
14.16
ISPS Code. Each Borrower shall comply with the ISPS Code and in particular, without limitation, shall:
(a)
procure that its Ship and the company responsible for such Ship's compliance with the ISPS Code comply with the ISPS Code; and
(b)
maintain for its Ship an ISSC; and
(c)
notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
14.17
Copies of Charter; Charterparty Assignment . Provided that the relevant Borrower has obtained the prior permission of the Agent necessary under Clause 14.13(a) (ii), that Borrower shall:
(a)
furnish promptly to the Agent a true and complete copy of any Charter for the Ship owned by it, all other documents related thereto including, without limitation, any guarantee of such Charter and a true and complete copy of each material amendment or other modification thereof; and
(b)
in respect of any such Charter (other than a Charter where the charterer is a member and/or Affiliate of the STI Group or entered into pursuant to an Approved Pooling Arrangement), execute and deliver to the Agent a Charterparty Assignment and deliver to the Agent a consent and acknowledgement executed by the charterer and any related charter guarantor and such other documents equivalent to those referred to in paragraphs 4, 5 and 6 of Part A of Schedule 4 as the Agent may require.
14.18
Change of Approved Ship Manager . If, in accordance with the terms of this Agreement, there is a change of Approved Ship Manager, Approved Sub-Manager or the appointment of an Approved Sub-Manager, the Borrower owning the relevant Ship shall:
(a)
promptly provide the Agent with a copy of the management agreement pursuant to which such Approved Ship Manager or Approved Sub-Manager is to be appointed; and
(b)
the new Approved Ship Manager or Approved Sub-Manager, as the case may be, shall provide to the Agent on or prior to the commencement of its appointment, an Approved Ship Manager's Undertaking.
14.19
Green Passport . Each Borrower shall procure that the Ship owned by it has obtained a Green Passport, or equivalent document acceptable to the Agent, in respect of that Ship which shall be maintained throughout the Security Period.

48    




14.20
Green scrapping . The Borrowers shall and shall procure that the Guarantor shall maintain a policy that provides that any ship owned by any member of the STI Group and which are to be scrapped shall be scrapped in compliance with (i) the International Maritime Organization's convention for the Safe and Environmentally Sound Recycling of ships to the extent that are issued and in force at the time of such scrapping and (ii) the guidelines to be issued by the International Maritime Organization in connection with such convention.
15
SECURITY COVER
15.1
Minimum required security cover. Clause 15.2 applies if the Agent notifies the Borrowers that:
(a)
the aggregate of the Fair Market Value of the Ships; plus
(b)
the net realisable value of any additional security previously provided under this Clause 15,
is below the Relevant Percentage of the Loan.
For the purposes of this Clause 15.1, " Relevant Percentage " means:
(i)
for the period commencing on the first Drawdown Date and ending on the second anniversary of the first Drawdown Date, 130 per cent.;
(ii)
for the period on and from the day following the second anniversary of the first Drawdown Date and expiring on the fourth anniversary of the first Drawdown Date, 135 per cent.; and
(iii)
at all times thereafter for the remainder of the Security Period, 140 per cent.
15.2
Provision of additional security; prepayment . If the Agent serves a notice on the Borrowers under Clause 15.1, the Borrowers shall prepay such part (at least) of the Loan as will eliminate the shortfall on or before the date falling 7 days after the date on which the Agent's notice is served under Clause 15.1 (the " Prepayment Date ") unless at least 1 Business Day before the Prepayment Date they have provided, or ensured that a third party has provided, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which has been documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require.
15.3
Valuation of Ship. The market value of a Ship at any date is that shown by:
(a)
the arithmetic average of 2 valuations each prepared by an Approved Broker selected by the Agent acting upon the instructions of all the Lenders;
(b)
as at a date not more than 30 days prior to the date such valuation is delivered to the Agent by such Approved Broker;
(c)
with or without physical inspection of that 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; and
(e)
after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

49    




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 Borrowers, 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 Borrowers shall promptly provide the Agent and any Approved Broker acting under Clause 15.3 or 15.4 with any information which the Agent or the Approved Broker may request for the purposes of the valuation; and, if the Borrowers fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.
15.7
Payment of valuation expenses. Without prejudice to the generality of the Borrowers' obligations under Clauses 20.2 , 20.3 and 21.3, the Borrowers shall, subject to Clause 15.8, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.
15.8
Frequency of valuations.
(a)
The Borrowers shall provide the valuations of each Ship required pursuant to paragraph 4 of Part B of Schedule 4 at the Borrowers' expense;
(b)
the Agent shall be entitled to obtain 2 valuations per Ship during each half of each Fiscal Year of the Guarantor commencing on 31 December 2016 (such valuations to be attached to the Compliance Certificates for the relevant fiscal quarter to be provided by the Guarantor) setting forth the Fair Market Value of each Ship in each case at the cost of the Borrowers save that the Borrowers shall not be required to pay for more than 2 valuations per Ship in each calendar year unless an Event of Default has occurred or any valuation obtained would entitle the Agent to serve a notice pursuant to Clause 15.1 in which case such valuations required by the Agent shall be for the cost of the Borrowers; and
(c)
the Agent shall be entitled, at its own expense, to obtain valuations of each Ship other than those referred to in paragraphs (a) and (b) above as often as it may request.
15.9
Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.2 .
15.10
Release of Additional Security . It is agreed that where a Borrower or a third party has provided additional security pursuant to Clause 15.2 , the Borrowers are entitled to request the release of such additional security at their expense at any time following a testing of compliance by the Borrowers of the minimum required security cover under Clause 15.1 where the Borrowers are shown to have been in compliance with such minimum required security cover for at least 90 consecutive days (without including the additional security within the calculation) and where the Borrowers are in compliance with the minimum required security cover under Clause 15.1, such additional security shall be released at the Borrowers' cost.
16
PAYMENTS AND CALCULATIONS

50    




16.1
Currency and method of payments. All payments to be made by the Lenders or by either Borrower and any Security Party 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 either Borrower or another Security Party to the Agent or any Lender, to the account of the Agent at The Bank of New York, New York at 1290 Avenue of Americas, Floor 5, New York NY10104 (Account: NIBC Bank NV, Account No 890 064 7140, BIC: IRVTUS3N, Sort code: ABA 021000018 for further credit to 89006471400052/STI Ville Shipping Company Ltd/STI Fontvielle Shipping Company Ltd), or to such other account with such other bank as the Agent may from time to time notify to the Borrowers and the other Creditor Parties; 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 Borrowers and the other Creditor Parties.
16.2
Payment on non-Business Day. If any payment by either Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:
(a)
the due date shall be extended to the next succeeding Business Day; or
(b)
if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;
and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.
16.3
Basis for calculation of periodic payments. All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.
16.4
Distribution of payments to Creditor Parties. Subject to Clauses 16.5 , 16.6 and 16.7:
(a)
any amount received by the Agent 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 and the Swap Counterparty or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and
(b)
amounts to be applied in satisfying amounts of a particular category which are due to the Lenders 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

51    




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 either Borrower or any Lender or any Swap Counterparty any sum which the Agent is expecting to receive for remittance or distribution to that 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 either Borrower or a Lender or a Swap Counterparty, without first having received that sum, that Borrower or (as the case may be) the Lender or 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 Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.
16.10
Agent's memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.
16.11
Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by either 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 shall be applied:
(a)
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreements in the following order and proportions:
(i)
first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents and the Swap Counterparties under any Master Agreement other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrowers under Clauses 20, 21 and 22 of this Agreement or by either Borrower or any Security Party under any corresponding or similar provision in any other Finance Document or in any Master Agreement);

52    




(ii)
secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents and the Master Agreements (and, for this purpose, the expression " interest " shall include any net amount which either Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of any Master Agreement but shall have failed to pay or deliver to the relevant Swap Counterparty at the time of application or distribution under this Clause 17); and
(iii)
thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure of each Swap Counterparty (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);
(b)
SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document or any Master Agreement but which the Agent, by notice to the Borrowers, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a); and
(c)
THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.
17.2
Variation of order of application. The Agent may, with the authorisation of the Majority Lenders and the Swap Counterparties, by notice to the Borrowers, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.
17.3
Notice of variation of order of application. The 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 Borrowers or any Security Party.
18
APPLICATION OF EARNINGS
18.1
Payment of Earnings. Each Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (subject only to the provisions of the General Assignment), all the Earnings of each Ship are paid to the Earnings Account for that Ship.
18.2
Application of Earnings. Each Borrower undertakes with the Lenders to procure that money from time to time credited to, or for the time being standing to the credit of, an Earnings Account shall, unless and until an Event of Default shall have occurred and for so long as the same is continuing (whereupon the provisions of Clause 17.1 shall be and become applicable), be freely available to the Borrower.
18.3
Location of accounts. The Borrowers shall promptly:
(a)
comply with any requirement of the Agent as to the location or re‑location of the Earnings Accounts (or either of them); and

53    




(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 Accounts (or either of them).
18.4
Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit either 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.
18.5
Borrowers' obligations unaffected. The provisions of this Clause 18 do not affect:
(a)
the liability of the Borrowers to make payments of principal and interest on the due dates; or
(b)
any other liability or obligation of the Borrowers or any Security Party under any Finance Document.
19
EVENTS OF DEFAULT
19.1
Events of Default. An Event of Default occurs if:
(a)
either Borrower or any Security Party fails to pay when due any sum payable under a Finance Document or under any document relating to a Finance Document unless its failure to pay is caused by a Disruption Event and payment is made within 3 Business Days of its due date; or
(b)
any breach occurs of Clause 9.2 , 11.2, 11.3, 12 or 15.2; or
(c)
any breach occurs of clause 12 ( Financial Covenants ) of the Guarantee, and such default continues unremedied 15 days after written notice from the Agent to the Borrowers and the Guarantor requesting action to remedy the same; or
(d)
any breach by either Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues remedied 10 days after written notice from the Agent requesting action to remedy the same; or
(e)
(subject to any applicable grace period specified in the Finance Document) any breach by either Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b) or (c)); or
(f)
any representation, warranty or statement made or repeated by, or by an officer of, either 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 repeated; or
(g)
any of the following occurs in relation to any Financial Indebtedness of the Guarantor exceeding $10,000,000 in aggregate or, in the case of each Borrower, $1,000,000 (or in either case, the equivalent in any other currency):
(i)
any Financial Indebtedness of that Relevant Person is not paid when due; or
(ii)
any Financial Indebtedness of that 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

54    




(iii)
a lease, hire purchase agreement or charter creating any Financial Indebtedness of that 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 that 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 that Relevant Person becomes enforceable; or
(h)
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, $10,000,000 in the case of the Guarantor and $1,000,000 in the case of each Borrower and any other Security Party or more or the equivalent in another currency; or
(iii)
any administrative or other receiver is appointed over any asset of a Relevant Person; or
(iv)
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 (a) 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 (did) a government minister or public or regulatory authority of a Pertinent Jurisdiction 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 Guarantor or a Borrower 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

55    




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 in any Pertinent Jurisdiction, 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 (a) 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 (a) 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
(xi)
in a Pertinent Jurisdiction 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 acting reasonably is similar to any of the foregoing.
(i)
either Borrower or the Guarantor ceases or suspends carrying on its business or a part of its business which is material in the context of this Agreement; or
(j)
it becomes unlawful in any Pertinent Jurisdiction or impossible:
(i)
for either Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document;
(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
(k)
any consent necessary to enable either Borrower to own, operate or charter the Ship owned by it or to enable such Borrower or any other Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document or the Shipbuilding Contract to which it is a party 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

56    




(l)
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 and which in each case such default continues unremedied 15 days after written notice from the Agent requesting action to remedy the same; or
(m)
the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
(n)
an Event of Default (as defined in section 14 of a Master Agreement) occurs; or
(o)
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
(p)
either of the Ships ceases to be employed by the relevant Approved Ship Manager or Approved Sub-Manager on terms acceptable to the Agent or any of the circumstances described in Clause 19.1(h) or (i) occurs ( mutatis mutandis ) in relation to an Approved Ship Manager or Approved Sub-Manager or an Approved Ship Manager or an Approved Sub-Manager breaches any provision of its Approved Ship Manager's Undertaking which the Agent considers material and the relevant Borrower fails within a period of 15 days of it becoming aware of the occurrence of such circumstance or breach or of the receipt of a written notification from the Agent requesting the relevant Borrower to remedy such circumstances or breach either to remedy such circumstances or breach or to substitute the relevant Approved Ship Manager or Approved Sub-Manager with another Approved Ship Manager or an Approved Sub-Manager which executes and delivers to the Security Trustee a replacement Approved Ship Manager's Undertaking; or
(q)
an event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect; or
(r)
it appears to the Majority Lenders that, without their prior consent, a Change of Control has occurred; or
(s)
any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced in relation to any of the Finance Documents or the transactions contemplated in any of the Finance Documents or against either Borrower or the Guarantor or its assets which has or is reasonably likely to have a Material Adverse Effect; or
(t)
the Guarantor is delisted from the New York Stock Exchange.
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 Borrowers a notice stating that all or part of the Commitments and of the other obligations of each Lender to the Borrowers under this Agreement are cancelled; and/or
(ii)
serve on the Borrowers a notice stating that all or part of the Loan together with 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

57    




(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 and/or 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 Borrowers under this Agreement shall be cancelled.
19.4
Acceleration of Loan. On the service of a notice under Clause 19.2(a)(i) , all or, as the case may be, the part of the Loan specified in the notice together with accrued interest and all other amounts accrued or owing from the Borrowers 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) and (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 Borrowers under Clause 19.2; but the notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide either Borrower or any Security Party with any form of claim or defence.
19.7
Creditor Party 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 either 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.

58    




19.9
Relevant Persons. In this Clause 19, a " Relevant Person " means the Borrowers and any Security Party.
19.10
Interpretation. In Clause 19.1(g) 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(h) " petition " includes an application.
19.11
Position of Swap Counterparties. 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 Borrowers shall pay to the Agent:
(a)
on or prior to the date of this Agreement, an arrangement fee in an amount referred to in the Fee Letter;
(b)
quarterly in arrears during the period from (and including) the date of this Agreement to the earlier of (i) the second 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 35 per cent. of the applicable Margin per annum on the Total Commitments less the amount of the Loan, for distribution among the Lenders pro rata to their Commitments; and
(c)
on the date of any initial syndication of the Loan to any Transferee Lender (as defined in Clause 26.2) which is not an Affiliate of NIBC Bank N.V., and on each anniversary thereof during the Security Period, an annual agency fee of $20,000, such agency fee to be payable to the Agent in advance for its own account.
20.2
Costs of negotiation, preparation etc. The Borrowers 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 Borrowers shall pay to the Agent, on the Agent's demand, for the account of the Creditor Party concerned, the amount of all expenses 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 Lender or the Swap Bank concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

59    




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 Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent's demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrowers to pay such a tax.
20.5
Financial Services Authority fees. The Borrowers 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 Borrowers that a Lender has notified the Agent to be necessary to compensate it 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 Services Authority (or other United Kingdom governmental authorities or agencies) of a requirement to pay fees to the Financial Services Authority calculated by reference to liabilities used to fund its 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 (without necessarily specifying a detailed breakdown) 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 Borrowers 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)
a Tranche not being borrowed on the date specified in the Drawdown Notice relating to such Tranche 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 Borrowers to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 7);
(d)
the occurrence of an Event of Default or a Latent Event of Default and/or the acceleration of repayment of the Loan under Clause 19;
and in respect of any tax (other than any FATCA Deduction or a 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 claim, expense, liability or loss, including a loss of a prospective profit, incurred by a Lender:

60    




(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 Borrowers 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 directly and mainly 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.
21.4
Currency indemnity. If any sum due from either 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 either 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 Borrowers shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.
In this Clause 21.4, the " available rate of exchange " means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

61    




This Clause 21.4 creates a separate liability of the Borrowers which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.
21.5
Application to Master Agreements. For the avoidance of doubt, Clause 21.4 does not apply in respect of sums due from either 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 (without necessarily specifying a detailed breakdown) 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.
21.7
Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.
22
NO SET-OFF OR TAX DEDUCTION
22.1
No deductions. All amounts due from the Borrowers or any Security Party under a Finance Document or any the Master 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 either Borrower or such Security Party is required by law to make.
22.2
Grossing-up for taxes. If either Borrower or any Security Party is required by law to make a tax deduction from any payment under a Finance Document or the Master Agreement (other than a FATCA Deduction):
(a)
either Borrower or such Security Party (as the case may be) shall notify the Agent as soon as it becomes aware of the requirement;
(b)
either Borrower or such Security Party (as the case may be) 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 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 Borrowers shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.
22.4
Exclusion of tax on overall net income. In this Clause 22 " tax deduction " means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party's overall net income.
22.5
FATCA Deduction. Each party to this Agreement may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and

62    




no party to this Agreement 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. Each party to this Agreement shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the party to this Agreement to whom it is making the payment and, in addition, shall notify the Borrowers, the Agent and the other Creditor Parties.
22.6
Stamp taxes. The Borrowers shall pay and, within 3 Business Days of demand, indemnify each Creditor Party against any cost, loss or liability which that Creditor Party incurs in relation to all stamp duty, registration and other similar taxes payable in respect of any Finance Document or any Master Agreement.
22.7
Application to Master Agreements. For the avoidance of doubt, Clause 22 does not apply in respect of sums due from either 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.
22.8
FATCA Information
(a)
Subject to paragraph (c) below, each Party shall, within 10 Business Days of a reasonable request by another Party:
(i)
confirm to that other Party whether it is:
(A)
a FATCA Exempt Party; or
(B)
not a FATCA Exempt Party; and
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable "passthru payment percentage" or other information required under the US Treasury Regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.
(b)
If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality.
(d)
If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then:
(i)
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

63    




(ii)
if that Party failed to confirm its applicable "passthru payment percentage" then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable "passthru payment percentage" is 100%,
until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.
23
ILLEGALITY, ETC
23.1
Illegality. This Clause 23 applies if a Lender (the " Notifying Lender ") notifies the Agent that it has become, or will with effect from a specified date, become:
(a)
unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
(b)
contrary to, or inconsistent with, any regulation,
for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.
23.2
Notification of illegality. The Agent shall promptly notify the Borrowers, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.
23.3
Prepayment; termination of Commitment. On the Agent notifying the Borrowers under Clause 23.2 , the 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 Borrowers 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 Notifying Lender's overall net income); or

64    




(b)
the effect of complying with any law or 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; or
(c)
the implementation or application of or compliance with "the international framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010 each as amended, supplemented or restated (" Basel III Accord ") or any other law or regulation implementing the Basel III Accord or any of the approaches provided for and allowed to be used by banks under or in connection with the Basel III Accord as from time to time implemented by the Notifying Lender (whether such implementation, application or compliance is by a government, regulator, supervisory authority, the Notifying Lender or its holding company),
the Notifying Lender (or a parent company of it) has incurred or will incur an " increased cost ".
24.2
Meaning of "increased costs". In this Clause 24, " increased costs " 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 having taken an assignment of rights under this Agreement, 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 after providing evidence of its method of calculation to quantify such increased costs under this Agreement,
but not an item attributable to a FATCA Deduction required to be made by a Party.
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 Borrowers of claim for increased costs. The Agent shall promptly notify the Borrowers and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.
24.4
Payment of increased costs. The Borrowers shall pay to the Agent, on the Agent's demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.
24.5
Notice of prepayment. If either Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4 , that Borrower may give the Agent not less than

65    




14 days' notice of its 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 Borrowers’ notice of intended prepayment; and:
(a)
on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and
(b)
on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Notifying Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.
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 either Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from either Borrower to that Creditor Party under any of the Finance Documents; and
(b)
for that purpose:
(i)
break, or alter the maturity of, all or any part of a deposit of that Borrower;
(ii)
convert or translate all or any part of a deposit or other credit balance into Dollars; and
(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 either 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 either Borrower.
26
TRANSFERS AND CHANGES IN LENDING OFFICES
26.1
Transfer by Borrower. Neither Borrower may, without the prior written consent of the Agent, given on the instructions of all the Lenders transfer any of its rights, liabilities or obligations under any Finance Document.

66    




26.2
Transfer by a Lender. Subject to Clause 26.5 a Lender (the " Transferor Lender ") may at any time, with:
(a)
the consent of the Borrowers (such consent not to be unreasonably withheld or delayed and such consent deemed to be given if the Borrowers do not expressly refuse their consent within 5 Business Days of a request by a Lender); and
(b)
the prior approval of the Agent,
cause:
(i)
its rights in respect of all or part of its Contribution; or
(ii)
its obligations in respect of all or part of its Commitment; or
(iii)
a combination of (i) and (ii),
to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution or trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets and which is FATCA compliant (a " Transferee Lender ") or the securitisation or similar transaction of that Transferor Lender's Contribution of Commitment 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 the consent of the Borrowers shall not be required where:
(i)
the Transferee Lender is an existing Lender, an Affiliate of an existing Lender or a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets, which is advised by, or the assets of which are managed by the NIBC Bank N.V. or a bank or financial institution which has, at any time previously, been a lender under this Agreement; or
(ii)
an Event of Default has occurred and is continuing; or
(iii)
the transfer is related to a securitisation or similar transaction in respect of the relevant Transferor Lender's Contribution or Commitment (in which case, no prior notice to either Borrower or any Security Party is required).
However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.
26.3
Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):
(a)
sign the Transfer Certificate on behalf of itself, the Borrowers, the Security Parties, the Security Trustee, each of the other Lenders and each of the Swap Banks;
(b)
on behalf of the Transferee Lender, send to each Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it;

67    




(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 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 signed by the Agent under Clause 26.3 on or before that date.
26.5
No transfer without Transfer Certificate. Except as provided in Clause 26.17, no assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, each Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
26.6
Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in a successor, the Agent may, if it sees fit, by notice to the successor and the Borrowers and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent's notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.
26.7
Effect of Transfer Certificate. A Transfer Certificate 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 either 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 either 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

68    




(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 either 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 either 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. Each 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 recover a registration fee of $5,000 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, either 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 Confidential Information. Any Creditor Party may disclose:
(a)
with the prior written consent of the Borrowers, to any of their respective Affiliates and any of their respective officers, directors, employees, professional advisers, auditors, partners and representatives such Confidential Information as that Creditor Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
(b)
to any person:

69    




(i)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents and to any of that person's Affiliates, representatives and professional advisers;
(ii)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or either Borrower and/or one or more of the Security Parties and to any of that person's Affiliates, representatives and professional advisers;
(iii)
appointed by any Creditor Party or by a person to whom paragraph (b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;
(iv)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above including any Rating Agency and or its or their professional advisers;
(v)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
(vi)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;
(vii)
to whom or for whose benefit that Creditor Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 26.17 and to any rating agency in relation to any such securitisation;
(viii)
who is a party; or
(ix)
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document,
in each case, such Confidential Information as that Creditor Party shall consider appropriate if:
(A)
in relation to paragraphs (b)(i), (b)(ii) and (b)(iii) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B)
in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(C)
in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive

70    




information except that there shall be no requirement to so inform if, in the opinion of that Creditor Party, it is not practicable so to do in the circumstances; and
(c)
with the prior written consent of the Borrowers, to any person appointed by that Creditor Party or by a person to whom paragraph (b)(i) or (b)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the Loan Market Association Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrowers and the relevant Creditor Party.
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 Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.
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 Borrowers, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting the Borrowers, 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 each 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

71    




(ii)
require any payments to be made by each 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 Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrowers, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.
27.2
Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words "by the Agent on behalf of the Majority Lenders" were replaced by the words "by or on behalf of every Lender and every Swap Bank":
(a)
a change to any Security Party, other than in accordance with the terms of the Finance Documents;
(b)
a reduction in the Margin;
(c)
a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement;
(d)
an increase in any Lender's Commitment;
(e)
a change to the definition of " Sanctions " or " Majority Lenders ";
(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)
an extension of the Availability Period; and
(i)
any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.
27.3
Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
(a)
a provision of this Agreement or another Finance Document; or
(b)
an Event of Default; or
(c)
a breach by either Borrower or a Security Party of an obligation under a Finance Document or the general law; or
(d)
any right or remedy conferred by any Finance Document or by the general law,

72    




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.
27.4
Exceptions.
(a)
If the Agent or a Lender reasonably believes that an amendment or waiver may constitute a "material modification" for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Borrowers 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).
(b)
The consent of a Lender shall not be required pursuant to paragraph (a) above if that Lender is a FATCA Protected Lender.
28
NOTICES
28.1
General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, electronic mail (" Email ") or fax and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
28.2
Addresses for communications. A notice by letter or fax shall be sent:
(a)
to the Borrowers:    c/o Scorpio Tankers Inc
    Le Millenium, 9 Boulevard Charles III,
    98000 Monaco
Attn: Mr Luca Forgione - Legal Department
Fax No:     + 3 77 97 77 83 46
Email@ legal@scorpiogroup.net
(b)
to a Lender:    At the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate.
(c)
to a Swap Bank    At the address below its name in Schedule 2.
(d)
to the Agent:    in respect of administrative matters:
NIBC Bank N.V.
    Carnegieplein 4
    2517 KJ The Hague
    The Netherlands
Attention: Lars Ravensbergen
    Email: lars.ravensbergen@nibc.com
    Fax: +31 (0)70 342 95 43
in respect of credit matters:
NIBC Bank N.V.
    Carnegieplein 4

73    




    2517 KJ The Hague
    The Netherlands
Attention: Michael de Visser / Pieter Jongen
    Email: michael.de.visser@nibc.com /
    pieter.jongen@nibc.com
    Fax: +31 (0)70 342 55 77
(e)
to the Security Trustee:        in respect of administrative matters:
NIBC Bank N.V.
    Carnegieplein 4
    2517 KJ The Hague
    The Netherlands
Attention: Lars Ravensbergen
    Email: lars.ravensbergen@nibc.com
    Fax: +31 (0)70 342 95 43
in respect of credit matters:
NIBC Bank N.V.
    Carnegieplein 4
    2517 KJ The Hague
    The Netherlands
Attention: Michael de Visser / Pieter Jongen
    Email: michael.de.visser@nibc.com /
    pieter.jongen@nibc.com
    Fax: +31 (0)70 342 55 77
or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders, 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 Email shall be deemed to be served, and shall take effect, at the time when it is actually received in readable form; and
(c)
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,

74    




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 between the Agent and a Lender or a Swap Bank. Any communication to be made between the Agent and a Lender or a Swap Bank under or in connection with the Finance Documents may be made by Email or other electronic means, if the Agent and the relevant Lender or Swap Bank:
(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 Email 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 Email addresses or any other such information supplied to them.
Any electronic communication made between the Agent and a Lender or a Swap Bank will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender or a Swap Bank 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
JOINT AND SEVERAL LIABILITY AND HEDGE GUARANTEE
29.1
General . Other than for the limited period referred to in Clause 29.6, all liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be several and, if and to the extent consistent with Clause 29.2, joint.
29.2
No impairment of Borrower’s obligations . The liabilities and obligations of a Borrower shall not be impaired by:
(a)
this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;

75    




(b)
any Lender or the Security Trustee entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;
(c)
any Lender or the Security Trustee releasing the other Borrower or any Security Interest created by a Finance Document; or
(d)
any combination of the foregoing.
29.3
Principal debtors. Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and neither Borrower shall in any circumstances be construed to be a surety for the obligations of the other Borrower under this Agreement.
29.4
Subordination. Subject to Clause 29.5 during the Security Period, neither Borrower shall:
(a)
claim any amount which may be due to it from the other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or the matter unconnected with this Agreement or any Finance Document; or
(b)
take or enforce any form of security from the other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of the other Borrower; or
(c)
set off such an amount against any sum due from it to the other Borrower; or
(d)
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower or any Security Party; or
(e)
exercise or assert any combination of the foregoing.
29.5
Borrower’s required action . If during the Security Period, the Agent, by notice to a Borrower, requires it to take any action referred to in paragraphs (a) to (d) of Clause 29.4, in relation to the other Borrower, that Borrower shall take that action as soon as practicable after receiving the Agent’s notice.
29.6
Deferred liability . The liabilities and obligations of Borrower B shall only commence on and from the Drawdown Date of Tranche B.
29.7
Hedge Guarantee . Each Borrower irrevocably and unconditionally and jointly and severally:
(a)
guarantees to the Swap Bank punctual performance by the other Borrower (the " Other Borrower ") of all that Other Borrower's obligations under the Master Agreement to which it is a party;
(b)
undertakes with the Swap Bank that whenever the Other Borrower does not pay any amount when due under or in connection with any Master Agreement to which it is a party, that Borrower shall immediately on demand pay that amount as if it were the principal obligor; and
(c)
agrees with the Swap Bank that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify the Swap Bank immediately on demand against any cost, loss or liability it incurs as a result of the Other Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Master Agreement on the date when it would have been due. The amount payable by a Borrower under this indemnity will not exceed the amount it would have

76    




had to pay under this clause if the amount claimed had been recoverable on the basis of a guarantee.
30
SUPPLEMENTAL
30.1
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.
30.2
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.
30.3
Counterparts. A Finance Document may be executed in any number of counterparts.
30.4
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.
30.5
Contractual recognition of bail-in . Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to this Agreement, each party to this Agreement acknowledges and accepts that any liability of any party to this Agreement to any other party to this Agreement under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
31
LAW AND JURISDICTION
31.1
English law. This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
31.2
Exclusive English jurisdiction. Subject to Clause 31.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.

77    




31.3
Choice of forum for the exclusive benefit of Creditor Parties. Clause 31.2 is for the exclusive benefit of the Creditor Parties, each of 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.
Neither Borrower shall commence any proceedings in any country other than England in relation to a Dispute.
31.4
Process agent. Each Borrower irrevocably appoints Scorpio UK Limited at its business address for the time being, presently at 10 Lower Grosvenor Place, London, SW1W 0EN (such communication to be marked preferably and if possible on the paper envelope (not any courier exterior) with “STNG Transaction” for the urgent attention of General Counsel), 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.
31.5
Creditor Party rights unaffected. Nothing in this Clause 31 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
31.6
Meaning of "proceedings". In this Clause 31, " proceedings " means proceedings of any kind, including an application for a provisional or protective measure 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.


78    





SCHEDULE 1

LENDERS AND COMMITMENTS
Part 1
Lender
Lending Office
Commitment (US Dollars)
NIBC Bank N.V.
NIBC Bank N.V.
4 Carnegieplein
2517 KJ, The Hague
The Netherlands
$44,000,000


79    





SCHEDULE 2

SWAP BANKS

Swap Bank
Booking Office
NIBC Bank N.V.
NIBC Bank N.V.
4 Carnegieplein
2517 KJ, The Hague
The Netherlands


80    





SCHEDULE 3

DRAWDOWN NOTICE
To:
NIBC Bank N.V.
4 Carnegieplein
2517 KJ, The Hague
The Netherlands
[ l ] 2016
DRAWDOWN NOTICE
1
We refer to the loan agreement (the " Loan Agreement ") dated [ l ] 2016 and made between ourselves as joint and several Borrowers, the Lenders referred to therein, the Swap Banks referred to therein and yourselves as Mandated Lead Arranger, Agent and as Security Trustee in connection with a facility of up to US$44,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
2
We request to borrow Tranche [A][B] as follows:‑
(a)
Amount: US$[ l ];
(b)
Drawdown Date: [ l ] 2016;
(c)
[Duration of the first Interest Period shall be [ l ] months;] and
(d)
Payment instructions: [ 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; and
(b)
no Event of Default or Latent 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]

___________________________
Director
for and on behalf of
STI FONTVIEILLE SHIPPING COMPANY LIMITED
and
STI VILLE SHIPPING COMPANY LIMITED

81    




[Name of Signatory]


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 14 of this Schedule 4 .
2
Copies of the certificate of incorporation and constitutional documents of each Borrower and each Security Party.
3
Copies of resolutions of the directors of each Borrower and each Security Party and in the case of the Borrowers copies of resolutions of their shareholders authorising the execution of the Master Agreement and each of the Finance Documents to which that Borrower or that Security Party is a party and, in the case of each Borrower, authorising named officers to give Drawdown Notices and other notices under this Agreement.
4
The original of any power of attorney under which the Master Agreement and any Finance Document is executed on behalf of each Borrower or a Security Party.
5
An incumbency certificate in respect of the officers and directors (or equivalent) of each Borrower and the Security Parties and signature samples of any signatories to any Finance Document.
6
Copies of all consents which each Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document and any Master Agreement.
7
Documentary evidence that the Earnings Accounts have been opened with the relevant Account Bank.
8
Documentary evidence that the agent for service of process named in Clause 31 has accepted its appointment.
9
Such documentation and other evidence in form and substance acceptable to the Agent or a Lender in order for each to carry out and be satisfied with the results of all necessary "know your customer" or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement, and other Finance Documents and any Master Agreement, including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and each of the Lenders to identify each Borrower and each Security Party.
10
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the structure of the financing which is the subject of this Agreement and the laws of the Marshall Islands and such other relevant jurisdictions as the Agent may require.
11
A Compliance Certificate together with all supporting Accounting Information and other evidence as required pursuant to the terms of this Agreement.

82    




12
The Fee Letter duly signed by the parties to it.
13
Evidence that the Borrowers have paid any and all fees and expenses then due and payable under the Finance Documents.
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.
15    

83    





PART B
The following are the documents referred to in Clause 9.1(a) .
In this Part B, the " relevant Ship " means the particular Ship to which the relevant Tranche relates and relevant " relevant Borrower " means the Borrower owning that Ship.
1
A duly executed original of the Mortgage, the General Assignment, any Charterparty Assignment, the Account Security Deed and any Intercompany Loan Assignment (if applicable) (and of each document to be delivered by each of them) relating to the relevant Ship.
2
Documentary evidence that:
(a)
the relevant Ship is permanently registered in the name of the relevant Borrower under the applicable Approved Flag;
(b)
the relevant Ship is in the absolute and unencumbered ownership of the relevant Borrower save as contemplated by the Finance Documents;
(c)
the relevant Ship maintains the highest available class with the Approved Classification Society free of all overdue recommendations and conditions of such Approved Classification Society;
(d)
the relevant Mortgage has been duly registered against the relevant Ship as a valid first priority or, as the case may be, preferred ship mortgage in accordance with the laws of the jurisdiction of its Approved Flag;
(e)
the relevant Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with together with copies of the insurance policies and certificates of entry for the relevant Ship; and
(f)
any and all Security Interests relating to the relevant Borrower's obligations under the Existing Facility including, without limitation, in respect of such Borrower, the relevant Ship, its Earnings, Insurances and any other assets, rights or interests of the relevant Borrower created pursuant to the Existing Facility has or have been released and discharged to the satisfaction of the Agent.
3
Documents establishing that the relevant Ship is managed by the Approved Ship Manager and/or the Approved Sub-Manager on terms acceptable to the Agent (such documents the " Approved Management Agreement "), together with:
(a)
an Approved Ship Manager's Undertaking executed by the relevant Approved Ship Manager and/or the Approved Sub-Manager which is party to an Approved Management Agreement with the relevant Borrower and/or relevant Approved Ship Manager, in favour of the Agent; and
(b)
copies of the Approved Technical Ship Manager's (or, if applicable, the Approved Sub-Manager’s) Document of Compliance and the relevant Ship's Safety Management Certificate (together with any other details of the applicable safety management system which the Agent requires) and ISSC.
4
Valuations of the Fair Market Value of the relevant Ship, addressed to the Agent and the Lenders stated to be for the purposes of this Agreement and dated not more than 14 days before the Drawdown Date in respect of the relevant Tranche which evidence an average Fair Market Value for such Ship of not less than 130 per cent. of the Tranche in respect of such Ship and, in the

84    




case of the second Ship to be refinanced under this Agreement, valuations of the Fair Market Value of the Ships of not less than 130 per cent. of the Loan.
5
Evidence that the Green Passport required pursuant to Clause 14.19 is in place.
6
An update on the current SIRE status of the relevant Ship satisfactory to the Agent.
7
A copy of the International Air Pollution Prevention Certificate for the relevant Ship.
8
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Marshall Islands, and such other relevant jurisdictions as the Agent may require.
9
A favourable opinion from an independent insurance consultant appointed by the Agent on such matters relating to the insurances for the relevant Ship as the Lenders may require
10
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 this Schedule 4 all be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of each Borrower.

85    





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:
[Name of Agent] for itself and for and on behalf of the Borrowers, each Security Party, the Security Trustee, each Lender and each Swap Bank, as defined in the Loan Agreement referred to below.
[ l ]
1
This Certificate relates to a Loan Agreement (the " Agreement ") dated [ l ] 2016 and made between (1) STI Fontvieille Shipping Company Limited and STI Fontvieille Shipping Company Limited as joint and several borrowers (the " Borrowers "), (2) the banks and financial institutions named therein as Lenders, (3) the banks and financial institutions named therein as Swap Banks, (4) NIBC Bank N.V. as Mandated Lead Arranger, (5) NIBC Bank N.V. as Agent and (5)NIBC Bank N.V. as Security Trustee for a loan facility of up to $44,000,000.
2
In this Certificate, terms defined in the Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate and:
" Relevant Parties " means the Agent, each Borrower, each Security Party, the Mandated Lead Arranger, the Security Trustee, each Lender and each Swap Bank;
" Transferor " means [full name] of [lending office];
" 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 Agreement and every other Finance Document in relation to [ l ] per cent. of its Contribution, which percentage represents $[ l ].]
5
[By virtue of this Certificate and Clause 26 of the 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 Agreement provides will become binding on it upon this Certificate taking effect.
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 Agreement.

86    




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 required 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 Agreement and each of the other Finance Documents;
(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)
each 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 each Borrower or any Security Party under any of 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)
that this Certificate is valid and binding as regards the Transferee;
(e)
confirms the accuracy of the administrative details set out below regarding the Transferee.
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.

87    




11
The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 9 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
[Name of Agent]
By:
Date:

88    





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.

89    





SCHEDULE 6

DESIGNATION NOTICE
To:    NIBC Bank N.V.
4 Carnegieplein
2517 KJ, The Hague
The Netherlands
[ l ]
Dear Sirs
Loan Agreement dated [ l ] 2016 made between (i) ourselves as joint and several Borrowers, (ii) the Lenders named therein, (iii) the Swap Banks named therein, (iv) yourselves as Mandated Lead Arranger and (v) yourselves as Agent and Security Trustee (the "Loan Agreement").
We refer to:-
1
the Loan Agreement;
2
the Master Agreement dated [ 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,
[Name of Signatory]

___________________________
Director
for and on behalf of
STI FONTVIEILLE SHIPPING COMPANY LIMITED

[Name of Signatory]

___________________________
Director
for and on behalf of
STI VILLE SHIPPING COMPANY LIMITED

90    





SCHEDULE 7

LIST OF APPROVED BROKERS
Clarkson plc
RS Platou Shipbrokers A.S.
Arrow Sale & Purchase Ltd.
Braemar Seascope Ltd.
Maersk Broker K/S
Fearnleys Ltd.
Compass Maritime Services LLC


91    






92    




SCHEDULE 8

MANDATORY COST
1
The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.
2
On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the " Additional Cost Rate ") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the Loan) and will be expressed as a percentage rate per annum.
3
The Additional Cost Rate for any Lender lending from a lending office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in all Loans made from that lending office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that lending office.
4
The Additional Cost Rate for any Lender lending from a lending office in the United Kingdom will be calculated by the Agent as follows:
(a)
in relation to a sterling Loan:
AB + C (B - D) + E * 0.01
100 - (A + C)
per cent. per annum
(b)    
E * 0.01
300
in relation to a Loan in any currency other than sterling:

per cent. per annum
Where:
A
is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
B
is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate of interest specified in paragraph (a) of Clause 7.2) payable for the relevant Interest Period on the Loan.

93    




C
is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.
D
is the percentage rate per annum payable by the Bank of England to the Agent on interest bearing Special Deposits.
E
is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.
5
For the purposes of this Schedule:
(a)
" Eligible Liabilities " and " Special Deposits " have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
(b)
" Fees Rules " means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;
(c)
" Fee Tariffs " means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and
(d)
" Tariff Base " has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.
(e)
" Unpaid Sum " means any sum due and payable but unpaid by each Borrower or a Security Party under the Finance Documents.
6
In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.
7
If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.
8
Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:
(a)
the jurisdiction of its lending office; and

94    




(b)
any other information that the Agent may reasonably require for such purpose.
Each Lender shall promptly notify the Agent of any change to the information provided by it pursuant to this paragraph.
9
The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender's obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a lending office in the same jurisdiction as its lending office.
10
The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.
11
The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.
12
Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties to the Loan Agreement.
13
The Agent may from time to time, after consultation with the Borrowers and the Lenders, determine and notify to all parties to the Loan Agreement any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties to the Loan Agreement.

95    





EXECUTION PAGES

BORROWERS
 
 
 
SIGNED  by Micha Withoft
/s/ Micha Withoft
for and on behalf of
 
STI FONTVIEILLE SHIPPING
 
COMPANY LIMITED     
 
in the presence of:
 
Francesca Gianfranchi
 
/s/ Francesca Gianfranchi
 
 
 
SIGNED  by Micha Withoft
/s/ Micha Withoft
for and on behalf of
 
STI VILLE SHIPPING
 
COMPANY LIMITED     
 
in the presence of:
 
Francesca Gianfranchi
 
/s/ Francesca Gianfranchi
 
 
 
THE LENDERS
 
 
 
SIGNED  by
/s/ Cameron Johnstone-Browne
for and on behalf of
Name: Cameron Johnstone-Browne    
NIBC BANK N.V.
Title: Attorney-in-Fact
in the presence of:
/s/Rohan Inamdar
 
Name: Rohan Inamdar
 
Title: Trainee Solicitor
 
London EC2A 2HB
 
 
THE SWAP BANKS
 
 
 
SIGNED  by
/s/ Cameron Johnstone-Browne
for and on behalf of
Name: Cameron Johnstone-Browne    
NIBC BANK N.V.
Title: Attorney-in-Fact
in the presence of:
/s/Rohan Inamdar
 
Name: Rohan Inamdar
 
Title: Trainee Solicitor
 
London EC2A 2HB
 
 
THE MANDATED LEAD ARRANGER
 
 
 
SIGNED  by
/s/ Cameron Johnstone-Browne
for and on behalf of
Name: Cameron Johnstone-Browne    

96    




NIBC BANK N.V.
Title: Attorney-in-Fact
in the presence of:
/s/Rohan Inamdar
 
Name: Rohan Inamdar
 
Title: Trainee Solicitor
 
London EC2A 2HB
 
 
THE AGENT
 
 
 
SIGNED  by
/s/ Cameron Johnstone-Browne
for and on behalf of
Name: Cameron Johnstone-Browne    
NIBC BANK N.V.
Title: Attorney-in-Fact
in the presence of:
/s/Rohan Inamdar
 
Name: Rohan Inamdar
 
Title: Trainee Solicitor
 
London EC2A 2HB
 
 
THE SECURITY TRUSTEE
 
 
 
SIGNED  by
/s/ Cameron Johnstone-Browne
for and on behalf of
Name: Cameron Johnstone-Browne    
NIBC BANK N.V.
Title: Attorney-in-Fact
in the presence of:
/s/Rohan Inamdar
 
Name: Rohan Inamdar
 
Title: Trainee Solicitor
 
London EC2A 2HB
 
 
 
 




97    

Execution version

Exhibit 4.27
Date 30 August 2016
SCORPIO TANKERS INC.
as Borrower
and
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
and
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 2
as Swap Banks
and
ABN AMRO BANK N.V.
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
as Bookrunners
and
ABN AMRO BANK N.V.
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
SKANDINAVISKA ENSKILDA BANKEN AB (publ)
as Mandated Lead Arrangers
and
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
as Agent and as Security Trustee

LOAN AGREEMENT
relating to
loan facility of up to $372,000,000 to refinance indebtedness
on up to 20 product tankers and for general corporate purposes

WATSONFARLEYWILLIAMS.JPG
Execution version

Index
Clause
    
1
Interpretation
2
Facility
3
Position of the Lenders and Swap Banks
4
Drawdown
5
Interest
6
Interest Periods
7
Default Interest
8
Repayment, Prepayment and Reborrowing
9
Conditions Precedent
10
Representations and Warranties
11
General Undertakings
12
Corporate and Financial Undertakings
13
Insurance
14
Ship Covenants
15
Security Cover
16
Payments and Calculations
17
Application of Receipts
18
Application of Earnings
19
Events of Default
20
Fees and Expenses
21
Indemnities
22
No Set-Off or Tax Deduction
23
Illegality, etc.
24
Increased Costs
25
Set-Off
26
Transfers and Changes in Lending Offices
27
Variations and Waivers
28
Bail in
29
Notices
30
Supplemental
31
Law and Jurisdiction
Schedules

58557071v16
Execution version

Schedule 1 Lenders and Commitments
Schedule 2 Swap Banks
Schedule 3 Drawdown Notice
Schedule 4 Condition Precedent Documents
Part A
Part B
Part C
Schedule 5 Transfer Certificate
Schedule 6 Designation Notice
Schedule 7 List of Approved Brokers
Schedule 8 Form of Compliance Certificate
Schedule 9 Advance A Ships
Schedule 10 Advance B Ships
Schedule 11 Additional Ships

Execution
Execution Pages




58557071v16


THIS AGREEMENT is made on 30 August 2016
BETWEEN
(1)
SCORPIO TANKERS INC. , a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (the " Borrower ");
(2)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders ;
(3)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2 , as Swap Banks ;
(4)
ABN AMRO BANK N.V. and NORDEA BANK FINLAND PLC, NEW YORK BRANCH as Bookrunners ;
(5)
ABN AMRO BANK N.V., NORDEA BANK FINLAND PLC, NEW YORK BRANCH and SKANDINAVISKA ENSKILDA BANKEN AB (publ) as Mandated Lead Arrangers ;
(6)
NORDEA BANK FINLAND PLC, NEW YORK BRANCH as Agent ; and
(7)
NORDEA BANK FINLAND PLC, NEW YORK BRANCH , as Security Trustee .
BACKGROUND
(A)
The Lenders have agreed to make available to the Borrower, subject to the terms of this Agreement, facilities in an amount (in aggregate) of up to $372,000,000 comprising:
(i)
a term loan facility of up to $200,000,000 and a revolving credit facility of up to $100,000,000 for the purposes of refinancing the Existing Indebtedness and/or for general corporate purposes; and
(ii)
an incremental credit facility in the initial amount of $0, with an option for the Borrower to increase up to $72,000,000 for the purpose of refinancing existing indebtedness in relation to the Additional Ships and/or for general corporate purposes and with each advance to be secured by an Additional Ship.
(B)
The Swap Banks and the Borrower may agree to enter into interest rate swap transactions from time to time to hedge the Borrower's exposure under this Agreement to interest rate 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 on the terms set out herein.
IT IS AGREED as follows:

58557071v16


1
INTERPRETATION
1.1
Definitions
Subject to Clause 1.5, in this Agreement:
" Account Security Deed " means, in respect of each Earnings Account, a deed creating security in respect of that Earnings Account in the Agreed Form.
" Account Bank " means ABN AMRO Bank N.V., acting through its branch at Coolsingel 93, 3012 AE Rotterdam, The Netherlands or any other bank or financial institution which at any time, with the Agent's prior written consent (acting on the instructions of all the Lenders) holds an Earnings Account.
" Accounting Information " means the annual audited consolidated accounts of the Borrower and the annual audited individual accounts of the Borrower or the quarterly unaudited consolidated accounts of the Borrower and the quarterly unaudited individual accounts of the Borrower, in each case, delivered to the Agent in accordance with Clause 11.6.
" Accounting Period " means each consecutive quarterly period during the Security Period ending on 31 March, 30 June, 30 September and 31 December of each financial year of the Borrower.
" Additional Owner " means an entity which:
(a)
is a direct or indirect wholly owned subsidiary of the Borrower; and
(b)
is the registered owner of an Additional Ship at the time a mortgage is executed over that Additional Ship in favour of the Security Trustee pursuant to this Agreement.
" Additional Ships " means each of the Ships described in Schedule 11 (Details of Additional Ships) and " Additional Ship " means any of them.
" Advance" means a Term Advance, a Revolving Advance and an Incremental Credit Facility Advance.
" Advance A Ships " means each of the Ships described in Schedule 9 (Details of Advance A Ships) and “ Advance A Ship ” means any of them.
" Advance B Ships " means each of the Ships described in Schedule 10 (Details of Advance B Ships) and “ Advance B Ship ” means any of them.
" Affected Lender " has the meaning given in Clause 5.7.
" Affiliate " means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term " control " (including the terms " controlling ", " controlled by " and " under common control with ") of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise and in relation to ABN AMRO Bank N.V. this shall exclude the state of the Netherlands and any of its subsidiaries other than ABN AMRO Bank N.V. and its subsidiaries.

2     58557071v16


" Agency and Trust Deed " means the agency and trust deed dated the same date as this Agreement and made between the same parties.
" Agent " means Nordea Bank Finland Plc, New York Branch, acting in its capacity as agent for the Lenders, the Swap Banks, the Bookrunners and the Mandated Lead Arrangers through its office at 1211 Avenue of the Americas 23 rd Floor, New York, NY 10036 includes its successor appointed under clause 5 of the Agency and Trust Deed and any transferee or assign.
" 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), or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document.
" Applicable Sanctions " means any Sanctions by which the Borrower or any Guarantor is bound or to which it is subject (which shall include, without limitation, any extra territorial sanctions imposed by law or regulation of the United States of America) or compliance with which is reasonable in the ordinary course of business of the Borrower and any Guarantor.
" Approved Broker " means any of the companies listed in Schedule 7 (or any Affiliate of such person through which valuations are commonly issued) or such other company proposed by the Borrower which the Agent may (acting on the instructions of all the Lenders) approve in writing from time to time to act as an " Approved Broker " under this Agreement.
" Approved Classification Society " means, in relation to a Ship, Lloyds Register, DNV, ABS, Korean Register, Bureau Veritas or any other generally recognised first class classification society that is a member of IACS that the Agent may (acting on the authorisation of all the Lenders), approve in writing from time to time as the " Approved Classification Society " of that Ship for the purposes of this Agreement.
“Approved Commercial Manager” means, in relation to a Ship, Scorpio Commercial Management s.a.m. of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary of Scorpio Commercial Management s.a.m), Scorpio Ship Management s.a.m of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary of Scorpio Ship Management s.a.m) or Zenith, Hellespont Shipping Synergy, CP Offen, Optimum Ship Services Ltd, V Ships Ship Management and d'Amico International Shipping, or any other company proposed by the Borrower or a Guarantor which the Agent may (acting on the instructions of all the Lenders), approve from time to time as the commercial manager of that Ship.
" Approved Flag " means, in relation to a Ship, the Republic of the Marshall Islands, the Republic of Liberia or such other flag as the Agent may acting reasonably (acting on the instructions of all the Lenders, such instructions not to be unreasonably withheld or delayed) approve from time to time in writing as the flag on which such Ship shall be registered.
" Approved Pooling Arrangement " means, in relation to a Ship, the Scorpio MR Pool any other pooling arrangement notified to the Agent prior to that Ship's entry into such pooling arrangement.
" Approved Ship Manager " means, in relation to a Ship, the Approved Commercial Manager or the Approved Technical Manager of that Ship.
“Approved Technical Manager” means, in relation to a Ship, Scorpio Ship Management s.a.m of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary of Scorpio Ship Management s.a.m), Scorpio Commercial Management s.a.m. of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary

3     58557071v16


of Scorpio Commercial Management s.a.m) or Zenith, Hellespont Shipping Synergy, CP Offen, Optimum Ship Services Ltd, V Ships Ship Management and d'Amico International Shipping, or any other company proposed by the Borrower or a Guarantor which the Agent may (acting on the instructions of all the Lenders), approve from time to time as the technical manager of that Ship.
" Approved Ship Manager's Undertaking " means, in relation to a Ship, the letter executed and delivered by an Approved Ship Manager and an Approved Sub-Manager, in the Agreed Form.
" Approved Sub-Manager " means any entity which is an Approved Ship Manager or any other company proposed by the Borrower or a Guarantor which the Agent may (acting on the instructions of all the Lenders), approve from time to time as the technical and/or commercial sub-contracting manager of a Ship.
" Availability Period " means in relation to:
(a)
the Term Loan, the period commencing on the date of this Agreement and ending on the earlier of (i) 60 days after the date of this Agreement and (ii) 30 November 2016;
(b)
the Revolving Credit Facility, the period commencing on the date of this Agreement and ending on the date falling 30 days prior to the Maturity Date; and
(c)
the Incremental Credit Facility, the period commencing on the date of this Agreement and ending on 30 November 2017.
“ Available Commitment ” means, in relation to a Lender and at any time, its Commitment less its Contribution at that time.
“ Available Incremental Credit Facility Commitment ” means, in relation to a Lender and at any time, its Incremental Credit Facility Commitment less its Incremental Credit Facility Contribution at that time (and " Total Available Incremental Loan Commitments " means the aggregate of the Available Incremental Loan Commitments of all the Lenders).
" Available Revolving Credit Facility Commitment " means, in relation to a Lender and at any time, its Revolving Credit Facility Commitment less its Revolving Credit Facility Contribution at that time (and " Total Available Revolving Credit Facility Commitments " means the aggregate of the Available Revolving Credit Facility Commitments of all the Lenders).
" Available Term Loan Commitment " means, in relation to a Lender and at any time, its Term Loan Commitment less its Term Loan Contribution at that time (and " Total Available Term Loan Commitments " means the aggregate of the Available Term Loan Commitments of all the Lenders).
" Bail-In Action " means the exercise of any Write-down and Conversion Powers.
" Bail-In Legislation " means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

4     58557071v16


(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
" Basel III " means:
(a)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; and
(b)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
" Bookrunners " means ABN AMRO Bank N.V., acting in its capacity as bookrunner through its office at Gustav Mahlerlaan 10, 1082 PP Amsterdam, The Netherlands, and Nordea Bank Finland Plc, New York Branch, acting in its capacity as bookrunner through its office at 1211 Avenue of the Americas 23 rd Floor, New York, NY 10036, and, in each case, including any transferee, assign or successor.
" Business Day " means a day on which banks are open in London, Amsterdam, New York and Stockholm.
" Cash " means any credit balance on any deposit, savings, current or other account, and any cash in hand held with banks or other financial institutions of the Borrower and/or any subsidiary of the Borrower which is:
(a)
freely withdrawable on demand;
(b)
not subject to any Security Interest (other than pursuant to the Finance Documents);
(c)
denominated and payable in freely transferable and freely convertible currency; and
(d)
capable of being remitted to the Borrower or such subsidiary of the Borrower.
" Cash Equivalents " means:
(a)
unencumbered securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)
time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognised standing organised under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and

5     58557071v16


(c)
such other securities or instruments as the Agent shall, with the authorisation of all the Lenders, agree in writing,
provided that in respect of (a) and (b) above such Cash Equivalents shall have a rating of at least "A-" given by S&P or "A" given by Moody's (or the equivalent rating given by another Rating Agency), in each case having maturities of not more than ninety (90) days from the date of acquisition.
" Change of Control " means the occurrence of any act, event or circumstances which results in:
(a)
100 per cent. of the Equity Interests of any Guarantor ceasing to be ultimately owned and/or controlled by the Borrower (an " Guarantor Disposal ");
(b)
a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) other than any holders of the Borrower's Equity Interests as at the date of this Agreement, becoming the ultimate beneficial owner of the Borrower including, without limitation, any change from the date of this Agreement in the ultimate "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 35 per cent. of the total voting power of the Voting Stock of the Borrower (calculated on a fully diluted basis); or
(c)
individuals who constitute the board of directors of the Borrower at the beginning of any period of two consecutive calendar years and yet ceasing for any reason to constitute at least 50 per cent. of the total members of the Borrower's board of directors at any time during such two year period;
" Charter " means, in relation to a Ship, any charterparty in respect of that Ship having a duration (including, without limitation, by virtue of any optional extensions) of more than 24 months entered or to be entered into by the Guarantor which is or is to be the owner of that Ship with a charterer and on terms and conditions acceptable to the Agent (acting on the instructions of all the Lenders).
" Charterparty Assignment " means, in respect of a Charter and any guarantee of that Charter (other than a Charter where the charterer is a member of the Group or pursuant to an Approved Pooling Arrangement), an assignment of the rights and interests of the Guarantor which is party to that Charter in respect of that Charter and any related guarantee, to be executed by that Guarantor in favour of the Security Trustee in the Agreed Form.
" Code " means the US Internal Revenue Code of 1986, as amended.
" Collateral Ships " means the Advance A Ships and the Advance B Ships and " Collateral Ship " means any one of them.
" Commission " means the United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act.
" Commitment " means, in relation to a Lender, the aggregate of its Term Loan Commitment and/or as the context requires its Revolving Credit Facility Commitment and/or as the context requires its Incremental Credit Facility Commitment (and " Total Commitments " means the aggregate of the Term Loan Commitments of all the Lenders and the aggregate of the Revolving Credit Facility Commitments of all the Lenders and the aggregate of the Incremental Credit Facility Commitments of all the Lenders).

6     58557071v16


" Compliance Certificate " means a certificate executed by the chief financial officer of the Borrower in the form set out in Schedule 8.
" Confidential Information " means all information relating to the Borrower, any Security Party, the Finance Documents or any Master Agreement of which a Creditor Party becomes aware in its capacity as, or for the purpose of becoming, a Creditor Party or which is received by a Creditor Party in relation to, or for the purpose of becoming a Creditor Party under, the Finance Documents or any Master Agreement from either:
(a)
the Borrower or any Security Party or any of their advisers; or
(b)
another Creditor Party, if the information was obtained by that Creditor Party directly or indirectly from the Borrower or any Security Party or any of their advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Creditor Party of Clause 26.13; or
(ii)
is identified in writing at the time of delivery as non-confidential by the Borrower or any Security Party or any of their advisers; or
(iii)
is known by that Creditor Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Creditor Party after that date, from a source which is, as far as that Creditor Party is aware, unconnected with the Borrower or any Security Party and which, in either case, as far as that Creditor Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
" Confidentiality Undertaking " means a confidentiality undertaking in substantially the appropriate form recommended by the Loan Market Association from time to time or in any other form agreed between the Borrower and the Agent.
" Confirmation " and " Early Termination Date ", in relation to any continuing Designated Transaction, have the meanings given in the relevant Master Agreement.
" Consolidated EBITDA " means, for any Accounting Period, the consolidated net income of the Borrower for that Accounting Period:
(a)
plus , to the extent deducted in computing the net income of the Borrower for that Accounting Period, the sum, without duplication, of:
(i)
all federal, state, local and foreign income taxes and tax distributions;
(ii)
Consolidated Net Interest Expense;
(iii)
depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortisation of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;

7     58557071v16


(iv)
expenses incurred in connection with a special or intermediate survey (including any underwater survey done in lieu thereof) of a Fleet Vessel during such period; and
(v)
any drydocking expenses;
(b)
minus , to the extent added in computing the consolidated net income of the Borrower for that Accounting Period:
(i)
any non-cash income or non-cash gains; and
(ii)
any extraordinary gains on asset sales not received in the ordinary course of business.
" Consolidated Funded Debt " means, for any Accounting Period, the sum of the following for the Borrower determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:
(a)
all Financial Indebtedness; and
(b)
all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet),
provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt.
" Consolidated Net Interest Expense " means, for any Accounting Period, the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Borrower and all of its subsidiaries during the relevant Accounting Period less:
(a)
commitment fees;
(b)
interest income received; and
(c)
amortisation of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Borrower.
" Consolidated Tangible Net Worth " means, on a consolidated basis, the total shareholders' equity (including retained earnings) of the Borrower, minus goodwill and other non-tangible items.
" Consolidated Total Capitalisation " means the Consolidated Tangible Net Worth plus Consolidated Funded Debt.
" Contractual Currency " has the meaning given in Clause 21.4.
" Contribution " means, in relation to a Lender, the aggregate of its Term Loan Contribution, its Revolving Credit Facility Contribution and its Incremental Credit Facility Contribution, the part of the Loan which is owing to that Lender.
" CRD IV " means Directive 2013/36/EU of the European Union on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.

8     58557071v16


" Creditor Party " means the Agent, the Security Trustee, the Bookrunners, the Mandated Lead Arrangers, any Lender or any Swap Bank, whether as at the date of this Agreement or at any later time.
" CRR " means and Regulation (EU) No 575/2013 of the European Union on prudential requirements for credit institutions and investment firms.
" 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;
(b)
its purpose is the hedging of the Borrower's exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Maturity 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;
" Disruption Event " means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a party prevent that, or any other party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the party whose operations are disrupted.
" 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 such Advance to be made, or (as the context requires) the date on which such Advance is actually made.
" Drawdown Notice " means a notice in the form set out in Schedule 3 (or in any other form which the Agent approves or reasonably requires).
" Earnings " means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Guarantor owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):
(a)
except to the extent that they fall within paragraph (b):

9     58557071v16


(i)
all freight, hire and passage moneys;
(ii)
compensation payable to the relevant Guarantor or the Security Trustee in the event of requisition of that 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 that Ship; and
(vi)
all moneys which are at any time payable under Insurances in respect of loss of hire; and
(b)
if and whenever that 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 that Ship;
" Earnings Account " means, in relation to a Ship, an account in the name of the Guarantor of that Ship with the relevant Account Bank designated as the Earnings Account in respect of such Ship, or any other account (with the relevant Account Bank, the Agent or with a bank or financial institution acceptable to all the Lenders) which is designated by the Agent as the Earnings Account for the purposes of this Agreement.
" Email " has the meaning given in Clause 29.1 .
" Environmental Claim " means:
(a)
any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or
(b)
any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,
and " claim " means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
" Environmental Incident " means:
(a)
any release of Environmentally Sensitive Material from a Ship; or
(b)
any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which such Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or such Ship and/or the Guarantor of such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

10     58557071v16


(c)
any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which such Ship is actually or potentially liable to be arrested and/or where the Guarantor of such Ship and/or any operator or manager of such 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.
" Equity Interests " of any person means:
(a)
any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)
all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person.
" Equity Proceeds " means the net cash proceeds from the issuance of common or preferred stock of the Borrower.
" EU Bail-In Legislation Schedule " means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
" euros " means the single currency unit of the Participating Member States.
" Event of Default " means any of the events or circumstances described in Clause 19.1.
" Exchange Act " means the United States Securities Exchange Act of 1934, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder.
" Existing Agents " means the "Agents" as such term is defined in each of the Existing Facility Agreements.
" Existing Facility Agreements " means the Existing Facility Agreement A and the Existing Facility Agreement B.
" Existing Facility Agreement A " means the facility agreement dated 2 July 2013 (as amended) and entered into between, inter alia, the Borrower as borrower and Nordea Bank Finland Plc, New York Branch as agent and security trustee in respect of a $525,000,000 loan facility.
" Existing Facility Agreement B " means the facility agreement dated 14 March 2014 (as amended and restated) and entered into between, inter alia, the Borrower as borrower and Credit Agricole Corporate and Investment Bank as agent and security trustee in respect of a $92,000,000 loan facility.
" Existing Indebtedness " means, at any date, the aggregate outstanding indebtedness of the Borrower on that date under the Existing Facility Agreements.

11     58557071v16


" Existing Security " means any Security created to secure the Existing Indebtedness.
“ Facility ” means the Term Loan, the Revolving Credit Facility or the Incremental Credit Facility.
" Facility Office " means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or following that date, by not less than 5 Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.
" Fair Market Value " means, in relation to a Ship, a valuation determined in accordance with Clause 15.3.
" FATCA " means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;
(b)
any treaty, law or regulation 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 Deduction " means a deduction or withholding from a payment under a Finance Document required by FATCA.
" FATCA Exempt Party " means a party to this Agreement that is entitled to receive payments free from any FATCA Deduction.
" Fee Letter " means any letter or letters dated on or about the date of this Agreement between the Agent and the Borrower setting out any of the fees referred to in Clause 20 ( Fees and Expenses );
" Finance Documents " means:
(a)
this Agreement;
(b)
the Agency and Trust Deed;
(c)
the Guarantees;
(d)
the Mortgages;
(e)
the General Assignments;
(f)
the Account Security Deeds;
(g)
any Charterparty Assignment;
(h)
any Intercompany Loan Assignment;
(i)
the Shares Pledges;
(j)
any Master Agreement Assignment;

12     58557071v16


(k)
any Fee Letter; and
(l)
any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower, any Security Party 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 (other than any Approved Ship Manager’s Undertakings).
" Financial Indebtedness " means, with respect to any person (the " Debtor ") at any date of determination (without duplication):
(a)
all obligations of the Debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)
all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)
all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto) which in accordance with IFRS would be shown on the liability side of a balance sheet;
(d)
all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)
all capitalised lease obligations of the Debtor as lessee;
(f)
all Financial Indebtedness of persons other than the Debtor secured by a Security Interest on any asset of that person, whether or not such Financial Indebtedness is assumed by the Debtor, provided that the amount of such Financial Indebtedness shall be the lesser of:
(i)
the fair market value of such asset at such date of determination; and
(ii)
the amount of such Financial Indebtedness; and
(g)
all Financial Indebtedness incurred under any guarantee, indemnity or similar obligation to the extent such Financial Indebtedness is guaranteed, secured, expressed to be indemnified by, or otherwise assured by the Debtor.
The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to the contingent obligations set out in paragraphs (f) and (g) above, the maximum liability which would or might arise upon the occurrence of the contingency giving rise to the obligation, as determined in conformity with IFRS, provided that:
(i)
the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount shall be deemed to be the face amount of such Financial Indebtedness less the remaining unamortised portion of such original issue discount of such Financial Indebtedness at such time; and

13     58557071v16


(ii)
the calculation of Financial Indebtedness shall not take into account any liability of the Debtor for taxes.
" Fiscal Year " means, in relation to any person, each period of 1 year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared.
" Fleet Vessel " means each vessel owned by a wholly owned direct or indirect subsidiary of the Borrower (including, but not limited to, the Ships).
" General Assignment " means, in relation to a Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation for that Ship in the Agreed Form.
" Green Passport " means, in relation to a Ship, a green passport statement of compliance issued by the relevant Approved Classification Society which includes a list of any and all materials known to be potentially hazardous utilised in the construction of that Ship.
" Group " means the Borrower and its subsidiaries.
" Guarantee " means each joint and several guarantee to be executed by one or more Guarantors in favour of the Security Trustee in the Agreed Form.
" Guarantor " means each of Guarantor A, Guarantor B, Guarantor C, Guarantor D, Guarantor E, Guarantor F, Guarantor G, Guarantor H, Guarantor I, Guarantor J, Guarantor K, Guarantor L, Guarantor M, Guarantor N, Guarantor O, Guarantor P and also any Additional Owner which has executed a Guarantee at the relevant time.
" Guarantor A " means STI Amber Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor B " means STI Topaz Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor C " means STI Ruby Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor D " means STI Garnet Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor E " means STI Opera Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor F " means STI Texas City Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor G " means STI Meraux Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.

14     58557071v16


" Guarantor H " means STI San Antonio Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor I " means STI Virtus Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor J " means STI Venere Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor K " means STI Aqua Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor L " means STI Dama Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor M " means STI Benicia Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor N " means STI Regina Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor O " means STI St. Charles Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor P " means STI Yorkville Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor Disposal " shall have the meaning given to that expression in paragraph (a) of the definition of "Change of Control".
" IACS " means the International Association of Classification Societies.
" IFRS " means international accounting standards within the meaning of the IAS Regulations 1606/2002 to the extent applicable to the relevant financial statements.
" Incremental Credit Facility " means the incremental credit facility made available under this Agreement as described in Clause 2.1.
" Incremental Credit Facility Advance " means the principal amount of each borrowing of a portion of the Total Incremental Credit Facility Commitments by the Borrower under this Agreement.
" Incremental Credit Facility Commitment " means in relation to a Lender, such amount as notified by that Lender to the Agent or as the case may require, the amount specified in the relevant accession agreement, as that amount may be reduced, cancelled or terminated in

15     58557071v16


accordance with this Agreement (and " Total Incremental Credit Facility Commitments " means the aggregate of the Incremental Credit Facility Commitments of all the Lenders).
" Incremental Credit Facility Contribution " means, in relation to a Lender, the part of the Incremental Credit Facility Advances which is owing to that lender.
" Insurances " means, in relation to a Ship:
(a)
all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, its Earnings or otherwise in relation to that Ship; 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.
" Intercompany Loan " means any transaction constituting Financial Indebtedness entered into by the Borrower or any direct or indirect shareholder of the Borrower (" Party A ") with the Guarantors or any of them (" Party B ") whereby Party A is entitled to receive any payment in cash or in kind from Party B.
" Intercompany Loan Assignment " means an assignment of each Intercompany Loan made or to be made by the person providing such Intercompany Loan in favour of the Security Trustee in the Agreed Form.
" Interest Period " means a period determined in accordance with Clause 6.
"Interpolated Screen Rate " means, in relation to LIBOR for the Loan or any part of the Loan, the rate which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of the Loan or that part of the Loan; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of the Loan or that part of the Loan,
each as of the Quotation Date for Dollars.
" 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.
" Latent Event of Default " means any event or circumstance specified in Clause 19 which would (with the expiry of a grace period, the giving of notice, the making of any determination under

16     58557071v16


the Finance Documents or any combination of any of the foregoing) be or become an Event of Default.
" 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 Borrower under Clause 26.14) or its transferee, successor or assignee or any Lender which accedes to this Agreement in connection with the Incremental Credit Facility.
" LIBOR " means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document:
(a)
the applicable Screen Rate as of 11 a.m. (London time) on the Quotation Date for that period for the offering of deposits in the relevant currency and for a period comparable to that period; or
(b)
as otherwise determined pursuant to Clause 5.5,
and if, in either case, any such rate is below zero, LIBOR shall be deemed to be zero.
" Loan " means the principal amount for the time being outstanding under this Agreement.
" Major Casualty " means, in relation to a Ship, any casualty to that 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 $5,000,000 or the equivalent in any other currency.
" Majority Lenders " means at any time Lenders whose Commitments total 66.66 per cent. of the Total Commitments at that time.
" Mandated Lead Arrangers " means ABN Amro Bank N.V., Nordea Bank Finland Plc, New York Branch and Skandinaviska Enskilda Banken AB (publ) acting as mandated lead arrangers of the loan facility made available to the Borrower under this Agreement.
" Margin " means 2.50 per cent. per annum.
" Master Agreement " means each master agreement (on the 2002 ISDA (Multicurrency - Crossborder) form) in the Agreed Form made between the Borrower and a Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement.
" Master Agreement Assignment " means, in relation to each Master Agreement, the assignment of the Master Agreement to be entered into between the Borrower and the Security Trustee in Agreed Form.
" Material Adverse Effect " means in the reasonable opinion of the Lenders a material adverse effect on:
(a)
the business, operations, property or condition (financial or otherwise) of the Borrower and/or any Guarantor; or
(b)
the ability of the Borrower and/or any Guarantor to perform its obligations under any Finance Document and any Master Agreement; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or intended to be granted pursuant to any of, the Finance Documents; or

17     58557071v16


(d)
the rights or remedies of any Creditor Party under any of the Finance Documents and any Master Agreement.
" Maturity Date " means earlier of (i) the fifth anniversary of the first Drawdown Date and (ii) 30 October 2021.
" Moody's " means Moody's Investors Service, Inc., a subsidiary of Moody's Corporation.
" Mortgage " means, in relation to a Ship the first priority or, as the case may be, preferred ship mortgage on the Ship under the applicable Approved Flag together with any deed of covenant collateral thereto, (if applicable) in the Agreed Form.
" Net Debt " means Consolidated Funded Debt less Cash and Cash Equivalents of the Borrower and its Subsidiaries.
" Notifying Lender " has the meaning given in Clause 23.1 or Clause 24.1 as the context requires.
" Participating Member State " means any member state of the European Union that has the euro as its lawful currency in accordance with the legislation of the European Union relating to Economic and Monetary Union.
" Payment Currency " has the meaning given in Clause 21.4.
" Permitted Security Interests " means:
(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 a Ship not prohibited by this Agreement or any other Finance Document;
(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 a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Guarantor that owns such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause  14.13(h) ;
(f)
any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the Guarantor that owns such Ship or the Borrower, as the case may be, is actively prosecuting or defending such proceedings or arbitration in good faith;
(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; and
(h)
any Security Interest and right of set-off arising under or pursuant to any applicable general banking conditions

18     58557071v16



" Pertinent Document " means:
(a)
any Finance Document;
(b)
any policy or contract of insurance contemplated by or referred to in Clause 13 or any other 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, the Principality of Monaco, New York State of the United States of America, The Netherlands and the Republic of the Marshall Islands;
(b)
if not within any of the jurisdictions referred to in (a) above, the country under the laws of which the company is incorporated or formed;
(c)
if not within any of the jurisdictions referred to in (a) above, a country in which the company has the centre of its main interests or in which the company's central management and control is or has recently been exercised.
" 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.
" Quotation Date " means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is 2 Business Days before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days).
" Rating Agency " means S&P, Moody's or, if both of them are not making ratings of securities publically available, an internationally recognised rating agency selected by the Agent which shall be substituted for S&P or Moody's.
" Reference Banks " means, subject to Clause 26.16 , ABN AMRO Bank N.V. Skandinaviska Enskilda Banken AB (publ) and Nordea Bank Norge Finland Plc, New York Branch and any other prime international banks selected by the Agent and notified to the Borrower.

19     58557071v16


" Reference Bank Rate " means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks:
(a)
(other than where paragraph (b) below applies) as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars for the relevant period were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period; or
(b)
if different, as the rate (if any and applied to the relevant Reference Bank and the relevant currency and period) which contributors to the Screen Rate are asked to submit to the relevant administrator.
" 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.
" Requisition Compensation " includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of " Total Loss ".
" Restricted Person " means a person that is:
(a)
listed on, or owned or controlled by a person listed on any Sanctions List;
(b)
located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions; or
(c)
otherwise a target of Sanctions.
" Revolving Advance " means the principal amount of each borrowing of a portion of the Total Revolving Credit Facility Commitments by the Borrower under this Agreement and shall include any reborrowing of the Total Revolving Credit Facility Commitments in accordance with the terms of this Agreement.
" Revolving Credit Facility " means the revolving credit facility made available under this Agreement as described in Clause 2.1.
" Revolving Credit Facility Commitment " means, in relation to a Lender, the amount set opposite its name in Part A of Schedule 1 ( Lenders and Commitments ), 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 Revolving Credit Facility Commitments " means the aggregate of the Revolving Credit Facility Commitments of all the Lenders).
" Revolving Credit Facility Contribution " means, in relation to a Lender, the part of the Revolving Advances which is owing to that lender.
" S&P " means Standard & Poor's Rating Services, a division of the McGraw Hill Companies Inc.
" Sanctions " means any economic or trade sanctions, laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:
(a)
the United States Government;

20     58557071v16


(b)
the United Nations;
(c)
the European Union or any of its Member States;
(d)
any country to which the Borrower or any Guarantor is bound;
(e)
the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury (" OFAC "), the United States Department of State, and Her Majesty's Treasury (" HMT ") (together the " Sanctions Authorities ").
" Sanctions List " means the "Specially Designated Nationals and Blocked Persons" List issued by OFAC, the "Consolidated List of Financial Sanctions Targets and Investment Ban List" issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities.
" Screen Rate " means, in respect of LIBOR for any period, the 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 Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. 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 the Master Agreements or any judgment relating to any Finance Documents or the Master Agreements; 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 each Guarantor and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of " Finance Documents " but always excluding any Approved Ship Manager and any Approved Sub-Manager.

21     58557071v16


" Security Period " means the period commencing on the date of this Agreement and ending on the date on which the Agent acting reasonably notifies the Borrower, the Security Parties and the other Creditor Parties that:
(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 Clause20, 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 all the 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, New York Branch, acting in its capacity as Security Trustee for the Lenders and the Swap Banks through its office at 1211 Avenue of the Americas 23 rd Floor, New York, NY10036 and includes any transferee, assign 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 each Guarantor in favour of the Security Trustee in the Agreed Form.
" Ship " means the Collateral Ships and shall also include each Additional Ship which is mortgaged in favour of the Security Trustee pursuant to this Agreement at the relevant 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 1.
" 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.
" Term Advance " means the Term Advance A and the Term Advance B.

22     58557071v16


" Term Advance A " means the principal amount of the borrowing of a portion of the Total Term Loan Commitments to be made available to the Borrower to refinance the Existing Indebtedness relating to the Advance A Ships pursuant to Existing Facility Agreement A and for general corporate purposes.
" Term Advance B " means the principal amount of the borrowing of a portion of the Total Term Loan Commitments to be made available to the Borrower to refinance the Existing Indebtedness relating to the Advance B Ships pursuant to Existing Facility Agreement B and for general corporate purposes.
" Term Loan Commitment " means in relation to a Lender, the amount set opposite its name in Part A of Schedule 1 ( Lenders and Commitments ), or, as the case may be 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 Term Loan Commitments" means the aggregate of the Term Loan Commitments of all the Lenders).
" Term Loan Contribution " means, in relation to a Lender the part of the Term Loan which is owing to that Lender.
" Term Loan " means the term loan facility made available under this Agreement as described in Clause 2.1.
" Total Loss " means, in relation to a Ship:
(a)
actual, constructive, compromised, agreed or arranged total loss of that Ship;
(b)
any expropriation, confiscation, requisition or acquisition of that 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), unless it is within 45 days redelivered to the full control of the Guarantor owning that Ship;
(c)
any arrest, capture, seizure or detention of that Ship (including any theft) unless it is within 45 days redelivered to the full control of the Guarantor owning that Ship; and
(d)
any hijacking of that ship unless it is within 45 days redelivered to the full control of the Guarantor owning that Ship.
" Total Loss Date " means:
(a)
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
(b)
in the case of a constructive, compromised, agreed or arranged total loss of that 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 with that Ship's insurers in which the insurers agree to treat such Ship as a total loss; and

23     58557071v16


(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.
" VAT " means:
(a)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.
" Voting Stock " of any person as of any date means the Equity Interests of such person that are at the time entitled to vote in the election of the board of directors or similar governing body of such person.
" Write-down and Conversion Powers " means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule ; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.
1.2
Construction of certain terms. In this Agreement:
" 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;
" approved " means, for the purposes of Clause 13, approved in writing by the Agent;
" asset " includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

24     58557071v16


" 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;
" document " includes a deed; also a letter or fax;
" excess risks " means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which such 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 of 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 a Ship, all insurances effected, or which the Guarantor owning that Ship 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 ;
" party " means any party to this Agreement;
" person " includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
" policy ", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
" protection and indemnity risks " means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) 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 body, intergovernmental or supranational, agency, department or regulatory, self‑regulatory or other authority or organisation;

25     58557071v16


" 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;
" war risks " includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83); and
an " Event of Default " or a " Latent Event of Default " is "continuing" if it has not been remedied or waived.
1.3
Meaning of "month". A period of one or more " months " ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (the " numerically corresponding day "), but:
(a)
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
(b)
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
and " month " and " monthly " shall be construed accordingly.
1.4
Meaning of "subsidiary". In this Agreement " subsidiary " means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
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 or supplemented, 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)
references to, Nordea Bank Finland Plc, New York Branch (either directly or indirectly in its capacity as Lender, Swap Bank, Bookrunner, Mandated Lead Arranger, Facility Agent and/or Security Trustee or any other capacity) in the Finance Documents shall be automatically construed as a reference to Nordea Bank AB in the event of any corporate reconstruction, merger, amalgamation, consolidation between Nordea Bank Finland Plc, New York Branch and Nordea Bank AB where Nordea Bank AB is the surviving entity and acquires all the rights of and assumes all the obligations of Nordea Bank Finland Plc, New York Branch, and nothing in the Finance Documents shall be construed so as to restrict, limit or impose any notification or other requirement or condition on either Nordea Bank Finland Plc, New York Branch or Nordea Bank AB in respect of the acquisition of rights to or assumption of obligations by Nordea Bank AB hereunder or under any other Finance Documents pursuant to such corporate reconstruction, merger, amalgamation or consolidation;
(d)
words denoting the singular number shall include the plural and vice versa; and

26     58557071v16


(e)
Clauses 1.1 to 1.5 apply unless the contrary intention appears.
1.6
Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
2
FACILITY
2.1
Amount of facility
Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower a loan facility to be advanced to the Borrower in accordance with Clause 4 ( Drawdown ) in the aggregate principal amount of up to $372,000,000 as follows:
(a)
a Term Loan in up to two Advances in an aggregate amount of up to $200,000,000 comprising:
(i)
a Term Advance A for the purposes of refinancing the Existing Indebtedness relating to the Advance A Ships and for general corporate purposes; and
(ii)
a Term Advance B for the purposes of refinancing the Existing Indebtedness relating to the Advance B Ships and for general corporate purposes;
(b)
a Revolving Credit Facility in a multiple number of Advances in an amount of up to $100,000,000 for the purposes of refinancing the Existing Indebtedness relating to any of the Advance A Ships, any of the Advance B Ships and for general corporate purposes. Any reborrowing of the Revolving Credit Facility shall be available for general corporate purposes only;
(c)
an Incremental Credit Facility in up to four Advances in an aggregate amount of up to $72,000,000;
(d)
the amount of Term Advance A shall not exceed the lower of (i) $200,000,000 less, if Term Advance B has been drawn prior to or will be drawn simultaneously with Term Advance A, Term Advance B; and (ii) 40 per cent. of the aggregate of the Fair Market Value of the Advance A Ships which will be subject to a Mortgage at the time of the making of the relevant Advance;
(e)
the amount of Term Advance B shall not exceed the lower of (i) $200,000,000 less, if Term Advance A has been drawn prior to or will be drawn simultaneously with Term Advance B, Term Advance A; and (ii) 40 per cent. of the aggregate of the Fair Market Value of the Advance B Ships which will be subject to a Mortgage at the time of the making of the relevant Advance;
(f)
the aggregate of Term Loan and the Revolving Advances shall not exceed the lower of (i) $300,000,000 and (ii) 60 per cent. of the aggregate of the Fair Market Value of the Collateral Ships which will be subject to a Mortgage at the time of the making of the relevant Advance;
(g)
for the purposes of paragraphs (d) to (f), the Fair Market Value of the applicable Collateral Ships shall be determined on the basis of valuations carried out:
(i)
in the case of each Term Advance, no earlier than the date falling fourteen days before the Drawdown Date for the relevant Term Advance; and
(ii)
in the case of the first Revolving Advance, no earlier than the date falling fourteen days before the Drawdown Date for that Revolving Advance, thereafter for each subsequent Revolving Advance the most recent valuations provided pursuant to this Agreement.

27     58557071v16


(h)
each Incremental Credit Facility Advance shall not exceed the lower of (i) the amount set out in Schedule 10 in relation to such Additional Ship and (ii) 60 per cent. of the Fair Market Value of that Additional Ship or, if less, the ratio of the Loan to the aggregate Fair Market Value of the Ships mortgaged in favour of the Security Trustee at the time of such Incremental Credit Facility Advance.
2.2
Incremental Credit Facility . Subject to Clause 2.3, at any time up until 30 September 2017, the Borrower may by notice to the Agent, increase the Incremental Credit Facility up to four times to an aggregate principal amount of up to $72,000,000 by either:
(a)
causing one or more banks or financial institutions (such financial institutions to be acceptable to the Borrower and the Agent) to become a Lender hereunder (with all the rights and obligations of a Lender thereto), in which case such bank or financial institution shall execute and deliver to the Agent an accession agreement (in a form acceptable to the Agent) to cause such bank or financial institution to accede to the rights and obligations of a Lender hereunder; or
(b)
agreeing with one or more Lenders, at such Lender’s sole discretion, to increase such Lender’s Incremental Credit Facility Commitment, in which case such Lender shall notify the Agent to cause such Lender’s Incremental Credit Facility Commitment to be increased.
2.3
Conditions precedent to exercise of the Incremental Credit Facility . Each increase in the Incremental Credit Facility shall be for the purpose of financing or refinancing the Additional Ships and shall be subject to the following conditions:
(a)
execution of additional security and collateral documentation in favour of the Security Trustee, including without limitation a Mortgage over the relevant Additional Ship to be financed pursuant to that Incremental Credit Facility Advance and other Finance Documents to provide the same security over that Additional Ship as that provided over the Collateral Ships and to include a Guarantee to be executed by the Additional Owner;
(b)
compliance with the requirements of Clause 15 immediately prior to and following such increase in the Incremental Credit Facility Commitments;
(c)
the existing Lenders shall have a right of first refusal to provide any increase to the Incremental Credit Facility;
(d)
no Lender’s Commitment shall be increased without the consent of such Lender;
(e)
no Event of Default has occurred and is continuing;
(f)
such further documentary requirements as may be agreed between the Borrower, the Agent and the Lenders.
2.4
Lenders' participations in an Advance
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.
2.5
Purpose of each Advance
The Borrower undertakes with each Creditor Party to use each Advance only for the purpose stated in the preamble to this Agreement.

28     58557071v16


3
POSITION OF THE LENDERS AND SWAP BANKS
3.1
Interests several. The rights of the Lenders and of the Swap Banks under this Agreement and under the Master Agreements are several.
3.2
Individual 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 Lender or any other Swap Bank as additional parties in the proceedings.
3.3
Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2 , no Lender and no Swap Bank may commence proceedings against the Borrower, any Security Party, any Approved Ship Manager or Approved Sub-Manager in connection with a Finance Document without the prior consent of the Majority Lenders.
3.4
Obligations several. The obligations of the Lenders under this Agreement and of the Swap Banks under the Master Agreement to which each is a party are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of a Swap Bank to perform its obligations under the Master Agreement to which it is a party shall not result in:
(a)
the obligations of the other Lenders or Swap Banks being increased; nor
(b)
the Borrower, any Security Party, any Approved Ship Manager or Approved Sub-Manager or any other Lender or any other Swap Bank 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 Lender or a Swap Bank have any responsibility for a failure of another Lender or another Swap Bank to perform its obligations under this Agreement or a Master Agreement.
4
DRAWDOWN
4.1
Request for Advance. Subject to the following conditions, the Borrower may request that an Advance 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
Availability . The conditions referred to in Clause 4.1 are that:
(a)
in the case of a Term Advance:
(i)
the Drawdown Date has to be a Business Day during the Availability Period for the Term Facility;
(ii)
the aggregate amount of the Term Advances shall not exceed the Total Term Commitments;
(iii)
there shall be no more than two Term Advances; and
(iv)
the Drawdown Date of the second Term Advance shall be no later than 10 Business Days from the Drawdown Date for the first Term Advance.

29     58557071v16


(b)
in the case of a Revolving Advance:
(i)
the Drawdown Date has to be a Business Day during the Availability Period for the Revolving Credit Facility;
(ii)
the Borrower shall be obliged to draw the first Revolving Advance on the Drawdown Date in relation to Term Advance A in an amount equal to 50 per cent. of the amount of Term Advance A;
(iii)
the Borrower shall be obliged to a Revolving Advance in an amount equal to 50 per cent. of the amount of Term B Advance on the Drawdown Date in relation to Term Advance B;
(iv)
the aggregate amount of the Revolving Advances shall not exceed the Total Revolving Credit Facility Commitments; and
(v)
there shall be no more than five Revolving Advances outstanding at any one time;
(c)
in the case of an Incremental Credit Facility Advance:
(i)
the Drawdown Date has to be a Business Day during the Availability Period for the Incremental Credit Facility;
(ii)
there shall be no more than four Incremental Credit Facility Advances, one in respect of each Additional Ship;
(iii)
each Incremental Facility Advance shall be the lower of (i) the amount set out in Schedule 11 in relation to such Additional Ship and (ii) 60 per cent. of the Fair Market Value of that Additional Ship, or, if less, the ratio of the Loan to the aggregate Fair Market Value of the Ships mortgaged in favour of the Security Trustee at the time of such Incremental Credit Facility Advance; and
(iv)
the aggregate amount of the Incremental Credit Facility Advances should not exceed the Total Incremental Credit Facility Commitments.
4.3
Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:
(a)
the amount of the Advance requested and the Drawdown Date and if applicable, the Ship to which that Advance relates;
(b)
the amount of that Lender's participation in that Advance; and
(c)
the duration of the first Interest Period applicable to that Advance.
4.4
Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer or a duly authorised attorney-in-fact of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.
4.5
Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent the amount due from that Lender under Clause 2.2.

30     58557071v16


4.6
Disbursement of an 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 4.5; and that payment to the Borrower shall be made:
(a)
to the account which the Borrower specifies in the Drawdown Notice; and
(b)
in the like funds as the Agent received the payments from the Lenders.
4.7
Disbursement of an Advance to third party. The payment of an Advance by the Agent under Clause 4.6 to the Borrower or such other person notified by the Borrower to the Agent shall constitute the making of that Advance and the Borrower shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender's Contribution.
4.8
Cancellation of Commitments. The Commitments in respect of any Advance which are unutilised at the end of the Availability Period for such Advance shall then be cancelled.
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 shall be paid by the Borrower on the last day of that Interest Period.
5.2
Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of (i) the Margin and (ii) 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
Unavailability of Screen Rate
(a)
If no Screen Rate is available for LIBOR for the Interest Period of the Loan or any part of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(b)
If no Screen Rate is available for LIBOR for:
(i)
dollars; or
(ii)
the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Screen Rate,
the applicable LIBOR shall be the Reference Bank Rate as of the Quotation Date and for a period equal in length to the Interest Period of the Loan or that part of the Loan.

31     58557071v16


(c)
If paragraph (b) above applies but no Reference Bank Rate is available for dollars or the relevant Interest Period, there shall be no LIBOR for the Loan or that part of the Loan and Clause 5.8 ( Cost of funds ) shall apply to the Loan or that part of the Loan for that Interest Period.
5.6
Calculation of Reference Bank Rate
(a)
Subject to paragraph (b) below, if LIBOR is to be determined on the basis of a Reference Bank Rate but a Reference Bank does not supply a quotation by the Quotation Date, the Reference Bank Rate shall be calculated on the basis of the quotations of the remaining Reference Banks.
(b)
If at or about 12.00 p.m. (London time) on the Quotation Date none or only one of the Reference Banks supplies a quotation, there shall be no Reference Bank Rate for the relevant Interest Period.
5.7
Market disruption
(a)
If before close of business in London on the Quotation Day for the relevant Interest Period the Agent receives notification from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan exceed 50 per cent. of the Loan or the relevant part of the Loan) (the " Relevant Lender ") that the cost to it of funding its participation in the Loan or that part of the Loan would be in excess of LIBOR then Clause 5.8 ( Cost of funds ) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
(b)
If, at least 1 Business Day before a Drawdown Date, the Agent receives notification from 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 participation in the relevant Advance, the Affected Lender's obligation to participate in that Advance shall be suspended while that situation continues.
5.8
Cost of funds
(a)
If this Clause 5.8 ( Cost of funds ) applies, the rate of interest on each Lender's share of the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
(i)
the Margin; and
(ii)
the rate notified to the Agent by that Lender as soon as practicable before interest is due to be paid in respect of that Interest Period to be that which expresses as a percentage rate per annum the cost to the relevant Lender of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select.
(b)
If this Clause 5.8 ( Cost of funds ) applies and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
(c)
Any substitute or alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all parties.
6
INTEREST PERIODS
6.1
Commencement, duration and consolidation of revolving Interest Periods. There shall be a single Interest Period for each Revolving Advance which shall be notified by the Borrower to the Agent in the Drawdown Notice for that Revolving Advance, shall commence on the

32     58557071v16


Drawdown Date relating to that Revolving Advance and, subject to Clauses 6.6, 6.7 and 6.8, shall be:
(a)
1, 3 or 6 months as notified by the Borrower to the Agent in the Drawdown Notice for that Revolving Advance; or
(b)
in the case of the Interest Period applicable to the second and any subsequent Revolving Advance and if the Borrower notifies the Agent in the Drawdown Notice for such Revolving Advance, a period ending on the last day of the Interest Period applicable to the Revolving Advance then current, whereupon that Revolving Advance and the Revolving Advance then current shall be consolidated and treated as a single Revolving Advance and if more than one Revolving Advance has been made at the time the Borrower notifies the Agent that it wishes to consolidate the Interest Periods of the Revolving Advances, the relevant Interest Periods shall be consolidated with the Interest Period applicable to the first Revolving Advance so that the Interest Period for that Revolving Advance expires on the same date as the Interest Period for the Revolving Advance then current; or
(c)
3 months, if the Borrower fails to notify the Agent in the Drawdown Notice for that Revolving Advance; or
(d)
such other period as the Agent may, with the authorisation of all the Lenders, agree with the Borrower,
Provided that , the Borrower shall not select a 1 month Interest Period for a Revolving Advance on more than 3 occasions in any calendar year.
6.2
Commencement of term Interest Periods
The first Interest Period applicable to a Term Advance shall commence on the Drawdown Date relating to that Term Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period applicable to such Term Advance.
6.3
Duration of normal term Interest Periods
Subject to Clauses 6.6, 6.7 and 6.8, each Interest Period shall be:
(a)
1, 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; or
(b)
in the case of the Interest Period applicable to the second Term Advance and if the Borrower notifies the Agent in the relevant Drawdown Notice, a period ending on the last day of the Interest Period applicable to the other Term Advance then current, whereupon the Term Advances shall be consolidated and treated as a single Term Advance; or
(c)
3 months, if the Borrower fails to notify the Agent by the time specified in paragraph (a); or
(d)
such other period as the Agent may, with the authorisation of all the Lenders, agree with the Borrower,
Provided that , the Borrower shall not select a 1 month Interest Period for a Term Advance on more than 3 occasions in any calendar year.

33     58557071v16


6.4
Commencement of incremental Interest Periods
The first Interest Period applicable to an Incremental Credit Facility Advance shall commence on the Drawdown Date relating to that Incremental Credit Facility Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period applicable to such Incremental Credit Facility Advance.
6.5
Duration of normal incremental Interest Periods
Subject to Clauses 6.6, 6.7 and 6.8, each Interest Period shall be:
(a)
1, 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; or
(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,
Provided that , the Borrower shall not select a 1 month Interest Period for an Incremental Credit Facility Advance on more than 3 occasions in any 12 month period.
6.6
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.
6.7
No Interest Period to extend beyond Maturity Date . No Interest Period shall end after the Maturity Date and any Interest Period which would otherwise extend beyond the Maturity Date shall instead end on the Maturity Date.
6.8
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 3 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 3 months.
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.

34     58557071v16


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 select by the Agent for so long as such amounts remain unpaid:
(i)
LIBOR; or
(ii)
if LIBOR is unavailable, a rate from time to time determined by the Agent by reference to the actual 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 default interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded by the default rate on a daily basis.
7.7
Application to Master Agreements. For the avoidance of doubt, this Clause 7 does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transaction as to which section 2(e) (Default Interest; Other Amounts) of that Master Agreement shall apply.
8
REPAYMENT, PREPAYMENT AND REBORROWING
8.1
Repayment of Term Loan.
(a)
The Borrower shall repay the Term Loan by 20 consecutive quarterly instalments (each a “ Term Repayment Instalment ”), the first of which shall be repaid on the date falling three Months after the first Drawdown Date relating to the Term Loan. The first eight Term Repayment Instalments shall be $7,100,000 thereafter the next twelve Term Repayment Instalments shall be $6,200,000 and an additional balloon instalment equal to the then outstanding balance of the Term Loan shall be paid together with the last Term Repayment Instalment.

35     58557071v16


(b)
If the amount advanced under the Term Loan is less than $200,000,000:
(i)
the repayment instalments referred to in this Clause 8.1 ( Repayment of Term Loan. ) (including the balloon) shall be reduced pro rata and the Agent shall provide the Borrower and the other Creditor Parties with a repayment schedule for the Term Loan with the amended repayment instalments (and balloon); and
(ii)
the unutilised Term Loan Commitments (if any) of each Lender shall be automatically cancelled at close of business on the Drawdown Date in relation to the second Term Advance.
8.2
Repayment of Revolving Advances
(a)
Subject to paragraphs (b) and (c) below, the Borrower shall repay each Revolving Advance on the last day of its Interest Period and shall repay the full amount of any outstanding Revolving Advances on the Maturity Date.
(b)
Notwithstanding paragraph (a) of this Clause, unless the Borrower notifies the Agent to the contrary not later than 11.00 a.m. (London time) 3 Business Days prior to the Repayment Date (other than the Maturity Date) applicable to a Revolving Advance, then:
(i)    the Borrower shall be deemed to have requested that the Repayment Date shall be a Drawdown Date in respect of another Revolving Advance in an amount equal to the Revolving Advance that is to be repaid; and
(ii)    each Lender’s obligation to contribute to the relevant Advance shall be subject to the conditions precedent set out in paragraphs (d), (e), (f) and (g) of Clause 9.1;
(iii)    the representations set out in Clause 10 shall be deemed to be made by the Borrower by reference to the facts and circumstances then existing on the date of that further Revolving Advance.
(c)
Unless the Borrower notifies the Agent to the contrary not later than 11.00 a.m. (London time) 3 Business Days prior to the Repayment Date applicable to a Revolving Advance, then, notwithstanding paragraph (a) of this Clause, where that Repayment Date is also a Drawdown Date in respect of another Revolving Advance (whether specifically requested by the Borrower or made pursuant to paragraph (b) above), the Agent shall, on behalf of the Borrower, apply the Revolving Advance which would otherwise have been paid to the Borrower on that Drawdown Date in or towards the discharge of the amount payable by the Borrower on that Repayment Date pursuant to paragraph (a) of this Clause (but without prejudice to the obligation of the Borrower to pay any balance due after application of such amount).Subject to the Borrower's compliance with paragraph (c) of Clause 9.1 on the relevant repayment date for the respective Revolving Advance, each Revolving Advance shall renew on the last day of its Interest Period unless the Borrower notifies the Agent that it will repay each or part of each Revolving Advance on the last day of its Interest Period. The Borrower shall repay the full amount of any outstanding Revolving Advances on the Maturity Date.
8.3
Repayment of Incremental Credit Facility. The Borrower shall repay each Incremental Credit Facility Advance by equal consecutive quarterly instalments, using an age-adjusted repayment profile corresponding to a repayment of such Incremental Credit Facility Advance by the fifteenth anniversary of the Drawdown Date to which such Incremental Credit Facility Advance relates up to the Maturity Date whereupon the remainder of the Incremental Credit Facility Advance then outstanding shall be repaid as a balloon instalment, provided that any repayments made in respect of such Incremental Credit Facility Advance prior to the second anniversary of the

36     58557071v16


first Drawdown Date shall reflect a repayment profile which is 15 per cent. higher. The first repayment instalment shall be repaid on the next Repayment Date, such date to be no less than 3 Months after the first Drawdown Date relating to that Incremental Credit Facility Advance.
8.4
Final Repayment Date. On the final Repayment 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.
8.5
Voluntary prepayment.
Subject to the conditions set forth in Clause 8.6, the Borrower may:
(a)
prepay or cancel the whole or any part of the Loan without premium other than pursuant to Clause 8.12; and
(b)
prepay the whole or part of a Revolving Advance.
8.6
Conditions for voluntary prepayment. The conditions referred to in Clause 8.5 are that:
(a)
a partial prepayment of the Loan shall be $1,000,000 or a higher integral multiple of $100,000 or such lower amount as the Agent may approve;
(b)
a partial cancellation of the Revolving Credit Facility shall be made simultaneously with any partial prepayment of the Term Loan other than a partial prepayment pursuant to Clause 8.5(b). The amount of such partial cancellation shall be the fraction of the Total Revolving Credit Facility Commitments equal to the equivalent fraction of the Term Advances prepaid;
(c)
the Agent has received from the Borrower at least 3 Business Days' prior written notice specifying the amounts to be prepaid and cancelled and the date on which the prepayment and cancellation is to be made; and
(d)
that the Borrower has complied with Clause 8.15 on or prior to the date of prepayment.
8.7
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 all the 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.
8.8
Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice.
8.9
Mandatory prepayment or cancellation on sale or Total Loss. If a Ship is sold or there is a Guarantor Disposal to facilitate the sale or disposal of a Ship or a Ship becomes a Total Loss, the Borrower shall prepay the Loan and cancel an amount of the Total Revolving Credit Facility Commitments (if applicable) by, in aggregate, the relevant amount (as defined below) and the Borrower shall be obliged, if applicable, to prepay any amount of the Revolving Advances which exceed the reduced Total Revolving Credit Facility Commitments:
(a)
in the case of a sale, on the earlier of (i) the date on which the sale is completed by delivery of the Ship to the relevant buyer and (ii) the date of receipt by the Security Trustee of the proceeds of the sale; or
(b)
in the case of a Guarantor Disposal, on the date on which the Guarantor Disposal occurs; or

37     58557071v16


(c)
in the case of a Total Loss, on the earlier of (i) the date falling 180 days after the Total Loss Date and (ii) the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.
In this Clause 8.9 "relevant amount" means:
in the case of a sale or a Guarantor Disposal or a Total Loss, the greater of the amount of the Loan on the date of such prepayment multiplied by a fraction of which the numerator is the Fair Market Value of the relevant Ship (determined as at the date of the most recent appraisal and not more than 6 months prior to the date of the sale or Total Loss) and the denominator is the aggregate of the most recently determined Fair Market Values of the Ships (determined on the same basis) and the amount required to comply with Clause 8.15 immediately following such prepayment and cancellation..
8.10
Mandatory prepayment or cancellation on Change of Control. If there is a Change of Control, the Borrower shall prepay the Loan and the Revolving Credit Facility shall be cancelled (if applicable) on or before the date falling 60 days following such Change of Control unless agreed otherwise by all the Lenders or the Change of Control consists of a Guarantor Disposal, where such Guarantor Disposal is made solely to facilitate the sale or disposal of a Ship and a corresponding prepayment is made in accordance with Clause 8.9.
8.11
Mandatory prepayment or cancellation on Illegality. If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or all or any part of the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so or if funding or maintaining its participation in an Advance or all or any part of the Loan would cause that Lender to breach any Sanctions applicable to it:
(a)
that Lender shall promptly notify the Agent upon becoming aware of that event;
(b)
upon the Agent notifying the Borrower, each Available Commitment of that Lender will be immediately cancelled; and
(c)
the Borrower shall prepay that Lender's participation in each part of the Loan on the last day of the Interest Period for that part of the Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender's corresponding Commitment shall be cancelled in the amount of the participation prepaid.
8.12
Amounts payable on prepayment. A voluntary prepayment under Clause 8.5, a mandatory prepayment under Clauses 8.9, 8.10 and 8.11 and any cancellation of any Lender's Commitment under this Agreement shall be made together with:
(a)
accrued interest (and any other amount payable under Clause 21 or otherwise) in respect of the amount prepaid;
(b)
if the prepayment or any part of it is not made on the last day of the Interest Period applicable to the part of the Loan against which it is to be applied, any sums payable under Clause 21.1(b) ; and
(c)
in respect of a voluntary prepayment or reduction pursuant to Clause 8.5 only, a prepayment fee of 1.00 per cent. of the amount of the prepayment or reduction of the Loan as at the prepayment or reduction date in respect of any voluntary prepayment or reduction made prior to the first anniversary of the earlier of (i) 30 September 2016 and (ii) the date of this Agreement.

38     58557071v16


8.13
Application of partial prepayment .
(a)
Each partial prepayment and cancellation shall be applied pro rata against:
(i)    the Term Loan;
(ii)    the Incremental Credit Facility (if utilized); and
(iii)    in permanently cancelling the relevant amount of the Total Revolving Credit Facility Commitments,
(b)
in an amount, in aggregate, equal to the amount of such prepayment and cancellation and, as regards the Term Loan, pro rata against the repayment instalments for the Term Loan as specified in Clause 8.1 including the balloon instalment, and, as regards the Incremental Credit Facility, pro rata against the repayment instalments for the Incremental Credit Facility as specified in Clause 8.3 including the balloon instalment.
(c)
Each prepayment of a Revolving Advance pursuant to paragraph (b) of Clause 8.5 shall be applied against the Revolving Advance selected by the Borrower. For the avoidance of doubt the Term Loan and Incremental Credit Facility will not be affected by such prepayment.
(d)
Any partial cancellation of the Total Revolving Credit Facility Commitments shall be applied against the Revolving Credit Facility Commitments of each Lender pro rata.
8.14
Reborrowing
(a)
No amount of the Term Loan or the Incremental Credit Facility repaid or prepaid may be reborrowed.
(b)
Subject to the terms of this Agreement, any amount of the Revolving Credit Facility repaid or prepaid may be reborrowed and, for the avoidance of doubt, any amount of the Revolving Credit Facility which is repaid or prepaid shall not in itself result in a cancellation of the Revolving Credit Facility 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 unless otherwise agreed by all the Lenders 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 Clauses 8.1, 8.2 and 8.3.
9
CONDITIONS PRECEDENT
9.1
Documents, fees and no default. Each Lender's obligation to contribute to the Loan 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 in relation to any Term Advance, the Agent receives or is satisfied that it will receive on the making of such Term Advance, the documents described in Part B of Schedule 4 in form and substance satisfactory to it and its lawyers;

39     58557071v16


(c)
that, on or before the Drawdown Date in relation to any Incremental Credit Facility Advance in respect of an Additional Ship, the Agent receives or is satisfied that it will receive on the making of such Incremental Credit Facility Advance, the documents described in Part C of Schedule 4 in form and substance satisfactory to it and its lawyers;
(d)
that, on or before the service of each Drawdown Notice, the Agent receives all accrued commitment fees payable pursuant to Clause 20.1(b) and any fees contemplated by Clause 20.1(a) and has received payment of the expenses referred to in Clause 20.2 ;
(e)
that both at the date of each Drawdown Notice and at each Drawdown Date:
(i)
no Event of Default or Latent Event of Default has occurred or would result from the borrowing of the relevant Advance;
(ii)
the representations and warranties in Clause 10.1 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;
(iii)
no event or circumstance has occurred which has or is reasonably likely to have a Material Adverse Effect;
(iv)
there has been no material change in the consolidated financial condition, operations or business prospects of the Borrower since the date on which the Borrower provided the Compliance Certificate and Accounting Information accompanying such Compliance Certificate or in respect of any of the information concerning those topics appended to the Compliance Certificate; and
(v)
none of the circumstances contemplated by Clause 5.6 has occurred and is continuing; and
(f)
that, the Agent is satisfied that the Borrower will be in compliance with the requirements of Clause 15 immediately following the making of the Advance; and
(g)
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 relevant 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 Drawdown Date relating to that Advance (or such longer period as the Agent may, with the authorisation of all 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 the Republic of the Marshall Islands.
10.3
Ownership of the Guarantors. The Borrower is the ultimate beneficial owner of all the issued share capital and voting rights in respect of each Guarantor free of Security Interests save for

40     58557071v16


the Security Interests created pursuant to the Finance Documents and, prior to the date of the Shares Pledge in respect of a Guarantor executed by the Borrower, Security Interests created in connection with the relevant Existing Facility Agreement over the share capital and voting rights of that Guarantor.
10.4
Corporate power. The Borrower (or in the case of paragraph (a) each Guarantor) has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
(a)
to register the Collateral Ships in their ownership on the Approval 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 each Master Agreement and to make all the payments contemplated by, and to comply with, the Finance Documents to which the Borrower is a party and each Master Agreement.
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 each Master Agreement, 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 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, and the borrowing by the Borrower of the Loan, and its compliance with each Finance Document and each Master Agreement 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.

41     58557071v16


10.9
No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.
10.10
No default. No Event of Default or Latent Event of Default has occurred.
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 satisfied the requirements of Clause 11.5 ; 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 from that disclosed in the latest of those accounts.
10.12
No litigation. No legal or administrative action involving the Borrower or any Security Party (including action 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.
10.13
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 or any Security Party, from the Borrower or any Security Party in connection with the Ships.
10.14
Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.4, 11.8 and 11.13.
10.15
Taxes paid. The Borrower has paid and has procured that each Guarantor has paid all taxes applicable to, or imposed on or in relation to it, its business or the Ship owned or to be owned by it.
10.16
ISM Code, ISPS Code and Environmental Laws compliance. All requirements of the ISM Code, the ISPS Code and all Environmental Laws as they relate to the Borrower, the Guarantors, any Approved Ship Manager and the Ships have been complied with.
10.17
No money laundering. Without prejudice to the generality of Clause 2.5 , in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents or any Master Agreement, and the transactions and other arrangements affected or contemplated by the Finance Documents or any Master Agreement 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).
10.18
No immunity. The Borrower is not and no assets of the Borrower are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceedings (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
10.19
Pari passu. The obligations of the Borrower under the Finance Documents and any Master Agreement to which it is a party rank at least pari passu with all other unsecured indebtedness of the Borrower other than indebtedness mandatorily preferred by law.
10.20
Sanctions

42     58557071v16


(a)
The Borrower shall, and shall procure that each Guarantor’s respective directors, officers, employees, agents or representatives has been and is in compliance with Applicable Sanctions.
(b)
No Security Party and their respective directors, officers, employees, agents or representatives:
(i)
is a Restricted Person, or is involved in any transaction through which it is likely to become a Restricted Person; or
(ii)
is subject to or involved in any inquiry, claim, action, suit, proceeding or investigation against it with respect to Sanctions or acts directly or indirectly on behalf of a Restricted Person in breach of Sanctions.
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 all the Lenders, otherwise permit.
11.2
Title; negative pledge. The Borrower will:
(a)
own (directly or indirectly) and maintain ownership of the entire legal and beneficial interest in the entire issued share capital of each Guarantor free from all Security Interests and other interests and rights of every kind except for those created by the Finance Documents and, prior to date of the Shares Pledge executed by the Borrower in respect of a Guarantor, Security Interests created in connection with the relevant Existing Facility Agreement over the share capital of that Guarantor;
(b)
procure that each Guarantor will:
(i)
hold the legal title to, and own the entire beneficial interest in the Ship to be owned by it, the Insurances and Earnings relating to that Ship and the Earnings Account in its name, 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; and
(ii)
not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and
(c)
procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law;
11.3
No disposal of assets. The Borrower will procure that no Guarantor will transfer, lease or otherwise dispose of:
(a)
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 except for demurrage claims and otherwise in the ordinary course of conducting its business as a ship owner ; or
(b)
make any substantial change to the nature of its business from that existing at the date of this Agreement.
11.4
No other liabilities or obligations to be incurred. The Borrower will procure that no Guarantor, from the date of the Guarantee executed by the relevant Guarantor in favour of the Security

43     58557071v16


Trustee, will incur any liability or obligation (including, without limitation, any contingent liability) except liabilities and obligations:
(a)
under the Finance Documents to which it is a party;
(b)
reasonably incurred in the ordinary course of operating, upgrading, maintaining and chartering its Ship; and
(c)
in respect of Intercompany Loans made to the relevant Guarantor provided these comply with the requirements of Clause 11.20.
11.5
Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower or any Security Party under or in connection with any Finance Document will be true, complete and not misleading and will not omit any material fact or consideration.
11.6
Provision of financial statements. The Borrower will send to the Agent:
(a)
as soon as possible, but in no event later than 120 days after the end of each financial year of the Borrower, the audited consolidated accounts of the Borrower and its subsidiaries;
(b)
as soon as possible, but in no event later than 90 days after the end of each of the first three Accounting Periods in a calendar year, unaudited consolidated accounts of the Borrower and its subsidiaries which are certified as to their correctness by the chief financial officer of the Borrower;
(c)
a Compliance Certificate together with the annual reports that the Borrower delivers pursuant to paragraph (a) above and quarterly reports that the Borrower delivers in (b) above each certified by the chief financial officer of the Borrower; and
(d)
such other information and financial statements (including, without limitation, details of the operating performance, employment, positions and engagements of the Ships, annual budgets and projections) as may be requested by the Agent from time to time.
11.7
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 consistently applied;
(b)
fairly represent the financial condition of the Borrower and its subsidiaries at the date of those accounts and of their profit for the period to which those accounts relate; and
(c)
fully disclose or provide for all significant liabilities of the Borrower and its subsidiaries.
11.8
Consents. The Borrower will, and will procure that each Guarantor will, maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:
(a)
for it to perform its obligations under any Finance Document to which it is a 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

44     58557071v16


(c)
in the case of each Guarantor, to continue to own and operate the Ship owned by it
and the Borrower will, and will procure that each Guarantor will, comply with the terms of all such consents.
11.9
Maintenance of Security Interests. The Borrower will:
(a)
at its own cost, do all that it reasonably can to ensure that any Finance Document and each Master Agreement 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 and any Master Agreement (if applicable) 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 Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.
11.10
Notification of litigation. The Borrower will provide the Agent with details of any legal action involving the Borrower, any Security Party or any Ship, its Earnings or its Insurances as soon as such action is instituted unless it is clear that the legal action cannot be considered material in the context of any Finance Document.
11.11
No amendment to Master Agreements. The Borrower will not agree to any amendment or supplement to, or waive or fail to enforce, any Master Agreement or any of its provisions.
11.12
Chief Executive Office. The Borrower will maintain its chief executive office in the Principality of Monaco.
11.13
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 Latent Event of Default has occurred; or
(b)
states that no Event of Default or Latent Event of Default has occurred, except for a specified event or matter, of which all material details are given.
The Agent may serve requests under this Clause 11.13 from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if the Loan has not been made) Commitments exceeding 10 per cent of the Total Commitments; and this Clause 11.13 does not affect the Borrower's obligations under Clause 11.14.
11.14
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 Latent Event of Default; or
(b)
any matter which indicates that an Event of Default or a Latent Event of Default may have occurred,
and will keep the Agent fully up‑to‑date with all developments.

45     58557071v16


11.15
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 to:
(a)
the financial condition, business and operations of the Borrower;
(b)
the Borrower, any Security Party, any Ship, its Earnings or its Insurances; or
(c)
any other matter relevant to, or to any provision of, a Finance Document and any Master Agreement,
which may be requested by the Agent, the Security Trustee, any Lender or any Swap Bank at any time and the Borrower shall promptly, provide such further information and/or documents as any Creditor Party (through the Agent) may request so as to enable such Creditor Party to comply with any laws applicable to it (including, without limitation, compliance with FATCA).
11.16
Provision of copies and translation of documents. The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and 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.
11.17
"Know your customer" checks. The Borrower shall notify the Agent immediately if it becomes aware of any actual or intended change in its status or the status of any Security Party after the date of this Agreement. If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(b)
any change in the status of the Borrower or any Security Party after the date of this Agreement; or
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender 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 the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
11.18
Compliance with laws. The Borrower shall comply and shall procure that each Guarantor shall comply in all material respects with all applicable laws, including, without limitation, all Environmental Laws, all Applicable Sanctions and regulations relating thereto.
11.19
Taxes. The Borrower shall prepare and timely file all tax returns required to be filed by it and any member of the Group and pay and discharge all taxes imposed upon it and any member of the Group or in respect of any of its or any member of the Group's property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labour, materials and supplies) which, if unpaid, might become a lien or any part

46     58557071v16


thereof, except in each case, for any such taxes (a) as are being contested in good faith by appropriate proceedings and for which adequate reserves have been established, (b) as to which such failure to have paid does not create any risk of sale, forfeiture, loss, confiscation or seizure of a Ship or criminal liability, or (c) the failure of which to pay or discharge would not be likely to have a Material Adverse Effect.
11.20
Use of proceeds and Intercompany Loans. The Borrower shall:
(a)
use the proceeds of each Advance to partially re-finance the Existing Facility Agreements and for general corporate purposes and shall on-lend the proceeds (or part of them where such proceeds have also been used to refinance the Existing Facility Agreements) of each Advance directly or indirectly to the Guarantor which owns the relevant Ship and shall procure that such Guarantor shall use the proceeds of such Advance solely as permitted pursuant to the terms of this Agreement; and
(b)
procure that any Intercompany Loan it provides whether directly or indirectly to an Guarantor pursuant to paragraph (a) above shall:
(i)
be fully subordinated to any and all obligations of the Guarantors and the rights of the Creditor Parties under the Finance Documents;
(ii)
not require the payment of interest prior to expiry of the Maturity Date;
(iii)
mature at least 1 year after the Maturity Date; and
(iv)
not be secured by any asset which is already, or is to be, the subject of a Security Interest created by the Borrower or any Security Party pursuant to any Finance Document;
(c)
furnish promptly to the Agent a true and complete copy of any instrument evidencing any Intercompany Loan, all other documents related thereto and a true and complete copy of each material amendment or other modification thereof; and
(d)
in respect of any such Intercompany Loan, execute and deliver to the Agent an Intercompany Loan Assignment and deliver to the Agent such other documents equivalent to those referred to in paragraphs 3, 4, and 6 of Part A of Schedule 4 as the Agent may require.
11.21
Sanctions
(a)
The Borrower undertakes for itself and on behalf of each Guarantor that:
(i)
they and each of their directors, officers, agents, employees or persons action on their behalf is not a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person or in breach of Applicable Sanctions;
(ii)
without limiting paragraph (a) above, not employ any Ship nor allow its employment, operation or management in any manner contrary to any Applicable Sanctions, Environmental Laws, ISM Code and the ISPS Code.
(b)
Without prejudice to Clause 14.10, the Borrower shall not, and will procure that no Guarantor shall, engage in any activity or dealing with a Restricted Person except such activity or dealing with a Restricted Person that is not in breach of Applicable Sanctions.

47     58557071v16


(c)
The Borrower shall procure, and will ensure that each Guarantor procures, that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with any Creditor Party in its name.
(d)
The Borrower shall, and will procure that the Guarantor shall, to the extent permitted by law, promptly upon becoming aware of them supply to the Agent details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority.
11.22
Use of proceeds
The Borrower shall not, and shall not permit or authorise any other person (including without limitation the Guarantors) to, directly or indirectly, make available any proceeds of the Loan to fund or facilitate trade, business or other activities (i) involving or for the benefit of any Restricted Person in breach of Sanctions or (ii) in any other manner that could result in the Borrower and/or any Guarantor and/or a Creditor Party being in breach of any Applicable Sanctions or becoming a Restricted Person.
12
CORPORATE AND FINANCIAL 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 all the Lenders, otherwise permit.
12.2
Maintenance of status . The Borrower will:
(a)
maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands;
(b)
remain listed on the New York Stock Exchange; and
(c)
procure that each Guarantor shall maintain its separate corporate existence and remain in goodstanding under the laws of the Republic of the Marshall Islands.
12.3
Negative undertakings.
(a)
The Borrower will not and will procure that no Guarantor shall:
(i)
change its name, its type of organisation or the nature of its business; or
(ii)
change its Fiscal Year; or
(iii)
permit any act, event or circumstance to occur or arise which would or could result in a Change of Control of the Borrower or any Guarantor other than a Guarantor Disposal for the purposes of selling or disposing of a Ship where the relevant prepayment is made in accordance with Clause 8.9 or give rise whether directly or indirectly to a Material Adverse Effect; or
(iv)
enter into any form of amalgamation, merge or de-merger or any form of reconstruction or reorganisation.
(b)
The Borrower will procure that no Guarantor shall:
(i)
provide any form of credit or financial assistance to:

48     58557071v16


(A)
a person who is directly or indirectly interested in the Borrower's or the relevant Guarantor's share or loan capital; or
(B)
any company in or with which such a person is directly or indirectly interested or connected,
or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower or the relevant Guarantor than those which it could obtain in a bargain made at arms' length; or
(ii)
issue (except in accordance with the terms of the relevant Share Pledge), allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital; or
(iii)
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than Designated Transactions.
12.4
Dividends.
(a)
The Borrower may only pay a dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital provided that no Event of Default has occurred and is continuing at the time of the payment of such dividends or making of such distributions, redemptions, purchase or return or will result from the payment of such dividend or making of such distributions, redemptions, purchase or return; and
(b)
The Borrower will procure that no Guarantor shall pay a dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital if:
(i)
any Event of Default has occurred and is continuing at the time of the payment of such dividend or making of such other form of distribution or effecting of such redemption, purchase or return of share capital or will result from such payment or making of such other form of distribution or effecting of such redemption, purchase or return of share capital; or
(ii)
such dividend or other form of distribution or redemption, purchase or return of share capital shall result in a breach of the financial covenants set out in Clauses 12.5, 12.6, 12.7 and 12.8 .
12.5
Minimum liquidity. The Borrower shall, at all times, maintain Cash and Cash Equivalents on a consolidated basis, including all amounts on deposit with any bank, of not less than the greater of (a) $25,000,000 or (b) $250,000 per ship which is time chartered by the Borrower, plus $500,000 per Fleet Vessel (the " Minimum Liquidity "), provided that:
(a)
for the purpose of this Clause 12.5, " Cash Equivalents " shall include unutilised and freely available amounts under the Facility (where no default or termination event has occurred and is continuing and there is no restriction on borrowing under such Facility) with a maturity date in excess of 12 months after the date of the financial statements delivered pursuant to Clause 11.6; and
(b)
100 per cent. of the Minimum Liquidity shall at all times consist of Cash.
12.6
Minimum Consolidated Tangible Net Worth. The Borrower shall maintain a Consolidated Tangible Net Worth of not less than $1,000,000,000 plus:

49     58557071v16


(a)
25 per cent. of the Borrower 's cumulative, positive consolidated net income for each Accounting Period commencing on or after 1 January 2016; and
(b)
50 per cent. of the Equity Proceeds realised from any issuance of Equity Interests in the Borrower occurring on or after 1 January 2016.
12.7
Maximum leverage. The Borrower shall maintain a ratio of Net Debt to Consolidated Total Capitalisation of not more than 0.60 to 1.00, to be tested on the last day of each Accounting Period.
12.8
Minimum interest coverage. The Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense greater than 2.50 to 1.00. Such ratio shall be calculated on the last day of each Accounting Period on a trailing four quarter basis.
12.9
Material Changes in IFRS requirements. If, at any time after the date of this Agreement, the IFRS requirements materially change so as to impact the financial covenants set out in this Clause 12 the Borrower shall notify the Agent and, if agreed between the Borrower and the Agent, this Agreement shall be amended and/or supplemented to reflect these changes.
13
INSURANCE
13.1
General. The Borrower also undertakes with each Creditor Party to procure that each Guarantor, at all times whilst the Ship owned by the relevant Guarantor is subject to a Mortgage, will 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 all the Lenders, otherwise permit.
13.2
Maintenance of obligatory insurances. The Borrower shall procure that each Guarantor shall keep the Ship owned by it insured at the expense of that Guarantor against:
(a)
fire and usual marine risks (including hull and machinery plus hull interest and any other usual marine risks such as excess risks as applicable);
(b)
war risks (including the London Blocking and Trapping addendum or equivalent coverage including war, terrorism, piracy and confiscation risks excluded from the protection and indemnity risks);
(c)
full protection and indemnity risks (including liability for oil pollution and excess war risk P&I cover) on standard club rules, covered by a protection and indemnity association which is a member of the International Group of Protection and Indemnity Associations (or, if the International Group of Protection and Indemnity Associations ceases to exist, any other leading protection and indemnity association or other leading provider of protection and indemnity insurance) (including, without limitation, the proportion (if any) of any collision liability not covered under the terms of the hull cover), or other with written consent from the Agent;
(d)
freight, demurrage & defence risks;
(e)
any other risks against which the Security Trustee considers, having regard to standard practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for that Guarantor to insure and which are specified by the Security Trustee by written notice to that Guarantor.
13.3
Terms of obligatory insurances. The Borrower shall procure that each Guarantor shall affect such insurances in respect of the Ship owned by it:

50     58557071v16


(a)
in Dollars;
(b)
in the case of the insurances described in 13.2(a) , (b) and, in the event such other risk is based on vessel value, (e) in an amount on an agreed value basis at least the greater of:
(i)
when aggregated with the insured values of the other Ships then financed under this Agreement, 120 per cent. of the aggregate amount of the Loan; and
(ii)
the Fair Market Value of the Ship owned by it;
(c)
in the case of hull and machinery insured values of each Ship, in an amount not less than 80 per cent. of the Fair Market Value of that Ship and the aggregate amount of the hull and machinery insured values of the Ships shall be equal to or greater than the amount of the Loan; and
(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;
(d)
in relation to protection and indemnity risks in respect of the full tonnage of the Ship owned by it;
(e)
on approved terms; and
(f)
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 that are members of the International Group of Protection and Indemnity Clubs.
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)
subject always to paragraph (b), name the relevant Guarantor as the sole named assured unless the interest of every other named assured is limited:
(i)
in respect of any obligatory insurances for hull and machinery and war risks;
(A)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
(ii)
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;
and when requested by the Security Trustee (acting reasonably) obtain or procure that every other named assured has undertaken in writing to the Security Trustee (in such form as it requires) that any deductible shall be apportioned between the relevant Guarantor and every other named assured in proportion to the gross claims made or paid by each of them and that it 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;

51     58557071v16


(b)
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 Lender, 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;
(c)
name the Security Trustee as loss payee with such directions for payment as the Security Trustee may specify;
(d)
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;
(e)
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;
(f)
provide that the Security Trustee may make proof of loss if the Guarantor concerned fails to do so; and
(g)
provide that the deductible of the hull and machinery insurance is not higher than the amount agreed upon and stated in the loss payable clause.
13.5
Renewal of obligatory insurances. The Borrower shall procure that each Guarantor shall;
(a)
at least 7 days before the expiry of any obligatory insurance:
(i)
notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Guarantor 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 procure that each Guarantor shall ensure that all approved insurance 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;

52     58557071v16


(d)
they will notify the Security Trustee, not less than 5 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Guarantor 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 owned by that Guarantor under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that 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 that Ship forthwith upon being so requested by the Security Trustee.
13.7
Copies of certificates of entry. The Borrower shall procure that each Guarantor shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Security Trustee with:
(a)
a certified copy of the certificate of entry for that Ship;
(b)
a letter or letters of undertaking in such form as may be required by the Security Trustee; and
(c)
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 that Ship.
13.8
Deposit of original policies. The Borrower shall procure that each Guarantor 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 procure that each Guarantor shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by that Guarantor and produce all relevant receipts when so required by the Security Trustee.
13.10
Guarantees. The Borrower shall procure that each Guarantor 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 and shall procure that no Guarantor shall do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:
(a)
each Guarantor 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)
no Guarantor shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;
(c)
each Guarantor shall make all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain

53     58557071v16


cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and
(d)
no Guarantor shall employ the Ship owned by it, or 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 and shall procure that no Guarantor shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.
13.13
Settlement of claims. The Borrower shall not and shall procure that no Guarantor shall settle, compromise or abandon any claim under any obligatory insurance effected by it 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 procure that each Guarantor shall provide the Security Trustee, at the time of each such communication, copies of all material written communications between the relevant Guarantor and:
(a)
the approved insurance brokers;
(b)
the approved protection and indemnity and/or war risks associations; and
(c)
the approved insurance companies and/or underwriters, which relate directly or indirectly to:
(i)
that Guarantor's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)
any credit arrangements made between that Guarantor 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 procure that each Guarantor 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) 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 by it; and/or
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 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 reasonable 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), provided the amount of such fees and expenses shall have been the subject of prior consultation between the Security Trustee and the Borrower but without any obligation on the part of the Security Trustee to consider or comply with any recommendation by or request from the Borrower during such consultation.

54     58557071v16


13.16
Mortgagee's interest, additional perils. The Security Trustee shall be entitled from time to time to effect, maintain and renew (i) mortgagee's interest additional perils insurance and (ii) mortgagee's interest marine insurance in such amounts and on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the Borrower shall upon demand fully indemnify the Security Trustee 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 that it shall and that it shall procure that each Guarantor will, at all times whilst the Ship owned by the relevant Guarantor is subject to a Mortgage, comply with the following provisions of this Clause 14 at all times during the Security Period except as the Agent, with the authorisation of all the Lenders, may otherwise permit.
14.2
Ship's name and registration. The Borrower shall procure that each Guarantor shall keep the Ship owned by it registered in its name under an Approved Flag; 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 any Ship without the prior written approval of the Agent, such approval not to be unreasonably withheld or delayed.
14.3
Repair and classification. The Borrower shall procure that each Guarantor shall keep the Ship owned by it in a good and safe condition and state of repair:
(a)
consistent with first‑class ship ownership and management practice;
(b)
so as to maintain the highest class for that Ship with the Approved Classification Society free of overdue recommendations and conditions affecting that Ship's class; and
(c)
so as to comply with all laws and regulations applicable to vessels registered under the law of the Approved Flag on which that Ship is registered or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.
14.4
Classification Society undertaking. The Borrower shall procure that each Guarantor shall instruct the Approved Classification Society (and in the case of dual classification, only the primary classification society):
(a)
to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the Approved Classification Society in relation to the Ship owned by it;
(b)
to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Guarantor and the Ship owned by it at the offices of the Approved Classification Society and to take copies of them;
(c)
following receipt of a written request from the Security Trustee:
(i)
to confirm that such Guarantor is not in default of any of its contractual obligations or liabilities to the Approved Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Approved Classification Society; or

55     58557071v16


(ii)
if such Guarantor is in default of any of its contractual obligations or liabilities to the Approved Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Approved Classification Society.
14.5
Modification. The Borrower shall procure that no Guarantor shall make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on that Ship which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.
14.6
Removal of parts. The Borrower shall procure that no Guarantor shall remove any material part of the Ship owned by it, or any item of equipment installed on, that 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 that Ship the property of that Guarantor and subject to the security constituted by the Mortgage Provided that an Guarantor may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.
14.7
Surveys. The Borrower shall procure that each Guarantor, at the Borrower's expense submits the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes with copies of all technical survey reports in respect of surveys carried out by an Approved Ship Manager or other qualified expert duly appointed for such purpose.
14.8
Inspection. The Borrower shall procure that each Guarantor shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times, with reasonable notice to the relevant Guarantor, always without interfering with the trading of the Ship at the Borrower's expense to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections provided that unless an Event of Default has occurred or that Ship's Approved Classification Society has issued a recommendation or condition affecting that Ship's class, the Borrower shall not have to pay for more than 1 inspection per Ship in each calendar year. The Security Trustee shall use reasonable efforts not to interfere with the operation of that Ship when exercising its rights under this Clause 14.8 .
14.9
Prevention of and release from arrest. The Borrower shall procure that each Guarantor shall promptly discharge:
(a)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, its Earnings or its Insurances;
(b)
all taxes, dues and other amounts charged in respect of the Ship owned by it, its Earnings or its Insurances; and
(c)
all other outgoings whatsoever in respect of the Ship owned by it, its Earnings or its Insurances,
and, forthwith upon receiving notice of the arrest of the Ship owned by it, 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.
14.10
Compliance with laws etc. The Borrower shall procure that each Guarantor shall:

56     58557071v16


(a)
comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws, all Applicable Sanctions and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Guarantor;
(b)
not employ the Ship owned by it 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, all Environmental Laws and Applicable Sanctions; 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 owned by it to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless the prior written consent of the Security Trustee has been given and the Borrower has or has procured that there is (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.
14.11
Provision of information. The Borrower shall procure that each Guarantor shall promptly provide the Security Trustee with any information which it requests regarding:
(a)
the Ship owned by it, its employment, position and engagements (including, without limitation, details of the operating performance, employment, positions and engagements of the Ships, annual budgets and projections);
(b)
the Earnings and payments and amounts due to the master and crew of the Ship owned by it;
(c)
any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship owned by it and any payments made in respect of that Ship;
(d)
any towages and salvages; and
(e)
its compliance, the Approved Ship Manager's or the compliance by the Ship owned by it with the ISM Code, the ISPS Code, all Environmental Laws and Applicable Sanctions,
and, upon the Security Trustee's request, provide copies of any current charter relating to that Ship, of any current charter guarantee and copies of each Guarantors or the Approved Ship Manager's Document of Compliance.
14.12
Notification of certain events. The Borrower shall procure that each Guarantor shall promptly notify the Security Trustee by email, 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 owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)
any requirement or condition made by any insurer or the Approved Classification Society or by any competent authority which is not complied with within the specified time;
(d)
any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on that Ship or its Earnings or any requisition of that Ship for hire;
(e)
any intended dry docking of the Ship owned by it;
(f)
any Environmental Claim made against any Security Party or the Borrower or in connection with any Ship, or any Environmental Incident;

57     58557071v16


(g)
any claim for breach of the ISM Code, the ISPS Code, any Environmental Laws or Applicable Sanctions being made against that Guarantor, the Approved Ship Manager (following the Guarantor becoming aware of the same) or otherwise in connection with the Ship owned by it; or
(h)
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code, the ISPS Code, any Environmental Laws or Sanctions 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, any Guarantor's, the Approved Ship Manager's or any other person's response to any of those events or matters.
14.13
Restrictions on chartering, appointment of managers etc. The Borrower shall procure that no Guarantor shall, in relation to the Ship owned by it:
(a)
let that Ship on demise charter for any period;
(b)
enter into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 24 months other than Charters where the charterer is a member of the Group or the Charter is pursuant to an Approved Pooling Arrangement;
(c)
enter into any charter in relation to that Ship under which more than 2 months' hire (or the equivalent) is payable in advance;
(d)
charter that Ship otherwise than on bona fide arm's length terms at the time when such Ship is fixed;
(e)
appoint a manager of that Ship other than an Approved Ship Manager or agree to any material alteration to the terms of the Approved Ship Manager's appointment;
(f)
appoint a classification society for that Ship other than an Approved Classification Society;
(g)
de‑activate or layup that Ship; or
(h)
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) or in the case of any scheduled special surveys in respect of such Ship, in an amount exceeding or likely to exceed $1,000,000, unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on such Ship or its Earnings for the cost of such work or for any other reason.
14.14
Notice of Mortgage. The Borrower shall procure that each Guarantor shall keep the Mortgage registered against the Ship owned by it as a valid first preferred or, as the case may be, priority mortgage, carry on board the Ship owned by it a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of that Ship a framed printed notice stating that such Ship is mortgaged by that Guarantor to the Security Trustee.
14.15
Sharing of Earnings. The Borrower shall procure that no Guarantor shall enter into any agreement or arrangement for the sharing of any Earnings of the Ship owned by it provided always that any Ship may be entered into any Approved Pooling Arrangement.

58     58557071v16


14.16
ISPS Code. The Borrower shall procure that each Guarantor shall comply with the ISPS Code and in particular, without limitation, shall:
(a)
procure that its Ship and the company responsible for such Ship's compliance with the ISPS Code comply with the ISPS Code; and
(b)
maintain for its Ship an ISSC; and
(c)
notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
14.17
Copies of Charter; Charterparty Assignment. Provided that the Borrower has obtained the prior permission of the Agent necessary under Clause 14.13(b) , the Borrower shall procure that each Guarantor shall:
(a)
furnish promptly to the Agent a true and complete copy of any Charter for the Ship owned by it, all other documents related thereto including, without limitation, any guarantee of such Charter and a true and complete copy of each material amendment or other modification thereof; and
(b)
in respect of any such Charter, execute and deliver to the Agent a Charterparty Assignment and deliver to the Agent a consent and acknowledgement executed by the charterer and any related charter guarantor and such other documents equivalent to those referred to in paragraphs 4, 5 and 6 of Part A of Schedule 4 as the Agent may require.
14.18
Change of Approved Ship Manager. If, in accordance with the terms of this Agreement, there is a change of Approved Ship Manager, the Borrower shall or shall procure that:
(a)
the relevant Guarantor shall promptly provide the Agent with a copy of the management agreement pursuant to which such Approved Ship Manager is to be appointed; and
(b)
the new Approved Ship Manager shall provide to the Agent on or prior to the commencement of its appointment, an Approved Ship Manager's Undertaking.
14.19
Green Passport. The Borrower shall procure that each Guarantor has obtained a Green Passport, or equivalent document acceptable to the Agent, within 30 days from the Drawdown Date of the relevant Advance in respect of the Ship owned by it which remains valid throughout the Security Period.
15
SECURITY COVER
15.1
Minimum required security cover. Clause 15.2 applies if the Agent notifies the Borrower that:
(a)
the Fair Market Value of the Ships then subject to a Mortgage; plus
(b)
the net realisable value of any additional security previously provided under this Clause 15,
is below 140 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 30 days after the date on which the Agent’s notice is served, either:
(a)
prepay such part (at least) of the Loan as will eliminate the shortfall; or

59     58557071v16


(b)
provide, or ensure that a third party provides, additional security which, in the opinion of all of the Lenders acting in their absolute discretion, 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 all of the Lenders, approve or require and, for this purpose, it is agreed that acceptable additional security shall include cash collateral in Dollars valued at par.
For the avoidance of doubt, amounts prepaid pursuant to this Clause shall be applied in accordance with Clause 8.13.
15.3
Valuation of Ship. The market value of a Ship at any date is that shown by:
(a)
the arithmetic average of 2 valuations each prepared by an Approved Broker selected by the Agent;
(b)
as at a date not more than 30 days prior to the date such valuation is delivered to the Agent by such Approved Broker;
(c)
with or without physical inspection of that 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; and
(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 15.2.
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 Approved Broker acting under Clause 15.3 or 15.4 with any information which the Agent or the Approved Broker may 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 Approved Broker or the 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 20.4, the Borrower shall, subject to Clause 15.8, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause 15.
15.8
Frequency of valuations
(a)
The Borrower shall provide the valuations of each Ship required pursuant to paragraph 12 of Part B of Schedule 4 and paragraph 13 of Part C of Schedule 4 at the Borrower's expense;
(b)
the Borrower shall provide to the Agent 2 valuations during each half of each Fiscal Year of the Borrower commencing on 1 January 2017 (such valuations to be attached to the Compliance

60     58557071v16


Certificates for the relevant fiscal quarter to be provided by the Borrower) setting forth the Fair Market Value of each Ship in each case at the cost of the Borrower save that the Borrower shall not be required to pay for more than 2 sets of valuations of each Ship in each calendar year unless an Event of Default has occurred and is continuing or any valuation obtained would entitle the Agent to serve a notice pursuant to Clause 15.1 in which case such valuations required by the Agent shall be for the cost of the Borrower; and
(c)
the Agent shall be entitled, at its own expense, to obtain valuations of each Ship other than those referred to in paragraphs (a) and (b) above as often as it may request.
15.9
Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.2 .
15.10
Release of Additional Security. It is agreed that where the Borrower or a third party has provided additional security pursuant to Clause 15.2 the Borrower is entitled to request the release of such additional security at its expense at any time following a testing of compliance by the Borrower of the minimum required security cover under Clause 15.1. Where the Borrower is shown to be in compliance with such minimum required security cover without including the additional security within the calculation and where the Borrower is in compliance with the minimum required security cover under Clause 15.1, such additional security shall be released at the Borrower's cost.
16
PAYMENTS AND CALCULATIONS
16.1
Currency and method of payments. All payments to be made by the Lenders or by the Borrower and any Security Party 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. (London 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 or another Security Party to the Agent or any Lender, to an account of the Agent as the Agent may from time to time notify to the Borrower and the other Creditor Parties, or to such other account with such other 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.

61     58557071v16


16.3
Basis for calculation of periodic payments. All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.
16.4
Distribution of payments to Creditor Parties. Subject to Clauses 16.5 , 16.6 and 16.7:
(a)
any amount received by the Agent 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 and the Swap Counterparty or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and
(b)
amounts to be applied in satisfying amounts of a particular category which are due to the Lenders 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 or 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 (as the case may be) the Lender or 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.

62     58557071v16


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 shall be applied:
(a)
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents and the Master Agreements in the following order and proportions:
(i)
first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents and the Swap Counterparties under any Master Agreements other than those amounts referred to at paragraphs (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document or in any Master Agreement);
(ii)
secondly, in or towards satisfaction of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents and the Master Agreements (and, for this purpose, the expression " interest " shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of any Master Agreement but shall have failed to pay or deliver to the relevant Swap Counterparty at the time of application or distribution under this Clause 17); and
(iii)
thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure of each Swap Counterparty (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);
(b)
SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document or any Master Agreement 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);
(c)
THIRDLY: 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 Lenders, 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.

63     58557071v16


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 (subject only to the provisions of the General Assignment), all the Earnings of each Ship are paid to the Earnings Account for that Ship, at all times whilst such Ship is subject to a Mortgage.
18.2
Application of Earnings. The Borrower undertakes with the Lenders to procure that money from time to time credited to, or for the time being standing to the credit of, an Earnings Account shall, unless and until an Event of Default shall have occurred and is continuing (whereupon the provisions of Clause 17.1 shall be and become applicable), be freely available to the Borrower.
18.3
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 Accounts (or any of them); 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 Accounts (or any of them).
18.4
Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit any 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.
18.5
Borrower's obligations unaffected. The provisions of this Clause 18 do not affect:
(a)
the liability of the Borrower to make payments of principal and interest on the due dates; or
(b)
any other liability or obligation of the Borrower or any Security Party under any Finance Document.
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 any sum payable under a Finance Document or under any document relating to a Finance Document unless its failure to pay is caused by a Disruption Event and payment is made within 3 Business Days of its due date; or
(b)
any breach occurs of Clause 9.2 , 11.2, 11.3, 11.21(a), 11.22, 12.5, 12.6, 12.7, 12.8 and 15.2; 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)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied 20 days after written notice from the Agent requesting action to remedy the same; or

64     58557071v16


(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 falling within paragraphs (a), (b) or (c)); or
(e)
any representation, warranty or statement made or repeated 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 repeated; or
(f)
any of the following occurs in relation to any Financial Indebtedness of the Borrower on a consolidated basis exceeding $10,000,000 in aggregate or, in the case of any Security Party, $2,500,000 (or in either case, the equivalent in any other currency):
(i)
any Financial Indebtedness of that Relevant Person is not paid when due; or
(ii)
any Financial Indebtedness of that 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 that 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 that 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 that Relevant Person becomes enforceable; or
(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, $10,000,000 in the case of the Borrower or $2,500,000 in the case of any Security Party or more or the equivalent in another currency; or
(iii)
any administrative or other receiver is appointed over any asset of a Relevant Person; or
(iv)
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

65     58557071v16


(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 (a) 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 (did) a government minister or public or regulatory authority of a Pertinent Jurisdiction 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 all the 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 in any Pertinent Jurisdiction, 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 (a) 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 (a) 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

66     58557071v16


(xi)
in a Pertinent Jurisdiction other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Lenders acting reasonably is similar to any of the foregoing.
(h)
any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened against a Relevant Person or its assets which has, will have or may have a Material Adverse Effect;
(i)
a Finance Document is amended, terminated, cancelled or suspended for any reason except with the prior written consent of the Agent, acting with the authorisation of all the Lenders;
(j)
the Borrower ceases or suspends carrying on its business or a part of its business which is material in the context of this Agreement; or
(k)
it becomes unlawful in any Pertinent Jurisdiction 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 all the Lenders consider material under a Finance Document;
(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
(l)
any consent necessary to enable any Guarantor to own, operate or charter the Ship owned by it or on the Approved Flag or to enable the Borrower, such Guarantor or any other Security Party to comply with any provision which all the Lenders consider material of a Finance Document, to which it is a party 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
(m)
any failure to change the flag state of a Ship after written notice from the Agent requesting a flag change as a result of governmental and/or political unrest which may in the Agent’s opinion have a Material Adverse Effect; or
(n)
any arrest, capture, seizure or detention of a Ship unless it is within 30 Business Days redelivered to the full control of the Guarantor owning that Ship; or
(o)
any provision which all the 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 and which in each case such default continues unremedied 15 days after written notice from the Agent requesting action to remedy the same; or
(p)
the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
(q)
an Event of Default (as defined in section 14 of a Master Agreement) occurs; or
(r)
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 all the Lenders; or
(s)
any of the Ships ceases to be employed by the relevant Approved Ship Manager on terms acceptable to the Agent or any of the circumstances described in Clause 19.1(g) or (j) occurs ( mutatis mutandis ) in relation to an Approved Ship Manager or an Approved Ship Manager or

67     58557071v16


Approved Sub‑Manager breaches any provision of its Approved Ship Manager's Undertaking which the Agent considers material and the Borrower fails within a period of 15 days of it becoming aware of the occurrence of such circumstance or breach or of the receipt of a written notification from the Agent requesting the Borrower to remedy such circumstances or breach either to remedy such circumstances or breach or to substitute the relevant Approved Ship Manager or Approved Sub-Manager with another Approved Ship Manager or Approved Sub‑Manager which executes and delivers to the Security Trustee a replacement Approved Ship Manager's Undertaking; or
(t)
an event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
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 all or part of the Commitments and of the other obligations of each Lender to the Borrower under this Agreement are cancelled; and/or
(ii)
serve on the Borrower a notice stating that all or part of the Loan together with 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 all the 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 and/or 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 be cancelled.
19.4
Acceleration of Loan. On the service of a notice under Clause 19.2(a)(i) , all or, as the case may be, the part of the Loan specified in the notice together with 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) and (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

68     58557071v16


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 Party 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, a " Relevant Person " means the Borrower and any Security Party.
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. 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
Commitment, agency fees. The Borrower shall pay to the Agent:
(a)
on the date of this Agreement or as otherwise agreed, the fees in the amounts previously agreed in writing between the Agent and the Borrower; and
(b)
quarterly in arrears on each 31 March, 30 June, 30 September and 31 December during the period from the date of this Agreement until the Maturity Date (or if earlier, the date on which this Agreement is terminated), for the account of the Lenders pro rata to their Commitments, a commitment fee at a rate equal to 40 per cent. of the Margin per annum on the amount of the unutilized Commitment of each Lender.
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, syndication or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document including, without limitation, any legal fees (including VAT and disbursements)

69     58557071v16


reasonably incurred by the Agent, Security Trustee, the Bookrunners and the Mandated Lead Arrangers in this connection.
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 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 Lender or the Swap Bank concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.
There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.
20.4
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 Services Authority 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 it 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 Services Authority (or other United Kingdom governmental authorities or agencies) of a requirement to pay fees to the Financial Services Authority calculated by reference to liabilities used to fund its 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 (without necessarily specifying a detailed breakdown) 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:

70     58557071v16


(a)
an Advance not being borrowed on the date specified in the Drawdown Notice relating to such Advance 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 of an Event of Default or a Latent Event of Default and/or the acceleration of repayment of the Loan under Clause 19;
and in respect of any tax (other than any FATCA Deduction or a tax on its overall net income under the law of the jurisdiction in which that Creditor Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Creditor Party is treated as a resident for tax purposes) 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 claim, expense, liability or loss, including a loss of a 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:
(a)
any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document or any Master Agreement by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document or any Master Agreement; or
(b)
any other Pertinent Matter,
other than claims, expenses, liabilities and losses which are shown to have been directly and mainly 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 or any Environmental Law.

71     58557071v16


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
Mandatory Cost
The Borrower shall, on demand by the Agent, pay to the Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Agent to be its good faith determination of the amount necessary to compensate it for complying with:
(a)
in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
(b)
in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions).
21.6
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.
21.7
Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

72     58557071v16


21.8
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 or any Security Party under a Finance Document or any the Master 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 or such Security Party is required by law to make.
22.2
Grossing-up for taxes. If the Borrower or any Security Party is required by law to make a tax deduction from any payment under a Finance Document or a Master Agreement (other than a FATCA Deduction):
(a)
the Borrower or such Security Party (as the case may be) shall notify the Agent as soon as it becomes aware of the requirement;
(b)
the Borrower or such Security Party (as the case may be) 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 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
Tax deduction. In this Clause 22 " tax deduction " means any deduction or withholding for or on account of any present or future tax except tax other than a FATCA Deduction.
22.5
FATCA Deduction. Each party to this Agreement 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 this Agreement 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. Each party to this Agreement shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the party to this Agreement to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Creditor Parties.
22.6
Stamp taxes. The Borrower shall pay and, within 3 Business Days of demand, indemnify each Creditor Party against any cost, loss or liability which that Creditor Party incurs in relation to all stamp duty, registration and other similar taxes payable in respect of any Finance Document or any Master Agreement.
22.7
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.

73     58557071v16


22.8
FATCA Information
(a)
Subject to paragraph (c) below, each Party shall, within 10 Business Days of a reasonable request by another Party:
(i)
confirm to that other Party whether it is:
(A)
a FATCA Exempt Party; or
(B)
not a FATCA Exempt Party;
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and
(iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation, or exchange of information regime.
(b)
If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Creditor Party to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality.
(d)
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
22.9
VAT
(a)
All amounts expressed to be payable under a Finance Document by any Party to a Creditor Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Creditor Party to any Party under a Finance Document and such Creditor Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Creditor Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Creditor Party must promptly provide an appropriate VAT invoice to that Party).
(b)
If VAT is or becomes chargeable on any supply made by any Creditor Party (the " Supplier ") to any other Creditor Party (the " Recipient ") under a Finance Document, and any Party other than

74     58557071v16


the Recipient (the " Relevant Party ") is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
(i)
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this sub-paragraph (i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(ii)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
(c)
Where a Finance Document requires any Party to reimburse or indemnify a Creditor Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Creditor Party for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that such Creditor Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(d)
Any reference in this Clause 22.9 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the Value Added Tax Act 1994).
(e)
In relation to any supply made by a Creditor Party to any Party under a Finance Document, if reasonably requested by such Creditor Party, that Party must promptly provide such Creditor Party with details of that Party's VAT registration and such other information as is reasonably requested in connection with such Creditor Party's VAT reporting requirements in relation to such supply.
23
ILLEGALITY, ETC.
23.1
Illegality. This Clause 23 applies if a Lender (the " Notifying Lender ") notifies the Agent that it has become, or will with effect from a specified date, become:
(a)
unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
(b)
contrary to, or inconsistent with, any regulation,
for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.
23.2
Notification of illegality. The Agent shall promptly notify the 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

75     58557071v16


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 Notifying Lender's overall net income); or
(b)
the effect of complying with any law or 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; or
(c)
the implementation or application of or compliance with any Basel III Regulation, CRD IV and CRR,
the Notifying Lender (or a parent company of it) has incurred or will incur an " increased cost ".
24.2
Meaning of "increased costs". In this Clause 24, "increased costs" 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 having taken an assignment of rights under this Agreement, 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

76     58557071v16


(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 after providing evidence of its method of calculation to quantify such increased costs under this Agreement,
but not an item attributable to a FATCA Deduction required to be made by a Party or compensated for by any payment made pursuant to Clause 21.5.
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 its 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; 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; and

77     58557071v16


(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
26.1
Transfer by Borrower. The Borrower may not, without the prior written 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 Clause 26.5 a Lender (the " Transferor Lender ") may at any time, without the consent of the Borrower or any Security Party but with the prior approval of the Agent, cause:
(a)
its rights in respect of all or part of its Contribution but in the case of part, in an amount no less than $5,000,000; or
(b)
its obligations in respect of all or part of its Commitment but in the case of part, in an amount no less than $5,000,000; 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 which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets and which is FATCA Exempt Party (a " Transferee Lender ") or the securitisation or similar transaction of that Transferor Lender's Contribution of Commitment by delivering to the Agent a completed certificate in the form set out in Schedule 5 with any modifications approved or required by the Agent (a " Transfer Certificate ") executed by the Transferor Lender and the Transferee Lender,
However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.
26.3
Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):
(a)
sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee, each of the other Lenders and each of the Swap Banks;

78     58557071v16


(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 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 signed by the Agent under Clause 26.3 on or before that date.
26.5
No transfer without Transfer Certificate. Except as provided in Clause 26.17, 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 or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
26.6
Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in a 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;

79     58557071v16


(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 5.6 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 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 recover a registration fee of $5,000 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 Confidential Information. Any Creditor Party may disclose:
(a)
with the prior written consent of the Borrower, to any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and representatives such Confidential Information as that Creditor Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

80     58557071v16


(b)
to any person:
(i)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents and to any of that person's Affiliates, representatives and professional advisers;
(ii)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or the Borrower and/or one or more of the Security Parties and to any of that person's Affiliates, representatives and professional advisers;
(iii)
appointed by any Creditor Party or by a person to whom paragraph (b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;
(iv)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above;
(v)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
(vi)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;
(vii)
to whom or for whose benefit that Creditor Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 26.17 and to any rating agency in relation to any such securitisation;
(viii)
who is a party; or
(ix)
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document,
in each case, such Confidential Information as that Creditor Party shall consider appropriate if:
(A)
in relation to paragraphs (b)(i), (b)(ii) and (b)(iii) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B)
in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

81     58557071v16


(C)
in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Creditor Party, it is not practicable so to do in the circumstances; and
(c)
with the prior written consent of the Borrower, to any person appointed by that Creditor Party or by a person to whom paragraph (b)(i) or (b)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the Loan Market Association Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrower and the relevant Creditor Party.
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.
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
(i)
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:
(ii)
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

82     58557071v16


(iii)
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 Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the 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 to any Security Party, other than in accordance with the terms of the Finance Documents;
(b)
a reduction in the Margin;
(c)
a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement;
(d)
an increase in any Lender's Commitment;
(e)
a change to the definition of " Majority Lenders ";
(f)
a change to the definition of " Sanctions ", " Sanctions List " or " Restricted Person ";
(g)
a change to Clause 3 or this Clause 27;
(h)
a change to clause 10.20;
(i)
a change to Clauses 12.5, 12.6, 12.7 and 12.8 ;
(j)
any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document;
(k)
an extension of the Availability Period; and
(l)
any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.
27.3
Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
(a)
a provision of this Agreement or another Finance Document; or

83     58557071v16


(b)
an Event of Default; or
(c)
a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or
(d)
any right or remedy conferred by any Finance Document or by the general law,
and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.
28
BAIL IN
28.1
Contractual recognition of bail-in
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
29
NOTICES
29.1
General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, electronic mail ("Email") or fax and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
29.2
Addresses for communications. A notice by letter or fax shall be sent:
(a)
to the Borrower:    Scorpio Tankers Inc.
Le Millenium, 9 Boulevard Charles III,
98000 Monaco
Attn: Mr Luca Forgione - Legal Department
Fax No:     + 3 77 97 77 83 46
Email@ legal@scorpiogroup.net
(b)
to a Lender:    At the address below its name in Schedule 1 or a Swap Bank Schedule 2 or (as the case may require) in the relevant Transfer Certificate.

84     58557071v16


(c)
to a Swap Bank    At the address below its name in Schedule 2 .
(d)
to the Agent:    
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
1211 Avenue of the Americas, 23 rd Floor,
New York, NY 10036
Attention: Henning Christiansen
Email: henning.christiansen@nordea.com
Fax: + 1 212 318 9300
(e)
to the Security Trustee:        in respect of administrative matters:
NORDEA BANK FINLAND PLC, NEW YORK BRANCH
1211 Avenue of the Americas, 23 rd Floor,
New York, NY 10036
Attention: Henning Christiansen
Email: henning.christiansen@nordea.com
Fax: + 1 212 318 9300
    
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.
29.3
Effective date of notices. Subject to Clauses 29.4 and 29.5 :
(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 Email shall be deemed to be served, and shall take effect, at the time when it is actually received in readable form; and
(c)
a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.
29.4
Service outside business hours. However, if under Clause 29.3 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 29.5 ) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.
29.5
Illegible notices. Clauses 29.3 and 29.4 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.

85     58557071v16


29.6
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.
29.7
Electronic communication between the Agent and a Lender or a Swap Bank. Any communication to be made between the Agent and a Lender or a Swap Bank under or in connection with the Finance Documents may be made by Email or other electronic means, if the Agent and the relevant Lender or Swap Bank:
(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 Email 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 Email addresses or any other such information supplied to them.
Any electronic communication made between the Agent and a Lender or a Swap Bank will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender or a Swap Bank to the Agent, only if it is addressed in such a manner as the Agent shall specify for this purpose.
29.8
English language. Any notice under or in connection with a Finance Document shall be in English.
29.9
Meaning of "notice". In this Clause 29, " notice " includes any demand, consent, authorisation, approval, instruction, waiver or other communication.
30
SUPPLEMENTAL
30.1
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.
30.2
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.
30.3
Counterparts. A Finance Document may be executed in any number of counterparts.

86     58557071v16


30.4
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.
31
LAW AND JURISDICTION
31.1
English law. This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
31.2
Exclusive English jurisdiction. Subject to Clause 31.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.
31.3
Choice of forum for the exclusive benefit of Creditor Parties. Clause 31.2 is for the exclusive benefit of the Creditor Parties, each of 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.
31.4
Process agent. The Borrower irrevocably appoints Scorpio UK Limited at its office for the time being, presently at 10 Lower Grosvenor Place, London, SW1W 0EN (such communication to be marked preferably and if possible on the paper envelope and not on the courier packaging marked " STNG Transaction " for the urgent attention of General Counsel), 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.-
31.5
Creditor Party rights unaffected. Nothing in this Clause 31 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
31.6
Meaning of "proceedings". In this Clause 31, " proceedings " means proceedings of any kind, including an application for a provisional or protective measure 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.


87     58557071v16



Schedule 1

LENDERS AND COMMITMENTS

Lender
Lending Office
Term Loan Commitment
Revolving Credit Facility Commitment
Incremental Credit Facility Commitments
ABN AMRO Bank N.V.
Gustav Mahlerlaan 10
1082 PP Amsterdam
The Netherlands
$66,666,666.67
$33,333,333.33
$0
 
 
 
 
 
Nordea Bank Finland Plc, New York Branch
1211 Avenue of the Americas 23 rd  Floor,
New York,
NY 10036
$66,666,666.66
$33,333,333.34
$0
 
 
 
 
 
Skandinaviska Enskilda Banken AB (publ)
Kungsträdgårdsgatan 8
106 40 Stockholm,
Sweden
$66,666,666.67
$33,333,333.33
$0
 
 
$200,000,000
$100,000,000
$0

88     58557071v16



Schedule 2     

SWAP BANKS

Swap Bank
Booking Office
ABN AMRO Bank N.V.
Gustav Mahlerlaan 10
1082 PP Amsterdam
The Netherlands
 
 
Nordea Bank Finland Plc, New York Branch

1211 Avenue of the Americas, 23 rd  Floor,
New York,
NY 10036

Skandinaviska Enskilda Banken AB (publ)

Kungsträdgårdsgatan 8
106 40 Stockholm,
Sweden


89     58557071v16



Schedule 3     

DRAWDOWN NOTICE
To:    Nordea Bank Finland Plc, New York Branch as Agent
Attn:     Henning Christiansen
1211 Avenue of the Americas, 23 rd Floor
New York,
NY 10036
[ l ] 2016
DRAWDOWN NOTICE
1
We refer to the loan agreement (the " Loan Agreement ") dated [ l ] 2016 and made between ourselves as Borrower, the Lenders referred to therein, the Swap Banks referred to therein, the Mandated Lead Arrangers referred to therein, the Bookrunners referred to therein, yourselves as Agent and as Security Trustee in connection with a facility of up to US$372,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
2
We request to borrow an Advance pursuant to the [Term Loan]/[Revolving Credit Facility]/[Incremental Credit Facility] as follows:‑
(a)
Amount: US$[ l ];
(b)
Drawdown Date: [ l ] 2016;
(c)
[Duration of the first Interest Period shall be [ l ] months;] and
(d)
Payment instructions: [ 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 and on the Drawdown Date with reference to the circumstances now existing; and
(b)
no Event of Default or Latent 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]

Chief Financial Officer
for and on behalf of
SCORPIO TANKERS INC.


90     58557071v16



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 this Agreement and the Agency and Trust Deed.
2
Copies of the certificate of incorporation and constitutional documents of the Borrower and each Security Party.
3
Copies of resolutions of the directors of the Borrower and each Security Party and in the case of the Guarantors copies of resolutions of their shareholders authorising the execution of the Master Agreement and 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 Drawdown Notices and other notices under this Agreement.
1
The original of any power of attorney under which the Master Agreement (if applicable) and any Finance Document is executed on behalf of the Borrower (where a separate power of attorney is issued by the Borrower) or a Security Party.
2
An incumbency certificate in respect of the officers and directors (or equivalent) of each of the Borrower and the Security Parties and signature samples of any signatories to any Finance Document.
3
Evidence satisfactory to the Agent that all consents and approvals which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document and any Master Agreement have been obtained and any required filings have been made.
4
Documentary evidence that the agent for service of process named in Clause 31 has accepted its appointment.
5
Such documentation and other evidence in form and substance acceptable to the Agent or a Lender in order for each to carry out and be satisfied with the results of all necessary "know your customer" or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement, and other Finance Documents and any Master Agreement, including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and each of the Lenders to identify the Borrower and each Security Party.
6
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of England and the Marshall Islands and such other relevant jurisdictions as the Agent may require.
7
A Compliance Certificate together with all supporting Accounting Information and other evidence as required pursuant to the terms of this Agreement.
8
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 20 have been paid or will be paid by the first Drawdown Date.

91     58557071v16


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.
10
The financial statements of the Borrower for its financial year ended 31 December 2015.
Part B     
The following are the documents referred to in Clause 9.1(b).
In this Part B, “ Collateral Ships ” means the particular Collateral Ships to which the relevant Term Advance relates and " Guarantors " means the relevant Guarantors owning such Collateral Ships.
1
A certificate of an authorised signatory of the relevant Guarantors and, if signing any Finance Document listed in paragraph 2 below, the Borrower and any other Security Party, certifying that each corporate and copy document provided by it under Part A of Schedule 4 remains correct, complete, has not been amended and is in full force and effect as at the relevant Drawdown Date and that there is no Event of Default.
2
Copies of resolutions of the directors of the Borrower and each Security Party and in the case of the relevant Guarantors copies of resolutions of their shareholders authorising the execution of the Master Agreement and each of the Finance Documents to which the Borrower or that Security Party is a party.
3
A duly executed original of the Mortgage, the Guarantee or Guarantees, the Shares Pledge, the General Assignment, the Charterparty Assignment, the Accounts Security Deed and any Intercompany Loan Assignment (if applicable) in relation to the relevant Guarantors and Collateral Ships and, if any Master Agreement has been or will be entered into on or prior to the Drawdown Date, the original of a Master Agreement Assignment in relation to such Master Agreement (and of each document required to be delivered by their respective terms).
4
Evidence that any Existing Security over the Collateral Ships (including any mortgages) has been released and evidence satisfactory to the Agent that the amount of the Existing Indebtedness in relation to the Collateral Ships has been prepaid.
5
The original of any power of attorney under which any Finance Document or any Master Agreement is to be executed on behalf of the relevant Guarantors or the Borrower if applicable (and only where a separate power of attorney is issued by the Borrower).
6
Copies of all consents which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document or any Master Agreement entered into on or prior to the Drawdown Date not already provided under Part A of this Schedule.
7
The Agent and Lenders have been provided with all information and documentation they have requested in order to carry out and be reasonably satisfied with all further necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated by this Agreement and to satisfy all internal compliance policies of the Agent and the Lenders in relation to "know you customer" requirements.
8
Confirmation that any Intercompany Loans made or to be made available to the relevant Guarantor have been or will be when made available fully subordinated to the rights of the Creditor Parties under the Finance Documents and any Master Agreements.
9
Documentary evidence that the Earnings Accounts in respect of the Collateral Ships have been opened with the Account Bank.

92     58557071v16


10
Documentary evidence that:
(a)
each Collateral Ship is definitively and permanently registered in the name of the relevant Guarantor under the relevant Approved Flag;
(b)
each Collateral Ship is in the absolute and unencumbered ownership of the relevant Guarantor save as contemplated by the Finance Documents;
(c)
each Collateral Ship maintains class acceptable to the Agent free of all overdue recommendations and conditions of an Approved Classification Society;
(d)
the Mortgage in relation to each Collateral Ship has been duly registered against such Ship as a valid first preferred ship mortgage in accordance with the laws of the relevant Approved Flag; and
(e)
each Collateral Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.
11
Documents establishing that each Collateral Ship is managed by the Approved Manager on terms acceptable to the Lenders, together with:
(a)
the Manager's Undertaking in respect of the Collateral Ship; and
(b)
copies of the relevant Approved Manager's Document of Compliance and of each Collateral Ships' Safety Management Certificate (together with any other details of the applicable safety management system which the Agent requires) and of each Collateral Ships’ ISSC.
12
Valuations of each Collateral Ship to determine its Fair Market Value, addressed to the Agent and the Lenders, stated to be for the purposes of this Agreement and dated not earlier than the date falling 14 days prior to the Drawdown Date and obtained in accordance with Clause 15 and showing that upon the drawdown of Advances relating to the Collateral Ships, the Borrower will be in compliance with Clause 15.
13
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of England, Marshall Islands, the Netherlands and such other relevant jurisdictions as the Agent may require.
14
A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances for the Collateral Ships as the Agent may require.
15
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 20 have been paid or will be paid by the first Drawdown Date.
16
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 copy document delivered under this Schedule 4 shall be certified as a true and up to date copy by a director or secretary (or equivalent officer) or an attorney-in-fact of the Borrower.

93     58557071v16



Part C     
The following are the documents referred to in Clause 9.1(c).
In this Part C, " Additional Ship " means the particular Additional Ship to which the relevant Advance relates and " Guarantor " means the Guarantor owning such Additional Ship.
1
A certificate of an authorised signatory of the relevant Guarantor and, if signing any Finance Document listed in paragraph 2 below, the Borrower and any other Security Party, certifying that each corporate and copy document provided by it under Part A of Schedule 4 remains correct, complete, has not been amended and is in full force and effect as at the relevant Drawdown Date and that there is no Event of Default.
2
Copies of resolutions of the directors of the Borrower and each Security Party and in the case of the Guarantors copies of resolutions of their shareholders authorising the execution of the Master Agreement and 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 Drawdown Notices and other notices under this Agreement.
3
A duly executed original of the Mortgage, the Guarantee in respect of the relevant Guarantor, the Shares Pledge, the General Assignment, the Charterparty Assignment, the Account Security Deed and any Intercompany Loan Assignment (if applicable) in relation to the relevant Guarantor and Additional Ship and, if any Master Agreement has been or will be entered into on or prior to the Drawdown Date, the original of a Master Agreement Assignment in relation to such Master Agreement (and of each document required to be delivered by their respective terms).
4
The original of any power of attorney under which any Finance Document or Master Agreement is to be executed on behalf of the relevant Guarantors or the Borrower if applicable (and only where a separate power of attorney is issued by the Borrower).
5
Evidence that any existing security over the Additional Ship (including any mortgages) has been released.
6
Copies of all consents which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document, any Master Agreement entered into on or prior to the Drawdown Date already provided under Part A or Part B of this Schedule.
7
The Agent and Lenders have been provided with all information and documentation they have requested in order to carry out and be reasonably satisfied with all further necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated by this Agreement and to satisfy all internal compliance policies of the Agent and the Lenders in relation to "know you customer" requirements.
8
Documentary evidence that the Earnings Accounts in respect of the Additional Ships have been opened with the Account Bank.
9
Documentary evidence that:
(a)
the Additional Ship is definitively and permanently registered in the name of the Borrower under the relevant Approved Flag;
(b)
the Additional Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents;

94     58557071v16


(c)
the Additional Ship maintains class acceptable to the Agent free of all overdue recommendations and conditions of an Approved Classification Society;
(d)
that any and all Security Interests in favour of any other creditors in respect of the Borrower, such Additional Ship and the relevant Guarantor have been unconditionally and irrevocably released in full together with evidence satisfactory to the Agent of the due execution of any such release by the parties to it;
(e)
the Mortgage in relation to it has been duly registered against the Additional Ship as valid first priority or preferred (as the case may be) ship mortgage in accordance with the laws of the relevant Approved Flag; and
(f)
the Additional Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.
10
Documents establishing that the Additional Ship will, as from the relevant Drawdown Date, be managed by the Approved Manager on terms acceptable to the Lenders, together with:
(a)
the Manager's Undertaking in respect of the Additional Ship; and
(b)
copies of the relevant Approved Manager's Document of Compliance and of the Additional Ship's Safety Management Certificate (together with any other details of the applicable safety management system which the Agent requires) and the Additional Ship’s ISSC.
11
Confirmation that any Intercompany Loans made or to be made available to the relevant Guarantor have been or will be when made available fully subordinated to the rights of the Creditor Parties under the Finance Documents and any Master Agreements.
12
Documentary evidence that the Earnings Accounts in respect of the Additional Ships have been opened with the relevant Account Bank.
13
A valuation of the Additional Ship to determine its Fair Market Value, addressed to the Agent and the Lenders, stated to be for the purposes of this Agreement and dated not earlier than the date falling 14 days prior to the Drawdown Date for the Advance and obtained in accordance with Clause 15 and showing that upon the drawdown of the Advance, the Borrower will be in compliance with Clause 15.
14
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of England, Marshall Islands, The Netherlands and such other relevant jurisdictions as the Agent may require.
15
A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances for the relevant Additional Ship as the Agent may require.
16
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 20 have been paid or will be paid by the first Drawdown Date.
17
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 copy document delivered under this Schedule 4 shall be certified as a true and up to date copy by a director or secretary (or equivalent officer) or an attorney-in-fact of the Borrower.

95     58557071v16



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:
[Name of Agent] for itself and for and on behalf of the Borrower, each Security Party, the Security Trustee, each Lender, each Swap Bank, each Bookrunner and each Mandated Lead Arranger as defined in the Loan Agreement referred to below.
[ l ]
1
This Certificate relates to a loan agreement ("the " Agreement ") dated [ l ] 2016 and made between (1) Scorpio Tankers Inc. (the " Borrower "), (2) the banks and financial institutions named therein as Lenders, (3) the banks and financial institutions named therein as Swap Banks, (4) the banks and financial institutions named therein as Mandated Lead Arrangers, (5) the banks and financial institutions named therein as Bookrunners, (6) Nordea Bank Finland Plc, New York Branch as Agent and as Security Trustee for a loan facility of up to $372,000,000.
2
In this Certificate, terms defined in the Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate and:
" Relevant Parties " means the Agent, the Borrower, each Security Party, the Bookrunners, the Mandated Lead Arrangers, the Security Trustee, each Lender and each Swap Bank;
" Transferor " means [full name] of [lending office];
" 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 Agreement and every other Finance Document in relation to [ l ] per cent. of its Contribution, which percentage represents $[ l ].]
5
[By virtue of this Certificate and Clause 26 of the 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 Agreement provides will become binding on it upon this Certificate taking effect.
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 Agreement.

96     58557071v16


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 required 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 Agreement and each of the other Finance Documents;
(b)
agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Security Trustee, any Lender, any Swap Bank, any Bookrunner or any Mandated Lead Arranger 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 any Security Party under any of the Finance Documents;
(c)
agrees that it will have no rights of recourse on any ground against the Agent, the Security Trustee, any Lender, any Swap Bank, any Bookrunner, or any Mandated Lead Arranger 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)
that this Certificate is valid and binding as regards the Transferee;
(e)
confirms the accuracy of the administrative details set out below regarding the Transferee.
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.

97     58557071v16


11
The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 9 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
[Name of Agent]
By:
Date:
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.


98     58557071v16



Schedule 6     

DESIGNATION NOTICE
To:    Nordea Bank Finland Plc, New York Branch as Agent
Attn: Henning Christiansen
1211 Avenue of the Americas 23 rd Floor,
New York
NY 10036
[ l ]
Dear Sirs
Loan Agreement dated [ l ] 2016 made between (i) ourselves as Borrower, (ii) the Lenders named therein, (iii) the Swap Banks named therein, (iv) the Mandated Lead Arrangers named therein, (v) the Bookrunners named therein, and (vi) yourselves as Agent and Security Trustee (the "Loan Agreement").
We refer to:-
1
the Loan Agreement;
2
the Master Agreement dated [ 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
SCORPIO TANKERS INC.


99     58557071v16



Schedule 7     

LIST OF APPROVED BROKERS

Affinity Shipbrokers
Clarkson Platou Securities AS
Arrow Sale & Purchase Ltd.
Braemar Seascope Ltd.
Maersk Broker K/S
Fearnleys Ltd.
Simpson Spence Young


100     58557071v16



Schedule 8     

FORM OF COMPLIANCE CERTIFICATE
To:    Nordea Bank Finland Plc, New York Branch as Agent
Attn: Henning Christiansen
1211 Avenue of the Americas 23 rd Floor,
New York
NY 10036
[date]
Dear Sirs,
We refer to a loan agreement dated [ l ] 2016 (the " Loan Agreement ") made between (i) Scorpio Tankers Inc. as borrower (the " Borrower "), (2) the Lenders named therein, (3) the Swap Banks named therein, (4) the Mandated Lead Arrangers named therein, (5) the Bookrunners named therein and (6) yourselves as Agent and Security Trustee
Words and expressions defined in each of the Loan Agreement shall have the same meaning when used in this Compliance Certificate.
We hereby represent that no Event of Default has occurred as at the date of this Certificate [other than [ l ]].
We hereby certify that, as at the date of this certificate:
(a)
the Minimum Liquidity is $[ l ], $[ l ] of which consists of Cash and Cash Equivalents;
(b)
the Consolidated Tangible Net Worth is $[ l ];
(c)
the ratio of Net Debt to Consolidated Total Capitalisation is [ l ] to [ l ];
(d)
the ratio of Consolidated EBITDA to Consolidated Net Interest Expense is [ l ] to [ l ]; and
(e)
the Fair Market Value of the Ships plus the net realisation value of any additional security previously provided under Clause 15 [as at [date of most recent half/full year certificate] is not less than 140 per cent of the Loan. [Note: Wording in square brackets is only relevant for quarterly compliance certificates]
All of these thresholds and ratios are in compliance with the requirements of clauses (a), 12.6, 12.7, 12.8 and 15.1 of the Loan Agreement. Copies of our calculations in relation to the financial covenants and the valuations for the purposes of determining the Fair Market Value of the Ships is attached.
This Certificate and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

______________________________
[ l ]
Chief Financial Officer
Scorpio Tankers Inc.

101     58557071v16



Schedule 9     

ADVANCE A SHIPS
 
Vessel
DWT
Built
Owner/Guarantor
1.     
STI Opera
50,000
Jan-14
STI Opera Shipping Company Limited
2.     
STI Texas City
50,000
Mar-14
STI Texas City Shipping Company Limited
3.     
STI Meraux
50,000
Apr-14
STI Meraux Shipping Company Limited
4.     
STI San Antonio
50,000
May-14
STI San Antonio Shipping Company Limited
5.     
STI Virtus
50,000
Jun-14
STI Virtus Shipping Company Limited
6.     
STI Venere
50,000
Jun-14
STI Venere Shipping Company Limited
7.     
STI Aqua
50,000
Jul-14
STI Aqua Shipping Company Limited
8.     
STI Dama
50,000
Jul-14
STI Dama Shipping Company Limited
9.     
STI Benicia
50,000
Sep-14
STI Benicia Shipping Company Limited
10.     
STI Regina
50,000
Sep-14
STI Regina Shipping Company Limited
11.     
STI St. Charles
50,000
Sep-14
STI St. Charles Shipping Company Limited
12.     
STI Yorkville
50,000
Oct-14
STI Yorkville Shipping Company Limited


102     58557071v16



Schedule 10     

ADVANCE B SHIPS
 
Vessel
DWT
Built
Owner/Guarantor
1.     
STI Amber
49,990
July-12
STI Amber Shipping Company Limited
2.     
STI Topaz
49,990
Aug-12
STI Topaz Shipping Company Limited

3.     
STI Ruby
49,990
Sep-12
STI Ruby Shipping Company Limited
4.     
STI Garnet
49,990
Sep-12
STI Garnet Shipping Company Limited


103     58557071v16



Schedule 11     

ADDITIONAL SHIPS

 
Vessel
DWT
Built
Ship Amount
1.
STI Onyx
52,000
Sep-12
$16,500,000
2.
STI Duchessa
52,000
Jan-14
$19,500,000
3.
STI Emerald
52,000
Mar-13
$18,000,000
4.
STI Beryl
52,000
Apr-13
$18,000,000


104     58557071v16



EXECUTION PAGES
THE BORROWER
 
 
 
SIGNED  by Micha Withoft
/s/ Micha Withoft
for and on behalf of
Title: Attorney in fact
SCORPIO TANKERS INC.
 
in the presence of:
 
/s/ Andrew Cottrell
 
Legal Intern
 
 
 
THE LENDERS
 
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
ABN AMRO BANK N.V.
Title: Attorney-in-Fact
in the presence of:
/s/ Jennifer Greengrass
 
Name: Jennifer Greengrass
 
Title: Solicitor
 
London EC2A 2HB
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
NORDEA BANK FINLAND PLC, NEW YORK
Title: Attorney-in-Fact
BRANCH
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
SKANDINAVISKA ENSKILDA BANKEN AB
Title: Attorney-in-Fact
(publ)
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
THE SWAP BANKS
 
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
ABN AMRO BANK N.V.
Title: Attorney-in-Fact

105     58557071v16


in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
NORDEA BANK FINLAND PLC, NEW YORK
Title: Attorney-in-Fact
BRANCH
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
SKANDINAVISKA ENSKILDA BANKEN AB
Title: Attorney-in-Fact
(publ)
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
THE MANDATED LEAD ARRANGER
 
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
ABN AMRO BANK N.V.
Title: Attorney-in-Fact
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
NORDEA BANK FINLAND PLC, NEW YORK
Title: Attorney-in-Fact
BRANCH
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB

106     58557071v16


 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
SKANDINAVISKA ENSKILDA BANKEN AB
Title: Attorney-in-Fact
(publ)
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
THE BOOKRUNNERS
 
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
NORDEA BANK FINLAND PLC, NEW YORK
Title: Attorney-in-Fact
BRANCH
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
THE SECURITY TRUSTEE
 
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
NORDEA BANK FINLAND PLC, NEW YORK
Title: Attorney-in-Fact
BRANCH
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB
 
 
THE AGENT
 
 
 
SIGNED  by
/s/ Joanna Goode
for and on behalf of
Name: Joanna Goode
NORDEA BANK FINLAND PLC, NEW YORK
Title: Attorney-in-Fact
BRANCH
 
in the presence of:
/s/ Amarjit Syan
 
Name: Amarjit Syan
 
Title: Paralegal
 
15 Appold Street
 
London EC2A 2HB

107     58557071v16
Execution Version


Exhibit 4.28
U.S.$90,000,000
FACILITY AGREEMENT
Dated September 8, 2016
for
SCORPIO TANKERS INC.
as Borrower
guaranteed by
STI WEMBLEY SHIPPING COMPANY LIMITED, STI MILWAUKEE SHIPPING COMPANY LIMITED, STI SENECA SHIPPING COMPANY LIMITED and STI ALEXIS SHIPPING COMPANY LIMITED
as Joint and Several Guarantors
arranged by
DVB BANK SE
as Arranger
underwritten by
DVB BANK SE
as Underwriter
with
DVB BANK AMERICA N.V.
acting as Facility Agent
DVB BANK AMERICA N.V.
acting as Security Agent

relating to the refinancing of
STI WEMBLEY, STI MILWAUKEE, STI SENECA and STI ALEXIS

WATSONFARLEYWILLIAMS.JPG

Index
Clause    
Section 1
Interpretation
1
Definitions and Interpretation
Section 2
The Facility
2
The Facility
3
Purpose
4
Conditions of Drawdown
Section 3
Drawdown
5
Drawdown
Section 4
Repayment, Prepayment and Cancellation
6
Repayment
7
Prepayment and Cancellation
Section 5
Costs of Drawdown
8
Interest
9
Interest Periods
10
Changes to the Calculation of Interest
11
Fees
Section 6
Additional Payment Obligations
12
Tax Gross Up and Indemnities
13
Increased Costs
14
Other Indemnities
15
Mitigation by the Finance Parties
16
Costs and Expenses
Section 7
Guarantee
17
Guarantee and Indemnity
Section 8
Representations, Undertakings and Events of Default
18
Representations
19
Information Undertakings
20
Financial Covenants
21
General Undertakings
22
Insurance Undertakings
23
Vessel Undertakings
24
Security Cover
25
Accounts and application of Earnings
26
Events of Default
Section 9
Changes to Parties
27
Changes to the Lenders
28
Changes to the Transaction Obligors
Section 10
The Finance Parties



29
The Facility Agent and the Arranger
30
The Security Agent
31
Conduct of Business by the Finance Parties
32
Sharing among the Finance Parties
Section 11
Administration
33
Payment Mechanics
34
Set-Off
35
Bail-In
36
Notices
37
Calculations and Certificates
38
Partial Invalidity
39
Remedies and Waivers
40
Settlement or Discharge Conditional
41
Irrevocable Payment
42
Amendments and Waivers
43
Confidentiality
44
Counterparts
Section 12
Governing Law and Enforcement
45
Governing Law
46
Enforcement
47
Waiver of Jury Trial
48
PATRIOT Act Notice
Execution
Execution Pages





Schedules
Schedule 1 The Parties
Part A The Obligors
Part B The Original Lenders
Part C The Servicing Parties
Schedule 2 Conditions Precedent
Part A Initial Conditions Precedent
Part B Conditions Precedent to each Advance
Schedule 3 Requests
Part A Drawdown Request
Part B Selection Notice
Schedule 4 Form of Transfer Certificate
Schedule 5 Form of Assignment Agreement
Schedule 6 Form of Compliance Certificate
Schedule 7 Timetables
Schedule 8 Classification Society Undertaking
Part A Letter to Approved Classification Society
Part B Undertaking from Approved Classification Society







THIS AGREEMENT is made on September 8, 2016
PARTIES
(1)
SCORPIO TANKERS INC. , a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as borrower (the “ Borrower ”)
(2)
STI WEMBLEY SHIPPING COMPANY LIMITED , a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as guarantor (“ Guarantor A ”)
(3)
STI MILWAUKEE SHIPPING COMPANY LIMITED , a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as guarantor (“ Guarantor B ”)
(4)
STI SENECA SHIPPING COMPANY LIMITED , a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as guarantor ( “ Guarantor C ”)
(5)
STI ALEXIS SHIPPING COMPANY LIMITED , a corporation incorporated and existing under the laws of the Republic of The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as guarantor (“ Guarantor D ” and, together with Guarantor A, Guarantor B and Guarantor C, collectively, the “ Guarantors ”, and each separately a “ Guarantor ”)
(6)
DVB BANK SE , as arranger (the “ Arranger ”)
(7)
DVB BANK SE , as underwriter (the “ Underwriter ”)
(8)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 ( The Parties ) as lenders (the “ Original Lenders ”)
(9)
DVB BANK AMERICA N.V. , as agent of the other Finance Parties (the “ Facility Agent ”)
(10)
DVB BANK AMERICA N.V. , as security agent for the Creditor Parties (the “ Security Agent ”)
OPERATIVE PROVISIONS






2     



SECTION 1

INTERPRETATION
1
DEFINITIONS AND INTERPRETATION
1.1
Definitions
In this Agreement:
“ Acceptable Accounting Firm ” means PricewaterhouseCoopers Auditors, or such other recognized accounting firm as the Agent may, with the consent of the Majority Lenders, approve from time to time in writing, such approval not to be unreasonably withheld.
“ Account Bank ” means ABN AMRO Bank N.V. acting through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands or any other bank or financial institution which at any time, with the Facility Agent’s prior written consent (acting on the instructions of all the Lenders) holds an Earnings Account.
“ Accounts ” means:
(a)
the Earnings Accounts; and
(b)
any other accounts opened by an Obligor with the Account Bank, the Facility Agent or the Security Agent for the purposes of the Finance Documents.
“ Account Security ” means a document creating Security over any Account in agreed form.
“ Advance ” means the borrowing of all or a part of a Tranche under this Agreement.
“ Affiliate ” means, as to any person, any other person that directly or indirectly controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a person means the possession, directly or indirectly, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise.
“ Approved Appraiser ” means Maritime Strategies International Ltd, Arrow Shipbrokers, Braemar Seascope Ltd., Compass Maritime Services LLC, Fearnleys, Clarkson Platou and any other firm or firms of independent sale and purchase shipbrokers approved in writing by the Facility Agent, acting with the authorization of the Majority Lenders.
“ Approved Classification ” means, in respect of a Vessel, the classification of that Vessel as at the date of this Agreement, free of any overdue recommendations and conditions affecting such classification, with the Approved Classification Society or the equivalent classification with another Approved Classification Society.
“ Approved Classification Society ” means, in respect of a Vessel, DNV GL, Lloyds Register, Korean Register or American Bureau of Shipping or any other generally recognized first class classification society that is a member of IACS that the Facility Agent may (acting with the authorization of the Majority Lenders) approve in writing from time to time.
“ Approved Commercial Manager ” means, in respect of a Vessel, as at the date of this Agreement, Scorpio Commercial Management s.a.m., a company incorporated in Monaco whose registered office is at 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco or any other person

3     



approved in writing by the Facility Agent, acting with the authorization of the Majority Lenders as the commercial manager of that Vessel.
“ Approved Flag ” means, in respect of a Vessel, the Republic of The Marshall Islands, Republic of Liberia or such other flag as the Facility Agent may, acting with the consent of the Majority Lenders, approve from time to time in writing as the flag on which a Vessel is be registered.
“ Approved Insurance Broker ” means Aon, Ital Brokers or any firm or firms of insurance brokers approved in writing by the Facility Agent, acting with the authorization of the Lenders.
“ Approved Manager ” means the Approved Commercial Manager and/or the Approved Technical Manager.
“ Approved Pooling Arrangement ” means, in relation to a Vessel, any pooling arrangement:
(a)     proposed by the Guarantor owning that Vessel;
(b)     run by any Affiliate of the Approved Commercial Manager of that Vessel; and
(c)
approved in writing by the Facility Agent (acting on the instructions of the Majority Lenders) prior to that Vessel’s entry into such pooling arrangement.
“ Approved Technical Manager ” means, in respect of a Vessel, Scorpio Ship Management s.a.m., a company incorporated in Monaco whose registered office is at 9, Rue de Gabian, Monte Carlo, the Principality of Monaco or any Affiliate thereof, Claus-Peter Offen Tankschiffreederei (GmbH & Co.) KG, a company incorporated in Germany whose registered office is at Bleichenbrücke 10, 20354 Hamburg, Germany, or any other person approved in writing by the Facility Agent, acting with the authorization of the Majority Lenders, as the technical manager of that Vessel.
“ Assignment Agreement ” means an agreement substantially in the form set out in Schedule 5 ( Form of Assignment Agreement ) or any other form agreed between the relevant assignor and assignee.
“ Authorization ” means an authorization, consent, approval, resolution, license, exemption, filing, notarization, legalization or registration.
“ Availability Period ” means, in respect of each Tranche, the period from and including the date of this Agreement up to October 31, 2016 (or such later date as the Facility Agent, with the consent of the Majority Lenders, agrees with the Borrower).
“ Available Commitment ” means a Lender’s Commitment minus:
(a)
the amount of its participation in the outstanding Loan; and
(b)
in relation to any proposed Drawdown, the amount of its participation in any Advance that is due to be made under the relevant Tranche on or before the proposed Drawdown Date.
“ Available Facility ” means the aggregate for the time being of each Lender’s Available Commitment.
” Bail-In Action ” means the exercise of any Write-down and Conversion Powers.
” Bail-In Legislation ” means:

4     



(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and
(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
“ Balloon Payment ” has the meaning given to it in Clause 6.1 ( Repayment of the Loan ).
“ Bank Secrecy Act ” means the U.S. Bank Secrecy Act of 1970, as amended.
“ Basel III ” means:
(a)
the agreements on capital requirements, leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
(b)
the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.
“ Break Costs ” means any claim, expense, liability or loss, including a loss of a prospective profit, or any other amount 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 Commitment and/or any overdue amount (or aggregate amount which includes its Commitment 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.

“ Business Day ” means a day (other than a Saturday or Sunday) on which banks are open for general business in London, England (with respect to fixing of LIBOR only), New York, New York, Amsterdam, The Netherlands, Frankfurt, Germany and Curaçao.
“ Cash Equivalents ” means:

5     



(a)
securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)
time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
(c)
such other securities or instruments as the Majority Lenders shall agree in writing;
and in respect of both (a) and (b) above, with a Rating Category of at least “A-” by S&P and “A” by Moody’s (or the equivalent used by another Rating Agency), and in each case having maturities of not more than ninety (90) days from the date of acquisition.
“ Change of Control ” means:
(a)
in respect of the Borrower,
(i)
a “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than any holders of the Borrower’s Equity Interests as at the date of this Agreement, becoming the ultimate “beneficial owner” (as so defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 35% of the total voting power of the Voting Stock of the Borrower (calculated on a fully diluted basis); or
(ii)
individuals who at the beginning of any period of two consecutive calendar years constituted the Board of Directors or equivalent governing body of the Borrower (together with any new directors (or equivalent) whose election by such Board of Directors or equivalent governing body or whose nomination for election was approved by a vote of at least two-thirds of the members of such Board of Directors or equivalent governing body then still in office who either were members of such Board of Directors or equivalent governing body at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least 50% of the members of such Board of Directors or equivalent governing body then in office;
(b)
in respect of any Guarantor, the occurrence of any act, event or circumstance that without prior written consent of the Majority Lenders results in the Borrower owning directly or indirectly less than 100% of the issued and outstanding Equity Interests in a Guarantor.
“ Charter ” means, in respect of a Vessel, any charter, or other contract for its employment, whether or not already in existence.
“ Charter Assignment ” means, in respect of a Vessel, an assignment of any Charter in excess of 12 months for such Vessel (other than a Charter where the charterer is a member and/or Affiliate of the Group or pursuant to an Approved Pooling Arrangement), in agreed form.
“ Code ” means the U.S. Internal Revenue Code of 1986.

6     



“ Commercial Management Agreement ” means, in respect of a Vessel, the agreement entered into between a Guarantor owning such Vessel and the Approved Commercial Manager regarding the commercial management of that Vessel.
“ Commission ” or “ SEC ” means the U.S. Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act.
“ Commitment ” means:
(a)
in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Part B of Schedule 1 ( The Parties ) and the amount of any other Commitment transferred to it under this Agreement; and
(b)
in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
“ Commitment Date ” means August 5, 2016.
“ Compliance Certificate ” means a certificate in the form set out in Schedule 6 ( Form of Compliance Certificate ) or in any other form agreed between the Borrower and the Facility Agent.
“ Confidential Information ” means all information relating to any Obligor, the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:
(a)
any member of the Group or any of its advisers; or
(b)
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 43 ( Confidentiality ); or
(ii)
is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or
(iii)
is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
“ Confidentiality Undertaking ” means a confidentiality undertaking in any form agreed between the Borrower and the Facility Agent.

7     



“ Consolidated EBITDA ” means, for any accounting period, the consolidated net income of the Borrower for that accounting period:
(a)
plus, to the extent deducted in computing the net income of the Borrower for that accounting period, the sum, without duplication, of:
(i)
all federal, state, local and foreign income taxes and tax distributions;
(ii)
Consolidated Net Interest Expense;
(iii)
depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)
expenses incurred in connection with a special or intermediate survey of a Fleet Vessel during such period; and
(v)
any drydocking expenses;
(b)
minus, to the extent added in computing the consolidated net income of the Borrower for that accounting period, (i) any non-cash income or non-cash gains and (ii) any extraordinary gains on asset sales not incurred in the ordinary course of business.
“ Consolidated Funded Debt ” means, for any accounting period, the sum of the following for the Borrower determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:
(a)
all Financial Indebtedness; and
(b)
all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations) which in accordance with IFRS would be shown on the liability side of a balance sheet;
provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt.
“ Consolidated Liquidity ” means, on a consolidated basis at any time, the sum of (a) cash and (b) Cash Equivalents, in each case held by the Borrower or any of its subsidiaries on a freely available and unencumbered basis.
“ Consolidated Net Interest Expense ” means the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Borrower and all of its subsidiaries during the relevant accounting period less (i) commitment fees, (ii) interest income received and (iii) amortization of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Borrower.
“ Consolidated Tangible Net Worth ” means, on a consolidated basis, the total shareholders’ equity (including retained earnings) of the Borrower, minus goodwill and other non-tangible items.
“ Consolidated Total Capitalization ” means Consolidated Tangible Net Worth plus Consolidated Funded Debt.

8     



“ Corresponding Debt ” means any amount, other than any Parallel Debt, which an Obligor owes to a Creditor Party under or in connection with the Finance Documents.
“ Creditor Party ” means each Finance Party from time to time party to this Agreement and any Receiver or Delegate.
“ Default ” means an Event of Default or a Potential Event of Default.
“ Delegate ” means any delegate, agent, attorney, co-trustee or other person appointed by the Security Agent.
“ Disruption Event ” means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties or, if applicable, any Obligor; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party or, if applicable, any Obligor preventing that, or any other, Party or, if applicable, any Obligor:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other Parties or, if applicable, any Obligor in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party or, if applicable, any Obligor whose operations are disrupted.
“ Document of Compliance ” has the meaning given to it in the ISM Code.
“ dollars ” and “ $ ” mean the lawful currency, for the time being, of the U.S.
“ Drawdown ” means the drawdown of an Advance.
“ Drawdown Date ” means the date of a Drawdown, being the date on which the relevant Advance is to be made.
“ Drawdown Request ” means a notice substantially in the form set out in Part A of Schedule 3 ( Requests ).
“ Earnings ” means, in respect of a Vessel, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Guarantor owning that Vessel or the Security Agent and which arise out of the use or operation of that Vessel, including (but not limited to):
(a)
the following, save to the extent that any of them is, pooled or shared with any other person, pursuant to an Approved Pooling Arrangement:
(i)
all freight, hire and passage moneys;

9     



(ii)
compensation payable to the relevant Guarantor or the Security Agent in the event of requisition of that Vessel 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 that Vessel;
(vi)
all moneys which are at any time payable under any Insurances in relation to loss of hire;
(vii)
all monies which are at any time payable to the relevant Guarantor in relation to general average contribution; and
(b)
if and whenever that Vessel is employed on terms whereby any moneys falling within sub-paragraphs (i) to (vi) of paragraph (a) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Vessel.
“ EEA Member Country ” means any member state of the European Union, Iceland, Liechtenstein and Norway.
“ Earnings Account ” means, in respect of a Vessel, an account in the name of the Guarantor owning that Vessel with the Account Bank with account number 44 92 92 029 (in the case of Vessel A), 41 60 58 434 (in the case of Vessel B), 41 69 27 270 (in the case of Vessel C), and 46 98 67 213 (in the case of Vessel D), or any other account (with the Account Bank, the Agent or with another bank or financial institution acceptable to the Majority Lenders) which is designated by the relevant Guarantor and approved by the Facility Agent as the Earnings Account in respect of that Vessel for the purposes of this Agreement.
“ Earnings Assignment ” means, in respect of a Vessel, an assignment of the Earnings and any Requisition Compensation of that Vessel, in agreed form.
“ Environmental Approval ” means any present or future permit, ruling, variance or other Authorization required under Environmental Laws.
“ Environmental Claim ” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “ claim ” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“ Environmental Incident ” means:
(a)
any release, emission, spill or discharge into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material from a Vessel; or

10     



(b)
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Transaction Obligor and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Transaction Obligor and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.
“ Environmental Law ” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
“ Environmentally Sensitive Material ” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“ EU Bail-In Legislation Schedule ” means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
“ Equity Interests ” of any person means:
(a)
any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)
all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person.
“ Equity Proceeds ” means the net cash proceeds from the issuance of common or preferred stock of the Borrower.
“ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder.
“ ERISA Affiliate ” means a trade or business (whether or not incorporated) that, together with the Borrower or any Subsidiary of it, would be deemed to be a single employer under Section 414 of the Code.
“ ERISA Funding Event ” means:
(a)
any failure by any Plan to satisfy the minimum funding standards (for purposes of Section 412 or 430 of the Code or Section 302 of ERISA), whether or not waived;

11     



(b)
the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan;
(c)
the failure by the Borrower, any Guarantor or any ERISA Affiliate to make any required contribution to a Multiemployer Plan;
(d)
a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430(i) of the Code);
(e)
the incurrence by the Borrower, any Guarantor or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan;
(f)
a determination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Section 4245 of ERISA, in reorganization within the meaning of Section 4241 of ERISA or in endangered status within the meaning of Section 432 of the Code or Section 305 of ERISA;
(g)
any Reportable Event; or
(h)
the existence with respect to any Plan of a non-exempt “prohibited transaction” for purposes of Section 406 of ERISA or Section 4975 of the Code.
“ ERISA Termination Event ” means:
(a)
the imposition of any lien in favor of the PBGC on any Plan or Multiemployer Plan, or on any asset of the Borrower, any Guarantor or any ERISA Affiliate in connection with any Plan or Multiemployer Plan;
(b)
the receipt by the Borrower, any Guarantor or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Multiemployer Plan or to appoint a trustee to administer any Plan or Multiemployer Plan under Section 4042 of ERISA;
(c)
the receipt by the Borrower, any Guarantor or ERISA Affiliate of any notice that a Multiemployer Plan is in critical status within the meaning of Section 432 of the Code or Section 305 of ERISA;
(d)
the filing of a notice of intent to terminate a Plan under Section 4041 of ERISA; or
(e)
the occurrence of any other event or condition which under Section 4042 of ERISA, could reasonably be expected to lead to the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan.
“ Event of Default ” means any event or circumstance specified as such in Clause 26 ( Events of Default ).
“ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder.
“ Existing Indebtedness ” means the outstanding Financial Indebtedness of the Borrower under the Loan Agreement dated July 2, 2013 as amended by a Letter Agreement dated August 19, 2013, a

12     



Letter Agreement dated September 22, 2014, a First Amendatory Agreement dated November 19, 2014 and a Second Amendatory Agreement dated May 28, 2015, and as may be further amended or supplemented from time to time, among (i) the Borrower, (ii) the companies listed in schedule 10 thereto as joint and several guarantors, (iii) the banks and financial institutions listed in schedule 1 thereto as Lenders, (iv) the banks and financial listed in schedule 2 thereto as Swap Banks, (v) the banks and financial institutions listed therein as Lead Arrangers, (vi) the banks and financial institutions listed therein as Bookrunners, (vii) the banks and financial institutions listed therein as Co-Arranger and (viii) Nordea Bank Finland plc, New York Branch, as Agent and Security Trustee providing for a loan facility in the aggregate principal amount of (originally) up to $525,000,000.
“ Executive Order ” means an executive order issued by the President of the United States of America.
“ Facility ” means the term loan facility made available under this Agreement as described in Clause 2 ( The Facility ).
“ Facility Office ” means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than 5 Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.
“ FATCA ” means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;
(b)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the U.S. and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
(c)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the U.S. government or any governmental or taxation authority in any other jurisdiction.
“ FATCA Deduction ” means a deduction or withholding from a payment under a Finance Document required by FATCA.
“ FATCA Exempt Party ” means a Party that is entitled to receive payments free from any FATCA Deduction.
“ Fee Letter ” means any letter or letters dated on or about the date of this Agreement between any of the Arranger, the Underwriter, the Facility Agent and the Security Agent and any Obligor setting out any of the fees referred to in Clause 11 ( Fees ).
“ Finance Document ” means:
(a)
this Agreement;
(b)
any Fee Letter;
(c)
the Note;
(d)
each Drawdown Request;

13     



(e)
any Security Document;
(f)
any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities; or
(g)
any other document designated as such by the Facility Agent and the Borrower.
“ Finance Party ” means the Facility Agent, the Security Agent, the Arranger, the Underwriter or a Lender.
“ Financial Indebtedness ” means
with respect to any person (the " Debtor ") at any date of determination (without duplication):
(a)
all obligations of the Debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)
all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)
all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto) which in accordance with IFRS would be shown on the liability side of a balance sheet;
(d)
all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)
all capitalised lease obligations of the Debtor as lessee;
(f)
all Financial Indebtedness of persons other than the Debtor secured by a Security on any asset of that person, whether or not such Financial Indebtedness is assumed by the Debtor, provided that the amount of such Financial Indebtedness shall be the lesser of:
(i)
the fair market value of such asset at such date of determination; and
(ii)
the amount of such Financial Indebtedness; and
(g)
all Financial Indebtedness incurred under any guarantee, indemnity or similar obligation to the extent such Financial Indebtedness is guaranteed, secured, expressed to be indemnified by, or otherwise assured by the Debtor.
The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to the contingent obligations set out in paragraphs (f) and (g) above, the maximum liability which would or might arise upon the occurrence of the contingency giving rise to the obligation, as determined in conformity with IFRS, provided that:
(a)
the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount shall be deemed to be the face amount of such Financial Indebtedness less

14     



the remaining unamortised portion of such original issue discount of such Financial Indebtedness at such time; and
(b)
the calculation of Financial Indebtedness shall not take into account any liability of the Debtor for taxes.
“ Fiscal Year ” means, in relation to any person, each period of one (1) year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared.
“ Fleet Vessel ” means each vessel owned by a wholly owned direct or indirect subsidiary of the Borrower (including, but not limited to, the Vessels).
“ Foreign Pension Plan ” means any plan, fund (including without limitation, any superannuation fund) or other similar program established or maintained outside the U.S. by any Obligor or any one or more of its Subsidiaries primarily for the benefit of its or their employees residing outside the U.S., which plan, fund or other similar program provides, or results in, (i) a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan would be covered by the funding requirements of ERISA or the Code but which is not subject to ERISA or the Code, or (ii) retirement income, and which plan is not subject to ERISA or the Code.
“ Group ” means the Borrower and its Subsidiaries for the time being.
“ IACS ” means the International Association of Classification Societies.
“ IFRS ” means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
“ Indemnified Person ” has the meaning given to it in Clause 14.2 ( Other indemnities ).
“ Insolvency Event ” means with respect to any person:
(a)
such person shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or
(b)
a proceeding shall have been instituted by or against such person seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property, and solely in case of an involuntary proceeding:
(i)
such proceeding shall remain undismissed or unstayed for a period of 45 days; or
(ii)
any of the actions sought in such involuntary proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur.
“ Insurances ” means, in respect of a Vessel:

15     



(a)
all policies and contracts of insurance, including entries of that Vessel in any protection and indemnity or war risks association, effected in respect of that Vessel, the Earnings or otherwise in respect of that Vessel whether before, on or after the date of this Agreement; and
(b)
all rights and other assets relating to, or derived from, any of such policies, contracts or entries, including any rights to a return of premium and any rights in relation to any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement.
“ Insurance Assignment ” means, in respect of a Vessel, an assignment of Insurances, in agreed form.
“ Interest Period ” means, in relation to any Advance or the Loan, each period determined in accordance with Clause 9 ( Interest Periods ) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 ( Default interest ).
“ Interpolated Screen Rate ” means, in relation to LIBOR for an Advance, the Loan or any Unpaid Sum, the rate which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of such Advance, the Loan or that Unpaid Sum; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of such Advance, the Loan or that Unpaid Sum,
each as of the Specified Time on the Quotation Day for the currency of the Loan or that Unpaid Sum.
“ IRS ” means the U.S. Internal Revenue Service or any successor taxing authority or agency of the U.S. government;
“ ISM Code ” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (including the guidelines on its implementation), adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time.
“ ISPS Code ” means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization’s (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.
“ ISSC ” means an International Ship Security Certificate issued under the ISPS Code.
“ Lender ” means:
(a)
any Original Lender; and
(b)
any reputable financial institution governed by banking regulations in the United States, the United Kingdom and/or the European Union which has become a Party in accordance with Clause 27 ( Changes to the Lenders ),
which in each case has not ceased to be a Party in accordance with this Agreement.

16     



“ LIBOR ” means, in relation to any Advance, the Loan or any Unpaid Sum:
(a)
the applicable Screen Rate;
(b)
(if no Screen Rate is available for the Interest Period of the Advance, the Loan or that Unpaid Sum), the applicable Interpolated Screen Rate; or
(c)
if:
(i)
no Screen Rate is available for the currency of the Advance, the Loan or that Unpaid Sum); or
(ii)
no Screen Rate is available for the Interest Period of the Advance, the Loan or that Unpaid Sum and it is not possible to calculate an Interpolated Screen Rate for the Advance, the Loan or that Unpaid Sum,
the Reference Bank Rate,
as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for dollars for the Advance, the Loan or that Unpaid Sum and for a period equal in length to the Interest Period of the Advance, the Loan or that Unpaid Sum and, if any such rate is below zero, LIBOR shall be deemed to be zero.
“ Loan ” means the loan to be made available under the Facility or the aggregate principal amount outstanding for the time being of the borrowings under the Facility.
“ Major Casualty ” means any casualty to the Vessel in relation to which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds U.S.$500,000 or the equivalent in any other currency.
“ Majority Lenders ” means:
(a)
if no Advance has yet been made, a Lender or Lenders whose Commitments aggregate more than 66⅔ percent of the Total Commitments; or
(b)
at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 66⅔ percent of the amount of the Loan then outstanding or, if the Loan has been repaid or prepaid in full, a Lender or Lenders whose participations in the Loan immediately before repayment or prepayment in full aggregate more than 66⅔ percent of the Loan immediately before such repayment.
“Management Agreement ” means, in respect of a Vessel, the master agreement dated January 23, 2013 entered into by and among (i) the Borrower, (ii) Scorpio Commercial Management s.a.m. and Scorpio Ship Management s.a.m., or such other management agreement in respect of a Vessel approved in writing by the Facility Agent, acting with the authorization of the Majority Lenders.
“ Manager’s Undertaking ” means, in respect of a Vessel, the letter of undertaking from the Approved Technical Manager and the letter of undertaking from the Approved Commercial Manager subordinating the rights of the Approved Technical Manager and the Approved Commercial Manager respectively against that Vessel and each Guarantor to the rights of the Finance Parties and assigning the rights and interests of the Approved Technical Manager and the Approved Commercial Manager in the Insurances to the Finance Parties in agreed form.

17     



“ Margin ” means 1.60 percent per annum.
“ Margin Stock ” has the meaning specified in Regulation U of the Board of Governors of the U.S. Federal Reserve System and any successor regulations thereto, as in effect from time to time.
“ Market Disruption Event ” has the meaning given to it in Clause 10.2 ( Market disruption ).
“ Market Value ” means, in respect of a Vessel or any other vessel, at any date, the market value of that Vessel or vessel shown by one valuation or the arithmetic mean of two or three valuations, as the case may be, prepared:
(a)
unless otherwise specified, as at a date not more than 14 days previously;
(b)
by an Approved Appraiser or Approved Appraisers;
(c)
without physical inspection (i.e., on a “desk-top” basis) of that Vessel or vessel; and
(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 Charter.
“ Material Adverse Effect ” means in the reasonable opinion of the Majority Lenders a material adverse effect on:
(a)
the business, operations, property, condition (financial or otherwise) or prospects of any Obligor or the Group as a whole; or
(b)
the ability of any Transaction Obligor to perform its obligations under any Finance Document; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Security granted or intended to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.
“ Maturity Date ” means August 4, 2017.
“ Month ” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a)
(subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;
(b)
if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and
(c)
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.
The above rules will only apply to the last Month of any period.

18     



“ Moody’s ” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“ Mortgage ” means, in respect of a Vessel, the first preferred Marshall Islands or Liberian ship mortgage on that Vessel in agreed form.
“ Multiemployer Plan ” means, at any time, a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which any Obligor or any ERISA Affiliate has any liability or obligation to contribute or has within any of the six preceding plan years had any liability or obligation to contribute.
“ Non-indemnified Tax ” means:
(a)
any tax on the net income of a Finance Party (but not a tax on gross income or individual items of income), whether collected by deduction or withholding or otherwise, which is levied by a taxing jurisdiction which:
(i)
is located in the country under whose laws such entity is incorporated or formed (or in the case of a natural person is a country of which such person is a citizen); or
(ii)
with respect to any Lender, is located in the country of its Facility Office; or
(iii)
with respect to any Finance Party other than a Lender, is located in the country from which such party has originated its participation in this transaction; or
(b)
any FATCA Deduction made on account of a payment to a Party.
“ Note ” means a promissory note of the Borrower, payable to the order of the Facility Agent, evidencing the aggregate indebtedness of the Borrower under this Agreement, in agreed form.
“ Obligor ” means the Borrower and the Guarantors.
“ Original Financial Statements ” means in relation to the Borrower, the audited consolidated financial statements of the Group for its Fiscal Year ended 2015.
“ Parallel Debt ” means any amount which an Obligor owes to the Security Agent under Clause 30.2 ( Parallel Debt (Covenant to pay the Security Agent) ) or under that clause as incorporated by reference or in full in any other Finance Document.
“ pari passu ”, when used with respect to the ranking of any Financial Indebtedness of any person in relation to other Financial Indebtedness of such person, means that each such Financial Indebtedness:
(a)
either (i) is not subordinated in right of payment to any other Financial Indebtedness of such person or (ii) is subordinate in right of payment to the same Financial Indebtedness of such person as is the other and is so subordinate to the same extent; and
(b)
is not subordinate in right of payment to the other or to any Financial Indebtedness of such person as to which the other is not so subordinate.
“ Participating Member State ” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

19     



“ PATRIOT Act ” means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended.
“ Party ” means a party to this Agreement.
“ PBGC ” means the U.S. Pension Benefits Guarantee Corporation and its successors.
“ Permitted Charter ” means:
(a)
a Charter:
(i)
which is a time, voyage or consecutive voyage charter;
(ii)
the duration of which does not exceed and is not capable of exceeding, by virtue of any optional extensions, 13 months plus a redelivery allowance of not more than 30 days;
(iii)
which is entered into on bona fide arm’s length terms at the time at which that Vessel is fixed; and
(iv)
in relation to which not more than two months’ hire is payable in advance; or
(b)
a Charter which is entered into pursuant to an Approved Pooling Arrangement; or
(c)
any Charter (other than one covered by paragraph (a) or (b) above) which is approved in writing by the Facility Agent acting with the authorization of the Majority Lenders.
“ Permitted Financial Indebtedness ” means:
(a)
any Financial Indebtedness incurred under the Finance Documents;
(b)
any Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under the Finance Documents on terms satisfactory to the Facility Agent (acting on instructions of the Majority Lenders).
“ Permitted Security ” means:
(a)
Security created by the Finance Documents;
(b)
any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
(c)
liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;
(d)
liens for salvage;
(e)
liens for master’s disbursements incurred in the ordinary course of trading; and
(f)
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of any Vessel and not as a result of any default or omission by any

20     



Obligor and subject, in the case of liens for repair or maintenance, to Clause 23.16 ( Restrictions on chartering, appointment of managers etc. ).
“ Plan ” means any employee benefit plan as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect to which any Obligor or ERISA Affiliate is (or, if such plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“ Potential Event of Default ” means any event or circumstance specified in Clause 26 ( Events of Default ) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
“ Prohibited Person ” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed, but only to the extent that transactions with such person would be prohibited or restricted to an Obligor, a Finance Party or any other person resident in or otherwise subject to the jurisdiction of the United States, the United Kingdom or the European Union.
“ Protected Party ” has the meaning given to it in Clause 12.1 ( Definitions ).
“ Quotation Day ” means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
“ Rating Agencies ” means:
(a)
S&P and Moody’s; or
(b)
if S&P or Moody’s or both of them are not making ratings of securities publicly available, a nationally recognized U.S. rating agency or agencies, as the case may be, selected by the Facility Agent with the consent of the Majority Lenders, which will be substituted for S&P or Moody’s or both, as the case may be.
“ Rating Category ” means:
(a)
with respect to S&P, any of the following categories (any of which may include a “+” or “-”): AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories);
(b)
with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(c)
the equivalent of any such categories of S&P or Moody’s used by another Rating Agency, if applicable.
“ Receiver ” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets.

21     



“ Reference Bank Rate ” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility Agent at its request by the Reference Banks as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.
“ Reference Banks ” means the principal Frankfurt am Main offices of DVB Bank SE and/or such other banks as may be appointed by the Facility Agent in consultation with the Borrower.
“ Relevant Interbank Market ” means the London interbank market.
“ Relevant Jurisdiction ” means, in relation to an Obligor:
(a)
its jurisdiction of incorporation or formation;
(b)
any jurisdiction where any asset subject to, or intended to be subject to, any of the Transaction Security created, or intended to be created, by it is situated;
(c)
any jurisdiction where it conducts its business; and
(d)
the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.
“ Repayment Date ” means each date on which a Repayment Instalment is required to be paid under Clause 6.1 ( Repayment of Loan ).
“ Repayment Instalment ” has the meaning given to it in Clause 6.1 ( Repayment of Loan ).
“ Repeating Representation ” means each of the representations set out in Clause 18 ( Representations ) except Clause 18.10 ( Solvency; Insolvency Event; Creditor’s process ), Clause 18.11 ( No filing or registration or stamp taxes ), Clause 18.12 ( Deduction of Tax ) and Clause 18.17 ( No proceedings pending or threatened) and any representation of any Obligor made in any other Finance Document that is expressed to be a “Repeating Representation” or is otherwise expressed to be repeated.
“ Representative ” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
“ Reportable Event ” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived.
“ Requisition ” means, in respect of a Vessel:
(a)
any expropriation, confiscation, requisition or acquisition of that Vessel, 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 one year without any right to an extension) unless it is within 60 days redelivered to the full control of the relevant Guarantor; and

22     



(b)
any arrest, capture, seizure or detention of that Vessel (including any hijacking or theft) unless it is within 60 days redelivered to the full control of the relevant Guarantor.
“ Requisition Compensation ” includes all compensation or other moneys payable by reason of any Requisition.
“ Resolution Authority ” means any body which has authority to exercise any Write-down and Conversion Powers.
“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies Inc., and its successors.
“ Safety Management Certificate ” has the meaning given to it in the ISM Code.
“ Safety Management System ” has the meaning given to it in the ISM Code.
“ Sanctions ” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a)
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America; or
(b)
otherwise imposed by any law or regulation or Executive Order by which any Obligor or any Finance Party is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Obligor or Finance Party including, without limitation, laws or regulations or Executive Orders restricting loans to investments in, or the exports of assets to, foreign countries or entities doing business there,
provided that such laws, regulations, sanctions, embargoes, freezing provisions, prohibitions or restrictive measures shall be applicable only to the extent such laws, regulations, sanctions, embargoes or restrictive measures are not in conflict with the laws of the United States of America.
“ Screen Rate ” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed on page LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Facility Agent may specify another page or service displaying the relevant rate after consultation with the Borrower.
“ Secured Liabilities ” means all present and future obligations and liabilities, (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of each Transaction Obligor to any Creditor Party under or in connection with each Finance Document.
“ Securities Act ” means the U.S. Securities Act of 1933, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder.
“ Security ” means a mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security.

23     



“ Security Assets ” means all of the assets of the Transaction Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.
“ Security Document ” means:
(a)
any Shares Security;
(b)
any Mortgage;
(c)
any Earnings Assignment;
(d)
any Insurance Assignment;
(e)
any Charter Assignment;
(f)
any Account Security;
(g)
any Manager’s Undertaking;
(h)
any other document (whether or not it creates Security) which is executed as security for the Secured Liabilities; or
(i)
any other document designated as such by the Facility Agent and the Borrower.
“ Security Period ” means the period starting on the date of this Agreement and ending on the date on which the Facility Agent is satisfied that there is no outstanding Commitment in force and that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
“ Security Property ” means:
(a)
the Transaction Security expressed to be granted in favor of the Security Agent as trustee for the Creditor Parties and all proceeds of that Transaction Security;
(b)
all obligations expressed to be undertaken by a Transaction Obligor to pay amounts in relation to the Secured Liabilities to the Security Agent as trustee for the Creditor Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by a Transaction Obligor or any other person in favor of the Security Agent as trustee for the Creditor Parties;
(c)
the Security Agent’s interest in any turnover trust created under the Finance Documents; and
(d)
any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as trustee on trust for the Creditor Parties,
except:
(i)
rights intended for the sole benefit of the Security Agent; and

24     



(ii)
any moneys or other assets which the Security Agent has transferred to the Facility Agent or (being entitled to do so) has retained in accordance with the provisions of this Agreement.
“ Selection Notice ” means a notice substantially in the form set out in Part B of Schedule 3 ( Requests ) given in accordance with Clause 9 ( Interest Periods ).
“ Servicing Party ” means the Facility Agent or the Security Agent.
“ Shares Security ” means, in relation to a Guarantor, a document creating Security over the Equity Interests of that Guarantor in agreed form.
“ Specified Time ” means a time determined in accordance with Schedule 7 ( Timetables ).
“ Subordinated Creditor ” means:
(a)
an Obligor; or
(b)
any other person who is owed Subordinated Liabilities.
“ Subordinated Finance Document ” means any document relating to or evidencing Subordinated Liabilities.
“ Subordinated Liabilities ” means all indebtedness owed or expressed to owed by the Borrower to a Subordinated Creditor whether under the Subordinated Finance Documents or otherwise.
“ Subordination Agreement ” means a subordination agreement entered into or to be entered into by each Subordinated Creditor and the Security Agent in agreed form.
“ Subsidiary ” means, with respect to any person (the “ parent ”) at any date:
(a)
any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors (or equivalent governing body) thereof are, as of such date, directly, indirectly or beneficially owned, controlled or held by the parent and/or one or more subsidiaries of the parent;
(b)
any partnership (i) the sole general partner or the managing general partner of which is the parent and/or one or more subsidiaries of the parent or (ii) the only general partners of which are the parent and/or one or more subsidiaries of the parent;
(c)
any other person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with IFRS as of such date;
(d)
any other person of which at least a majority of the income, capital, beneficial or ownership interests (however designated) are at the time directly, indirectly or beneficially owned or controlled by the parent and/or one or more subsidiaries of the parent; or
(e)
any other person that is otherwise controlled by the parent and/or one or more subsidiaries of the parent.

25     



“ Tax ” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
“ Tax Credit ” has the meaning given to it in Clause 12.1 ( Definitions ).
“ Tax Deduction ” has the meaning given to it in Clause 12.1 ( Definitions ).
“ Tax Payment ” has the meaning given to it in Clause 12.1 ( Definitions ).
“ Technical Management Agreement ” means, in respect of a Vessel, the agreement entered into between the Guarantor owning such Vessel and the Approved Technical Manager regarding the technical management of that Vessel.
“ Total Commitments ” means the aggregate of the Commitments, being $90,000,000 at the date of this Agreement.
“ Total Loss ” means, in respect of a Vessel:
(a)
actual, constructive, compromised, agreed or arranged total loss of that Vessel; or
(b)
any Requisition.
“ Total Loss Date ” means, in relation to the Total Loss of a Vessel:
(a)
in the case of an actual loss of that Vessel, the date on which it occurred or, if that is unknown, the date when that Vessel was last heard of;
(b)
in the case of a constructive, compromised, agreed or arranged total loss of that Vessel, the earlier 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 relevant Guarantor with that Vessel’s insurers in which the insurers agree to treat that Vessel as a total loss; and
(c)
in the case of any other type of Total Loss, the date (or the most likely date) on which it appears to the Facility Agent that the event constituting the total loss occurred.
“ Tranche ” means Tranche A, Tranche B, Tranche C or Tranche D as the context may require.
“ Tranche A ” has the meaning given to it in Clause 3.1(a)(i).
“ Tranche B ” has the meaning given to it in Clause 3.1(a)(ii).
“ Tranche C ” has the meaning given to it in Clause 3.1(a)(iii).
“ Tranche D ” has the meaning given to it in Clause 3.1(a)(iv).
“ Transaction Document ” means:

26     



(a)
a Finance Document;
(b)
a Subordinated Finance Document;
(c)
any Charter
(d)
any Approved Pooling Arrangement; or
(e)
any other document designated as such by the Facility Agent and the Borrower.
“ Transaction Obligor ” means an Obligor, any Approved Manager who is a member of the Group or any other member of the Group who executes a Transaction Document.
“ Transaction Security” means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
“ Transfer Certificate ” means a certificate in the form set out in Schedule 4 ( Form of Transfer Certificate ) or any other form agreed between the Facility Agent and the Borrower.
“ Transfer Date ” means, in relation to an assignment or a transfer, the later of:
(a)
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
(b)
the date on which the Facility Agent executes the relevant Assignment Agreement or Transfer Certificate.
“ UCC ” means the Uniform Commercial Code of the State of New York.
“ Unpaid Sum ” means any sum due and payable but unpaid by a Transaction Obligor under the Finance Documents.
“ U.S. ” means the United States of America.
“ VAT ” means:  
(a)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.
“ VAT Group ” means two or more companies or limited liability partnerships which register as a single taxable entity for VAT purposes.
“ Vessel ” means Vessel A, Vessel B, Vessel C or Vessel D.
“ Vessel A ” means the product tanker of 38,000 deadweight tons, currently registered in the name of Guarantor A under Marshall Islands flag with the name “STI WEMBLEY”, IMO number 9691735.

27     



“ Vessel B ” means the product tanker of 49,990 deadweight tons, currently registered in the name of Guarantor B under Marshall Islands flag with the name “STI MILWAUKEE”, IMO number 9686974.
“ Vessel C ” means the product tanker of 49,990 deadweight tons, currently registered in the name of Guarantor C under Marshall Islands flag with the name “STI SENECA”, IMO number 9704477.
“ Vessel D ” means the product tanker of 114,900 deadweight tons, currently registered in the name of Guarantor D under Marshall Islands flag with the name “STI ALEXIS”, IMO number 9696694.
“ Voting Stock ” of any person as of any date means the Equity Interests of such person that are at the time entitled to vote in the election of the board of directors or similar governing body of such person.
” Write-down and Conversion Powers ” means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.
1.2
Construction
(a)
Unless a contrary indication appears, a reference in this Agreement to:
(i)
the “ Account Bank ”, the “ Arranger ”, the “ Underwriter ”, the “ Facility Agent ”, any “ Finance Party ”, any “ Lender ”, any “ Obligor ”, any “ Party ”, any “ Creditor Party ”, the “ Security Agent ”, any “ Transaction Obligor ” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents;
(ii)
“ assets ” includes present and future properties, revenues and rights of every description;
(iii)
a liability which is “ contingent ” means a liability which is not certain to arise and/or the amount of which remains unascertained;
(iv)
“ document ” includes a deed and also a letter, Email, fax or telex;

28     



(v)
“ expense ” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable Tax including VAT;
(vi)
a “ Finance Document ”, a “ Security Document ” or “ Transaction Document ” or any other agreement or instrument is a reference to that Finance Document, Security Document or Transaction Document or other agreement or instrument as amended or novated;
(vii)
“ indebtedness ” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(viii)
“ law ” includes any order or decree, any form of delegated legislation, any treaty or international convention and any statute, regulation or resolution or Executive Order of the United States of America, any state thereof, the Council of the European Union, the European Commission, the United Nations or its Security Council;
(ix)
“ proceedings ” means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure;
(x)
a “ person ” includes any individual or natural person, firm, corporation, limited liability company, partnership, government, state or agency of a state or any association, trust, joint venture, consortium unincorporated association, joint stock company and trust (whether or not having separate legal personality);
(xi)
a “ 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 organization;
(xii)
a provision of law is a reference to that provision as amended or re-enacted;
(xiii)
a time of day is a reference to New York City time (unless otherwise indicated);
(xiv)
any New York legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction other than the State of New York or a U.S. federal court, be deemed to include that which most nearly approximates in that jurisdiction to the New York legal term;
(xv)
words denoting the singular number shall include the plural and vice versa; and
(xvi)
“ including ” and “ in particular ” (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used.
(b)
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents.
(c)
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under, or in connection with, any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(d)
A Potential Event of Default is “ continuing ” if it has not been remedied or waived and an Event of Default is “ continuing ” if it has not been remedied or waived.
1.3
Construction of insurance terms

29     



In this Agreement:
“ approved ” means, for the purposes of Clause 22 ( Insurance Undertakings ), approved in writing by the Facility Agent;
“ excess risks ” means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of a Vessel in consequence of its insured value being less than the value at which such Vessel is assessed for the purpose of such claims;
“ obligatory insurances ” means all insurances effected, or which a Guarantor is obliged to effect, under Clause 22 ( Insurance Undertakings ) or any other provision of this Agreement or of another Finance Document;
“ policy ” includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“ protection and indemnity risks ” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation 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) (1/10/83)(1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision; 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).
1.4
Agreed forms of Finance Documents
References in Clause 1.1 ( Definitions ) to any Finance Document being in “agreed form” are to that Finance Document:
(a)
in a form attached to a certificate dated the same date as this Agreement (and signed by the Borrower and the Facility Agent); or
(b)
in any other form agreed in writing between the Borrower and the Facility Agent acting with the authorization of the Majority Lenders or, where Clause 42.2 ( All Lender matters ) applies, all the Lenders.
1.5
Third party rights
(a)
Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right to enforce or to enjoy the benefit of any term of this Agreement.
(b)
Notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
(c)
Any Receiver, Delegate or any other person described in paragraph (d) of Clause 14.2 ( Other indemnities ), paragraph (b) of Clause 29.11 ( Exclusion of liability ) or paragraph (b) of Clause 30.11 ( Exclusion of liability ) may, subject to this Clause 1.5 ( Third party rights ), rely on any Clause of this Agreement which expressly confers rights on it.

30     




SECTION 2

THE FACILITY
2
THE FACILITY
2.1
The Facility
Subject to the terms of this Agreement, the Lenders agree to make available to the Borrower a dollar term loan facility in four Tranches in an aggregate amount not exceeding the Total Commitments.
2.2
Finance Parties’ rights and obligations
(a)
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b)
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from a Transaction Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by a Transaction Obligor which relates to a Finance Party's participation in the Facility or its role under a Finance Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Transaction Obligor.
(c)
A Finance Party may, except as otherwise stated as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents.
3
PURPOSE
3.1
Purpose
(a)
The Borrower shall apply all amounts borrowed by it under the Facility only for the purpose of partially refinancing the Existing Indebtedness and for other general corporate purposes, which borrowings shall be made available in the following four Tranches:
(i)
Tranche A, in a principal amount not exceeding the lesser of (i) 65 percent of the Market Value of Vessel A, and (ii) $18,500,000;
(ii)
Tranche B, in a principal amount not exceeding the lesser of (i) 65 percent of the Market Value of Vessel B, and (ii) $19,500,000;
(iii)
Tranche C, in a principal amount not exceeding the lesser of (i) 65 percent of the Market Value of Vessel C, and (ii) $20,500,000; and
(iv)
Tranche D, in a principal amount not exceeding the lower of (i) 65 percent of the Market Value of Vessel D, and (ii) $31,500,000.
3.2
Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4
CONDITIONS OF DRAWDOWN
4.1
Conditions precedent to delivery of a Drawdown Request
The Borrower may not deliver a Drawdown Request unless the Facility Agent has received all of the documents and other evidence listed in Part A of Schedule 2 ( Conditions Precedent ) in form and substance satisfactory to the Facility Agent.
4.2
Conditions precedent to each Advance
The Lenders will be obliged to comply with Clause 5.4 ( Lenders’ participation ) only if:
(a)
on the date of the Drawdown Request and on the proposed Drawdown Date and before the Advance under a Tranche is made available:
(i)
no Default is continuing or would result from the proposed Advance;
(ii)
the Repeating Representations to be made by each Obligor are true;
(iii)
a Change of Control has not occurred; and
(iv)
the provisions of paragraph (c) of Clause 10.3 ( Alternative basis of interest or funding, suspension) do not apply;
(b)
the Facility Agent has received on or before the relevant Drawdown Date, or is satisfied that it will receive when such Advance is made available, all of the documents and other evidence listed in Part B of Schedule 2 ( Conditions Precedent ) in form and substance satisfactory to the Facility Agent.
4.3
Notification of satisfaction of conditions precedent
(a)
The Facility Agent shall notify the Borrower and the Lenders promptly upon being satisfied as to the satisfaction of the conditions precedent and subsequent referred to in Clause 4.1 ( Conditions precedent to delivery of a Drawdown Request ) and Clause 4.2 ( Conditions precedent to each Advance ).
(b)
Other than to the extent that the Majority Lenders notify the Facility Agent in writing to the contrary before the Facility Agent gives the notification described in paragraph (a) above, the Lenders authorize (but do not require) the Facility Agent to give that notification. The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.
4.4
Waiver of conditions precedent
If the Majority Lenders, at their discretion, permit an Advance to be borrowed before any of the conditions precedent referred to in Clause 4.1 ( Conditions of Drawdown ) or Clause 4.2 ( Conditions precedent to each Advance ) has been satisfied, the Borrower shall ensure that the waived condition is satisfied within five Business Days after the relevant Drawdown Date or such later date as the Facility Agent, acting with the authorization of the Majority Lenders, may agree in writing with the Borrower.

SECTION 3

DRAWDOWN
5
DRAWDOWN
5.1
Delivery of a Drawdown Request
(a)
The Borrower may utilize the Facility by delivery to the Facility Agent of a duly completed Drawdown Request not later than the Specified Time.
(b)
Only one Advance may be made under each Tranche.
5.2
Completion of a Drawdown Request
(a)
Each Drawdown Request is irrevocable and will not be regarded as having been duly completed unless:
(i)
the proposed Drawdown Date is a Business Day within the Availability Period; and
(ii)
the currency and amount of the Drawdown comply with Clause 5.3 ( Currency and amount ).
5.3
Currency and amount
(a)
The currency specified in a Drawdown Request must be dollars.
(b)
The amount of the proposed Advance must be an amount which is not more than the relevant Tranche; and
(c)
The amount of the proposed Advance must be an amount which would not oblige the Borrower to provide additional security or prepay part of the Advance if the ratio set out in Clause 24 ( Security Cover ) were applied and notice was given by the Facility Agent under Clause 24.1 ( Minimum required security cover ) immediately after that Advance was made.
5.4
Lenders’ participation
(a)
If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Advance available by the relevant Drawdown Date through its Facility Office.
(b)
The amount of each Lender’s participation in each Advance will be equal to the proportion borne by its Commitment to the Total Commitments immediately before making that Advance.
(c)
The Facility Agent shall notify each Lender of the amount of each Advance and the amount of its participation in that Advance by the Specified Time.
5.5
Cancellation of Commitments
The Commitments in respect of any Tranche which are unutilized after an Advance has been made with respect thereto or at the end of the Availability Period shall then be cancelled.
5.6
Disbursement of Advance to third party
A payment by the Facility Agent to a person other than the Borrower at the request of the Borrower shall constitute the making of the relevant Advance and the Borrower shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s participation in that Advance.
5.7
Promissory note
(a)
The obligation of the Borrower to pay the principal of, and interest on, the Loan shall be evidenced by the Note.
(b)
Each Advance made by the Lenders to the Borrower may be evidenced by a notation of the same made by the Facility Agent on the grid attached to the Note, which notation, absent manifest error, shall be prima facie evidence of the amount of such Advance.
(c)
Each Lender shall record on its internal records the amount of its participation in each Advance and each payment in respect thereof, and the unpaid balance of such participation in such Advance shall, absent manifest error and to the extent not inconsistent with the notations made by the Facility Agent on the grid attached to the Note, be as so recorded.
(d)
The failure of the Facility Agent or any Lender to make any such notation shall not affect the obligation of the Borrower in respect of such Advance or the Loan nor affect the validity of any transfer by the Facility Agent of the Note.
(e)
On receipt of satisfactory evidence that the Note has been lost, mutilated or destroyed and on surrender of the remnants thereof, if any, the Borrower will promptly replace the Note, without charge to the Finance Parties, with a similar Note. If such replacement Note replaces a lost Note it shall bear an endorsement to that effect. Any lost Note subsequently found shall be surrendered to the Borrower and cancelled. The Facility Agent shall indemnify the Borrower for any losses, claims or damages resulting from the loss of such Note.

SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION
6
REPAYMENT
6.1
Repayment of Loan
The Borrower shall repay
(a)
Tranche A by three equal consecutive quarterly instalments, each in an amount of $330,000 (each a “ Tranche A Repayment Instalment ”), the first of which shall be repaid on the date falling three months after the Drawdown Date in respect of Tranche A, followed by a balloon payment in an amount of $17,510,000 on the Maturity Date (the “ Tranche A Balloon Payment ”);
(b)
Tranche B by three equal consecutive quarterly instalments, each in an amount of $350,000 (each a “ Tranche B Repayment Instalment ”), the first of which shall be repaid on the date falling three months after the Drawdown Date in respect of Tranche B, followed by a balloon payment in an amount of $18,450,000 on the Maturity Date (the “ Tranche B Balloon Payment ”);
(c)
Tranche C by three equal consecutive quarterly instalments, each in an amount of $370,000 (each a “ Tranche C Repayment Instalment ”), the first of which shall be repaid on the date falling three months after the Drawdown Date in respect of Tranche C, followed by a balloon payment in an amount of $19,390,000 on the Maturity Date (the “ Tranche C Balloon Payment ”); and
(d)
Tranche D by three equal consecutive quarterly instalments, each in an amount of $575,000 (each a “ Tranche D Repayment Instalment ” and, together with a Tranche A Repayment Instalment, a Tranche B Repayment Instalment, and a Tranche C Repayment Instalment, each a “ Repayment Instalment ”), the first of which shall be repaid on the date falling three months after the Drawdown Date in respect of Tranche D, followed by a balloon payment in an amount of $29,775,000 on the Maturity Date (the “ Tranche D Balloon Payment ” and, together with the Tranche A Balloon Payment, the Tranche B Balloon Payment and the Tranche C Balloon Payment, each a “ Balloon Payment ”).
6.2
Reduction of Repayment Instalments
If any part of a Tranche is cancelled, the Repayment Instalments in respect of such Tranche falling after that cancellation shall be reduced in inverse chronological order by the amount cancelled.
6.3
Maturity Date
On the Maturity Date, the Borrower shall additionally pay to the Facility Agent for the account of the Finance Parties all other sums then accrued and owing under the Finance Documents.
6.4
Re-borrowing
The Borrower may not re-borrow any part of the Facility which is repaid.
7
PREPAYMENT AND CANCELLATION
7.1
Illegality
(a)
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:
(i)
that Lender shall promptly notify the Facility Agent upon becoming aware of that event;
(ii)
upon the Facility Agent notifying the Borrower, the Available Commitment in respect of any Tranche of that Lender will be immediately cancelled; and
(iii)
the Borrower shall prepay that Lender’s participation in the Loan on the last day of the Interest Period for the Loan occurring after the Facility Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender’s corresponding Commitment shall be cancelled in the amount of the participation prepaid.
(b)
Any partial prepayment under this Clause 7.1 ( Illegality ) shall reduce pro rata the amount of each Repayment Instalment falling after that prepayment by the amount prepaid.
7.2
Automatic cancellation
(a)
The unutilized Commitment (if any) of each Lender for each Tranche shall be automatically cancelled at close of business on the date on which the Advance relating to such Tranche is made available.
7.3
Voluntary prepayment of Loan
(a)
The Borrower may, if it gives the Facility Agent not less than five Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of any Tranche (but, if in part, being an amount that reduces the amount of the relevant Tranche by a minimum amount of $500,000 or a multiple of that amount) on the last day of an Interest Period.
(b)
Any partial prepayment of a Tranche under this Clause 7.3 ( Voluntary prepayment of Loan ) shall reduce in inverse chronological order the amount of each Repayment Instalment (including the Balloon Payment) of such Tranche falling after that prepayment by the amount prepaid.
7.4
Mandatory prepayment on sale or Total Loss
If a Vessel is sold or becomes a Total Loss, the Borrower shall repay the Tranche applicable to that Vessel. Such repayment shall be made:
(a)
in the case of a sale of a Vessel, on or before the date on which the sale is completed by delivery of such Vessel to the buyer;
(b)
in the case of any arrest of a Vessel where a Vessel is not within 45 days redelivered to the full control of the relevant Guarantor, on or before the date falling 52 days after the date of the arrest of such Vessel; or
(c)
in the case of any other Total Loss, on the earlier of (i) the date falling 180 days after the Total Loss Date and (ii) the date of receipt by the Security Agent of the proceeds of insurance relating to such Total Loss.
7.5
Restrictions
(a)
Any notice of cancellation or prepayment given by any Party under this Clause 7 ( Prepayment and Cancellation ) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
(b)
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.
(c)
The Borrower may not re-borrow any part of the Facility which is prepaid.
(d)
The Borrower shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.
(e)
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
(f)
If the Facility Agent receives a notice under this Clause 7 ( Prepayment and Cancellation ) it shall promptly forward a copy of that notice to either the Borrower or the affected Lender, as appropriate.

SECTION 5

COSTS OF DRAWDOWN
8
INTEREST
8.1
Calculation of interest
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of:
(a)
the Margin; and
(b)
LIBOR.
8.2
Payment of interest
(a)
The Borrower shall pay accrued interest on the Loan or any part of the Loan on the last day of each Interest Period (each an “ Interest Payment Date ”).
(b)
If an Interest Period is longer than three Months, the Borrower shall also pay interest then accrued on the Loan or the relevant part of the Loan on the dates falling at three monthly intervals after the first day of the Interest Period.
8.3
Default interest
(a)
If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2 percent per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of a Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Facility Agent. Any interest accruing under this Clause 8.3 ( Default interest ) shall be immediately payable by the Obligor on demand by the Facility Agent.
(b)
If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan:
(i)
the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan; and
(ii)
the rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2 percent per annum higher than the rate which would have applied if that Unpaid Sum had not become due.
(c)
Default interest (if unpaid) accruing on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but will remain immediately due and payable.
8.4
Notification of rates of interest
The Facility Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement.
9
INTEREST PERIODS
9.1
Selection of Interest Periods
(a)
The first Interest Period for the Loan as specified in the first Drawdown Request shall be three Months from the Drawdown Date, unless otherwise agreed between the Borrower and the Facility Agent (acting on instructions of all Lenders).
(b)
Subject to paragraph (g) below, the Borrower may select each subsequent Interest Period in respect of the Loan in a Selection Notice.
(c)
Each Selection Notice is irrevocable and must be delivered to the Facility Agent by the Borrower not later than the Specified Time.
(d)
If the Borrower fails to deliver a Selection Notice to the Facility Agent in accordance with paragraphs (b) and (c) above, the relevant Interest Period will, subject to Clause 9.2 ( Changes to Interest Periods ) and paragraph (g) below, be three Months.
(e)
Subject to this Clause 9 ( Interest Periods ), the Borrower may select an Interest Period of three Months or any other period (up to a maximum of 12 Months) agreed between the Borrower and the Facility Agent (acting on the instructions of all the Lenders).
(f)
An Interest Period in respect of the Loan shall not extend beyond the Maturity Date.
(g)
In respect of a Repayment Instalment, an Interest Period for a part of the Loan equal to such Repayment Instalment shall end on the Repayment Date relating to it if such date is before the end of the Interest Period then current.
(h)
Subject to paragraph (i) below, the first Interest Period for the Loan shall start on the Drawdown Date and each subsequent Interest Period shall start on the last day of the preceding Interest Period.
(i)
Except for the purposes of paragraph (g) above, each Tranche shall have one Interest Period only at any time.
9.2
Changes to Interest Periods
(a)
If after the Borrower has selected and the Lenders have agreed an Interest Period longer than three Months, any Lender notifies the Facility Agent within two Business Days after the Specified Time relating to the relevant Drawdown Request or Selection Notice that it is not satisfied that deposits in dollars for a period equal to the Interest Period will be available to it in the Relevant Interbank Market when the Interest Period commences, the Facility Agent shall change the Interest Period to three Months.
(b)
If the Facility Agent makes any change to an Interest Period referred to in this Clause 9.2 ( Changes to Interest Periods ), it shall promptly notify the Borrower and the Lenders.
9.3
Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
10
CHANGES TO THE CALCULATION OF INTEREST
10.1
Absence of quotations
Subject to Clause 10.2 ( Market disruption ), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.
10.2
Market disruption
(a)
If a Market Disruption Event occurs in relation to an Advance or the Loan for any Interest Period, then the rate of interest on each Lender’s share of such Advance or the Loan for the Interest Period shall be the rate per annum which is the sum of:
(i)
the Margin; and
(ii)
the rate notified to the Facility Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the Advance or the Loan from whatever source it may reasonably select.
(b)
In this Agreement “ Market Disruption Event ” means:
(i)
at or about noon on the Quotation Day for the relevant Interest Period, LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Facility Agent to determine LIBOR for dollars for the relevant Interest Period; or
(ii)
before close of business in London on the Quotation Day for the relevant Interest Period, the Facility Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed 50 percent of the Loan) that the cost to it or them of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR; or
(iii)
at least one Business Day before the start of an Interest Period, the Facility Agent receives notification from a Lender (the “ Affected Lender ”) that for any reason it is unable to obtain dollars in the Relevant Interbank Market in order to fund its participation in the Advance or the Loan.
10.3
Alternative basis of interest or funding, suspension
(a)
If a Market Disruption Event occurs and the Facility Agent or the Borrower so requires, the Facility Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
(b)
Any substitute or alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties to the Finance Documents.
(c)
If a Market Disruption Event occurs before the Advance is made:
(i)
in circumstances falling within sub-paragraph (i) of paragraph (b) of Clause 10.2 ( Market disruption ) or sub-paragraph (ii) of paragraph (b) of Clause 10.2 ( Market disruption ), the Lenders’ obligation to make the Advance; or
(ii)
in circumstances falling within sub-paragraph (iii) of paragraph (b) of Clause 10.2 ( Market disruption ), the Affected Lender’s obligation to participate in the Advance,
shall be suspended while the circumstances giving rise to the Market Disruption Event continue.
10.4
Break Costs
(a)
The Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan or Unpaid Sum.
(b)
Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
11
FEES
11.1
Commitment fee
(a)
The Borrower shall pay to the Facility Agent (for the account of each Lender) a fee computed beginning on the date that is 45 days after the Commitment Date at the rate of 1.00 percent per annum on that Lender’s Available Commitment from time to time for the Availability Period.
(b)
The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of the Availability Period and, if cancelled, on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.
11.2
Upfront fee
The Borrower shall pay to the Facility Agent for its own account an upfront fee in the amount and at the times agreed in a Fee Letter.

SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS
12
TAX GROSS UP AND INDEMNITIES
12.1
Definitions
(a)
In this Agreement:
“ Protected Party ” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
“ Tax Credit ” means a credit against, relief or remission for, or repayment of any Tax.
“ Tax Deduction ” means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
“ Tax Payment ” means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 ( Tax gross-up ) or a payment under Clause 12.3 ( Tax indemnity ).
(b)
Unless a contrary indication appears, in this Clause 12 ( Tax Gross Up and Indemnities ) reference to “ determines ” or “ determined ” means a determination made in the absolute discretion of the person making the determination.
12.2
Tax gross-up
(a)
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
(b)
The Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a Lender it shall notify the Borrower and that Obligor.
(c)
If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required, provided, however, that this Clause 12.2(c) shall not apply to any Tax Deduction arising with respect to any Non-Indemnified Tax imposed on a Finance Party.
(d)
If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(e)
Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction or payment shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
12.3
Tax indemnity
(a)
The Borrower shall (within three Business Days of demand by the Facility Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
(b)
Paragraph (a) above shall not apply:
(i)
with respect to any Non-indemnified Tax assessed on a Finance Party; or
(ii)
to the extent a loss, liability or cost is compensated for by an increased payment under Clause 12.2 ( Tax gross-up ).
(c)
A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Borrower.
(d)
A Protected Party shall, on receiving a payment from an Obligor under this Clause 12.3 ( Tax indemnity ), notify the Facility Agent.
12.4
Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a)
a Tax Credit is attributable to (i) an increased payment of which that Tax Payment forms part, (ii) to that Tax Payment or (iii) to a Tax Deduction in consequence of which that Tax Payment was received; and
(b)
that Finance Party has obtained, utilized and retained that Tax Credit,
the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.
12.5
Stamp taxes
The Borrower shall pay and, within three Business Days of demand, indemnify each Creditor Party against any cost, loss or liability which that Creditor Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
12.6
VAT
(a)
All amounts expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that Party).
(b)
If VAT is or becomes chargeable on any supply made by any Finance Party (the “ Supplier ”) to any other Finance Party (the “ Recipient ”) under a Finance Document, and any Party other than the Recipient (the “ Relevant Party ”) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
(i)
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this sub-paragraph (i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(ii)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
(c)
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(d)
Any reference in this Clause 12.6 ( VAT ) to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time.
(e)
In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party’s VAT registration and such other information as is reasonably requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply.
12.7
FATCA Information
(a)
Subject to paragraph (c) below, each Party confirms to each other Party that it is a FATCA Exempt Party on the date of this Agreement (or in the case of a New Lender, on the date of its applicable Transfer Certificate, and except as otherwise indicated therein) and thereafter each Party shall, within ten Business Days of a reasonable request by another Party:
(i)
confirm to that other Party whether it is:
(A)
a FATCA Exempt Party; or
(B)
not a FATCA Exempt Party; and
(ii)
supply to that other Party such forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable), documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.
(b)
If a Party confirms to another Party pursuant to paragraph (a) above that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing 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, or that the IRS Form has ceased to be accurate or valid, that Party shall notify that other Party or provide a revised IRS Form, as applicable, reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Finance Party to do anything which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality;
provided that nothing in this paragraph shall excuse any Finance Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph.
(d)
If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
12.8
FATCA Deduction
(a)
Each Party may make any FATCA Deduction as it reasonably determines is required to be made by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
(b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower and the Facility Agent, and the Facility Agent shall notify the other Finance Parties.
(c)
If a FATCA Deduction is made as a result of any Finance Party failing to be a FATCA Exempt Party, such Party shall indemnify each other Finance Party against any loss, cost or expense to it resulting from such FATCA Deduction.
13
INCREASED COSTS
13.1
Increased costs
(a)
Subject to Clause 13.3 ( Exceptions ), the Borrower shall, within three Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:
(i)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or
(ii)
compliance with any law or regulation made,
after the date of this Agreement. Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and (ii) Basel III, and all requests, rules, guidelines and directives promulgated pursuant to the foregoing, are deemed to have been introduced or adopted after the date hereof, regardless of the date enacted or adopted.
(b)
In this Agreement, “ Increased Costs ” means:
(i)
a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;
(ii)
an additional or increased cost; or
(iii)
a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.
13.2
Increased cost claims
(a)
A Finance Party intending to make a claim pursuant to Clause 13.1 ( Increased costs ) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Borrower.
(b)
Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.
13.3
Exceptions
Clause 13.1 ( Increased costs ) does not apply to the extent any Increased Cost is:
(a)
attributable to a change in the rate of tax on the overall net income of a Finance Party;
(b)
compensated for by Clause 12.2 ( Tax gross-up ) or 12.3 ( Tax indemnity ) (or would have been compensated for under Clause 12.3 ( Tax indemnity ) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 ( Tax indemnity ) applied);
(c)
compensated for by any payment made pursuant to Clause 14.3 ( Mandatory Cost ); or
(d)
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or
(e)
relates to a Non-Indemnified Tax.
14
OTHER INDEMNITIES
14.1
Currency indemnity
(a)
If any sum due from an Obligor under the Finance Documents (a “ Sum ”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “ First Currency ”) in which that Sum is payable into another currency (the “ Second Currency ”) for the purpose of:
(i)
making or filing a claim or proof against that Obligor; or
(ii)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Obligor shall, as an independent obligation, on demand, indemnify each Creditor Party to which that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
14.2
Other indemnities
(a)
Each Obligor shall, on demand, indemnify each Creditor Party against any cost, loss or liability incurred by it as a result of:
(i)
the occurrence of any Event of Default;
(ii)
a failure by a Transaction Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 32 ( Sharing among the Finance Parties );
(iii)
funding, or making arrangements to fund, its participation in the Advance or the Loan requested by the Borrower in a Drawdown Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Creditor Party alone); or
(iv)
the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.
(b)
Each Obligor shall, on demand, indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 ( Other indemnities ) an “ Indemnified Person ”), against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory inquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Security constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, the Vessel unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.
(c)
Without limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
(i)
arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions; or
(ii)
in connection with any Environmental Claim.
(d)
Any Affiliate or any officer or employee of a Finance Party or of any of its Affiliates may rely on this Clause 14.2 ( Other indemnities ) subject to Clause 1.5 ( Third party rights ).
14.3
Mandatory Cost
The Borrower shall, on demand by the Facility Agent, pay to the Facility Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Facility Agent to be its good faith determination of the amount necessary to compensate it for complying with:
(a)
in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
(b)
in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the U.K. Financial Conduct Authority and/or the U.K. Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions),
which, in each case, is referable to that Lender’s participation in the Loan.
14.4
Indemnity to the Facility Agent
Each Obligor shall, on demand, indemnify the Facility Agent against:
(a)
any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of:
(i)
investigating any event which it reasonably believes is a Default; or
(ii)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorized; or
(iii)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents; and
(b)
any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent’s gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 33.11 ( Disruption to Payment Systems etc. ) notwithstanding the Facility Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent in acting as Facility Agent under the Finance Documents.
14.5
Indemnity to the Security Agent
(a)
Each Obligor shall, on demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them:
(i)
in relation to or as a result of:
(A)
any failure by the Borrower to comply with its obligations under Clause 16 ( Costs and Expenses );
(B)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorized;
(C)
the taking, holding, protection or enforcement of the Finance Documents and the Transaction Security;
(D)
the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;
(E)
any default by any Transaction Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents;
(F)
any action by any Transaction Obligor which vitiates, reduces the value of, or is otherwise prejudicial to, the Transaction Security; and
(G)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents.
(ii)
acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property or the performance of the terms of this Agreement or the other Finance Documents (otherwise, in each case, than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct).
(b)
The Security Agent and every Receiver and Delegate may, in priority to any payment to the Creditor Parties, indemnify itself out of the Security Assets in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.5 ( Indemnity to the Security Agent ) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it.
15
MITIGATION BY THE FINANCE PARTIES
15.1
Mitigation
(a)
Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 ( Illegality ), Clause 12 ( Tax Gross Up and Indemnities ), Clause 13 ( Increased Costs ) or paragraph (a) of Clause 14.3 ( Mandatory Cost ).
(b)
Paragraph (a) above does not in any way limit the obligations of any Transaction Obligor under the Finance Documents.
15.2
Limitation of liability
(a)
Each Obligor shall, on demand, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 ( Mitigation ).
(b)
A Finance Party is not obliged to take any steps under Clause 15 ( Mitigation by the Finance Parties ) if either:
(i)
An Event of Default has occurred and is continuing; or
(ii)
in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
16
COSTS AND EXPENSES
16.1
Transaction expenses
The Obligors shall, on demand, pay the Facility Agent, the Security Agent, the Arranger and the Underwriter the amount of all costs and expenses (including reasonable legal fees) reasonably incurred by any Creditor Party in connection with the negotiation, preparation, printing, execution, syndication and perfection of:
(a)
this Agreement and any other documents referred to in this Agreement;
(b)
the Transaction Security; and
(c)
any other Finance Documents executed after the date of this Agreement.
16.2
Amendment costs
If:
(a)
a Transaction Obligor requests an amendment, waiver or consent; or
(b)
an amendment is required pursuant to Clause 33.9 ( Change of currency ); or
(c)
a Transaction Obligor requests, and the Security Agent agrees to, the release of all or any part of the Security Assets from the Transaction Security,
the Obligors shall, on demand, reimburse each of the Facility Agent and the Security Agent for the amount of all costs and expenses (including reasonable legal fees) reasonably incurred by each Creditor Party in responding to, evaluating, negotiating or complying with that request or requirement.
16.3
Enforcement and preservation costs
The Obligors shall, on demand, pay to each Creditor Party the amount of all costs and expenses (including reasonable legal fees) incurred by that Creditor Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the Transaction Security and with any proceedings instituted by or against that Creditor Party as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights.

SECTION 7

GUARANTEE
17
GUARANTEE AND INDEMNITY
17.1
Guarantee and indemnity
In order to induce the Lenders to make the Loan to the Borrower, each Guarantor irrevocably and unconditionally jointly and severally:
(a)
guarantees to each Finance Party, as a primary obligor and not merely as a surety, punctual payment and performance by the Borrower of all the Borrower’s obligations under the Finance Documents;
(b)
undertakes with each Finance Party that whenever the Borrower does not pay any amount (whether for principal, interest, fees, expenses or otherwise) when due (whether at stated maturity, by acceleration or otherwise) under or in connection with any Finance Document, such Guarantor shall immediately on demand pay that amount as if it were the primary obligor; and
(c)
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of the Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by such Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 17 ( Guarantee and Indemnity ) if the amount claimed had been recoverable on the basis of a guarantee.
17.2
Continuing guarantee
This guarantee is a continuing guarantee that shall remain in full force and effect until the irrevocable payment and performance in full by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part. This guarantee constitutes a guarantee of punctual performance and payment and not merely of collection.
17.3
Reinstatement
If any discharge, release or arrangement (whether in respect of the obligations of Obligor or any security for those obligations or otherwise) is made by a Creditor Party in whole or in part on the basis of any payment, security or other disposition which is rescinded, discharged, avoided or reduced, or must be restored or returned, upon insolvency, bankruptcy, reorganization, liquidation, administration or otherwise, without limitation, then the liability of each Guarantor under this Clause 17 ( Guarantee and Indemnity ) will continue or be reinstated as if the discharge, release or arrangement had not occurred.
17.4
Waiver of defenses
The obligations of each Guarantor under this Clause 17 ( Guarantee and Indemnity ) and in respect of any Transaction Security are irrevocable, absolute and unconditional and shall not be affected or discharged by an act, omission, matter or thing which, but for this Clause 17.4 ( Waiver of defenses ), would reduce, release or prejudice any of its obligations under this Clause 17 ( Guarantee and Indemnity ) or in respect of any Transaction Security (without limitation and whether or not known to it or any Creditor Party) including (and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to):
(a)
any time, waiver or consent granted to, or composition with, any Obligor or other person;
(b)
the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any Security Asset;
(d)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the corporate or company structure, shareholders, members or status of an Obligor or any other person (including without limitation any change in the holding of such Obligor’s or other person’s Equity Interests);
(e)
any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
(f)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security;
(g)
any bankruptcy, insolvency or similar proceedings;
(h)
any election of remedies by a Creditor Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any Obligor, any other guarantor or any other person or entity or any Security Asset;
(i)
any right of set-off or counterclaim against or in respect of the obligations of such Guarantor hereunder; or
(j)
any other circumstance whatsoever that might otherwise constitute a defense available to, or a legal or equitable discharge of, any Obligor.
17.5
Other waivers
Each Guarantor hereby unconditionally and irrevocably waives:
(a)
promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice and this guarantee and any requirement that a Creditor Party protect, secure, perfect or insure any Security or any property subject thereto or exhaust any right or take any action against an Obligor, any other guarantor or any other person or entity or any Security Asset;
(b)
any right to revoke this guarantee; and
(c)
any duty on the part of an Obligor to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of that Obligor or any of their respective Subsidiaries now or hereafter known by any Creditor Party.
17.6
Acknowledgment of benefits
Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Finance Documents and that the waivers set forth in this Clause 17 ( Guarantee and Indemnity ) are knowingly made in contemplation of such benefits.
17.7
Immediate recourse
Each Guarantor waives any right it may have of first requiring any Creditor Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 17 ( Guarantee and Indemnity ). This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
17.8
Appropriations
Until all amounts which may be or become payable by the Transaction Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Creditor Party (or any trustee or agent on its behalf) may:
(a)
refrain from applying or enforcing any other moneys, security or rights held or received by that Creditor Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and
(b)
hold in an interest-bearing suspense account any moneys received from a Guarantor or on account of a Guarantor’s liability under this Clause 17 ( Guarantee and Indemnity ).
17.9
Deferral of Guarantors’ rights
All rights which a Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against the Borrower, any other Transaction Obligor or their respective assets shall be fully subordinated to the rights of the Creditor Parties under the Finance Documents and until the end of the Security Period and unless the Facility Agent otherwise directs, no Guarantor will exercise its rights which it may have (whether in respect of any Finance Document to which it is a Party or any other transaction) by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 17 ( Guarantee and Indemnity ):
(a)
to be indemnified by any Transaction Obligor;
(b)
to claim any contribution from any third party providing security for, or any other guarantor of, any Transaction Obligor’s obligations under the Finance Documents;
(c)
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Creditor Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Creditor Party;
(d)
to bring legal or other proceedings for an order requiring any Transaction Obligor to make any payment, or perform any obligation, in respect of which a Guarantor has given a guarantee, undertaking or indemnity under Clause 17.1 ( Guarantee and indemnity );
(e)
to exercise any right of set-off against any Transaction Obligor; and/or
(f)
to claim or prove as a creditor of any Transaction Obligor in competition with any Creditor Party.
If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Creditor Parties by the Transaction Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Creditor Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 33 ( Payment Mechanics ).
17.10
Additional security
This guarantee and any other Security given by each Guarantor is in addition to and is not in any way prejudiced by, and shall not prejudice, any other guarantee or Security or any other right of recourse now or subsequently held by any Creditor Party or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
17.11
Independent obligations
The obligations of each Guarantor under or in respect of this guarantee are independent of any other obligations of any other Obligor under or in respect of the Finance Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this guarantee irrespective of whether any action is brought against any other Obligor or whether any other Obligor is joined in any such action or actions.
17.12
Limitation of liability
Each of the Guarantors and each of the Creditor Parties hereby confirms that it is its intention that the obligations under this guarantee not constitute a fraudulent transfer or conveyance for purposes of the U.S. Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar law. To effectuate the foregoing intention, each of the Guarantors and each of the Creditor Parties hereby irrevocably agrees that the obligations guaranteed by each Guarantor under this guarantee shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, result in the obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
17.13
Applicability of provisions of Guarantee to other Security
Clauses 17.2 ( Continuing guarantee ), 17.3 ( Reinstatement ), 17.4 ( Waiver of defenses ), 17.5 ( Other waivers ), 17.6 ( Acknowledgment of benefits ), 17.7 ( Immediate recourse ), 17.8 ( Appropriations ), 17.9 ( Deferral of Guarantors’ rights ), 17.10 ( Additional security ), 17.11 ( Independent obligations ) and 17.12 ( Limitation of liability ) shall apply, with any necessary modifications, to any Security which a Guarantor creates (whether at the time at which it signs this Agreement or at any later time) to secure the Secured Liabilities or any part of them.

SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
18
REPRESENTATIONS
18.1
General
Each Obligor jointly and severally makes the representations and warranties set out in this Clause 18 ( Representations ) to each Finance Party on the date of this Agreement.
18.2
Status
(a)
It is a corporation duly incorporated and validly existing in good standing under the law of its jurisdiction of incorporation, formation or organization.
(b)
It and each Transaction Obligor has the power to own its assets and carry on its business as it is being conducted.
(c)
It is duly qualified and in good standing as a foreign company in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where, in each case, the failure to so qualify or be licensed and be in good standing could not reasonably be expected to have a Material Adverse Effect.
18.3
Equity Interests and ownership
(a)
All of the Equity Interests of the Borrower that are issued and outstanding have been validly issued, are fully paid and non-assessable.
(b)
All of the Equity Interests of each Guarantor have been validly issued, are fully paid and non-assessable and are owned beneficially and of record by the Borrower, free and clear of any Security (except for Permitted Security).
(c)
None of the Equity Interests of any Guarantor are subject to any existing option, warrant, call, right (including pre-emption rights or similar rights), commitment or other agreement of any character to which such Guarantor is a party requiring, and there are no Equity Interests of any Guarantor outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional Equity Interests of such Guarantor or other Equity Interests convertible into, exchangeable for or evidencing the right to subscribe for or purchase Equity Interests of any Guarantor.
18.4
Binding obligations
The obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
18.5
Validity, effectiveness and ranking of Security
(a)
Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery and, where applicable, registration as provided for in that Finance Document create the Security it purports to create over any assets to which such Security, by its terms, relates, and such Security will, when created, be valid and effective.
(b)
No third party has or will have any Security (except for Permitted Security) over any assets that are the subject of any Transaction Security granted by it.
(c)
The Transaction Security granted by it to the Security Agent or any other Creditor Party has or will when created or intended to be created have first ranking priority or such other priority it is expressed to have in the Finance Documents and is not subject to any prior ranking or pari passu ranking security.
(d)
No concurrence, consent or authorization of any person is required for the creation of or otherwise in connection with any Transaction Security.
18.6
Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
(a)
any law or regulation applicable to it;
(b)
its constitutional documents; or
(c)
any agreement or instrument binding upon it or any member of the Group or any member of the Group’s assets or constitute a default or termination event (however described) under any such agreement or instrument.
18.7
Power and authority
(a)
It has the power to enter into, perform and deliver, and has taken all necessary action to authorize:
(i)
its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and
(ii)
in the case of each Guarantor, the registration of the Vessel owned by it under the relevant Approved Flag.
(b)
No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
18.8
Validity and admissibility in evidence
All Authorizations required or desirable:
(a)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
(b)
to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
have been obtained or effected and are in full force and effect.
18.9
Governing law and enforcement
(a)
The choice of governing law of each Transaction Document to which it is a party will be recognized and enforced in its Relevant Jurisdictions.
(b)
Any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognized and enforced in its Relevant Jurisdictions.
18.10
Solvency; Insolvency Event; Creditor’s process
(a)
It is solvent because:
(i)
the sum of its assets, at a fair valuation, does and will exceed its liabilities, including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities;
(ii)
the present fair market saleable value of its assets is not and shall not be less than the amount that will be required to pay its probable liability on its then existing debts, including, to the extent they are reportable as such in accordance with IFRS, contingent liabilities, as they mature;
(iii)
it does not and will not have unreasonably small working capital with which to continue its business; and
(iv)
it has not incurred, does not intend to incur and does not believe it will incur, debts beyond its ability to pay such debts as they mature.
(b)
No Insolvency Event or any expropriation, attachment, sequestration, distress or execution process (or any analogous creditor's process in any jurisdiction) that affects any of its assets has been taken or, to its knowledge, is threatened in relation to a member of the Group.
18.11
No filing or registration or stamp taxes
Under the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which it is a party be registered, filed, recorded, notarized or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance Documents which is referred to in any legal opinion delivered pursuant to Clause 4 ( Conditions of Drawdown ) and which will be made or paid promptly after the date of the relevant Finance Document.
18.12
Deduction of Tax
It is not required to make any Tax Deduction from any payment it may make under any Finance Document to which it is a party.
18.13
No default
(a)
No Event of Default and, on the date of this Agreement and on each Drawdown Date, no Default is continuing or might reasonably be expected to result from the making of any Drawdown or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.
(b)
No other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject.
18.14
No misleading information
(a)
Any factual information provided by any member of the Group for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
(b)
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.
(c)
Nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading in any material respect.
18.15
Financial Statements
(a)
The Borrower’s Original Financial Statements were prepared in accordance with IFRS consistently applied unless expressly disclosed to the Facility Agent in writing to the contrary before the date of this Agreement.
(b)
The Borrower’s Original Financial Statements give a fair presentation of its financial position, results of operations and cash flows as at the end of the relevant Fiscal Year unless expressly disclosed to the Facility Agent in writing to the contrary before the date of this Agreement.
(c)
There has been no material adverse change in its or any Obligor’s assets, business or financial condition (or the assets, business or consolidated financial condition of the Group, in the case of the Borrower) since December 31, 2015.
(d)
The Borrower’s most recent financial statements delivered pursuant to Clause 19.2 ( Financial statements ):
(i)
have been prepared in accordance with Clause 19.4 ( Requirements as to financial statements ); and
(ii)
give a true and fair view of (if audited) or fairly represent (if unaudited) its financial condition as at the end of the relevant Fiscal Year and operations during the relevant Fiscal Year.
(e)
Since the date of the most recent financial statements delivered pursuant to Clause 19.2 ( Financial statements ) there has been no material adverse change in its or any Transaction Obligor’s business, assets or financial condition (or the business or consolidated financial condition of the Group, in the case of the Borrower).
18.16
Pari passu ranking
Its payment obligations under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
18.17
No proceedings pending or threatened
No litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code or any Sanctions) of or before any court, arbitral body or agency have (to the best of its knowledge and belief (having made due and careful inquiry)) been started or threatened against it or any member of the Group.
18.18
Validity and completeness of the Transaction Documents
(a)
Each of the Transaction Documents to which a Transaction Obligor is a party constitutes legal, valid, binding and enforceable obligations of each Transaction Obligor.
(b)
The copies of the Transaction Documents delivered to the Facility Agent before the date of this Agreement are true and complete copies.
(c)
No amendments or additions to the Transaction Documents have been agreed nor has any Transaction Obligor waived any of its respective rights under the Transaction Documents.
18.19
Valuations
(a)
All information supplied by it or on its behalf to an Approved Appraiser for the purposes of a valuation delivered to the Facility Agent in accordance with this Agreement was true and accurate as at the date it was supplied or (if appropriate) as at the date (if any) at which it is stated to be given.
(b)
It has not omitted to supply any information to an Approved Appraiser which, if disclosed, would adversely affect any valuation prepared by such Approved Appraiser.
(c)
There has been no change to the factual information provided pursuant to paragraph (a) above in relation to any valuation between the date such information was provided and the date of that valuation which, in either case, renders that information untrue or misleading in any material respect.
18.20
No breach of laws
It has not breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
18.21
No Charter
No Vessel is subject to any Charter other than a Permitted Charter.
18.22
Compliance with Environmental Laws
All Environmental Laws relating to the ownership, operation and management of each Vessel and the business of each Transaction Obligor (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.
18.23
No Environmental Claim
No Environmental Claim which, in any case, could reasonably be expected to (i) exceed $500,000, or (ii) result in a Material Adverse Effect, has been made or, to the knowledge of the Obligors, threatened against any member of the Group or any Vessel.
18.24
No Environmental Incident
No Environmental Incident has occurred and, to the knowledge of the Obligors, no person has claimed that an Environmental Incident has occurred.
18.25
ISM and ISPS Code compliance
All requirements of the ISM Code and the ISPS Code as they relate to each Guarantor, the Approved Manager and each Vessel have been complied with.
18.26
Taxes paid
(a)
It has timely filed or has caused to be filed all tax returns and other reports that it is required by law or regulation to file in the U.S. or any Relevant Jurisdiction, and has paid or caused to be paid all taxes, assessments and other similar charges that are due and payable in the U.S. or any Relevant Jurisdiction, other than any Taxes:
(i)
which (A) are not yet due and payable or (B) are being contested in good faith by appropriate proceedings and for which adequate reserves have been established and as to which such failure to have paid such Tax does not create any risk of sale, forfeiture, loss, confiscation or seizure of any of its assets or of criminal liability; or
(ii)
the non-payment of which could not reasonably be expected to have a Material Adverse Effect.
The charges, accruals, and reserves on its books respecting taxes are adequate in accordance with IFRS.
(b)
No material claim for any Tax has been asserted against it by any Relevant Jurisdiction or other taxing authority other than claims that are included in the liabilities for taxes in its most recent balance sheet or disclosed in the notes thereto, if any.
(c)
The execution, delivery, filing and registration or recording (if applicable) of the Finance Documents and the consummation of the transactions contemplated thereby will not cause any of the Creditor Parties to be required to make any registration with, give any notice to, obtain any license, permit or other authorization from, or file any declaration, return, report or other document with any governmental authority in any Relevant Jurisdiction.
(d)
No Taxes are required by any governmental authority in any Relevant Jurisdiction to be paid with respect to or in connection with the execution, delivery, filing, recording, performance or enforcement of any Finance Document.
(e)
The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents by any of the Creditor Parties will not cause such Creditor Party to be subject to taxation under any law or regulation of any governmental authority in any Relevant Jurisdiction of any Obligor.
(f)
It is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any stamp, registration or similar taxes be paid on or in relation to this Agreement or any of the other Finance Documents.
18.27
Financial Indebtedness
No Guarantor has any Financial Indebtedness outstanding other than as permitted by this Agreement.
18.28
Intellectual property
Except for those with respect to which the failure to own or license could not reasonably be expected to have a Material Adverse Effect, it owns or has the right to use all patents, trademarks, permits, service marks, trade names, copyrights, franchises, formulas, licenses and other rights with respect thereto, and has obtained assignment of all licenses and other rights of whatsoever nature, that are material to its business as currently contemplated without any conflict with the rights of others.
18.29
Good title to assets
(a)
It has good, valid and marketable title to, or valid leases or licenses of, and all appropriate Authorizations to use, the assets necessary to carry on its business as presently conducted.
(b)
It has not created and is not contractually bound to create any Security on or with respect to any of its assets, properties, rights or revenues, except for Permitted Security, and except as provided in this Agreement, it is not restricted by contract, applicable law or regulation or otherwise from creating Security on any of its assets, properties, rights or revenues.
18.30
Ownership
(a)
Each Guarantor is the sole legal and beneficial owner of the Vessel owned by it, its Earnings and its Insurances.
(b)
With effect on and from the date of its creation or intended creation, each Transaction Obligor will be the sole legal and beneficial owner of any asset that is the subject of any Transaction Security created or intended to be created by such Transaction Obligor.
(c)
The constitutional documents of each Obligor do not and could not restrict or inhibit any transfer of the shares of the Guarantors on creation or enforcement of the security conferred by the Security Documents.
18.31
Margin stock
It is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of any Advance will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock.
18.32
Place of business
For purposes of the UCC, it has only one place of business located at, or, if it has more than one place of business, the chief executive office from which it manages the main part of its business operations and conducts its affairs is located at:
9, Boulevard Charles III
Monaco 98000

It does not have a place of business in the U.S., the District of Columbia, the U.S. Virgin Islands, or any territory or insular possession subject to the jurisdiction of the U.S, other than its representative office at:
150 East 58 th Street
New York, New York, 10155

18.33
Pension plans
(a)
None of the Obligors or any ERISA Affiliate is a party to a Plan or a Multiemployer Plan and none of the Obligors is a party to a Foreign Pension Plan.
(b)
No Obligor is deemed to be an entity any of whose underlying assets constitute “plan assets” within the meaning of Section 3(42) of ERISA.
(c)
The execution and delivery of this Agreement by the Obligors and the consummation of the transactions hereunder will not involve any non-exempt “prohibited transaction” for purposes of Section 406 of ERISA or Section 4975 of the Code that could result in any liability to the Lenders under Section 502 of ERISA or Section 4975 of the Code, assuming, for this purpose, that the funds loaned to the Borrower by the Lenders under this Agreement are not themselves “plan assets” subject to ERISA or Section 4975 of the Code.
(d)
No ERISA Termination Event has occurred in the five years prior to the date of this Agreement.
(e)
No ERISA Funding Event exists or has occurred in the five years prior to the date of this Agreement.
18.34
Sanctions
(a)
No Obligor:
(i)
and no director or officer of a Transaction Obligor, is a Prohibited Person;
(ii)
is owned or controlled by or acting directly or, to the knowledge of the Borrower, indirectly on behalf of or for the benefit of, a Prohibited Person; or
(iii)
owns or controls a Prohibited Person.
(b)
No proceeds of the Loan shall be made available, directly or, to the knowledge of the Borrower, indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise directly or, to the knowledge of the Borrower, indirectly, applied in a manner or for a purpose prohibited by Sanctions.
18.35
Investment company, public utility, etc.
It is not:
(a)
an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended; or
(b)
a “public utility” within the meaning of the U.S. Federal Power Act of 1920, as amended.
18.36
Immunity; enforcement; submission to jurisdiction; choice of law
(a)
It is subject to civil and commercial law with respect to its obligations under the Finance Documents, and the execution, delivery and performance by it of the Finance Documents to which it is a party constitute private and commercial acts rather than public or governmental acts.
(b)
Neither it nor any of its properties has any immunity from suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment, set-off, execution of a judgment or from any other legal process in relation to any Finance Document.
(c)
It is not necessary under the laws of its jurisdiction of incorporation or formation, in order to enable any Creditor Party to enforce its rights under any Finance Document or by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document, that such Creditor Party should be licensed, qualified or otherwise entitled to carry on business in such Obligor's jurisdiction of incorporation or formation.
(d)
Other than the recording of the Mortgages in accordance with the laws of the Republic of The Marshall Islands and such filings as may be required in a Relevant Jurisdiction in respect of certain of the Finance Documents, and the payment of fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any of them or any document relating thereto be registered, filed recorded or enrolled with any court or authority in any Relevant Jurisdiction.
(e)
The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents by any of the Creditor Parties will not cause such Creditor Party to be deemed to be resident, domiciled or carrying on business in any Relevant Jurisdiction of any Obligor or subject to taxation under any law or regulation of any governmental authority in any Relevant Jurisdiction of any Obligor.
(f)
Under the law of its jurisdiction of incorporation or formation, the choice of the law of New York to govern this Agreement and the other Finance Documents to which New York law is applicable is valid and binding.
(g)
The submission by it to the jurisdiction of the New York State courts and the U.S. Federal court sitting in New York County pursuant to Clause 46.1 ( Jurisdiction ) is valid and binding and not subject to revocation, and service of process effected in the manner set forth in Clause 48.2 (Service of process) will be effective to confer personal jurisdiction over it in such courts.
18.37
Repetition
The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of each Drawdown Request and the first day of each Interest Period.
19
INFORMATION UNDERTAKINGS
19.1
General
The undertakings in this Clause 19 ( Information Undertakings ) remain in force throughout the Security Period unless the Facility Agent, acting with the authorization of the Majority Lenders (or, where specified, all the Lenders), may otherwise permit.
19.2
Financial statements
(a)
Subject to paragraph (b) below, the Borrower shall supply to the Facility Agent electronic copies:
(i)
as soon as it becomes available, but in any event within 180 days after the end of each of its Fiscal Years an annual report on Form 20-F (or any successor form) containing the audited financial and other information required to be contained therein for such Fiscal Year of the Borrower;
(ii)
as soon as the same become available, but in any event within 90 days after the end of the first, second and third quarter of each of its Fiscal Years:
(A)
the unaudited consolidated financial statement of the Borrower for that quarter of that Fiscal Year on Form 6-K (or any successor form); and
(B)
as soon as possible, but in no event later than 90 days after the end of each of its Fiscal Years an annual budget for the Borrower.
(b)
To the extent that the financial statements and other information required to be provided by the Borrower to the Facility Agent under paragraph (a) above are published on the internet by, or on behalf of the Borrower, notice of such publication must be made within 5 Business Days of such publication.
19.3
Compliance Certificate
(a)
The Borrower shall supply to the Facility Agent, with each set of financial statements delivered pursuant to sub-paragraphs (i) and (ii) of paragraph (a) of Clause 19.2 ( Financial statements ), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 20 ( Financial Covenants ) as at the date as at which those financial statements were drawn up.
(b)
Each Compliance Certificate shall be signed by the chief financial officer (or equivalent) of the Borrower as appropriate and, if required to be delivered with the financial statements delivered pursuant to sub-paragraphs (i) and (ii) of paragraph (a) of Clause 19.2 ( Financial statements ), shall be reported on by the Borrower’s auditors in the form agreed by the Borrower and all the Lenders before the date of this Agreement.
19.4
Requirements as to financial statements
(a)
Each set of financial statements delivered by the Borrower pursuant to Clause 19.2 ( Financial statements ) shall be certified by the chief financial officer (or equivalent) of the relevant Obligor as being a fair presentation of the financial position, results of operations and cash flows of such Obligor as at the date as at which those financial statements were prepared.
(b)
The Borrower shall procure that each set of financial statements delivered pursuant to Clause 19.2(a)(i) ( Financial statements ) was audited by an Acceptable Accounting Firm.
(c)
The Borrower shall procure that each set of financial statements delivered pursuant to Clause 19.2 ( Financial statements ) is prepared using IFRS, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements for the Borrower unless, in relation to any set of financial statements, it notifies the Facility Agent that there has been a change in IFRS, the accounting practices or reference periods and its auditors (or, if appropriate, the auditors of the Borrower) deliver to the Facility Agent:
(i)
a description of any change necessary for those financial statements to reflect the IFRS, accounting practices and reference periods upon which the Borrower’s Original Financial Statements were prepared; and
(ii)
sufficient information, in form and substance as may be reasonably required by the Facility Agent, to enable the Lenders to determine whether Clause 20 ( Financial Covenants ) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Borrower’s Original Financial Statements.
Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.
19.5
Information: miscellaneous
Each Obligor shall supply to the Facility Agent in electronic format:
(a)
all documents dispatched by it to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;
(b)
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) which are current, threatened or pending against any member of the Group, and which might, if adversely determined, have a Material Adverse Effect;
(c)
promptly, its constitutional documents where these have been amended or varied;
(d)
promptly, such further information and/or documents regarding:
(i)
each Vessel, goods transported on each Vessel, its Earnings or its Insurances;
(ii)
the Security Assets;
(iii)
compliance of the Transaction Obligors with the terms of the Finance Documents;
(iv)
the financial condition, business and operations of any Obligor,
as any Finance Party (through the Facility Agent) may reasonably request; and
(e)
promptly, such further information and/or documents as any Finance Party (through the Facility Agent) may reasonably request so as to enable such Finance Party to comply with any laws applicable to it or as may be required by any regulatory authority (including without limitation compliance with FATCA).
19.6
Notification of Default
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor shall, notify the Facility Agent (i) of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor); and (ii) promptly upon becoming aware of the same, of any breach of any Sanctions applicable to a Vessel, any Transaction Obligor or any party to any agreement relating to a Vessel.
(b)
Promptly upon a request by the Facility Agent, the Borrower shall supply to the Facility Agent a certificate signed by its chief financial officer (or another executive officer) on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
19.7
Use of websites
(a)
Each Obligor may satisfy its obligation under the Finance Documents to which it is a party to deliver any information in relation to the Lenders by posting this information onto an electronic website designated by the Borrower and the Facility Agent (the “ Designated Website ”) if:
(i)
the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii)
both the relevant Obligor and the Facility Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii)
the information is in a format previously agreed between the relevant Obligor and the Facility Agent.
(b)
The Facility Agent shall supply each Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Obligors or any of them and the Facility Agent.
(c)
An Obligor shall promptly upon becoming aware of its occurrence notify the Facility Agent if:
(i)
the Designated Website cannot be accessed due to technical failure;
(ii)
the password specifications for the Designated Website change;
(iii)
any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv)
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v)
the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.
If an Obligor notifies the Facility Agent under sub-paragraph (i) or (v) of paragraph (c) above, all information to be provided by the Obligors under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
19.8
“Know your customer” checks
(a)
If:
(i)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)
any change in the status of an Obligor (including, without limitation, a change of ownership of an Obligor) after the date of this Agreement; or
(iii)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges a Finance Party (or, in the case of sub-paragraph (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of any Finance Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by a Servicing Party (for itself or on behalf of any other Finance Party) or any Lender (for itself or, in the case of the event described in sub-paragraph (iii) above, on behalf of any prospective new Lender) in order for such Finance Party or, in the case of the event described in sub-paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(b)
Each Lender shall promptly upon the request of a Servicing Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Servicing Party (for itself) in order for that Servicing Party 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.
19.9
Change of place of business
The Borrower shall notify the Facility Agent promptly of any change in the location of the place of business where an Obligor conducts its affairs and keeps its records.
19.10
Information provided to be accurate
All financial and other information which is provided in writing by or on behalf of any Obligor under or in connection with any Finance Document shall be true and not misleading and shall not omit any material fact or consideration.
20
FINANCIAL COVENANTS
20.1
Financial covenants
The undertakings in this Clause 20 ( Financial Covenants ) remain in force throughout the Security Period except as the Facility Agent, acting with the authorization of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
20.2
Maximum leverage
The Borrower shall maintain a ratio of Consolidated Funded Debt to Consolidated Total Capitalization of not more than .60 to 1.00, to be tested on the last day of each fiscal quarter.
20.3
Minimum Consolidated Tangible Net Worth
The Borrower shall maintain a Consolidated Tangible Net Worth greater than $677,286,768 plus (a) 25 percent of the Borrower’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after October 1, 2013, and (b) 50 percent of the Equity Proceeds realized from the issuance of Equity Interests in the Borrower occurring on or after October 1, 2013.
20.4
Minimum interest coverage
The Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of not less than 2.50 to 1.00. Such ratio shall be calculated quarterly on the last day of each fiscal quarter on a trailing four quarters basis.
20.5
Free liquidity
The Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any bank, of not less than the greater of (a) $25,000,000 and (b) $500,000 per vessel owned by a wholly owned direct or indirect subsidiary of the Borrower (including, but not limited to, the Vessels).
21
GENERAL UNDERTAKINGS
21.1
General
The undertakings in this Clause 21 ( General Undertakings ) remain in force throughout the Security Period except as the Facility Agent, acting with the authorization of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
21.2
Authorizations
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly:
(a)
obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)
supply certified copies to the Facility Agent of,
any Authorization required under any law or regulation of a Relevant Jurisdiction or the state of the Approved Flag at any time of each Vessel to enable it to:
(i)
perform its obligations under the Transaction Documents to which it is a party;
(ii)
ensure the legality, validity, enforceability or admissibility in evidence in any Relevant Jurisdiction or in the state of the Approved Flag at any time of each Vessel or any Transaction Document to which it is a party; and
(iii)
own and operate the relevant Vessel (in the case of each Guarantor).
21.3
Compliance with laws
Each Obligor shall, and shall procure that each other Transaction Obligor will, comply in all respects with all laws and regulations to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
21.4
Environmental compliance
Each Obligor shall, and shall procure that each other Transaction Obligor will:
(a)
comply with all Environmental Laws;
(b)
obtain, maintain and ensure compliance with all requisite Environmental Approvals;
(c)
implement procedures to monitor compliance with and to prevent liability under any Environmental Law,
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
21.5
Environmental claims
Each Obligor shall, and shall procure that each other Transaction Obligor will (through the Borrower), promptly upon becoming aware of the same, inform the Facility Agent in writing of:
(a)
any Environmental Claim against any Transaction Obligor which is current, pending or threatened; and
(b)
any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any Transaction Obligor,
where the claim, if determined against that Transaction Obligor, has or is reasonably likely to have a Material Adverse Effect.
21.6
Environmental Incidents
Each Obligor shall, and shall procure that each other Transaction Obligor will, take, or cause to be taken, such actions as may be reasonably required to mitigate potential liability to it arising out of Environmental Incidents or as may be reasonably required to protect the interests of the Creditor Parties with respect thereto.
21.7
Taxation
(a)
Each Obligor shall pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
(i)
such payment is being contested in good faith;
(ii)
adequate reserves are maintained for those Taxes and the costs required to contest them have been disclosed in its latest financial statements delivered to the Facility Agent under Clause 19.2 ( Financial statements ); and
(iii)
such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.
(b)
No Obligor shall change its residence for Tax purposes.
21.8
Performance of obligations
Each Obligor shall, and shall procure that each other Transaction Obligor will, duly observe and perform its obligations under each Finance Document to which it is or is to become a party.
21.9
Pari passu ranking
Each Obligor shall, and shall procure that each other Transaction Obligor will, ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
21.10
Title
(a)
Each Guarantor shall, in respect of the Vessel owned by it, hold the legal title to, and own the entire beneficial interest in:
(i)
such Vessel, its Earnings and its Insurances; and
(ii)
with effect on and from its creation or intended creation, any other assets the subject of any Transaction Security created or intended to be created by such Guarantor.
(b)
The Borrower shall hold the legal title to, and own the entire beneficial interest in with effect on and from its creation or intended creation, any assets the subject of any Transaction Security created or intended to be created by the Borrower.
21.11
Books of record and account; separate accounts
(a)
Each of the Obligors shall keep separate and proper books of record and account in which full and materially correct entries shall be made of all financial transactions and the assets and business of each of such Obligor in accordance with IFRS, and the Facility Agent shall have the right to examine the books and records of such Obligor wherever the same may be kept from time to time as it sees fit, in its sole reasonable discretion, or to cause an examination to be made by a firm of accountants selected by it, provided that any examination shall be done only once annually so long as no Event of Default has occurred and is continuing and without undue interference with the day to day business operations of such Obligor.
(b)
Each of the Obligors shall keep separate accounts and shall not co-mingle assets with each other or any other person nor become a member of a VAT Group.
21.12
Separate existence in good standing
Each Obligor shall do or cause to be done all things necessary to preserve and keep in full force and effect its separate identity and existence in good standing under the laws of its jurisdiction of incorporation.
21.13
Conduct of business
(a)
The Borrower shall conduct business only in connection with, or for the purpose of, owning, managing, chartering and operating the Vessels and other vessels and directly or indirectly owning the Equity Interests of each Guarantor and other vessel owning companies.
(b)
Each Guarantor shall conduct business only in connection with, or for the purpose of, owning, managing, chartering and operating the Vessel owned by it.
(c)
Each Obligor shall conduct business in its own name and observe all corporate and other formalities required by its constitutional documents.
21.14
Properties
(a)
Except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect, each Obligor shall maintain and preserve all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.
(b)
Each Obligor shall obtain and maintain good and marketable title or the right to use or occupy all real and personal properties and assets (including intellectual property) reasonably required for the conduct of its business.
(c)
Each Obligor shall maintain and protect its intellectual property and conduct its business and affairs without infringement of or interference with any intellectual property of any other person in any material respect and shall comply in all material respects with the terms of its licenses.
21.15
Loan proceeds
The Borrower shall use the proceeds of the Loan solely to partially refinance the Existing Indebtedness and for other general corporate purposes.
21.16
Subordination of loans
Each Guarantor shall cause all loans made to it by any Affiliate (with the exception of permitted credits not exceeding $250,000 per Vessel owed to each Approved Manager), parent or subsidiary and all sums and other obligations (financial or otherwise) owed by it to any Affiliate, parent or subsidiary to be fully subordinated to all Secured Liabilities pursuant to a Subordination Agreement.
21.17
Asset control
Each Obligor shall to the best of its knowledge and ability ensure that it is not owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and does not own or control a Prohibited Person.
21.18
Sanctions
(a)
Each Obligor shall ensure that no part of the proceeds of the Loan or other transactions contemplated by this Agreement or any other Finance Document shall, directly or, to its knowledge, indirectly, be used or otherwise made available:
(i)
to fund any trade, business or other activity involving any Prohibited Person;
(ii)
for the direct or indirect benefit of any Prohibited Person; or
(iii)
in any other manner that would reasonably be expected to result in (1) the occurrence of an Event of Default under Clause 26.18 (Prohibited Person), or (2) any Affiliate of an Obligor or any other person being party to or benefitting from any Finance Document being in breach of any Sanctions (if and to the extent applicable to any of them) or becoming a Prohibited Person.
(b)
Each Obligor shall ensure that its assets (including, without limitation, each Vessel) shall not be used directly or, to its knowledge, indirectly:
(i)
by or for the direct or indirect benefit of any Prohibited Person; or
(ii)
in any trade which is prohibited under applicable Sanctions or which could reasonably be expected to expose any Obligor, any asset subject to Security under the Finance Documents, any Creditor Party, any other person being party to or benefitting from any Finance Document, any Approved Manager, any operator, crew or insurers to enforcement proceedings or any other consequences whatsoever arising from Sanctions.
21.19
Money laundering
Each Obligor shall to the best of its knowledge and ability comply, and cause each of its Subsidiaries to comply, with any applicable law or regulation implemented to combat “money laundering”, including without limitation the PATRIOT Act and the Bank Secrecy Act.
21.20
Pension plans
Promptly upon the institution of a Plan, a Multiemployer Plan or a Foreign Pension Plan by any Obligor, the Borrower shall furnish or cause to be furnished to the Facility Agent written notice thereof and, if requested by the Facility Agent or any Lender, a copy of such Plan, Multiemployer Plan or Foreign Pension Plan.
21.21
Maintenance of status
(a)
The Borrower will:
(i)
maintain its separate corporate existence and remain in good standing under the laws of the Republic of The Marshall Islands;
(ii)
remain listed on the New York Stock Exchange; and
(iii)
procure that each Guarantor shall maintain its separate corporate existence and remain in goodstanding under the laws of the Republic of The Marshall Islands.
21.22
Securitization
Each Obligor shall, and the Obligors shall procure that each Transaction Obligor will provide such information as required by the Facility Agent and/or any Lender in order to effect a securitization (or similar transaction) in respect of the Facility and the Finance Documents and such Transaction Obligor’s reasonable costs for providing such assistance shall be met by the relevant Lender.
21.23
Negative pledge
(a)
No Obligor shall create or permit to subsist any Security over any of its assets (including without limitation in the case of each Guarantor its Equity Interests) subject to the Security created or intended to be created by the Finance Documents.
(b)
No Obligor shall:
(i)
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor or any other member of the Group;
(ii)
sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(iii)
enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(iv)
enter into any other preferential arrangement having a similar effect,
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
(c)
Paragraphs (a) and (b) above do not apply to any Permitted Security.
21.24
Disposals
(a)
No Obligor shall enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of all or substantially all of its assets (including without limitation any Vessel, its Earnings or its Insurances) unless the applicable portion of the Loan is repaid in accordance with the provisions of Clause 7.4 ( Mandatory prepayment on sale or Total Loss ).
(b)
Paragraph (a) above does not apply to any Charter to which Clause 23.16 ( Restrictions on chartering, appointment of managers etc. ) applies or to any Approved Pooling Arrangement.
21.25
Merger
No Obligor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction.
21.26
Change of business
(a)
The Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower or the Group from that carried on at the date of this Agreement.
(b)
No Guarantor shall engage in any business other than the ownership, operation and employment of the Vessel owned by it.
21.27
Financial Indebtedness
No Guarantor shall, incur or permit to be outstanding any Financial Indebtedness except Permitted Financial Indebtedness.
21.28
Expenditure
Neither the Borrower nor any Guarantor shall incur any expenditure, except for expenditure reasonably incurred in the ordinary course of owning, operating, maintaining and repairing its Vessel.
21.29
Equity Interests
No Guarantor shall:
(a)
purchase, cancel, redeem or retire any of its Equity Interests;
(b)
increase or reduce its authorized Equity Interests;
(c)
issue any additional Equity Interests except to the Borrower and provided such new Equity Interests are made subject to the terms of the Shares Security applicable to that Guarantor immediately upon the issue thereof in a manner satisfactory to the Facility Agent and the terms of the Shares Security are complied with;
(d)
appoint any additional directors or officers (or equivalent) of that Guarantor (unless the provisions of the Shares Security applicable to that Guarantor are complied with).
21.30
Dividends
No Guarantor shall make or pay (or set aside any funds to pay) any dividend or other distribution (in cash or in kind) in respect of its Equity Interests following the occurrence of a Potential Event of Default or where the making or payment of such dividend or distribution would result in the occurrence of an Event of Default.
21.31
Accounts
No Guarantor shall open or maintain any account with any bank or financial institution except the Accounts for the purposes of the Finance Documents.
21.32
Other transactions
No Guarantor shall:
(a)
be the creditor in respect of any loan or any form of credit to any person other than another Obligor and where such loan or form of credit is Permitted Financial Indebtedness;
(b)
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which that Guarantor assumes any liability of any other person other than any guarantee or indemnity given under the Finance Documents.
(c)
enter into any material agreement other than:
(i)
the Transaction Documents;
(ii)
any other agreement expressly allowed under any other term of this Agreement; and
(d)
enter into any transaction or series of transactions on terms which are, in any respect, less favorable to that Guarantor than those which it could obtain in a bargain made at arms’ length; or
(e)
acquire any shares or other securities other than U.S. or U.K. Treasury bills and certificates of deposit issued by major North American or European banks.
21.33
Unlawfulness, invalidity and ranking; Security imperiled
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
(a)
make it unlawful for a Transaction Obligor to perform any of its obligations under the Transaction Documents;
(b)
cause any obligation of a Transaction Obligor under the Transaction Documents to cease to be legal, valid, binding or enforceable;
(c)
cause any Transaction Document to cease to be in full force and effect;
(d)
cause any Transaction Security to rank after, or lose its priority to, any other Security; and
(e)
imperil or jeopardize the Transaction Security.
21.34
Changes to Fiscal Year
No Obligor shall change its Fiscal Year or its year end accounting reference date.
21.35
Jurisdiction of incorporation; Amendment of constitutional documents
No Obligor shall change the jurisdiction of its incorporation. No Guarantor shall amend its constitutional documents. The Borrower shall not amend its constitutional documents in any manner that would adversely affect its obligations under this Agreement or any other Finance Document to which it is a party.
21.36
Change of location
No Obligor shall change the location of its chief executive office or the office where its corporate records are kept or open any new office for the conduct of its business on less than thirty (30) days prior written notice to the Facility Agent.
21.37
Further assurance
(a)
Each Obligor shall promptly, and in any event within the time period specified by the Security Agent do all such acts (including procuring or arranging any registration, notarization or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgments, proxies and powers of attorney), as the Security Agent may specify (and in such form as the Security Agent may require in favor of the Security Agent or its nominee(s)):
(i)
to create, perfect, vest in favor of the Security Agent or protect the priority of the Security or any right of any kind created or intended to be created under or evidenced by the Finance Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent, any Receiver or the Creditor Parties provided by or pursuant to the Finance Documents or by law;
(ii)
to confer on the Security Agent or confer on the Creditor Parties Security over any property and assets of that Obligor located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Finance Documents;
(iii)
to facilitate or expedite the realization and/or sale of, the transfer of title to or the grant of, any interest in or right relating to the assets which are, or are intended to be, the subject of the Transaction Security or to exercise any power specified in any Finance Document in respect of which the Security has become enforceable; and/or
(iv)
to enable or assist the Security Agent to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to any item of the Security Property.
(b)
Each Obligor shall, and shall procure that each Transaction Obligor will, take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Creditor Parties by or pursuant to the Finance Documents.
(c)
At the same time as an Obligor delivers to the Security Agent any document executed by itself or another Transaction Obligor pursuant to this Clause 21.37 ( Further assurance ), that Obligor shall deliver, or shall procure that such other Transaction Obligor will deliver, to the Security Agent a certificate signed by an officer (or equivalent) of that Obligor’s or Transaction Obligor’s which shall:
(i)
set out the text of a resolution of that Obligor’s directors (or equivalent governing body) specifically authorizing the execution of the document specified by the Security Agent; and
(ii)
state that either the resolution was duly passed at a meeting of the directors (or equivalent governing body) 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 (or equivalent governing body) and is valid under that Obligor’s or Transaction Obligor’s constitutional documents.
22
INSURANCE UNDERTAKINGS
22.1
General
The undertakings in this Clause 22 ( Insurance Undertakings ) remain in force on and from each Drawdown Date and throughout the rest of the Security Period except as the Facility Agent, acting with the authorization of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
22.2
Maintenance of obligatory insurances
Each Guarantor shall keep the Vessel owned by it insured at its expense against:
(a)
hull and machinery plus freight interest and hull interest and/or increased value and any other usual marine risks (including excess risks);
(b)
war risks (including the London Blocking and Trapping addendum or its equivalent);
(c)
protection and indemnity risks (including liability for oil pollution for an amount of no less than $1,000,000,000 and excess war risk P&I cover) on standard Club Rules, covered by a Protection and Indemnity association which is a member of the International Group of Protection and Indemnity Associations (or, if the International Group ceases to exist, any other leading protection and indemnity association or other leading provider of protection and indemnity insurance) (including, without limitation, the proportion (if any) of any collision liability not covered under the terms of the hull cover);
(d)
freight, demurrage and defense; and
(e)
any other risks against which the Facility Agent acting on the instructions of the Majority Lenders considers, having regard to practices and other circumstances prevailing at the relevant time, it would be reasonable for that Guarantor to insure and which are specified by the Facility Agent by notice to such Guarantor.
22.3
Terms of obligatory insurances
Each Guarantor shall effect such insurances in respect of the Vessel owned by it:
(a)
in Dollars;
(b)
in the case of hull and machinery and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of:
(i)
an amount which, when aggregated with the insured value of the other Vessels then financed under this Agreement, equals to 120 percent of the Loan; and
(ii)
the Market Value of the Vessel owned by it;
(c)
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market, which amount is currently $1,000,000,000;
(d)
in the case of protection and indemnity risks, in respect of the full tonnage of such Vessel;
(e)
in the case of the hull and machinery insurance, on the basis that the deductible is not higher than the Major Casualty figure;
(f)
in the case where such Vessel is insured on a fleet policy, on the basis that each vessel insured on that fleet policy is deemed to be insured on an individual basis;
(g)
on approved terms, such terms to be disclosed to the Facility Agent at least 5 days prior to the Drawdown Date in respect of such Vessel; and
(h)
through Approved Insurance 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.
22.4
Further protections for the Finance Parties
In addition to the terms set out in Clause 22.3 ( Terms of obligatory insurances ), each Guarantor shall procure that the obligatory insurances shall:
(a)
subject always to paragraph (b), name that Guarantor as the named insured unless the interest of every other named insured is limited:
(i)
in respect of any obligatory insurances for hull and machinery and war risks;
(A)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
(ii)
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;
and every other named insured has undertaken in writing to the Security Agent (in such form as it requires) that any deductible shall be apportioned between that Guarantor and every other named insured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
(b)
whenever the Facility Agent requires, name (or be amended to name) the Security Agent as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Agent, but without the Security Agent being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
(c)
name the Security Agent as loss payee with such directions for payment as the Facility Agent may specify;
(d)
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever;
(e)
provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Agent or any other Finance Party; and
(f)
provide that the Security Agent may make proof of loss if that Guarantor fails to do so.
22.5
Renewal of obligatory insurances
Each Guarantor shall:
(a)
at least 10 days before the expiry of any obligatory insurance:
(i)
notify the Facility Agent of the Approved Insurance Brokers (or other insurers) and any protection and indemnity or war risks association through or with which it proposes to renew that obligatory insurance and of the proposed terms of renewal; and
(ii)
obtain the Facility Agents’ approval to the matters referred to in sub-paragraph (i) of paragraph (a) above;
(b)
at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Facility Agent’s approval pursuant to paragraph (a) above; and
(c)
procure that the Approved Insurance Brokers and/or the approved war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Facility Agent in writing of the terms and conditions of the renewal.
22.6
Copies of policies; letters of undertaking
Each Guarantor shall ensure that the Approved Insurance Brokers provide the Security Agent with:
(a)
pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew; and
(b)
a letter or letters or undertaking in a form required by the Facility Agent and including undertakings by the Approved Insurance Brokers that:
(i)
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 22.4 ( Further protections for the Finance Parties );
(ii)
they will hold such policies, and the benefit of such insurances, to the order of the Security Agent in accordance with such loss payable clause;
(iii)
they will advise the Security Agent immediately of any material change to the terms of the obligatory insurances;
(iv)
they will, if they have not received notice of renewal instructions from the relevant Guarantor or its agents, notify the Security Agent not less than 14 days before the expiry of the obligatory insurances;
(v)
if they receive instructions to renew the obligatory insurances, they will promptly notify the Facility Agent of the terms of the instructions;
(vi)
they will not set off against any sum recoverable in respect of a claim relating to the Vessel owned by that Guarantor under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Vessel 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
(vii)
they will arrange for a separate policy to be issued in respect of the Vessel owned by that Guarantor forthwith upon being so requested by the Facility Agent.
22.7
Copies of certificates of entry
Each Guarantor shall ensure that any protection and indemnity and/or war risks associations in which the Vessel owned by it is entered provide the Security Agent with:
(a)
a certified copy of the certificate of entry for that Vessel;
(b)
a letter or letters of undertaking in such form as may be required by the Facility Agent; 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 that Vessel.
22.8
Deposit of original policies
Each Guarantor shall ensure that all policies relating to obligatory insurances are deposited with the Approved Insurance Brokers through which the insurances are effected or renewed.
22.9
Payment of premiums
Each Guarantor 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 Facility Agent or the Security Agent.
22.10
Guarantees
Each Guarantor 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.
22.11
Compliance with terms of insurances
(a)
No Guarantor shall do or 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.
(b)
Without limiting paragraph (a) above, each Guarantor shall:
(i)
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 sub-paragraph (iii) of paragraph (b) of Clause 22.6 ( Copies of policies; letters of undertaking )) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Facility Agent has not given its prior approval;
(ii)
not make any changes relating to the classification or classification society or manager or operator of the Vessel owned by it approved by the underwriters of the obligatory insurances;
(iii)
make (and promptly supply copies to the Facility Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel owned by it is entered to maintain cover for trading to the U.S. and the Exclusive Economic Zone (as defined in the United States Oil Pollution Act of 1990, as amended, or any other applicable legislation); and
(iv)
not employ the Vessel owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
22.12
Alteration to terms of insurances
No Guarantor shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.
22.13
Settlement of claims
Each Guarantor shall:
(a)
not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty without the consent of the Facility Agent, such consent not to be unreasonably withheld; and
(b)
do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.
22.14
Provision of copies of communications
Each Guarantor shall provide the Security Agent, at the time of each such communication, with copies of any material written communications between that Guarantor and:
(a)
the Approved Insurance Brokers;
(b)
the approved protection and indemnity and/or war risks associations; and
(c)
the approved insurance companies and/or underwriters,
which relate directly or indirectly to:
(i)
that Guarantor’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)
any credit arrangements made between that Guarantor and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.
22.15
Provision of information
Each Guarantor shall promptly provide the Facility Agent (or any persons which it may designate) with any information which the Facility Agent (or any such designated person) requests for the purpose of:
(a)
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 22.16 ( Mortgagee’s interest, additional perils and mortgagee’s rights insurances ) or dealing with or considering any matters relating to any such insurances,
and that Guarantor shall, forthwith upon demand, indemnify the Facility Agent in respect of all fees and other expenses incurred by or for the account of the Facility Agent in connection with any such report as is referred to in paragraph (a) above.
22.16
Mortgagee’s interest, additional perils and mortgagee’s rights insurances
The Security Agent shall be entitled from time to time to effect, maintain and renew:
(a)
a mortgagee’s interest insurance in an amount equal to 120 percent of the Loan;
(b)
a mortgagee’s interest additional perils insurance in an amount equal to 120 percent of the Loan;
(c)
a mortgagee’s rights insurance in an amount equal to 120 percent of the Loan,
and the Borrower shall upon demand fully indemnify the Finance 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.

31     



23
VESSEL UNDERTAKINGS
23.1
General
The undertakings in this Clause 23 ( Vessel Undertakings ) remain in force on and from the first Drawdown Date and throughout the rest of the Security Period except as the Facility Agent, acting with the authorization of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
23.2
Vessels’ names and registration
Each Guarantor shall, in respect of the Vessel owned by it:
(a)
keep that Vessel registered in its name under the Approved Flag from time to time at its port of registration;
(b)
not do or allow to be done anything as a result of which such registration might be suspended, cancelled or imperiled; and
(c)
not change the name of that Vessel.
23.3
Repair and classification
Each Guarantor shall keep the Vessel owned by it in a good and safe condition and state of repair:
(a)
consistent with first class ship ownership and management practice; and
(b)
so as to maintain the Approved Classification for that Vessel with the Approved Classification Society free of overdue recommendations and conditions affecting that Vessel’s class.
23.4
Classification society undertaking
Each Guarantor shall, in respect of the Vessel owned by it, request (by sending a letter in the form set out in Part A of Schedule 8 ( Classification Society Undertaking ) the Approved Classification Society and use its best efforts to procure that the Approved Classification Society undertakes with the Security Agent by entering into an undertaking in the form set out in Part B of Schedule 8 ( Classification Society Undertaking ):
(a)
to send to the Security Agent, following receipt of a written request from the Security Agent, certified true copies of all original class records held by the Approved Classification Society in relation to that Vessel;
(b)
to allow the Security Agent (or its agents), at any time and from time to time, to inspect the original class and related records of that Guarantor and that Vessel at the offices of the Approved Classification Society and to take copies of them;
(c)
to notify the Security Agent immediately in writing (at Jurek.Bochner@dvbbank.com and techcom@dvbbank.com) if the Approved Classification Society:
(i)
receives notification from that Guarantor any person that that Vessel’s Approved Classification Society is to be changed; or

32     



(ii)
becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Vessel’s class under the rules or terms and conditions of that Guarantor or that Vessel’s membership of the Approved Classification Society;
(d)
following receipt of a written request from the Security Agent:
(i)
to confirm that such Guarantor is not in default of any of its contractual obligations or liabilities to the Approved Classification Society, including confirmation that it has paid in full all fees or other charges due and payable to the Approved Classification Society; or
(ii)
if such Guarantor is in default of any of its contractual obligations or liabilities to the Approved Classification Society, to specify to the Security Agent in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Approved Classification Society.
23.5
Modifications
No Guarantor shall make any modification or repairs to, or replacement of, any Vessel or equipment installed on it which would or is reasonably likely to be materially detrimental to the structure, type or performance characteristics of that Vessel or materially reduce its value.
23.6
Removal and installation of parts
(a)
Subject to paragraph (b) below, no Guarantor shall remove any material part of any Vessel, or any item of equipment installed on any Vessel unless:
(i)
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;
(ii)
the replacement part or item is free from any Security in favor of any person other than the Security Agent; and
(iii)
the replacement part or item becomes, on installation on that Vessel, the property of that Guarantor and subject to the security constituted by the Mortgage.
(b)
A Guarantor may install equipment owned by a third party if the equipment can be removed without the risk of material damage to the Vessel owned by that Guarantor.
23.7
Surveys
Each Guarantor shall submit the Vessel owned by it regularly to all periodic or other surveys which may be required for classification purposes and, if so required by the Facility Agent acting on the instructions of the Majority Lenders, provide the Facility Agent, with copies of all survey reports.
23.8
Inspection
(a)
Each Guarantor shall permit the Security Agent (acting through surveyors or other persons appointed by it for that purpose) to board the Vessel owned by it once annually to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections, provided, however, if an Event of Default has occurred and is continuing such persons shall be permitted to board at all reasonable times.

33     



(b)
The cost of all inspections under this Clause 23.8 ( Inspection ) shall be for the account of the relevant Guarantor once annually, unless an Event of Default has occurred and is continuing at which time the cost shall be for the account of the relevant Guarantor.
23.9
Prevention of and release from arrest
(a)
Each Guarantor shall, in respect of the Vessel owned by it, promptly discharge:
(i)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against that Vessel, its Earnings or its Insurances;
(ii)
all Taxes, dues and other amounts charged in respect of the Vessel, the Earnings or the Insurances; and
(iii)
all other outgoings whatsoever in respect of that Vessel, its Earnings or its Insurances.
(b)
Each Guarantor shall immediately and, forthwith upon receiving notice of the arrest of the Vessel owned by it or of its detention in exercise or purported exercise of any lien or claim, procure its release by providing bail or otherwise as the circumstances may require.
23.10
Compliance with laws etc.
Each Guarantor shall:
(a)
comply, or procure compliance with all laws or regulations:
(i)
relating to its business generally; and
(ii)
relating to the Vessel owned by it, its ownership, employment, operation, management and registration,
including, but not limited to, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;
(b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals;
(c)
without limiting paragraph (a) above, not employ the Vessel owned by it nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions; and
(d)
not appoint any manager or agent to manage the Vessel owned by it unless such party undertakes to procure that any agreement entered into relating to the management, employment or operation of that Vessel contains a clause in which the counterparty undertakes to comply with all Sanctions.
23.11
ISPS Code
Without limiting paragraph (a) of Clause 23.10 ( Compliance with laws etc. ), each Guarantor shall:
(a)
procure that the Vessel owned by it and the company responsible for that Vessel’s compliance with the ISPS Code comply with the ISPS Code; and

34     



(b)
maintain an ISSC for the Vessel owned by it; and
(c)
notify the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
23.12
Trading in war zones
In the event of hostilities in any part of the world (whether war is declared or not), no Guarantor shall cause or permit the Vessel owned by it to enter or trade to any zone which is declared a war zone by any government or by that Vessel’s war risks insurers unless that Guarantor has (at its expense) effected any special, additional or modified insurance cover which the Security Agent acting on the instructions of the Majority Lenders may require.
23.13
Monitoring
(a)
Each Guarantor shall (or shall procure that any Charterer and the Approved Technical Manager shall) allow the Security Agent (or its agents), at any reasonable time and from time to time, to access all information pertaining to the Vessel owned by it (including the movement of that Vessel) using any and all available means.
(b)
All costs incurred by the Security Agent (and any of its agents) under paragraph (a) of this Clause 24.13 ( Monitoring ) shall be for the account of the Lenders.
23.14
Provision of information
Without prejudice to Clause 19.5 ( Information: miscellaneous ) each Guarantor shall, in respect of the Vessel owned by it, promptly provide the Facility Agent with any information which it requests regarding:
(a)
that Vessel, its employment, position and engagements;
(b)
its Earnings and payments and amounts due to its master and crew;
(c)
any expenditure incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Vessel and any payments made by it in respect of that Vessel;
(d)
any towages and salvages; and
(e)
its compliance, the Approved Manager’s compliance and the compliance of that Vessel with the ISM Code and the ISPS Code,
and, upon the Facility Agent’s request, provide copies of any current Charter relating to that Vessel, of any current guarantee of any such Charter, that Vessel’s Safety Management Certificate and any relevant Document of Compliance.
23.15
Notification of certain events
Each Guarantor shall, in respect of the Vessel owned by it, immediately notify the Facility Agent by fax, confirmed forthwith by letter, of:
(a)
any casualty to that Vessel which is or is, in the reasonable opinion of the Guarantor, likely to be or to become a Major Casualty;

35     



(b)
any occurrence as a result of which that Vessel has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)
any requisition of that Vessel for hire;
(d)
any requirement or recommendation made in relation to that Vessel by any insurer or classification society or by any competent authority which is not immediately complied with;
(e)
any arrest or detention of that Vessel, any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of that Vessel for hire;
(f)
any intended dry docking of that Vessel;
(g)
any Environmental Claim made against that Guarantor or in connection with that Vessel, or any Environmental Incident;
(h)
any claim for breach of the ISM Code or the ISPS Code being made against the that Guarantor, an Approved Manager or otherwise in connection with that Vessel; or
(i)
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 each Guarantor shall keep the Facility Agent advised in writing on a regular basis and in such detail as the Facility Agent shall require as to that Guarantor’s, any such Approved Manager’s or any other person’s response to any of those events or matters.
23.16
Restrictions on chartering, appointment of managers etc.
No Guarantor shall, in relation to the Vessel owned by it:
(a)
let that Vessel on demise charter for any period;
(b)
enter into any time, voyage or consecutive voyage charter in respect of that Vessel other than a Permitted Charter;
(c)
cancel or terminate any Permitted Charter which has a duration of 12 months or more;
(d)
materially change, cancel or terminate a Management Agreement;
(e)
appoint a manager of that Vessel other than an Approved Manager or agree to any material alteration to the terms of an Approved Manager’s appointment;
(f)
de activate or lay up that Vessel; or
(g)
put that Vessel into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed U.S.$500,000 (or the equivalent in any other currency) unless that person has first given to the Security Agent and in terms satisfactory to it a written undertaking not to exercise any lien on that Vessel or its Earnings for the cost of such work or for any other reason.
23.17
Notice of Mortgage

36     



Each Guarantor shall keep the Mortgage registered against the Vessel owned by it as a valid first preferred mortgage, carry on board that Vessel a certified copy of such Mortgage and place and maintain in a conspicuous place in the navigation room and the master’s cabin of that Vessel a framed printed notice stating that that Vessel is mortgaged by that Guarantor to the Security Agent.
23.18
Sharing of Earnings
Save for any Approved Pooling Arrangement in relation to a Vessel, no Guarantor shall enter into any agreement or arrangement for the sharing of any Earnings.
23.19
Notification of compliance
Upon the Facility Agent’s request, each Guarantor shall promptly provide the Facility Agent from time to time with evidence (in such form as the Facility Agent requires) that it is complying with this Clause 23 ( Vessel Undertakings ).
23.20
Nuclear materials
No Guarantor shall permit the Vessel owned by it to carry any nuclear material or any nuclear waste.
24
SECURITY COVER
24.1
Minimum required security cover
Clause 24.2 ( Provision of additional security; prepayment ) applies if the Facility Agent notifies the Borrower that:
(a)
The aggregated Market Value of the Vessels; plus
(b)
the net realizable value of additional Security previously provided under this Clause 24.1 ( Minimum required security cover ),
is below 140 percent of the Loan.
24.2
Provision of additional security; prepayment
(a)
If the Facility Agent serves a notice on the Borrower under Clause 24.1 ( Minimum required security cover ), the Borrower shall, on or before the date falling 30 days after the date (the “ Prepayment Date ”) on which the Facility Agent’s notice is served, prepay such part of the Loan as shall eliminate the shortfall.
(b)
The Borrower may, instead of making a prepayment as described in paragraph (a) above, provide, or ensure that a third party has provided, additional security which, in the opinion of the Facility Agent acting on the instructions of the Majority Lenders:
(i)
has a net realizable value at least equal to the shortfall; and
(ii)
is documented in such terms as the Facility Agent may approve or require,
before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation. If the additional security is at any point during the Security Period no longer required to comply with Clause 24.1 ( Minimum required security cover ), the Facility Agent shall, at the request of the Borrower, release such additional security.
24.3
Value of additional vessel security
The net realizable value of any additional security which is provided under Clause 24.2 ( Provision of additional security ; prepayment) and which consists of Security over a vessel shall be the Market Value of the vessel concerned.
24.4
Valuations binding
Any valuation under this Clause 24 ( Security Cover ) shall be binding and conclusive as regards the Borrower and the Guarantors.
24.5
Provision of information
(a)
The Borrower shall promptly provide the Facility Agent and any Approved Appraiser acting under this Clause 24 ( Security Cover ) with any information which the Facility Agent or the Approved Appraiser may request for the purposes of the valuation.
(b)
If the Borrower fails to provide the information referred to in paragraph (a) above by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Appraiser or the Facility Agent considers prudent.
24.6
Prepayment mechanism
Any prepayment pursuant to Clause 24.2 ( Provision of additional security ; prepayment) shall be made in accordance with the relevant provisions of Clause 7 ( Prepayment and Cancellation ) and shall be treated as a voluntary prepayment pursuant to Clause 7.3 ( Voluntary prepayment of Loan ).
24.7
Provision of valuations
(a)
The Facility Agent shall be entitled to test the security requirements under Clause 24.1 ( Minimum required security cover ) by reference to valuations in respect of a Vessel from the required number of Approved Appraisers semi-annually delivered with the Compliance Certificates for the second and fourth quarter.
(b)
The Facility Agent shall at the request of the Lenders additionally be entitled to test the security cover requirement under Clause 24.1 ( Minimum required security cover ) by reference to a valuation in respect of a Vessel from the required number of Approved Appraisers at any time and each such valuation shall be at the expense of the Lenders except where the Borrower is by means of such valuation(s) shown to be in breach of Clause 24.1 ( Minimum required security cover ).
(c)
Subject to paragraph (d) below, the Market Value of a Vessel shall be determined by reference to one valuation of that Vessel as given by an Approved Appraiser selected by the Borrower and appointed by the Facility Agent.
(d)
If requested by the Borrower in relation to paragraph (c) above, a second Approved Appraiser shall be selected by the Borrower and appointed by the Facility Agent, and the Market Value of that Vessel shall be the arithmetic average of the two valuations.
(e)
If one such valuation in respect of that Vessel obtained pursuant to paragraphs (c) and (d) above differs by at least 10 percent from the other valuation, then a third valuation for that Vessel shall be obtained from an Approved Appraiser selected by the Borrower and appointed by the Facility Agent and the Market Value of that Vessel shall be the arithmetic average of all three such valuations.
(f)
The Facility Agent may at any time after a Default has occurred and is continuing obtain valuations of the Vessel and any other vessel over which additional security has been created in accordance with Clause 24.2 ( Provision of additional security ; prepayment) from Approved Appraisers to enable the Facility Agent to determine the Market Values of the Vessels and any other vessel.
(g)
The valuations referred to in paragraph (a), (b), (c), (d), (e) and (f) above shall be obtained at the cost and expense of the Borrower (except where specified in paragraph (b) above) and the Borrower shall within three Business Days of demand by the Facility Agent pay to the Facility Agent all costs and expenses incurred by it in obtaining any such valuation.
25
ACCOUNTS AND APPLICATION OF EARNINGS
25.1
Account bank
Subject to Clause 25.5 ( Location of Accounts ), each Account must be held with the Account Bank.
25.2
Accounts
(a)
Each Guarantor must operate the Account held by it in accordance with this Clause 26 ( Accounts and Application of Earnings ) and the provisions of the Account Security.
(b)
Account Security must be provided in respect of any Account opened after the date of this Agreement.
25.3
Payment of Earnings
Each Guarantor shall ensure that, subject only to the provisions of the Earnings Assignment to which it is a party, all Earnings in respect of that Vessel owned by it are paid in to that Vessel’s Earnings Account.
25.4
Application of Earnings
The Borrower and each of the Guarantors shall procure that there is transferred to the Facility Agent:
(i)
on each Repayment Date, the amount of the Repayment Instalment then due on the Repayment Date; and
(ii)
on the last day of each Interest Period, the amount of interest then due on that date; and
(iii)
on any day on which an amount is otherwise due from the Borrower under a Finance Document, an amount necessary to meet that due amount,
and the Borrower irrevocably authorizes and instructs:
(A)
the Account Bank to make those transfers in accordance with the instructions of the Facility Agent (copied to the Security Agent, who, as security taker under the Accounts Security, agrees for itself and on behalf of the other pledgees that such transfers may be made);
(B)
the Facility Agent to apply the transferred amounts in payment of the relevant Repayment Instalment, interest amount or other amount due.
25.5
Location of Accounts
Each Guarantor shall promptly:
(a)
comply with any requirement of the Facility Agent as to the location or relocation of the Accounts (or any of them); and
(b)
execute any documents which the Facility Agent specifies to create or maintain in favor of the Security Agent Security over (and/or rights of set-off, consolidation or other rights in relation to) each Account.
25.6
Miscellaneous Accounts provisions
No Finance Party is responsible or liable to any Obligor for:
(a)
any non-payment of any liability of an Obligor which could be paid out of moneys standing to the credit of the Earnings Account; or
(b)
any withdrawal wrongly made, if made in good faith.
26
EVENTS OF DEFAULT
26.1
General
Each of the events or circumstances set out in this Clause 26 ( Events of Default ) is an Event of Default except for Clause 26.19 ( Acceleration ) and Clause 26.20 ( Enforcement of security ).
26.2
Non-payment
An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
(a)
its failure to pay is caused by:
(i)
administrative or technical error; or
(ii)
a Disruption Event; and
(b)
payment is made within three Business Days of its due date.
26.3
Specific obligations
A breach occurs of Clause 4.4 ( Waiver of conditions precedent ), Clause 20 ( Financial Covenants ), Clause 21.10 ( Title ), Clause 21.17 ( Asset control ), Clause 21.18 ( Sanctions ), Clause 21.19 ( Money laundering ), Clause 21.23 ( Negative pledge ), Clause 21.24 ( Disposals ), Clause 21.25 ( Merger ), Clause 21.26 ( Change of business ), Clause 21.33 ( Unlawfulness, invalidity and ranking; Security imperiled ), Clause 21.34 ( Changes to Fiscal Year ), Clause 21.35 ( Jurisdiction of incorporation; Amendment of constitutional documents ), Clause 22.2 ( Maintenance of obligatory insurances ), Clause 22.3 ( Terms of obligatory insurances ), Clause 22.5 ( Renewal of obligatory insurances ) or Clause 24 ( Security Cover ).
26.4
Other obligations
(a)
An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 26.2 ( Non-payment ) and Clause 26.3 ( Specific obligations )).
(b)
No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within ten Business Days of the Facility Agent giving notice to the Borrower or (if earlier) any Obligor becoming aware of the failure to comply.
26.5
Misrepresentation
Any representation or statement made or deemed to be made by a Transaction Obligor in the Finance Documents or any other document delivered by or on behalf of any Transaction Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.
26.6
Cross default
Other than with respect to Financial Indebtedness arising under the Finance Documents:
(a)
Any Financial Indebtedness of any Obligor is not paid when due nor within any originally applicable grace period.
(b)
Any Financial Indebtedness of any Obligor is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).
(c)
Any commitment for any Financial Indebtedness of any Obligor is cancelled or suspended by a creditor of any Obligor as a result of an event of default (however described).
(d)
Any creditor of any Obligor becomes entitled to declare any Financial Indebtedness of any Obligor due and payable prior to its specified maturity as a result of an event of default (however described).
(e)
No Event of Default will occur under this Clause 26.6 ( Cross default ) in respect of a person other than the Borrower if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than $2,500,000 individually or $10,000,000 in the aggregate in respect of the Obligors (or its equivalent in any other currency).
26.7
Insolvency Event
An Insolvency Event occurs with respect to any Obligor.
26.8
Judgments
Any judgment or order for the payment of money individually or in the aggregate in excess of $2,500,000 in the case of any Obligor (other than the Borrower) or $10,000,000 in the case of the Borrower (exclusive of any amounts fully covered by insurance (less any applicable deductible) and as to which the insurer has acknowledged its responsibility to cover such judgment or order) shall be rendered against an Obligor and such judgment shall not have been vacated or discharged or stayed or bonded pending appeal within 30 days after the entry thereof or enforcement proceedings shall have been commenced by any creditor upon such judgment or order.
26.9
Creditors’ process
Any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects a Vessel (other than an arrest where paragraph 7.4(b) of Clause 7.4 ( Mandatory prepayment on sale or Total Loss ) shall apply) and such Vessel is not returned to the full control of the relevant Guarantor within 60 days.

26.10
Change of Control
A Change of Control shall have occurred.
26.11
Unlawfulness, invalidity and ranking
(a)
It is or becomes unlawful for a Transaction Obligor to perform any of its obligations under the Finance Documents.
(b)
Any obligation of a Transaction Obligor under the Finance Documents is not or ceases to be legal, valid, binding or enforceable.
(c)
Any Finance Document ceases to be in full force and effect or to be continuing or is or purports to be determined or any Transaction Security is alleged by a party to it (other than a Finance Party) to be ineffective.
(d)
Any Transaction Security proves to have ranked after, or loses its priority to, any other Security.
26.12
Security imperiled; flag instability
(a)
Any Security created or intended to be created by a Finance Document is in any way imperiled or in jeopardy.
(b)
The state of the Approved Flag of a Vessel is or becomes involved in hostilities or civil war or there is a seizure of power in such state by unconstitutional means, or any other event occurs in relation to that Vessel, the Mortgage or the Approved Flag and in the reasonable opinion of the Facility Agent such event is likely to have a Material Adverse Effect.
26.13
Cessation of business
Any Obligor suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business.
26.14
Expropriation
The authority or ability of any Transaction Obligor to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalization, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any Transaction Obligor or any of its assets.
26.15
Repudiation and rescission of agreements
A Transaction Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Transaction Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Transaction Document or any Transaction Security.
26.16
Litigation
Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened in relation to any of the Transaction Documents or the transactions contemplated in any of the Transaction Documents or against any member of the Group or its assets which has or is reasonably likely to have a Material Adverse Effect.
26.17
Material adverse change
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
26.18
Prohibited Person
A Transaction Obligor or any Subsidiary of it or any of their respective directors or officers becomes a Prohibited Person.
26.19
Acceleration
On and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrower:
(a)
cancel the Total Commitments, whereupon they shall immediately be cancelled;
(b)
declare that all or part of the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon it shall become immediately due and payable; and/or
(c)
declare that all or part of the Loan be payable on demand, whereupon it shall immediately become payable on demand by the Facility Agent acting on the instructions of the Majority Lenders,
and the Facility Agent may serve notices under paragraphs (a), (b) and (c) above simultaneously or on different dates (provided that in the case of an Event of Default under Clause 26.7 ( Insolvency Event ), the Loan, together with accrued interest and all other amounts accrued or outstanding under the Finance Documents, shall be deemed immediately due and payable without notice or demand therefor) and the Security Agent may take any action referred to in Clause 26.20 ( Enforcement of security ) if no such notice is served or simultaneously with or at any time after the service of any of such notice.
26.20
Enforcement of security
Subject to any restrictions imposed by applicable law or regulation, on and at any time after the occurrence of an Event of Default which is continuing the Security Agent may, and shall if so directed by the Majority Lenders, take any action which, as a result of the Event of Default or any notice served under Clause 26.19 ( Acceleration ), the Security Agent is entitled to take under any Finance Document or any applicable law or regulation.
26.21
No impairment of rights
Nothing in Clauses 26.19 ( Acceleration ) or 26.20 ( Enforcement of security ) shall be taken to impair or restrict the exercise of any right given to individual Finance Parties under a Finance Document; and, in particular, this Clause is without prejudice to Clause 2.2 ( Finance Parties’ rights and obligations ).

SECTION 9

CHANGES TO PARTIES
27
CHANGES TO THE LENDERS
27.1
Assignments and transfers by the Lenders
Subject to this Clause 27 ( Changes to the Lenders ), a Lender (the “ Existing Lender ”) may:
(a)
assign any of its rights; or
(b)
transfer by novation any of its rights and obligations,
under the Finance Documents to an Affiliate of the Lender or another bank or a reputable financial institution which is governed by banking regulations in the United States, United Kingdom or the European Union (the “ New Lender ”).
27.2
Conditions of assignment or transfer
(a)
The consent of the Borrower (or any other Transaction Obligor) is not required for an assignment or transfer by an Existing Lender to a New Lender. The consent of the Facility Agent is required for an assignment or transfer by an Existing Lender, such consent not to be unreasonably withheld.
(b)
An assignment will only be effective on:
(i)
receipt by the Facility Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other Creditor Parties as it would have been under if it were an Original Lender; and
(ii)
performance by the Facility Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.
(c)
A transfer will only be effective if the procedure set out in Clause 27.5 ( Procedure for transfer ) is complied with.
(d)
If:
(i)
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii)
as a result of circumstances existing at the date the assignment, transfer or change occurs, a Transaction Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 12 ( Tax Gross Up and Indemnities ) or under that clause as incorporated by reference or in full in any other Finance Document or Clause 13 ( Increased Costs ),
then the New Lender or Lender acting through its new Facility Office is entitled to receive payment under those Clauses only to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.
(e)
Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.
27.3
Assignment or transfer fee
The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of $5,000.
27.4
Limitation of responsibility of Existing Lenders
(a)
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:
(i)
the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents, the Transaction Security or any other documents;
(ii)
the financial condition of any Transaction Obligor;
(iii)
the performance and observance by any Transaction Obligor of its obligations under the Finance Documents or any other documents; or
(iv)
the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,
and any representations or warranties implied by law are excluded.
(b)
Each New Lender confirms to the Existing Lender and the other Finance Parties and the Creditor Parties that it:
(i)
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Transaction Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Finance Document or the Transaction Security; and
(ii)
will continue to make its own independent appraisal of the creditworthiness of each Transaction Obligor and its related entities throughout the Security Period.
(c)
Nothing in any Finance Document obliges an Existing Lender to:
(i)
accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 27 ( Changes to the Lenders ); or
(ii)
support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Transaction Obligor of its obligations under the Finance Documents or otherwise.
27.5
Procedure for transfer
(a)
Subject to the conditions set out in 27.2 ( Conditions of assignment or transfer ), a transfer is effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with this Agreement and delivered in accordance with this Agreement, execute that Transfer Certificate.
(b)
The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New 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 such New Lender.
(c)
On the Transfer Date:
(i)
to the extent that in the Transfer Certificate the Existing Lender seeks to transfer its rights and obligations under the Finance Documents and in respect of the Transaction Security, each of the Transaction Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and in respect of the Transaction Security and their respective rights against one another under the Finance Documents and in respect of the Transaction Security shall be cancelled (being the “ Discharged Rights and Obligations ”);
(ii)
each of the Transaction Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Transaction Obligor and the New Lender have assumed and/or acquired the same in place of that Transaction Obligor and the Existing Lender;
(iii)
the Facility Agent, the Security Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves and in respect of the Transaction Security as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Facility Agent, the Security Agent, the Arranger and the Existing Lenders shall each be released from further obligations to each other under the Finance Documents; and
(iv)
the New Lender shall become a Party as a “Lender”.
27.6
Procedure for assignment
(a)
Subject to the conditions set out in Clause 27.2 ( Conditions of assignment or transfer ) an assignment may be effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.
(b)
The Facility Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New 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 assignment to such New Lender.
(c)
On the Transfer Date:
(i)
the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of the Transaction Security expressed to be the subject of the assignment in the Assignment Agreement;
(ii)
the Existing Lender will be released from the obligations (the “ Relevant Obligations ”) expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of the Transaction Security); and
(iii)
the New Lender shall become a Party as a “Lender” and will be bound by obligations equivalent to the Relevant Obligations.
(d)
Lenders may utilize procedures other than those set out in this Clause 27.6 ( Procedure for assignment ) to assign their rights under the Finance Documents (but not, without the consent of the relevant Transaction Obligor or unless in accordance with Clause 27.5 ( Procedure for transfer ), to obtain a release by that Transaction Obligor from the obligations owed to that Transaction Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 27.2 ( Conditions of assignment or transfer ).
27.7
Copy of Transfer Certificate or Assignment Agreement to Borrower
The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrower a copy of that Transfer Certificate or Assignment Agreement.
27.8
Security over Lenders’ rights
In addition to the other rights provided to Lenders under this Clause 27 ( Changes to the Lenders ), each Lender may without consulting with or obtaining consent from any Transaction Obligor, at any time charge, assign or otherwise create Security 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, any charge, pledge, assignment or other Security to secure obligations to a federal reserve or central bank, except that no such charge, pledge, assignment or Security shall:
(i)
release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, pledge, assignment or Security for the Lender as a party to any of the Finance Documents; or
(ii)
require any payments to be made by a Transaction Obligor other than or in excess of, 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.
27.9
Pro rata interest settlement
If the Facility Agent has notified the Lenders that it is able to distribute interest payments on a “ pro rata basis” to Existing Lenders and New Lenders then (in respect of any transfer pursuant to Clause 27.5 ( Procedure for transfer ) or any assignment pursuant to Clause 27.6 ( Procedure for assignment ) the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period):
(a)
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favor of the Existing Lender up to but excluding the Transfer Date (“ Accrued Amounts ”) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and
(b)
The rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:
(i)
when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and
(ii)
the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 27.9 ( Pro rata interest settlement ), have been payable to it on that date, but after deduction of the Accrued Amounts.
(c)
In this Clause 27.9 ( Pro rata interest settlement ) references to “Interest Period” shall be construed to include a reference to any other period for accrual of fees.
28
CHANGES TO THE TRANSACTION OBLIGORS
28.1
Assignment or transfer by Transaction Obligors
No Transaction Obligor may assign any of its rights or transfer any of its rights or obligations under the Transaction Documents.
28.2
Release of security
(a)
If a disposal of any asset subject to security created by a Security Document is made in the following circumstances:
(i)
the disposal is permitted by the terms of any Finance Document;
(ii)
the Majority Lenders agree to the disposal;
(iii)
the disposal is being made at the request of the Security Agent in circumstances where any security created by the Security Documents has become enforceable; or
(iv)
the disposal is being effected by enforcement of a Security Document,
the Security Agent shall release the asset(s) being disposed of from any security over those assets created by a Security Document and the Guarantor owning any Vessel sol. However, the proceeds of any disposal (or an amount corresponding to them) must be applied in accordance with the requirements of the Finance Documents (if any).
(b)
If the Security Agent is satisfied that a release is allowed under this Clause 28.2 ( Release of security ) (at the request and expense of the Borrower) each Finance Party must enter into any document and do all such other things which are reasonably required to achieve that release. Each other Finance Party irrevocably authorizes the Security Agent to enter into any such document. Any release will not affect the obligations of any other Transaction Obligor under the Finance Documents.

SECTION 10

THE FINANCE PARTIES
29
THE FACILITY AGENT AND THE ARRANGER
29.1
Appointment of the Facility Agent
(a)
Each other Finance Party appoints the Facility Agent to act as its agent under and in connection with the Finance Documents.
(b)
Each other Finance Party authorizes the Facility Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions.
29.2
Instructions
(a)
The Facility Agent shall:
(i)
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Facility Agent in accordance with any instructions given to it by:
(A)
all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and
(B)
in all other cases, the Majority Lenders; and
(ii)
not be liable for any act (or omission) if it acts (or fails to act) in accordance with sub-paragraph (i) above (or, if this Agreement stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties).
(b)
The Facility Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Facility Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
(c)
Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Facility Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.
(d)
Paragraph (a) above shall not apply:
(i)
where a contrary indication appears in a Finance Document;
(ii)
where a Finance Document requires the Facility Agent to act in a specified manner or to take a specified action;
(iii)
in respect of any provision which protects the Facility Agent’s own position in its personal capacity as opposed to its role of Facility Agent for the relevant Finance Parties.
(e)
If giving effect to instructions given by the Majority Lenders would in the Facility Agent’s opinion have an effect equivalent to an amendment or waiver referred to in Clause 42 ( Amendments and Waivers ), the Facility Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Facility Agent) whose consent would have been required in respect of that amendment or waiver.
(f)
In exercising any discretion to exercise a right, power or authority under the Finance Documents where it has not received any instructions as to the exercise of that discretion the Facility Agent shall do so having regard to the interests of all the Finance Parties.
(g)
The Facility Agent may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions.
(h)
Without prejudice to the remainder of this Clause 29.2 ( Instructions ), in the absence of instructions, the Facility Agent shall not be obliged to take any action (or refrain from taking action) even if it considers acting or not acting to be in the best interests of the Finance Parties. The Facility Agent may act (or refrain from acting) as it considers to be in the best interest of the Finance Parties.
(i)
The Facility Agent is not authorized to act on behalf of a Finance Party (without first obtaining that Finance Party’s consent) in any legal or arbitration proceedings relating to any Finance Document. This paragraph (i) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Transaction Security or Security Documents.
29.3
Duties of the Facility Agent
(a)
The Facility Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.
(b)
Subject to paragraph (c) below, the Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.
(c)
Without prejudice to Clause 27.7 ( Copy of Transfer Certificate or Assignment Agreement to Borrower ), paragraph (b) above shall not apply to any Transfer Certificate or any Assignment Agreement.
(d)
Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(e)
If the Facility Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.
(f)
If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent, the Arranger or the Security Agent) under this Agreement, it shall promptly notify the other Finance Parties.
(g)
The Facility Agent shall provide to the Borrower, within three (3) Business Days of a request by the Borrower (but no more frequently than once per calendar month), a list (which may be in electronic form) setting out the names of the Lenders as at the date of that request, their respective Commitments, the address and fax number (and the department or officer, if any, for whose attention any communication is to be made) of each Lender for any communication to be made or document to be delivered under or in connection with the Finance Documents, the electronic mail address and/or any other information required to enable the sending and receipt of information by electronic mail or other electronic means to and by each Lender to whom any communication under or in connection with the Finance Documents may be made by that means and the account details of each Lender for any payment to be distributed by the Facility Agent to that Lender under the Finance Documents.
(h)
The Facility Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
29.4
Role of the Arranger
Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
29.5
No fiduciary duties
(a)
Nothing in any Finance Document constitutes the Facility Agent or the Arranger a trustee or fiduciary of any other person.
(b)
Neither the Facility Agent nor the Arranger shall be bound to account to other Finance Party for any sum or the profit element of any sum received by it for its own account.
29.6
Application of receipts
Except as expressly stated to the contrary in any Finance Document, any moneys which the Facility Agent receives or recovers in its capacity as Facility Agent shall be applied by the Facility Agent in accordance with Clause 33.5 ( Application of receipts; partial payments ).
29.7
Business with the Group
The Facility Agent and the Arranger may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.
29.8
Rights and discretions
(a)
The Facility Agent may:
(i)
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorized;
(ii)
assume that:
(A)
any instructions received by it from the Majority Lenders, any Finance Parties or any group of Finance Parties are duly given in accordance with the terms of the Finance Documents; and
(B)
unless it has received notice of revocation, that those instructions have not been revoked; and
(iii)
rely on a certificate from any person:
(A)
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or
(B)
to the effect that such person approves of any particular dealing, transaction, step, action or thing,
as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b)
The Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Finance Parties) that:
(i)
no Default has occurred (unless it has actual knowledge of a Default arising under Clause 26.2 ( Non-payment ));
(ii)
any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and
(iii)
any notice or request made by the Borrower (other than a Drawdown Request or a Selection Notice) is made on behalf of and with the consent and knowledge of all the Transaction Obligors.
(c)
The Facility Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts.
(d)
Without prejudice to the generality of paragraph (c) above or paragraph (e) below, the Facility Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Facility Agent (and so separate from any lawyers instructed by the Lenders) if the Facility Agent in its reasonable opinion deems this to be desirable.
(e)
The Facility Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Facility Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.
(f)
The Facility Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not:
(i)
be liable for any error of judgment made by any such person; or
(ii)
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person,
unless such error or such loss was directly caused by the Facility Agent’s gross negligence or wilful misconduct.
(g)
Unless a Finance Document expressly provides otherwise the Facility Agent may disclose to any other Party any information it reasonably believes it has received as agent under the Finance Documents.
(h)
Notwithstanding any other provision of any Finance Document to the contrary, neither the Facility Agent nor the Arranger is obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
(i)
The Facility Agent is not obliged to disclose to any Finance Party any details of the rate notified to the Facility Agent by any Lender or the identity of any such Lender for the purpose of sub-paragraph (ii) of paragraph (a) of Clause 10.2 ( Market disruption ).
(j)
Notwithstanding any provision of any Finance Document to the contrary, the Facility Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
29.9
Responsibility for documentation
Neither the Facility Agent nor the Arranger is responsible or liable for:
(a)
the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Facility Agent, the Security Agent, the Arranger, a Transaction Obligor or any other person in, or in connection with, any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; or
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(c)
any determination as to whether any information provided or to be provided to any Finance Party or Creditor Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
29.10
No duty to monitor
The Facility Agent shall not be bound to inquire:
(a)
whether or not any Default has occurred;
(b)
as to the performance, default or any breach by any Transaction Obligor of its obligations under any Transaction Document; or
(c)
whether any other event specified in any Transaction Document has occurred.
29.11
Exclusion of liability
(a)
Without limiting paragraph (b) below (and without prejudice to paragraph (e) of Clause 33.11 ( Disruption to Payment Systems etc. ) or any other provision of any Finance Document excluding or limiting the liability of the Facility Agent), the Facility Agent will not be liable for:
(i)
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct;
(ii)
exercising, or not exercising ,any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(iii)
any shortfall which arises on the enforcement or realization of the Security Property; or
(iv)
without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:
(A)
any act, event or circumstance not reasonably within its control; or
(B)
the general risks of investment in, or the holding of assets in, any jurisdiction,
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalization, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b)
No Party other than the Facility Agent may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Facility Agent may rely on this Clause subject to Clause 1.5 ( Third party rights ).
(c)
The Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Facility Agent if the Facility Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognized clearing or settlement system used by the Facility Agent for that purpose.
(d)
Nothing in this Agreement shall oblige the Facility Agent or the Arranger to carry out:
(i)
any “know your customer” or other checks in relation to any person; or
(ii)
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Finance Party,
on behalf of any Finance Party and each Finance Party confirms to the Facility Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Facility Agent or the Arranger.
(e)
Without prejudice to any provision of any Finance Document excluding or limiting the Facility Agent’s liability, any liability of the Facility Agent arising under or in connection with any Transaction Document or the Security Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Facility Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Facility Agent at any time which increase the amount of that loss. In no event shall the Facility Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Facility Agent has been advised of the possibility of such loss or damages.
29.12
Lenders’ indemnity to the Facility Agent
(a)
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Facility Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 33.11 ( Disruption to Payment Systems etc. ) notwithstanding the Facility Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) in acting as Facility Agent under the Finance Documents (unless the Facility Agent has been reimbursed by a Transaction Obligor pursuant to a Finance Document).
(b)
Subject to paragraph (c) below, the Borrower shall immediately on demand reimburse any Lender for any payment that Lender makes to the Facility Agent pursuant to paragraph (a) above.
(c)
Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Facility Agent to an Obligor.
29.13
Resignation of the Facility Agent
(a)
The Facility Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrower.
(b)
Alternatively, the Facility Agent may resign by giving 30 days’ notice to the other Finance Parties and the Borrower, in which case the Majority Lenders may appoint a successor Facility Agent.
(c)
If the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Facility Agent may appoint a successor Facility Agent.
(d)
If the Facility Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Facility Agent is entitled to appoint a successor Facility Agent under paragraph (c) above, the Facility Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor Facility Agent to become a party to this Agreement as Facility Agent) agree with the proposed successor Facility Agent amendments to this Clause 29 ( The Facility Agent and the Arranger) and any other term of this Agreement dealing with the rights or obligations of the Facility Agent consistent with then current market practice for the appointment and protection of administrative agents together with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Facility Agent’s normal fee rates and those amendments will bind the Parties.
(e)
The retiring Facility Agent shall, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Finance Documents.
(f)
The Facility Agent’s resignation notice shall only take effect upon the appointment of a successor.
(g)
Upon the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (e) above) but shall remain entitled to the benefit of Clause 14.4 ( Indemnity to the Facility Agent ) and this Clause 29 ( The Facility Agent and the Arranger ) and any other provisions of a Finance Document which are expressed to limit or exclude its liability (or to indemnify it) in acting as Facility Agent. Any fees for the account of the retiring Facility Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(h)
The Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with paragraph (b) above. In this event, the Facility Agent shall resign in accordance with paragraph (b) above.
(i)
The consent of the Borrower (or any other Transaction Obligor) is not required for an assignment or transfer of rights and/or obligations by the Facility Agent.
29.14
Confidentiality
(a)
In acting as Facility Agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b)
If information is received by a division or department of the Facility Agent other than the division or department responsible for complying with the obligations assumed by it under the Finance Documents, that information may be treated as confidential to that division or department, and the Facility Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party.
29.15
Relationship with the other Finance Parties
(a)
The Facility Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Facility Agent’s principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:
(i)
entitled to or liable for any payment due under any Finance Document on that day; and
(ii)
entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,
unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b)
Each Finance Party shall supply the Facility Agent with any information that the Security Agent may reasonably specify (through the Facility Agent) as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent.
(c)
Any Lender may by notice to the Facility Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or dispatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 36.5 ( Electronic communication ) electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address, department and officer by that Lender for the purposes of Clause 36.2 ( Addresses ) and sub-paragraph (ii) of paragraph (a) of Clause 36.5 ( Electronic communication ) and the Facility Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.
29.16
Credit appraisal by the Finance Parties
Without affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Finance Party confirms to the Facility Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document including but not limited to:
(a)
the financial condition, status and nature of each member of the Group;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(c)
whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Transaction Document, the Security Property, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(d)
the adequacy, accuracy or completeness of any information provided by the Facility Agent, any Party or by any other person under, or in connection with, any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and
(e)
the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets.
29.17
Reference Banks
The Facility Agent shall (if so instructed by the Majority Lenders and in consultation with the Borrower) replace a Reference Bank with another bank or financial institution.
29.18
Facility Agent’s management time
(a)
Any amount payable to the Facility Agent under Clause 14.4 ( Indemnity to the Facility Agent ), Clause 16 ( Costs and Expenses ) and Clause 29.12 ( Lenders’ indemnity to the Facility Agent ) shall include the cost of utilizing the Facility Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the Borrower and the other Finance Parties, and is in addition to any fee paid or payable to the Facility Agent under Clause 11 ( Fees ).
29.19
Deduction from amounts payable by the Facility Agent
If any Party owes an amount to the Facility Agent under the Finance Documents, the Facility Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Facility Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
29.20
Reliance and engagement letters
Each Creditor Party confirms that each of the Arranger and the Facility Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Arranger or the Facility Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
29.21
Full freedom to enter into transactions
Without prejudice to Clause 29.7 ( Business with the Group ) or any other provision of a Finance Document and notwithstanding any rule of law or equity to the contrary, the Facility Agent shall be absolutely entitled:
(a)
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document);
(b)
to deal in and enter into and arrange transactions relating to:
(i)
any securities issued or to be issued by any Transaction Obligor or any other person; or
(ii)
any options or other derivatives in connection with such securities; and
(c)
to provide advice or other services to the Borrower or any person who is a party to, or referred to in, a Finance Document,
and, in particular, the Facility Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.
30
THE SECURITY AGENT
30.1
Appointment and trust
(a)
Each other Finance Party appoints the Security Agent to act as its agent and (to the extent permitted or required under any applicable law) trustee in connection with the Security Property and confirms that the Security Agent shall have a lien on the Security Property and the proceeds of the enforcement of the Security Documents for all moneys payable to the beneficiaries of the Security Documents.
(b)
The Security Agent accepts its appointment under paragraph (a) above as trustee of the Security Property with effect from the date of this Agreement and declares that it holds the Security Property on trust for the Creditor Parties on the terms contained in this Agreement and shall deal with the Security Property in accordance with this Clause 30 ( The Security Agent ) and the other provisions of the Finance Documents.
(c)
Each other Finance Party appoints the Security Agent, as trustee to (i) perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions, and (ii) execute each of the Security Documents and all other documents that may be approved by the Facility Agent and/or the Majority Lenders for execution by it.
30.2
Parallel Debt (Covenant to pay the Security Agent)
(a)
Each Obligor irrevocably and unconditionally undertakes to pay to the Security Agent its Parallel Debt which shall be amounts equal to, and in the currency or currencies of, its Corresponding Debt.
(b)
The Parallel Debt of an Obligor:
(i)
shall become due and payable at the same time as its Corresponding Debt;
(ii)
is independent and separate from, and without prejudice to, its Corresponding Debt.
(c)
For purposes of this Clause 30.2 ( Parallel Debt (Covenant to pay the Security Agent) , the Security Agent:
(i)
is the independent and separate creditor of each Parallel Debt;
(ii)
acts in its own name and not as agent, representative or trustee of the Finance Parties and its claims in respect of each Parallel Debt shall not be held on trust; and
(iii)
shall have the independent and separate right to demand payment of each Parallel Debt in its own name (including, without limitation, through any suit, execution, enforcement of security, recovery of guarantees and applications for and voting in any kind of insolvency proceeding).
(d)
The Parallel Debt of an Obligor shall be:
(i)
decreased to the extent that its Corresponding Debt has been irrevocably and unconditionally paid or discharged; and
(ii)
increased to the extent that its Corresponding Debt has increased,
and the Corresponding Debt of an Obligor shall be:
(A)
decreased to the extent that its Parallel Debt has been irrevocably and unconditionally paid or discharged; and
(B)
increased to the extent that its Parallel Debt has increased,
in each case provided that the Parallel Debt of an Obligor shall never exceed its Corresponding Debt.
(e)
All amounts received or recovered by the Security Agent in connection with this Clause 30.2 ( Parallel Debt (Covenant to pay the Security Agent) ) to the extent permitted by applicable law, shall be applied in accordance with Clause 33.5 ( Application of receipts; partial payments ).
(f)
This Clause 30.2 ( Parallel Debt (Covenant to pay the Security Agent) ) shall apply, with any necessary modifications, to each Finance Document.
30.3
Enforcement through Security Agent only
The Creditor Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any right, power, authority or discretion arising under the Security Documents except through the Security Agent.
30.4
Instructions
(a)
The Security Agent shall:
(i)
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Security Agent in accordance with any instructions given to it by the Facility Agent acting on the instructions of:
(A)
all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and
(B)
in all other cases, the Majority Lenders; and
(ii)
not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with sub-paragraph (i) above (or if this Agreement stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties).
(b)
The Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Facility Agent acting on the instructions of the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Security Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
(c)
Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Security Agent by the Facility Agent acting on the instructions of the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.
(d)
Paragraph (a) above shall not apply:
(i)
where a contrary indication appears in a Finance Document;
(ii)
where a Finance Document requires the Security Agent to act in a specified manner or to take a specified action;
(iii)
in respect of any provision which protects the Security Agent’s own position in its personal capacity as opposed to its role of Security Agent for the relevant Creditor Parties.
(iv)
in respect of the exercise of the Security Agent’s discretion to exercise a right, power or authority under any of:
(A)
Clause 30.26 ( Deductions from receipts ); and
(B)
Clause 30.27 ( Prospective liabilities ).
(e)
If giving effect to instructions given by the Facility Agent acting on the instructions of the Majority Lenders would in the Security Agent’s opinion have an effect equivalent to an amendment or waiver referred to in Clause 42 ( Amendments and Waivers ), the Security Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Security Agent) whose consent would have been required in respect of that amendment or waiver.
(f)
In exercising any discretion to exercise a right, power or authority under the Finance Documents where either:
(i)
it has not received any instructions as to the exercise of that discretion; or
(ii)
the exercise of that discretion is subject to sub-paragraph (iv) (iv)of paragraph (d) above,
the Security Agent shall do so having regard to the interests of all the Creditor Parties.
(g)
The Security Agent may refrain from acting in accordance with any instructions of the Facility Agent acting on the instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions.
(h)
Without prejudice to the remainder of this Clause 30.4 ( Instructions ), in the absence of instructions, the Security Agent may (but shall not be obliged to) take such action in the exercise of its powers and duties under the Finance Documents as it considers in its discretion to be appropriate.
(i)
The Security Agent is not authorized to act on behalf of a Finance Party (without first obtaining that Finance Party’s consent) in any legal or arbitration proceedings relating to any Finance Document. This paragraph (i) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Transaction Security or Security Documents.
30.5
Duties of the Security Agent
(a)
The Security Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.
(b)
The Security Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Security Agent for that Party by any other Party.
(c)
Except where a Finance Document specifically provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(d)
If the Security Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.
(e)
The Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
30.6
No fiduciary duties
(a)
Nothing in any Finance Document constitutes the Security Agent as an agent, trustee or fiduciary of any Transaction Obligor.
(b)
The Security Agent shall not be bound to account to any other Party for any sum or the profit element of any sum received by it for its own account.
30.7
Business with the Group
The Security Agent may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.
30.8
Rights and discretions
(a)
The Security Agent may:
(i)
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorized;
(ii)
assume that:
(A)
any instructions received by it from the Facility Agent acting on the instructions of the Majority Lenders, any Finance Parties or any group of Finance Parties are duly given in accordance with the terms of the Finance Documents; and
(B)
unless it has received notice of revocation, that those instructions have not been revoked; and
(iii)
rely on a certificate from any person:
(A)
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or
(B)
to the effect that such person approves of any particular dealing, transaction, step, action or thing,
as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b)
The Security Agent may assume (unless it has received notice to the contrary in its capacity as security agent for the Creditor Parties) that:
(i)
no Default has occurred;
(ii)
any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and
(iii)
any notice or request made by the Borrower (other than a Drawdown Request or a Selection Notice) is made on behalf of and with the consent and knowledge of all the Transaction Obligors.
(c)
The Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts.
(d)
Without prejudice to the generality of paragraph (c) above or paragraph (e) below, the Security Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Security Agent (and so separate from any lawyers instructed by the Facility Agent or the Lenders) if the Security Agent in its reasonable opinion deems this to be desirable.
(e)
The Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Security Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.
(f)
The Security Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not:
(i)
be liable for any error of judgment made by any such person; or
(ii)
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person,
unless such error or such loss was directly caused by the Security Agent’s gross negligence or wilful misconduct.
(g)
Unless a Finance Document expressly provides otherwise the Security Agent may disclose to any other Party any information it reasonably believes it has received as security agent under the Finance Documents.
(h)
Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
(i)
Notwithstanding any provision of any Finance Document to the contrary, the Security Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
30.9
Responsibility for documentation
The Security Agent is not responsible or liable for:
(a)
the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Facility Agent, the Security Agent, the Arranger, a Transaction Obligor or any other person in, or in connection with, any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(c)
any determination as to whether any information provided or to be provided to any Creditor Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
30.10
No duty to monitor
The Security Agent shall not be bound to inquire:
(a)
whether or not any Default has occurred;
(b)
as to the performance, default or any breach by any Transaction Obligor of its obligations under any Transaction Document; or
(c)
whether any other event specified in any Transaction Document has occurred.
30.11
Exclusion of liability
(a)
Without limiting paragraph (b) below (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Security Agent or any Receiver or Delegate), none of the Security Agent nor any Receiver or Delegate will be liable for:
(i)
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct;
(ii)
exercising, or not exercising ,any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(iii)
any shortfall which arises on the enforcement or realization of the Security Property; or
(iv)
without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:
(A)
any act, event or circumstance not reasonably within its control; or
(B)
the general risks of investment in, or the holding of assets in, any jurisdiction,
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalization, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b)
No Party other than the Security Agent, that Receiver or that Delegate (as applicable) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this Clause subject to Clause 1.5 ( Third party rights ).
(c)
The Security Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Security Agent if the Security Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognized clearing or settlement system used by the Security Agent for that purpose.
(d)
Nothing in this Agreement shall oblige the Security Agent to carry out:
(i)
any “know your customer” or other checks in relation to any person; or
(ii)
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Finance Party,
on behalf of any Finance Party and each Finance Party confirms to the Security Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Security Agent.
(e)
Without prejudice to any provision of any Finance Document excluding or limiting the liability of the Security Agent, any Receiver or Delegate, any liability of the Security Agent, any Receiver or Delegate arising under or in connection with any Transaction Document or the Security Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Security Agent, Receiver or Delegate or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Security Agent, any Receiver or Delegate at any time which increase the amount of that loss. In no event shall the Security Agent, any Receiver or Delegate be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Security Agent, the Receiver or Delegate has been advised of the possibility of such loss or damages.
30.12
Lenders’ indemnity to the Security Agent
(a)
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Security Agent and every Receiver and every Delegate, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by reason of the Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct) in acting as Security Agent, Receiver or Delegate under the Finance Documents (unless the Security Agent, Receiver or Delegate has been reimbursed by a Transaction Obligor pursuant to a Finance Document).
(b)
Subject to paragraph (c) below, the Borrower shall immediately on demand reimburse any Lender for any payment that Lender makes to the Security Agent pursuant to paragraph (a) above.
(c)
Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Security Agent to an Obligor.
30.13
Resignation of the Security Agent
(a)
The Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrower.
(b)
Alternatively, the Security Agent may resign by giving 30 days’ notice to the other Finance Parties and the Borrower, in which case the Majority Lenders may appoint a successor Security Agent.
(c)
If the Majority Lenders have not appointed a successor Security Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Security Agent may appoint a successor Security Agent.
(d)
The retiring Security Agent shall, at its own cost, make available to the successor Security Agent such documents and records and provide such assistance as the successor Security Agent may reasonably request for the purposes of performing its functions as Security Agent under the Finance Documents.
(e)
The Security Agent’s resignation notice shall only take effect upon:
(i)
the appointment of a successor; and
(ii)
the transfer of all the Security Property to that successor.
(f)
Upon the appointment of a successor, the retiring Security Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (b) of Clause 30.24 ( Winding up of trust ) and paragraph (d) above) but shall remain entitled to the benefit of Clause 14.5 ( Indemnity to the Security Agent ) and this Clause 30 ( The Security Agent ) and any other provisions of a Finance Document which are expressed to limit or exclude its liability (or to indemnify it) in acting as Security Agent. Any fees for the account of the retiring Security Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(g)
The Majority Lenders may, by notice to the Security Agent, require it to resign in accordance with paragraph (b) above. In this event, the Security Agent shall resign in accordance with paragraph (b) above.
(h)
The consent of the Borrower (or any other Transaction Obligor) is not required for an assignment or transfer of rights and/or obligations by the Security Agent.
30.14
Confidentiality
(a)
In acting as Security Agent for the Finance Parties, the Security Agent shall be regarded as acting through its trustee division which shall be treated as a separate entity from any other of its divisions or departments.
(b)
If information is received by a division or department of the Security Agent other than the division or department responsible for complying with the obligations assumed by it under the Finance Documents, that information may be treated as confidential to that division or department, and the Security Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party.
30.15
Credit appraisal by the Finance Parties
Without affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Finance Party confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document including but not limited to:
(a)
the financial condition, status and nature of each member of the Group;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(c)
whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Transaction Document, the Security Property, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(d)
the adequacy, accuracy or completeness of any information provided by the Security Agent, any Party or by any other person under, or in connection with, any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and
(e)
the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets.
30.16
Security Agent’s management time
(a)
Any amount payable to the Security Agent under Clause 14.5 ( Indemnity to the Security Agent ), Clause 16 ( Costs and Expenses ) and Clause 30.12 ( Lenders’ indemnity to the Security Agent ) shall include the cost of utilizing the Security Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Security Agent may notify to the Borrower and the other Finance Parties, and is in addition to any fee paid or payable to the Security Agent under Clause 11 ( Fees ).
(b)
Without prejudice to paragraph (a) above, in the event of:
(i)
An Event of Default;
(ii)
the Security Agent being requested by a Transaction Obligor or the Facility Agent acting on the instructions of the Majority Lenders to undertake duties which the Security Agent and the Borrower agree to be of an exceptional nature or outside the scope of the normal duties of the Security Agent under the Finance Documents; or
(iii)
the Security Agent and the Borrower agreeing that it is otherwise appropriate in the circumstances,
the Borrower shall pay to the Security Agent any additional remuneration (together with any applicable VAT) that may be agreed between them or determined pursuant to paragraph (c) below.
(c)
If the Security Agent and the Borrower fail to agree upon the nature of the duties, or upon the additional remuneration referred to in paragraph (b) above or whether additional remuneration is appropriate in the circumstances, any dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Security Agent and approved by the Borrower (the costs of the nomination and of the investment bank being payable by the Borrower) and the determination of any investment bank shall be final and binding upon the Parties.
30.17
Reliance and engagement letters
Each Creditor Party confirms that the Security Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Security Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
30.18
No responsibility to perfect Transaction Security
The Security Agent shall not be liable for any failure to:
(a)
require the deposit with it of any deed or document certifying, representing or constituting the title of any Transaction Obligor to any of the Security Assets;
(b)
obtain any license, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Finance Document or the Transaction Security;
(c)
register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any law or regulation or to give notice to any person of the execution of any Finance Document or of the Transaction Security;
(d)
take, or to require any Transaction Obligor to take, any step to perfect its title to any of the Security Assets or to render the Transaction Security effective or to secure the creation of any ancillary Security under any law or regulation; or
(e)
require any further assurance in relation to any Security Document.
30.19
Insurance by Security Agent
(a)
The Security Agent shall not be obliged:
(i)
to insure any of the Security Assets;
(ii)
to require any other person to maintain any insurance; or
(iii)
to verify any obligation to arrange or maintain insurance contained in any Finance Document,
and the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance.
(b)
Where the Security Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result of its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Facility Agent acting on the instructions of the Majority Lenders request it to do so in writing and the Security Agent fails to do so within 14 days after receipt of that request.
30.20
Custodians and nominees
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.
30.21
Delegation by the Security Agent
(a)
Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any right, power, authority or discretion vested in it in its capacity as such.
(b)
That delegation may be made upon any terms and conditions (including the power to sub delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Creditor Parties.
(c)
No Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible for any damages, costs or losses incurred by reason of any misconduct, omission or default on the part of any such delegate or sub delegate.
30.22
Additional Security Agents
(a)
The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it:
(i)
if it considers that appointment to be in the interests of the Creditor Parties; or
(ii)
for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or
(iii)
for obtaining or enforcing any judgment in any jurisdiction,
and the Security Agent shall give prior notice to the Borrower and the Finance Parties of that appointment.
(b)
Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection with the Finance Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment.
(c)
The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent.
30.23
Acceptance of title
The Security Agent shall be entitled to accept without inquiry, and shall not be obliged to investigate, any right and title that any Transaction Obligor may have to any of the Security Assets and shall not be liable for or bound to require any Transaction Obligor to remedy any defect in its right or title.
30.24
Winding up of trust
If the Security Agent, with the approval of the Facility Agent determines that:
(a)
all of the Secured Liabilities and all other obligations secured by the Security Documents have been fully and finally discharged; and
(b)
no Creditor Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Transaction Obligor pursuant to the Finance Documents,
then
(i)
the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Security Documents; and
(ii)
any Security Agent which has resigned pursuant to Clause 30.13 ( Resignation of the Security Agent ) shall release, without recourse or warranty, all of its rights under each Security Document.
30.25
Application of receipts
(a)
Except as expressly stated to the contrary in any Finance Document, any moneys which the Security Agent receives or recovers and which are, or are attributable to, Security Property (for the purposes of this Clause 30 ( The Security Agent ), the “ Recoveries ”) shall be transferred to the Facility Agent for application in accordance with Clause 33.5 ( Application of receipts; partial payments ).
(b)
Paragraph (a) above is without prejudice to the rights of the Security Agent, each Receiver and each Delegate:
(i)
under Clause 14.5 ( Indemnity to the Security Agent ) or any other indemnity in favor of the Security Agent under the Finance Documents to be indemnified out of the Security Assets; and
(ii)
under any Finance Document to credit any moneys received or recovered by it to any suspense account.
(c)
Any transfer by the Security Agent to the Facility Agent in accordance with paragraph (a) above shall be a good discharge, to the extent of that payment, by the Security Agent.
(d)
The Security Agent is under no obligation to make the payments to the Facility Agent under paragraph (a) of this Clause 30.25 ( Application of receipts ) in the same currency as that in which the obligations and liabilities owing to the relevant Finance Party are denominated.
30.26
Deductions from receipts
(a)
Before transferring any moneys to the Facility Agent under Clause 30.25 ( Application of receipts ), the Security Agent may, in its discretion:
(i)
deduct any sum then due and payable under this Agreement or any other Finance Documents to the Security Agent or any Receiver or Delegate and retain that sum for itself or, as the case may require, pay it to another person to whom it is then due and payable;
(ii)
set aside by way of reserve amounts required to meet, and to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement; and
(iii)
pay all Taxes which may be assessed against it in respect of any of the Security Property, or as a consequence of performing its duties, or by virtue of its capacity as Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement).
(b)
For the purposes of sub-paragraph (i) of paragraph (a) above, if the Security Agent has become entitled to require a sum to be paid to it on demand, that sum shall be treated as due and payable, even if no demand has yet been served.
30.27
Prospective liabilities
Following acceleration, the Security Agent may, in its discretion, or at the request of the Facility Agent, hold any Recoveries in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) for later payment to the Facility Agent for application in accordance with Clause 33.5 ( Application of receipts; partial payments ) in respect of:
(a)
any sum to the Security Agent, any Receiver or any Delegate; and
(b)
any part of the Secured Liabilities,
that the Security Agent or, in the case of paragraph (b) only, the Facility Agent, reasonably considers, in each case, might become due or owing at any time in the future.
30.28
Investment of proceeds
Prior to the payment of the proceeds of the Recoveries to the Facility Agent for application in accordance with Clause 33.5 ( Application of receipts; partial payments ) the Security Agent may, in its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) pending the payment from time to time of those moneys in the Security Agent’s discretion in accordance with the provisions of this Clause 30.28 ( Investment of proceeds ).
30.29
Currency conversion
(a)
For the purpose of, or pending the discharge of, any of the Secured Liabilities the Security Agent may convert any moneys received or recovered by the Security Agent from one currency to another, at a market rate of exchange.
(b)
The obligations of any Transaction Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.
30.30
Good discharge
Any payment to be made in respect of the Secured Liabilities by the Security Agent may be made to the Facility Agent on behalf of the Creditor Parties and any payment made in that way shall be a good discharge, to the extent of that payment, by the Security Agent.
30.31
Full freedom to enter into transactions
Without prejudice to Clause 30.7 ( Business with the Group ) or any other provision of a Finance Document and notwithstanding any rule of law or equity to the contrary, the Security Agent shall be absolutely entitled:
(a)
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document);
(b)
to deal in and enter into and arrange transactions relating to:
(i)
any securities issued or to be issued by any Transaction Obligor or any other person; or
(ii)
any options or other derivatives in connection with such securities; and
(c)
to provide advice or other services to the Borrower or any person who is a party to, or referred to in, a Finance Document,
and, in particular, the Security Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.
31
CONDUCT OF BUSINESS BY THE FINANCE PARTIES
No provision of this Agreement will:
(a)
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
32
SHARING AMONG THE FINANCE PARTIES
32.1
Payments to Finance Parties
If a Finance Party (a “ Recovering Finance Party ”) receives or recovers any amount from a Transaction Obligor other than in accordance with Clause 33 ( Payment Mechanics ) (a “ Recovered Amount ”) and applies that amount to a payment due to it under the Finance Documents then:
(a)
the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Facility Agent;
(b)
the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Facility Agent and distributed in accordance with Clause 33 ( Payment Mechanics ), without taking account of any Tax which would be imposed on the Facility Agent in relation to the receipt, recovery or distribution; and
(c)
the Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the “ Sharing Payment ”) equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 33.5 ( Application of receipts; partial payments ).
32.2
Redistribution of payments
The Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Transaction Obligor and distribute it among the Finance Parties (other than the Recovering Finance Party) (the “ Sharing Finance Parties ”) in accordance with Clause 33.5 ( Application of receipts; partial payments ) towards the obligations of that Transaction Obligor to the Sharing Finance Parties.
32.3
Recovering Finance Party’s rights
On a distribution by the Facility Agent under Clause 32.2 ( Redistribution of payments ) of a payment received by a Recovering Finance Party from a Transaction Obligor, as between the relevant Transaction Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Transaction Obligor.
32.4
Reversal of redistribution
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a)
each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the “ Redistributed Amount ”); and
(b)
as between the relevant Transaction Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Transaction Obligor.
32.5
Exceptions
(a)
This Clause 32 ( Sharing among the Finance Parties ) shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Transaction Obligor.
(b)
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:
(i)
it notified that other Finance Party of the legal or arbitration proceedings; and
(ii)
that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

SECTION 11

ADMINISTRATION
33
PAYMENT MECHANICS
33.1
Payments to the Facility Agent
(a)
On each date on which a Transaction Obligor or a Lender is required to make a payment under a Finance Document, that Transaction Obligor or Lender shall make an amount equal to such payment available to the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time specified by the Facility Agent as being customary for settlement of transactions in dollars in the place of payment.
(b)
Payment shall be made to such account as specified by the Facility Agent) and with such bank as the Facility Agent, in each case, specifies.
33.2
Distributions by the Facility Agent
Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 33.3 ( Distributions to a Transaction Obligor ) and Clause 33.4 ( Clawback and pre-funding ) be made available by the Facility Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Facility Agent by not less than five Business Days’ notice with a bank specified by that Party or, in the case of the Advance, to such account of such person as may be specified by the Borrower in the Drawdown Request.
33.3
Distribu t ions to a Transaction Obligor
The Facility Agent may (with the consent of the Transaction Obligor or in accordance with Clause 34 ( Set-Off )) apply any amount received by it for that Transaction Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Transaction Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
33.4
Clawback and pre-funding
(a)
Where a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
(b)
Unless paragraph (c) below applies, if the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.
(c)
If the Facility Agent has notified the Lenders that it is willing to make available amounts for the account of the Borrower before receiving funds from the Lenders then if and to the extent that the Facility Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to the Borrower:
(i)
the Facility Agent shall notify the Borrower of the Lender’s identity and the Borrower shall on demand refund it to the Facility Agent; and
(ii)
the Lender by whom those funds should have been made available or, if that Lender fails to do so, the Borrower shall on demand pay to the Facility Agent the amount (as certified by the Facility Agent) which will indemnify the Facility Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.
33.5
Application of receipts; partial payments
(a)
Subject to paragraph (b) below and except as any Finance Document may otherwise provide, any payment that is received or recovered by any Finance Party under, in connection with, or pursuant to any Finance Document shall be paid to the Facility Agent which shall apply the same in the following order:
(i)
first , in or towards payment of any amounts then due and payable under any of the Finance Documents;
(ii)
secondly , in retention by the Security Agent of an amount equal to any amount not then payable under any Finance Document but which the Facility Agent, by notice to the Borrower and the other Finance Parties, states in its opinion will or may become payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them; and
(iii)
thirdly , any surplus shall be paid to the Borrower or to any other person who appears to be entitled to it.
(b)
If the Facility Agent receives a payment that is insufficient to discharge all the amounts then due and payable by a Transaction Obligor under the Finance Documents, the Facility Agent shall apply that payment towards the obligations of that Transaction Obligor under the Finance Documents in the following order:
(i)
first , in or towards payment pro rata of any unpaid fees, costs and expenses of, and any other amounts owing to, the Facility Agent, the Security Agent, any Receiver and any Delegate under the Finance Documents;
(ii)
secondly , in or towards payment pro rata of any accrued interest or commission due to any Finance Party but unpaid under this Agreement;
(iii)
thirdly , in or towards payment pro rata of any principal due but unpaid under this Agreement; and
(iv)
fourthly , in or towards payment pro rata of any other sum due to any Finance Party but unpaid under the Finance Documents.
(c)
The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in sub-paragraphs (ii) to (iv) of paragraph (b) above.
(d)
Paragraphs (a), (b) and (c) above will override any appropriation made by a Transaction Obligor.
33.6
No set-off by Transaction Obligors
All payments to be made by a Transaction Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
33.7
Business Days
(a)
Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
(b)
During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
33.8
Currency of account
(a)
Subject to paragraphs (b) and (c) below, dollars is the currency of account and payment for any sum due from a Transaction Obligor under any Finance Document.
(b)
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(c)
Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.
33.9
Change of currency
(a)
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognized by the central bank of any country as the lawful currency of that country, then:
(i)
any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility Agent (after consultation with the Borrower); and
(ii)
any translation from one currency or currency unit to another shall be at the official rate of exchange recognized by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility Agent (acting reasonably).
(b)
If a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and after consultation with the Borrower) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.
33.10
Currency Conversion
(a)
For the purpose of, or pending any payment to be made by any Servicing Party under any Finance Document, such Servicing Party may convert any moneys received or recovered by it from one currency to another, at a market rate of exchange.
(b)
The obligations of any Transaction Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.
33.11
Disruption to Payment Systems etc.
If either the Facility Agent determines (in its discretion) that a Disruption Event has occurred or the Facility Agent is notified by the Borrower that a Disruption Event has occurred:
(a)
the Facility Agent may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Facility as the Facility Agent may deem necessary in the circumstances;
(b)
the Facility Agent shall not be obliged to consult with the Borrower in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;
(c)
the Facility Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;
(d)
any such changes agreed upon by the Facility Agent and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 42 ( Amendments and Waivers );
(e)
the Facility Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 33.11 ( Disruption to Payment Systems etc. ); and
(f)
the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.
34
SET-OFF
A Finance Party may set off any matured obligation due from a Transaction Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Transaction Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
35
BAIL-IN
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
35.1
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
35.2
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
36
NOTICES
36.1
Communications in writing
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
36.2
Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents are:
(a)
in the case of the Borrower and the Guarantor, that specified in Schedule 1 ( The Parties );
(b)
in the case of each Lender or any other Obligor, that specified in Schedule 1 ( The Parties ) or, if it becomes a Party after the date of this Agreement, that notified in writing to the Facility Agent on or before the date on which it becomes a Party;
(c)
in the case of the Facility Agent, that specified in Schedule 1 ( The Parties ); and
(d)
in the case of the Security Agent, that specified in Schedule 1 ( The Parties ),
or any substitute address, fax number or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than five Business Days’ notice.
36.3
Delivery
(a)
Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:
(i)
if by way of fax, when received in legible form; or
(ii)
if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,
and, if a particular department or officer is specified as part of its address details provided under Clause 36.2 ( Addresses ), if addressed to that department or officer.
(b)
Any communication or document to be made or delivered to a Servicing Party will be effective only when actually received by that Servicing Party and then only if it is expressly marked for the attention of the department or officer of that Servicing Party specified in Schedule 1 ( The Parties ) (or any substitute department or officer as that Servicing Party shall specify for this purpose).
(c)
All notices from or to a Transaction Obligor shall be sent through the Facility Agent unless otherwise specified in any Finance Document.
(d)
Any communication or document made or delivered to the Borrower in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.
(e)
Any communication or document which becomes effective, in accordance with paragraphs (a) to (d) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
36.4
Notification of address and fax number
Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 36.2 ( Addresses ) or changing its own address or fax number, the Facility Agent shall notify the other Parties.
36.5
Electronic communication
(a)
Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means, to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:
(i)
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
(ii)
notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice.
(b)
Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Facility Agent only if it is addressed in such a manner as the Facility Agent shall specify for this purpose.
(c)
Any electronic communication which becomes effective, in accordance with paragraph (b) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
36.6
English language
(a)
Any notice given under or in connection with any Finance Document must be in English.
(b)
All other documents provided under or in connection with any Finance Document must be:
(i)
in English; or
(ii)
if not in English, and if so required by the Facility Agent, accompanied by a certified English translation prepared by a translator approved by the Facility Agent and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
37
CALCULATIONS AND CERTIFICATES
37.1
Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
37.2
Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
37.3
Day count convention
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
38
PARTIAL INVALIDITY
If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
39
REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any Creditor Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of a Creditor Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
40
SETTLEMENT OR DISCHARGE CONDITIONAL
Any settlement or discharge under any Finance Document between any Finance Party and any Transaction Obligor shall be conditional upon no security or payment to any Finance Party by any Transaction Obligor or any other person being set aside, adjusted or ordered to be repaid, whether under any bankruptcy or insolvency law or otherwise.
41
IRREVOCABLE PAYMENT
If the Facility Agent considers that an amount paid or discharged by, or on behalf of, a Transaction Obligor or by any other person in purported payment or discharge of an obligation of that Transaction Obligor to a Finance Party under the Finance Documents is capable of being avoided or otherwise set aside on the bankruptcy, liquidation or administration of that Transaction Obligor or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Finance Documents.
42
AMENDMENTS AND WAIVERS
42.1
Required consents
(a)
Subject to Clause 42.2 ( All Lender matters ) and Clause 42.3 ( Other exceptions ) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and, in the case of an amendment, the Transaction Obligors party thereto and any such amendment or waiver will be binding on all Parties.
(b)
The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 42 ( Amendments and Waivers ).
(c)
Without prejudice to the generality of Clause 29.8 ( Rights and discretions ), the Facility Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.
42.2
All Lender matters
An amendment of or waiver or consent in relation to any term of any Finance Document that has the effect of changing or which relates to:
(a)
the definition of “Majority Lenders” in Clause 1.1 ( Definitions );
(b)
a postponement to or extension of the date of payment of any amount under the Finance Documents (other than in relation to Clause 7.3 ( Voluntary prepayment of Loan ) in respect of a prepayment made pursuant to Clause 24.2 ( Provision of additional security ; prepayment) or Clause 7.4 ( Mandatory prepayment on sale or Total Loss );
(c)
a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable;
(d)
a change in currency of payment of any amount under the Finance Documents;
(e)
an increase in any Commitment or the Total Commitments, an extension of any Availability Period or any requirement that a cancellation of Commitments reduces the Commitments rateably under the Facility;
(f)
any provision which expressly requires the consent of all the Lenders;
(g)
this Clause 42 ( Amendments and Waivers );
(h)
any change to Clause 2 ( The Facility ), Clause 3 ( Purpose ), Clause 5 ( Drawdown ), Clause 8 ( Interest ), paragraph (a) of Clause 24.7 ( Provision of valuations ), Clause 25 ( Accounts and application of Earnings), Clause 27 ( Changes to the Lenders ), Clause 45 ( Governing Law );
(i)
any release of, or material variation to, any Transaction Security, guarantee, indemnity or subordination arrangement set out in a Finance Document (except in the case of a release of Transaction Security as it relates to the disposal of an asset which is the subject of the Transaction Security and where such disposal is expressly permitted by the Majority Lenders or otherwise under a Finance Document);
(j)
(other than as expressly permitted by the provisions of any Finance Document) the nature or scope of:
(i)
the guarantee and indemnity granted under Clause 17 ( Guarantee and Indemnity );
(ii)
the Security Assets; or
(iii)
the manner in which the proceeds of enforcement of the Transaction Security are distributed,
(except in the case of sub-paragraphs (ii) and (iii) above, insofar as it relates to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document); or
(k)
the release of the guarantee and indemnity granted under Clause 17 ( Guarantee and Indemnity ) or of any Transaction Security unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document,
shall not be made, or given, without the prior consent of all the Lenders.
42.3
Other exceptions
(a)
An amendment or waiver which relates to the rights or obligations of a Servicing Party or the Arranger (each in their capacity as such) may not be effected without the consent of that Servicing Party or, as the case may be, the Arranger.
(b)
The Borrower and the Facility Agent, the Arranger or the Security Agent, as applicable, may amend or waive a term of a Fee Letter to which they are party.
43
CONFIDENTIALITY
43.1
Confidential Information
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 43.2 ( Disclosure of Confidential Information ) and Clause 43.3 ( Disclosure to numbering service providers ) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
43.2
Disclosure of Confidential Information
Any Finance Party may disclose:
(a)
to any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
(b)
to any person:
(i)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Facility Agent or Security Agent and, in each case, to any of that person’s Affiliates, Representatives and professional advisers;
(ii)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction including a Securitization under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Transaction Obligors and to any of that person’s Affiliates, Representatives and professional advisers;
(iii)
appointed by any Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (b) of Clause 29.15 ( Relationship with the other Finance Parties );
(iv)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in sub-paragraph (i) or (ii) of paragraph (b) above;
(v)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation including any applicable data protection laws;
(vi)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;
(vii)
to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 27.8 ( Security over Lenders’ rights );
(viii)
who is a Party, a member of the Group or any related entity of a Transaction Obligor;
(ix)
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document; or
(x)
with the consent of the Borrower;
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
(A)
in relation to sub-paragraphs (i), (ii) and (iii) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B)
in relation to sub-paragraph (iv) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(C)
in relation to sub-paragraphs (v) (vi) and (vii) of paragraph (b) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances;
(c)
to any person appointed by that Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement in such form as may be agreed between the Borrower and the relevant Finance Party; and
(d)
to any Rating Agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such Rating Agency to carry out its normal rating activities in relation to the Finance Documents and/or the Transaction Obligors if the Rating Agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.
43.3
Disclosure to numbering service providers
(a)
Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:
(i)
names of Transaction Obligors;
(ii)
country of domicile of Transaction Obligors;
(iii)
place of incorporation of Transaction Obligors;
(iv)
date of this Agreement;
(v)
Clause 45 ( Governing Law );
(vi)
the names of the Facility Agent and the Arranger;
(vii)
date of each amendment and restatement of this Agreement;
(viii)
amount of Total Commitments;
(ix)
currency of the Facility;
(x)
type of Facility;
(xi)
ranking of Facility;
(xii)
Maturity Date for Facility;
(xiii)
changes to any of the information previously supplied pursuant to sub-paragraphs (i) to (xii) above; and
(xiv)
such other information agreed between such Finance Party and the Borrower,
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
(b)
The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Transaction Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.
(c)
Each Obligor represents, on behalf of itself and the other Transaction Obligors, that none of the information set out in sub-paragraphs (i) to (xiv) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information.
(d)
The Facility Agent shall notify the Guarantor and the other Finance Parties of:
(i)
the name of any numbering service provider appointed by the Facility Agent in respect of this Agreement, the Facility and/or one or more Transaction Obligors; and
(ii)
the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Transaction Obligors by such numbering service provider.
43.4
Entire agreement
This Clause 43 ( Confidentiality ) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
43.5
Inside information
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
43.6
Notification of disclosure
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrower:
(a)
of the circumstances of any disclosure of Confidential Information made pursuant to sub-paragraph (v) of paragraph (b) of Clause 43.2 ( Disclosure of Confidential Information ) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and
(b)
upon becoming aware that Confidential Information has been disclosed in breach of this Clause 43 ( Confidentiality ).
43.7
Continuing obligations
The obligations in this Clause 43 ( Confidentiality ) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:
(a)
the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and
(b)
the date on which such Finance Party otherwise ceases to be a Finance Party.
44
COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

SECTION 12

GOVERNING LAW AND ENFORCEMENT
45
GOVERNING LAW
THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN A FINANCE DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.
46
ENFORCEMENT
46.1
Jurisdiction
(a)
Each of the Obligors hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Finance Documents to which such Obligor is a party or for recognition or enforcement of any judgment, and each of the Parties hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State Court or, to the extent permitted by law, in such Federal court. Each of the Parties agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(b)
This Clause 46.1 ( Jurisdiction ) is for the benefit of the Creditor Parties only. As a result, no Creditor Party shall be prevented from taking proceedings relating to any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) in any other courts with jurisdiction. To the extent allowed by law, the Creditor Parties may take concurrent proceedings in any number of jurisdictions.
46.2
Service of process
(a)
Each of the Obligors hereby agrees to appoint Seward & Kissel LLP, attention Michael Timpone, Esq., with offices currently located at One Battery Park Plaza, New York, New York 10004, as its designated agent for service of process for any action or proceeding arising out of or relating to this Agreement or any other Finance Document. Each of the Obligors also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to its address specified in Clause 36.2 ( Addresses ). Each of the Obligors also agrees that service of process may be made on it by any other method of service provided for under the applicable laws in effect in the State of New York.
(b)
If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrower (on behalf of all the Obligors) must immediately (and in any event within 10 days of such event taking place) appoint another agent on terms acceptable to the Facility Agent. Failing this, the Facility Agent may appoint another agent for this purpose.
46.3
Venue; immunity
Each of the Obligors hereby irrevocably and unconditionally waives to the fullest extent it may legally and effectively do so:
(a)
any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Finance Document to which it is a party in any New York State or Federal court and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court; and
(b)
any immunity from suit, the jurisdiction of any court in which judicial proceedings may at any time be commenced with respect to this Agreement or any other Finance Document or from any legal process with respect to itself or its property (including without limitation attachment prior to judgment, attachment in aid of execution of judgment, set-off, execution of a judgment or any other legal process), and to the extent that in any such jurisdiction there may be attributed to such person such an immunity (whether or not claimed), such person hereby irrevocably agrees not to claim such immunity.
47
WAIVER OF JURY TRIAL
47.1
Waiver
EACH OF THE PARTIES MUTUALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
48
PATRIOT ACT NOTICE
48.1
PATRIOT Act Notice
Each of the Creditor Parties hereby notifies the Obligors that pursuant to the requirements of the PATRIOT Act and the policies and practices of the Creditor Parties, each of the Creditor Parties is required to obtain, verify and record certain information and documentation that identifies each Obligor, which information includes the name and address of each Obligor and such other information that will allow each of the Creditor Parties to identify each Obligor in accordance with the PATRIOT Act.


EXECUTION PAGES
WHEREFORE, the Parties have caused this Loan Agreement to be executed as of the date first above written.

SCORPIO TANKERS INC., as Borrower

By: _/s/ Luca Forgione ____________________
Name: Luca Forgione
Title: General Counsel

DVB BANK SE, as Arranger

By: __/s/ Theresa M. Adamski _______________
Name: Theresa M. Adamski
Title: Attorney-in-Fact

STI WEMBLEY SHIPPING COMPANY LIMITED,
as Guarantor

By: _/s/ Francesca Gianfranchi _______________
Name: Francesca Gianfranchi
Title: Attorney-in-Fact

DVB BANK SE, as Underwriter


By: __/s/ Theresa M. Adamski _______________
Name: Theresa M. Adamski
Title: Attorney-in-Fact

STI MILWAUKEE SHIPPING COMPANY LIMITED,
as Guarantor

By: _/s/ Francesca Gianfranchi _______________
Name: Francesca Gianfranchi
Title: Attorney-in-Fact

DVB BANK SE, AMSTERDAM BRANCH, as Original Lender

By: __/s/ Theresa M. Adamski _______________
Name: Theresa M. Adamski
Title: Attorney-in-Fact

STI SENECA SHIPPING COMPANY LIMITED,
as Guarantor

By: _/s/ Francesca Gianfranchi _______________
Name: Francesca Gianfranchi
Title: Attorney-in-Fact

DVB BANK AMERICA N.V., as Facility Agent


By: __/s/ Theresa M. Adamski _______________
Name: Theresa M. Adamski
Title: Attorney-in-Fact


STI ALEXIS SHIPPING COMPANY LIMITED,
as Guarantor

By: _/s/ Francesca Gianfranchi _______________
Name: Francesca Gianfranchi
Title: Attorney-in-Fact

DVB BANK AMERICA N.V., as Security Agent


By: __/s/ Theresa M. Adamski _______________
Name: Theresa M. Adamski
Title: Attorney-in-Fact


 
 



SCHEDULE 1

THE PARTIES
PART A

THE OBLIGORS
Name of Borrower
Place of Incorporation
Registration number (or equivalent, if any)
Address for Communication
Scorpio Tankers Inc.
The Republic of The Marshall Islands
36141
Scorpio Tankers Inc.
Le Millenium,
9 Boulevard Charles III
98000 Monaco
Attention: Mr. Luca Forgione – Legal Department
Facsimile: +3 77 97 77 83 46
Email: legal@scorpiogroup.net
 
 
 
 
 


 
 
Name of Guarantor
Place of Incorporation
Registration number (or equivalent, if any)
Address for Communication
STI Wembley Shipping Company Limited
The Republic of The Marshall Islands
60722
c/o Scorpio Tankers Inc.
Le Millenium,
9 Boulevard Charles III
98000 Monaco
Attention: Mr. Luca Forgione – Legal Department
Facsimile: +3 77 97 77 83 46
Email: legal@scorpiogroup.net
STI Milwaukee Shipping Company Limited
The Republic of The Marshall Islands
65151
c/o Scorpio Tankers Inc.
Le Millenium,
9 Boulevard Charles III
98000 Monaco
Attention: Mr. Luca Forgione – Legal Department
Facsimile: +3 77 97 77 83 46
Email: legal@scorpiogroup.net
STI Seneca Shipping Company Limited
The Republic of The Marshall Islands
65154
c/o Scorpio Tankers Inc.
Le Millenium,
9 Boulevard Charles III
98000 Monaco
Attention: Mr. Luca Forgione – Legal Department
Facsimile: +3 77 97 77 83 46
Email: legal@scorpiogroup.net
STI Alexis Shipping Company Limited
The Republic of The Marshall Islands
71771
c/o Scorpio Tankers Inc.
Le Millenium,
9 Boulevard Charles III
98000 Monaco
Attention: Mr. Luca Forgione – Legal Department
Facsimile: +3 77 97 77 83 46
Email: legal@scorpiogroup.net


PART B

THE ORIGINAL LENDERS
Name of Original Lender
Commitment
Address for Communication
DVB Bank SE, Amsterdam Branch
$90,000,000
Tower F, 6 th  Floor
Schiphol Boulevard 255
118 BH Schiphol, The Netherlands

Attention: Ingmar Loges
Facsimile: +31 88 399 8112
Email: Ingmar.Loges@dvbbank.com

With a copy to:

DVB Transport (US) LLC
Representative Office of DVB Bank SE
609 Fifth Avenue, 5 th  Floor
New York, New York 10017

Attention: Jurek Bochner
Facsimile: + (212) 588 0424
Email: Jurek.bochner@dvbbank.com
 
 
 



37     



PART C

THE SERVICING PARTIES
Name of Facility Agent
Address for Communication
DVB Bank America N.V.
DVB Bank America N.V.
Gaitoweg 35
Willemstad, Curacao

Attention: Managing Director
and Loan Administration Department  

Facsimile: +599-9-465-2366
Email: TLS.Curacao@dvbbank.com

With a copy to:

DVB Transport (US) LLC
Representative Office of DVB Bank SE
609 Fifth Avenue, 5 th  Floor
New York, New York 10017

Attention: Jurek Bochner
Facsimile: +1 (212) 588 0424
Email: Jurek.bochner@dvbbank.com

Attention: TM New York
Facsimile: +1 (212) 588 0424
Email: TM.NewYork@dvbbank.com



38     



Name of Security Agent
Address for Communication
DVB Bank America N.V.

DVB Bank America N.V.
Gaitoweg 35
Willemstad, Curacao

Attention: Managing Director
and Loan Administration Department  

Facsimile: +599-9-465-2366
Email: TLS.Curacao@dvbbank.com

With a copy to:

DVB Transport (US) LLC
Representative Office of DVB Bank SE
609 Fifth Avenue, 5 th  Floor
New York, New York 10017

Attention: Jurek Bochner
Facsimile: +1 (212) 588 0424
Email: Jurek.bochner@dvbbank.com

Attention: TM New York
Facsimile: +1 (212) 588 0424
Email: TM.NewYork@dvbbank.com


39     



Name of Arranger
Address for Communication
DVB Bank SE
DVB Bank SE
Legal Department
Platz der Republik 6
60325 Frankfurt am Main
Germany

With a copy to:

DVB Transport (US) LLC
Representative Office of DVB Bank SE
609 Fifth Avenue, 5 th  Floor
New York, New York 10017

Attention: Jurek Bochner
Facsimile: +1 (212) 588 0424
Email: Jurek.bochner@dvbbank.com

Attention: TM New York
Facsimile: +1 (212) 588 0424
Email: TM.NewYork@dvbbank.com


Name of Underwriter
Address for Communication
DVB Bank SE
DVB Bank SE
Legal Department
Platz der Republik 6
60325 Frankfurt am Main
Germany

With a copy to:

DVB Transport (US) LLC
Representative Office of DVB Bank SE
609 Fifth Avenue, 5 th  Floor
New York, New York 10017

Attention: Jurek Bochner
Facsimile: +1 (212) 588 0424
Email: Jurek.bochner@dvbbank.com

Attention: TM New York
Facsimile: +1 (212) 588 0424
Email: TM.NewYork@dvbbank.com

40     




 
 
SCHEDULE 2

CONDITIONS PRECEDENT
PART A

INITIAL CONDITIONS PRECEDENT
1
Obligors
1.1
A copy of the constitutional documents of each Obligor.
1.2
A copy of a resolution of the board of directors (or equivalent governing body) of each Obligor:
(a)
approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;
(b)
authorizing a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and
(c)
authorizing a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices (including, if relevant, a Drawdown Request and each Selection Notice) to be signed and/or dispatched by it under, or in connection with, the Finance Documents to which it is a party.
1.3
A copy of a resolution signed by the Borrower as the holder of all of the issued shares in each Guarantor, approving the terms of, and the transactions contemplated by, the Finance Documents to which each Guarantor is a party.
1.4
An original of the power of attorney of any Obligor authorizing a specified person or persons to execute the Finance Documents to which it is a party.
1.5
A specimen of the signature of each person signing any Finance Document.
1.6
A certificate of an authorized signatory of each Obligor confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on that Obligor to be exceeded.
1.7
A certificate of an authorized signatory of the relevant Obligor certifying that each copy document relating to it specified in this Part A of Schedule 2 ( Conditions Precedent ) is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.
2
Finance Documents
2.1
If applicable, a duly executed original of the Subordination Agreement and copies of each Subordinated Finance Document in respect of any Subordinated Liabilities.
2.2
A duly executed original of any Finance Document not otherwise referred to in this Schedule 2 ( Conditions Precedent ).
2.3
A duly executed original of any other document required to be delivered by each Finance Document if not otherwise referred to in this Schedule 2 ( Conditions Precedent ).
3
Other documents and evidence
3.1
A valuation of the relevant Vessel, addressed to the Facility Agent on behalf of the Finance Parties, dated not earlier than two weeks before the Drawdown Date unless otherwise agreed by the Facility Agent from an Approved Appraiser and showing the Market Value for that Vessel.
3.2
A copy of any other Authorization or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document.
3.3
The Original Financial Statements of the Borrower.
3.4
A copy of any mandates or other documents required in connection with the opening or operation of the Accounts.
3.5
Such evidence as the Facility Agent may require for the Finance Parties to be able to satisfy each of their “know your customer” or similar identification procedures in relation to the transactions contemplated by the Finance Documents.


PART B

CONDITIONS PRECEDENT TO EACH ADVANCE
1
Obligors
A certificate of an authorized signatory of the relevant Obligor certifying that each corporate and copy document provided by it under Part A of Schedule 2 ( Conditions Precedent ) remains correct, complete and in full force and effect as at the Drawdown Date.
2
Borrower
A certificate of an authorized signatory of each of the Borrower and the relevant Guarantor certifying that each copy document which it is required to provide under this Part B of Schedule 2 ( Conditions Precedent ) is correct, complete and in full force and effect as at the Drawdown Date.
3
Existing Indebtedness
3.1
Evidence that all sums then due to DVB Bank America N.V., as Lender in respect of the Existing Indebtedness will have been paid in full immediately upon the making of the Advance.
4
Finance Documents
4.1
A duly executed copy of each Security Document if not previously delivered pursuant to Part A of this Schedule 2 ( Conditions Precedent ).
4.2
A duly executed copy of any other document required to be delivered by each Finance Document if not previously provided pursuant to Part A of this Schedule 2 ( Conditions Precedent ).
5
Vessel and other security
5.1
Documentary evidence that the Mortgage in respect of the relevant Vessel has been duly recorded as a valid first preferred ship mortgage in accordance with the laws of the jurisdiction of its Approved Flag.
5.2
Documentary evidence that the relevant Vessel:
(a)
maintains the Approved Classification for that Vessel with the Approved Classification Society free of all overdue recommendations and conditions of the Approved Classification Society; and
(b)
is insured in accordance with the provisions of this Agreement and all requirements in this Agreement in respect of insurances have been complied with.
5.3
Copies of the relevant Vessel’s Safety Management Certificate (together with any other details of the applicable Safety Management System which the Facility Agent requires) and of any other documents required under the ISM Code and the ISPS Code in relation to the Vessel including without limitation an ISSC.
5.4
Copies of the relevant Vessel’s Commercial Management Agreement and Technical Management Agreement, both on terms acceptable to the Facility Agent acting with the authorization of all of the Lenders, together with:
(a)
a Manager’s Undertaking for each of the Approved Technical Manager and the Approved Commercial Manager; and
(b)
copies of the Approved Technical Manager’s Document of Compliance.
5.5
A copy of the Approved Pooling Arrangement, if applicable.
5.6
Evidence that the Security Documents have been duly registered or recorded in such jurisdictions as the Facility Agent may require and that all notices of assignment required under or in connection with the relevant Security Documents have been served.
5.7
A duly executed copy of a Letter of Undertaking from the Approved Insurance Brokers in a form acceptable to the Facility Agent.
5.8
A duly executed copy of a Letter of Undertaking from any protection and indemnity club or war risks association through or with whom any obligatory insurances are placed or effected in a form acceptable to the Facility Agent.
5.9
A duly executed copy of a Letter of Undertaking from the Approved Classification Society in a form acceptable to the Facility Agent.
5.10
Confirmation from the Facility Agent’s insurance team that it is satisfied that the Vessel is insured in accordance with the provisions of this Agreement.
5.11
In respect of the Vessel, a class certificate together with maintenance certificate.
6
Legal opinions
(a)
Executed favorable legal opinions by lawyers appointed by each Transaction Obligor on such matters concerning the laws of such relevant jurisdictions as the Facility Agent may require in agreed form.
(b)
Executed favorable legal opinions of the legal advisers to the Arranger, the Facility Agent and the Security Agent in New York, in the jurisdiction of the Approved Flag of the relevant Vessel, and such other relevant jurisdictions as the Facility Agent may require.
7
Other documents and evidence
7.1
Evidence that any process agent referred to in Clause 46.2 ( Service of process ), if not an Obligor, has accepted its appointment.
7.2
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 11 ( Fees ) and Clause 16 ( Costs and Expenses ), including legal fees, have been paid.

SCHEDULE 3

REQUESTS
PART A

DRAWDOWN REQUEST

From:     Scorpio Tankers Inc.
To:     DVB Bank America N.V., as Facility Agent
Gaitoweg 35
Willemstad, Curacao
Attention: Managing Director and Loan Administration Department
-and-
DVB Bank SE
c/o DVB Transport (US) LLC
609 Fifth Avenue, 5 th Floor
New York, New York 10017
Attention: Jurek Bochner
Dated:     [ l ]
Dear Sirs
Scorpio Tankers Inc. – $90,000,000 Facility Agreement dated [ l ] (the “Agreement”)
1
We refer to the Agreement. This is a Drawdown Request. Terms defined in the Agreement have the same meaning in this Drawdown Request unless given a different meaning in this Drawdown Request.
2
We wish to borrow the Advance under Tranche [A][B][C][D] on the following terms:
Proposed Drawdown Date:    [ l ] (or, if that is not a Business Day, the     next Business Day)
Amount:    [ l ] or, if less, the Available Facility
Interest Period:    [ l ]
3
We confirm that each condition specified in Clause 4.1 ( Conditions precedent to delivery of a Drawdown Request ) and paragraph (a) of Clause 4.2 ( Conditions precedent to each Advance ) is satisfied on the date of this Drawdown Request.
4
The proceeds of this Advance should be credited to the following account[s]:
amount: [ l ]
account number: [ l ]
name and SWIFT of account bank: [ l ]
name and SWIFT of U.S. correspondent bank: [ l ]

[amount: [ l ]
account number: [ l ]
name and SWIFT of account bank: [ l ]
name and SWIFT of U.S. correspondent bank: [ l ]]

5
This Drawdown Request is irrevocable.
Yours faithfully


________________________
[ l ]
authorized signatory for
Scorpio Tankers Inc.

PART B

SELECTION NOTICE

From:     Scorpio Tankers Inc.
To:     DVB Bank America N.V., as Facility Agent
Gaitoweg 35
Willemstad, Curacao
Attention: Managing Director and Loan Administration Department
-and-
DVB Bank SE
c/o DVB Transport (US) LLC
609 Fifth Avenue, 5 th Floor
New York, New York 10017
Attention: Jurek Bochner

Dated:    [ l ]

Dear Sirs
Scorpio Tankers Inc. - $90,000,000 Facility Agreement dated [ l ] (the “Agreement”)
We refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.
2
We request that, subject to paragraph (g) of Clause 9.1 ( Selection of Interest Periods ) of the Agreement, the next Interest Period for the Loan be [ l ].
3
This Selection Notice is irrevocable.
Yours faithfully


_________________________
[ l ]
authorized signatory for
Scorpio Tankers Inc.

SCHEDULE 4

FORM OF TRANSFER CERTIFICATE

To:    DVB Bank America N.V. as Facility Agent
From:    [The Existing Lender] (the “ Existing Lender ”) and [The New Lender] (the “ New Lender ”)

Dated:     [ l ]
Dear Sirs
Scorpio Tankers Inc. – $90,000,000 Facility Agreement dated [ l ] (the “Agreement”)
1
We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.
2
We refer to Clause 27.5 ( Procedure for transfer ) of the Agreement:
(a)
The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all of the Existing Lender’s rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender’s Commitment and participation in the Loan under the Agreement as specified in the Schedule in accordance with Clause 27.5 ( Procedure for transfer ) of the Agreement.
(b)
The proposed Transfer Date is [ l ].
(c)
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 36.2 ( Addresses ) of the Agreement are set out in the Schedule.
3
The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 27.4 ( Limitation of responsibility of Existing Lenders ) of the Agreement.
4
This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.
5
This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by New York law.
6
This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.
7
The New Lender confirms that, immediately following the effective date of this Transfer Certificate, it will be a FATCA Exempt Party.
Note: The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender’s interest in the Transaction Security in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender’s Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

THE SCHEDULE

Commitment/rights and obligations to be transferred
[insert relevant details]
[Facility Office address, fax number and attention details
for notices and account details for payments.]

[Existing Lender]    [New Lender]

By: _________________    By: _________________
Name:                            Name:
Title:                             Title:

This Transfer Certificate is accepted by the Facility Agent [and the Security Agent] and the Transfer Date is confirmed as [ l ].
[Facility Agent]

By: _______________________
Name:
Title:




SCHEDULE 5

FORM OF ASSIGNMENT AGREEMENT

To:    DVB Bank America N.V. as Facility Agent and [ l ] as Borrower, for and on behalf of each Obligor
From:
[the Existing Lender] (the “ Existing Lender ”) and [the New Lender] (the “ New Lender ”)

Dated: [ l ]
Dear Sirs
Scorpio Tankers Inc. - $90,000,000 Facility Agreement dated [ l ] (the “Agreement”)
1
We refer to the Agreement. This is an Assignment Agreement. Terms defined in the Agreement have the same meaning in this Assignment Agreement unless given a different meaning in this Assignment Agreement.
2
We refer to Clause 27.6 ( Procedure for assignment ):
(a)
The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement, the other Finance Documents and in respect of the Transaction Security which correspond to that portion of the Existing Lender’s Commitment and participations in the Loan under the Agreement as specified in the Schedule.
(b)
The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender’s Commitments and participations in the Loan under the Agreement specified in the Schedule.
(c)
The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.
3
The proposed Transfer Date is [ l ].
4
On the Transfer Date the New Lender becomes Party to the Finance Documents as a Lender.
5
The Facility Office and address, fax, number and attention details for notices of the New Lender for the purposes of Clause 36.2 ( Addresses ) are set out in the Schedule.
6
The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 27.4 ( Limitation of responsibility of Existing Lenders ).
7
This Assignment Agreement acts as notice to the Facility Agent (on behalf of each Finance Party) and, upon delivery in accordance with Clause 27.7 ( Copy of Transfer Certificate or Assignment Agreement to Borrower ), to the Borrower (on behalf of each Transaction Obligor) of the assignment referred to in this Assignment Agreement.
8
This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment Agreement.
9
This Assignment Agreement and any non-contractual obligations arising out of or in connection with it are governed by New York law.
10
This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement.
Note: The execution of this Assignment Agreement may not transfer a proportionate share of the Existing Lender’s interest in the Transaction Security in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender’s Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.


















THE SCHEDULE
Commitment rights and obligations to be transferred by assignment, release and accession
[insert relevant details]
[Facility office address, fax number and attention details for notices
and account details for payments]
[Existing Lender]    [New Lender]

By: _________________    By: _________________
Name:                            Name:
Title:                             Title:
This Assignment Agreement is accepted by the Facility Agent [and the Security Agent] and the Transfer Date is confirmed as [ l ].
Signature of this Assignment Agreement by the Facility Agent [and the Security Agent] constitutes confirmation by the Facility Agent of receipt of notice of the assignment referred to herein, which notice the Facility Agent receives on behalf of each Finance Party.
[Facility Agent]

By: _______________________
Name:
Title:




SCHEDULE 6

FORM OF COMPLIANCE CERTIFICATE

To:     DVB Bank America N.V., as Facility Agent
Gaitoweg 35
Willemstad, Curacao
Attention: Managing Director and Loan Administration Department
-and-
DVB Bank SE
c/o DVB Transport (US) LLC
609 Fifth Avenue, 5 th Floor
New York, New York 10017
Attention: Jurek Bochner

From:    Scorpio Tankers Inc.
Dated:     [ l ]

Dear Sirs
Scorpio Tankers Inc. – $90,000,000 Facility Agreement dated [ l ] (the “Agreement”)
1
We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
2
I am an authorized signatory of the Borrower and in such capacity I hereby certify to the Facility Agent that:
Attached to this certificate is [a true, correct and complete copy of the annual report on Form 20-F (or any successor form) containing the audited financial and other information required to be contained therein for [ l ] of the Borrower] [the unaudited consolidated financial statement of the Borrower for that quarter of [ l ] on Form 6-K (or any successor form)]
3
We confirm that: [Insert details of covenants to be certified] and that the computations of such financial covenants are attached to this Compliance Certificate.
4
The representations and warranties stated in Clause 18 ( Representations ) of the Agreement (updated mutatis mutandis ) are true and correct as of the date hereof.
5
[We confirm that no Default is continuing.]*

Yours faithfully,

______________________
[ l ]
authorized signatory for
Scorpio Tankers Inc.



________________________
for and on behalf of
[ name of Auditors of the Borrower ]

*If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it

SCHEDULE 7

TIMETABLES

Delivery of a duly completed Drawdown Request (Clause 5.1 ( Delivery of a Drawdown Request )) or a Selection Notice (Clause 9.1 ( Selection of Interest Periods ))
Five Business Days before the intended Drawdown Date (Clause 5.1 ( Delivery of a Drawdown Request )) or the expiry of the preceding Interest Period (Clause 9.1 ( Selection of Interest Periods ))
Facility Agent notifies the Lenders of the Advance in accordance with Clause 5.4 ( Lenders’ participation )
Three Business Days before the intended Drawdown Date.
LIBOR is fixed
Quotation Day as of 11:00 am New York time
 
 


SCHEDULE 8

CLASSIFICATION SOCIETY UNDERTAKING

41     



PART A

LETTER TO APPROVED CLASSIFICATION SOCIETY


To:    [ Insert name of classification society ]
Date: [ l ]

Dear Sirs
Name of vessel: m.v. [“STI WEMBLEY”][“STI MILWAUKEE”][“STI SENECA”][“STI ALEXIS”] (the “Vessel”)
Name of mortgagee: DVB BANK AMERICA N.V. (the “Mortgagee”)
We [ l ] (the “ Owner ”) as owner of the Vessel (which has been entered into and classed by you) give notice that we have authorized the Mortgagee to access all and any information we are contractually or otherwise entitled to receive from you in relation to the Vessel.
We hereby authorize and instruct you to provide the Mortgagee with such information as it may request from you.
Furthermore, we instruct you to notify the Mortgagee by email (to techcom@dvbbank.com ) on a best efforts basis as soon as reasonably practicable following the imposition of a condition or the issue of a recommendation in relation to the Vessel or if class is withdrawn in relation to the Vessel.
This letter and any non-contractual obligations arising out of or in connection with it are governed by New York law.


________________________
For and on behalf of
[ Insert name of Owner ]

42     




PART B

UNDERTAKING FROM APPROVED CLASSIFICATION SOCIETY



To:    [ name of Owner ]

And

DVB Bank America N.V., as Facility Agent
Gaitoweg 35
Willemstad, Curacao
Attention: Managing Director and Loan Administration Department
-and-
DVB Bank SE
c/o DVB Transport (US) LLC
609 Fifth Avenue, 5 th Floor
New York, New York 10017
Attention: Jurek Bochner

Dated: [ l ]
Dear Sirs
Name of vessel: m.v. “[ l ]” (the “Vessel”)
Name of Owner: [ l ] (the “Owner”)
We [ name of classification society ], acknowledge receipt of a letter dated [ l ] sent to us by the Owner regarding the Vessel and consent to the instructions contained in such letter.
Yours faithfully


________________________
For and on behalf of
[ name of classification society ]

43     

Execution Version

Exhibit 4.29
Date 26 January 2017
SCORPIO TANKERS INC.
as Borrower
and
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
and
HSH NORDBANK AG
as Bookrunner
and
HSH NORDBANK AG
as Mandated Lead Arranger
and
HSH NORDBANK AG
as Agent and as Security Trustee

LOAN AGREEMENT
relating to
a loan facility of up to $34,000,000 to refinance existing indebtedness
on two combined product tankers (m.v.s "STI ONYX" and "STI DUCHESSA")
and/or for general corporate purposes


HSHSCORPIO34000000LOA_IMAGE1.JPG


Index
Clause    
1
Interpretation
2
Facility
3
Position of the Lenders
4
Drawdown
5
Interest
6
Interest Periods
7
Default Interest
8
Repayment, Prepayment and Reborrowing
9
Conditions Precedent
10
Representations and Warranties
11
General Undertakings
12
Corporate and Financial Undertakings
13
Insurance
14
Ship Covenants
15
Security Cover
16
Payments and Calculations
17
Application of Receipts
18
Application of Earnings
19
Events of Default
20
Fees and Expenses
21
Indemnities
22
No Set-Off or Tax Deduction
23
Illegality, etc.
24
Increased Costs
25
Set-Off
26
Transfers and Changes in Lending Offices
27
Variations and Waivers
28
Bail in
29
Notices
30
Supplemental
31
Law and Jurisdiction

Schedules
Schedule 1 Lenders and Commitments
Schedule 2 Drawdown Notice
Schedule 3 Condition Precedent Documents
Part A
Part B
Schedule 4 Transfer Certificate
Schedule 5 List of Approved Brokers
Schedule 6 Form of Compliance Certificate
Schedule 7 The Ships
Schedule 8 Power of Attorney

59295567v5



Execution
Execution Pages




59295567v5


THIS AGREEMENT is made on January 2017
BETWEEN
(1)
SCORPIO TANKERS INC. , a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (the " Borrower ");
(2)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders ;
(3)
HSH NORDBANK AG as Bookrunner ;
(4)
HSH NORDBANK AG as Mandated Lead Arranger ;
(5)
HSH NORDBANK AG as Agent ; and
(6)
HSH NORDBANK AG , as Security Trustee .
BACKGROUND
The Lenders have agreed to make available to the Borrower, subject to the terms of this Agreement, a term loan facility in an amount of up to $34,000,000 for the purpose of refinancing the Existing Indebtedness and/or for general corporate purposes.
IT IS AGREED as follows:

59295567v5


1
INTERPRETATION
1.1
Definitions
Subject to Clause 1.5, in this Agreement:
" Account Security Deed " means, in respect of each Earnings Account, a deed creating security in respect of that Earnings Account in the Agreed Form.
" Account Bank " means HSH Nordbank AG, acting through its branch at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, ABN AMRO Bank N.V. or any other bank or financial institution which at any time, with the Agent's prior written consent (acting on the instructions of all the Lenders) holds an Earnings Account.
" Accounting Information " means the annual audited consolidated accounts of the Borrower and the annual audited individual accounts of the Borrower or the quarterly unaudited consolidated accounts of the Borrower and the quarterly unaudited individual accounts of the Borrower, in each case, delivered to the Agent in accordance with Clause 11.6.
" Accounting Period " means each consecutive quarterly period during the Security Period ending on 31 March, 30 June, 30 September and 31 December of each financial year of the Borrower.
" Advance" means Advance A and Advance B.
" Advance A " means the principal amount of the borrowing of a portion of the Total Commitments to be made available to the Borrower to refinance the Existing Indebtedness relating to Ship A pursuant to the Existing Facility Agreement and/or for general corporate purposes.
" Advance B " means the principal amount of the borrowing of a portion of the Total Commitments to be made available to the Borrower to refinance the Existing Indebtedness relating to Ship B pursuant to the Existing Facility Agreement and/or for general corporate purposes.
" Affected Lender " has the meaning given in Clause 5.7.
" Affiliate " means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term " control " (including the terms " controlling ", " controlled by " and " under common control with ") of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise.
" Agency and Trust Deed " means the agency and trust deed dated the same date as this Agreement and made between the same parties.
" Agent " means HSH Nordbank AG, acting in its capacity as agent for the Lenders, the Bookrunner and the Mandated Lead Arranger through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany includes its successor appointed under clause 5 of the Agency and Trust Deed and any transferee or assign.
" 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), or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document.

2     59295567v5


" Approved Broker " means any of the companies listed in Schedule 5 (or any Affiliate of such person through which valuations are commonly issued) or such other company proposed by the Borrower which the Agent may (acting on the instructions of all the Lenders) approve in writing from time to time to act as an " Approved Broker " under this Agreement.
" Approved Classification Society " means, in relation to a Ship, ABS or any other generally recognised first class classification society that is a member of IACS (other than the China Classification Society and the Russian Maritime Registry of Shipping) that the Agent may (acting on the authorisation of all the Lenders), approve in writing from time to time as the " Approved Classification Society " of that Ship for the purposes of this Agreement.
"Approved Commercial Manager" means, in relation to a Ship, Scorpio Commercial Management s.a.m. of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary of Scorpio Commercial Management s.a.m), Scorpio Ship Management s.a.m of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary of Scorpio Ship Management s.a.m) or Zenith, Hellespont Shipping Synergy, CP Offen, Optimum Ship Services Ltd, V Ships Ship Management and d'Amico International Shipping, or any other company proposed by the Borrower or a Guarantor which the Agent may (acting on the instructions of all the Lenders), approve from time to time as the commercial manager of that Ship.
" Approved Flag " means, in relation to a Ship, the Republic of the Marshall Islands, the Republic of Liberia or such other flag as the Agent may acting reasonably (acting on the instructions of all the Lenders, such instructions not to be unreasonably withheld or delayed) approve from time to time in writing as the flag on which such Ship shall be registered.
" Approved Pooling Arrangement " means, in relation to a Ship, the Scorpio MR Pool or any other pooling arrangement notified to the Agent prior to that Ship's entry into such pooling arrangement.
" Approved Ship Manager " means, in relation to a Ship, the Approved Commercial Manager or the Approved Technical Manager of that Ship.
"Approved Technical Manager" means, in relation to a Ship, Scorpio Ship Management s.a.m of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary of Scorpio Ship Management s.a.m), Scorpio Commercial Management s.a.m. of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco (or any Affiliate or subsidiary of Scorpio Commercial Management s.a.m) or Zenith, Hellespont Shipping Synergy, CP Offen, Optimum Ship Services Ltd, V Ships Ship Management and d'Amico International Shipping, or any other company proposed by the Borrower or a Guarantor which the Agent may (acting on the instructions of all the Lenders), approve from time to time as the technical manager of that Ship.
" Approved Ship Manager's Undertaking " means, in relation to a Ship, the letter executed and delivered by an Approved Ship Manager and an Approved Sub-Manager, in the Agreed Form.
" Approved Sub-Manager " means any entity which is an Approved Ship Manager or any other company proposed by the Borrower or a Guarantor which the Agent may (acting on the instructions of all the Lenders), approve from time to time as the technical and/or commercial sub-contracting manager of a Ship.
" Assignable Charter " means, in relation to a Ship, any demise charter for any period and/or any time charterparty, consecutive voyage charter or contract of affreightment in respect of such

3     59295567v5


Ship having a duration (or capable of exceeding a duration) of more than 12 months and any guarantee of the obligations of the charterer under such charter or any bareboat charter in respect of that Ship and any guarantee of the obligations of the charterer under such demise charter, entered or to be entered into by the Guarantor which is the owner thereof and a charterer or, as the context may require, bareboat charterer (other than an Assignable Charter where the charterer is a member of the Group or pursuant to an Approved Pooling Arrangement).
" Availability Period " means the period commencing on the date of this Agreement and ending on the earlier of (i) 60 days after the date of this Agreement and (ii) 31 March 2017.
" Available Commitment " means, in relation to a Lender and at any time, its Commitment less its Contribution at that time.
" Bail-In Action " means the exercise of any Write-down and Conversion Powers.
" Bail-In Legislation " means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and
(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
" Basel III " means:
(a)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; and
(b)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
" Bookrunner " means HSH Nordbank AG, acting in its capacity as bookrunner through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany including any transferee, assign or successor.
" Business Day " means a day on which banks are open in London, Hamburg and New York.
" Cash " means any credit balance on any deposit, savings, current or other account, and any cash in hand held with banks or other financial institutions of the Borrower and/or any subsidiary of the Borrower which is:

4     59295567v5


(a)
freely withdrawable on demand;
(b)
not subject to any Security Interest (other than pursuant to the Finance Documents);
(c)
denominated and payable in freely transferable and freely convertible currency; and
(d)
capable of being remitted to the Borrower or such subsidiary of the Borrower.
" Cash Equivalents " means:
(a)
unencumbered securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)
time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognised standing organised under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
(c)
such other securities or instruments as the Agent shall, with the authorisation of all the Lenders, agree in writing,
provided that in respect of (a) and (b) above such Cash Equivalents shall have a rating of at least "A-" given by S&P or "A" given by Moody's (or the equivalent rating given by another Rating Agency), in each case having maturities of not more than ninety (90) days from the date of acquisition.
" Change of Control " means the occurrence of any act, event or circumstances which results in:
(a)
100 per cent. of the Equity Interests of any Guarantor ceasing to be ultimately owned and/or controlled by the Borrower (an " Guarantor Disposal ");
(b)
a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) other than any holders of the Borrower's Equity Interests as at the date of this Agreement, becoming the ultimate beneficial owner of the Borrower including, without limitation, any change from the date of this Agreement in the ultimate "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 35 per cent. of the total voting power of the Voting Stock of the Borrower (calculated on a fully diluted basis); or
(c)
individuals who constitute the board of directors of the Borrower at the beginning of any period of two consecutive calendar years and yet ceasing for any reason to constitute at least 50 per cent. of the total members of the Borrower's board of directors at any time during such two year period;
" Charterparty Assignment " means, in respect of an Assignable Charter including, without limitation, any guarantee of that Assignable Charter, an assignment of the rights and interests of the Guarantor which is party to that Assignable Charter in respect of that Assignable Charter including, without limitation, any related guarantee, to be executed by that Guarantor in favour of the Security Trustee in the Agreed Form.
" Code " means the US Internal Revenue Code of 1986, as amended.

5     59295567v5


" Commission " means the United States Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act.
" Commitment " means:
(a)
in relation to a Lender as at the date of this Agreement, the amount set opposite its name under the heading "Commitment" in Schedule 1 ( Lenders and Commitments ) and the amount of any other Commitment transferred to it under this Agreement; and
(b)
in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement.
" Compliance Certificate " means a certificate executed by the chief financial officer of the Borrower in the form set out in Schedule 6.
" Confidential Information " means all information relating to the Borrower, any Security Party or the Finance Documents of which a Creditor Party becomes aware in its capacity as, or for the purpose of becoming, a Creditor Party or which is received by a Creditor Party in relation to, or for the purpose of becoming a Creditor Party under or the Finance Documents from either:
(a)
the Borrower or any Security Party or any of their advisers; or
(b)
another Creditor Party, if the information was obtained by that Creditor Party directly or indirectly from the Borrower or any Security Party or any of their advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Creditor Party of Clause 26.13; or
(ii)
is identified in writing at the time of delivery as non-confidential by the Borrower or any Security Party or any of their advisers; or
(iii)
is known by that Creditor Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Creditor Party after that date, from a source which is, as far as that Creditor Party is aware, unconnected with the Borrower or any Security Party and which, in either case, as far as that Creditor Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
" Confidentiality Undertaking " means a confidentiality undertaking in substantially the appropriate form recommended by the Loan Market Association from time to time or in any other form agreed between the Borrower and the Agent.
" Consolidated EBITDA " means, for any Accounting Period, the consolidated net income of the Borrower for that Accounting Period:
(a)
plus , to the extent deducted in computing the net income of the Borrower for that Accounting Period, the sum, without duplication, of:
(i)
all federal, state, local and foreign income taxes and tax distributions;

6     59295567v5


(ii)
Consolidated Net Interest Expense;
(iii)
depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortisation of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)
expenses incurred in connection with a special or intermediate survey (including any underwater survey done in lieu thereof) of a Fleet Vessel during such period; and
(v)
any drydocking expenses;
(b)
minus , to the extent added in computing the consolidated net income of the Borrower for that Accounting Period:
(i)
any non-cash income or non-cash gains; and
(ii)
any extraordinary gains on asset sales not received in the ordinary course of business.
" Consolidated Funded Debt " means, for any Accounting Period, the sum of the following for the Borrower determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:
(a)
all Financial Indebtedness; and
(b)
all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet),
provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt.
" Consolidated Net Interest Expense " means, for any Accounting Period, the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Borrower and all of its subsidiaries during the relevant Accounting Period less:
(a)
commitment fees;
(b)
interest income received; and
(c)
amortisation of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Borrower.
" Consolidated Tangible Net Worth " means, on a consolidated basis, the total shareholders' equity (including retained earnings) of the Borrower, minus goodwill and other non-tangible items.
" Consolidated Total Capitalisation " means the Consolidated Tangible Net Worth plus Consolidated Funded Debt.
" Contractual Currency " has the meaning given in Clause 21.4.

7     59295567v5


" Contribution " means, in relation to a Lender, the part of the Loan which is owing to that Lender.
" CRD IV " means Directive 2013/36/EU of the European Union on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
" Creditor Party " means the Agent, the Security Trustee, the Bookrunner, the Mandated Lead Arranger or any Lender whether as at the date of this Agreement or at any later time.
" CRR " means and Regulation (EU) No 575/2013 of the European Union on prudential requirements for credit institutions and investment firms.
" Disruption Event " means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a party prevent that, or any other party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the party whose operations are disrupted.
" 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 such Advance to be made, or (as the context requires) the date on which such Advance is actually made.
" Drawdown Notice " means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires).
" Earnings " means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Guarantor owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):
(a)
except to the extent that they fall within paragraph (b):
(i)
all freight, hire and passage moneys;
(ii)
compensation payable to the relevant Guarantor or the Security Trustee in the event of requisition of that Ship for hire;
(iii)
remuneration for salvage and towage services;
(iv)
demurrage and detention moneys;

8     59295567v5


(v)
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and
(vi)
all moneys which are at any time payable under Insurances in respect of loss of hire; and
(b)
if and whenever that 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 that Ship;
" Earnings Account " means, in relation to a Ship, an account in the name of the Guarantor of that Ship with the relevant Account Bank designated as the Earnings Account in respect of such Ship, or any other account (with the relevant Account Bank, the Agent or with a bank or financial institution acceptable to all the Lenders) which is designated by the Agent as the Earnings Account for the purposes of this Agreement.
" Email " has the meaning given in Clause 29.1 .
" Environmental Claim " means:
(a)
any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or
(b)
any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,
and " claim " means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
" Environmental Incident " means:
(a)
any release of Environmentally Sensitive Material from a Ship; or
(b)
any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which such Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or such Ship and/or the Guarantor of such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)
any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which such Ship is actually or potentially liable to be arrested and/or where the Guarantor of such Ship and/or any operator or manager of such 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.

9     59295567v5


" 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.
" Equity Interests " of any person means:
(a)
any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)
all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person.
" Equity Proceeds " means the net cash proceeds from the issuance of common or preferred stock of the Borrower.
" EU Bail-In Legislation Schedule " means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
" euros " means the single currency unit of the Participating Member States.
" Event of Default " means any of the events or circumstances described in Clause 19.1.
" Exchange Act " means the United States Securities Exchange Act of 1934, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder.
" Existing Agents " means the "Agents" as such term is defined in the Existing Facility Agreement.
" Existing Facility Agreement " means the facility agreement dated 3 May 2011 (as amended from time to time) and entered into between, inter alia , the Borrower as borrower and Nordea Bank Finland plc, New York branch as agent and security trustee in respect of a $150,000,000 loan facility.
" Existing Indebtedness " means, at any date, the aggregate outstanding indebtedness of the Borrower on that date under the Existing Facility Agreement.
" Existing Security " means any Security Interest created to secure the Existing Indebtedness.
" Facility " means the term loan facility made available under this Agreement as described in Clause 2.1 ( Amount of facility ).
" Facility Office " means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or following that date, by not less than 5 Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.
" Fair Market Value " means, in relation to a Ship, a valuation determined in accordance with Clause 15.3.
" FATCA " means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;

10     59295567v5


(b)
any treaty, law or regulation 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 Deduction " means a deduction or withholding from a payment under a Finance Document required by FATCA.
" FATCA Exempt Party " means a party to this Agreement that is entitled to receive payments free from any FATCA Deduction.
" Finance Documents " means:
(a)
this Agreement;
(b)
the Agency and Trust Deed;
(c)
the Guarantee;
(d)
the Mortgages;
(e)
the General Assignments;
(f)
the Account Security Deeds;
(g)
any Charterparty Assignment;
(h)
any Intercompany Loan Assignment; and
(i)
any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower, any Security Party or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition (other than any Approved Ship Manager's Undertakings).
" Financial Indebtedness " means, with respect to any person (the " Debtor ") at any date of determination (without duplication):
(a)
all obligations of the Debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)
all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)
all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto) which in accordance with IFRS would be shown on the liability side of a balance sheet;
(d)
all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property

11     59295567v5


in service or taking delivery thereto or the completion of such services, except trade payables;
(e)
all capitalised lease obligations of the Debtor as lessee;
(f)
all Financial Indebtedness of persons other than the Debtor secured by a Security Interest on any asset of that person, whether or not such Financial Indebtedness is assumed by the Debtor, provided that the amount of such Financial Indebtedness shall be the lesser of:
(i)
the fair market value of such asset at such date of determination; and
(ii)
the amount of such Financial Indebtedness; and
(g)
all Financial Indebtedness incurred under any guarantee, indemnity or similar obligation to the extent such Financial Indebtedness is guaranteed, secured, expressed to be indemnified by, or otherwise assured by the Debtor.
The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to the contingent obligations set out in paragraphs (f) and (g) above, the maximum liability which would or might arise upon the occurrence of the contingency giving rise to the obligation, as determined in conformity with IFRS, provided that:
(i)
the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount shall be deemed to be the face amount of such Financial Indebtedness less the remaining unamortised portion of such original issue discount of such Financial Indebtedness at such time; and
(ii)
the calculation of Financial Indebtedness shall not take into account any liability of the Debtor for taxes.
" Fiscal Year " means, in relation to any person, each period of 1 year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared.
" Fleet Vessel " means each vessel owned by a wholly owned direct or indirect subsidiary of the Borrower (including, but not limited to, the Ships).
" General Assignment " means, in relation to a Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation for that Ship in the Agreed Form.
" Green Passport " means, in relation to a Ship, a green passport statement of compliance issued by the relevant Approved Classification Society which includes a list of any and all materials known to be potentially hazardous utilised in the construction of that Ship.
" Group " means the Borrower and its subsidiaries.
" Guarantee " means the joint and several guarantee to be executed by the Guarantors in favour of the Security Trustee in the Agreed Form.
" Guarantor " means each of Guarantor A and Guarantor B.

12     59295567v5


" Guarantor A " means STI Onyx Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor B " means STI Duchessa Shipping Company Limited, a corporation incorporated in the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
" Guarantor Disposal " shall have the meaning given to that expression in paragraph (a) of the definition of "Change of Control".
" IACS " means the International Association of Classification Societies.
" 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, in relation to a Ship:
(a)
all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, its Earnings or otherwise in relation to that Ship; 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.
" Intercompany Loan " means any transaction constituting Financial Indebtedness entered into by the Borrower or any direct or indirect shareholder of the Borrower (" Party A ") with the Guarantors or any of them (" Party B ") whereby Party A is entitled to receive any payment in cash or in kind from Party B.
" Intercompany Loan Assignment " means an assignment of each Intercompany Loan made or to be made by the person providing such Intercompany Loan in favour of the Security Trustee in the Agreed Form.
" Interest Period " means a period determined in accordance with Clause 6.
"Interpolated Screen Rate " means, in relation to LIBOR for the Loan or any part of the Loan, the rate which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of the Loan or that part of the Loan; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of the Loan or that part of the Loan,
each as of the Quotation Date for Dollars.
" 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).

13     59295567v5


" 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.
" Latent Event of Default " means any event or circumstance specified in Clause 19 which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be or become an Event of Default.
" 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 Borrower under Clause 26.14) or its transferee, successor or assignee.
" LIBOR " means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document:
(a)
the applicable Screen Rate as of 11 a.m. (London time) on the Quotation Date for that period for the offering of deposits in the relevant currency and for a period comparable to that period; or
(b)
as otherwise determined pursuant to Clause 5.5,
and if, in either case, any such rate is below zero, LIBOR shall be deemed to be zero.
" Loan " means the principal amount for the time being outstanding under this Agreement.
" Major Casualty " means, in relation to a Ship, any casualty to that 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 $5,000,000 or the equivalent in any other currency.
" Majority Lenders " means at any time Lenders whose Commitments total 66.66 per cent. of the Total Commitments at that time.
" Mandated Lead Arranger " means HSH Nordbank AG acting as mandated lead arranger of the loan facility made available to the Borrower under this Agreement.
" Margin " means 2.50 per cent. per annum.
" Material Adverse Effect " means in the reasonable opinion of the Lenders a material adverse effect on:
(a)
the business, operations, property or condition (financial or otherwise) of the Borrower and/or any Guarantor; or
(b)
the ability of the Borrower and/or any Guarantor to perform its obligations under any Finance Document; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or intended to be granted pursuant to any of, the Finance Documents; or
(d)
the rights or remedies of any Creditor Party under any of the Finance Documents.

14     59295567v5


" Maturity Date " means the earlier of (i) the fifth anniversary of the first Drawdown Date and (ii) 31 May 2022.
" Moody's " means Moody's Investors Service, Inc., a subsidiary of Moody's Corporation.
" Mortgage " means, in relation to a Ship the first priority or, as the case may be, preferred ship mortgage on the Ship under the applicable Approved Flag together with any deed of covenant collateral thereto, (if applicable) in the Agreed Form.
" Net Debt " means Consolidated Funded Debt less Cash and Cash Equivalents of the Borrower and its Subsidiaries.
" Notifying Lender " has the meaning given in Clause 23.1 or Clause 24.1 as the context requires.
" Participating Member State " means any member state of the European Union that has the euro as its lawful currency in accordance with the legislation of the European Union relating to Economic and Monetary Union.
" Payment Currency " has the meaning given in Clause 21.4.
" Permitted Security Interests " means:
(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 a Ship not prohibited by this Agreement or any other Finance Document;
(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 a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Guarantor that owns such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(d);
(f)
any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the Guarantor that owns such Ship or the Borrower, as the case may be, is actively prosecuting or defending such proceedings or arbitration in good faith;
(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; and
(h)
any Security Interest and right of set-off arising under or pursuant to any applicable general banking conditions
" Pertinent Document " means:
(a)
any Finance Document;

15     59295567v5


(b)
any policy or contract of insurance contemplated by or referred to in Clause 13 or any other 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, the Principality of Monaco, New York State of the United States of America, Germany and the Republic of the Marshall Islands;
(b)
if not within any of the jurisdictions referred to in (a) above, the country under the laws of which the company is incorporated or formed;
(c)
if not within any of the jurisdictions referred to in (a) above, a country in which the company has the centre of its main interests or in which the company's central management and control is or has recently been exercised.
" 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.
" Quotation Date " means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is 2 Business Days before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days).
" Rating Agency " means S&P, Moody's or, if both of them are not making ratings of securities publically available, an internationally recognised rating agency selected by the Agent which shall be substituted for S&P or Moody's.
" Reference Banks " means, subject to Clause 26.16 , HSH Nordbank AG, and any other prime international banks selected by the Agent and notified to the Borrower.
" Reference Bank Rate " means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks:
(a)
(other than where paragraph (b) below applies) as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars for the relevant period were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period; or

16     59295567v5


(b)
if different, as the rate (if any and applied to the relevant Reference Bank and the relevant currency and period) which contributors to the Screen Rate are asked to submit to the relevant administrator.
" 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.
" 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 ".
" S&P " means Standard & Poor's Rating Services, a division of the McGraw Hill Companies Inc.
" Screen Rate " means, in respect of LIBOR for any period, the 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 Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. 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 judgment relating to any Finance Documents and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
" Security Interest " means:
(a)
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;
(b)
the 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 each Guarantor and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the last paragraph of the definition of " Finance Documents " but always excluding any Approved Ship Manager and any Approved Sub-Manager.
" Security Period " means the period commencing on the date of this Agreement and ending on the date on which the Agent acting reasonably notifies the Borrower, the Security Parties and the other Creditor Parties that:

17     59295567v5


(a)
all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;
(b)
no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;
(c)
neither 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; and
(d)
the Agent, the Security Trustee and all the Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document.
" Security Trustee " means HSH Nordbank AG, acting in its capacity as Security Trustee for the Lenders through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany and includes any transferee, assign or any successor of it appointed under clause 5 of the Agency and Trust Deed.
" Servicing Bank " means the Agent or the Security Trustee.
" Ship " means Ship A or Ship B.
" Ship A " means m.v. "STI ONYX", details of which are set out opposite its name in Schedule 7 ( The Ships ).
" Ship B " means m.v. "STI DUCHESSA", details of which are set out opposite its name in Schedule 7 ( The Ships ).
" SMC " means a safety management certificate issued in respect of the Ship in accordance with Rule 13 of the ISM Code.
" Total Commitments " means the aggregate of the Commitments of all the Lenders.
" Total Loss " means, in relation to a Ship:
(a)
actual, constructive, compromised, agreed or arranged total loss of that Ship;
(b)
any expropriation, confiscation, requisition or acquisition of that 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), unless it is within 45 days redelivered to the full control of the Guarantor owning that Ship;
(c)
any arrest, capture, seizure or detention of that Ship (including any theft) unless it is within 45 days redelivered to the full control of the Guarantor owning that Ship; and
(d)
any hijacking of that ship unless it is within 45 days redelivered to the full control of the Guarantor owning that Ship.

18     59295567v5


" Total Loss Date " means:
(a)
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
(b)
in the case of a constructive, compromised, agreed or arranged total loss of that 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 with that Ship's insurers in which the insurers agree to treat such 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.
" 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.
" VAT " means:
(a)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.
" Voting Stock " of any person as of any date means the Equity Interests of such person that are at the time entitled to vote in the election of the board of directors or similar governing body of such person.
" Write-down and Conversion Powers " means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule ; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.

19     59295567v5


1.2
Construction of certain terms. In this Agreement:
" 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;
" approved " means, for the purposes of Clause 13, approved in writing by the Agent;
" asset " includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
" company " includes any partnership, joint venture and unincorporated association;
" consent " includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
" contingent liability " means a liability which is not certain to arise and/or the amount of which remains unascertained;
" document " includes a deed; also a letter or fax;
" excess risks " means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which such 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 of 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 a Ship, all insurances effected, or which the Guarantor owning that Ship is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;
" party " means any party to this Agreement;
" person " includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
" policy ", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

20     59295567v5


" 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 Time Clauses (Hulls)(1/11/02 or 1/11/03) 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 body, intergovernmental or supranational, 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;
" war risks " includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83); and
an " Event of Default " or a " Latent Event of Default " is "continuing" if it has not been remedied or waived.
1.3
Meaning of "month". A period of one or more " months " ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (the " numerically corresponding day "), but:
(a)
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
(b)
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
and " month " and " monthly " shall be construed accordingly.
1.4
Meaning of "subsidiary". In this Agreement " subsidiary " means a subsidiary within the meaning of section 1159 of the Companies Act 2006.
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 or supplemented, 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.

21     59295567v5


1.6
Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
2
FACILITY
2.1
Amount of facility . Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower a term loan facility to be made available to the Borrower in two (2) Advances in accordance with Clause 4 ( Drawdown ) in the aggregate principal amount of up to $34,000,000.
2.2
Lenders' participations in an Advance
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 each Advance
The Borrower undertakes with each Creditor Party to use each Advance only for the purpose stated in the preamble to this Agreement and Clause 4.2(g).
3
POSITION OF THE LENDERS
3.1
Interests several. The rights of the Lenders under this Agreement are several.
3.2
Individual right of action. Each Lender shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement without joining the Agent, the Security Trustee or any other Lender as additional parties in the proceedings.
3.3
Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2 , no Lender may commence proceedings against the Borrower, any Security Party, any Approved Ship Manager or Approved Sub-Manager in connection with a Finance Document without the prior consent of the Majority Lenders.
3.4
Obligations several. The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement shall not result in:
(a)
the obligations of the other Lenders being increased; nor
(b)
the Borrower, any Security Party, any Approved Ship Manager or Approved Sub-Manager or any other Lender being discharged (in whole or in part) from its obligations under any Finance Document,
and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.
4
DRAWDOWN
4.1
Request for Advance. Subject to the following conditions, the Borrower may request that an Advance 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
Availability . The conditions referred to in Clause 4.1 are that:
(a)
the Drawdown Date has to be a Business Day during the Availability Period;
(b)
the aggregate of the Advances shall not exceed the lower of (i) $34,000,000 and (ii) 60 per cent. of the aggregate of the Fair Market Value of the Ships;
(c)
there shall be no more than two Advances;
(d)
the aggregate amount of the Advances once drawn shall not exceed the Total Commitments;
(e)
the Drawdown Date of the second Advance shall be no later than 30 Business Days from the Drawdown Date for the first Advance;
(f)
each Advance shall be made available in a single amount and any amount undrawn following the drawdown of the second Advance shall be cancelled in accordance with Clause 8.1(b) and may not be borrowed by the Borrower at a later date;
For the purposes of paragraph (b), the Fair Market Value of the Ships shall, notwithstanding paragraph (b) of Clause 15.3, in any event be determined on the basis of valuations carried out in the case of each Advance as required pursuant to paragraph 2 of Part B of Schedule 3 ( Condition Precedent Documents ), at a date not earlier than fourteen (14) days before the Drawdown Date for the relevant Advance.
4.3
Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:
(a)
the amount of the Advance requested and the Drawdown Date and the Ship to which that Advance relates;
(b)
the amount of that Lender's participation in that Advance; and
(c)
the duration of the first Interest Period applicable to that Advance.
4.4
Drawdown Notice irrevocable. A Drawdown Notice must be signed by an officer or a duly authorised attorney-in-fact of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.
4.5
Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent the amount due from that Lender under Clause 2.2.
4.6
Disbursement of an 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 4.5; and that payment to the Borrower shall be made:
(a)
to the account which the Borrower specifies in the Drawdown Notice; and
(b)
in the like funds as the Agent received the payments from the Lenders.
4.7
Disbursement of an Advance to third party. The payment of an Advance by the Agent under Clause 4.6 to the Borrower or such other person notified by the Borrower to the Agent shall constitute the making of that Advance and the Borrower shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender's Contribution.
4.8
Cancellation of Commitments. The Commitments in respect of any Advance which are unutilised at the end of the Availability Period for such Advance shall then be cancelled.

22     59295567v5


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 shall be paid by the Borrower on the last day of that Interest Period.
5.2
Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of (i) the Margin and (ii) 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
Unavailability of Screen Rate
(a)
If no Screen Rate is available for LIBOR for the Interest Period of the Loan or any part of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(b)
If no Screen Rate is available for LIBOR for:
(i)
dollars; or
(ii)
the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Screen Rate,
the applicable LIBOR shall be the Reference Bank Rate as of the Quotation Date and for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(c)
If paragraph (b) above applies but no Reference Bank Rate is available for dollars or the relevant Interest Period, there shall be no LIBOR for the Loan or that part of the Loan and Clause 5.8 ( Cost of funds ) shall apply to the Loan or that part of the Loan for that Interest Period.
5.6
Calculation of Reference Bank Rate
(a)
Subject to paragraph (b) below, if LIBOR is to be determined on the basis of a Reference Bank Rate but a Reference Bank does not supply a quotation by the Quotation Date, the Reference Bank Rate shall be calculated on the basis of the quotations of the remaining Reference Banks.
(b)
If at or about 12.00 p.m. (London time) on the Quotation Date none or only one of the Reference Banks supplies a quotation, there shall be no Reference Bank Rate for the relevant Interest Period.
5.7
Market disruption

23     59295567v5


(a)
If before close of business in London on the Quotation Day for the relevant Interest Period the Agent receives notification from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan exceed 50 per cent. of the Loan or the relevant part of the Loan) (the " Relevant Lender ") that the cost to it of funding its participation in the Loan or that part of the Loan would be in excess of LIBOR then Clause 5.8 ( Cost of funds ) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
(b)
If, at least 1 Business Day before a Drawdown Date, the Agent receives notification from 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 participation in the relevant Advance, the Affected Lender's obligation to participate in that Advance shall be suspended while that situation continues.
5.8
Cost of funds
(a)
If this Clause 5.8 ( Cost of funds ) applies, the rate of interest on each Lender's share of the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
(i)
the Margin; and
(ii)
the rate notified to the Agent by that Lender as soon as practicable before interest is due to be paid in respect of that Interest Period to be that which expresses as a percentage rate per annum the cost to the relevant Lender of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select.
(b)
If this Clause 5.8 ( Cost of funds ) applies and the Agent or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
(c)
Any substitute or alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all parties.
6
INTEREST PERIODS
6.1
Commencement of term Interest Periods
The first Interest Period applicable to an Advance shall commence on the Drawdown Date relating to that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period applicable to such Advance.
6.2
Duration of normal term Interest Periods
Subject to Clauses 6.3, 6.4 and 6.5, each Interest Period shall be:
(a)
three (3) months; or
(b)
in the case of the Interest Period applicable to the second Advance, a period ending on the last day of the Interest Period applicable to the other Advance then current, whereupon the Advances shall be consolidated and treated as a single Advance; or
(c)
such longer period (as proposed by the Borrower to the Agent not later than 11.00am (Hamburg time) 3 Business Days before the commencement of the Interest Period in respect of that Advance) as the Agent may, with the authorisation of all the Lenders, agree with the Borrower, failing which, the Interest Period shall be three (3) months).
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
No Interest Period to extend beyond Maturity Date . No Interest Period shall end after the Maturity Date and any Interest Period which would otherwise extend beyond the Maturity Date shall instead end on the Maturity Date.
6.5
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 3 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 3 months.
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 select by the Agent for so long as such amounts remain unpaid:
(i)
LIBOR; or
(ii)
if LIBOR is unavailable, a rate from time to time determined by the Agent by reference to the actual 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 default interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded by the default rate on a daily basis.
8
REPAYMENT, PREPAYMENT AND REBORROWING
8.1
Repayment of Loan
(a)
The Borrower shall repay the Loan by 20 consecutive quarterly instalments (each a " Repayment Instalment "), the first of which shall be repaid on the date falling three months after the first Drawdown Date relating to the Loan. The first 8 Repayment Instalments shall be $814,583 each and the next 12 Repayment Instalments shall be $708,333 each, the last of which shall be payable together with an additional balloon instalment equal to the then outstanding balance of the Loan.
(b)
If the aggregate amount advanced under the Loan is less than $34,000,000:
(i)
the repayment instalments referred to in this Clause 8.1 ( Repayment of Loan ) (including the balloon) shall be reduced pro rata and the Agent shall provide the Borrower and the other Creditor Parties with a repayment schedule for the Loan with the amended repayment instalments (and balloon); and
(ii)
the unutilised Commitments (if any) of each Lender shall be automatically cancelled at close of business on the earlier to occur of the expiry of the Availability Period and the Drawdown Date in relation to the second Advance.
8.2
Final Repayment Date. On the final Repayment 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.
8.3
Voluntary prepayment
Subject to the conditions set forth in Clause 8.4, the Borrower may prepay or cancel the whole or any part of the Loan without premium other than pursuant to Clause 8.10.
8.4
Conditions for voluntary prepayment. The conditions referred to in Clause 8.3 are that:
(a)
a partial prepayment of the Loan shall be $1,000,000 or a higher integral multiple of $100,000 or such lower amount as the Agent may approve; and
(b)
the Agent has received from the Borrower at least 3 Business Days' prior written notice specifying the amounts to be prepaid and cancelled and the date on which the prepayment and cancellation is to be made.
8.5
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 all the 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.
8.6
Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice.
8.7
Mandatory prepayment or cancellation on sale or Total Loss. If a Ship is sold or there is a Guarantor Disposal to facilitate the sale or disposal of a Ship or a Ship becomes a Total Loss, the Borrower shall prepay the Loan by, in aggregate, the relevant amount (as defined below):
(a)
in the case of a sale, on the earlier of (i) the date on which the sale is completed by delivery of the Ship to the relevant buyer and (ii) the date of receipt by the Security Trustee of the proceeds of the sale; or
(b)
in the case of a Guarantor Disposal, on the date on which the Guarantor Disposal occurs; or
(c)
in the case of a Total Loss, on the earlier of (i) the date falling 180 days after the Total Loss Date and (ii) the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.
In this Clause 8.7 " relevant amount " means:
in the case of a sale or a Guarantor Disposal or a Total Loss, the greater of the amount of the Loan on the date of such prepayment multiplied by a fraction of which the numerator is the Fair Market Value of the relevant Ship (determined as at the date of the most recent appraisal and not more than 6 months prior to the date of the sale or Total Loss) and the denominator is the aggregate of the most recently determined Fair Market Values of the Ships (determined on the same basis).
8.8
Mandatory prepayment or cancellation on Change of Control. If there is a Change of Control, the Borrower shall prepay the Loan on or before the date falling 60 days following such Change of Control unless agreed otherwise by all the Lenders or the Change of Control consists of a Guarantor Disposal, where such Guarantor Disposal is made solely to facilitate the sale or disposal of a Ship and a corresponding prepayment is made in accordance with Clause 8.7.
8.9
Mandatory prepayment or cancellation on Illegality. If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or all or any part of the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:
(a)
that Lender shall promptly notify the Agent upon becoming aware of that event;
(b)
upon the Agent notifying the Borrower, each Available Commitment of that Lender will be immediately cancelled; and
(c)
the Borrower shall prepay that Lender's participation in each part of the Loan on the last day of the Interest Period for that part of the Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender's corresponding Commitment shall be cancelled in the amount of the participation prepaid.
8.10
Amounts payable on prepayment. A voluntary prepayment under Clause 8.3, a mandatory prepayment under Clauses 8.7, 8.8 and 8.9 and any cancellation of any Lender's Commitment under this Agreement shall be made together with:
(a)
accrued interest (and any other amount payable under Clause 21 or otherwise) in respect of the amount prepaid;
(b)
if the prepayment or any part of it is not made on the last day of the Interest Period applicable to the part of the Loan against which it is to be applied, any sums payable under Clause 21.1(b) ; and
(c)
in respect of a voluntary prepayment or reduction pursuant to Clause 8.3 only, a prepayment fee of 1.00 per cent. of the amount of the prepayment or reduction of the Loan as at the prepayment or reduction date in respect of any voluntary prepayment or reduction made prior to the first anniversary of the earlier of (i) 31 January 2017 and (ii) the date of this Agreement.
8.11
Application of partial prepayment .
(a)
Each voluntary partial prepayment pursuant to Clause 8.3 where the aggregate amount of the partial prepayment is:
(i)
in an amount equal to or lesser than $5,000,000 shall be applied as regards the Loan, first against the balloon instalment and secondly against the Repayment Instalments as specified in Clause 8.1 in inverse order of maturity; and
(ii)
in an amount in excess of $5,000,000 shall be applied:
(A)
in respect of the amount up to and including $5,000,000, first against the balloon instalment and secondly against the Repayment Instalments as specified in Clause 8.1 in inverse order of maturity; and
(B)
in respect of the amount exceeding $5,000,000, pro rata against the Repayment Instalments and the balloon instalment as specified in Clause 8.1.
(b)
Any mandatory partial prepayment made pursuant to Clause 8.7 shall be applied pro rata against the Repayment Instalments and the balloon instalments as specified in Clause 8.1.
(c)
Any mandatory partial prepayment or cancellation made pursuant to Clauses 8.8, 8.9, 15.2, 23.3 and 24.6 (b) s hall be applied in an amount, in aggregate, equal to the amount of such prepayment and cancellation and, as regards the Loan, first against the balloon instalment and secondly against the repayment instalments for the Loan as specified in Clause 8.1 in inverse order of maturity.
8.12
Reborrowing. No amount of the Loan repaid or prepaid may be reborrowed.
9
CONDITIONS PRECEDENT
9.1
Documents, fees and no default. Each Lender's obligation to contribute to the Loan 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 3 in form and substance satisfactory to the Agent and its lawyers;
(b)
that, on or before the Drawdown Date in relation to any Advance, the Agent receives or is satisfied that it will receive on the making of such Advance, the documents described in Part B of Schedule 3 in form and substance satisfactory to it and its lawyers;
(c)
that, on or before the service of each Drawdown Notice, the Agent receives all fees contemplated by 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 Latent Event of Default has occurred or would result from the borrowing of the relevant Advance;
(ii)
the representations and warranties in Clause 10.1 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;
(iii)
no event or circumstance has occurred which has or is reasonably likely to have a Material Adverse Effect;
(iv)
there has been no material change in the consolidated financial condition, operations or business prospects of the Borrower since the date on which the Borrower provided the Compliance Certificate and Accounting Information accompanying such Compliance Certificate or in respect of any of the information concerning those topics appended to the Compliance Certificate; and
(v)
none of the circumstances contemplated by Clause 5.7 ( Market disruption ) has occurred and is continuing; and
(e)
that, the Agent is satisfied that the Borrower will be in compliance with the requirements of Clause 15 immediately following the making of the Advance; and
(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 relevant 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 Drawdown Date relating to that Advance (or such longer period as the Agent may, with the authorisation of all 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 the Republic of the Marshall Islands.
10.3
Ownership of the Guarantors. The Borrower is the ultimate beneficial owner of all the issued share capital and voting rights in respect of each Guarantor free of Security Interests save for the Security Interests created pursuant to the Finance Documents and Security Interests created in connection with the Existing Facility Agreement over the share capital and voting rights of that Guarantor.
10.4
Corporate power. The Borrower (or, in the case of paragraph (a), each Guarantor) has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
(a)
to register the Ships in its ownership on the Approved Flag;
(b)
to execute the Finance Documents to which the Borrower is a party; and
(c)
to borrow under this Agreement and to make all the payments contemplated by, and to comply with, the Finance Documents to which the Borrower is a party.
10.5
Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.
10.6
Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):
(a)
constitute 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 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 the borrowing by the Borrower of the Loan, and its compliance with each Finance Document 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 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 Latent Event of Default has occurred.
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 satisfied the requirements of Clause 11.5 ; 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 from that disclosed in the latest of those accounts.
10.12
No litigation. No legal or administrative action involving the Borrower or any Security Party (including action 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.
10.13
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 or any Security Party, from the Borrower or any Security Party in connection with the Ships.
10.14
Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 11.2, 11.4, 11.8 and 11.12.
10.15
Taxes paid. The Borrower has paid and has procured that each Guarantor has paid all taxes applicable to, or imposed on or in relation to it, its business or the Ship owned or to be owned by it.
10.16
ISM Code, ISPS Code and Environmental Laws compliance. All requirements of the ISM Code, the ISPS Code and all Environmental Laws as they relate to the Borrower, the Guarantors, any Approved Ship Manager, any Approved Sub-Manager and the Ships have been complied with.
10.17
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 transactions and other arrangements affected or contemplated by the Finance Documents 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).
10.18
No immunity. The Borrower is not and no assets of the Borrower are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceedings (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
10.19
Pari passu. The obligations of the Borrower under the Finance Documents to which it is a party rank at least pari passu with all other unsecured indebtedness of the Borrower other than indebtedness mandatorily preferred by law.
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 all the Lenders, otherwise permit.
11.2
Title; negative pledge. The Borrower will:
(a)
own (directly or indirectly) and maintain ownership of the entire legal and beneficial interest in the entire issued share capital of each Guarantor free from all Security Interests and other interests and rights of every kind except for those created by the Finance Documents and Security Interests created in connection with the Existing Facility Agreement over the share capital of that Guarantor;
(b)
procure that each Guarantor will:
(i)
hold the legal title to, and own the entire beneficial interest in the Ship to be owned by it, the Insurances and Earnings relating to that Ship and the Earnings Account in its name, 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; and
(ii)
not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and
(c)
procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law;
11.3
No disposal of assets. The Borrower will procure that no Guarantor will transfer, lease or otherwise dispose of:
(a)
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 except for demurrage claims and otherwise in the ordinary course of conducting its business as a ship owner ; or
(b)
make any substantial change to the nature of its business from that existing at the date of this Agreement.
11.4
No other liabilities or obligations to be incurred. The Borrower will procure that no Guarantor, from the date of the Guarantee, will incur any liability or obligation (including, without limitation, any contingent liability) except liabilities and obligations:
(a)
under the Finance Documents to which it is a party;
(b)
reasonably incurred in the ordinary course of operating, upgrading, maintaining and chartering its Ship; and
(c)
in respect of Intercompany Loans made to the relevant Guarantor provided these comply with the requirements of Clause 11.19.
11.5
Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower or any Security Party under or in connection with any Finance Document will be true, complete and not misleading and will not omit any material fact or consideration.
11.6
Provision of financial statements. The Borrower will send to the Agent:
(a)
as soon as possible, but in no event later than 120 days after the end of each financial year of the Borrower, the audited consolidated accounts of the Borrower and its subsidiaries;
(b)
as soon as possible, but in no event later than 90 days after the end of each of the first three Accounting Periods in a calendar year, unaudited consolidated accounts of the Borrower and its subsidiaries which are certified as to their correctness by the chief financial officer of the Borrower;
(c)
a Compliance Certificate together with the annual reports that the Borrower delivers pursuant to paragraph (a) above and quarterly reports that the Borrower delivers in (b) above each certified by the chief financial officer of the Borrower; and
(d)
such other information and financial statements (including, without limitation, details of the operating performance, employment, positions and engagements of the Ships, annual budgets and projections) as may be requested by the Agent from time to time.
11.7
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 consistently applied;
(b)
fairly represent the financial condition of the Borrower and its subsidiaries at the date of those accounts and of their profit for the period to which those accounts relate; and
(c)
fully disclose or provide for all significant liabilities of the Borrower and its subsidiaries.
11.8
Consents. The Borrower will, and will procure that each Guarantor will, maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:
(a)
for it to perform its obligations under any Finance Document to which it is a party;
(b)
for the validity or enforceability of any Finance Document to which it is a party; and
(c)
in the case of each Guarantor, to continue to own and operate the Ship owned by it
and the Borrower will, and will procure that each Guarantor will, comply with the terms of all such consents.
11.9
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 (if applicable) 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 Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.
11.10
Notification of litigation. The Borrower will provide the Agent with details of any legal action involving the Borrower, any Security Party or any Ship, its Earnings or its Insurances as soon as such action is instituted unless it is clear that the legal action cannot be considered material in the context of any Finance Document.
11.11
Chief Executive Office. The Borrower will maintain its chief executive office in the Principality of Monaco.
11.12
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 Latent Event of Default has occurred; or
(b)
states that no Event of Default or Latent Event of Default has occurred, except for a specified event or matter, of which all material details are given.
The Agent may serve requests under this Clause 11.12 from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if the Loan has not been made) Commitments exceeding 10 per cent of the Total Commitments; and this Clause 11.12 does not affect the Borrower's obligations under Clause 11.13.
11.13
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 Latent Event of Default; or
(b)
any matter which indicates that an Event of Default or a Latent Event of Default may have occurred,
and will keep the Agent fully up‑to‑date with all developments.
11.14
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 to:
(a)
the financial condition, business and operations of the Borrower;
(b)
the Borrower, any Security Party, any Ship, its Earnings or its Insurances; or
(c)
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 at any time and the Borrower shall promptly, provide such further information and/or documents as any Creditor Party (through the Agent) may request so as to enable such Creditor Party to comply with any laws applicable to it (including, without limitation, compliance with FATCA).
11.15
Provision of copies and translation of documents. The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and 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.
11.16
"Know your customer" checks. The Borrower shall notify the Agent immediately if it becomes aware of any actual or intended change in its status or the status of any Security Party after the date of this Agreement. If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(b)
any change in the status of the Borrower or any Security Party after the date of this Agreement; or
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender 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 the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
11.17
Compliance with laws. The Borrower shall comply and shall procure that each Guarantor shall comply in all material respects with all applicable laws, including, without limitation, all Environmental Laws and regulations relating thereto.
11.18
Taxes. The Borrower shall prepare and timely file all tax returns required to be filed by it and any member of the Group and pay and discharge all taxes imposed upon it and any member of the Group or in respect of any of its or any member of the Group's property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labour, materials and supplies) which, if unpaid, might become a lien or any part thereof, except in each case, for any such taxes (a) as are being contested in good faith by appropriate proceedings and for which adequate reserves have been established, (b) as to which such failure to have paid does not create any risk of sale, forfeiture, loss, confiscation or seizure of a Ship or criminal liability, or (c) the failure of which to pay or discharge would not be likely to have a Material Adverse Effect.
11.19
Use of proceeds and Intercompany Loans. The Borrower shall:
(a)
use the proceeds of each Advance to partially re-finance the Existing Facility Agreement and/or for general corporate purposes and where it on-lends part of the proceeds of each Advance directly or indirectly to the Guarantor which owns the relevant Ship, it shall procure that such Guarantor shall use the proceeds of such Advance solely as permitted pursuant to the terms of this Agreement; and
(b)
procure that any Intercompany Loan it provides whether directly or indirectly to a Guarantor pursuant to paragraph (a) above shall:
(i)
be fully subordinated to any and all obligations of the Guarantors and the rights of the Creditor Parties under the Finance Documents;
(ii)
not require the payment of interest prior to expiry of the Maturity Date;
(iii)
mature at least 1 year after the Maturity Date; and
(iv)
not be secured by any asset which is already, or is to be, the subject of a Security Interest created by the Borrower or any Security Party pursuant to any Finance Document;
(c)
furnish promptly to the Agent a true and complete copy of any instrument evidencing any Intercompany Loan, all other documents related thereto and a true and complete copy of each material amendment or other modification thereof; and
(d)
in respect of any such Intercompany Loan, execute and deliver to the Agent an Intercompany Loan Assignment and deliver to the Agent such other documents equivalent to those referred to in paragraphs 3, 4, and 6 of Part A of Schedule 3 as the Agent may require.
12
CORPORATE AND FINANCIAL 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 all the Lenders, otherwise permit.
12.2
Maintenance of status . The Borrower will:
(a)
maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands;
(b)
remain listed on the New York Stock Exchange; and
(c)
procure that each Guarantor shall maintain its separate corporate existence and remain in goodstanding under the laws of the Republic of the Marshall Islands.
12.3
Negative undertakings.
(a)
The Borrower will not and will procure that no Guarantor shall:
(i)
change its name, its type of organisation or the nature of its business; or
(ii)
change its Fiscal Year; or
(iii)
permit any act, event or circumstance to occur or arise which would or could result in a Change of Control of the Borrower or any Guarantor other than a Guarantor Disposal for the purposes of selling or disposing of a Ship where the relevant prepayment is made in accordance with Clause 8.7 or give rise whether directly or indirectly to a Material Adverse Effect; or
(iv)
enter into any form of amalgamation, merge or de-merger or any form of reconstruction or reorganisation.
(b)
The Borrower will procure that no Guarantor shall:
(i)
provide any form of credit or financial assistance to:
(A)
a person who is directly or indirectly interested in the Borrower's or the relevant Guarantor's share or loan capital; or
(B)
any company in or with which such a person is directly or indirectly interested or connected,
or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower or the relevant Guarantor than those which it could obtain in a bargain made at arms' length; or
(ii)
issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital; or
(iii)
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative.
12.4
Dividends.
(a)
The Borrower may only pay a dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital provided that no Event of Default has occurred and is continuing at the time of the payment of such dividends or making of such distributions, redemptions, purchase or return or will result from the payment of such dividend or making of such distributions, redemptions, purchase or return; and
(b)
The Borrower will procure that no Guarantor shall pay a dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital if:
(i)
any Event of Default has occurred and is continuing at the time of the payment of such dividend or making of such other form of distribution or effecting of such redemption, purchase or return of share capital or will result from such payment or making of such other form of distribution or effecting of such redemption, purchase or return of share capital; or
(ii)
such dividend or other form of distribution or redemption, purchase or return of share capital shall result in a breach of the financial covenants set out in Clauses 12.5, 12.6, 12.7 and 12.8 .
12.5
Minimum liquidity. The Borrower shall, at all times, maintain Cash and Cash Equivalents on a consolidated basis, including all amounts on deposit with any bank, of not less than the greater of (a) $25,000,000 or (b) $250,000 per ship which is time chartered by the Borrower, plus $500,000 per Fleet Vessel (the " Minimum Liquidity "), provided that:
(a)
for the purpose of this Clause 12.5, " Cash Equivalents " shall include unutilised and freely available amounts under the Facility (where no default or termination event has occurred and is continuing and there is no restriction on borrowing under such Facility) with a maturity date in excess of 12 months after the date of the financial statements delivered pursuant to Clause 11.6; and
(b)
100 per cent. of the Minimum Liquidity shall at all times consist of Cash.
12.6
Minimum Consolidated Tangible Net Worth. The Borrower shall maintain a Consolidated Tangible Net Worth of not less than $1,000,000,000 plus:
(a)
25 per cent. of the Borrower 's cumulative, positive consolidated net income for each Accounting Period commencing on or after 1 January 2016; and
(b)
50 per cent. of the Equity Proceeds realised from any issuance of Equity Interests in the Borrower occurring on or after 1 January 2016.
12.7
Maximum leverage. The Borrower shall maintain a ratio of Net Debt to Consolidated Total Capitalisation of not more than 0.60 to 1.00, to be tested on the last day of each Accounting Period.
12.8
Minimum interest coverage. The Borrower shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense greater than 2.50 to 1.00. Such ratio shall be calculated on the last day of each Accounting Period on a trailing four quarter basis.
12.9
Material Changes in IFRS requirements. If, at any time after the date of this Agreement, the IFRS requirements materially change so as to impact the financial covenants set out in this Clause 12 the Borrower shall notify the Agent and, if agreed between the Borrower and the Agent, this Agreement shall be amended and/or supplemented to reflect these changes.
13
INSURANCE
13.1
General. The Borrower also undertakes with each Creditor Party to procure that each Guarantor will comply with the following provisions of this Clause 13 ( Insurance ) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing.
13.1
Maintenance of obligatory insurances. The Borrower shall procure that each Guarantor shall keep the Ship owned by it insured at the expense of that Guarantor against:
(a)
fire and usual marine risks (including hull and machinery and excess risks);
(b)
war risks (including, without limitation, protection and indemnity war risks with a separate limit not less than hull value of the relevant Ship);
(c)
protection and indemnity risks (including, without limitation, protection and indemnity war risks in excess of the amount for war risks (hull) and oil pollution liability risks) in each case in the highest amount available in the international insurance market); and
(d)
any other risks the insurance of which the Security Trustee (acting on the instructions of the Majority Lenders), having regard to practices, recommendations and other circumstances prevailing at the relevant time, may from time to time require by notice to that Guarantor.
13.2
Terms of obligatory insurances. The Borrower shall procure that each Guarantor shall effect such insurances in respect of the Ship owned by it in such amounts in such currency and upon such terms and conditions as shall from time to time be approved in writing by the Security Trustee acting reasonably, but in any event as follows:
(a)
in Dollars;
(b)
in the case of fire and usual marine risks and war risks, on an agreed value basis in an amount equal to at least the higher of (i) an amount which when aggregated with the amount for which any other Ship then subject to a Mortgage, is insured, is equal to 120 per cent. of the Loan and (ii) the Fair Market Value of that Ship;
(c)
in the case of oil pollution liability risks, for an amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the International Group of Protection and Indemnity Clubs) and the international marine insurance market (currently at the time of entering this Agreement $1,000,000,000 for any one accident or occurrence);
(d)
in relation to protection and indemnity risks in respect of the full tonnage of that Ship;
(e)
in relation to war risks insurance, extended to cover piracy and terrorism where excluded under the fire and usual marine risks insurance;
(f)
on approved terms and conditions;
(g)
such other risks of whatever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of a vessel similar to that Ship; and
(h)
through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations which are members of the International Group of Protection and Indemnity Associations, and have an S&P rating of at least BBB- or a comparable rating by any other rating agency acceptable to the Security Trustee (acting on the instructions of the Majority Lenders).
13.3
Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3 ( Terms of obligatory insurances ), the Borrower shall procure that:
(a)
each Guarantor and any and all third parties who are named assured or co-assured under any obligatory insurance shall assign their interest in any and all obligatory insurances and other Insurances if so required by the Agent (acting reasonably);
(b)
whenever the Security Trustee requires, the obligatory insurances 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 they may have under any applicable law 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;
(c)
the interest of the Security Trustee as assignee and as loss payee shall be duly endorsed on all slips, cover notes, policies, certificates of entry or other instruments of insurance in respect of the obligatory insurances;
(d)
the obligatory insurances shall name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;
(e)
the obligatory insurances shall 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;
(f)
the obligatory insurances shall provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (f) from making personal claims against persons (other than either Guarantor, the Borrower or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;
(g)
the obligatory insurances shall provide that the obligatory insurances shall be primary without right of contribution from other insurances effected by the Security Trustee or any other Creditor Party;
(h)
the obligatory insurances shall provide that the Security Trustee may make proof of loss if either Guarantor fails to do so; and
(i)
the obligatory insurances shall provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non‑payment of premium, such cancellation, charge or lapse shall only be effective against the Security Trustee 14 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.
13.4
Renewal of obligatory insurances. The Borrower shall procure that each Guarantor shall:
(a)
at least 7 days before the expiry of any obligatory insurance effected by it:
(i)
notify the Security Trustee of the brokers, underwriters, insurance companies and any protection and indemnity or war risks association through or with whom that Guarantor proposes to renew that obligatory insurance and of the proposed terms and conditions of renewal; and
(ii)
seek 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.
13.5
Copies of policies; letters of undertaking. The Borrower shall procure that each Guarantor shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all cover notes and policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters of 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 ( Further protections for the Creditor Parties );
(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 5 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Guarantor 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 owned by that Guarantor under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that 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 that Ship forthwith upon being so requested by the Security Trustee.
13.6
Copies of certificates of entry; letters of undertaking. The Borrower shall procure that each Guarantor shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by that Guarantor is entered provides the Security Trustee with:
(a)
a certified copy of the certificate of entry for that Ship; and
(b)
a letter or letters of undertaking in such form as may be required by the Security Trustee.
13.7
Deposit of original policies. The Borrower shall procure that each Guarantor shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.
13.8
Payment of premiums. The Borrower shall procure that each Guarantor shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Security Trustee.
13.9
Guarantees. The Borrower shall procure that each Guarantor 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.
13.10
Compliance with terms of insurances. The Borrower shall procure that each Guarantor shall not do or 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)
each Guarantor 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)
no Guarantor shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;
(c)
each Guarantor 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 that 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) and, if applicable, shall procure that the Approved Ship Manager and any Approved Sub-Manager complies with this requirement; and
(d)
no Guarantor shall employ the Ship owned by it, or 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.
13.11
Alteration to terms of insurances. The Borrower shall procure that each Guarantor shall neither make nor agree to any material alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.
13.12
Settlement of claims. The Borrower shall not and shall procure that no Guarantor shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances and shall do all things necessary to ensure such collection or recovery is made.
13.13
Provision of copies of communications. The Borrower shall procure that each Guarantor shall provide the Security Trustee, at the time of each such communication, copies of all material written communications between the relevant Guarantor and:
(a)
the approved insurance brokers;
(b)
the approved protection and indemnity and/or war risks associations; and
(c)
the approved insurance companies and/or underwriters, which relate directly or indirectly to:
(i)
that Guarantor's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)
any credit arrangements made between that Guarantor 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.
13.14
Provision of information and further undertakings. In addition, the Borrower shall procure that each Guarantor 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) 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 13.16 or dealing with or considering any matters relating to any such insurances,
and the Borrower shall procure that each Guarantor shall:
(i)
do all things necessary and provide the Agent and the Security Trustee with all documents and information to enable the Security Trustee to collect or recover any moneys in respect of the Insurances which are payable to the Security Trustee pursuant to the Finance Documents; and
(ii)
promptly provide the Agent with full information regarding any Major Casualty in consequence whereof the Ship owned by that Guarantor has become or may become a Total Loss and agree to any settlement of such casualty or other accident or damage to that Ship only with the Agent's prior written consent,
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).
13.15
Mortgagee's interest and additional perils insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew all or any of the following insurances in such amounts, on such terms, through such insurers and generally in such manner as the Majority Lenders may from time to time consider appropriate:
(a)
a mortgagee's interest insurance providing for the indemnification of the Creditor Parties for any losses under or in connection with any Finance Document (in an aggregate amount of up to 120 per cent. of the Loan) which directly or indirectly result from loss of or damage to a Ship or a liability of that Ship or of the Guarantor owning that Ship, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning:
(i)
any act or omission on the part of that Guarantor, of any operator, charterer, manager or sub-manager of that Ship or of any officer, employee or agent of that Borrower or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;
(ii)
any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of that Guarantor, any other person referred to in paragraph (i) above, or of any officer, employee or agent of that Guarantor or of such a person, including the casting away or damaging of that Ship and/or that Ship being unseaworthy; and/or
(iii)
any other matter capable of being insured against under a mortgagee's interest marine insurance policy whether or not similar to the foregoing; and
(b)
a mortgagee's interest additional perils insurance providing for the indemnification of the Creditor Parties against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of a Ship, the imposition of any Security Interest over that Ship and/or any other matter capable of being insured against under a mortgagee's interest additional perils policy whether or not similar to the foregoing, and in an aggregate amount of up to 110 per cent. of the Loan,
and the Borrower shall upon demand fully indemnify the Security Trustee 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.
1
SHIP COVENANTS
1.1
General. The Borrower also undertakes with each Creditor Party that it shall and that it shall procure that each Guarantor shall comply with the following provisions of this Clause 14 at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing (and which shall not be unreasonably withheld or delayed in relation to Clause 14.2 ( Ship's name and registration )).
1.2
Ship's name and registration. The Borrower shall and shall procure that each Guarantor shall keep the Ship owned by it registered in its name under an Approved Flag; 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 that Ship.
1.3
Repair and classification. The Borrower shall, and shall procure that each Guarantor, each Approved Ship Manager and any Approved Sub-Manager shall, keep the Ship owned by that Guarantor in a good and safe condition and state of repair:
(a)
consistent with first-class ship ownership and management practice;
(b)
so as to maintain the highest class free of overdue recommendations and conditions, an Approved Classification Society; and
(c)
so as to comply with all laws and regulations applicable to vessels registered under the law of the applicable Approved Flag or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code,
and the Agent shall be given power of attorney in the form attached as Schedule 8 ( Power of Attorney ) to act on behalf of that Guarantor in order to, inspect the class records and any files held by the Approved Classification Society and to require the Approved Classification Society to provide the Agent or any of its nominees with any information, document or file, it might request and the Approved Classification Society shall be fully entitled to rely hereon without any further inquiry.
1.4
Classification society undertaking. The Borrower shall procure that each Guarantor shall instruct the Approved Classification Society in relation to its Ship (and in the case of dual classification, only the primary classification society):
(a)
to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records and any other related records held by the Approved Classification Society in relation to the Ship owned by that Guarantor;
(b)
to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Ship at the offices of the Approved Classification Society and to take copies of them;
(c)
to notify the Security Trustee immediately in writing if the Approved Classification Society:
(i)
receives notification from that Guarantor or any person that that Ship's Approved Classification Society is to be changed; or
(ii)
becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship's class under the rules or terms and conditions of that Guarantor's or that Ship's membership of the Approved Classification Society;
(d)
following receipt of a written request from the Security Trustee:
(i)
to confirm that that Guarantor is not in default of any of its contractual obligations or liabilities to the Approved Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Approved Classification Society; or
(ii)
if that Guarantor is in default of any of its contractual obligations or liabilities to the Approved Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the Approved Classification Society.
1.5
Modification. The Borrower shall procure that neither Guarantor shall make any modification or repairs to, or replacement of, its Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.
1.6
Removal of parts. The Borrower shall procure that neither Guarantor shall remove any material part of its Ship, or any item of equipment installed on that 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 that Ship the property of that Guarantor and subject to the security constituted by the relevant Mortgage Provided that a Guarantor may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.
1.7
Surveys. The Borrower shall procure that each Guarantor shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all technical survey reports.
1.8
Inspection. The Borrower shall procure that each Guarantor shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by that Guarantor at all reasonable times, with reasonable notice to the relevant Guarantor, always without interfering with the trading of the Ship, to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections at the Borrower's expense, and if the inspector or surveyor appointed by the Security Trustee under this Clause is of the opinion that there are any technical, commercial or operational actions being undertaken or omitted to be undertaken by the Guarantor which is the owner of that Ship, the Approved Ship Manager or the Approved Sub-Manager (as the case may be) which adversely affect the operation or value of that Ship, the Borrower shall procure that the Guarantors shall forthwith (at the Borrower’s or applicable Guarantor's expense) on the Security Trustee's demand remedy such action or inaction and provide the Security Trustee with evidence that it has or the Guarantors have taken such remedial action. Provided always that unless an Event of Default has occurred or that Ship's Approved Classification Society has issued a recommendation or condition affecting that Ship's class, the Borrower shall not have to pay for more than 1 inspection per Ship in each calendar year. Further, the Security Trustee shall use reasonable efforts not to interfere with the operation of that Ship when exercising its rights under this Clause 14 ( Ship Covenants ).
1.9
Prevention of and release from arrest. The Borrower shall procure that each Guarantor shall promptly discharge:
(a)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;
(b)
all taxes, dues and other amounts charged in respect of that Ship, the Earnings or the Insurances; and
(c)
all other outgoings whatsoever in respect of that Ship, the Earnings or the Insurances,
and, forthwith upon receiving notice of the arrest of that 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.
1.10
Compliance with laws etc. The Borrower shall procure that each Guarantor shall:
(a)
comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Guarantor;
(b)
not employ the Ship owned by it 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 and the ISPS Code; 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 owned by it to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless the prior written consent of the Security Trustee has been given and the Borrower has or has procured that the Guarantor which owns that Ship has (at the Borrower’s expense) effected any special, additional or modified insurance cover which the Security Trustee may require.
1.11
Provision of information. The Borrower shall procure that each Guarantor shall promptly provide the Security Trustee with any information which it requests regarding:
(a)
the Ship owned by it, its employment, position and engagements;
(b)
the Earnings and payments and amounts due to the master and crew of the Ship owned by it;
(c)
any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship owned by it and any payments made in respect of that Ship;
(d)
any towages and salvages; and
(e)
its compliance, the Approved Ship Manager's and/or Approved Sub-Manager's compliance and the compliance of the Ship owned by it with the ISM Code and the ISPS Code,
and, upon the Security Trustee's request, provide copies of any current charter relating to that Ship, of any current charter guarantee and copies of each Guarantor's, the Approved Ship Manager's and/or Approved Sub-Manager's (as applicable) Document of Compliance, SMC and the ISSC.
1.12
Notification of certain events. The Borrower shall procure that each Guarantor shall:
(a)
before entering into any Assignable Charter, notify the Agent and provide copies of any draft charter relating to its Ship and, if applicable, any draft charter guarantee and that Guarantor shall be entitled to enter into such charter without the consent of the Creditor Parties Provided that :
(i)
that Guarantor executes in favour of the Security Trustee a specific assignment of all its rights, title and interest in and to such charter and any charter guarantee in the form of a Charterparty Assignment;
(ii)
each Guarantor sends to the charterer and any charter guarantor a notice of the specific assignment of such charter and charter guarantee substantially in the form included in the relevant Charterparty Assignment and will use best commercial efforts to procure that the charterer and any charter guarantor provides to the Security Trustee an acknowledgment of the notice of assignment and, in the case where such charter is a demise charter, the relevant Guarantor shall use best commercial efforts to procure that the relevant charterer undertakes to the Security Trustee (1) to comply with all of that Guarantor's undertakings with regard to the employment, insurances, operation, repairs and maintenance of its Ship contained in this Agreement, the Guarantee, the Mortgage and the General Assignment in relation to that Ship and (2) the relevant charterer and any charter guarantor undertakes to provide an assignment of its interest in the insurances of the Ship in the form of a Charterparty Assignment;
(iii)
the relevant Guarantor provides certified true and complete copies of the charter relating to its Ship and of the current charter guarantee, if any, immediately after its execution;
(iv)
the Agent's receipt of a copy of the charter and any charter guarantee and its failure or neglect to act, delay or acquiescence in connection with the relevant Guarantor's entering into such charter shall not in any way constitute an acceptance by the Agent of whether or not the Earnings under the charter are sufficient to meet the debt service requirements under this Agreement nor shall it in any way affect the Agent's or the Security Trustee's entitlement to exercise its rights under the Finance Documents pursuant to Clause 19 upon the occurrence of an Event of Default arising as a result of an act or omission of the charterer or charter guarantor; and
(v)
each Guarantor delivers to the Agent such other documents equivalent to those referred to at paragraphs 2, 3, 4, 5, 6, 7 and 8 of Schedule 3, Part A as the Agent may require; and
(b)
immediately notify the Security Trustee by letter, of:
(i)
any casualty which is or is likely to be or to become a Major Casualty;
(ii)
any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(iii)
any requirement, condition or recommendation made by any insurer or the Approved Classification Society or by any competent authority which is not complied with within the specified time;
(iv)
any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on that Ship or its Earnings or any requisition of that Ship for hire;
(v)
any intended dry docking of the Ship owned by it;
(vi)
any Environmental Claim made against either Guarantor in connection with its Ship, or any Environmental Incident;
(vii)
any claim for breach of the ISM Code or the ISPS Code being made against either Guarantor, the Approved Ship Manager, the Approved Sub-Manager or otherwise in connection with the Ship owned by it;
(viii)
its intention to de-activate or lay up its Ship; or
(ix)
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 procure that the Guarantor shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Guarantor's, the Approved Ship Manager's, the Approved Sub-Manager's or any other person's response to any of those events or matters.
1.13
Restrictions on chartering, appointment of managers etc. The Borrower shall procure that neither Guarantor shall, in relation to the Ship owned by it:
(a)
enter into any charter in relation to that Ship under which more than two months' hire (or the equivalent) is payable in advance;
(b)
charter that Ship otherwise than on bona fide arm's length terms at the time when that Ship is fixed;
(c)
appoint a manager of that Ship other than the Approved Ship Manager or an Approved Sub-Manager or agree to any material alteration to the terms of the Approved Ship Manager's or Approved Sub-Manager's appointment save that changes to termination and insurance provisions shall always be permitted provided they do not affect the security granted to the Security Trustee; or
(d)
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason.
1.14
Notice of Mortgage. The Borrower shall procure that each Guarantor shall keep the Mortgage relative to its Ship registered against that Ship as a valid first preferred or, as the case may be, priority mortgage, carry on board that Ship a certified copy of that Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Guarantor to the Security Trustee.
1.15
Sharing of Earnings. The Borrower shall procure that neither Guarantor shall enter into any agreement or arrangement for the sharing of any Earnings (other than (i) any profit sharing agreement with a charterer which takes effect above an agreed minimum charter hire rate payable to the relevant Guarantor under a charter to which that Guarantor is a party and (ii) any Approved Pooling Arrangement, in either case, on bona fide arm's length terms).
1.16
ISPS Code. The Borrower shall procure that each Guarantor shall comply with the ISPS Code and in particular, without limitation, shall:
(a)
procure that the Ship owned by it and the company responsible for that Ship's compliance with the ISPS Code comply with the ISPS Code; and
(b)
maintain for that Ship an ISSC; and
(c)
notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
1.17
Green Passport. The Borrower shall procure that each Guarantor has obtained a Green Passport, or equivalent document acceptable to the Agent, within 30 days from the Drawdown Date of the relevant Advance in respect of the Ship owned by it which remains valid throughout the Security Period.
2
SECURITY COVER
2.1
Minimum required security cover. Clause 15.2 applies if the Agent notifies the Borrower that:
(a)
the Fair Market Value of the Ships then subject to a Mortgage; plus
(b)
the net realisable value of any additional security previously provided under this Clause 15,
is below 140 per cent. of the Loan.
2.2
Provision of additional security; prepayment. If the Agent serves a notice on the Borrower under Clause 15.1, the Borrower shall within 30 days after the date on which the Agent's notice is served, either:
(a)
prepay such part (at least) of the Loan as will eliminate the shortfall; or
(b)
provide, or ensure that a third party provides, additional security which, in the opinion of all of the Lenders acting in their absolute discretion, 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 all of the Lenders, approve or require and, for this purpose, it is agreed that acceptable additional security shall include cash collateral in Dollars valued at par.
For the avoidance of doubt, amounts prepaid pursuant to this Clause shall be applied in accordance with Clause 8.11.
2.3
Valuation of Ship. The market value of a Ship at any date is that shown by:
(a)
the arithmetic average of 2 valuations each prepared by an Approved Broker selected by the Agent;
(b)
as at a date not more than 30 days prior to the date such valuation is delivered to the Agent by such Approved Broker;
(c)
with or without physical inspection of that 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; and
(e)
after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.
2.4
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 15.2.
2.5
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.
2.6
Provision of information. The Borrower shall promptly provide the Agent and any Approved Broker acting under Clause 15.3 or 15.4 with any information which the Agent or the Approved Broker may 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 Approved Broker or the Lenders (or the expert appointed by them) consider prudent.
2.7
Payment of valuation expenses. Without prejudice to the generality of the Borrower's obligations under Clauses 20.2 , 20.3 and 20.4, the Borrower shall, subject to Clause 15.8, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause 15.
2.8
Frequency of valuations
(a)
The Borrower shall provide the valuations of each Ship required pursuant to paragraph 12 of Part B of Schedule 3 at the Borrower's expense;
(b)
the Borrower shall provide to the Agent 2 valuations during each half of each Fiscal Year of the Borrower commencing on 1 January 2017 (such valuations to be attached to the Compliance Certificates for the relevant fiscal quarter to be provided by the Borrower) setting forth the Fair Market Value of each Ship in each case at the cost of the Borrower save that the Borrower shall not be required to pay for more than 2 sets of valuations of each Ship in each calendar year unless an Event of Default has occurred and is continuing or any valuation obtained would entitle the Agent to serve a notice pursuant to Clause 15.1 in which case such valuations required by the Agent shall be for the cost of the Borrower; and
(c)
the Agent shall be entitled, at its own expense, to obtain valuations of each Ship other than those referred to in paragraphs (a) and (b) above as often as it may request.
2.9
Application of prepayment. Clause 8 shall apply in relation to any prepayment pursuant to Clause 15.2 .
2.10
Release of Additional Security. It is agreed that where the Borrower or a third party has provided additional security pursuant to Clause 15.2 the Borrower is entitled to request the release of such additional security at its expense at any time following a testing of compliance by the Borrower of the minimum required security cover under Clause 15.1. Where the Borrower is shown to be in compliance with such minimum required security cover without including the additional security within the calculation and where the Borrower is in compliance with the minimum required security cover under Clause 15.1, such additional security shall be released at the Borrower's cost.
3
PAYMENTS AND CALCULATIONS
3.1
Currency and method of payments. All payments to be made by the Lenders or by the Borrower and any Security Party 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. (London 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 or another Security Party to the Agent or any Lender, to an account of the Agent as the Agent may from time to time notify to the Borrower and the other Creditor Parties, or to such other account with such other 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.
3.2
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.
3.3
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.
3.4
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, or the Security Trustee shall be made available by the Agent to that Lender 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 or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and
(b)
amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.
3.5
Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.
3.6
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 or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender until the Agent has satisfied itself that it has received that sum.
3.7
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, without first having received that sum, the Borrower or the Lender 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.
3.8
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.
3.9
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.
3.10
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.
3.11
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.
4
APPLICATION OF RECEIPTS
4.1
Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:
(a)
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:
(i)
first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);
(ii)
secondly, in or towards satisfaction of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents; and
(iii)
thirdly, in or towards satisfaction of the Loan;
(b)
SECONDLY: 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);
(c)
THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.
4.2
Variation of order of application. The Agent may, with the authorisation of the Lenders, 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.
4.3
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.
4.4
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.
5
APPLICATION OF EARNINGS
5.1
Payment of Earnings. The Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (subject only to the provisions of the General Assignment), all the Earnings of each Ship are paid to the Earnings Account for that Ship, at all times whilst such Ship is subject to a Mortgage.
5.2
Application of Earnings. The Borrower undertakes with the Lenders to procure that money from time to time credited to, or for the time being standing to the credit of, an Earnings Account shall, unless and until an Event of Default shall have occurred and is continuing (whereupon the provisions of Clause 17.1 shall be and become applicable), be freely available to the Borrower.
5.3
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 Accounts (or any of them); 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 Accounts (or any of them).
5.4
Debits for expenses etc. The Agent shall be entitled (but not obliged) from time to time to debit any 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.
5.5
Borrower's obligations unaffected. The provisions of this Clause 18 do not affect:
(a)
the liability of the Borrower to make payments of principal and interest on the due dates; or
(b)
any other liability or obligation of the Borrower or any Security Party under any Finance Document.
6
EVENTS OF DEFAULT
6.1
Events of Default. An Event of Default occurs if:
(a)
the Borrower or any Security Party fails to pay when due any sum payable under a Finance Document or under any document relating to a Finance Document unless its failure to pay is caused by a Disruption Event and payment is made within 3 Business Days of its due date; or
(b)
any breach occurs of Clause 9.2 , 11.2, 11.3, 12.5, 12.6, 12.7, 12.8 and 15.2; 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)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied 20 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 falling within paragraphs (a), (b) or (c)); or
(e)
any representation, warranty or statement made or repeated 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 repeated; or
(f)
any of the following occurs in relation to any Financial Indebtedness of the Borrower on a consolidated basis exceeding $10,000,000 in aggregate or, in the case of any Security Party, $2,500,000 (or in either case, the equivalent in any other currency):
(i)
any Financial Indebtedness of that Relevant Person is not paid when due; or
(ii)
any Financial Indebtedness of that 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 that 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 that 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 that Relevant Person becomes enforceable; or
(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, $10,000,000 in the case of the Borrower or $2,500,000 in the case of any Security Party or more or the equivalent in another currency; or
(iii)
any administrative or other receiver is appointed over any asset of a Relevant Person; or
(iv)
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 (a) 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 (did) a government minister or public or regulatory authority of a Pertinent Jurisdiction 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 all the 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 in any Pertinent Jurisdiction, 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 (a) 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 (a) 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
(xi)
in a Pertinent Jurisdiction other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Lenders acting reasonably is similar to any of the foregoing.
(h)
any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened against a Relevant Person or its assets which has, will have or may have a Material Adverse Effect;
(i)
a Finance Document is amended, terminated, cancelled or suspended for any reason except with the prior written consent of the Agent, acting with the authorisation of all the Lenders;
(j)
the Borrower ceases or suspends carrying on its business or a part of its business which is material in the context of this Agreement; or
(k)
it becomes unlawful in any Pertinent Jurisdiction 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 all the Lenders consider material under a Finance Document;
(ii)
for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or
(l)
any consent necessary to enable any Guarantor to own, operate or charter the Ship owned by it or on the Approved Flag or to enable the Borrower, such Guarantor or any other Security Party to comply with any provision which all the Lenders consider material of a Finance Document, to which it is a party 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
(m)
any failure to change the flag state of a Ship after written notice from the Agent requesting a flag change as a result of governmental and/or political unrest which may in the Agent's opinion have a Material Adverse Effect; or
(n)
any arrest, capture, seizure or detention of a Ship unless it is within 30 Business Days redelivered to the full control of the Guarantor owning that Ship; or
(o)
any provision which all the 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 and which in each case such default continues unremedied 15 days after written notice from the Agent requesting action to remedy the same; or
(p)
the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
(q)
any of the Ships ceases to be employed by the relevant Approved Ship Manager on terms acceptable to the Agent or any of the circumstances described in Clause 19.1(g) or (j) occurs ( mutatis mutandis ) in relation to an Approved Ship Manager or an Approved Ship Manager or Approved Sub‑Manager breaches any provision of its Approved Ship Manager's Undertaking which the Agent considers material and the Borrower fails within a period of 15 days of it becoming aware of the occurrence of such circumstance or breach or of the receipt of a written notification from the Agent requesting the Borrower to remedy such circumstances or breach either to remedy such circumstances or breach or to substitute the relevant Approved Ship Manager or Approved Sub-Manager with another Approved Ship Manager or Approved Sub‑Manager which executes and delivers to the Security Trustee a replacement Approved Ship Manager's Undertaking; or
(r)
an event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
6.2
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 all or part of the Commitments and of the other obligations of each Lender to the Borrower under this Agreement are cancelled; and/or
(ii)
serve on the Borrower a notice stating that all or part of the Loan together with 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 all the 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 and/or the Lenders are entitled to take under any Finance Document or any applicable law.
6.3
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 be cancelled.
6.4
Acceleration of Loan. On the service of a notice under Clause 19.2(a)(i) , all or, as the case may be, the part of the Loan specified in the notice together with 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.
6.5
Multiple notices; action without notice. The Agent may serve notices under Clauses  19.2(a)(i) and (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.
6.6
Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, 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.
6.7
Creditor Party rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 .
6.8
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.
6.9
Relevant Persons. In this Clause 19, a " Relevant Person " means the Borrower and any Security Party.
6.10
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.
7
FEES AND EXPENSES
7.1
Upfront fees. The Borrower shall pay to the Agent on the date of this Agreement the following:
(a)
a structuring fee of $272,000, representing 0.8 per cent, of the Total Commitments; and
(b)
an arrangement fee of $187,000, representing 0.55 per cent, of the Total Commitments.
7.2
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, syndication or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document including, without limitation, any legal fees (including VAT and disbursements) reasonably incurred by the Agent, Security Trustee, the Bookrunner and the Mandated Lead Arranger in this connection.
7.3
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 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 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 Lender 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.
7.4
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.
7.5
Financial Services Authority 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 it 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 Services Authority (or other United Kingdom governmental authorities or agencies) of a requirement to pay fees to the Financial Services Authority calculated by reference to liabilities used to fund its Contribution.
7.6
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 (without necessarily specifying a detailed breakdown) 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.
8
INDEMNITIES
8.1
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 relating to such Advance 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 of an Event of Default or a Latent Event of Default and/or the acceleration of repayment of the Loan under Clause 19;
and in respect of any tax (other than any FATCA Deduction or a tax on its overall net income under the law of the jurisdiction in which that Creditor Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Creditor Party is treated as a resident for tax purposes) 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 or in respect of any Finance Document.
8.2
Breakage costs. Without limiting its generality, Clause 21.1 covers any claim, expense, liability or loss, including a loss of a 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.
8.3
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 directly and mainly 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 or any Environmental Law.
8.4
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.
8.5
Mandatory Cost
The Borrower shall, on demand by the Agent, pay to the Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Agent to be its good faith determination of the amount necessary to compensate it for complying with:
(a)
in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
(b)
in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions).
8.6
Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
8.7
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.
9
NO SET-OFF OR TAX DEDUCTION
9.1
No deductions. All amounts due from the Borrower or any Security Party 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 or such Security Party is required by law to make.
9.2
Grossing-up for taxes. If the Borrower or any Security Party is required by law to make a tax deduction from any payment under a Finance Document (other than a FATCA Deduction):
(a)
the Borrower or such Security Party (as the case may be) shall notify the Agent as soon as it becomes aware of the requirement;
(b)
the Borrower or such Security Party (as the case may be) 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 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.
9.3
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.
9.4
Tax deduction. In this Clause 22 " tax deduction " means any deduction or withholding for or on account of any present or future tax other than a FATCA Deduction.
9.5
FATCA Deduction. Each party to this Agreement 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 this Agreement 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. Each party to this Agreement shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the party to this Agreement to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Creditor Parties.
9.6
Stamp taxes. The Borrower shall pay and, within 3 Business Days of demand, indemnify each Creditor Party against any cost, loss or liability which that Creditor Party incurs in relation to all stamp duty, registration and other similar taxes payable in respect of any Finance Document.
9.7
FATCA Information
(a)
Subject to paragraph (c) below, each Party shall, within 10 Business Days of a reasonable request by another Party:
(i)
confirm to that other Party whether it is:
(A)
a FATCA Exempt Party; or
(B)
not a FATCA Exempt Party;
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and
(iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation, or exchange of information regime.
(b)
If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Creditor Party to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality.
(d)
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
9.8
VAT
(a)
All amounts expressed to be payable under a Finance Document by any Party to a Creditor Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Creditor Party to any Party under a Finance Document and such Creditor Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Creditor Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Creditor Party must promptly provide an appropriate VAT invoice to that Party).
(b)
If VAT is or becomes chargeable on any supply made by any Creditor Party (the " Supplier ") to any other Creditor Party (the " Recipient ") under a Finance Document, and any Party other than the Recipient (the " Relevant Party ") is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
(i)
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this sub-paragraph (i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(ii)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
(c)
Where a Finance Document requires any Party to reimburse or indemnify a Creditor Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Creditor Party for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that such Creditor Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(d)
Any reference in this Clause 22.8 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to any member of such group at such time.
(e)
In relation to any supply made by a Creditor Party to any Party under a Finance Document, if reasonably requested by such Creditor Party, that Party must promptly provide such Creditor Party with details of that Party's VAT registration and such other information as is reasonably requested in connection with such Creditor Party's VAT reporting requirements in relation to such supply.
10
ILLEGALITY, ETC.
10.1
Illegality. This Clause 23 applies if a Lender (the " Notifying Lender ") notifies the Agent that it has become, or will with effect from a specified date, become:
(a)
unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
(b)
contrary to, or inconsistent with, any regulation,
for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.
10.2
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.
10.3
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.
10.4
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.
11
INCREASED COSTS
11.1
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 Notifying Lender's overall net income); or
(b)
the effect of complying with any law or 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; or
(c)
the implementation or application of or compliance with any Basel III Regulation, CRD IV and CRR,
the Notifying Lender (or a parent company of it) has incurred or will incur an " increased cost ".
11.2
Meaning of "increased costs". In this Clause 24, "increased costs" 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 having taken an assignment of rights under this Agreement, 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 after providing evidence of its method of calculation to quantify such increased costs under this Agreement,
but not an item attributable to a FATCA Deduction required to be made by a Party or compensated for by any payment made pursuant to Clause 21.5.
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.
11.3
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.
11.4
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.
11.5
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 its intention to prepay the Notifying Lender's Contribution at the end of an Interest Period.
11.6
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.
11.7
Application of prepayment. Clause 8 shall apply in relation to the prepayment.
12
SET‑OFF
12.1
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; 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; and
(iii)
enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.
12.2
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).
12.3
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.
12.4
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.
13
TRANSFERS AND CHANGES IN LENDING OFFICES
13.1
Transfer by Borrower. The Borrower may not, without the prior written consent of the Agent, given on the instructions of all the Lenders transfer any of its rights, liabilities or obligations under any Finance Document.
13.2
Transfer by a Lender. Subject to Clause 26.5 a Lender (the " Transferor Lender ") may at any time, without the consent of the Borrower or any Security Party but with the prior approval of the Agent, cause:
(a)
its rights in respect of all or part of its Contribution but in the case of part, in an amount no less than $5,000,000; or
(b)
its obligations in respect of all or part of its Commitment but in the case of part, in an amount no less than $5,000,000; 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 which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets and which is FATCA Exempt Party (a " Transferee Lender ") or the securitisation or similar transaction of that Transferor Lender's Contribution of Commitment 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,
However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.
13.3
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 and each of the other Lenders;
(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 to the transfer to that Transferee Lender.
13.4
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 on or before that date.
13.5
No transfer without Transfer Certificate. Except as provided in Clause 26.17, 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 or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
13.6
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 a 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.
13.7
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 5.6 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 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.
13.8
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.
13.9
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.
13.10
Authorisation of Agent to sign Transfer Certificates. The Borrower, the Security Trustee and each Lender irrevocably authorises the Agent to sign Transfer Certificates on its behalf.
13.11
Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $5,000 from the Transferor Lender or (at the Agent's option) the Transferee Lender.
13.12
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.
13.13
Disclosure of Confidential Information. Any Creditor Party may disclose:
(a)
with the prior written consent of the Borrower, to any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and representatives such Confidential Information as that Creditor Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
(b)
to any person:
(i)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents and to any of that person's Affiliates, representatives and professional advisers;
(ii)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or the Borrower and/or one or more of the Security Parties and to any of that person's Affiliates, representatives and professional advisers;
(iii)
appointed by any Creditor Party or by a person to whom paragraph (b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;
(iv)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above;
(v)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
(vi)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;
(vii)
to whom or for whose benefit that Creditor Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 26.17 and to any rating agency in relation to any such securitisation;
(viii)
who is a party; or
(ix)
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document,
in each case, such Confidential Information as that Creditor Party shall consider appropriate if:
(A)
in relation to paragraphs (b)(i), (b)(ii) and (b)(iii) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B)
in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(C)
in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Creditor Party, it is not practicable so to do in the circumstances; and
(c)
with the prior written consent of the Borrower, to any person appointed by that Creditor Party or by a person to whom paragraph (b)(i) or (b)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the Loan Market Association Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrower and the relevant Creditor Party.
13.14
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.
13.15
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.
13.16
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.
13.17
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
(i)
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:
(ii)
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
(iii)
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.
14
VARIATIONS AND WAIVERS
14.1
Variations, waivers etc. by Majority Lenders . Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the 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.
14.2
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 ":
(a)
a change to any Security Party, other than in accordance with the terms of the Finance Documents;
(b)
a reduction in the Margin;
(c)
a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement;
(d)
an increase in any Lender's Commitment;
(e)
a change to the definition of " Majority Lenders ";
(f)
a change to Clause 3 or this Clause 27;
(g)
a change to Clauses 12.5, 12.6, 12.7 and 12.8 ;
(h)
any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document;
(i)
an extension of the Availability Period; and
(j)
any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.
14.3
Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
(a)
a provision of this Agreement or another Finance Document; or
(b)
an Event of Default; or
(c)
a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or
(d)
any right or remedy conferred by any Finance Document or by the general law,
and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.
15
BAIL IN
15.1
Contractual recognition of bail-in
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
16
NOTICES
16.1
General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, electronic mail ("Email") or fax and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
16.2
Addresses for communications. A notice by letter or fax shall be sent:
(a)
to the Borrower:    Scorpio Tankers Inc.
Le Millenium, 9 Boulevard Charles III,
98000 Monaco
Attn: Mr Luca Forgione - Legal Department
Fax No:     + 3 77 97 77 83 46
Email@ legal@scorpiogroup.net
(b)
to a Lender:    At the address below its name in Schedule 1 in the relevant Transfer Certificate.
(c)
to the Agent:            HSH Nordbank AG
                Gerhart-Hauptmann-Platz 50,
20095 Hamburg,
Germany
    
Attention: Michael Stamp
Email: michael.stamp@hsh-nordbank.com
Fax: +49 403333613620
(d)
to the Security Trustee:        in respect of administrative matters:
HSH Nordbank AG
Gerhart-Hauptmann-Platz 50,
20095 Hamburg,
Germany
    
Attention:     Loan and Collateral Management,
Steffi Dädlow

Email: Steffi.daedlow@hsh-nordbank.com
Fax: +49 40 3333 610475
    
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 and the Security Parties.
16.3
Effective date of notices. Subject to Clauses 29.4 and 29.5 :
(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 Email shall be deemed to be served, and shall take effect, at the time when it is actually received in readable form; and
(c)
a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.
16.4
Service outside business hours. However, if under Clause 29.3 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 29.5 ) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.
16.5
Illegible notices. Clauses 29.3 and 29.4 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.
16.6
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.
16.7
Electronic communication between the Agent and a Lender. Any communication to be made between the Agent and a Lender under or in connection with the Finance Documents may be made by Email 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 Email 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 Email 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.
16.8
English language. Any notice under or in connection with a Finance Document shall be in English.
16.9
Meaning of "notice". In this Clause 29, " notice " includes any demand, consent, authorisation, approval, instruction, waiver or other communication.
17
SUPPLEMENTAL
17.1
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.
17.2
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.
17.3
Counterparts. A Finance Document may be executed in any number of counterparts.
17.4
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.
18
LAW AND JURISDICTION
18.1
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.
18.2
Exclusive English jurisdiction. Subject to Clause 31.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.
18.3
Choice of forum for the exclusive benefit of Creditor Parties. Clause 31.2 is for the exclusive benefit of the Creditor Parties, each of 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.
(a)
The Borrower irrevocably appoints Scorpio UK Limited at its office for the time being, presently at 10 Lower Grosvenor Place, London, SW1W 0EN (such communication to be marked preferably and if possible on the paper envelope and not on the courier packaging marked " STNG Transaction " for the urgent attention of General Counsel), 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.
(b)
If any agent appointed as an agent for service of process under this Clause is unable for any reason to act as agent for service of process, the Borrower (on behalf of itself and all of the other Security Parties) must immediately (and in any event no later than the end of the previous process agent's appointment) appoint another agent on terms acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose.
18.5
Creditor Party rights unaffected. Nothing in this Clause 31 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
18.6
Meaning of "proceedings". In this Clause 31, " 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.


Schedule 1

LENDERS AND COMMITMENTS

Lender
Lending Office
Commitment
HSH Nordbank AG
Gerhart-Hauptmann-Platz 50,
20095 Hamburg, Germany
$34,000,000

Schedule 2     

DRAWDOWN NOTICE
To:    HSH Nordbank AG
Attn:     [ l ]

Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
 
[ l ] 2017
DRAWDOWN NOTICE
1
We refer to the loan agreement (the " Loan Agreement ") dated [ l ] 2017 and made between ourselves as Borrower, the Lenders referred to therein, the Mandated Lead Arranger referred to therein, the Bookrunner referred to therein, yourselves as Agent and as Security Trustee in connection with a facility of up to US$34,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
2
We request to borrow an Advance pursuant to the Loan as follows:
(a)
Amount: US$[ l ];
(b)
Drawdown Date: [ l ] 2017;
(c)
[Duration of the first Interest Period shall be [ l ] months;] and
(d)
Payment instructions: [ 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 and on the Drawdown Date with reference to the circumstances now existing; and
(b)
no Event of Default or Latent 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]

Chief Financial Officer
for and on behalf of
SCORPIO TANKERS INC.


Schedule 3     

CONDITION PRECEDENT DOCUMENTS
Part A     
The following are the documents referred to in Clause 9.1(a) .
1
A duly executed original of this Agreement and the Agency and Trust Deed.
2
Copies of the certificate of incorporation and constitutional documents of the Borrower and each Security Party.
3
Copies of resolutions of the directors of the Borrower and each Security Party and in the case of the Guarantors copies of resolutions of their shareholders 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 Drawdown Notices and other notices under this Agreement.
1
The original of any power of attorney under which any Finance Document is executed on behalf of the Borrower (where a separate power of attorney is issued by the Borrower) or a Security Party.
2
An incumbency certificate in respect of the officers and directors (or equivalent) of each of the Borrower and the Security Parties and signature samples of any signatories to any Finance Document.
3
Evidence satisfactory to the Agent that all consents and approvals which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document have been obtained and any required filings have been made.
4
Documentary evidence that the agent for service of process named in Clause 31 has accepted its appointment.
5
Such documentation and other evidence in form and substance acceptable to the Agent or a Lender in order for each to carry out and be satisfied with the results of all necessary "know your customer" or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement, and other Finance Documents including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and each of the Lenders to identify the Borrower and each Security Party.
6
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of England, the Marshall Islands, The Netherlands and such other relevant jurisdictions as the Agent may require.
7
A Compliance Certificate together with all supporting Accounting Information and other evidence as required pursuant to the terms of this Agreement.
8
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 20 have been paid or will be paid by the first 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.
10
The financial statements of the Borrower for its financial year ended 31 December 2015.
Part B     
The following are the documents referred to in Clause 9.1(b).
In this Part B, " Ship " means the particular Ship to which the relevant Advance relates and " Guarantor " means the relevant Guarantor owning such Ship.
1
A certificate of an authorised signatory of the Guarantor and, if signing any Finance Document listed in paragraph 3 below, the Borrower and any other Security Party, certifying that each corporate and copy document provided by it under Part A of Schedule 3 remains correct, complete, has not been amended and is in full force and effect as at the relevant Drawdown Date and that there is no Event of Default.
2
Copies of resolutions of the directors of the Borrower and each Security Party and, in the case of the Guarantor, copies of resolutions of its shareholders, in each case, authorising the execution of the Finance Documents to which the Borrower or that Security Party is a party.
3
A duly executed original of the Mortgage, the Guarantee, the General Assignment, the Charterparty Assignment, the Accounts Security Deed and any Intercompany Loan Assignment (if applicable) in relation to the Guarantor and the Ship (and of each document required to be delivered by their respective terms).
4
Evidence that any Existing Security over the Ship (including any mortgages) has been released and evidence satisfactory to the Agent that the amount of the Existing Indebtedness in relation to the Ship has been prepaid.
5
The original of any power of attorney under which any Finance Document is to be executed on behalf of the Guarantor or the Borrower if applicable (and only where a separate power of attorney is issued by the Borrower).
6
Copies of all consents which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document entered into on or prior to the Drawdown Date not already provided under Part A of this Schedule.
7
The Agent and Lenders have been provided with all information and documentation they have requested in order to carry out and be reasonably satisfied with all further necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated by this Agreement and to satisfy all internal compliance policies of the Agent and the Lenders in relation to "know you customer" requirements.
8
Confirmation that any Intercompany Loans made or to be made available to the Guarantor have been or will be when made available fully subordinated to the rights of the Creditor Parties under the Finance Documents.
9
Documentary evidence that the Earnings Account in respect of the Ship has been opened with the Account Bank.
10
Documentary evidence that:
(a)
the Ship is definitively and permanently registered in the name of the Guarantor under the relevant Approved Flag in accordance with the laws of the applicable Approved Flag;
(b)
the Ship is in the absolute and unencumbered ownership of the Guarantor save as contemplated by the Finance Documents;
(c)
the Ship maintains class acceptable to the Agent free of all overdue recommendations and conditions of an Approved Classification Society;
(d)
the Mortgage in relation to the Ship has been duly registered against such Ship as a valid first preferred ship mortgage in accordance with the laws of the relevant Approved Flag; 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.
11
Documents establishing that the Ship is managed by the Approved Ship Manager on terms acceptable to the Lenders, together with:
(a)
the Approved Ship Manager's Undertaking in respect of the Ship; and
(b)
copies of the relevant Approved Ship 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) and of the Ship's ISSC.
12
Valuations of the Ship to determine its Fair Market Value, addressed to the Agent and the Lenders, stated to be for the purposes of this Agreement and, notwithstanding paragraph (b) of Clause 15.3, in any event dated not earlier than the date falling 14 days prior to the relevant Drawdown Date and obtained in accordance with Clause 15 and showing that upon the drawdown of the Advance relating to the Ship, the Borrower will be in compliance with Clause 15.
13
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of England, Marshall Islands and such other relevant jurisdictions as the Agent may require.
14
A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances for the Ship as the Agent may require.
15
Evidence that the fees, costs and expenses then due from the Borrower pursuant to Clause 20 have been paid or will be paid by the first Drawdown Date.
16
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 copy document delivered under this Schedule 3 shall be certified as a true and up to date copy by a director or secretary (or equivalent officer) or an attorney-in-fact of the Borrower.

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:
[Name of Agent] for itself and for and on behalf of the Borrower, each Security Party, the Security Trustee, each Lender, the Bookrunner and the Mandated Lead Arranger as defined in the Loan Agreement referred to below.
[ l ]
1
This Certificate relates to a loan agreement ("the " Agreement ") dated [ l ] 2017 and made between (1) Scorpio Tankers Inc. (the " Borrower "), (2) the banks and financial institutions named therein as Lenders, (3) HSH Nordbank AG as Mandated Lead Arranger, (4) HSH Nordbank AG as Bookrunner, (5) HSH Nordbank AG as Agent and as Security Trustee for a loan facility of up to $34,000,000.
2
In this Certificate, terms defined in the Agreement shall, unless the contrary intention appears, have the same meanings when used in this Certificate and:
" Relevant Parties " means the Agent, the Borrower, each Security Party, the Bookrunner, the Mandated Lead Arranger, the Security Trustee and each Lender;
" Transferor " means [full name] of [lending office];
" 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 Agreement and every other Finance Document in relation to [ l ] per cent. of its Contribution, which percentage represents $[ l ].]
5
[By virtue of this Certificate and Clause 26 of the 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 Agreement provides will become binding on it upon this Certificate taking effect.
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 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 required 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 Agreement and each of the other Finance Documents;
(b)
agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Security Trustee, any Lender, the Bookrunner or the Mandated Lead Arranger 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 any Security Party under any of the Finance Documents;
(c)
agrees that it will have no rights of recourse on any ground against the Agent, the Security Trustee, any Lender, the Bookrunner, or any Mandated Lead Arranger 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)
that this Certificate is valid and binding as regards the Transferee;
(e)
confirms the accuracy of the administrative details set out below regarding the Transferee.
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 9 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
[Name of Agent]
By:
Date:
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.


Schedule 5     

LIST OF APPROVED BROKERS

Clarkson Platou Securities AS
Arrow Sale & Purchase Ltd.
Braemar Seascope Ltd.
Maersk Broker K/S
Fearnleys Ltd.
Simpson Spence Young



24     59295567v5


Schedule 6     

FORM OF COMPLIANCE CERTIFICATE
To:    HSH Nordbank AG
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
[date]
Dear Sirs,
We refer to a loan agreement dated [ l ] 2017 (the " Loan Agreement ") made between (i) Scorpio Tankers Inc. as borrower (the " Borrower "), (2) the Lenders named therein, (3) the Mandated Lead Arranger named therein, (4) the Bookrunner named therein and (5) yourselves as Agent and Security Trustee
Words and expressions defined in each of the Loan Agreement shall have the same meaning when used in this Compliance Certificate.
We hereby represent that no Event of Default has occurred as at the date of this Certificate [other than [ l ]].
We hereby certify that, as at the date of this certificate:
(a)
the Minimum Liquidity requirement is $[ l ], Cash and Cash Equivalents is $[ l ]; $[ l ] of which consists of Cash;
(b)
the Consolidated Tangible Net Worth is $[ l ];
(c)
the ratio of Net Debt to Consolidated Total Capitalisation is [ l ] to [ l ];
(d)
the ratio of Consolidated EBITDA to Consolidated Net Interest Expense is [ l ] to [ l ]; and
(e)
the Fair Market Value of the Ships plus the net realisation value of any additional security previously provided under Clause 15 [as at [date of most recent half/full year certificate] is not less than 140 per cent of the Loan. [Note: Wording in square brackets is only relevant for quarterly compliance certificates]
All of these thresholds and ratios are in compliance with the requirements of clauses 12.5, 12.6, 12.7, 12.8 and 15.1 of the Loan Agreement. Copies of our calculations in relation to the financial covenants and the valuations for the purposes of determining the Fair Market Value of the Ships is attached.
This Certificate and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

______________________________
[ l ]
Chief Financial Officer
Scorpio Tankers Inc.

25     59295567v5



Schedule 7     

THE SHIPS

 
Vessel
DWT
Built
Owner/Guarantor
1.
STI Onyx
52,000
Sep-12
STI Onyx Shipping Company Limited
2.
STI Duchessa
52,000
Jan-14
STI Duchessa Shipping Company Limited

Schedule 8     

POWER OF ATTORNEY
Know all men by these presents that STI [Onyx][Duchessa] Shipping Company Limited (the " Company "), a company incorporated in the Republic of the Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands irrevocably and by way of security appoints HSH Nordbank AG (the " Attorney ") of Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany its attorney, to act in the name of the Company in relation to [ name of Approved Classification Society ] (the " Classification Society ") and/or to the classification records of any vessel owned, controlled or operated by the Company including, with limitation, such powers or entitlement as the Company may have to inspect the class records and any files held by the Classification Society in relation to any such vessel and to require the Classification Society to provide to the Attorney or to any of its nominees any information, document or file which the Attorney may request
Delegation. The Attorney may exercise its powers hereunder through any officer or through any nominee and/or may sub‑delegate to any person or persons (including a Receiver and persons designated by him) all or any of the powers (including the discretions) conferred on the Attorney hereunder, and may do so on terms authorising successive sub‑delegations.
This Power of Attorney was executed by the Company as a Deed on [ date ].

EXECUTED as a DEED by            )
STI [Onyx][Duchessa] Shipping Company Limited     )
acting by two directors or one director    )
and the company secretary        )

Director: ……………………………
Director/Secretary: …………………..

26     59295567v5



EXECUTION PAGES

THE BORROWER
 
SIGNED by
 
Name: Micha Withoft
/s/ Micha Withoft
Title: Attorney-in-Fact
 
for and on behalf of
 
SCORPIO TANKERS INC.
 
in the presence of:
 
 
 
Name: Andrew Cottrell, Legal Intern
/s/ Andrew Cottrell
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
THE LENDERS
 
SIGNED by
 
Name: Lucy Shtenko
/s/ Lucy Shtenko
for and on behalf of
Title: Attorney-in-Fact
HSH NORDBANK AG
 
in the presence of:
 
Name: Clementine Freeth
 
/s/ Clementine Freeth
 
Title: Trainee, WFW, LLP
 
 
 
THE MANDATED LEAD ARRANGER
 
SIGNED by
 
Name: Lucy Shtenko
/s/ Lucy Shtenko
for and on behalf of
Title: Attorney-in-Fact
HSH NORDBANK AG
 
in the presence of:
 
Name: Clementine Freeth
 
/s/ Clementine Freeth
 
Title: Trainee, WFW, LLP
 
 
 
THE BOOKRUNNER
 
SIGNED by
 
Name: Lucy Shtenko
/s/ Lucy Shtenko
for and on behalf of
Title: Attorney-in-Fact
HSH NORDBANK AG
 
in the presence of:
 
Name: Clementine Freeth
 
/s/ Clementine Freeth
 
Title: Trainee, WFW, LLP
 
 
 
THE SECURITY TRUSTEE
 
SIGNED by
 

27     59295567v5


Name: Lucy Shtenko
/s/ Lucy Shtenko
for and on behalf of
Title: Attorney-in-Fact
HSH NORDBANK AG
 
in the presence of:
 
Name: Clementine Freeth
 
/s/ Clementine Freeth
 
Title: Trainee, WFW, LLP
 
 
 
THE AGENT
 
SIGNED by
 
Name: Lucy Shtenko
/s/ Lucy Shtenko
for and on behalf of
Title: Attorney-in-Fact
HSH NORDBANK AG
 
in the presence of:
 
Name: Clementine Freeth
 
/s/ Clementine Freeth
 
Title: Trainee, WFW, LLP
 





28     59295567v5
Execution Copy

Exhibit 4.30
Dated 10 March 2017

USD 172,000,000
TERM LOAN FACILITY


STI GALATA SHIPPING COMPANY LIMITED
STI TAKSIM SHIPPING COMPANY LIMITED (tbn STI BOSPHORUS SHIPPING COMPANY LIMITED)
STI LEBLON SHIPPING COMPANY LIMITED
STI LA BOCA SHIPPING COMPANY LIMITED
STI SAN TELMO SHIPPING COMPANY LIMITED
STI JURERE SHIPPING COMPANY LIMITED (tbn STI DONALD C TRAUSCHT SHIPPING COMPANY LIMITED)
STI ESLES II SHIPPING COMPANY LIMITED
STI JARDINS SHIPPING COMPANY LIMITED
as joint and several Borrowers
and Hedge Guarantors
and
SCORPIO TANKERS INC.
as Parent Guarantor
and    
THE BANKS AND FINANCIAL INSTITUTIONS NAMED THEREIN
as Hedge Counterparties

THE BANKS AND FINANCIAL INSTITUTIONS NAMED THEREIN
as Lenders under the Commercial Facilities

THE BANKS AND FINANCIAL INSTITUTIONS NAMED THEREIN
as Lenders under the GIEK Guaranteed Facility

THE BANKS AND FINANCIAL INSTITUTIONS NAMED THEREIN
as Lenders under the Kexim Guaranteed Facility

THE EXPORT-IMPORT BANK OF KOREA
as Lender under the Kexim Direct Facility

MACQUARIE BANK LIMITED (LONDON BRANCH)
THE EXPORT-IMPORT BANK OF KOREA
DEKABANK DEUTSCHE GIROZENTRALE
as Mandated Lead Arrangers
MACQUARIE BANK LIMITED (LONDON BRANCH)
as Global Coordinator and ECA Agent
and

1    

Execution Copy

WILMINGTON TRUST (LONDON) LIMITED
as Facility Agent and Security Agent
FACILITY AGREEMENT
relating to the financing of hull nos. 2601, 2602, 2603, 2604, 2605, 2606, 2607 and 2608 at
Hyundai Mipo Dockyard

2        
Execution Copy

Index
Clause    Page
Section 1
Interpretation
1
Definitions and Interpretation
Section 2
The Facility
2
The Facility
3
Purpose
4
Conditions of Utilisation
Section 3
Utilisation
5
Utilisation
Section 4
Repayment, Prepayment and Cancellation
6
Repayment
7
Prepayment and Cancellation
Section 5
Costs of Utilisation
8
Interest
9
Interest Periods
10
Changes to the Calculation of Interest
11
Fees
Section 6
Additional Payment Obligations
12
Tax Gross Up and Indemnities
13
Increased Costs
14
Other Indemnities
15
Mitigation by the Finance Parties
16
Costs and Expenses
Section 7
Guarantees and Join and Several Liability of Borrowers
17
Guarantee and Indemnity -- Parent Guarantor
18
Joint and Several Liability of the Borrowers
19
Guarantee and Indemnity -- Hedge Guarantors
Section 8
Representations, Undertakings and Events of Default
20
Representations
21
Information Undertakings
22
Financial Covenants
23
General Undertakings
24
Insurance Undertakings
25
General Ship Undertakings
26
Security Cover
27
Accounts, and application of Earnings and Hedge Receipts
28
Events of Default
Section 9
Changes to Parties
29
Changes to the Lenders
30
Changes to the Transaction Obligors
Section 10
The Finance Parties
31
The Facility Agent and the Mandated Lead Arrangers

3        
Execution Copy

32
The Security Agent
33
ECA Agent
34
Conduct of Business by the Finance Parties
35
Sharing among the Finance Parties
Section 11
Administration
36
Payment Mechanics
37
Set-Off
38
Bail-In
39
Notices
40
Calculations and Certificates
41
Partial Invalidity
42
Remedies and Waivers
43
Settlement or Discharge Conditional
44
Irrevocable Payment
45
Amendments and Waivers
46
Confidential Information
47
Confidentiality of Funding Rates
48
Counterparts
Section 12
Governing Law and Enforcement
49
Governing Law
50
Enforcement

Schedules
Schedule 1 The Parties
Part A The Obligors
Part B The Original Lenders
Part C The Servicing Parties
Schedule 2 Conditions of Preceden
Part A Conditions Precedent to each Utilisation Request
Part B Conditions Precedent to each Utilisation
Schedule 3 Requests
Part A Utilisation Request




4        
Execution Copy



Execution
Execution Pages






5        
Execution Copy



THIS AGREEMENT is made on 10 March 2017
PARTIES
(1)
STI GALATA SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands with registered number 77908 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower A ");
(2)
STI TAKSIM SHIPPING COMPANY LIMITED (to be named STI BOSPHORUS SHIPPING COMPANY LIMITED ), a corporation incorporated in the Republic of the Marshall Islands with registered number 77910 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower B ");
(3)
STI LEBLON SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands with registered number 77911 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower C ");
(4)
STI LA BOCA SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands with registered number 77912 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower D ");
(5)
STI SAN TELMO SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands with registered number 77913 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower E ");
(6)
STI JURERE SHIPPING COMPANY LIMITED (to be named STI Donald C Trauscht Shipping Company Limited), a corporation incorporated in the Republic of the Marshall Islands with registered number 77914 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower F ");
(7)
STI ESLES II SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands with registered number 78196 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower G ");
(8)
STI JARDINS SHIPPING COMPANY LIMITED , a corporation incorporated in the Republic of the Marshall Islands with registered number 77917 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as a borrower (" Borrower H ");
(9)
SCORPIO TANKERS INC. , a corporation incorporated in the Republic of the Marshall Islands with registered number 36141 whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands as guarantor (the " Parent Guarantor ");
(10)
THE COMPANIES listed in Part A of Schedule 1 ( The Parties ) as hedge guarantors (the " Hedge Guarantors ");

1    

Execution Copy

(11)
MACQUARIE BANK LIMITED (LONDON BRANCH), THE EXPORT-IMPORT BANK OF KOREA and DEKABANK DEUTSCHE GIROZENTRALE as mandated lead arrangers (the " Mandated Lead Arrangers ");
(12)
THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 ( The Parties ) as original commercial lenders (the “ Original Commercial Lenders ”);
(13)
THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 ( The Parties ) as original lenders under the GIEK Guaranteed Facility (the “ Original GIEK Guaranteed Lenders ”);
(14)
THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 ( The Parties ) as original lenders under the Kexim Guaranteed Facility (the “ Original Kexim Guaranteed Lenders ”);
(15)
THE EXPORT–IMPORT BANK OF KOREA of 38 Eunhaeng-ro, Yeongdeungpo-gu, Seoul, 07242, Republic of Korea as lender under the Kexim Direct Facility (“ Kexim ”);
(16)
THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 ( The Parties ) as original hedge counterparties (the " Original Hedge Counterparties ");
(17)
MACQUARIE BANK LIMITED (LONDON BRANCH) as global coordinator (the “ Global Coordinator ”);
(18)
MACQUARIE BANK LIMITED (LONDON BRANCH) as agent for the Kexim Guaranteed Lenders and the GIEK Guaranteed Lenders (the “ ECA Agent ”);
(19)
WILMINGTON TRUST (LONDON) LIMITED as agent of the other Finance Parties (the " Facility Agent "); and
(20)
WILMINGTON TRUST (LONDON) LIMITED as security agent for the Secured Parties (the " Security Agent ").
BACKGROUND
The Lenders have agreed to make available to the Borrowers facilities of up to USD 172,000,000 for the purposes of financing and/or, in relation to any amounts previously paid by an Obligor, refinancing (by reimbursement to the relevant Obligor) the acquisition of the Ships.

OPERATIVE PROVISIONS

2        
Execution Copy



3        
Execution Copy

SECTION 1

INTERPRETATION
1
DEFINITIONS AND INTERPRETATION
1.1
Definitions
In this Agreement:
" Account Bank " means ABN AMRO Bank, N.V., acting through its office at Coolsingel 93, P.O. Box 749, 3000 AS Rotterdam, The Netherlands or any replacement bank or other financial institution as may be approved by the Facility Agent acting with the authorisation of the Majority Lenders.
" Accounting Period " means each consecutive quarterly period during the Security Period ending on 31 March, 30 June, 30 September and 31 December of each financial year of the Parent Guarantor.
" Accounts " means the Earnings Accounts, the Retention Accounts and the Debt Service Reserve Account.
" Account Security " means a document creating Security over any Account in agreed form.
" Additional Hedge Counterparty " means a bank or financial institution which becomes a Hedge Counterparty in accordance with Clause 29.11 ( Additional Hedge Counterparties ).
" Advance " means a borrowing of all or part of a Ship Loan under this Agreement.
" Affiliate " means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for the purposes of this definition, the term “ control ” (including the terms “ controlling ”, “ controlled by ” and “ under common control with ”) of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise.
" Applicable Margin ” means:
(a)
the Commercial Facility Margin for each Commercial Facility;
(b)
the GIEK Guaranteed Facility Margin for the GIEK Guaranteed Facility;
(c)
the Kexim Direct Facility Margin for the Kexim Direct Facility; and
(d)
the Kexim Guaranteed Facility Margin for the Kexim Guaranteed Facility.
" Applicable Sanctions " means any Sanctions by which any Obligor is bound or to which it is subject (which shall include, without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America) or compliance with which is reasonable in the ordinary course of business of any Obligor.
" Approved Classification " means, in relation to a Ship, the highest classification obtainable for that category of ship with an Approved Classification Society.

4        
Execution Copy

" Approved Classification Society " means, in relation to a Ship, DNV GL, Korean Register of Shipping, American Bureau of Shipping, Lloyd's Register, Nippon Kaiji Kyokai, Bureau Veritas or any other classification society approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders and the ECAs (such authorisation not to be unreasonably withheld).
"Approved Commercial Manager" means, in relation to a Ship:
(a)
Scorpio Commercial Management s.a.m. of 9, Boulevard Charles III, Monte Carlo, the Principality of Monaco;
(b)
any Affiliate or Subsidiary of Scorpio Commercial Management s.a.m. or the Parent Guarantor; or
(c)
any other company proposed by the Parent Guarantor which the Facility Agent (acting on the instructions of all the Lenders and the ECAs) may from time to time approve (such approval not to be unreasonably withheld or delayed) as the commercial manager of that Ship.
" Approved Flag " means, in relation to a Ship, the flag of the Marshall Islands, Bahamas, Singapore or such other flag approved in writing by the Facility Agent acting with the authorisation of all the Lenders and the ECAs.
" Approved Pooling Arrangement " means, in relation to a Ship, the “Scorpio MR Pool” and any pooling arrangement:
(a)
proposed by the Parent Guarantor or the Borrower that owns that Ship;
(b)
run by any Affiliate of the Approved Commercial Manager; and
(c)
approved in writing by the Facility Agent (acting on the instructions of all the Lenders) prior to that Ship's entry into such pooling arrangement.
" Approved Ship Manager " means, in relation to a Ship, the Approved Commercial Manager or the Approved Technical Manager of that Ship.
" Approved Ship Manager's Undertaking " means, in relation to a Ship, the letter executed and delivered by an Approved Ship Manager and any Approved Sub-Manager, which shall include, where relevant, an assignment of the interest of that manager in the Insurances and subordination of the rights of that manager to the rights of the Finance Parties, in agreed form.
" Approved Sub-Manager " means any entity which is an Approved Ship Manager or any other company proposed by the Parent Guarantor which the Facility Agent may (acting on the instructions of all the Lenders and the ECAs), approve from time to time as the technical and/or commercial sub-contracting manager of a Ship in accordance with Clause 25.16 ( Change of Approved Ship Manager and appointment of Approved Sub-Manager ).
"Approved Technical Manager" means, in relation to a Ship:
(a)
Scorpio Ship Management s.a.m. of 9, Rue Du Gabian, Monte Carlo, the Principality of Monaco;
(b)
any Affiliate or subsidiary of Scorpio Ship Management s.a.m. or the Parent Guarantor;

5        
Execution Copy

(c)
V. Ships Ship Management, D’Amico International Shipping, Hellespont Shipping, Anglo-Eastern Ship Management, Astor Ship Management, Synergy Marine, Univan Ship Management Limited, C.P. Offen, Optimum Ship Services Ltd and Zenith Ship Management; or
(d)
any other company proposed by the Parent Guarantor which the Facility Agent (acting on the instructions of all the Lenders and the ECAs) may from time to time approve (such approval not to be unreasonably withheld or delayed) as the technical manager of that Ship.
" Approved Valuer " means Fearnleys, Clarksons Platou, Braemar Seascope, Simpson Spence & Young (SSY) and any other firm or firms of independent sale and purchase shipbrokers approved in writing by the Facility Agent, acting with the authorisation of all the Lenders and the ECAs.
" Assignment Agreement " means an agreement substantially in the form set out in Schedule 5 ( Form of Assignment Agreement ) or any other form agreed between the relevant assignor and assignee.
" Authorisation " means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, legalisation or registration.
" Availability Period " means, in relation to each Ship Loan, the period from and including the date of this Agreement to and including the earlier of:
(a)
the relevant Back-stop Date;
(b)
the Delivery Date of that Ship; or
(c)
such later date as the Facility Agent may, with the authorisation of all the Lenders and the ECAs, agree with the Borrowers.
" Available Commitment " means a Lender's Commitment minus:
(a)
the amount of its participation in the outstanding Loan; and
(b)
in relation to any proposed Utilisation, the amount of its participation in any Advance that is due to be made on or before the proposed Utilisation Date.
" Available Facility " means the aggregate for the time being of each Lender's Available Commitment.
" Back-stop Date " means, in relation to each Ship, the date falling 210 days after the Estimated Delivery Date, being:
(a)
in relation to the Ship A, 25 October 2017;
(b)
in relation to the Ship B, 16 November 2017;
(c)
in relation to the Ship C, 30 January 2018;
(d)
in relation to the Ship D, 16 February 2018;
(e)
in relation to the Ship E, 10 April 2018;

6        
Execution Copy

(f)
in relation to the Ship F, 17 May 2018;
(g)
in relation to the Ship G, 24 July 2018; and
(h)
in relation to the Ship H, 20 August 2018.
" Bail-In Action " means the exercise of any Write-down and Conversion Powers.
" Bail-In Legislation " means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and
(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
" Borrower " means Borrower A, Borrower B, Borrower C, Borrower D, Borrower E, Borrower F, Borrower G or Borrower H.
" Break Costs " means the amount (if any) by which:
(a)
the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in relation to the Loan, the relevant part of the Loan or that Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
exceeds
(b)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
" Builder " means Hyundai Mipo Dockyard, a company incorporated in South Korea whose principal office is at 100, Bangeojinsunhwan-Doro, Dong-Gu, Ulsan 44113, Korea.
" Business Day " means a day (other than a Saturday or Sunday) on which banks are open for general business in Amsterdam, Frankfurt, London, New York, Oslo and Seoul.
“ Cash ” means any credit balance on any deposit, savings, current or other account, and any cash in hand held with banks or other financial institutions of the Group which is:
(a)
freely withdrawable on demand;
(b)
not subject to any Security (other than pursuant to any Security Document);
(c)
denominated and payable in a freely transferable and freely convertible currency; and
(d)
capable of being remitted to the Group.

7        
Execution Copy

" Capitalized Lease Obligations " means as such term is described by IFRS.
“ Cash Equivalents ” means:
(a)
unencumbered securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)
time deposits, certificates of deposit or deposits (in each case, unencumbered) in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of USD 500,000,000; and
(c)
such other securities or instruments as the Majority Lenders shall agree in writing,
and in respect of both (a) and (b) above, with a rating category of at least “A-” by Standard & Poor's Rating Services and “A” by Moody's Investors Service Limited (or the equivalent used by another rating agency) (provided that, in the case of (b) above only, such rating category shall not be applicable for time deposits, certificates of deposit or deposits (in each case, unencumbered) in the interbank market of any commercial bank which is a Lender), and in each case having maturities of not more than 90 days from the date of acquisition.
" Charter " means, in relation to a Ship, any charter relating to that Ship, or other contract for its employment, whether or not already in existence.
" Code " means the US Internal Revenue Code of 1986.
“ Commercial Facility ” means the Commercial Facility A or the Commercial Facility B.
“ Commercial Facility A ” means the term loan facility of up to USD 15,000,000 made available under this Agreement as described in Clause 2.1 ( Facility ).
“ Commercial Facility A Loan ” means the principal amount of the loan to be made available under the Commercial Facility A or the aggregate principal amount for the time being outstanding under this Agreement.
“ Commercial Facility B ” means the term loan facility of up to USD 25,000,000 made available under this Agreement as described in Clause 2.1 ( Facility ).
“ Commercial Facility B Loan ” means the principal amount of the loan to be made available under the Commercial Facility B for the time being outstanding under this Agreement.
“ Commercial Facility Loan ” means the aggregate of the Commercial Facility A Loan and the Commercial Facility B Loan.
“ Commercial Facility Margin ” means, in relation to each Commercial Facility, 2.25 per cent. per annum.
“ Commercial Facility Termination Date ” means:
(a)
in relation to Commercial Facility A, the date falling six years after the Utilisation Date of the relevant Ship Loan; or

8        
Execution Copy

(b)
in relation to Commercial Facility B, the date falling nine years after the Utilisation Date of the relevant Ship Loan.
“ Commercial Lender Commitment ” means:
(a)
in relation to an Original Commercial Lender, the aggregate of the amounts set opposite its name under the heading "Commitment" in Part B of Schedule 1 ( The Parties ) and the amount of any other Commercial Lender Commitment transferred to it under this Agreement; and
(b)
in relation to any other Commercial Lender, the amount of any Commercial Lender Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
“ Commercial Lender ” means:
(a)
any Original Commercial Lender; and
(b)
any bank, financial institution, a trust, fund or other entity which has become a Party as a Lender in relation to the Commercial Facility in accordance with Clause 29 ( Changes to the Lenders ),
which in each case has not ceased to be a party in accordance with this Agreement.
“ Commitment ” means:
(a)
in relation to a Commercial Lender, its Commercial Lender Commitment;
(b)
in relation to a GIEK Guaranteed Lender, its GIEK Guaranteed Lender Commitment.
(c)
in relation to Kexim or any other Lender under the Kexim Direct Facility, its Kexim Commitment;
(d)
in relation to a Kexim Guaranteed Lender, its Kexim Guaranteed Lender Commitment.
" Compliance Certificate " means a certificate in the form set out in Schedule 7 ( Form of Compliance Certificate ) or in any other form agreed between the Parent Guarantor and the Facility Agent.
" Confidential Information " means all information relating to any Obligor, the Group, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:
(a)
any member of the Group or any of its advisers; or
(b)
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes:

9        
Execution Copy

(i)
information that:
(A)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 46 ( Confidential Information ); or
(B)
is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or
(C)
is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and
(ii)
any Funding Rate.
" Confidentiality Undertaking " means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrowers and the Facility Agent.
“ Consolidated EBITDA ” means, for any accounting period, the consolidated net income of the Parent Guarantor for that accounting period:
(a)
plus , to the extent deducted in computing the net income of the Parent Guarantor for that accounting period, the sum, without duplication, of:
(i)
all federal, state, local and foreign income taxes and tax distributions;
(ii)
Consolidated Net Interest Expense;
(iii)
depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)
expenses incurred in connection with a special or intermediate survey (including any underwater survey done in lieu thereof) of a vessel owned by the Group during such period; and
(v)
any drydocking expenses;
(b)
minus , to the extent added in computing the consolidated net income of the Parent Guarantor for that accounting period, (i) any non-cash income, non-cash gains and (ii) any extraordinary gains on asset sales not incurred in the ordinary course of business.
“ Consolidated Funded Debt ” means, for any accounting period, the sum of the following for the Parent Guarantor determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:
(a)
all Financial Indebtedness; and

10        
Execution Copy

(b)
all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet),
provided that balance sheet accruals for future dry docking expenses shall not be classified as Consolidated Funded Debt.
“ Consolidated Net Income ” means as such term is described by IFRS.
“ Consolidated Net Interest Expense ” means the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Parent Guarantor and all of its Subsidiaries during the relevant accounting period less (i) interest income received, (ii) commitment fees and (iii) amortization of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Parent Guarantor.
“ Consolidated Tangible Net Worth ” means, on a consolidated basis, the total shareholders’ equity (including retained earnings) of the Parent Guarantor, minus goodwill.
“ Consolidated Total Capitalization ” means Consolidated Tangible Net Worth plus Consolidated Funded Debt.
" Contract Price " means, in relation to each Ship, the price payable for that Ship under the relevant Shipbuilding Contact as set out in Schedule 8 ( Details of the Ships ).
" Corresponding Debt " means any amount, other than any Parallel Debt, which an Obligor owes to a Secured Party under or in connection with the Finance Documents.
" Debt Service Reserve Account " means:
(a)
an account in the name of the Parent Guarantor with the Account Bank designated "Debt Service Reserve Account";
(b)
any other account in the name of the Parent Guarantor with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account but to thereafter be designated as the "Debt Service Reserve Account"; or
(c)
any sub-account of any account referred to in paragraphs (a) or (b) above.
" Default " means an Event of Default or a Potential Event of Default.
" Delegate " means any delegate, agent, attorney or co-trustee appointed by the Security Agent.
" Delivery Date " means, in relation to each Ship, the date on which that Ship is actually delivered by the Builder to, and duly accepted by, the relevant Borrower under the relevant Shipbuilding Contract.
" Disruption Event " means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated

11        
Execution Copy

by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other, Party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
" Document of Compliance " has the meaning given to it in the ISM Code.
" dollars " and “ USD ” mean the lawful currency, for the time being, of the United States of America.
" Earnings " means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to a Borrower or the Security Agent and which arise out of or in connection with or relate to the use or operation of that Ship, including (but not limited to):
(a)
the following, save to the extent that any of them is, with the prior written consent of the Facility Agent, pooled (except for under an Approved Pooling Arrangement) or shared with any other person:
(i)
all freight, hire and passage moneys including, without limitation, all moneys payable under, arising out of or in connection with a Charter, any guarantee provided under a Charter or any Approved Pooling Arrangement;
(ii)
the proceeds of the exercise of any lien on sub-freights;
(iii)
compensation payable to a Borrower or the Security Agent in the event of requisition of that Ship for hire or use;
(iv)
remuneration for salvage and towage services;
(v)
demurrage and detention moneys;
(vi)
without prejudice to the generality of sub-paragraph (i) above, damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship;
(vii)
all moneys which are at any time payable under any Insurances in relation to loss of hire;
(viii)
all monies which are at any time payable to a Borrower in relation to general average contribution; and
(b)
if and whenever that Ship is employed on terms whereby any moneys falling within sub-paragraphs (i) to (viii) of paragraph (a) above are pooled or shared with any other

12        
Execution Copy

person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship.
" Earnings Account " means, in relation to a Borrower:
(a)
an account in the name of that Borrower with the Account Bank designated "Earnings Account";
(b)
any other account in the name of that Borrower with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or
(c)
any sub-account of any account referred to in paragraphs (a) or (b) above.
" ECA " means GIEK or the Kexim Guarantor.
" ECA Facility " means the GIEK Guaranteed Facility, the Kexim Direct Facility or the Kexim Guaranteed Facility.
“ ECA Facility Loan ” means the GIEK Guaranteed Facility Loan, the Kexim Direct Facility Loan or the Kexim Guaranteed Facility Loan.
" ECA Facility Termination Date " means, in relation to each ECA Facility, subject to the provisions of Clause 7.5 ( ECA prepayment option ), the date falling 12 years after the Utilisation Date of the relevant Ship Loan.
" ECA Guaranteed Lender " means a GIEK Guaranteed Lender or a Kexim Guaranteed Lender.
" ECA Support " means the GIEK Guarantee or the Kexim Guarantee.
" EEA Member Country " means any member state of the European Union, Iceland, Liechtenstein and Norway.
" Environmental Approval " means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.
" Environmental Claim " means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, " claim " includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
" Environmental Incident " means:
(a)
any release, emission, spill or discharge of Environmentally Sensitive Material whether within a Ship or from a Ship into any other vessel or into or upon the air, sea, land or soils (including the seabed) or surface water; or
(b)
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface

13        
Execution Copy

water from a vessel other than any Ship and which involves a collision between any Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or any Obligor and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where any Obligor and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action.
" Environmental Law " means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
" Environmentally Sensitive Material " means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
" Equity Interests " of any person means:
(a)
any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)
all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person.
" Estimated Delivery Date " means, in relation to each Ship, the date set out in Schedule 8 ( Details of the Ships ).
" EU Bail-In Legislation Schedule " means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
" Event of Default " means any event or circumstance specified as such in Clause 28 ( Events of Default ).
“ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended, and any successor act thereto, and (unless the context otherwise requires) includes the rules and regulations of the Commission promulgated thereunder.
" Existing Lender " has the meaning given to it in Clause 29 ( Changes to the Lenders ).
" Facility " means the Commercial Facility A, the Commercial Facility B, the GIEK Guaranteed Facility, the Kexim Direct Facility or the Kexim Guaranteed Facility, and “ Facilities ” shall mean all of them.
" Facility Office " means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than 5 Business

14        
Execution Copy

Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.
" FATCA " means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;
(b)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
(c)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in 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 2019; 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 2019,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
" FATCA Deduction " means a deduction or withholding from a payment under a Finance Document required by FATCA.
" FATCA Exempt Party " means a Party that is entitled to receive payments free from any FATCA Deduction.
" Fee Letter " means any letter or letters dated on or about the date of this Agreement between the Facility Agent or the Security Agent and any Obligor setting out any of the fees referred to in Clause 11 ( Fees ).
" Finance Document " means:
(a)
this Agreement;
(b)
any Fee Letter;
(c)
each Utilisation Request;
(d)
any Security Document (excluding any Approved Ship Manager’s Undertaking);
(e)
any Hedging Agreement;

15        
Execution Copy

(f)
any subordination or intercreditor deed entered into pursuant to paragraph (n) of Clause 8.5 ( Hedging );
(g)
any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities (excluding any Approved Ship Manager’s Undertaking); or
(h)
any other document designated as such by the Facility Agent and the Borrowers (excluding any Approved Ship Manager’s Undertaking).
" Finance Party " means the Facility Agent, the Security Agent, the ECA Agent, the Global Coordinator, a Mandated Lead Arranger, a Lender or a Hedge Counterparty.
" Financial Indebtedness " means, with respect to any person (the " Debtor ") at any date of determination (without duplication):
(a)
all obligations of the Debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)
all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)
all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto) which in accordance with IFRS would be shown on the liability side of a balance sheet;
(d)
all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)
all Capitalized Lease Obligations of the Debtor as lessee;
(f)
all such Financial Indebtedness as described in sub paragraphs (a) to (e) of persons other than the Debtor secured by any Security on any asset of the Debtor, whether or not such Financial Indebtedness is assumed by the Debtor, provided that the amount of such Financial Indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Financial Indebtedness; and
(g)
all such Financial Indebtedness as described in sub-paragraphs (a) to (e) of persons other than the Debtor under any guarantee, indemnity to similar obligation entered into by the Debtor to the extent such Financial Indebtedness is guaranteed, indemnified, etc. by the Debtor.
The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations described in (f) and (g) above, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that (i) the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount is the face amount of such Financial Indebtedness less the remaining unamortized portion of such original issue discount of such Financial Indebtedness at such time, and (ii) Financial Indebtedness shall not include any liability for taxes.

16        
Execution Copy

" Fleet Vessel " means each vessel owned by a wholly owned direct or indirect Subsidiary of the Parent Guarantor (including, but not limited to, the Ships).
" Funding Rate" means any individual rate notified by a Lender to the Facility Agent pursuant to sub-paragraph (ii) of paragraph (a) of Clause 10.3 ( Cost of funds ).
" General Assignment " means, in relation to a Ship, the general assignment creating Security over:
(a)
its Earnings;
(b)
its Insurances;
(c)
any Requisition Compensation;
(d)
the warranties under the Shipbuilding Contract in relation to that Ship; and
(e)
any Long Term Charter and any guarantee of that Long Term Charter in relation to that Ship,
in agreed form.
“ GIEK " means Garanti-Instituttet for Eksportkreditt of Støperigata 1, 0250 Oslo, Norway, Norwegian organisation number 974 760 908.
"GIEK Guarantee ” means the guarantee issued or to be issued by GIEK in favour of the GIEK Guaranteed Lenders pursuant to which GIEK has guaranteed or will guarantee the payment to the GIEK Guaranteed Lenders of 100 per cent. of the GIEK Guaranteed Facility Loan outstanding from time to time and accrued interest on that in circumstances therein specified.
“ GIEK Guarantee Premium ” means, in relation to the GIEK Guarantee, the sums payable from time to time to GIEK in accordance with Clause 11.6 ( GIEK Guarantee Premium ) and as stipulated in the GIEK Guarantee, being 1.05 per cent. per annum of the GIEK Guaranteed Facility Loan.
“ GIEK Guaranteed Facility ” means the term loan facility of up to USD 32,000,000 made available under this Agreement as described in clause 2.1 ( Facility ).
“ GIEK Guaranteed Facility Loan ” the principal amount of the loan to be made available under the GIEK Guaranteed Facility or the aggregate principal amount for the time being outstanding under this Agreement.
“ GIEK Guaranteed Facility Margin ” means 1.10 per cent. per annum.
" GIEK Guaranteed Lender Commitment " means:
(a)
in relation to an Original GIEK Guaranteed Lender, the aggregate of the amounts set opposite its name under the heading "Commitment" in Part B of Schedule 1 ( The Parties ) and the amount of any other GIEK Guaranteed Lender Commitment transferred to it under this Agreement; and
(b)
in relation to any other GIEK Guaranteed Lender, the amount of any GIEK Guaranteed Lender Commitment transferred to it under this Agreement,

17        
Execution Copy

to the extent not cancelled, reduced or transferred by it under this Agreement.
" GIEK Guaranteed Lenders " means:
(a)
any Original GIEK Guaranteed Lender; and
(b)
any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in relation to the GIEK Guaranteed Facility in accordance with Clause 29 ( Changes to the Lenders ),
which in each case has not ceased to be a party in accordance with this Agreement.
" Green Passport " means, in relation to a Ship, a green passport statement of compliance issued by the relevant Approved Classification Society which includes a list of any and all materials known to be potentially hazardous utilised in the construction of that Ship.
" Group " means the Parent Guarantor and its Subsidiaries for the time being.
" Hedge Counterparty " means any Original Hedge Counterparty or any Additional Hedge Counterparty.
" Hedge Counterparty Accession Letter " means a document substantially in the form set out in Schedule 6 ( Form of Hedge Counterparty Accession Letter ).
" Hedging Agreement " means any master agreement, confirmation, transaction, schedule or other agreement in agreed form entered into or to be entered into by a Borrower with a Hedge Counterparty for the purpose of hedging interest payable under this Agreement.
" Hedging Agreement Security " means, in relation to a Borrower, a first priority assignment of that Borrower's rights and interests in any Hedging Agreement, in agreed form.
" Hedging Prepayment Proceeds " means any Hedge Receipts arising as a result of termination or closing out under a Hedging Agreement.
" Hedge Receipts " means all moneys whatsoever which are now, or later become, payable (actually or contingently) to a Borrower or the Security Agent by a Hedge Counterparty under a Hedging Agreement.
" Holding Company " means, in relation to a person, any other person in relation to which it is a Subsidiary.
" IFRS " means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
" Indemnified Person " has the meaning given to it in Clause 14.2 ( Other indemnities ).
" Insurances " means, in relation to a Ship:
(a)
all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in relation to that Ship, that Ship's Earnings or otherwise in relation to that Ship; and
(b)
all rights and other assets relating to, or derived from, any of such policies, contracts or entries, including any rights to a return of premium.

18        
Execution Copy

" Interest Payment Date " has the meaning given to it in paragraph (a) of Clause 8.2 ( Payment of interest ).
" Interest Period " means, in relation to the Loan or any part of the Loan, each period determined in accordance with Clause 9 ( Interest Periods ) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 ( Default interest ).
" Interpolated Screen Rate " means, in relation to the Loan or any part of the Loan, the rate (rounded) which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of the Loan or that part of the Loan; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of the Loan or that part of the Loan,
each as of the Specified Time for dollars.
“ Intra-Group Loans ” means any current and future intra-group or shareholder loans from the Parent Guarantor to a Borrower.
“ Intra-Group Loan Receivables ” means any amounts owing or payable by a Borrower to the Parent Guarantor under the Intra-Group Loans.
" ISM Code " means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (including the guidelines on its implementation), adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time.
" ISPS Code " means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization's (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.
" ISSC " means an International Ship Security Certificate issued under the ISPS Code.
" Kexim Commitment " means the aggregate of the amounts set opposite its name under the heading "Commitment" in Part B of Schedule 1 ( The Parties ), to the extent not cancelled, reduced or transferred by it under this Agreement.
“ Kexim Direct Facility ” means the term loan facility of up to USD 52,000,000 made available under this Agreement as described in clause 2.1 ( Facility ).
“ Kexim Direct Facility Loan ” means the principal amount of the loan to be made available under the Kexim Direct Facility or the aggregate principal amount for the time being outstanding under this Agreement.
“ Kexim Direct Facility Margin ” means 2.15 per cent. per annum.
“ Kexim Facility ” means the Kexim Direct Facility and the Kexim Guaranteed Facility, and “ Kexim Facilities ” shall mean both of them.
“ Kexim Guarantee ” means the guarantee issued or to be issued by the Kexim Guarantor in favour of the Kexim Guaranteed Lenders pursuant to which the Kexim Guarantor has guaranteed

19        
Execution Copy

or will guarantee the payment to the Kexim Guaranteed Lenders of 100 per cent. of the Kexim Guaranteed Facility Loan outstanding from time to time and accrued interest on that.
“ Kexim Guarantee Premium ” means, in relation to the Kexim Guarantee, the sums payable from time to time to the Kexim Guarantor in accordance with Clause 11.5 ( Kexim Guarantee Premium ) and as stipulated in the Kexim Guarantee, being 3.37 per cent. of the Kexim Guaranteed Facility.
“ Kexim Guaranteed Facility ” means the term loan facility of up to USD 48,000,000 made available under this Agreement as described in clause 2.1 ( Facility ).
“ Kexim Guaranteed Facility Loan ” means the principal amount of the loan to be made available under the Kexim Guaranteed Facility or the aggregate principal amount for the time being outstanding under this Agreement.
“ Kexim Guaranteed Facility Margin ” means 1.60 per cent. per annum.
" Kexim Guaranteed Lender Commitment " means:
(a)
in relation to an Original Kexim Guaranteed Lender, the aggregate of the amounts set opposite its name under the heading "Commitment" in Part B of Schedule 1 ( The Parties ) and the amount of any other Kexim Guaranteed Lender Commitment transferred to it under this Agreement; and
(b)
in relation to any other Kexim Guaranteed Lender, the amount of any Kexim Guaranteed Lender Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
" Kexim Guaranteed Lenders " means:
(a)
any Original Kexim Guaranteed Lender; and
(b)
any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in relation to the Kexim Guaranteed Facility in accordance with Clause 29 ( Changes to the Lenders ),
which in each case has not ceased to be a party in accordance with this Agreement.
" Kexim Guarantor ” means The Export-Import Bank of Korea of 38 Eunhaeng-ro, Yeongdeungpo-gu, Seoul, 07242, Republic of Korea in its capacity as the issuer of the Kexim Guarantee.
" Legal Reservations " means:
(a)
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;
(b)
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim; and
(c)
similar principles, rights and defences under the laws of any Relevant Jurisdiction.

20        
Execution Copy

" Lender ” means:
(a)
Kexim;
(b)
the Original GIEK Guaranteed Lenders;
(c)
the Original Kexim Guaranteed Lenders;
(d)
the Original Commercial Lenders; and
(e)
any New Lender,
which in each case has not ceased to be a Party in accordance with this Agreement.
" LIBOR " means, in relation to the Loan or any part of the Loan:
(a)
the applicable Screen Rate as of the Specified Time for dollars and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or
(b)
as otherwise determined pursuant to Clause 10.1 ( Unavailability of Screen Rate ),
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
" Limitation Acts " means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.
" LMA " means the Loan Market Association.
" Loan " means the aggregate amount of the Commercial Facility Loan, the GIEK Guaranteed Facility Loan, the Kexim Direct Facility Loan and the Kexim Guaranteed Facility Loan and a “part of the Loan” means an Advance or any other part of the Loan as the context may require.
" Long Term Charter " means, in relation to a Ship, any Charter in respect of that Ship having a duration (including, without limitation, by virtue of any optional extensions) of more than 12 months entered into by a Borrower with a charterer (but excluding a Charter with an Affiliate of the Group or pursuant to an Approved Pooling Arrangement), in form and substance approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders and the ECAs.
" Major Casualty " means, in relation to a Ship, any casualty to that Ship in relation to which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds USD 2,000,000 or the equivalent in any other currency.
" Majority Lenders " means:
(a)
if no Advance has yet been made, a Lender or Lenders whose Commitments aggregate more than 66⅔ per cent. of the Total Commitments; or
(b)
at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 66⅔ per cent. of the amount of the Loan then outstanding or, if the Loan has been repaid or prepaid in full, a Lender or Lenders whose participations in the Loan immediately before repayment or prepayment in full aggregate more than 66⅔ per cent. of the Loan immediately before such repayment.

21        
Execution Copy

" Management Agreement " has the meaning given to it in Part B of Schedule 2 ( Conditions Precedent ).
" Market Value " means, in relation to a Ship or any other vessel, at any date, the market value of that Ship shown by the average of two valuations or, if the two valuations differ by a margin of more than 15 per cent., three valuations and it being understood that the third Approved Valuer shall be selected and appointed by the Facility Agent, each such valuation prepared at the cost of the Obligors and addressed to the Facility Agent:
(a)
as at a date not more than 30 days previously;
(b)
by an Approved Valuer;
(c)
with or without physical inspection of that Ship or vessel (as the Facility Agent may require); and
(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 Charter,
after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.
" Material Adverse Effect " means in the reasonable opinion of the Majority Lenders and the ECAs a material adverse effect on:
(a)
the business, operations, property, condition (financial or otherwise) or prospects of the Obligors taken as a whole; or
(b)
the ability of an Obligor to perform its payment and other material obligations under any Finance Documents; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any security granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party (as defined in the Finance Documents).
" Month " means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a)
(subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;
(b)
if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and
(c)
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.
The above rules will only apply to the last Month of any period.
" Mortgage " means, in relation to a Ship, a first preferred ship mortgage registered on the Approved Flag on that Ship in agreed form.

22        
Execution Copy

“ Net Debt ” means Financial Indebtedness less Cash and Cash Equivalents.
" New Lender " has the meaning given to it in Clause 29 ( Changes to the Lenders ).
" Non-Lender Hedge Counterparty " has the meaning given to it in Clause 8.5 ( Hedging ).
" Obligor " means a Borrower, the Parent Guarantor or a Hedge Guarantor.
" Original Financial Statements " means the audited consolidated financial statements of the Group for its financial year ended 31 December 2015.
" Original Jurisdiction " means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement.
" Overseas Regulations " means the Overseas Companies Regulations 2009 (SI 2009/1801).
" Parallel Debt " means any present and future amount which an Obligor owes to the Security Agent under Clause 32.2 ( Parallel Debt (Covenant to pay the Security Agent) ) or under that clause as incorporated by reference or in full in any other Finance Document.
" Participating Member State " means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
" Party " means a party to this Agreement.
" Permitted Charter " means, in relation to a Ship, a Charter:
(a)
which is a Long Term Charter; or
(b)
in relation to a charterer that is not an affiliate of the Group, the duration of which does not exceed and is not capable of exceeding, by virtue of any optional extensions, 12 months, except where such Charter is a Long Term Charter;
(c)
in relation to a charterer that is an Affiliate of the Group, the duration of which is less than (and is not capable of being equal to or exceeding, by virtue of any optional extensions) 24 months;
(d)
entered into pursuant to an Approved Pooling Arrangement; or
(e)
any other Charter which is approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders and the ECAs,
in each case, which is entered into on bona fide arm's length terms at the time at which that Ship is fixed and in relation to which not more than two months' hire is payable in advance.
" Permitted Financial Indebtedness " means:
(a)
any Financial Indebtedness incurred under the Finance Documents;
(b)
any hedging agreement entered into with a Non-Lender Hedge Counterparty in accordance with the provisions of Clause 8.5 ( Hedging );

23        
Execution Copy

(c)
any Intra-Group Loans that are subordinated and subject to Security in accordance with the provisions of Clause 23.15 ( Financial Indebtedness ).
" Permitted Security " means:
(a)
Security created by the Finance Documents;
(b)
any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
(c)
liens for unpaid master's and crew's wages in accordance with first class ship ownership and management practice;
(d)
liens for salvage;
(e)
liens for master's disbursements incurred in the ordinary course of trading; and
(f)
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of any Ship and not as a result of any default or omission by any Borrower, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower that owns the Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 25.15 ( Restrictions on chartering );
(g)
any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the Borrower that owns such Ship or the Parent Guarantor, as the case may be, is actively prosecuting or defending such proceedings or arbitration in good faith; and
(h)
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.
" Potential Event of Default " means any event or circumstance specified in Clause 28 ( Events of Default ) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
" Prohibited User " means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
" Protected Party " has the meaning given to it in Clause 12.1 ( Definitions ).
" Quotation Day " means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
" Receiver " means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets.

24        
Execution Copy

" Related Fund " in relation to a fund (the "first fund"), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
" Relevant Interbank Market " means the London interbank market.
" Relevant Jurisdiction " means, in relation to an Obligor:
(a)
its Original Jurisdiction;
(b)
any jurisdiction where any asset subject to, or intended to be subject to, any of the Transaction Security created, or intended to be created, by it is situated;
(c)
any jurisdiction where it conducts its business; and
(d)
the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.
" Repayment Date " means each date on which a Repayment Instalment is required to be paid under Clause 6.1 ( Repayment of Loan ).
" Repayment Instalment " has the meaning given to it in Clause 6.1 ( Repayment of Loan ).
" Repeating Representation " means each of the representations set out in Clause 20 ( Representations ) except Clause 20.10 ( Insolvency ), Clause 20.11 ( No filing or stamp taxes ), Clause 20.12 ( Deduction of Tax ), Clause 20.22 ( Compliance with Environmental Laws and Social Laws ), Clause 20.23 ( No Environmental Claim or Social Claim ), Clause 20.24 ( No Environmental Incident or Social Incident ) and in respect of repetition on the first day of each Interest Period, Clause 20.25 ( ISM and ISPS Code compliance ) and any representation of any Obligor made in any other Finance Document that is expressed to be a "Repeating Representation" or is otherwise expressed to be repeated.
" Representative " means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
" Requisition " means in relation to a Ship:
(a)
any expropriation, confiscation, requisition (excluding a requisition for hire or use which does not involve a requisition for title) or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected (whether de jure or de facto ) by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; and
(b)
any capture or seizure of that Ship (including any hijacking or theft) by any person whatsoever.
" Requisition Compensation " includes all compensation or other moneys payable to a Borrower by reason of any Requisition or any arrest or detention of a Ship in the exercise or purported exercise of any lien or claim.

25        
Execution Copy

" Resolution Authority " means any body which has authority to exercise any Write-down and Conversion Powers.
" Retention Account " means, in relation to a Borrower:
(a)
an account in the name of that Borrower with the Account Bank designated "Retention Account";
(b)
any other account in the name of that Borrower with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or
(c)
any sub-account of any account referred to in paragraphs (a) or (b) above.
" Safety Management Certificate " has the meaning given to it in the ISM Code.
" Safety Management System " has the meaning given to it in the ISM Code.
" Sanctions " means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a)
imposed by law or regulation of the United Kingdom, the Council of the European Union, the European Commission, any member state of the European Union, the United Nations or its Security Council, the United States of America (including the Office of Foreign Assets Control of the US Department of Treasury) or Australia regardless of whether the same is or is not binding on any Obligor; or
(b)
otherwise imposed by any law or regulation binding on an Obligor or to which an Obligor is subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).
" Screen Rate " means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Facility Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.
" Secured Liabilities " means all present and future obligations and liabilities, (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of each Obligor to any Secured Party under or in connection with each Finance Document.
" Secured Party " means each Finance Party from time to time party to this Agreement, the ECAs, a Receiver or any Delegate.
" Security " means a mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security.
" Security Assets " means all of the assets of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.

26        
Execution Copy

" Security Document " means:
(a)
any Account Security;
(b)
any Shares Security and Assignment of Intra-Group Loan Receivables;
(c)
any Hedging Agreement Security;
(d)
any Mortgage;
(e)
any General Assignment;
(f)
any Approved Ship Manager’s Undertaking;
(g)
any other document (whether or not it creates Security) which is executed as security for the Secured Liabilities; or
(h)
any other document designated as such by the Facility Agent and the Borrowers.
" Security Period " means the period starting on the date of this Agreement and ending on the date on which the Facility Agent is satisfied that there is no outstanding Commitment in force and that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
" Security Property " means:
(a)
the Transaction Security expressed to be granted in favour of the Security Agent as trustee for the Secured Parties and all proceeds of that Transaction Security;
(b)
all obligations expressed to be undertaken by an Obligor to pay amounts in relation to the Secured Liabilities to the Security Agent as trustee for the Secured Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by an Obligor or any other person in favour of the Security Agent as trustee for the Secured Parties;
(c)
the Security Agent's interest in any turnover trust created under the Finance Documents;
(d)
any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as trustee on trust for the Secured Parties,
except:
(i)
rights intended for the sole benefit of the Security Agent; and
(ii)
any moneys or other assets which the Security Agent has transferred to the Facility Agent or (being entitled to do so) has retained in accordance with the provisions of this Agreement.
" Servicing Party " means the Facility Agent or the Security Agent.
" Shares Security and Assignment of Intra-Group Loan Receivables " means, in relation to a Borrower, a document creating Security over the share capital in that Borrower and any Intra-

27        
Execution Copy

Group Loan Receivables and subordinating the rights of the Parent Guarantor under any Intra-Group Loan, in agreed form.
" Ship " means Ship A, Ship B, Ship C, Ship D, Ship E, Ship F, Ship G or Ship H.
" Ship A " means Builder's hull number 2601, which is to be constructed by the Builder for, and purchased by, Borrower A under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower A under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships ).
" Ship B " means Builder's hull number 2602, which is to be constructed by the Builder for, and purchased by, Borrower B under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower B under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships ).
" Ship C " means Builder's hull number 2603, which is to be constructed by the Builder for, and purchased by, Borrower C under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower C under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships ).
" Ship D " means Builder's hull number 2604, which is to be constructed by the Builder for, and purchased by, Borrower D under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower D under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships )..
" Ship E " means Builder's hull number 2605, which is to be constructed by the Builder for, and purchased by, Borrower E under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower E under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships ).
" Ship F " means Builder's hull number 2606, which is to be constructed by the Builder for, and purchased by, Borrower F under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower F under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships ).
" Ship G " means Builder's hull number 2607, which is to be constructed by the Builder for, and purchased by, Borrower G under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower G under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships ).
" Ship H " means Builder's hull number 2608, which is to be constructed by the Builder for, and purchased by, Borrower H under the relevant Shipbuilding Contract and which, on delivery, is to be registered in the name of Borrower H under an Approved Flag further details of which are set out opposite its name in Schedule 8 ( Details of the Ships ).
" Ship Loan " means, in relation to a Ship, the aggregate principal amount of the Commercial Facility A Loan, the Commercial Facility B Loan, the GIEK Guaranteed Facility Loan, the Kexim Direct Facility Loan and the Kexim Guaranteed Facility Loan made available to a Borrower in respect of that Ship as described in Schedule 11 ( Ship Loan overview ) or (as the case may be) utilised by a Borrower in respect of that Ship, in each case in accordance with Clause 5 ( Utilisation ).
" Shipbuilding Contract " means:

28        
Execution Copy

(a)
in relation to Ship A, the shipbuilding contract dated 11 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower A for the construction by the Builder of Ship A and its purchase by Borrower A;
(b)
in relation to Ship B, the shipbuilding contract dated 11 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower B for the construction by the Builder of Ship B and its purchase by Borrower B;
(c)
in relation to Ship C, the shipbuilding contract dated 11 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower C for the construction by the Builder of Ship C and its purchase by Borrower C;
(d)
in relation to Ship D, the shipbuilding contract dated 11 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower D for the construction by the Builder of Ship D and its purchase by Borrower D;
(e)
in relation to Ship E, the shipbuilding contract dated 12 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower E for the construction by the Builder of Ship E and its purchase by Borrower E;
(f)
in relation to Ship F, the shipbuilding contract dated 12 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower F for the construction by the Builder of Ship F and its purchase by Borrower F;
(g)
in relation to Ship G, the shipbuilding contract dated 13 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower G for the construction by the Builder of Ship G and its purchase by Borrower G; and
(h)
in relation to Ship H, the shipbuilding contract dated 13 August 2015 as amended from time to time and made between (i) the Builder and (ii) Borrower H for the construction by the Builder of Ship H and its purchase by Borrower H.
“Social Claim " means any claim by any governmental, judicial or regulatory authority or any other person which arises out of any Social Incident or which arises out of any Social Law and, for this purpose, " claim " includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, 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 (provided always that employment claims in the ordinary course of business shall be excluded from this definition).
“ Social Incident ” means, in relation to any Obligor or Approved Ship Manager, any incident related to fatalities to staff or contractors and fines or sanctions from labour authorities.
" Social Law " means the ILO Maritime Labour Convention 2006 and any other applicable law or regulation which is binding on any Obligor or Approved Ship Manager and which relates to labour or human right issues.
" Specified Time " means a day or time determined in accordance with Schedule 9 ( Timetables ).
" Subsidiary " means a subsidiary within the meaning of section 1159 of the Companies Act 2006.

29        
Execution Copy

" Tax " means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
" Tax Credit " has the meaning given to it in Clause 12.1 ( Definitions ).
" Tax Deduction " has the meaning given to it in Clause 12.1 ( Definitions ).
" Tax Payment " has the meaning given to it in Clause 12.1 ( Definitions ).
“ Termination Date ” means the relevant Commercial Facility Termination Date or the relevant ECA Facility Termination Date.
" Third Parties Act " has the meaning given to it in Clause 1.5 ( Third party rights ).
“ Total Commercial Facility Loan Commitment ” means the aggregate of the amounts made available under the Commercial Facility A and the Commercial Facility B, being up to USD 40,000,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement.
“ Total Commitments ” means the aggregate of the Commitments, being up to USD 172,000,000 at the date of this Agreement.
“ Total GIEK Guaranteed Facility Loan Commitment ” means the aggregate of the amounts made available under the GIEK Guaranteed Facility, being up to USD 32,000,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement.
“ Total Kexim Direct Facility Loan Commitment ” means the aggregate of the amounts made available under the Kexim Direct Facility, being up to USD 52,000,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement.
“ Total Kexim Guaranteed Facility Loan Commitment ” means the aggregate of the amounts made available under the Kexim Guaranteed Facility, being up to USD 48,000,000 as that amount may be reduced, cancelled or terminated in accordance with this Agreement.
" Total Loss " means, in relation to a Ship:
(a)
actual, constructive, compromised, agreed or arranged total loss of that Ship; or
(b)
any Requisition of that Ship unless that Ship is returned to the full control of the relevant Borrower within three Months of such Requisition.
" Total Loss Date " means, in relation to the Total Loss of a Ship:
(a)
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
(b)
in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earlier of:
(i)
the date on which a notice of abandonment is given to the insurers; and

30        
Execution Copy

(ii)
the date of any compromise, arrangement or agreement made by or on behalf of the relevant Borrower with that Ship's insurers in which the insurers agree to treat that Ship as a total loss; and
(c)
in the case of any other type of Total Loss, the date (or the most likely date) on which it appears to the Facility Agent that the event constituting the total loss occurred.
" Transaction Document " means:
(a)
a Finance Document;
(b)
a Shipbuilding Contract;
(c)
any Long Term Charter; or
(d)
any other document designated as such by the Facility Agent and a Borrower.
" Transaction Security" means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
" Transfer Certificate " means a certificate substantially in the form set out in Schedule 4 ( Form of Transfer Certificate ) or any other form agreed between the Facility Agent and the Borrowers.
" Transfer Date " means, in relation to an assignment or a transfer, the later of:
(a)
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
(b)
the date on which the Facility Agent executes the relevant Assignment Agreement or Transfer Certificate.
" UK Establishment " means a UK establishment as defined in the Overseas Regulations.
" Unpaid Sum " means any sum due and payable but unpaid by an Obligor under the Finance Documents.
" US " means the United States of America.
" US Tax Obligor " means:
(a)
a person which is resident for tax purposes in the US; or
(b)
a person some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
" Utilisation " means a utilisation of the Facility.
" Utilisation Date " means the date of a Utilisation, being the date on which the relevant Advance is to be made.
" Utilisation Request " means a notice substantially in the form set out in Part A of Schedule 3 ( Requests ).
" VAT " means:

31        
Execution Copy

(a)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.
"Voting Stock ” of any person as of any date means the Equity Interests of such person that are at the time entitled to vote in the election of the board of directors or similar governing body of such person.
“ Working Conditions Side Letter ” means the letter to be entered into by the Parent Guarantor in favour of GIEK pursuant to which the Parent Guarantor agrees to commit to a process of engagement with the Builder regarding the health, safety and labour conditions of the employees of the Builder involved in the construction of each Ship in the form set out in Schedule 12 ( Form of Working Conditions Side Letter ).
" Write-down and Conversion Powers " means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.
1.2
Construction
(a)
Unless a contrary indication appears, a reference in this Agreement to:
(i)
the " Account Bank ", any " Mandated Lead Arranger ", the " Facility Agent ", any " Finance Party ", any " Hedge Counterparty ", any " Lender ", any " Obligor ", any " Party ", any " Secured Party ", the " Security Agent " or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents;
(ii)
" assets " includes present and future properties, revenues and rights of every description;
(iii)
a liability which is " contingent " means a liability which is not certain to arise and/or the amount of which remains unascertained;
(iv)
" document " includes a deed and also a letter, fax or telex;

32        
Execution Copy

(v)
" expense " means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable Tax including VAT;
(vi)
a " Finance Document ", a " Security Document " or " Transaction Document " or any other agreement or instrument is a reference to that Finance Document, Security Document or Transaction Document or other agreement or instrument as amended, novated, supplemented, extended or restated;
(vii)
" indebtedness " includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(viii)
" 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;
(ix)
" proceedings " means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure;
(x)
a " person " includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality);
(xi)
a " 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;
(xii)
a provision of law is a reference to that provision as amended or re-enacted;
(xiii)
a time of day is a reference to London time;
(xiv)
any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction other than England, be deemed to include that which most nearly approximates in that jurisdiction to the English legal term;
(xv)
words denoting the singular number shall include the plural and vice versa; and
(xvi)
" including " and " in particular " (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used.
(b)
The determination of the extent to which a rate is " for a period equal in length " to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.
(c)
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents.
(d)
Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under, or in connection with, any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(e)
A Potential Event of Default is " continuing " if it has not been remedied or waived and an Event of Default is " continuing " if it has not been waived.

33        
Execution Copy

1.3
Construction of insurance terms
In this Agreement:
" approved " means, for the purposes of Clause 24 ( Insurance Undertakings ), approved in writing by the Facility Agent acting on the instructions of the Majority Lenders and the ECAs.
" excess risks " means, in respect of a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims.
" obligatory insurances " means all insurances effected, or which any Borrower is obliged to effect, under Clause 24 ( Insurance Undertakings ) or any other provision of this Agreement or of another Finance Document.
" policy " includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
" protection and indemnity risks " means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision.
" 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).
1.4
Agreed forms of Finance Documents
References in Clause 1.1 ( Definitions ) to any Finance Document being in "agreed form" are to that Finance Document:
(a)
in a form attached to a certificate dated the same date as this Agreement (and signed by each Borrower and the Facility Agent); or
(b)
in any other form agreed in writing between each Borrower and the Facility Agent acting with the authorisation of all the Lenders and the ECAs.
1.5
Third party rights
(a)
Unless expressly provided to the contrary in a Finance Document including but not limited to Clause 11.5 ( Kexim Guarantee Premium ), Clause 11.6 ( GIEK Guarantee Premium ), Clause 14.2 ( Other indemnities) and Clause 29.10 ( Transfer to an ECA ), a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the " Third Parties Act ") to enforce or to enjoy the benefit of any term of this Agreement.
(b)
Subject to Clause 45.3 ( Other exceptions ) but otherwise notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

34        
Execution Copy

(c)
Any Affiliate, Receiver, Delegate or any other person described in paragraph (d) of Clause 14.2 ( Other indemnities ), paragraph (b) of Clause 31.11 ( Exclusion of liability ) or paragraph (b) of Clause 32.11 ( Exclusion of liability ) may, subject to this Clause 1.5 ( Third party rights ) and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it.

35        
Execution Copy


SECTION 2

THE FACILITY
2
THE FACILITY
2.1
The Facility
Subject to the terms of this Agreement, the Lenders make available to the Borrowers USD senior secured credit facilities in an aggregate principal amount equal to the Total Commitments as follows:
(a)
a term loan facility which certain Commercial Lenders have agreed to make available in an aggregate principal amount of up to USD 15,000,000 (referred to as the Commercial Facility A);
(b)
a term loan facility which certain Commercial Lenders have agreed to make available in an aggregate principal amount of up to USD 25,000,000 (referred to as the Commercial Facility B);
(c)
a term loan export credit facility which the GIEK Guaranteed Lenders have agreed to make available in an aggregate principal amount not exceeding the Total GIEK Guaranteed Facility Loan Commitment, being up to USD 32,000,000 (referred to as the GIEK Guaranteed Facility);
(d)
a term loan export credit facility which Kexim has agreed to make available in an aggregate principal amount not exceeding the Total Kexim Direct Facility Loan Commitment, being up to USD 52,000,000 (referred to as the Kexim Direct Facility); and
(e)
a term loan export credit facility which the Kexim Guaranteed Lenders have agreed to make available in an aggregate principal amount not exceeding the Total Kexim Guaranteed Facility Loan Commitment, being up to USD 48,000,000 (referred to as the Kexim Guaranteed Facility).
2.2
Finance Parties' rights and obligations
(a)
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b)
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by an Obligor which relates to a Finance Party's participation in the Facility or its role under a Finance Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Obligor.
(c)
A Finance Party may not, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.
(d)
Notwithstanding any other provision of the Finance Documents, a Finance Party may separately sue for any Unpaid Sum due to it without the consent of any other Finance Party or joining any other Finance Party to the relevant proceedings, but, for the avoidance of doubt, no Finance Party shall be permitted to make a double recovery.

36        
Execution Copy

2.3
Borrowers' Agent
(a)
Each Borrower by its execution of this Agreement irrevocably appoints the Parent Guarantor to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:
(i)
the Parent Guarantor on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including Utilisation Requests), to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Borrower notwithstanding that they may affect the Borrower, without further reference to or the consent of that Borrower; and
(ii)
each Finance Party to give any notice, demand or other communication to that Borrower pursuant to the Finance Documents to the Parent Guarantor,
and in each case that Borrower shall be bound as though that Borrower itself had given the notices and instructions (including, without limitation, any Utilisation Requests) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
(b)
Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Parent Guarantor or given to the Parent Guarantor under any Finance Document on behalf of a Borrower or in connection with any Finance Document (whether or not known to any Borrower) shall be binding for all purposes on that Borrower as if that Borrower had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Parent Guarantor and any Borrower, those of the Parent Guarantor shall prevail.
3
PURPOSE
3.1
Purpose
Each Borrower shall apply all amounts borrowed by it under a Facility only for the purpose stated in the preamble (Background) to this Agreement.
3.2
Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4
CONDITIONS OF UTILISATION
4.1
Initial conditions precedent
The Borrowers may not deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Part A of Schedule 2 ( Conditions Precedent ) in form and substance satisfactory to the Facility Agent.
4.2
Further conditions precedent
The Lenders will only be obliged to comply with Clause 5.4 ( Lenders' participation ) if:
(a)
on the date of each Utilisation Request and on the proposed Utilisation Date and before the relevant Advance is made available:
(i)
no Default is continuing or would result from the proposed Advance;
(ii)
the Repeating Representations to be made by each Obligor are true; and
(b)
the Facility Agent has received on or before the relevant Utilisation Date, or is satisfied it will receive when the relevant Advance is made available, all of the documents and other evidence listed in Part B of Schedule 2 ( Conditions Precedent ) in respect of the Ship to which the relevant Advance relates in form and substance satisfactory to the Facility Agent.
4.3
Notification of satisfaction of conditions precedent
(a)
The Facility Agent shall notify the Borrowers and the Lenders promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in Clause 4.1 ( Initial conditions precedent ) and Clause 4.2 ( Further conditions precedent ).
(b)
Other than to the extent that the Majority Lenders notify the Facility Agent in writing to the contrary before the Facility Agent gives the notification described in paragraph (a) above, the Lenders authorise (but do not require) the Facility Agent to give that notification. The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.
4.4
Waiver of conditions precedent
If all the Lenders and the ECAs, at their discretion, permit an Advance to be borrowed before any of the conditions precedent referred to in Clause 4.1 ( Initial conditions precedent ) or Clause 4.2 ( Further conditions precedent ) has been satisfied, the Borrowers shall ensure that that condition is satisfied within five Business Days after the relevant Utilisation Date or such later date as the Facility Agent, acting with the authorisation of all the Lenders and the ECAs, may agree in writing with the Borrowers.

SECTION 3

UTILISATION

37        
Execution Copy

5
UTILISATION
5.1
Delivery of a Utilisation Request
(a)
The Borrowers may utilise a Facility by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time.
(b)
The Borrowers may not deliver more than one Utilisation Request in respect of each Ship, and the Utilisation in respect of that Ship must be pro rata across the five Facilities.
5.2
Completion of a Utilisation Request
(a)
Each Utilisation Request is irrevocable (except where the prior written consent of all the Lenders and the ECAs has been obtained) and will not be regarded as having been duly completed unless:
(i)
the proposed Utilisation Date in relation to a Ship Loan is the Delivery Date of that Ship and is a Business Day within the relevant Availability Period;
(ii)
the currency and amount of the Utilisation comply with Clause 5.3 ( Currency and amount );
(iii)
it specifies the account of the Builder in accordance with the Shipbuilding Contract and/or the account of an Obligor for reimbursement to that Obligor of amounts already paid by it to the Builder; and
(iv)
all applicable deductible items have been completed.
(b)
Only one Advance may be requested under each Facility in each Utilisation Request.
5.3
Currency and amount
(a)
The currency specified in a Utilisation Request must be dollars.
(b)
The aggregate amount of each proposed Advance in relation to a Ship must be an amount which:
(i)
is the lesser of:
(A)
60 per cent. of the Contract Price for the relevant Ship; or
(B)
60 per cent. of the Market Value of the relevant Ship; and
(ii)
would not oblige the Borrowers to provide additional security or prepay part of the Advance if the ratio set out in Clause 26 ( Security Cover ) was applied and notice was given by the Facility Agent under Clause 26.2 ( Minimum required security cover )immediately after the relevant Advance was made.
(c)
The amount of the proposed Advance must be an amount which is not more than the Available Facility.
5.4
Lenders' participation
(a)
If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Advance available by the Utilisation Date through its Facility Office.

38        
Execution Copy

(b)
The amount of each Lender's participation in each Advance will be equal to the proportion borne by its Available Commitment to the Available Facility immediately before making that Advance.
(c)
The Facility Agent shall notify each Lender, the ECAs and the ECA Agent of the amount of each Advance and the amount of its participation (if any) in that Advance by the Specified Time.
5.5
Cancellation of Commitments
The Commitments in respect of any Facility to be made available for a Ship Loan which are unutilised at the end of the Availability Period for such Ship Loan shall then be cancelled.
5.6
Retentions and payment to third parties
The Borrowers irrevocably authorise the Facility Agent:
(a)
If so specified in a Utilisation Request, to deduct from the proceeds of any Advance any fees then payable to the Finance Parties in accordance with Clause 11 ( Fees ), any solicitors fees and disbursements together with any applicable VAT and any other items listed as deductible items in the relevant Utilisation Request and to apply them in payment of the items to which they relate; and
(b)
on each Utilisation Date, to pay to, or for the account of, the Borrower which is to utilise the relevant Advance the balance (after any deduction made in accordance with paragraph (a) above) of the amounts which the Facility Agent receives from the Lenders in respect of the relevant Advance. That payment shall be made in like funds as the Facility Agent received from the Lenders in respect of the relevant Advance to the account of the Builder and/or, in relation to reimbursement to an Obligor of amounts already paid, that Obligor which the Borrowers specify in the relevant Utilisation Request.
5.7
Disbursement of Advance to third party
Payment by the Facility Agent under Clause 5.6 ( Retentions and payment to third parties ) to a person other than a Borrower shall constitute the making of the relevant Advance and the Borrowers shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender's participation in that Advance.
5.8
Prepositioning of funds
If, in respect of any Utilisation, the Lenders, at the request of the Borrowers and on terms acceptable to all the Lenders and in their absolute discretion (including but not limited to the Facility Agent having received or being satisfied it will receive all of the documents and evidence listed in Part B of Schedule 2 ( Conditions Precedent ) (other than any document or evidence which has been waived in accordance with the terms of this Agreement)), preposition funds with any bank for the purposes of financing the amount of the instalment of the Contract Price payable on the Delivery Date of the relevant Ship under the relevant Shipbuilding Contract (such date, the “ Preposition Date ”):
(a)
each Lender agrees to fund its participation in such Advance on the Preposition Date, which date shall be specified in the relevant Utilisation Request and which shall be no more than three Business Days prior to the Delivery Date of the Ship to which that Advance relates;
(b)
on the relevant Preposition Date, the Facility Agent shall (and the Obligors and all Finance Parties agree that the Facility Agent shall) preposition such amount as requested by the Borrowers in the Utilisation Request at the Builder’s bank as directed by the Borrowers in the Utilisation

39        
Execution Copy

Request, which funds shall be held by the Builder’s bank in the name and under the sole control of the Facility Agent and issue to the Builder's bank by authenticated SWIFT a conditional payment order (in a form acceptable to the Facility Agent and appended at Schedule 14 ( Form of Swift Message )) in respect of such prepositioned funds, which payment order shall:
(i)
authorise the release of funds by the Builder’s Bank on the relevant Delivery Date (which date will be the Utilisation Date) upon receipt of a protocol of delivery and acceptance in respect of such Ship duly executed by the Builder and the relevant Borrower and countersigned by a representative of the Facility Agent;
(ii)
provide that:
(A)
such prepositioned funds shall be returned to the Facility Agent if that Ship is not delivered to the relevant Borrower by the Builder under the relevant Shipbuilding Contract within a period of 18 days (or such longer period as the Facility Agent (acting on the instructions of all the Lenders) may subsequently agree in writing) from the Preposition Date;
(B)
upon receipt by the Facility Agent of such prepositioned funds in accordance with paragraph (A) above, the Facility Agent shall place such funds into the Retention Account of the relevant Borrower where such funds shall be held on behalf of the Borrowers until:
(1)
a new delivery date of the relevant Ship which falls within the Availability Period for the relevant Ship Loan is confirmed following which the Facility Agent shall release such funds from that Retention Account and preposition such funds in accordance with Clause 5.7 ( Disbursement of Advance to third party ) and this Clause 5.8 ( Prepositioning of funds ); or
(2)
the Borrowers instruct the Facility Agent to apply such funds in prepayment of the relevant Ship Loan in accordance with Clause 7.4 ( Voluntary prepayment of Loan ) which instruction shall be made if the relevant Ship is not delivered by the end of the Availability Period, in which case the Utilisation Date in respect of such funds shall be deemed to have occurred on the last date of the Availability Period and such funds shall be immediately applied in prepayment of the relevant Ship Loan; and
(c)
each Borrower and the Parent Guarantor agree to pay interest on the amount of the funds so prepositioned from the Preposition Date at the rate described in Clause 8.1 ( Calculation of interest ) on the basis of successive interest periods of one day and so that such interest shall be paid together with the first payment of interest on such Advance after the Utilisation Date in respect of it or, if such Utilisation Date does not occur, within three Business Days of demand by the Facility Agent.
(d)    

40        
Execution Copy


SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION
6
REPAYMENT
6.1
Repayment of Loan
(a)
The Borrowers shall repay the Loan as follows:
(i)
the amounts utilised under Commercial Facility A in respect of each Ship Loan shall be repaid by 24 consecutive quarterly instalments according to a 15 year amortisation profile, the first 23 of which shall be equal instalments and the last instalment to be a balloon repayment repaid on the relevant Commercial Facility Termination Date,
(ii)
the amounts utilised under Commercial Facility B in respect of each Ship Loan shall be repaid by 36 consecutive quarterly instalments according to a 15 year amortisation profile, the first 35 of which shall be equal instalments and the last instalment to be a balloon repayment repaid on the relevant Commercial Facility Termination Date; and
(iii)
the amounts utilised under each ECA Facility in respect of each Ship Loan shall be repaid by 48 consecutive quarterly equal instalments according to a 12 year straight-line amortisation profile, the last of which to be repaid on the relevant ECA Facility Termination Date,
and each such instalment shall be a " Repayment Instalment " and in each case to be made in accordance with Schedule 10 ( Repayment Schedule ) as attached hereto which shall be updated, if necessary, in accordance with paragraph (c) below).
(b)
The first Repayment Instalment under each Ship Loan shall be repaid on the date falling three Months after the Utilisation Date of that Ship Loan.
(c)
Schedule 10 ( Repayment Schedule ) shall be updated following each Utilisation Date if so required to reflect the actual Repayment Instalments to be made in respect of the actual Advance.
6.2
Termination Date
On each Termination Date, the Borrowers shall additionally pay to the Facility Agent for the account of the Finance Parties all other sums then accrued and owing under the Finance Documents.
6.3
Reborrowing
No Borrower may reborrow any part of the Facility which is repaid.
7
PREPAYMENT AND CANCELLATION
7.1
Illegality
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:
(a)
that Lender shall promptly notify the Facility Agent upon becoming aware of that event;
(b)
upon the Facility Agent notifying the Borrowers, the Available Commitment of that Lender will be immediately cancelled; and
(c)
the Borrowers shall prepay that Lender's participation in the Loan on the last day of the Interest Period for the Loan occurring after the Facility Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender's corresponding Commitment shall be cancelled in the amount of the participation prepaid.
7.2
Change of control
(a)
If a Change of Control occurs without the prior written consent of the Majority Lenders and the ECAs:
(i)
the Parent Guarantor shall immediately notify the Facility Agent upon becoming aware of that Change of Control; and
(ii)
the Facility Agent shall, by notice to the Borrowers, cancel the Facility and declare the Loan, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Facility will be cancelled and the Loan and all such outstanding interest and other amounts will become immediately due and payable.
(b)
In this Clause 7.2 ( Change of control ):
" Change of Control " means the occurrence of any act, event or circumstances which results in:
(a)
a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) other than any holders of the Parent Guarantor’s Equity Interests as at the date of this Agreement, becoming the ultimate beneficial owner of the Parent Guarantor including, without limitation, any change from the date of this Agreement in the ultimate "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 35 per cent. of the total voting power of the Voting Stock of the Parent Guarantor (calculated on a fully diluted basis); or
(b)
individuals who constitute the board of directors of the Parent Guarantor at the beginning of any period of two consecutive calendar years and yet ceasing for any reason to constitute at least 50 per cent. of the total members of the Parent Guarantor's board of directors at any time during such two year period.
7.3
Automatic cancellation
The unutilised Commitment (if any) of each Lender in respect of a Ship Loan shall be automatically cancelled at close of business on the date on which the Advance for that Ship Loan is made available.
7.4
Voluntary prepayment of Loan
The Borrowers may, if they give the Facility Agent and the ECA Agent not less than 30 days’ prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of USD 1,000,000 or a multiple of that amount).
7.5
ECA prepayment option
(a)
In the event that a Commercial Facility has not been extended hereunder by the relevant Commercial Lenders or otherwise refinanced on terms acceptable to the ECAs by the date falling two Months prior to the relevant Commercial Facility Termination Date, each of Kexim (in relation to the Kexim Direct Facility) and each ECA (acting through the ECA Agent) shall have the option, but not the obligation, to terminate the relevant ECA Support and the relevant ECA Facility Loan at the relevant Commercial Facility Termination Date. Unless the Borrowers have been notified in writing by Kexim (in relation to the Kexim Direct Facility) and the ECA Agent (in relation to the GIEK Guaranteed Facility and the Kexim Guaranteed Facility) no later than 45 days before the relevant Commercial Facility Termination Date that Kexim and the ECAs are satisfied with such terms and do not require prepayment, then such prepayment options shall be deemed to have been exercised, and the Borrowers shall prepay in full each of the Advances made by Kexim under the Kexim Direct Facility Loan, the GIEK Guaranteed Lenders under the GIEK Guaranteed Facility Loan and/or the Kexim Guaranteed Lenders under the Kexim Guaranteed Facility Loan, as the case may be on the relevant Commercial Facility Termination Date without premium, penalty or additional costs of any kind.
(b)
This right of prepayment for the benefit of Kexim (in relation to the Kexim Direct Facility) and of each ECA (acting through the ECA Agent) set out in paragraph (a) above shall thereafter also arise for Kexim and each ECA at all other relevant times where a Commercial Facility having been extended or refinanced for a further period pursuant to paragraph (a) above has not been further extended or otherwise refinanced by the date falling two Months prior to the maturity date of so extended or refinanced Commercial Facility, so long as any ECA Facility Loan remains at such time outstanding under this Agreement.
(c)
If the option to terminate any ECA Facility Loan on the Termination Date in respect of Commercial Facility A (or the maturity date of so extended or refinanced Commercial Facility A, as the case may be) is exercised in accordance with paragraphs (a) or (b) above then the Borrowers shall also prepay in full the Commercial Facility B Loan on the Termination Date in respect of Commercial Facility A (or the maturity date of so extended or refinanced Commercial Facility A).
7.6
Mandatory cancellation on default under a Shipbuilding Contract
If:
(a)
any party to any Shipbuilding Contract rescinds, cancels, repudiates, terminates, novates or assigns a Shipbuilding Contract or any Shipbuilding Contract otherwise ceases to remain in full force and effect for any reason; or
(b)
a Ship has not been delivered to, and accepted by, the relevant Borrower prior to the end of the Availability Period in respect of the Ship Loan for that Ship,
then:
(i)
the Borrowers shall promptly notify the Facility Agent upon becoming aware of that event; and
(ii)
if the Majority Lenders so require, the Facility Agent shall cancel all amounts to be made available in respect of that Ship.
7.7
Mandatory prepayment on sale or Total Loss
(a)
If a Ship is sold or becomes a Total Loss, the Borrowers shall on the Relevant Date prepay the Ship Loan applicable to that Ship.
(b)
On the Relevant Date, the Borrowers shall also prepay such part of the Loan as shall eliminate any shortfall arising if the ratio set out in Clause 26 ( Security Cover ) were applied immediately following the payment referred to in paragraph (a) above.
(c)
Provided that no Default has occurred and is continuing, any remaining proceeds of the sale or Total Loss of a Ship after the prepayment referred to in paragraphs (a) and (b) has been made together with all other amounts that are payable on any such prepayment pursuant to the Finance Documents shall be paid to the Borrower that owned the relevant Ship.
(d)
In this Clause 7.7 ( Mandatory prepayment on sale or Total Loss ):
" Relevant Date " means:
(i)
in the case of a sale of a Ship, on the date on which the sale is completed by delivery of that Ship to the buyer of that Ship; and
(ii)
in the case of a Total Loss of a Ship, on the earlier of:
(A)
the date falling 180 days after the Total Loss Date; and
(B)
the date of receipt by the Security Agent of the proceeds of insurance relating to such Total Loss.
7.8
Mandatory prepayment of Hedging Prepayment Proceeds
Any Hedging Prepayment Proceeds arising as a result of any cancellation or prepayment under this Agreement shall, following payment into the Retention Account of the relevant Borrower in accordance with Clause 27.4 ( Monthly retentions ), be applied on the last day of the next Interest Period which ends after such payment in prepayment of the Loan.
7.9
Mandatory prepayment – refund under Shipbuilding Contract
(a)
If any member of the Group receives, from the Builder or any Affiliate of the Builder, any rebate, premium, inducement, commission, discount or any other benefit or payment which reduces the Contract Price of a Ship payable under the relevant Shipbuilding Contract (always excluding for the avoidance of doubt any liquidated damages payable to the relevant Borrower under the Shipbuilding Contract):
(i)
the relevant Borrower shall procure that the relevant Group member shall promptly notify the Facility Agent upon becoming aware of such an event; and
(ii)
60 per cent. of any amount received shall be paid to the Facility Agent in prepayment of the Loan on the next repayment date falling under Clause 6 ( Repayment ).
7.10
Loss of ECA Support
If any ECA Support is cancelled, suspended, rescinded, terminated or otherwise ceases to remain in full force and effect for any reason other than as a result of any act or omission by or attributable to any member of the Group (each an “ Event ”), all outstanding amounts under the Finance Documents shall become immediately due and payable and Borrowers shall prepay such amounts on or before the date falling ten Business Days after the date of such Event.
7.11
Restrictions
(a)
Any notice of cancellation or prepayment given by any Party under this Clause 7 ( Prepayment and Cancellation ) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made, the amount of that cancellation or prepayment and, if relevant, the part of the Loan to be prepaid or cancelled.
(b)
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and amounts (if any) payable under the Hedging Agreements in connection with that prepayment and, subject to the fee provided for in Clause 11.4 ( Kexim prepayment fee ), any Break Costs, without premium or penalty.
(c)
No Borrower may reborrow any part of the Facility which is prepaid.
(d)
No Borrower shall repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.
(e)
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
(f)
If the Facility Agent receives a notice under this Clause 7 ( Prepayment and Cancellation ) it shall promptly forward a copy of that notice to either the Borrowers or the affected Lenders and the ECAs and/or Hedge Counterparties, as appropriate.
(g)
If all or part of any Lender's participation in the Loan is repaid or prepaid, an amount of that Lender's Commitment (equal to the amount of the participation which is repaid or prepaid) will be deemed to be cancelled on the date of repayment or prepayment.
7.12
Application of prepayments or partial prepayments
Any prepayment or partial prepayment of any part of the Loan (other than a prepayment pursuant to Clause 7.1 ( Illegality ), a full prepayment of any Ship Loan(s), or Clause 7.7 ( Mandatory prepayment on sale or Total Loss )) shall be applied pro rata across the Facilities and thereafter, in relation to each ECA Facility, in an inverse order of maturity against the scheduled Repayment Instalments and, in relation to each Commercial Facility, in an inverse order of maturity against the scheduled Repayment Instalments (but excluding the balloon) and, thereafter, against the balloon.

SECTION 5

COSTS OF UTILISATION
8
INTEREST
8.1
Calculation of interest
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of:
(a)
the Applicable Margin; and
(b)
LIBOR.
8.2
Payment of interest
(a)
The Borrowers shall pay accrued interest on the Loan or any part of the Loan together with the applicable GIEK Guarantee Premium (payable pursuant to paragraph (a) of Clause 11.6 ( GIEK Guarantee Premium )) on the last day of each Interest Period (each an " Interest Payment Date ").
(b)
If an Interest Period is longer than three Months, the Borrowers shall also pay interest then accrued on the Loan or the relevant part of the Loan on the dates falling at three Monthly intervals after the first day of the Interest Period.
8.3
Default interest
(a)
If an Obligor fails to pay any amount payable by it under a Finance Document (other than a Hedging Agreement) on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2.00 per cent. per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of the Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Facility Agent. Any interest accruing under this Clause 8.3 ( Default interest ) shall be immediately payable by the Obligor on demand by the Facility Agent.
(b)
If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or that part of the Loan:
(i)
the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan or that part of the Loan; and
(ii)
the rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2.00 per cent. per annum higher than the rate which would have applied if that Unpaid Sum had not become due.
(c)
Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but will remain immediately due and payable.
8.4
Notification of rates of interest
(a)
The Facility Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.
(b)
The Facility Agent shall promptly notify the Borrowers of each Funding Rate relating to the Loan, any part of the Loan or any Unpaid Sum.
8.5
Hedging
(a)
Each Borrower may at any time, but is not obliged to, enter into Hedging Agreements with any Hedge Counterparty and shall from that time onwards maintain such Hedging Agreements in accordance with this Clause 8.5 ( Hedging ).
(b)
Each Hedging Agreement shall:
(i)
be in a form and on terms and conditions agreed by the Majority Lenders, and documented on using a form of ISDA Master Agreement;
(ii)
be with a Hedge Counterparty and each Hedge Counterparty shall also be a Lender;
(iii)
be for a term ending on (or before) the relevant Termination Date;
(iv)
have settlement dates coinciding with the Interest Payment Dates; and
(v)
provide that the Termination Currency (as defined in the relevant Hedging Agreement) shall be dollars.
(c)
The rights of each Borrower under the Hedging Agreements shall be assigned by way of security under a Hedging Agreement Security.
(d)
The parties to each Hedging Agreement must comply with the terms of that Hedging Agreement.
(e)
Neither a Hedge Counterparty nor a Borrower may amend, supplement, extend or waive the terms of any Hedging Agreement without the consent of the Facility Agent, acting on the instructions of the Majority Lenders, which instructions no Lender shall unreasonably withhold, condition or delay.
(f)
Paragraph (e) above shall not apply to an amendment, supplement or waiver that is administrative and mechanical in nature and does not give rise to a conflict with any provision of this Agreement.
(g)
If, at any time, the aggregate notional principal amount of the transactions in respect of the Hedging Agreements exceeds or, as a result of any repayment or prepayment under this Agreement, will exceed the Loan or a Facility, as the case may be, at that time, the Borrowers must promptly notify the Facility Agent and must, at the request of the Facility Agent (acting on the instructions of the Majority Lenders), reduce the aggregate notional amount of those transactions by an amount and in a manner satisfactory to the Facility Agent (acting on the instructions of the Majority Lenders) so that it no longer exceeds or will not exceed the Loan or that Facility, as the case may be, then or that will be outstanding and shall provide evidence that the transactions have been so reduced.
(h)
Any reductions in the aggregate notional amount of the transactions in respect of the Hedging Agreements in accordance with paragraph (g) above will be apportioned as between those transactions pro rata .
(i)
Paragraph (g) above shall not apply to any transactions in respect of any Hedging Agreement under which no Borrower has any actual or contingent indebtedness.
(j)
A Hedge Counterparty may only suspend making payments under a transaction in respect of a Hedging Agreement if a Borrower is in breach of its payment obligations under any transaction in respect of that Hedging Agreement.
(k)
Each Hedge Counterparty consents to, and acknowledges notices of, the charging by way of security by each Borrower pursuant to the relevant Hedging Agreement Security of its rights under the Hedging Agreements to which it is party in favour of the Security Agent.
(l)
Any such assigning by way of security is without prejudice to, and after giving effect to, the operation of any payment or close-out netting in respect of any amounts owing under any Hedging Agreement.
(m)
The Security Agent shall not be liable for the performance of any of a Borrower's obligations under a Hedging Agreement.
(n)
Additionally, a Borrower may, subject to the provisions of paragraph (o) below, enter into hedging agreements with a person other than a Hedge Counterparty (a “ Non-Lender Hedge Counterparty ") for the purpose of hedging interest payable under this Agreement, subject to:
(i)
any subordination and intercreditor deed (in form and substance reasonably satisfactory to the Majority Lenders, with each of the Lenders acting reasonably) being entered into between the Finance Parties and the Non-Lender Hedge Counterparty prior to the entering into by that Borrower of such hedging agreement;
(ii)
that Borrower creating Security in favour of the Security Agent of its rights and interests in any such hedging agreement with a Non-Lender Hedge Counterparty, in agreed form; and
(iii)
all payments to that Borrower under any such hedging agreement with a Non-Lender Hedge Counterparty being made to the relevant Earnings Account in accordance with Clause 27.1 ( Earnings Account ); and
(iv)
all liabilities of that Borrower to the Non-Lender Hedge Counterparty under such hedging agreement being fully subordinated to the rights of the Secured Parties under the Finance Documents and until the end of the Security Period.
(o)
Each Borrower agrees that, prior to it entering into any interest rate swap or other hedge instrument with a Non-Lender Hedge Counterparty for the purpose of hedging any interest payable under this Agreement, it shall offer for a period of not less than ten Business Days to enter into a swap, or other instrument, on the same proposed terms and conditions with the Hedge Counterparties (with each Hedge Counterparty taking such portion as may be agreed between that Borrower and the Hedge Counterparties or, if one or more Hedge Counterparties declines such an offer or that Borrower elects only to enter into the hedge instrument with one of them, the remaining Hedge Counterparty or Hedge Counterparties (as the case may be) shall be entitled to take such portion as it or they (as the case may be) may agree with that Borrower). If all Hedge Counterparties decline such an offer or if that Borrower elects not to proceed on the basis that the offers are not competitive, that Borrower may then (subject, and without prejudice, to the requirements set out elsewhere in the Finance Documents) enter into such swap, or other instrument, on the same terms and conditions offered to those declining Hedge Counterparties (and in the same proportion as those Hedge Counterparties would have taken if they had accepted), with the Non-Lender Hedge Counterparty, subject to the requirements described in paragraph (n) above.
9
INTEREST PERIODS
9.1
Interest Periods
(a)
Subject to this Clause 9 ( Interest Periods ), each Interest Period for an Advance shall be three Months.
(b)
The first Interest Period for an Advance shall start on the Utilisation Date of that Advance and each subsequent Interest Period shall start on the last day of the preceding Interest Period.
(c)
An Interest Period in respect of an Advance shall not extend beyond the applicable Termination Date, but shall be shortened so that it ends on the applicable Termination Date.
(d)
In respect of a Repayment Instalment, an Interest Period for a part of the Advance equal to such Repayment Instalment shall end on the Repayment Date relating to it if such date is before the end of the Interest Period then current.
(e)
Each Advance shall have one Interest Period only at any time.
9.2
Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
10
CHANGES TO THE CALCULATION OF INTEREST
10.1
Unavailability of Screen Rate
(a)
Interpolated Screen Rate : If no Screen Rate is available for LIBOR for the Interest Period of the Loan or any part of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(b)
Cost of funds : If no Screen Rate is available for LIBOR for:
(i)
dollars; or
(ii)
the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Screen Rate,
Clause 10.3 ( Cost of funds ) shall apply to the Loan or that part of the Loan for that Interest Period.
10.2
Market disruption
If before close of business in London on the Quotation Day for the relevant Interest Period the Facility Agent receives notification from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan exceed 50 per cent. of the Loan or the relevant part of the Loan as appropriate) (the " Relevant Lender ") that the cost to it of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select would be in excess of LIBOR then Clause 10.3 ( Cost of funds ) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
10.3
Cost of funds
(a)
If this Clause 10.3 ( Cost of funds ) applies, the rate of interest on each Lender's share of the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
(i)
the Margin; and
(ii)
the rate notified to the Facility Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period to be that which expresses as a percentage rate per annum the cost to the relevant Lender of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select.
(b)
If this Clause 10.3 ( Cost of funds ) applies and the Facility Agent or the Borrowers so require, the Facility Agent and the Borrowers shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
(c)
Subject to Clause 45.4 ( Replacement of Screen Rate ), any substitute or alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties.
(d)
If paragraph (e) below does not apply and any rate notified to the Facility Agent under sub-paragraph (ii) of paragraph (a) above is less than zero, the relevant rate shall be deemed to be zero.
(e)
If this Clause ‎10.3 ( Cost of funds ) applies pursuant to Clause ‎10.2 ( Market disruption ) and:
(i)
a Lender's Funding Rate is less than LIBOR; or
(ii)
a Lender does not supply a quotation by the time specified in sub-paragraph ‎(ii) of paragraph (a) above,
(f)
the cost to that Lender of funding its participation in the Loan or the relevant part of the Loan for that Interest Period shall be deemed, for the purposes of paragraph (a) above, to be LIBOR.
10.4
Break Costs
(a)
The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by a Borrower on a day other than the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
(b)
Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
11
FEES
11.1
Commitment fee
(a)
The Borrowers shall pay to the Facility Agent:
(i)
for the account of each Lender, a fee computed at the rate of 40 per cent. of the relevant Applicable Margin on that Lender's Available Commitment from time to time for the Availability Period; and
(ii)
for the account of GIEK, a fee computed at the rate of 40 per cent. of the GIEK Guarantee Premium on the available, undrawn amount of the Total GIEK Guaranteed Facility Loan Commitment from time to time for the Availability Period.
(b)
The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the Availability Period, on the last day of the Availability Period and, if cancelled, on the cancelled amount of the relevant Lender's Commitment (or, in relation to sub-paragraph (ii) of paragraph (a) above, on the cancelled amount of the Total GIEK Guaranteed Facility Loan Commitment) at the time the cancellation is effective.
11.2
Facility Agent fee
The Borrowers shall pay to the Facility Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.
11.3
Security Agent fee
The Borrowers shall pay to the Security Agent (for its own account) a security agency fee in the amount and at the times agreed in a Fee Letter.
11.4
Kexim prepayment fee
Any voluntary prepayment made under the Kexim Direct Facility and any prepayment following a voluntary sale or disposal of a Ship pursuant to Clause 7.7 ( Mandatory prepayment on sale or Total Loss ) under the Kexim Direct Facility (but excluding, for the avoidance of doubt, any prepayment made under Clause 7.5 ( ECA prepayment option ) or under Clause 26 ( Security Cover )) shall be paid to the Facility Agent (for the account of Kexim) together with a fee for the account of Kexim in an amount equal to 50 basis points of the amount prepaid under the Kexim Direct Facility.
11.5
Kexim Guarantee Premium
(a)
The Borrowers acknowledge that the Kexim Guaranteed Lenders shall procure the placement of the Kexim Guarantee either through the ECA Agent or directly with the Kexim Guarantor and shall benefit from it throughout the duration of the Security Period. The Borrowers agree to pay to the Facility Agent (for the account of the Kexim Guarantor) the portion of the Kexim Guarantee Premium in respect of the Kexim Guarantee in relation to each Ship prior to the Utilisation Date of the Ship Loan in relation to that Ship, at such time and in such amount as notified to the Borrowers by the Facility Agent (acting on behalf of KEXIM). An invoice for the KEXIM Guarantee Premium shall be provided to the Borrowers by the ECA Agent or by the Facility Agent (acting on behalf of the ECA Agent) or the Kexim Guarantor in advance of (and not less than two Business Days prior to) the Utilisation Date of the Ship Loan in relation to that Ship.
(b)
Each Borrower agrees that its obligation to make the payments set out in paragraph (a) above to the Facility Agent in respect of the Kexim Guarantee Premium (or any part thereof) shall be an absolute obligation and shall not be affected by any matter whatsoever. The Kexim Guarantee Premium (or any part thereof) shall be refundable only in accordance with the terms of the Kexim Guarantee.
(c)
Each Borrower acknowledges that the amount of the Kexim Guarantee Premium will be solely determined by the Kexim Guarantor and no Kexim Guaranteed Lender is in any way involved in the determination of the amount of the Kexim Guarantee Premium and agrees that the Borrowers shall have no claim or defence against any Kexim Guaranteed Lender in connection with the amount of the Kexim Guarantee Premium.
11.6
GIEK Guarantee Premium
(a)
The Borrowers acknowledge that the GIEK Guaranteed Lenders shall procure the placement of the GIEK Guarantee either through the ECA Agent or directly with GIEK and shall benefit from it throughout the duration of the Security Period. The Borrowers agree to pay to the Facility Agent (for the account of GIEK) the GIEK Guarantee Premium in respect of the GIEK Guarantee on each Interest Payment Date throughout the duration of the Security Period, at such time and in such amount as notified to the Borrowers by the Facility Agent (acting on behalf of GIEK).
(b)
Each Borrower agrees that its obligation to make the payments set out in paragraph (a) above to the Facility Agent in respect of the GIEK Guarantee Premium (or any part thereof) shall be an absolute obligation and shall not be affected by any matter whatsoever.
(c)
Each Borrower acknowledges that the amount of the GIEK Guarantee Premium will be solely determined by GIEK and no GIEK Guaranteed Lender is in any way involved in the determination of the amount of the GIEK Guarantee Premium and agrees that the Borrowers shall have no claim or defence against any GIEK Guaranteed Lender in connection with the amount of the GIEK Guarantee Premium.

SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS
12
TAX GROSS UP AND INDEMNITIES
12.1
Definitions
(a)
In this Agreement:
" Protected Party " means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
" Tax Credit " means a credit against, relief or remission for, or repayment of any Tax.
" Tax Deduction " means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
" Tax Payment " means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 ( Tax gross-up ) or a payment under Clause 12.3 ( Tax indemnity ).
(b)
Unless a contrary indication appears, in this Clause 12 ( Tax Gross Up and Indemnities ) reference to "determines" or "determined" means a determination made in the absolute discretion of the person making the determination.
(c)
This Clause 12 ( Tax Gross Up and Indemnities ) shall not apply to any Hedging Agreement.
12.2
Tax gross-up
(a)
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
(b)
The Borrowers shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a Lender it shall notify the Borrowers and that Obligor.
(c)
If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)
If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(e)
Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
12.3
Tax indemnity
(a)
The Obligors shall (within three Business Days of demand by the Facility Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
(b)
Paragraph (a) above shall not apply:
(i)
with respect to any Tax assessed on a Finance Party:
(A)
under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(B)
under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or
(ii)
to the extent a loss, liability or cost:
(A)
is compensated for by an increased payment under Clause 12.2 ( Tax gross-up ); or
(B)
relates to a FATCA Deduction required to be made by a Party.
(c)
A Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Obligors.
(d)
A Protected Party shall, on receiving a payment from an Obligor under this Clause 12.3 ( Tax indemnity ), notify the Facility Agent.
12.4
Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a)
a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was received; and
(b)
that Finance Party has obtained and utilised that Tax Credit,
the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.
12.5
Stamp taxes
The Obligors shall pay and, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability which that Secured Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
12.6
VAT
(a)
All amounts expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that Party).
(b)
If VAT is or becomes chargeable on any supply made by any Finance Party (the " Supplier ") to any other Finance Party (the " Recipient ") under a Finance Document, and any Party other than the Recipient (the " Relevant Party ") is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
(i)
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this sub-paragraph (i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(ii)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
(c)
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part of it as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(d)
Any reference in this Clause 12.6 ( VAT ) to any Party shall, at any time when that Party is treated as a member of a group or unity (or fiscal unity) for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the person who is treated at that time as making the supply, or (as appropriate) receiving the supply, under the grouping rules (provided for in Article 11 of Council Directive 2006/112/EC (or as implemented by the relevant member state of the European Union) so that a reference to a Party shall be construed as a reference to that Party or the relevant group or unity (or fiscal unity) of which that Party is a member for VAT purposes at the relevant time or the relevant representative member (or representative or head) of that group or unity at the relevant time (as the case may be).
(e)
In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party's VAT registration and such other information as is reasonably requested in connection with such Finance Party's VAT reporting requirements in relation to such supply.
12.7
FATCA Information
(a)
Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
(i)
confirm to that other Party whether it is:
(A)
a FATCA Exempt Party; or
(B)
not a FATCA Exempt Party; and
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and
(iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation or exchange of information regime.
(b)
If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Finance Party to do anything and sub-paragraph (iii) of paragraph (a) above shall not oblige any other Party to do anything which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality.
(d)
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
(e)
If a Borrower is a US Tax Obligor, or the Facility Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lender shall, within ten Business Days of:
(i)
where a Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;
(ii)
where a Borrower is a US Tax Obligor on a Transfer Date and the relevant Lender is a New Lender, the relevant Transfer Date; or
(iii)
where a Borrower is not a US Tax Obligor, the date of a request from the Facility Agent,
supply to the Facility Agent:
(i)
a withholding certificate on Form W-8, Form W-9 or any other relevant form; or
(ii)
any withholding statement or other document, authorisation or waiver as the Facility Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation.
(f)
The Facility Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (e) above to the Borrowers.
(g)
If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Facility Agent by a Lender pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Facility Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Facility Agent). The Facility Agent shall provide any such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrowers.
(h)
The Facility Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (e) or (g) above without further verification. The Facility Agent shall not be liable for any action taken by it under or in connection with paragraphs (e), (f) or (g) above.
12.8
FATCA Deduction
(a)
Each Party 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 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.
(b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify each Obligor and the Facility Agent and the Facility Agent shall notify the other Finance Parties.
13
INCREASED COSTS
13.1
Increased costs
(a)
Subject to Clause 13.3 ( Exceptions ), the Borrowers shall, within three Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:
(i)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or
(ii)
compliance with any law or regulation made,
in each case after the date of this Agreement; or
(iii)
the implementation, application of or compliance with Basel III or CRD IV or any law or regulation that implements or applies Basel III or CRD IV.
(b)
In this Agreement:
(i)
" Basel III " means:
(A)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
(B)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(C)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
(ii)
" CRD IV " means:
(A)
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012;
(B)
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC; and
(C)
any other law or regulation which implements Basel III.
(iii)
" Increased Costs " means:
(A)
a reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital;
(B)
an additional or increased cost; or
(C)
a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.
13.2
Increased cost claims
(a)
A Finance Party intending to make a claim pursuant to Clause 13.1 ( Increased costs ) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Borrowers.
(b)
Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.
13.3
Exceptions
Clause 13.1 ( Increased costs ) does not apply to the extent any Increased Cost is:
(a)
attributable to a Tax Deduction required by law to be made by an Obligor;
(b)
attributable to a FATCA Deduction required to be made by a Party;
(c)
compensated for by Clause 12.3 ( Tax indemnity ) (or would have been compensated for under Clause 12.3 ( Tax indemnity ) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 12.3 ( Tax indemnity ) applied);
(d)
compensated for by any payment made pursuant to Clause 14.3 ( Mandatory Cost );
(e)
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or
(f)
incurred by a Hedge Counterparty in its capacity as such.
14
OTHER INDEMNITIES
14.1
Currency indemnity
(a)
If any sum due from an Obligor under the Finance Documents (a " Sum "), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the " First Currency ") in which that Sum is payable into another currency (the " Second Currency ") for the purpose of:
(i)
making or filing a claim or proof against that Obligor; or
(ii)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Obligor shall, as an independent obligation, within three Business Days of demand, indemnify each Secured Party to which that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
(c)
This Clause 14.1 ( Currency indemnity ) does not apply to any sum due to a Hedge Counterparty in its capacity as such.
14.2
Other indemnities
(a)
Each Obligor shall, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability incurred by it as a result of:
(i)
the occurrence of any Event of Default;
(ii)
a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 35 ( Sharing among the Finance Parties );
(iii)
funding, or making arrangements to fund, its participation in an Advance requested by the Borrowers in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Secured Party alone);
(iv)
the arrangements described in Clause 5.8 ( Prepositioning of funds ) (other than by reason of default or negligence by that Secured Party alone); or
(v)
the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.
(b)
Each Obligor shall, on demand, indemnify each ECA and each Finance Party, each Affiliate of a Finance Party and each officer or employee of an ECA, a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 ( Other indemnities ) an " Indemnified Person "), against any cost, loss or liability incurred by that Indemnified Person (i) pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, (ii) in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, (iii) having the benefit of any Security constituted by the Finance Documents or which relates to the condition or operation of, or (iv) any incident occurring in relation to, any Ship unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.
(c)
The indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
(i)
arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or Social Law or any Sanctions; or
(ii)
in connection with any Environmental Claim or Social Claim.
(d)
Any Affiliate of a Finance Party or any officer or employee of an ECA, a Finance Party or of any of its Affiliates may rely on this Clause 14.2 ( Other indemnities ) subject to Clause 1.5 ( Third party rights ) and the provisions of the Third Parties Act.
14.3
Mandatory Cost
Each Borrower shall, on demand by the Facility Agent, pay to the Facility Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Facility Agent to be its good faith determination of the amount necessary to compensate it for complying with:
(a)
in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
(b)
in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions),
which, in each case, is referable to that Lender's participation in the Loan.
14.4
Indemnity to the Facility Agent
Each Obligor shall, on demand, indemnify the Facility Agent against:
(a)
any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of:
(i)
investigating any event which it reasonably believes is a Default; or
(ii)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or
(iii)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Transaction Documents and any ECA Support; and
(b)
any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent's gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 36.11 ( Disruption to Payment Systems etc. ) notwithstanding the Facility Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent in acting as Facility Agent under the Finance Documents.
14.5
Indemnity to the Security Agent
(a)
Each Obligor shall, on demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them:
(i)
in relation to or as a result of:
(A)
any failure by an Obligor to comply with its obligations under Clause 16 ( Costs and Expenses );
(B)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;
(C)
the taking, holding, protection or enforcement of the Finance Documents and the Transaction Security;
(D)
the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;
(E)
any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents;
(F)
any action by any Obligor which vitiates, reduces the value of, or is otherwise prejudicial to, the Transaction Security; and
(G)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents.
(ii)
acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property or the performance of the terms of this Agreement or the other Finance Documents (otherwise, in each case, than by reason of the relevant Security Agent's, Receiver's or Delegate's gross negligence or wilful misconduct).
(b)
The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Security Assets in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.5 ( Indemnity to the Security Agent ) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it.
15
MITIGATION BY THE FINANCE PARTIES
15.1
Mitigation
(a)
Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 ( Illegality ), Clause 12 ( Tax Gross Up and Indemnities ), Clause 13 ( Increased Costs ) or paragraph (a) of Clause 14.3 ( Mandatory Cost ) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
(b)
Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.
15.2
Limitation of liability
(a)
Each Obligor shall, on demand, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 ( Mitigation ).
(b)
A Finance Party is not obliged to take any steps under Clause 15.1 ( Mitigation ) if either:
(i)
a Default has occurred and is continuing; or
(ii)
in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
16
COSTS AND EXPENSES
16.1
Transaction expenses
The Obligors shall, on demand, pay the Facility Agent, the Security Agent and the Mandated Lead Arrangers the amount of all costs and expenses (including legal fees) reasonably incurred by any Secured Party and any ECA in connection with the negotiation, preparation, printing, execution, syndication and perfection of:
(a)
this Agreement and any other documents referred to in this Agreement (including for the avoidance of doubt any ECA Support) or in a Security Document; and
(b)
any other Transaction Documents or ECA Support executed after the date of this Agreement.
16.2
Amendment costs
If:
(a)
an Obligor requests an amendment, waiver or consent; or
(b)
an amendment is required pursuant to Clause 36.9 ( Change of currency ); or
(c)
an Obligor requests, and the Security Agent agrees to, the release of all or any part of the Security Assets from the Transaction Security,
the Obligors shall, on demand, reimburse each of the Facility Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by each Secured Party and any ECA in responding to, evaluating, negotiating or complying with that request or requirement.
16.3
Enforcement and preservation costs
The Obligors shall, on demand, pay to each Secured Party and each ECA the amount of all costs and expenses (including legal fees) incurred by that Secured Party or an ECA in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the Transaction Security and with any proceedings instituted by or against that Secured Party or an ECA as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights.

SECTION 7

GUARANTEES AND JOINT AND SEVERAL LIABILITY OF BORROWERS
17
GUARANTEE AND INDEMNITY – PARENT GUARANTOR
17.1
Guarantee and indemnity
The Parent Guarantor irrevocably and unconditionally:
(a)
guarantees to each Finance Party punctual performance by each Borrower of all that Borrower's obligations under the Finance Documents;
(b)
undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, the Parent Guarantor shall immediately on demand pay that amount as if it were the principal obligor; and
(c)
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of a Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by the Parent Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 17 ( Guarantee and Indemnity – Parent Guarantor ) if the amount claimed had been recoverable on the basis of a guarantee.
17.2
Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by each Borrower under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
17.3
Reinstatement
If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a Secured Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Parent Guarantor under this Clause 17 ( Guarantee and Indemnity – Parent Guarantor ) will continue or be reinstated as if the discharge, release or arrangement had not occurred.
17.4
Waiver of defences
The obligations of the Parent Guarantor under this Clause 17 ( Guarantee and Indemnity – Parent Guarantor ) and in respect of any Transaction Security will not be affected or discharged by an act, omission, matter or thing which, but for this Clause 17.4 ( Waiver of defences ), would reduce, release or prejudice any of its obligations under this Clause 17 ( Guarantee and Indemnity – Parent Guarantor ) or in respect of any Transaction Security (without limitation and whether or not known to it or any Secured Party) including:
(a)
any time, waiver or consent granted to, or composition with, any Obligor or other person;
(b)
the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(d)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;
(e)
any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
(f)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
(g)
any insolvency or similar proceedings.
17.5
Immediate recourse
The Parent Guarantor waives any right it may have of first requiring any Secured Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 17 ( Guarantee and Indemnity – Parent Guarantor ). This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
17.6
Appropriations
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Secured Party (or any trustee or agent on its behalf) may:
(a)
refrain from applying or enforcing any other moneys, security or rights held or received by that Secured Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Parent Guarantor shall not be entitled to the benefit of the same; and
(b)
hold in an interest-bearing suspense account any moneys received from the Parent Guarantor or on account of the Parent Guarantor's liability under this Clause 17 ( Guarantee and Indemnity – Parent Guarantor ).
17.7
Deferral of Parent Guarantor's rights
All rights which the Parent Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against any Borrower, any other Obligor or their respective assets shall be fully subordinated to the rights of the Secured Parties under the Finance Documents and until the end of the Security Period and unless the Facility Agent otherwise directs, the Parent Guarantor will not exercise any rights which it may have (whether in respect of any Finance Document to which it is a Party or any other transaction) by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 17 ( Guarantee and Indemnity – Parent Guarantor ):
(a)
to be indemnified by an Obligor;
(b)
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor's obligations under the Finance Documents;
(c)
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Secured Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Secured Party;
(d)
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which the Parent Guarantor has given a guarantee, undertaking or indemnity under Clause 17.1 ( Guarantee and indemnity );
(e)
to exercise any right of set-off against any Obligor; and/or
(f)
to claim or prove as a creditor of any Obligor in competition with any Secured Party.
If the Parent Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Secured Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Secured Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 36 ( Payment Mechanics ). For the avoidance of doubt this paragraph does not apply to any distribution permitted in accordance with paragraph (b) of Clause 23.18 ( Dividends ) of this Agreement.
17.8
Additional security
This guarantee and any other Security given by the Parent Guarantor is in addition to and is not in any way prejudiced by, and shall not prejudice, any other guarantee or Security or any other right of recourse now or subsequently held by any Secured Party or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
17.9
Applicability of provisions of Guarantee to other Security
Clauses 17.2 ( Continuing guarantee ), 17.3 ( Reinstatement ), 17.4 ( Waiver of defences ), 17.5 ( Immediate recourse ), 17.6 ( Appropriations ), 17.7 ( Deferral of Parent Guarantor's rights ) and 17.8 ( Additional security ) shall apply, with any necessary modifications, to any Security which the Parent Guarantor creates (whether at the time at which it signs this Agreement or at any later time) to secure the Secured Liabilities or any part of them.
18
JOINT AND SEVERAL LIABILITY OF THE BORROWERS
18.1
Joint and several liability
All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several.
18.2
Waiver of defences
The liabilities and obligations of a Borrower shall not be impaired by:
(a)
this Agreement being or later becoming void, unenforceable or illegal as regards any other Borrower;
(b)
any payment by any ECA under any ECA Support;
(c)
any Lender or the Security Agent entering into any rescheduling, refinancing or other arrangement of any kind with any other Borrower;
(d)
any Lender or the Security Agent releasing any other Borrower or any Security created by a Finance Document; or
(e)
any time, waiver or consent granted to, or composition with any other Borrower or other person;
(f)
the release of any other Borrower or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(g)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any other Borrower or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(h)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any other Borrower or any other person;
(i)
any amendment, novation, supplement, extension, restatement (however fundamental, and whether or not more onerous) or replacement of a Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
(j)
any unenforceability, illegality or invalidity of any obligation or any person under any Finance Document or any other document or security; or
(k)
any insolvency or similar proceedings.
18.3
Principal Debtor
Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and no Borrower shall, in any circumstances, be construed to be a surety for the obligations of any other Borrower under this Agreement.
18.4
Borrower restrictions
(a)
Subject to paragraph (b) below, during the Security Period no Borrower shall:
(i)
claim any amount which may be due to it from any other Borrower whether in respect of a payment made under, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or
(ii)
take or enforce any form of security from any other Borrower for such an amount, or in any way seek to have recourse in respect of such an amount against any asset of any other Borrower; or
(iii)
set off such an amount against any sum due from it to any other Borrower; or
(iv)
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving any other Borrower; or
(v)
exercise or assert any combination of the foregoing.
(b)
If during the Security Period, the Facility Agent, by notice to a Borrower, requires it to take any action referred to in paragraph (a) above in relation to any other Borrower, that Borrower shall take that action as soon as practicable after receiving the Facility Agent's notice.
18.5
Deferral of Borrowers' rights
Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full and unless the Facility Agent otherwise directs, no Borrower will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:
(a)
to be indemnified by any other Borrower; or
(b)
to claim any contribution from any other Borrower in relation to any payment made by it under the Finance Documents.
19
GUARANTEE AND INDEMNITY – HEDGE GUARANTORS
19.1
Guarantee and indemnity
Each Hedge Guarantor irrevocably and unconditionally jointly and severally:
(a)
guarantees to each Hedge Counterparty punctual performance by each Borrower of all that Borrower's obligations under the Hedging Agreements;
(b)
undertakes with each Hedge Counterparty that whenever a Borrower does not pay any amount when due under or in connection with any Hedging Agreement, that Hedge Guarantor shall immediately on demand pay that amount as if it were the principal obligor; and
(c)
agrees with each Hedge Counterparty that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Hedge Counterparty immediately on demand against any cost, loss or liability it incurs as a result of a Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Hedging Agreement on the date when it would have been due. The amount payable by a Hedge Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ) if the amount claimed had been recoverable on the basis of a guarantee.
19.2
Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Borrower under the Hedging Agreements, regardless of any intermediate payment or discharge in whole or in part.
19.3
Reinstatement
If any discharge, release or arrangement (whether in respect of the obligations of any Borrower or any security for those obligations or otherwise) is made by a Secured Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of each Hedge Guarantor under this Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ) will continue or be reinstated as if the discharge, release or arrangement had not occurred.
19.4
Waiver of defences
The obligations of each Hedge Guarantor under this Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ) and in respect of any Transaction Security will not be affected or discharged by an act, omission, matter or thing which, but for this Clause 19.4 ( Waiver of defences ), would reduce, release or prejudice any of its obligations under this Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ) or in respect of any Transaction Security (without limitation and whether or not known to it or any Secured Party) including:
(a)
any time, waiver or consent granted to, or composition with, any Obligor or other person;
(b)
the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(d)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;
(e)
any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
(f)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
(g)
any insolvency or similar proceedings.
19.5
Immediate recourse
Each Hedge Guarantor waives any right it may have of first requiring any Secured Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ). This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
19.6
Appropriations
Until all amounts which may be or become payable by the Borrowers under or in connection with the Hedging Agreements have been irrevocably paid in full, each Secured Party (or any trustee or agent on its behalf) may:
(a)
refrain from applying or enforcing any other moneys, security or rights held or received by that Secured Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Hedge Guarantor shall be entitled to the benefit of the same; and
(b)
hold in an interest-bearing suspense account any moneys received from any Hedge Guarantor or on account of any Hedge Guarantor's liability under this Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ).
19.7
Deferral of Hedge Guarantors' rights
All rights which each Hedge Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against any Borrower, any other Obligor or their respective assets shall be fully subordinated to the rights of the Secured Parties under the Finance Documents and until the end of the Security Period and unless the Facility Agent otherwise directs, no Hedge Guarantor will exercise any rights which it may have (whether in respect of any Finance Document to which it is a Party or any other transaction) by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ):
(a)
to be indemnified by an Obligor;
(b)
to claim any contribution from any third party providing security for, or any other guarantor of, any Obligor's obligations under the Finance Documents;
(c)
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Secured Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Secured Party;
(d)
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Hedge Guarantor has given a guarantee, undertaking or indemnity under Clause 19 ( Guarantee and Indemnity – Hedge Guarantors );
(e)
to exercise any right of set-off against any Obligor; and/or
(f)
to claim or prove as a creditor of any Obligor in competition with any Secured Party.
If a Hedge Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Secured Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Secured Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 36 ( Payment Mechanics ).
19.8
Additional security
This guarantee and any other Security given by a Hedge Guarantor is in addition to and is not in any way prejudiced by, and shall not prejudice, any other guarantee or Security or any other right of recourse now or subsequently held by any Secured Party or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
19.9
Applicability of provisions of Guarantee to other Security
Clauses 19.2 ( Continuing guarantee ), 19.3 ( Reinstatement ), 19.4 ( Waiver of defences ), 19.5 ( Immediate recourse ), 19.6 ( Appropriations ), 19.7 ( Deferral of Hedge Guarantors' rights ) and 19.8 ( Additional security ) shall apply, with any necessary modifications, to any Security which a Hedge Guarantor creates (whether at the time at which it signs this Agreement or at any later time) to secure the Secured Liabilities or any part of them.

SECTION 8

REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
20
REPRESENTATIONS
20.1
General
Each Obligor makes the representations and warranties set out in this Clause 20 ( Representations ) to each Finance Party on the date of this Agreement.
20.2
Status
(a)
It is a corporation, duly incorporated and validly existing in good standing under the law of its Original Jurisdiction.
(b)
It and, in relation to the Parent Guarantor, each of its Subsidiaries, has the power to own its assets and carry on its business as it is being conducted.
20.3
Share capital and ownership
(a)
Each Borrower has an authorised share capital of 1500 shares of USD1.00 each, all of which have been issued in registered form and all of which shares have been issued fully paid.
(b)
The legal title to and beneficial interest in the shares in each Borrower is held by the Parent Guarantor, free of any Security (other than Permitted Security) or any other claim.
(c)
None of the shares in any Borrower is subject to any option to purchase, pre-emption rights or similar rights.
20.4
Binding obligations
Subject to the Legal Reservations, the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
20.5
Validity, effectiveness and ranking of Security
(a)
Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery create the Security it purports to create over any assets to which such Security, by its terms, relates, and such Security will, when created or intended to be created, be valid and effective.
(b)
No third party has or will have any Security (except for Permitted Security) over any assets that are the subject of any Transaction Security granted by it.
(c)
The Transaction Security granted by it to the Security Agent or any other Secured Party has or will when created or intended to be created have first ranking priority or such priority it is expressed to have in the Finance Documents and is not subject to any prior ranking or pari passu ranking security.
(d)
No concurrence, consent or authorisation of any person is required for the creation of or otherwise in connection with any Transaction Security.
20.6
Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
(a)
any law or regulation applicable to it;
(b)
its constitutional documents; or
(c)
any contractual or other obligation or restriction which is binding on it or any of its assets.
20.7
Power and authority
(a)
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise:
(i)
its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents;
(ii)
in the case of each Borrower, its registration of the Ship owned by it under its Approved Flag.
(b)
No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
20.8
Validity and admissibility in evidence
All Authorisations required or desirable:
(a)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
(b)
to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
have been obtained or effected and are in full force and effect.
20.9
Governing law and enforcement
(a)
Subject to the Legal Reservations, the choice of governing law of each Transaction Document to which it is a party will be recognised and enforced in its Relevant Jurisdictions.
(b)
Subject to the Legal Reservations, any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.
20.10
Insolvency
No:
(a)
corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 28.8 ( Insolvency proceedings ); or
(b)
creditors' process described in Clause 28.9 ( Creditors' process ),
has been taken or, to its knowledge, threatened in relation to an Obligor; and none of the circumstances described in Clause 28.7 ( Insolvency ) applies to an Obligor.
20.11
No filing or stamp taxes
Under the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which it is a party be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance Documents except:
(a)
registration of each Ship in the relevant ship registry of its Approved Flag, which registration and related fees shall be made and paid promptly and in accordance with the terms of the relevant Finance Documents; and
(b)
such UCC filings and other filings or registrations as the legal counsels to the Lenders may consider appropriate or desirable, which shall be arranged by the relevant legal counsel to the Lenders (with the cooperation of the Obligors as required) and any fees in relation thereto shall be paid promptly by the Obligors on demand.
20.12
Deduction of Tax
It is not required to make any Tax Deduction from any payment it may make under any Finance Document to which it is a party.
20.13
No default
(a)
No Event of Default and, on the date of this Agreement and on each Utilisation Date, no Default is continuing or might reasonably be expected to result from the making of any Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.
(b)
No other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject.
20.14
No misleading information
(a)
Any factual information provided by any Obligor for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
(b)
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.
(c)
Nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading in any material respect.
20.15
Financial Statements
(a)
The Parent Guarantor’s Original Financial Statements (on a consolidated basis) were prepared in accordance with IFRS consistently applied.
(b)
The Parent Guarantor’s Original Financial Statements fairly present its financial condition as at the end of the relevant financial year and results of operations during the relevant financial year on a consolidated basis.
(c)
There has been no material adverse change in its assets, business or financial condition (or the assets, business or consolidated financial condition of the Group since 31 December 2015.
(d)
The Parent Guarantor’s most recent financial statements delivered pursuant to Clause 21.2 ( Financial statements ):
(i)
have been prepared in accordance with Clause 21.4 ( Requirements as to financial statements ); and
(ii)
fairly present its financial condition as at the end of the relevant financial year and operations during the relevant financial year on a consolidated basis.
(e)
Since the date of the most recent financial statements delivered pursuant to Clause 21.2 ( Financial statements ) there has been no material adverse change in the business, assets or financial condition of any Obligor.
20.16
Pari passu ranking
Its payment obligations under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
20.17
No proceedings pending or threatened
(a)
No litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against it or any Obligor.
(b)
No judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body which might reasonably be expected to have a Material Adverse Effect has (to the best of its knowledge and belief (having made due and careful enquiry)) been made against it or any Obligor.
20.18
Completeness of the Transaction Documents
(a)
The copies of the Shipbuilding Contracts and any copy of a Long Term Charter delivered to the Facility Agent before the date of this Agreement are true and complete copies and, to the best of the Obligors’ knowledge and belief, each Shipbuilding Contract and any Long Term Charter is in full force and effect.
(b)
No material amendments or additions to the Shipbuilding Contracts or any Long Term Charter have been agreed nor have any material rights under any Shipbuilding Contract or any Long Term Charter been waived.
20.19
No rebates etc.
There is no agreement or understanding to allow or pay any rebate, premium, inducement, commission, discount or other benefit or payment (however described but always excluding any liquidated damages payable to the Borrower in accordance with the relevant Shipbuilding Contract) to any member of the Group from the Builder or any Affiliate of the Builder in connection with any Ship, other than as disclosed to the Facility Agent in writing (at the time of making or repeating this representation).
20.20
Valuations
(a)
All information supplied by it or on its behalf to an Approved Valuer for the purposes of a valuation delivered to the Facility Agent in accordance with this Agreement was true and accurate as at the date it was supplied or (if appropriate) as at the date (if any) at which it is stated to be given.
(b)
It has not omitted to supply any information to an Approved Valuer which, if disclosed, would adversely affect any valuation prepared by such Approved Valuer.
(c)
There has been no change to the factual information provided pursuant to paragraph (a) above in relation to any valuation between the date such information was provided and the date of that valuation which, in either case, renders that information untrue or misleading in any material respect.
20.21
No breach of laws
It has not (and no other member of the Group has) breached any law or regulation which breach has a Material Adverse Effect.
20.22
Compliance with Environmental Laws and Social Laws
All Environmental Laws and Social Laws relating to the ownership, operation and management of each Ship and the business of each Obligor (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.
20.23
No Environmental Claim or Social Claim
(a)
No Environmental Claim or Social Claim has been made or, to the knowledge of the Obligors, threatened against any Borrower or any Ship.
(b)
No Environmental Claim which could reasonably be expected to:
(i)
exceed USD 250,000; or
(ii)
result in a Material Adverse Effect,
has been made against the Parent Guarantor or, to the knowledge of the Parent Guarantor, threatened against the Parent Guarantor.
20.24
No Environmental Incident or Social Incident
No Environmental Incident or Social Incident has occurred in relation to any Borrower or any Ship and, to the knowledge of the Obligors, no person has claimed that an Environmental Incident or Social Incident has occurred in relation to any Borrower or any Ship.
20.25
ISM and ISPS Code compliance
All requirements of the ISM Code and the ISPS Code as they relate to each Borrower, each Approved Ship Manager and each Ship have been complied with.
20.26
Taxes paid
(a)
It is not materially overdue in the filing of any Tax returns and it is not overdue in the payment of any amount in respect of Tax.
(b)
No claims or investigations are being, or are reasonably likely to be, made or conducted against it with respect to Taxes.
20.27
Financial Indebtedness
No Borrower has any Financial Indebtedness outstanding other than Permitted Financial Indebtedness or other liabilities or obligations reasonably incurred in the ordinary course of operating, maintaining and chartering its Ship.
20.28
Overseas companies
No Obligor has delivered particulars, whether in its name stated in the Finance Documents or any other name, of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or, if it has so registered, it has provided to the Facility Agent sufficient details to enable an accurate search against it to be undertaken by the Lenders at the Companies Registry.
20.29
Good title to assets
It has good title to its assets.
20.30
Ownership
(a)
With effect on and from the Delivery Date of a Ship, the relevant Borrower who owns that Ship will be the sole legal and beneficial owner of that Ship, its Earnings and its Insurances.
(b)
With effect on and from the date of its creation or intended creation, each Obligor will be the sole legal and beneficial owner of any asset that is the subject of any Transaction Security created or intended to be created by such Obligor.
(c)
The constitutional documents of each Obligor do not and could not restrict or inhibit any transfer of the shares of the Borrowers on creation or enforcement of the security conferred by the Security Documents.
20.31
Centre of main interests and establishments
For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the "Regulation"), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in Monaco and it has no "establishment" (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction save for the Parent Guarantor’s representative office at 150 East 58 th Street, New York, New York, 10155.
20.32
Place of business
(a)
For purposes of the UCC, the Parent Guarantor has only one place of business located at, or, if it has more than one place of business, the chief executive office from which it manages the main part of its business operations and conducts its affairs is located at 9, Boulevard Charles, III Monaco 98000.
(b)
The Parent Guarantor does not have a place of business in the U.S., the District of Columbia, the U.S. Virgin Islands, or any territory or insular possession subject to the jurisdiction of the U.S, other than its representative office at 150 East 58 th Street, New York, New York, 10155.
20.33
No employee or pension arrangements
No Borrower has any employees or any liabilities under any pension scheme.
20.34
Sanctions
(a)
No Obligor:
(i)
is a Prohibited User;
(ii)
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited User;
(iii)
owns or controls a Prohibited User; or
(iv)
has a Prohibited User serving as a director, officer or, to the best of its knowledge, employee in breach of Sanctions.
(b)
No proceeds of any Advance or the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited User in breach of Sanctions nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
20.35
ECA conditions
The Obligors are not in breach of the provisions of the GIEK Guarantee or the Kexim Guarantee.
20.36
No Charter
No Ship is subject to any Charter other than a Permitted Charter.
20.37
Repetition
The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of each Utilisation Request (and in respect of paragraph (c) of Clause 20.15 ( Financial Statements ) the date 31 December 2015 shall be updated to reflect the year end date of the last audited financial statements), on each Utilisation Date and, in respect of the first day of each Interest Period.
21
INFORMATION UNDERTAKINGS
21.1
General
The undertakings in this Clause 21 ( Information Undertakings ) remain in force throughout the Security Period unless the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders), may otherwise permit.
21.2
Financial statements
The Borrowers shall supply to the Facility Agent in sufficient copies for all the Lenders:
(a)
as soon as they become available, but in any event within 120 days after the end of each financial year of the Parent Guarantor, the audited consolidated financial statements of the Parent Guarantor for that financial year;
(b)
as soon as the same become available, but in any event within 60 days after the end of each quarter (other than the fourth quarter) of each financial year of the Parent Guarantor, the consolidated financial statement of the Parent Guarantor for that financial quarter year; and
(c)
as soon as possible, but in no event later than 90 days after the end of each financial year of the Parent Guarantor, a budget in a format approved by the Facility Agent (including P&L, balance sheet and cash flow forecast) during the next financial year of the Parent Guarantor
21.3
Compliance Certificate
(a)
The Parent Guarantor shall supply to the Facility Agent, with each set of financial statements delivered pursuant to paragraph (a)(ii) or paragraph (b)(ii) of Clause 21.2 ( Financial statements ), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 22 ( Financial Covenants ) and, when applicable, Clause 26.2 ( Minimum required security cover ) as at the date as at which those financial statements were drawn up.
(b)
Each Compliance Certificate shall be signed by an authorised signatory for the Parent Guarantor.
21.4
Requirements as to financial statements
(a)
Each set of financial statements delivered pursuant to Clause 21.2 ( Financial statements ) shall be certified by an officer of the relevant company as fairly presenting its financial condition and operations as at the date as at which those financial statements were drawn up.
(b)
The Obligors shall procure that each set of financial statements delivered pursuant to Clause 21.2 ( Financial statements ) is prepared using IFRS.
(c)
In relation to any set of financial statements, if any Obligor notifies the Facility Agent that there has been a change in IFRS, the accounting practices or reference periods and its auditors, it shall deliver to the Facility Agent:
(i)
a description of any change necessary for those financial statements to reflect IFRS, accounting practices and reference periods upon which that Obligor's Original Financial Statements were prepared; and
(ii)
sufficient information, in form and substance as may be reasonably required by the Facility Agent, to enable the Lenders to determine whether Clause 22 ( Financial Covenants ) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and that Obligor's Original Financial Statements.
21.5
Information: miscellaneous
Each Obligor shall supply to the Facility Agent:
(a)
all documents dispatched by it to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;
(b)
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) which are current, threatened or pending against any Obligor, and which would, if adversely determined, have a Material Adverse Effect, and each Obligor shall take all steps necessary to defend such litigation, arbitration or administrative proceedings in good faith and shall inform the Facility Agent of any such actions unless it cannot be considered material in the context of the Finance Documents;
(c)
promptly upon becoming aware of them, the details of any judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body which is made against any Obligor and which might have a Material Adverse Effect;
(d)
promptly, its constitutional documents where these have been amended or varied (it being understood that no amendment or variation of any constitutional documents which might have a Material Adverse Effect shall be permitted);
(e)
promptly, such further information and/or documents regarding:
(i)
each Ship, goods transported on each Ship, its Earnings and its Insurances;
(ii)
the Security Assets;
(iii)
compliance of the Obligors with the terms of the Finance Documents;
(iv)
the financial condition, assets and operations of any Obligor,
as any Finance Party or ECA (through the Facility Agent) may reasonably request; and
(f)
promptly, such further information and/or documents as any Finance Party (through the Facility Agent) may reasonably request so as to enable such Finance Party to comply with any laws applicable to it or as may be required by any regulatory authority.
21.6
Notification of Default
(a)
Each Obligor shall notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).
(b)
Promptly upon a request by the Facility Agent, each Borrower shall supply to the Facility Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
21.7
Use of websites
(a)
Each Obligor may satisfy its obligation under the Finance Documents to which it is a party to deliver any information in relation to those Lenders (the " Website Lenders ") which accept this method of communication by posting this information onto an electronic website designated by the Borrowers and the Facility Agent (the " Designated Website ") if:
(i)
the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii)
both the relevant Obligor and the Facility Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii)
the information is in a format previously agreed between the relevant Obligor and the Facility Agent.
If any Lender (a " Paper Form Lender ") does not agree to the delivery of information electronically then the Facility Agent shall notify the Obligors accordingly and each Obligor shall supply the information to the Facility Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event each Obligor shall supply the Facility Agent with at least one copy in paper form of any information required to be provided by it.
(b)
The Facility Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Obligors or any of them and the Facility Agent.
(c)
An Obligor shall promptly upon becoming aware of its occurrence notify the Facility Agent if:
(i)
the Designated Website cannot be accessed due to technical failure;
(ii)
the password specifications for the Designated Website change;
(iii)
any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv)
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v)
if that Obligor becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.
If an Obligor notifies the Facility Agent under sub-paragraph (i) or (v) of paragraph (c) above, all information to be provided by the Obligors under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d)
Any Website Lender may request, through the Facility Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Obligors shall comply with any such request within 10 Business Days.
21.8
"Know your customer" checks
(a)
If:
(i)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)
any change in the status of an Obligor (including, without limitation, a change of ownership of an Obligor) after the date of this Agreement; or
(iii)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges a Finance Party (or, in the case of sub-paragraph (iii) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of any Finance Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by a Servicing Party (for itself or on behalf of any other Finance Party) or any Lender (for itself or, in the case of the event described in sub-paragraph (iii) above, on behalf of any prospective new Lender) in order for such Finance Party or, in the case of the event described in sub-paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(b)
Each Lender shall promptly upon the request of a Servicing Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Servicing Party (for itself) in order for that Servicing Party 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.
22
FINANCIAL COVENANTS
22.1
General
The undertakings in this Clause 22 ( Financial Covenants ) remain in force throughout the Security Period except as the Facility Agent, acting with the authorisation of the ECAs and minimum one Commercial Lender, may otherwise permit.
22.2
Minimum Liquidity
The Parent Guarantor shall at all times maintain Cash and Cash Equivalents equal to or greater than (i) USD 25,000,000 and (ii) USD 500,000 per Fleet Vessel plus USD 250,000 per time chartered-in vessel (the " Minimum Liquidity ").
For the purpose of this test, Cash and Cash Equivalents can include unutilised and freely available parts of revolving credit facilities made available to the Parent Guarantor or any other member of the Group (where no default or termination event has occurred and is continuing and there is no restriction on borrowing under such facilities) with a maturity date in excess of 12 months after the date of the most recently delivered financial statements provided that 50 per cent. of the Minimum Liquidity shall at all times consist of Cash.
22.3
Minimum Tangible Net Worth
The Parent Guarantor shall at all times maintain a Consolidated Tangible Net Worth of not less than USD 1,000,000,000 plus:
(a)
25 per cent. of the Parent Guarantor’s cumulative, positive Consolidated Net Income for each fiscal quarter commencing on or after January 1, 2016; and
(b)
50 per cent. of the value of the equity proceeds realized from any issuance of equity interests in the Parent Guarantor occurring on or after January 1, 2016.
22.4
Maximum Leverage
The Parent Guarantor shall maintain a ratio of Net Debt to Consolidated Total Capitalization of not more than 0.60 to 1.00, to be tested on the last day of each Accounting Period.
22.5
Minimum Interest Coverage
The Parent Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense greater than 2.50: 1.00, to be calculated on the last day of each Accounting Period on a trailing four quarter basis.
23
GENERAL UNDERTAKINGS
23.1
General
The undertakings in this Clause 23 ( General Undertakings ) remain in force throughout the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, in relation to Clauses 23.13 ( Merger ) and 23.14 ( Change of business ), the Majority Lenders and the ECAs or, where specified, all the Lenders) may otherwise permit.
23.2
Authorisations
Each Obligor shall promptly:
(a)
obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)
supply certified copies to the Facility Agent of,
any Authorisation required under any law or regulation of a Relevant Jurisdiction or the state of the Approved Flag at any time of each Ship to enable it to:
(i)
perform its obligations under the Transaction Documents to which it is a party;
(ii)
ensure the legality, validity, enforceability or admissibility in evidence in any Relevant Jurisdiction or in the state of the Approved Flag at any time of each Ship, of any Transaction Document to which it is a party; and
(iii)
own and operate each Ship (in the case of the Borrowers).
23.3
Compliance with laws
Each Obligor shall comply in all respects with all laws and regulations to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
23.4
Anti-bribery, anti-corruption and anti-money laundering
(a)
Each Obligor confirms:
(i)
that it is acting for its own account in relation to the Facilities and in relation to the performance and discharge of its obligations and liabilities under the Finance Documents or any Hedging Agreement, and the transactions and other arrangements affected or contemplated by the Finance Documents or any Hedging Agreement to which it is a party;
(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).
(b)
Each Obligor shall conduct its businesses in compliance with all applicable anti-corruption laws or applicable laws on Corrupt Practices and maintain policies and procedures designed to promote and achieve compliance with such laws.
(c)
No Obligor shall, and shall ensure that none of its Affiliates or respective officers, directors or employees will offer, give, insist on, receive or solicit any illegal payment or improper advantage to influence the action of any person in connection with the this Agreement in breach of applicable anti-corruption laws.
(d)
Each Obligor confirms that it is aware of Sections 387–389, cf. Section 15 of the Norwegian Penal Code of 2005 (No. straffeloven ) (the “ Penal Code ”) pursuant to which corruption and participation in corruption may be charged with penalties of fines or up to three years of imprisonment or up to 10 years of imprisonment in severe cases and that the Penal Code criminalises corruption in the public as well as the private sector.
23.5
Environmental and social compliance
Each Obligor shall:
(a)
comply with all Environmental Laws and Social Laws;
(b)
obtain, maintain and ensure compliance with all requisite Environmental and Social Approvals;
(c)
implement procedures to monitor compliance with and to prevent liability under any Environmental Law or Social Law,
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
23.6
Environmental Claims and Social Claims
Each Obligor shall (through the Parent Guarantor) promptly upon becoming aware of the same, inform the Facility Agent in writing of:
(a)
any Environmental Claim and Social Claim against any Obligor which is current, pending or threatened; and
(b)
any facts or circumstances which are reasonably likely to result in any Environmental Claim and Social Claim being commenced or threatened against any Obligor,
where the claim, if determined against that Obligor, has or is reasonably likely to have a Material Adverse Effect.
The Parties agree that the provisions of this Clause 23.6 are material obligations for the purposes of paragraph (b) of the definition of Material Adverse Effect.
23.7
Taxation
(a)
Each Obligor shall pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
(i)
such payment is being contested in good faith;
(ii)
adequate reserves are maintained for those Taxes and the costs required to contest them and both have been disclosed in its latest financial statements delivered to the Facility Agent under Clause 21.2 ( Financial statements ); and
(iii)
such payment can be lawfully withheld.
(b)
No Obligor shall change its residence for Tax purposes.
23.8
Overseas companies
Each Obligor shall promptly inform the Facility Agent if it delivers to the Registrar particulars required under the Overseas Regulations of any UK Establishment and it shall comply with any directions given to it by the Facility Agent regarding the recording of any Transaction Security on the register which it is required to maintain under The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009.
23.9
Pari passu ranking
Each Obligor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
23.10
Title
(a)
With effect from the Delivery Date in respect of each Ship, the relevant Borrower who owns that Ship shall hold the legal title to, and own the entire beneficial interest in that Ship, its Earnings and its Insurances;
(b)
With effect on and from its creation or intended creation, each Obligor shall hold the legal title to, and own the entire beneficial interest in any other assets the subject of any Transaction Security created or intended to be created by such Obligor.
23.11
Negative pledge
(a)
No Borrower shall create or permit to subsist any Security over any of its assets.
(b)
The Parent Guarantor shall not create or permit to subsist any Security over any of its assets which are the subject of the Security created or intended to be created by the Finance Documents.
(c)
No Borrower shall:
(i)
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an;
(ii)
sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(iii)
enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(iv)
enter into any other preferential arrangement having a similar effect,
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
(d)
Paragraphs (a) to (c) above do not apply to any Permitted Security.
23.12
Disposals
(a)
No Borrower shall enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset (including without limitation any Ship, its Earnings or its Insurances).
(b)
Paragraph (a) above does not apply to:
(i)
any Charter as all Charters are subject to Clause 25.15 ( Restrictions on chartering ); or
(ii)
any sale of a Ship on arm’s length if the Borrowers can demonstrate prior to such sale to the Facility Agent's satisfaction that the net proceeds of such sale shall be sufficient to enable the relevant Borrower to comply with its mandatory prepayment obligation under Clause 7.7 ( Mandatory prepayment on sale or Total Loss ) and, upon such sale, the net proceeds of such sale are sufficient to enable the relevant Borrower to comply with its mandatory prepayment obligation under Clause 7.7 ( Mandatory prepayment on sale or Total Loss ); or
(iii)
any demurrage claim as the Borrower shall always be able to deal with prior to an Event of Default which is continuing.
23.13
Merger
No Obligor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction, and no Borrower shall have, form or acquire any Subsidiary.
23.14
Change of business
(a)
The Parent Guarantor shall procure that no change is made to the nature of the business of the Parent Guarantor from that carried on at the date of this Agreement.
(b)
The Parent Guarantor shall not commence any business other than in connection with or for the purpose of managing, chartering and operating the Ships and any other ships and directly or indirectly owning the equity interests in each Borrower and any other Subsidiaries.
(c)
No Borrower shall engage in any business other than the ownership, management, chartering and operation of its Ship.
23.15
Financial Indebtedness
(a)
No Borrower shall incur or permit to be outstanding any Financial Indebtedness (including any intra-group Financial Indebtedness) except Permitted Financial Indebtedness or other liabilities or obligations reasonably incurred in the ordinary course of operating, maintaining and chartering its Ship.
(b)
Intra-Group Loans shall only be permitted to the extent each Intra-Group Loan shall:
(i)
not require payment of interest during the Security Period;
(ii)
mature at least one year after the expiry of the Security Period;
(iii)
be unsecured;
(iv)
be subject to an assignment under the Shares Security and Assignment of Intra-Group Loan Receivables and subordinated, in terms of payment and priority, to the rights of the Finance Parties under the Finance Documents on terms acceptable to the Facility Agent,
and each Obligor shall provide promptly to the Facility Agent a true and complete copy of any instrument evidencing any such Intra-Group Loan and a true and complete copy of each material amendment or other modification thereof.
(c)
The Parent Guarantor shall not incur or permit to be outstanding any Financial Indebtedness after the date of this Agreement unless:
(i)
it is in compliance with the provisions of Clause 22 ( Financial Covenants ); and
(ii)
no Event of Default has occurred and is continuing or would result as a result thereof.
23.16
Expenditure
No Borrower shall incur any expenditure, except for expenditure reasonably incurred in the ordinary course of contracting for the construction, owning, operating, maintaining and repairing its Ship.
23.17
Share capital
No Borrower shall:
(a)
purchase, cancel or redeem any of its share capital;
(b)
increase or reduce its authorised share capital;
(c)
issue any further shares except to the Parent Guarantor and provided such new shares are made subject to the terms of the Shares Security applicable to that Borrower immediately upon the issue of such new shares in a manner satisfactory to the Facility Agent and the terms of that Shares Security are complied with;
(d)
appoint any further director or officer of that Borrower (unless the provisions of the Shares Security applicable to that Borrower are complied with).
23.18
Dividends
(a)
No Borrower shall make or pay any dividend or other distribution (in cash or in kind) in respect of its share capital where there is an Event of Default which is continuing or where the making or payment of such dividend or distribution would result in the occurrence of an Event of Default.
(b)
The Parent Guarantor shall not make or pay any dividend or other distribution (in cash or in kind) in respect of its share capital where there is an Event of Default which is continuing or where the making or payment of such dividend or distribution would result in the occurrence of an Event of Default.
23.19
Other transactions
(a)
No Borrower shall:
(i)
be the creditor in respect of any loan or any form of credit to any person other than another Obligor and where such loan or form of credit is Permitted Financial Indebtedness;
(ii)
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which that Borrower assumes any liability of any other person other than any guarantee or indemnity given under the Finance Documents or other obligations reasonably incurred in the ordinary course of operating, maintaining and chartering its Ship.
(iii)
enter into any material agreement other than:
(A)
the Transaction Documents;
(B)
any other agreement expressly allowed under any other term of this Agreement; and
(iv)
enter into any transaction on terms which are, in any respect, less favourable to that Borrower than those which it could obtain in a bargain made at arms' length; or
(v)
acquire any shares or other securities.
(b)
The Parent Guarantor shall not enter into any material transactions on terms which are less favourable to it than those which it could obtain in a bargain made at arms' length.
23.20
Unlawfulness, invalidity and ranking; Security imperilled
No Obligor shall (and the Parent Guarantor shall ensure that no other member of the Group will) do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
(a)
make it unlawful for an Obligor to perform any of its obligations under the Transaction Documents;
(b)
cause any obligation of an Obligor under the Transaction Documents to cease to be legal, valid, binding or enforceable;
(c)
cause any Transaction Document to cease to be in full force and effect;
(d)
cause any Transaction Security to rank after, or lose its priority to, any other Security; and
(e)
imperil or jeopardise the Transaction Security.
23.21
No immunity
No Obligor nor any of its respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceedings (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
23.22
Compliance with ECA Support
(a)
No Obligor shall act (or omit to act) in a manner that is inconsistent with or which could result in a breach of any requirement of any ECA under or in connection with any ECA Support and, in particular:
(i)
each Obligor shall do all that is reasonably necessary and within its control to ensure that all requirements of any ECA under or in connection with its ECA Support are complied with;
(ii)
each Obligor will cooperate with the Facility Agent and the ECA Agent to take all steps necessary on the part of the Obligors (or any of them) to ensure that all ECA Support remains in full force and effect throughout the Security Period; and
(iii)
each Obligor will use reasonable efforts to assist the ECA Agent in making any claim under any ECA Support.
(b)
Each Obligor shall promptly:
(i)
notify the Facility Agent and the ECA Agent promptly after it becomes aware of the occurrence of any Default or Event of Default;
(ii)
provide copies of all financial or other information reasonably required by the Facility Agent and/or the ECA Agent to satisfy any request for information by any ECA pursuant to its ECA Support. Each Obligor agrees that it shall be reasonable for the Facility Agent and/or the ECA Agent to make a request under this Clause 23.22 ( Compliance with ECA Support ) if it is required to do so as a condition of maintaining the ECA Support in full force and effect.
(c)
The Parent Guarantor shall:
(i)
15 Business Days prior to each Utilisation Date (other than the first Utilisation Date) issue a certificate (in the form set out in Schedule 13 ( Working Conditions Side Letter CP Certificate ) declaring that the Working Conditions Side Letter remains in full force and effect and that the Parent Guarantor is in compliance with its terms; and
(ii)
no later than 30 Business Days after the final Utilisation Date under this Agreement provide a copy of the completion report required to be provided pursuant to the Working Conditions Side Letter to GIEK.
23.23
Further assurance
(a)
Each Obligor shall promptly, and in any event within the time period specified by the Security Agent do all such acts (including procuring or arranging any registration, notarisation or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgments, proxies and powers of attorney), as the Security Agent may specify (and in such form as the Security Agent may require in favour of the Security Agent or its nominee(s)):
(i)
to create, perfect, vest in favour of the Security Agent or protect the priority of the Security or any right of any kind created or intended to be created under or evidenced by the Finance Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of any of the Secured Parties provided by or pursuant to the Finance Documents or by law;
(ii)
to confer on the Security Agent or confer on the Secured Parties Security over any property and assets of that Obligor located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Finance Documents;
(iii)
to facilitate or expedite the realisation and/or sale of, the transfer of title to or the grant of, any interest in or right relating to the assets which are, or are intended to be, the subject of the Transaction Security or to exercise any power specified in any Finance Document in respect of which the Security has become enforceable; and/or
(iv)
to enable or assist the Security Agent to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to any item of the Security Property.
(b)
Each Obligor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Secured Parties by or pursuant to the Finance Documents.
At the same time as an Obligor delivers to the Security Agent any document executed by itself pursuant to this Clause 23.23 ( Further assurance ), that Obligor shall deliver to the Security Agent reasonable evidence that that Obligor’s execution of such document has been duly authorised by it.
24
INSURANCE UNDERTAKINGS
24.1
General
The undertakings in this Clause 24 ( Insurance Undertakings ) remain in force from the date of this Agreement throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
24.2
Maintenance of obligatory insurances
Each Borrower shall, and the Parent Guarantor shall ensure that each Borrower will, keep the Ship owned by it insured at its expense against:
(a)
fire and usual marine risks (including hull and machinery and excess risks);
(b)
hull interest and/or freight interest;
(c)
freight, demurrage & defence risks;
(d)
war risks (including acts of terrorism and piracy and the amended version of AHIS Addendum (April 1 1984) and similar arrangements);
(e)
protection and indemnity risks (including liability for oil pollution and excess war risk protection and indemnity cover); and
(f)
any other risks against which the Facility Agent acting on the instructions of the Majority Lenders and the ECAs considers, having regard to practices and other circumstances prevailing at the relevant time, it would be reasonable for that Borrower to insure and which are specified by the Facility Agent by notice to that Borrower.
24.3
Terms of obligatory insurances
Each Borrower shall effect such insurances on and from the Delivery Date of the Ship owned by it:
(a)
in dollars;
(b)
in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of:
(i)
120 per cent. of the Ship Loan relating to the Ship owned by it; and
(ii)
the Market Value of that Ship;
(c)
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market, as of the date of this Agreement not to be less than USD 1,000,000,000;
(d)
in the case of protection and indemnity risks, in respect of the full tonnage of its Ship;
(e)
on approved terms; and
(f)
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.
24.4
Further protections for the Finance Parties
In addition to the terms set out in Clause 24.3 ( Terms of obligatory insurances ), each Borrower shall procure that the obligatory insurances effected by it shall:
(a)
subject always to paragraph (b), name that Borrower as the sole named insured unless the interest of every other named insured is limited:
(i)
in respect of any obligatory insurances for hull and machinery and war risks;
(A)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
(ii)
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;
and every other named insured has undertaken in writing to the Security Agent (in such form as it requires) that on or after an Event of Default which is continuing any deductible shall be apportioned between that Borrower and every other named insured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
(b)
whenever the Facility Agent requires, name (or be amended to name) the Security Agent as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Agent, but without the Security Agent being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
(c)
name the Security Agent as loss payee with such directions for payment as the Facility Agent may specify;
(d)
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever;
(e)
provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Agent or any other Finance Party; and
(f)
provide that the Security Agent may make proof of loss if that Borrower fails to do so.
24.5
Renewal of obligatory insurances
Each Borrower shall:
(a)
at least seven days before the expiry of any obligatory insurance effected by it:
(i)
notify the Facility Agent of the approved brokers (or other insurers) and any protection and indemnity or war risks association through or with which it proposes to renew that obligatory insurance and of the proposed terms of renewal; and
(ii)
obtain the Facility Agents' approval to the matters referred to in sub-paragraph (i) above;
(b)
at least five days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Facility Agent's approval pursuant to paragraph (a) above; and
(c)
procure that the approved brokers and/or the approved war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Facility Agent in writing of the terms and conditions of the renewal.
24.6
Copies of policies; letters of undertaking
Each Borrower shall ensure that the approved brokers provide the Security Agent with:
(a)
pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew; and
(b)
a letter or letters or undertaking in a form required by the Facility Agent and including undertakings by the approved brokers that:
(i)
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 24.4 ( Further protections for the Finance Parties );
(ii)
they will hold such policies, and the benefit of such insurances, to the order of the Security Agent in accordance with such loss payable clause;
(iii)
they will advise the Security Agent immediately of any material change to the terms of the obligatory insurances;
(iv)
they will, if they have not received notice of renewal instructions from the relevant Borrower or its agents, notify the Security Agent not less than five days before the expiry of the obligatory insurances;
(v)
if they receive instructions to renew the obligatory insurances, they will promptly notify the Facility Agent of the terms of the instructions;
(vi)
they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that 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
(vii)
they will arrange for a separate policy to be issued in respect of the Ship owned by that Borrower forthwith upon being so requested by the Facility Agent.
24.7
Copies of certificates of entry
Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provide the Security Agent with:
(a)
a certified copy of the certificate of entry for that Ship;
(b)
a letter or letters of undertaking in such form as may be required by the Facility Agent acting on the instructions of Majority Lenders; 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 that Ship.
24.8
Deposit of original policies
Each Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.
24.9
Payment of premiums
Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Facility Agent or the Security Agent.
24.10
Guarantees
Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
24.11
Compliance with terms of insurances
(a)
No Borrower shall do or 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.
(b)
Without limiting paragraph (a) above, each Borrower shall:
(i)
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 sub-paragraph (iii) of paragraph (b) of Clause 24.6 ( Copies of policies; letters of undertaking )) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Facility Agent has not given its prior approval;
(ii)
not make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;
(iii)
make all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) and, if so requested by the Facility Agent acting reasonably, provide copies of such declarations to the Facility Agent on an annual basis; and
(iv)
not employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
24.12
Alteration to terms of insurances
No Borrower shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance unless such alterations are minor and made in the ordinary course of business.
24.13
Settlement of claims
Each Borrower shall:
(a)
not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty without consent of the Facility Agent (acting on the authorisation of the Majority Lenders, which authorisation shall not be unreasonably withheld); and
(b)
do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.
24.14
Provision of copies of communications
Each Borrower shall provide the Security Agent, at the time of each such material communication, with copies of all material written communications between that Borrower and:
(a)
the approved brokers;
(b)
the approved protection and indemnity and/or war risks associations; and
(c)
the approved insurance companies and/or underwriters,
which relate directly or indirectly to:
(i)
that Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)
any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.
24.15
Provision of information
Each Borrower shall promptly provide the Facility Agent (or any persons which it may designate) with any information which the Facility Agent (or any such designated person) requests for the purpose of:
(a)
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 24.16 ( Mortgagee's interest, additional perils and interest insurances ) or dealing with or considering any matters relating to any such insurances,
and the Borrowers shall, forthwith upon demand, indemnify the Security Agent in respect of all fees and other expenses incurred by or for the account of the Security Agent in connection with any such report as is referred to in paragraph (a) above.
24.16
Mortgagee's interest, additional perils and interest insurances
(a)
The Security Agent shall effect, maintain and renew a mortgagee's interest marine insurance, a mortgagee's interest additional perils insurance and a mortgagee's interest insurance in such amounts (for a value of no less than 120 per cent. of the Loan), on such terms, through such insurers and generally in such manner as the Security Agent acting on the instructions of the Majority Lenders may from time to time consider appropriate.
(b)
The Obligors shall upon demand fully indemnify the Security Agent in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any insurance referred to in paragraph (a) above or dealing with, or considering, any matter arising out of any such insurance.
25
GENERAL SHIP UNDERTAKINGS
25.1
General
The undertakings in this Clause 25 ( General Ship Undertakings ) remain in force on and from the date of this Agreement and throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, in relation to Clauses 25.3 ( Repair and classification ), 25.11 ( Sanctions and Ship trading ), 25.15 ( Restrictions on chartering etc. ) and 25.16 ( Change of Approved Ship Manager and appointment of Approved Sub-Manager ), the Majority Lenders and the ECAs (in relation to a consent under paragraph (a)(i) of Clause 25.16 ( Change of Approved Ship Manager and appointment of Approved Sub-Manager ), not to be unreasonably withheld) or, where specified, all the Lenders) may otherwise permit.
25.2
Ships' names and registration
Each Borrower shall, in respect of the Ship owned by it:
(a)
keep that Ship registered in its name under an Approved Flag from time to time at its port of registration;
(b)
not do or allow to be done anything as a result of which such registration might be suspended, cancelled or imperilled; and
(c)
not change the name of that Ship,
provided that any change of name, flag or port of registration of a Ship shall be subject to:
(i)
the prior written consent of the Majority Lenders and the ECAs (not to be unreasonably withheld or delayed in relation to a flag that is an Approved Flag);
(ii)
that Ship remaining subject to Security securing the Secured Liabilities created by a first priority or preferred ship mortgage on that Ship and, if appropriate, a first priority deed of covenant collateral to that mortgage (or equivalent first priority Security) on substantially the same terms as the Mortgage on that Ship and on such other terms and in such other form as the Facility Agent, acting with the authorisation of the Lenders, shall approve or require; and
(iii)
the execution of such other documentation amending and supplementing the Finance Documents as the Facility Agent, acting with the authorisation of the Lenders, shall approve or require.
25.3
Repair and classification
(a)
Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:
(i)
consistent with first class ship ownership and management practice; and
(ii)
so as to maintain the Approved Classification free of overdue recommendations and conditions.
(b)
Each Borrower shall, in relation to the Ship owned by it, instruct the Approved Classification Society (and in the case of dual classification, only the primary classification society):
(i)
to send to the Facility Agent, following receipt of a written at the request of the Facility Agent (acting on the instructions of any Lender or ECA), certified true copies of all original class records held by the Approved Classification Society in relation to that Ship; and
(ii)
to allow the Facility Agent (or its agents), at any time and from time to time, to inspect the original class and related records of that Borrower and that Ship at the offices of the Approved Classification Society and to take copies of them and share those copies with the Lenders and the ECAs.
25.4
Modifications
No Borrower shall make any modification or repairs to, or replacement of, any Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.
25.5
Removal and installation of parts
(a)
Subject to paragraph (b) below, no Borrower shall remove any material part of any Ship, or any item of equipment installed on any Ship unless:
(i)
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;
(ii)
the replacement part or item is free from any Security in favour of any person other than the Security Agent; and
(iii)
the replacement part or item becomes, on installation on that Ship, the property of that Borrower and subject to the security constituted by the Mortgage on that Ship.
(b)
A Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by that Borrower.
25.6
Surveys
Each Borrower shall submit the Ship owned by it regularly to all periodic or other surveys which may be required for classification purposes and, if so required by the Facility Agent, provide the Facility Agent, with copies of all survey reports.
25.7
Inspection
(a)
Each Borrower shall permit (and shall procure that any Approved Ship Manager and any charterer or operator of the Ship owned by it shall permit) the Security Agent (acting through surveyors or other persons appointed by it for that purpose) to board the Ship owned by it once a year at the expense of that Borrower on an annual basis (which inspection shall not disrupt the normal running, management or operations and trading pattern of that Ship) to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.
(b)
If a Default has occurred, the inspections referred to in paragraph (a) above may be conducted at any time and on any number of occasions and at the expense of that Borrower.
25.8
Prevention of and release from arrest
Each Borrower shall, in respect of the Ship owned by it, promptly discharge:
(a)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against that Ship, its Earnings or its Insurances;
(b)
all Taxes, dues and other amounts charged in respect of that Ship, its Earnings or its Insurances; and
(c)
all other outgoings whatsoever in respect of that Ship, its Earnings or its Insurances.
25.9
Compliance with laws etc.
Each Borrower shall, and each Borrower shall procure that each Approved Ship Manager shall:
(a)
comply, or procure compliance with all laws or regulations:
(i)
relating to its business generally; and
(ii)
relating to the Ship owned by it, its ownership, employment, operation, management and registration,
including, but not limited to:
(A)
the ISM Code, the ISPS Code, all Environmental Laws, all Social Laws and the laws of the Approved Flag if failure to so comply has or is likely to have a Material Adverse Effect; and
(B)
all Applicable Sanctions;
(b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental and Social Approvals; and
(c)
without limiting paragraph (a) above, not employ the Ship owned by it nor allow its employment, operation or management in any manner contrary to:
(i)
any law or regulation including but not limited to the ISM Code, the ISPS Code and all Environmental Laws and Social Laws, which has or is likely to have a Material Adverse Effect; or
(ii)
Sanctions.
25.10
ISPS Code
Without limiting paragraph (a) of Clause 25.9 ( Compliance with laws etc. ), each Borrower shall:
(a)
procure that the Ship owned by it and the company responsible for that Ship's compliance with the ISPS Code comply with the ISPS Code; and
(b)
maintain an ISSC for that Ship; and
(c)
notify the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
25.11
Sanctions and Ship trading
Without limiting Clause 25.9 ( Compliance with laws etc. ), each Borrower shall procure:
(a)
that the Ship owned by it shall not be used by or for the benefit of a Prohibited User in breach of Sanctions;
(b)
that such Ship shall not be used in trading in any manner contrary to Sanctions;
(c)
that such Ship shall not be traded in any manner which would trigger the operation of any sanctions limitation in the Insurances; and
(d)
that each charterparty in respect of that Ship shall contain, for the benefit of that Borrower, language which broadly gives effect to the provisions of paragraph (c) of Clause 25.9 ( Compliance with laws etc. ) as regards Sanctions.
25.12
Trading in war zones
In the event of hostilities in any part of the world (whether war is declared or not), no Borrower shall cause or permit any Ship to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless:
(a)
the prior written consent of the Security Agent acting on the instructions of the Majority Lenders (not to be unreasonably withheld or delayed) has been given; and
(b)
that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Agent acting on the instructions of the Majority Lenders may require.
25.13
Provision of information
Without prejudice to Clause 21.5 ( Information: miscellaneous ) each Borrower shall, in respect of the Ship owned by it, promptly provide the Facility Agent with any information which it requests regarding:
(a)
that Ship, its employment, position and engagements;
(b)
the Earnings and payments and amounts due to its master and crew;
(c)
any expenditure incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made by it in respect of that Ship;
(d)
any towages and salvages; and
(e)
its compliance, the Approved Ship Manager's compliance and the compliance of that Ship with the ISM Code and the ISPS Code,
and, upon the Facility Agent's request, promptly provide copies of any current Charter relating to that Ship, of any current guarantee of any such Charter, the Ship's Safety Management Certificate and any relevant Document of Compliance.
25.14
Notification of certain events
Each Borrower (and, in relation to paragraph (e) below, the Parent Guarantor) shall, in respect of the Ship owned by it, promptly notify the Facility Agent in writing of:
(a)
any casualty to that Ship which is or is likely to be or to become a Major Casualty;
(b)
any occurrence as a result of which that Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)
any requisition of that Ship for hire;
(d)
any requirement or recommendation made in relation to that Ship by any insurer or classification society or by any competent authority which is not immediately complied with;
(e)
any arrest or detention of that Ship or any exercise or purported exercise of any lien on that Ship or the Earnings, such notification to be provided no later than 10 days after such event;
(f)
any intended dry docking of that Ship;
(g)
any Environmental Claim and any Social Claim made against that Borrower or in connection with that Ship, or any Environmental Incident and any Social Incident made against that Borrower or in connection with that Ship which would in any of the foregoing cases be likely to result in a Material Adverse Effect (it being agreed by the Parties that this paragraph (g) is a material obligation for the purposes of paragraph (b) of the definition of Material Adverse Effect);
(h)
any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, an Approved Ship Manager or otherwise in connection with that Ship; or
(i)
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 each Borrower shall keep the Facility Agent advised in writing on a regular basis and in such detail as the Facility Agent shall require as to that Borrower's, any such Approved Ship Manager's or any other person's response to any of those events or matters.
25.15
Restrictions on chartering etc.
(a)
No Borrower shall, in relation to the Ship owned by it:
(i)
let that Ship on demise charter for any period (or permit any sub-demise charter of that Ship) except with the prior written consent of all the Lenders and the ECAs and subject to the relevant Borrower granting an assignment of its rights and interests in such demise charter and obtaining an assignment of the rights and interests of such demise charterer to the Insurances;
(ii)
enter into any time, voyage or consecutive voyage charter in respect of that Ship other than a Permitted Charter;
(iii)
de activate or lay up that Ship; or
(iv)
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed USD 1,500,000 (or the equivalent in any other currency) unless that person has first given to the Security Agent and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason .
(b)
Each Borrower shall, in relation to any Long Term Charter entered into for the Ship owned by it:
(i)
furnish promptly to the Facility Agent a true and complete copy of that Long Term Charter and any guarantee of that Long Term Charter and a true and complete copy of each material amendment or other modification thereof; and
(ii)
procure that its rights under that Long Term Charter and any guarantee of that Long Term Charter are assigned under the General Assignment and use commercially reasonable efforts to obtain an acknowledgement executed by the charterer and any charter guarantor and shall deliver any such other documentation in relation thereto as the Security Agent may require.
25.16
Change of Approved Ship Manager and appointment of Approved Sub-Manager
(a)
No Borrower shall, in relation to the Ship owned by it:
(i)
terminate a Management Agreement without the prior written consent of the Facility Agent (acting on the authorisation of the Majority Lenders, such authorisation not to be unreasonably withheld);
(ii)
appoint a manager of that Ship other than an Approved Ship Manager other than in accordance with this Clause 25.16 ( Change of Approved Ship Manager and appointment of Approved Sub-Manager ).
(b)
If, in accordance with the terms of this Agreement, there is a change of Approved Ship Manager, the Obligors shall procure that:
(i)
the relevant Borrower who owns the Ship shall promptly provide the Facility Agent with a copy of the Management Agreement pursuant to which such Approved Ship Manager is to be appointed; and
(ii)
the new Approved Ship Manager shall provide to the Facility Agent on or prior to the commencement of its appointment, an Approved Ship Manager's Undertaking.
(c)
Each Borrower shall procure that, in relation to the Ship owned by it, an Approved Ship Manager may only appoint an Approved Sub-Manager in relation to the commercial or technical, as relevant, management of the Ship so long as that Approved Ship Manager continues to remain primarily liable to perform the management responsibilities in relation to that Ship and, if so appointed as Approved Sub-Manager of that Ship, such Approved Sub-Manager shall be appointed on substantially the same terms as that Approved Ship Manager (including provision of an Approved Ship Manager’s Undertaking) and the relevant Obligor shall not, and shall procure that that Approved Ship Manager shall not, agree to any material alteration to the terms of the Approved Sub-Manager’s appointment.
(d)
If:
(i)
an Approved Ship Manager or an Approved Sub-Manager breaches any provision of its Approved Ship Manager's Undertaking which the Facility Agent considers material; and
(ii)
the relevant Borrower that owns the relevant Ship fails within a period of 15 days of it becoming aware of the occurrence of such circumstance or breach or of the receipt of a written notification from the Facility Agent requesting it to remedy such circumstance or breach,
that Borrower shall promptly substitute the relevant Approved Ship Manager or Approved Sub-Manager with another Approved Ship Manager or an Approved Sub-Manager which executes and delivers to the Facility Agent a replacement Approved Ship Manager's Undertaking.
25.17
Notice of Mortgage
Each Borrower shall keep the relevant Mortgage registered against the Ship owned by it as a valid first preferred mortgage, carry on board that Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the master's cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the Security Agent.
25.18
Sharing of Earnings
No Borrower shall enter into any agreement or arrangement for the sharing of any Earnings other than for the purposes of this Agreement and provided always that each Ship may be entered into any Approved Pooling Arrangement.
25.19
Green Passport
Each Borrower shall obtain a Green Passport or equivalent document acceptable to the Facility Agent within 30 days from the Delivery Date in respect of the Ship owned by it and such procure that such Green Passport (or equivalent document) shall remain valid throughout the rest of the Security Period.
25.20
Scrapping policy
The Parent Guarantor shall maintain a policy that any scrapping of a Ship which is to be carried out during a period under which that Ship is owned and controlled by a Borrower shall be conducted in compliance with the IMO convention for the Safe and Environmentally Sound Recycling of Ship and with any future guideline issued by the IMO in connection with such Convention (if the same have come into force).
25.21
Notification of compliance
Each Borrower shall promptly provide the Facility Agent from time to time with evidence (in such form as the Facility Agent requires) that it is complying with this Clause 25 ( General Ship Undertakings ).
26
SECURITY COVER
26.1
Provision of valuations
(a)
Each Borrower shall obtain two valuations to be provided on or about 31 December and two valuations to be provided on or about 30 June of each financial year (and in each case, each valuation to be dated within 4 weeks from either 31 December or 30 June, as the case may be) of the Ship owned by it and any other vessel over which additional Security has been created in accordance with Clause 26.4 (Value of additional vessel security ), from Approved Valuers, to enable the Facility Agent to determine the Market Value of that Ship or vessel, on or about 31 December and 30 June of each financial year (with such valuations being provided together with a Compliance Certificate under Clause 21.3 ( Compliance Certificate )) and, upon the occurrence of an Event of Default which is continuing, at such other times as the Facility Agent may request.
(b)
In addition, the Lenders (acting reasonably) shall be entitled to instruct the Facility Agent to arrange for valuations of a Ship and any other vessel over which additional Security has been created in accordance with Clause 26.4 (Value of additional vessel security ), to be carried out at any time to determine the Market Value of that Ship or vessel, which valuations shall be obtained at the cost of the Lenders unless the valuations evidence a breach of the threshold required under Clause 26.2 ( Minimum required security cover ) in which case the valuations shall be at the cost of the Obligors.
26.2
Minimum required security cover
Clause 26.3 ( Provision of additional security; prepayment ) applies if, on or after the first Delivery Date under this Agreement, the Facility Agent notifies the Borrowers that:
(i)
the aggregate Market Value of each Ship then subject to a Mortgage; plus
(ii)
the net realisable value of additional Security previously provided under this Clause  26 ( Security Cover ),
is below 135 per cent. of the outstanding Loan.
26.3
Provision of additional security; prepayment
(a)
If the Facility Agent serves a notice on the Borrowers under Clause 26.2 ( Minimum required security cover ), the Borrowers shall, on or before the date falling 20 days after the date (the " Prepayment Date ") on which the Facility Agent's notice is served, prepay such part of the Loan as shall eliminate the shortfall.
(b)
A Borrower may, instead of making a prepayment as described in paragraph (a) above, provide, or ensure that a third party has provided, additional security which, in the opinion of the Facility Agent acting on the instructions of the Majority Lenders and the ECAs:
(i)
has a net realisable value at least equal to the shortfall; and
(ii)
is documented in such terms as the Facility Agent may approve or require,
before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.
26.4
Value of additional vessel security
The net realisable value of any additional security which is provided under Clause 26.3 ( Provision of additional security; prepayment ) and which consists of Security over a vessel shall be the Market Value of the vessel concerned.
26.5
Valuations binding
Any valuation under this Clause 26 ( Security Cover ) shall be binding and conclusive as regards each Borrower.
26.6
Provision of information
(a)
Each Borrower shall promptly provide the Facility Agent and any Approved Valuer acting under this Clause 26 ( Security Cover ) with any information which the Facility Agent or that Approved Valuer may request for the purposes of the valuation.
(b)
If a Borrower fails to provide the information referred to in paragraph (a) above by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Valuer or the Facility Agent considers prudent.
26.7
Prepayment mechanism
Any prepayment pursuant to Clause 26.3 ( Provision of additional security; prepayment ) shall be made in accordance with the relevant provisions of Clause 7 ( Prepayment and Cancellation ) and shall be treated as a voluntary prepayment pursuant to Clause 7.4 ( Voluntary prepayment of Loan ).
26.8
Release of additional security
If the Facility Agent (acting on the instruction of all Lenders and the ECAs) is satisfied that:
(a)
the aggregate of the Market Value of each Ship then subject to a Mortgage; plus
(b)
net realisable value of additional security previously provided under Clause 26.3 ( Provision of additional security; prepayment ),
is above 135 per cent. of the Loan and has been above such percentage for a minimum period of three Months, there shall be released (at the cost and expense of the Borrowers) all or a portion of such additional security in an amount equal to the excess over 135 per cent. of the Loan, Provided that any such release shall not give rise to a further shortfall and that no Default has occurred and is continuing or would arise as a result of such release.
27
ACCOUNTS, APPLICATION OF EARNINGS AND HEDGE RECEIPTS
27.1
Earnings Account and Retention Account
Each Borrower shall, no later than the date of the Utilisation Request in relation to the Ship owned by it, open and maintain an Earnings Account and a Retention Account in respect of its Ship. No Borrower may, without the prior consent of the Facility Agent, maintain any bank account other than its Earnings Account and its Retention Account.
27.2
Debt Service Reserve Account
(a)
The Parent Guarantor shall:
(i)
no later than the date of the first Utilisation Request under this Agreement, open a Debt Service Reserve Account in respect of the Ships; and
(ii)
before each Utilisation Date in relation to a Ship under this Agreement, deposit an amount equal to or greater than the Debt Service in relation to the Ship for which that Utilisation relates into the Debt Service Reserve Account (and the Facility Agent shall provide an invoice specifying that amount not less than two Business Days prior to that Utilisation Date).
(b)
In this Clause 27.2 ( Debt Service Reserve Account ), " Debt Service " means, at any date of determination under this Agreement, the aggregate amount of the Repayment Instalments and accrued interest (based on the then current LIBOR rate), in each case falling due under this Agreement on the next Repayment Date and Interest Payment Date.
27.3
Payment of Earnings
Each Borrower shall ensure that, subject only to the provisions of the General Assignment to which it is a party, all the Earnings in respect of the Ship owned by it and any Hedge Receipts and all payments to it under any hedging agreement with a Non-Lender Hedge Counterparty are paid in to its Earnings Account.
27.4
Monthly retentions
Each Borrower shall ensure that, in each calendar month following the Delivery Date of the Ship owned by it, on such dates as the Facility Agent may from time to time specify, there is transferred to its Retention Account from its Earnings Account during the preceding calendar month:
(a)
one-third of the amount of any Repayment Instalment falling due under Clause 6.1 ( Repayment of Loan ) on the next Repayment Date; and
(b)
the relevant fraction of the aggregate amount of interest on the Loan which is payable under this Agreement in respect of any Interest Period then current; and
(c)
if applicable, the relevant fraction of the aggregated net amount which is payable by any Borrower to any Hedge Counterparty under any Hedging Agreement on the next due date for payment of such amount under the relevant Hedging Agreement.
The " relevant fraction " is a fraction of which:
(i)
the numerator is one; and
(ii)
the denominator is:
(A)
the number of months comprised in the relevant then current Interest Period; or
(B)
if the period is shorter, the number of months from the later of the commencement of the relevant current Interest Period or the last due date for payment of interest on the Loan or the relevant part of the Loan to the next due date for payment of interest on the Loan or the relevant part of the Loan under this Agreement.
27.5
Shortfall in Earnings
(a)
If the credit balance on a Borrower’s Earnings Account is insufficient in any calendar month for the required amount to be transferred to its Retention Account under Clause 27.4 ( Monthly retentions ), the Borrowers shall procure that the amount of the insufficiency is made up on such date as it makes the transfer under Clause 27.4 ( Monthly retentions ).
(b)
Without prejudicing the Facility Agent's right to make such demand at any time, the Facility Agent may, if so authorised by the Majority Lenders, permit the relevant Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 27.4 ( Monthly retentions ) from the Earnings received by it in the next or subsequent calendar months.
27.6
Application of retentions
(a)
The Security Agent has sole signing rights in relation to the Retention Accounts.
(b)
Until an Event of Default occurs, the Facility Agent shall instruct the Security Agent to release to it, on each Repayment Date and on each Interest Payment Date in respect of a Ship Loan, for distribution to the Finance Parties in accordance with Clause 36.2 ( Distributions by the Facility Agent ) so much of the then balance on the Retention Account relative to that Ship as equals:
(i)
any Repayment Instalment due on that Repayment Date; and
(ii)
the amount of interest payable on that Interest Payment Date,
in discharge of the Borrowers' liability for that Repayment Instalment or that interest, as the case may be.
27.7
Right to apply amounts on Earnings Accounts, Retention Accounts and Debt Service Reserve Account
If an Event of Default has occurred the Facility Agent shall be entitled then or at any later time or times:
(a)
to withdraw all or any part of the amount standing to the credit of any Earnings Account, any Retention Account or the Debt Service Reserve Account and to use the amount withdrawn in or towards discharging the Secured Liabilities; and/or
(b)
to transfer or remit all or any part of the amount standing to the credit of any Earnings Account, any Retention Account or the Debt Service Reserve Account to any Secured Party up to the amount of the Secured Liabilities to, or for the benefit of, that Secured Party,
and the Facility Agent may take any action described in paragraph (a) or (b) above notwithstanding that any maturity or roll-over date attached to any part or parts of the amount standing to the credit of that Earnings Account, that Retention Account or the Debt Service Reserve Account may not yet have arrived.
27.8
Release of accrued interest
Any interest accruing under the Debt Service Reserve Account shall be credited to the Debt Service Reserve Account and, to the extent not applied previously pursuant to Clause 27.7 ( Right to apply amounts on Earnings Accounts, Retention Accounts and Debt Service Reserve Account )), shall be released to the Parent Guarantor at the end of the Security Period.
27.9
Restrictions on dealing with the Accounts
(a)
Subject to the provisions of this Clause 27 ( Accounts, application of Earnings and Hedge Receipts ), each Borrower shall be entitled to withdraw, transfer and in other ways deal with all or any part of the amount standing to the credit of its Earnings Account so long as no Event of Default has occurred and for so long as the same is continuing.
(b)
No Obligor shall attempt to withdraw, transfer or in any other way deal with all or any part of the amount standing to the credit of any Retention Account or the Debt Service Reserve Account.
(c)
No Obligor shall purport to give any authorisation or instruction to the Account Bank or the Facility Agent concerning any Retention Account or the Debt Service Reserve Account in conflict with this Clause 27 ( Accounts, application of Earnings and Hedge Receipts ).
(d)
Each Obligor shall, if so required by the Facility Agent, promptly execute any document which the Facility Agent or the Account Bank may specify for the purpose of, or in connection with, any withdrawal, transfer or other dealing with all or any part of the amount standing to the credit of any Retention Account or the Debt Service Reserve Account.
27.10
Location of Accounts
Each Obligor shall promptly:
(a)
comply with any requirement of the Facility Agent as to the location or relocation of its Accounts (or any of them); and
(b)
execute any documents which the Facility Agent specifies to create or maintain in favour of the Security Agent Security over (and/or rights of set-off, consolidation or other rights in relation to) its Accounts.
28
EVENTS OF DEFAULT
28.1
General
Each of the events or circumstances set out in this Clause 28 ( Events of Default ) is an Event of Default except for Clause 28.19 ( Acceleration ) and Clause 28.20 ( Enforcement of security ).
28.2
Non-payment
An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
(a)
its failure to pay is caused by:
(i)
administrative or technical error; or
(ii)
a Disruption Event; and
(b)
payment is made within three Business Days of its due date.
28.3
Specific obligations
A breach occurs of Clause 4.4 ( Waiver of conditions precedent ), Clause 22 ( Financial Covenants ), Clause 23.10 ( Title ), Clause 23.11 ( Negative pledge ), Clause 23.14 ( Change of business ), Clause 23.20 ( Unlawfulness, invalidity and ranking; Security imperilled ), Clause 24.2 ( Maintenance of obligatory insurances ), Clause 24.3 ( Terms of obligatory insurances ), Clause 24.5 ( Renewal of obligatory insurances ), Clause 25.11 ( Sanctions and Ship trading ,paragraph (d) of Clause 25.16 ( Change of Approved Ship Manager and appointment of Approved Sub-Manager )or Clause 26 ( Security Cover ).
28.4
Other obligations
(a)
An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 28.2 ( Non-payment ) and Clause 28.3 ( Specific obligations )).
(b)
No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 10 Business Days of the Facility Agent giving notice to the Borrowers or (if earlier) any Obligor becoming aware of the failure to comply.
28.5
Misrepresentation
Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.
28.6
Cross default
(a)
Any Financial Indebtedness of any Obligor is not paid when due nor within any originally applicable grace period.
(b)
Any Financial Indebtedness of any Obligor is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).
(c)
Any commitment for any Financial Indebtedness of any Obligor is cancelled or suspended by a creditor of any Obligor as a result of an event of default (however described).
(d)
Any creditor of any Obligor becomes entitled to declare any Financial Indebtedness of any Obligor due and payable prior to its specified maturity as a result of an event of default (however described).
(e)
No Event of Default will occur under this Clause 28.6 ( Cross default) if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than:
(i)
in relation to a Borrower, USD 1,000,000 (or its equivalent in any other currency); or.
(ii)
in relation to the Parent Guarantor, USD 10,000,000 (or its equivalent in any other currency).
28.7
Insolvency
(a)
An Obligor:
(i)
is unable or admits inability to pay its debts as they fall due;
(ii)
is deemed to, or is declared to, be unable to pay its debts under applicable law;
(iii)
suspends or threatens to suspend making payments on any of its debts; or
(iv)
by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (excluding any Finance Party in its capacity as such) with a view to rescheduling any of its indebtedness.
(b)
The value of the assets of any Obligor is less than its liabilities (taking into account contingent and prospective liabilities).
(c)
A moratorium is declared in respect of any indebtedness of any Obligor. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.
28.8
Insolvency proceedings
(a)
Any corporate action, legal proceedings or other procedure or step is taken in relation to:
(i)
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor;
(ii)
a composition, compromise, assignment or arrangement with any creditor of any Obligor;
(iii)
the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any Obligor or any of its assets; or
(iv)
enforcement of any Security over any assets of any Obligor,
or any analogous procedure or step is taken in any jurisdiction.
(b)
Paragraph (a) above shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 30 days of commencement.
28.9
Creditors' process
Any expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assets of an Obligor having an aggregate value of USD 1,000,000 in relation to a Borrower or USD 10,000,000 in relation to the Parent Guarantor (or its equivalent in any other currency) and is not discharged within 30 Business Days (other than an arrest or detention of a Ship referred to in Clause 28.13 ( Arrest ).
28.10
Ownership of the Borrowers
The Parent Guarantor is not or ceases to be the legal and beneficial owner of all the shares or equity interests in a Borrower.
28.11
Unlawfulness, invalidity and ranking
(a)
It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents.
(b)
Any obligation of an Obligor under the Finance Documents is not or ceases to be legal, valid, binding or enforceable.
(c)
Any Finance Document ceases to be in full force and effect or to be continuing or is or purports to be determined or any Transaction Security is alleged by a party to it (other than a Finance Party) to be ineffective.
(d)
Any Transaction Security proves to have ranked after, or loses its priority to, any other Security.
28.12
Security imperilled
Any Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy.
28.13
Arrest
Any arrest of a Ship or its detention in the exercise or the purported exercise of any lien or claim unless it is redelivered to the full control of the relevant Borrower within 45 days of such arrest or detention or, in the event of an arrest which the relevant Borrower is contesting in good faith, such longer period as the Majority Lenders may, following a request from the relevant Borrower, approve (such approval not to be unreasonably withheld or delayed provided that the relevant Borrower is cooperating with the Secured Parties and has provided grounds for such an extension).
28.14
Expropriation
The authority or ability of any Obligor to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any Obligor or any of its assets other than:
(a)
an arrest or detention of a Ship referred to in Clause 28.13 ( Arrest ); or
(b)
any Requisition.
28.15
Repudiation and rescission of agreements
An Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Transaction Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Transaction Document or any Transaction Security.
28.16
Litigation
Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened, or any judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body is made, in relation to any of the Transaction Documents or the transactions contemplated in any of the Transaction Documents or against any Obligor or its assets which has or is reasonably likely to have a Material Adverse Effect.
28.17
Material adverse change
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
28.18
Termination of ECA Support
Any ECA Support is cancelled, suspended, rescinded, terminated or otherwise ceases to remain in full force and effect as a result of an act or omission by or attributable to a member of the Group.
28.19
Acceleration
On and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrowers:
(a)
cancel the Total Commitments, whereupon they shall immediately be cancelled;
(b)
declare that all or part of the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon it shall become immediately due and payable;
(c)
declare that all or part of the Loan be payable on demand, whereupon it shall immediately become payable on demand by the Facility Agent acting on the instructions of the Majority Lenders; and/or
(d)
exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents,
and the Facility Agent may serve notices under paragraphs (a), (b) and (c) above simultaneously or on different dates and the Security Agent may take any action referred to in Clause 28.20 ( Enforcement of security ) if no such notice is served or simultaneously with or at any time after the service of any of such notice.
28.20
Enforcement of security
On and at any time after the occurrence of an Event of Default which is continuing the Security Agent may, and shall if so directed by the Majority Lenders, take any action which, as a result of the Event of Default or any notice served under Clause 28.19 ( Acceleration ), the Security Agent is entitled to take under any Finance Document or any applicable law or regulation.

SECTION 9

CHANGES TO PARTIES
29
CHANGES TO THE LENDERS
29.1
Assignments and transfers by the Lenders
Subject to this Clause 29 ( Changes to the Lenders ), a Lender (the " Existing Lender ") may:
(a)
assign any of its rights; or
(b)
transfer by novation any of its rights and obligations,
under the Finance Documents to:
(i)
another bank or financial institution or pension fund; or
(ii)
in respect of any transfer by a Commercial Lender of its participation or commitment in the Commercial Facility to a trust or fund (other than a pension fund) with the prior written consent of each of the ECAs (such consent not to be unreasonably withheld or delayed),
(the “ New Lender ”).
29.2
Conditions of assignment or transfer
(a)
The consent of the Borrowers is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is:
(i)
to another Lender or an Affiliate of a Lender;
(ii)
to a bank;
(iii)
to a financial institution which has, at any time previously, been a Lender;
(iv)
to an ECA in accordance with Clause 29.10 ( Transfer to an ECA ); or
(v)
made at a time when an Event of Default is continuing.
(b)
The consent of the Borrowers to an assignment or transfer must not be unreasonably withheld or delayed. Each Borrower will be deemed to have given its consent five Business Days after the Existing Lender has requested it unless consent is expressly refused by that Borrower within that time.
(c)
The consent of a Borrower to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to any amount payable under Clause 14.3 ( Mandatory Cost ).
(d)
The consent of the Kexim Guarantor is required for an assignment or transfer by a Kexim Guaranteed Lender (such consent not to be unreasonably withheld or delayed).
(e)
Macquarie Factoring (UK) Limited may not, without the consent of the ECAs (such consent not to be unreasonably withheld or delayed), transfer its participation in the Commercial Facility A Loan if such transfer would result in Macquarie Factoring (UK) Limited holding less than 33.33 per cent. of the Commercial Facility A Loan outstanding at such time (being an amount of USD 5,000,000 as at the date of the Facility Agreement), unless the assignment or transfer is to Macquarie Bank Limited.
(f)
The consent of GIEK (such decision not to be unreasonably delayed and consent not to be unreasonably withheld) is required for an assignment or transfer by Macquarie Factoring (UK) Limited in its capacity as a GIEK Guaranteed Lender, unless the assignment or transfer is to Macquarie Bank Limited (in which case Macquarie Factoring (UK) Limited shall provide a written notice to GIEK at least 15 Business Days prior to the date of such assignment or transfer to Macquarie Bank Limited).
(g)
An assignment will only be effective on:
(i)
receipt by the Facility Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other Secured Parties as it would have been under if it were an Original Lender; and
(ii)
performance by the Facility Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.
(h)
Each Obligor agrees that all rights and interests (present, future or contingent) which the Existing Lender has under or by virtue of the Finance Documents are assigned to the New Lender absolutely, free of any defects in the Existing Lender's title and of any rights or equities which the Borrowers or any other Obligor had against the Existing Lender.
(i)
A transfer will only be effective if the procedure set out in Clause 29.5 ( Procedure for transfer ) is complied with.
(j)
If:
(i)
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii)
as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 12 ( Tax Gross Up and Indemnities ) or under that clause as incorporated by reference or in full in any other Finance Document or Clause 13 ( Increased Costs ),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred. This paragraph (j) shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Facility.
(k)
Each New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.
29.3
Assignment or transfer fee
The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of US$1,000.
29.4
Limitation of responsibility of Existing Lenders
(a)
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:
(i)
the legality, validity, effectiveness, adequacy or enforceability of the Transaction Documents, the Transaction Security or any other documents;
(ii)
the financial condition of any Obligor;
(iii)
the performance and observance by any Obligor of its obligations under the Transaction Documents or any other documents; or
(iv)
the accuracy of any statements (whether written or oral) made in or in connection with any Transaction Document or any other document,
and any representations or warranties implied by law are excluded.
(b)
Each New Lender confirms to the Existing Lender and the other Finance Parties and the Secured Parties that it:
(i)
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Transaction Document or the Transaction Security; and
(ii)
will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities throughout the Security Period.
(c)
Nothing in any Finance Document obliges an Existing Lender to:
(i)
accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 29 ( Changes to the Lenders ); or
(ii)
support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Transaction Documents or otherwise.
29.5
Procedure for transfer
(a)
Subject to the conditions set out in Clause 29.2 ( Conditions of assignment or transfer ), a transfer is effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with this Agreement and delivered in accordance with this Agreement, execute that Transfer Certificate.
(b)
The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New 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 such New Lender.
(c)
Subject to Clause 29.9 ( Pro rata interest settlement ), on the Transfer Date:
(i)
to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents and in respect of the Transaction Security, each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and in respect of the Transaction Security and their respective rights against one another under the Finance Documents and in respect of the Transaction Security shall be cancelled (being the " Discharged Rights and Obligations ");
(ii)
each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;
(iii)
the Facility Agent, the Security Agent, the Mandated Lead Arrangers, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves and in respect of the Transaction Security as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Facility Agent, the Security Agent, the Mandated Lead Arrangers and the Existing Lenders shall each be released from further obligations to each other under the Finance Documents; and
(iv)
the New Lender shall become a Party as a "Lender".
29.6
Procedure for assignment
(a)
Subject to the conditions set out in Clause 29.2 ( Conditions of assignment or transfer ) an assignment may be effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.
(b)
The Facility Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New 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 assignment to such New Lender.
(c)
Subject to Clause 29.9 ( Pro rata interest settlement ), on the Transfer Date:
(i)
the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of the Transaction Security expressed to be the subject of the assignment in the Assignment Agreement;
(ii)
the Existing Lender will be released from the obligations (the " Relevant Obligations ") expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of the Transaction Security); and
(iii)
the New Lender shall become a Party as a "Lender" and will be bound by obligations equivalent to the Relevant Obligations.
(d)
Lenders may utilise procedures other than those set out in this Clause 29.6 ( Procedure for assignment ) to assign their rights under the Finance Documents (but not, without the consent of the relevant Obligor or unless in accordance with Clause 29.5 ( Procedure for transfer ), to obtain a release by that Obligor from the obligations owed to that Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 29.2 ( Conditions of assignment or transfer ).
29.7
Copy of Transfer Certificate or Assignment Agreement to Borrowers
The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrowers a copy of that Transfer Certificate or Assignment Agreement.
29.8
Security over Lenders' rights
In addition to the other rights provided to Lenders under this Clause 29 ( Changes to the Lenders ), each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Security 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 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 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 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 for the Lender as a party to any of the Finance Documents; or
(ii)
require any payments to be made by an Obligor other than or in excess of, 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.
29.9
Pro rata interest settlement
If the Facility Agent has notified the Lenders that it is able to distribute interest payments on a " pro rata basis" to Existing Lenders and New Lenders then (in respect of any transfer pursuant to Clause 29.5 ( Procedure for transfer ) or any assignment pursuant to Clause 29.6 ( Procedure for assignment ) the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period):
(a)
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date (" Accrued Amounts ") and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and
(b)
the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:
(i)
when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and
(ii)
the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 29.9 ( Pro rata interest settlement ), have been payable to it on that date, but after deduction of the Accrued Amounts.
(c)
In this Clause 29.9 ( Pro rata interest settlement ) references to "Interest Period" shall be construed to include a reference to any other period for accrual of fees.
29.10
Transfer to an ECA
(a)
If an ECA makes a payment under its ECA Support (being the GIEK Guarantee in relation to GIEK and the Kexim Guarantee in relation to the Kexim Guarantor), then, to the extent that it is required to do so by that ECA under that ECA Support, an ECA Guaranteed Lender receiving a payment pursuant to that ECA Support shall, at the cost of the Borrowers and without any requirement for the consent of any Borrower, transfer to that ECA (in accordance with, and subject to, Clause 29.5 ( Procedure for transfer ) a part of its participation in the Loan equal to the amount paid to it by that ECA.
(b)
A transfer pursuant to paragraph (a) above shall not limit the rights of the relevant ECA Guaranteed Lender to recover any remaining part of its participation in a Loan or any other moneys owing to it under this Agreement or any other Finance Documents.
(c)
If an ECA makes any payment to an ECA Guaranteed Lender under its ECA Support:
(i)
the obligations and liabilities of the Obligors (and of any of them) under this Agreement and each of the other Finance Documents shall not be reduced, discharged nor affected in any way;
(ii)
that ECA shall be entitled to be subrogated to the rights of that ECA Guaranteed Lender against the Obligors under this Agreement and each of the other Finance Documents;
(iii)
that ECA shall be entitled to the extent of such payment to exercise the rights of that ECA Guaranteed Lender against the Obligors (and against any of them) under this Agreement and each of the other Finance Documents or any relevant laws and/or regulations unless and until such payment and the interest accrued on it are fully reimbursed to that ECA; and
(iv)
with respect to the obligations and liabilities of the Obligors owed to that ECA Guaranteed Lender under the Finance Documents (or any of them), such obligations and liabilities shall additionally be owed to that ECA by way of subrogation of the rights of that ECA Guaranteed Lender.
(d)
The Obligors shall indemnify each ECA in respect of any costs or expenses (including legal fees) suffered or incurred by it in connection with any transfer referred to in paragraph (a) above.
29.11
Additional Hedge Counterparties
(a)
The Borrowers or a Lender may request that a Lender or a New Lender becomes an Additional Hedge Counterparty, with the prior approval of the Facility Agent and (in the case of a request by a Lender) the Borrowers, by delivering to the Facility Agent a duly executed Hedge Counterparty Accession Letter.
(b)
The relevant Lender or New Lender will become an Additional Hedge Counterparty when the Facility Agent enters into the relevant Hedge Counterparty Accession Letter.
30
CHANGES TO THE OBLIGORS
30.1
Assignment or transfer by Obligors
No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
30.2
Release of security
(a)
If a disposal of any asset subject to security created by a Security Document is made in the following circumstances:
(i)
the disposal is permitted by the terms of any Finance Document;
(ii)
all the Lenders and the ECAs agree to the disposal;
(iii)
the disposal is being made at the request of the Security Agent in circumstances where any security created by the Security Documents has become enforceable; or
(iv)
the disposal is being effected by enforcement of a Security Document,
the Security Agent may release the asset(s) being disposed of from any security over those assets created by a Security Document. However, the proceeds of any disposal (or an amount corresponding to them) must be applied in accordance with the requirements of the Finance Documents (if any).
(b)
If the Security Agent is satisfied that a release is allowed under this Clause 30.2 ( Release of security ) (at the request and expense of the Borrowers) each Finance Party must enter into any document and do all such other things which are reasonably required to achieve that release. Each other Finance Party irrevocably authorises the Security Agent to enter into any such document. Any release will not affect the obligations of any other Obligor under the Finance Documents.
30.3
Release of Borrower
(a)
If a Ship is sold or becomes a Total Loss and the Borrowers repay the Ship Loan to which that Ship relates and any other amount due and outstanding in relation thereto in accordance with Clause 7.7 ( Mandatory prepayment on sale or Total Loss ), the Borrower who owned that Ship may request by written notice to the Facility Agent to be released from all its obligations under the Finance Documents.
(b)
If the Facility Agent is satisfied (acting on the authorisation of all the Lenders and the ECAs) that no Default has occurred or would result from the proposed release, the Facility Agent shall, following receipt of the notice referred to in paragraph (a) above and at the expense of the Borrowers, arrange for each Finance Party to enter into any document and do all such other things which are reasonably required to achieve that release. Any release will not affect the obligations of any other Obligor under the Finance Documents.
(c)    

SECTION 10

THE FINANCE PARTIES
31
THE FACILITY AGENT AND THE MANDATED LEAD ARRANGERS
31.1
Appointment of the Facility Agent
(a)
Each of the Mandated Lead Arrangers, the Lenders and the Hedge Counterparties appoints the Facility Agent to act as its agent under and in connection with the Finance Documents.
(b)
Each of the Mandated Lead Arrangers, the Lenders and the Hedge Counterparties authorises the Facility Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions.
31.2
Instructions
(a)
The Facility Agent shall:
(i)
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Facility Agent in accordance with any instructions given to it by:
(A)
all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and
(B)
in all other cases, the Majority Lenders; and
(ii)
not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with sub-paragraph (i) above (or, if this Agreement stipulates the matter is a decision for any other Finance Party or group of Finance Parties, in accordance with instructions given to it by that Finance Party or group of Finance Parties).
(b)
The Facility Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Facility Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
(c)
Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Facility Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.
(d)
Paragraph (a) above shall not apply:
(i)
where a contrary indication appears in a Finance Document;
(ii)
where a Finance Document requires the Facility Agent to act in a specified manner or to take a specified action;
(iii)
in respect of any provision which protects the Facility Agent's own position in its personal capacity as opposed to its role of Facility Agent for the relevant Finance Parties.
(e)
If giving effect to instructions given by the Majority Lenders would in the Facility Agent's opinion have an effect equivalent to an amendment or waiver referred to in Clause 45 ( Amendments and Waivers ), the Facility Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Facility Agent) whose consent would have been required in respect of that amendment or waiver.
(f)
In exercising any discretion to exercise a right, power or authority under the Finance Documents where it has not received any instructions as to the exercise of that discretion the Facility Agent shall do so having regard to the interests of all the Finance Parties.
(g)
The Facility Agent may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions.
(h)
Without prejudice to the remainder of this Clause 31.2 ( Instructions ), in the absence of instructions, the Facility Agent shall not be obliged to take any action (or refrain from taking action) even if it considers acting or not acting to be in the best interests of the Finance Parties. The Facility Agent may act (or refrain from acting) as it considers to be in the best interest of the Finance Parties.
(i)
The Facility Agent is not authorised to act on behalf of a Finance Party (without first obtaining that Finance Party's consent) in any legal or arbitration proceedings relating to any Finance Document. This paragraph (i) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Transaction Security or Security Documents.
31.3
Duties of the Facility Agent
(a)
The Facility Agent's duties under the Finance Documents are solely mechanical and administrative in nature.
(b)
Subject to paragraph (c) below, the Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.
(c)
Without prejudice to Clause 29.7 ( Copy of Transfer Certificate or Assignment Agreement to Borrower ), paragraph (b) above shall not apply to any Transfer Certificate or any Assignment Agreement.
(d)
Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(e)
If the Facility Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.
(f)
If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent, the Mandated Lead Arrangers or the Security Agent) under this Agreement, it shall promptly notify the other Finance Parties.
(g)
The Facility Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
31.4
Role of the Mandated Lead Arrangers
Except as specifically provided in the Finance Documents, the Mandated Lead Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document.
31.5
No fiduciary duties
(a)
Nothing in any Finance Document constitutes the Facility Agent or any Mandated Lead Arranger as a trustee or fiduciary of any other person.
(b)
Neither the Facility Agent nor any Mandated Lead Arranger shall be bound to account to other Finance Party for any sum or the profit element of any sum received by it for its own account.
31.6
Application of receipts
Except as expressly stated to the contrary in any Finance Document, any moneys which the Facility Agent receives or recovers in its capacity as Facility Agent shall be applied by the Facility Agent in accordance with Clause 36.5 ( Application of receipts; partial payments ).
31.7
Business with the Group
The Facility Agent and the Mandated Lead Arrangers may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.
31.8
Rights and discretions
(a)
The Facility Agent may:
(i)
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;
(ii)
assume that:
(A)
any instructions received by it from the Majority Lenders, any Finance Parties or any group of Finance Parties are duly given in accordance with the terms of the Finance Documents; and
(B)
unless it has received notice of revocation, that those instructions have not been revoked; and
(iii)
rely on a certificate from any person:
(A)
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or
(B)
to the effect that such person approves of any particular dealing, transaction, step, action or thing,
as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b)
The Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Finance Parties) that:
(i)
no Default has occurred (unless it has actual knowledge of a Default arising under Clause 28.2 ( Non-payment ));
(ii)
any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and
(iii)
any notice or request made by any Borrower is made on behalf of and with the consent and knowledge of all the Obligors.
(c)
The Facility Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts.
(d)
Without prejudice to the generality of paragraph (c) above or paragraph (e) below, the Facility Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Facility Agent (and so separate from any lawyers instructed by the Lenders) if the Facility Agent in its reasonable opinion deems this to be desirable.
(e)
The Facility Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Facility Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.
(f)
The Facility Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not:
(i)
be liable for any error of judgment made by any such person; or
(ii)
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person,
unless such error or such loss was directly caused by the Facility Agent's gross negligence or wilful misconduct.
(g)
Unless a Finance Document expressly provides otherwise the Facility Agent may disclose to any other Party any information it reasonably believes it has received as agent under the Finance Documents.
(h)
Notwithstanding any other provision of any Finance Document to the contrary, neither the Facility Agent nor any Mandated Lead Arranger is obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
(i)
Notwithstanding any provision of any Finance Document to the contrary, the Facility Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
31.9
Responsibility for documentation
Neither the Facility Agent nor any Mandated Lead Arranger is responsible or liable for:
(a)
the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Facility Agent, the Security Agent, any Mandated Lead Arranger, an Obligor or any other person in, or in connection with, any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(c)
any determination as to whether any information provided or to be provided to any Finance Party or Secured Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
31.10
No duty to monitor
The Facility Agent shall not be bound to enquire:
(a)
whether or not any Default has occurred;
(b)
as to the performance, default or any breach by any Obligor of its obligations under any Transaction Document; or
(c)
whether any other event specified in any Transaction Document has occurred.
31.11
Exclusion of liability
(a)
Without limiting paragraph (b) below (and without prejudice to paragraph (e) of Clause 36.11 ( Disruption to Payment Systems etc. ) or any other provision of any Finance Document excluding or limiting the liability of the Facility Agent), the Facility Agent will not be liable for:
(i)
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct;
(ii)
exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(iii)
any shortfall which arises on the enforcement or realisation of the Security Property; or
(iv)
without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:
(A)
any act, event or circumstance not reasonably within its control; or
(B)
the general risks of investment in, or the holding of assets in, any jurisdiction,
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b)
No Party other than the Facility Agent may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Facility Agent may rely on this Clause subject to Clause 1.5 ( Third party rights ) and the provisions of the Third Parties Act.
(c)
The Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Facility Agent if the Facility Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Facility Agent for that purpose.
(d)
Nothing in this Agreement shall oblige the Facility Agent or any Mandated Lead Arranger to carry out:
(i)
any "know your customer" or other checks in relation to any person; or
(ii)
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Finance Party,
on behalf of any Finance Party and each Finance Party confirms to the Facility Agent and the Mandated Lead Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Facility Agent or the Mandated Lead Arrangers.
(e)
Without prejudice to any provision of any Finance Document excluding or limiting the Facility Agent's liability, any liability of the Facility Agent arising under or in connection with any Transaction Document or the Security Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Facility Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Facility Agent at any time which increase the amount of that loss. In no event shall the Facility Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Facility Agent has been advised of the possibility of such loss or damages.
31.12
Lenders' indemnity to the Facility Agent
(a)
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Facility Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent's gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 36.11 ( Disruption to Payment Systems etc. ) notwithstanding the Facility Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) in acting as Facility Agent under the Finance Documents (unless the Facility Agent has been reimbursed by an Obligor pursuant to a Finance Document).
(b)
Subject to paragraph (c) below, the Borrowers shall immediately on demand reimburse any Lender for any payment that Lender makes to the Facility Agent pursuant to paragraph (a) above.
(c)
Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Facility Agent to an Obligor.
31.13
Resignation of the Facility Agent
(a)
The Facility Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrowers.
(b)
Alternatively, the Facility Agent may resign by giving 30 days' notice to the other Finance Parties and the Borrowers, in which case the Majority Lenders may appoint a successor Facility Agent.
(c)
If the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Facility Agent may appoint a successor Facility Agent.
(d)
If the Facility Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Facility Agent is entitled to appoint a successor Facility Agent under paragraph (c) above, the Facility Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor Facility Agent to become a party to this Agreement as Facility Agent) agree with the proposed successor Facility Agent amendments to this Clause 31 ( The Facility Agent and the Mandated Lead Arrangers ) and any other term of this Agreement dealing with the rights or obligations of the Facility Agent consistent with then current market practice for the appointment and protection of corporate trustees together with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Facility Agent's normal fee rates and those amendments will bind the Parties.
(e)
The retiring Facility Agent shall make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Finance Documents. The Borrowers shall, within three Business Days of demand, reimburse the retiring Facility Agent for the amount of all reasonable and documented costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance.
(f)
The Facility Agent's resignation notice shall only take effect upon the appointment of a successor.
(g)
Upon the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (e) above) but shall remain entitled to the benefit of Clause 14.4 ( Indemnity to the Facility Agent ) and this Clause 31 ( The Facility Agent and the Mandated Lead Arrangers ) and any other provisions of a Finance Document which are expressed to limit or exclude its liability (or to indemnify it) in acting as Facility Agent. Any fees for the account of the retiring Facility Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(h)
The Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with paragraph (b) above. In this event, the Facility Agent shall resign in accordance with paragraph (b) above.
(i)
The consent of the Borrowers shall be required for an assignment or transfer of rights and/or obligations by the Facility Agent (such consent not to be unreasonably withheld or delayed and to be deemed granted within 15 Business Days from the day it has been sought unless it has been expressly refused within that period).
(j)
The Facility Agent shall resign in accordance with paragraph (b) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Facility Agent pursuant to paragraph (c) above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Facility Agent under the Finance Documents, either:
(i)
the Facility Agent fails to respond to a request under Clause 12.7 ( FATCA Information ) and a Lender reasonably believes that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
(ii)
the information supplied by the Facility Agent pursuant to Clause 12.7 ( FATCA Information ) indicates that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or
(iii)
the Facility Agent notifies the Borrowers and the Lenders that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
and (in each case) a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Facility Agent were a FATCA Exempt Party, and that Lender, by notice to the Facility Agent, requires it to resign.
31.14
Confidentiality
(a)
In acting as Facility Agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b)
If information is received by a division or department of the Facility Agent other than the division or department responsible for complying with the obligations assumed by it under the Finance Documents, that information may be treated as confidential to that division or department, and the Facility Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party.
(c)
Notwithstanding any other provision of any Finance Document to the contrary, neither the Facility Agent nor any Mandated Lead Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty.
31.15
Relationship with the other Finance Parties
(a)
Subject to Clause 29.9 ( Pro rata interest settlement ), the Facility Agent may treat the person shown in its records as Lender or Hedge Counterparty at the opening of business (in the place of the Facility Agent's principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office or, as the case may be, the Hedge Counterparty:
(i)
entitled to or liable for any payment due under any Finance Document on that day; and
(ii)
entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,
unless it has received not less than five Business Days' prior notice from that Lender or Hedge Counterparty to the contrary in accordance with the terms of this Agreement.
(b)
Each Finance Party shall supply the Facility Agent with any information that the Security Agent may reasonably specify (through the Facility Agent) as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent. Each Finance Party shall deal with the Security Agent exclusively through the Facility Agent and shall not deal directly with the Security Agent and any reference to any instructions being given by or sought from any Finance Party or group of Finance Parties by or to the Security Agent in this Agreement must be given or sought through the Facility Agent.
(c)
Any Lender may by notice to the Facility Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 39.5 ( Electronic communication ) electronic mail address and/or any other information required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address (or such other information), department and officer by that Lender for the purposes of Clause 39.2 ( Addresses ) and sub-paragraph (ii) of paragraph (a) of Clause 39.5 ( Electronic communication ) and the Facility Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.
31.16
Credit appraisal by the Finance Parties
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Finance Party confirms to the Facility Agent and the Mandated Lead Arrangers that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document including but not limited to:
(a)
the financial condition, status and nature of each member of the Group;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(c)
whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Transaction Document, the Security Property, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property, including but not limited to any ECA Support;
(d)
the adequacy, accuracy or completeness of any information provided by the Facility Agent, any Party or by any other person under, or in connection with, any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and
(e)
the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets.
31.17
Deduction from amounts payable by the Facility Agent
If any Party owes an amount to the Facility Agent under the Finance Documents, the Facility Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Facility Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
31.18
Reliance and engagement letters
Each Secured Party confirms that each of the Mandated Lead Arrangers and the Facility Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by any Mandated Lead Arranger or the Facility Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
31.19
Full freedom to enter into transactions
Without prejudice to Clause 31.7 ( Business with the Group ) or any other provision of a Finance Document and notwithstanding any rule of law or equity to the contrary, the Facility Agent shall be absolutely entitled:
(a)
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Obligor or any person who is party to, or referred to in, a Finance Document);
(b)
to deal in and enter into and arrange transactions relating to:
(i)
any securities issued or to be issued by any Obligor or any other person; or
(ii)
any options or other derivatives in connection with such securities; and
(c)
to provide advice or other services to any Obligor or other member of the Group or any person who is a party to, or referred to in, a Finance Document,
and, in particular, the Facility Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.
32
THE SECURITY AGENT
32.1
Trust
(a)
The Security Agent declares that it holds the Security Property, save for the Security Property governed by Dutch law, on trust for the Secured Parties on the terms contained in this Agreement and shall deal with the Security Property in accordance with this Clause 32 ( The Security Agent ) and the other provisions of the Finance Documents.
(b)
Each other Finance Party authorises the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions.
32.2
Parallel Debt (Covenant to pay the Security Agent)
(a)
Each Obligor irrevocably and unconditionally undertakes to pay to the Security Agent an amount equal to, and in the currency or currencies of, its Corresponding Debt.
(b)
The Parallel Debt of an Obligor:
(i)
shall become due and payable at the same time as and for the same amount of its Corresponding Debt;
(ii)
is independent and separate from, and without prejudice to, its Corresponding Debt.
(c)
For purposes of this Clause 32.2 ( Parallel Debt (Covenant to pay the Security Agent) ), the Security Agent:
(i)
is the independent and separate creditor of each Parallel Debt;
(ii)
acts in its own name and not as agent, representative or trustee of the Finance Parties and its claims in respect of each Parallel Debt and any security granting such Parallel Debt shall not be held on trust; and
(iii)
shall have the independent and separate right to demand payment of each Parallel Debt in its own name (including, without limitation, through any suit, execution, enforcement of security, recovery of guarantees and applications for and voting in any kind of insolvency proceeding).
(d)
The Parallel Debt of an Obligor shall be:
(i)
decreased to the extent that its Corresponding Debt has been irrevocably and unconditionally paid or discharged; and
(ii)
increased to the extent that its Corresponding Debt has increased,
and the Corresponding Debt of an Obligor shall be decreased to the extent that its Parallel Debt has been irrevocably and unconditionally paid or discharged,
in each case provided that the Parallel Debt of an Obligor shall never exceed its Corresponding Debt.
(e)
All amounts received or recovered by the Security Agent in connection with this Clause 32.2 ( Parallel Debt (Covenant to pay the Security Agent) ) to the extent permitted by applicable law, shall be applied in accordance with Clause 36.5 ( Application of receipts; partial payments ).
(f)
This Clause 32.2 ( Parallel Debt (Covenant to pay the Security Agent) ) shall apply, with any necessary modifications, to each Finance Document.
32.3
Enforcement through Security Agent only
The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any right, power, authority or discretion arising under the Security Documents except through the Security Agent.
32.4
Instructions
(a)
The Security Agent shall:
(i)
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Security Agent in accordance with any instructions given to it by:
(A)
all Lenders (or the Facility Agent on their behalf) if the relevant Finance Document stipulates the matter is an all Lender decision; and
(B)
in all other cases, the Majority Lenders (or the Facility Agent on their behalf); and
(ii)
not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with sub-paragraph (i) above (or if this Agreement stipulates the matter is a decision for any other Finance Party or group of Finance Parties, in accordance with instructions given to it by that Finance Party or group of Finance Parties).
(b)
The Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or the Facility Agent on their behalf) (or, if the relevant Finance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Security Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
(c)
Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Security Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.
(d)
Paragraph (a) above shall not apply:
(i)
where a contrary indication appears in a Finance Document;
(ii)
where a Finance Document requires the Security Agent to act in a specified manner or to take a specified action;
(iii)
in respect of any provision which protects the Security Agent's own position in its personal capacity as opposed to its role of Security Agent for the relevant Secured Parties.
(iv)
in respect of the exercise of the Security Agent's discretion to exercise a right, power or authority under any of:
(A)
Clause 32.27 ( Application of receipts );
(B)
Clause 32.28 ( Permitted Deductions ); and
(C)
Clause 32.29 ( Prospective liabilities ).
(e)
If giving effect to instructions given by the Majority Lenders would in the Security Agent's opinion have an effect equivalent to an amendment or waiver referred to in Clause 45 ( Amendments and Waivers ), the Security Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Security Agent) whose consent would have been required in respect of that amendment or waiver.
(f)
In exercising any discretion to exercise a right, power or authority under the Finance Documents where either:
(i)
it has not received any instructions as to the exercise of that discretion; or
(ii)
the exercise of that discretion is subject to sub-paragraph (iv) of paragraph (d) above,
the Security Agent shall do so having regard to the interests of all the Secured Parties.
(g)
The Security Agent may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions.
(h)
Without prejudice to the remainder of this Clause 32.4 ( Instructions ), in the absence of instructions, the Security Agent may (but shall not be obliged to) take such action in the exercise of its powers and duties under the Finance Documents as it considers in its discretion to be appropriate.
(i)
The Security Agent is not authorised to act on behalf of a Finance Party (without first obtaining that Finance Party's consent) in any legal or arbitration proceedings relating to any Finance Document. This paragraph (i) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Transaction Security or Security Documents.
32.5
Duties of the Security Agent
(a)
The Security Agent's duties under the Finance Documents are solely mechanical and administrative in nature.
(b)
The Security Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Security Agent for that Party by any other Party.
(c)
Except where a Finance Document specifically provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(d)
If the Security Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.
(e)
The Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
32.6
No fiduciary duties
(a)
Nothing in any Finance Document constitutes the Security Agent as an agent, trustee or fiduciary of any Obligor.
(b)
The Security Agent shall not be bound to account to any other Secured Party for any sum or the profit element of any sum received by it for its own account.
32.7
Business with the Group
The Security Agent may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member of the Group.
32.8
Rights and discretions
(a)
The Security Agent may:
(i)
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;
(ii)
assume that:
(A)
any instructions received by it from the Majority Lenders, any Finance Parties or any group of Finance Parties are duly given in accordance with the terms of the Finance Documents;
(B)
unless it has received notice of revocation, that those instructions have not been revoked;
(C)
if it receives any instructions to act in relation to the Transaction Security, that all applicable conditions under the Finance Documents for so acting have been satisfied; and
(iii)
rely on a certificate from any person:
(A)
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or
(B)
to the effect that such person approves of any particular dealing, transaction, step, action or thing,
as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b)
The Security Agent shall be entitled to carry out all dealings with the other Finance Parties through the Facility Agent and may give to the Facility Agent any notice or other communication required to be given by the Security Agent to any Finance Party.
(c)
The Security Agent may assume (unless it has received notice to the contrary in its capacity as security agent for the Secured Parties) that:
(i)
no Default has occurred;
(ii)
any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and
(iii)
any notice or request made by any Borrower (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Obligors.
(d)
The Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts.
(e)
Without prejudice to the generality of paragraph (c) above or paragraph (f) below, the Security Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Security Agent (and so separate from any lawyers instructed by the Facility Agent or the Lenders) if the Security Agent in its reasonable opinion deems this to be desirable.
(f)
The Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Security Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.
(g)
The Security Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not:
(i)
be liable for any error of judgment made by any such person; or
(ii)
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person,
unless such error or such loss was directly caused by the Security Agent's gross negligence or wilful misconduct.
(h)
Unless a Finance Document expressly provides otherwise the Security Agent may disclose to any other Party any information it reasonably believes it has received as security agent under the Finance Documents.
(i)
Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
(j)
Notwithstanding any provision of any Finance Document to the contrary, the Security Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
32.9
Responsibility for documentation
None of the Security Agent, any Receiver or Delegate is responsible or liable for:
(a)
the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Facility Agent, the Security Agent, any Mandated Lead Arranger, an Obligor or any other person in, or in connection with, any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(c)
any determination as to whether any information provided or to be provided to any Secured Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
32.10
No duty to monitor
The Security Agent shall not be bound to enquire:
(a)
whether or not any Default has occurred;
(b)
as to the performance, default or any breach by any Obligor of its obligations under any Transaction Document; or
(c)
whether any other event specified in any Transaction Document has occurred.
32.11
Exclusion of liability
(a)
Without limiting paragraph (b) below (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Security Agent or any Receiver or Delegate), none of the Security Agent nor any Receiver or Delegate will be liable for:
(i)
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct;
(ii)
exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or
(iii)
any shortfall which arises on the enforcement or realisation of the Security Property; or
(iv)
without prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:
(A)
any act, event or circumstance not reasonably within its control; or
(B)
the general risks of investment in, or the holding of assets in, any jurisdiction,
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b)
No Party other than the Security Agent, that Receiver or that Delegate (as applicable) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this Clause subject to Clause 1.5 ( Third party rights ) and the provisions of the Third Parties Act.
(c)
The Security Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Security Agent if the Security Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Security Agent for that purpose.
(d)
Nothing in this Agreement shall oblige the Security Agent to carry out:
(i)
any "know your customer" or other checks in relation to any person; or
(ii)
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Finance Party,
on behalf of any Finance Party and each Finance Party confirms to the Security Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Security Agent.
(e)
Without prejudice to any provision of any Finance Document excluding or limiting the liability of the Security Agent or any Receiver or Delegate, any liability of the Security Agent or any Receiver arising under or in connection with any Transaction Document or the Security Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Security Agent, Receiver or Delegate or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Security Agent, any Receiver or Delegate at any time which increase the amount of that loss. In no event shall the Security Agent, any Receiver or Delegate be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Security Agent, the Receiver or Delegate has been advised of the possibility of such loss or damages.
32.12
Lenders' indemnity to the Security Agent
(a)
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Security Agent and every Receiver, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by reason of the Security Agent's or Receiver's gross negligence or wilful misconduct) in acting as Security Agent or Receiver under the Finance Documents (unless the Security Agent or Receiver has been reimbursed by an Obligor pursuant to a Finance Document).
(b)
Subject to paragraph (c) below, the Borrowers shall immediately on demand reimburse any Lender for any payment that Lender makes to the Security Agent pursuant to paragraph (a) above.
(c)
Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Security Agent to an Obligor.
32.13
Resignation of the Security Agent
(a)
The Security Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Finance Parties and the Borrowers.
(b)
Alternatively, the Security Agent may resign by giving 30 days' notice to the other Finance Parties and the Borrowers, in which case the Majority Lenders may appoint a successor Security Agent.
(c)
If the Majority Lenders have not appointed a successor Security Agent in accordance with paragraph (b) above within 20 days after notice of resignation was given, the retiring Security Agent may appoint a successor Security Agent.
(d)
The retiring Security Agent shall make available to the successor Security Agent such documents and records and provide such assistance as the successor Security Agent may reasonably request for the purposes of performing its functions as Security Agent under the Finance Documents. The Borrowers shall, within three Business Days of demand, reimburse the retiring Security Agent for the amount of all reasonable and documented costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance.
(e)
The Security Agent's resignation notice shall only take effect upon:
(i)
the appointment of a successor; and
(ii)
the transfer, by way of a document expressed as a deed, of all the Security Property to that successor.
(f)
Upon the appointment of a successor, the retiring Security Agent shall be discharged, by way of a document executed as a deed, from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (b) of Clause 32.24 ( Winding up of trust ) and paragraph (d) above) but shall remain entitled to the benefit of Clause 14.5 ( Indemnity to the Security Agent ) and this Clause 32 ( The Security Agent ) and any other provisions of a Finance Document which are expressed to limit or exclude its liability (or to indemnify it) in acting as Security Agent. Any fees for the account of the retiring Security Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(g)
The Majority Lenders may, by notice to the Security Agent, require it to resign in accordance with paragraph (b) above. In this event, the Security Agent shall resign in accordance with paragraph (b) above.
(h)
The consent of the Borrowers shall be required for an assignment or transfer of rights and/or obligations by the Security Agent (such consent not to be unreasonably withheld or delayed and to be deemed granted within 15 Business Days from the day it has been sought unless it has been expressly refused within that period).
32.14
Confidentiality
(a)
In acting as Security Agent for the Finance Parties, the Security Agent shall be regarded as acting through its trustee division which shall be treated as a separate entity from any other of its divisions or departments.
(b)
If information is received by a division or department of the Security Agent other than the division or department responsible for complying with the obligations assumed by it under the Finance Documents, that information may be treated as confidential to that division or department, and the Security Agent shall not be deemed to have notice of it nor shall it be obliged to disclose such information to any Party.
(c)
Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty.
32.15
Credit appraisal by the Finance Parties
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Transaction Document, each Finance Party confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document including but not limited to:
(a)
the financial condition, status and nature of each member of the Group;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document, the Security Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(c)
whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Transaction Document, the Security Property, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property;
(d)
the adequacy, accuracy or completeness of any information provided by the Security Agent, any Party or by any other person under, or in connection with, any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and
(e)
the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets.
32.16
Reliance and engagement letters
Each Secured Party confirms that the Security Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Security Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
32.17
No responsibility to perfect Transaction Security
The Security Agent shall not be liable for any failure to:
(a)
require the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor to any of the Security Assets;
(b)
obtain any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Finance Document or the Transaction Security;
(c)
register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any law or regulation or to give notice to any person of the execution of any Finance Document or of the Transaction Security;
(d)
take, or to require any Obligor to take, any step to perfect its title to any of the Security Assets or to render the Transaction Security effective or to secure the creation of any ancillary Security under any law or regulation; or
(e)
require any further assurance in relation to any Security Document.
32.18
Insurance by Security Agent
(a)
The Security Agent shall not be obliged:
(i)
to insure any of the Security Assets;
(ii)
to require any other person to maintain any insurance; or
(iii)
to verify any obligation to arrange or maintain insurance contained in any Finance Document,
and the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance.
(b)
Where the Security Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result of its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Majority Lenders request it to do so in writing and the Security Agent fails to do so within 14 days after receipt of that request.
32.19
Custodians and nominees
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.
32.20
Delegation by the Security Agent
(a)
Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any right, power, authority or discretion vested in it in its capacity as such.
(b)
That delegation may be made upon any terms and conditions (including the power to sub delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Secured Parties.
(c)
No Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible for any damages, costs or losses incurred by reason of any misconduct, omission or default on the part of any such delegate or sub delegate.
32.21
Additional Security Agents
(a)
The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it:
(i)
if it considers that appointment to be in the interests of the Secured Parties; or
(ii)
for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or
(iii)
for obtaining or enforcing any judgment in any jurisdiction,
and the Security Agent shall give prior notice to the Borrowers and the Finance Parties of that appointment.
(b)
Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection with the Finance Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment.
(c)
The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent.
32.22
Acceptance of title
The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Obligor may have to any of the Security Assets and shall not be liable for or bound to require any Obligor to remedy any defect in its right or title.
32.23
Releases
Upon a disposal of any of the Security Assets pursuant to the enforcement of the Transaction Security by a Receiver, a Delegate or the Security Agent, the Security Agent is irrevocably authorised (at the cost of the Obligors and without any consent, sanction, authority or further confirmation from any other Secured Party) to release, without recourse or warranty, that property from the Transaction Security and to execute any release of the Transaction Security or other claim over that asset and to issue any certificates of non-crystallisation of floating charges that may be required or desirable.
32.24
Winding up of trust
If the Security Agent, with the approval of the Facility Agent determines that:
(a)
all of the Secured Liabilities and all other obligations secured by the Security Documents have been fully and finally discharged; and
(b)
no Secured Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligor pursuant to the Finance Documents,
then
(i)
the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Security Documents; and
(ii)
any Security Agent which has resigned pursuant to Clause 32.13 ( Resignation of the Security Agent ) shall release, without recourse or warranty, all of its rights under each Security Document.
32.25
Powers supplemental to Trustee Acts
The rights, powers, authorities and discretions given to the Security Agent under or in connection with the Finance Documents shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by law or regulation or otherwise.
32.26
Disapplication of Trustee Acts
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement and the other Finance Documents. Where there are any inconsistencies between (i) the Trustee Acts 1925 and 2000 and (ii) the provisions of this Agreement and any other Finance Document, the provisions of this Agreement and any other Finance Document shall, to the extent permitted by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement and any other Finance Document shall constitute a restriction or exclusion for the purposes of the Trustee Act 2000.
32.27
Application of receipts
All amounts from time to time received or recovered by the Security Agent pursuant to the terms of any Finance Document, under Clause 32.2 ( Parallel Debt (Covenant to pay the Security Agent) ) or in connection with the realisation or enforcement of all or any part of the Security Property (for the purposes of this Clause 32 ( The Security Agent ), the " Recoveries ") shall be held by the Security Agent on trust to apply them at any time as the Security Agent (in its discretion) sees fit, to the extent permitted by applicable law (and subject to the remaining provisions of this Clause 32 ( The Security Agent ), in the following order of priority:
(a)
in discharging any sums owing to the Security Agent (in its capacity as such) (other than pursuant to Clause 32.2 ( Parallel Debt (Covenant to pay the Security Agent) ) or any Receiver or Delegate;
(b)
in payment or distribution to the Facility Agent, on its behalf and on behalf of the other Secured Parties, for application towards the discharge of all sums due and payable by any Obligor under any of the Finance Documents in accordance with Clause 36.5 ( Application of receipts; partial payments );
(c)
if none of the Obligors is under any further actual or contingent liability under any Finance Document, in payment or distribution to any person to whom the Security Agent is obliged to pay or distribute in priority to any Obligor; and
(d)
the balance, if any, in payment or distribution to the relevant Obligor.
32.28
Permitted Deductions
The Security Agent may, in its discretion:
(a)
set aside by way of reserve amounts required to meet, and to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement; and
(b)
pay all Taxes which may be assessed against it in respect of any of the Security Property, or as a consequence of performing its duties, or by virtue of its capacity as Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement).
32.29
Prospective liabilities
Following enforcement of any of the Transaction Security, the Security Agent may, in its discretion, or at the request of the Facility Agent, hold any Recoveries in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) for later payment to the Facility Agent for application in accordance with Clause 32.27 ( Application of receipts ) in respect of:
(a)
any sum to the Security Agent, any Receiver or any Delegate; and
(b)
any part of the Secured Liabilities,
that the Security Agent or, in the case of paragraph (b) only, the Facility Agent, reasonably considers, in each case, might become due or owing at any time in the future.
32.30
Investment of proceeds
Prior to the payment of the proceeds of the Recoveries to the Facility Agent for application in accordance with Clause 32.27 ( Application of receipts ) the Security Agent may, in its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) pending the payment from time to time of those moneys in the Security Agent's discretion in accordance with the provisions of Clause 32.27 ( Application of receipts ).
32.31
Currency conversion
(a)
For the purpose of, or pending the discharge of, any of the Secured Liabilities the Security Agent may convert any moneys received or recovered by the Security Agent from one currency to another, at a market rate of exchange.
(b)
The obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.
32.32
Good discharge
(a)
Any payment to be made in respect of the Secured Liabilities by the Security Agent may be made to the Facility Agent on behalf of the Secured Parties and any payment made in that way shall be a good discharge, to the extent of that payment, by the Security Agent.
(b)
The Security Agent is under no obligation to make the payments to the Facility Agent under paragraph (a) above in the same currency as that in which the obligations and liabilities owing to the relevant Finance Party are denominated.
32.33
Amounts received by Obligors
If any of the Obligors receives or recovers any amount which, under the terms of any of the Finance Documents, should have been paid to the Security Agent, that Obligor will hold the amount received or recovered on trust for the Security Agent and promptly pay that amount to the Security Agent for application in accordance with the terms of this Agreement.
32.34
Application and consideration
In consideration for the covenants given to the Security Agent by each Obligor in relation to Clause 32.2 ( Parallel Debt (Covenant to pay the Security Agent) ), the Security Agent agrees with each Obligor to apply all moneys from time to time paid by such Obligor to the Security Agent in accordance with the foregoing provisions of this Clause 32 ( The Security Agent ).
32.35
Full freedom to enter into transactions
Without prejudice to Clause 32.7 ( Business with the Group ) or any other provision of a Finance Document and notwithstanding any rule of law or equity to the contrary, the Security Agent shall be absolutely entitled:
(a)
to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Obligor or any person who is party to, or referred to in, a Finance Document);
(b)
to deal in and enter into and arrange transactions relating to:
(i)
any securities issued or to be issued by any Obligor or any other person; or
(ii)
any options or other derivatives in connection with such securities; and
(c)
to provide advice or other services to the Borrowers or any person who is a party to, or referred to in, a Finance Document,
and, in particular, the Security Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all such transactions and in connection with all other matters covered by paragraphs (a), (b) and (c) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.
33
ECA AGENT
33.1
Appointment and duties of ECA Agent
(a)
Each GIEK Guaranteed Lender appoints the ECA Agent to act as its agent under and in connection with the GIEK Guarantee and the Finance Documents and each Kexim Guaranteed Lender appoints the ECA Agent to act as its agent under and in connection with the Kexim Guarantee and the Finance Documents.
(b)
Each ECA Guaranteed Lender authorises the ECA Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the ECA Agent under, or in connection with, the relevant ECA Support and the Finance Documents together with any other incidental rights, powers, authorities and discretions.
(c)
The ECA Agent shall (or shall procure that the Facility Agent shall) promptly forward to each ECA Guaranteed Lender and, to the extent any such document is from a Party other than an ECA, the ECAs the original or a copy of any document which is delivered to the ECA Agent for that ECA Guaranteed Lender by any other Party or by the relevant ECA. Such document (or correspondence to which such document is attached) shall be dated and signed and shall include the guarantee number for the GIEK Guarantee.
(d)
Except where the relevant ECA Support or a Finance Document specifically provides otherwise, the ECA Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(e)
Each ECA Guaranteed Lender authorises the ECA Agent to consult with the relevant ECA (where necessary) in relation to any waivers, consents or approvals under or pursuant to the Finance Documents or the relevant ECA Support, including but not limited to any amendment, modification or waiver which:
(i)
varies the dates for, or increases the amount of, or changes the currency or the priority of, any payment of any amount under the Finance Documents;
(ii)
amends, extends or waives any of the conditions precedent referred to in Clause 4.1 ( Initial conditions precedent ) or Clause 4.2 ( Further conditions precedent ) of the Facilities Agreement; or
(iii)
imposes a new obligation on the relevant ECA, or increases an existing obligation of the relevant ECA under the relevant ECA Support or any other Finance Document,
which, in each case, shall not be made without the prior consent of the relevant ECA, and to inform the ECA Guaranteed Lenders of the result of such consultation and if such waiver, consent or approval is within the scope of the relevant ECA Support (at the discretion of the ECA Agent after consulting with the relevant ECA), such decision will be taken by the ECA Agent (acting on the sole instruction of the relevant ECA).
(f)
The ECA Agent's duties under the relevant ECA Support and the Finance Documents are solely mechanical and administrative in nature and the ECA Agent shall have no duties or obligations as agent other than those expressly conferred on it by the Finance Documents.
(g)
Nothing in this Agreement or any Finance Document shall permit or oblige any ECA Guaranteed Lender or the ECA Agent to act (or omit to act) in a manner that is inconsistent with any requirement under or in connection with the relevant ECA Support and, in particular:
(i)
each ECA Guaranteed Lender shall be authorised to take all such actions as it may deem necessary to ensure that all requirements of the relevant ECA under or in connection with the relevant ECA Support are complied with; and
(ii)
no ECA Guaranteed Lender shall be obliged to do anything if, in its opinion (upon consultation with the relevant ECA), to do so could result in a breach of any requirement of that ECA under or in connection with the relevant ECA Support or affect the validity of the relevant ECA Support.
(h)
In case of any conflict between the Finance Documents and any ECA Support, the relevant ECA Support shall, as between the ECA Guaranteed Lenders relying on it and the relevant ECA, prevail, and to the extent of such conflict or inconsistency, none of the relevant ECA Guaranteed Lenders or the ECA Agent shall assert to that ECA, the terms of the relevant Finance Documents.
33.2
Application of certain Clauses
The provisions of Clauses 31.7 ( Business with the Group ), 31.8 ( Rights and discretions ), 31.9 ( Responsibility for documentation ), 31.11 ( Exclusion of liability ), 31.12 ( Lenders' indemnity to the Facility Agent ), 31.13 ( Resignation of the Facility Agent ), 31.14 ( Confidentiality ) (it being understood that the reference to Finance Parties in Clause 31.14 ( Confidentiality ) shall be construed as a reference to the relevant ECA Guaranteed Lenders), paragraph (d) of 31.15 ( Relationship with the other Finance Parties ), 31.16 ( Credit appraisal by the Finance Parties ) and 31.19 ( Full freedom to enter into transactions ) shall apply in respect of the ECA Agent in its capacity as such as if each reference to the Facility Agent were a reference to the ECA Agent, each reference to Lenders were a reference to the relevant ECA Guaranteed Lenders, each reference to the Finance Documents included a reference to the relevant ECA Support.
33.3
ECA Guaranteed Lenders' representations
(a)
Each GIEK Guaranteed Lender represents and warrants to the ECA Agent that:
(i)
no information provided by it in writing to the ECA Agent or to GIEK prior to the date of this Agreement was untrue or incorrect in any material respect except to the extent that it, in the exercise of reasonable care and due diligence prior to giving such information, could not have discovered the error or omission;
(ii)
it has not taken (or failed to take), and agrees that it shall not take (or fail to take), any action that would result in the ECA Agent being in breach of any of its obligations in its capacity as ECA Agent under the GIEK Guarantee or any of the Finance Documents, or result in the GIEK Guaranteed Lenders being in breach of any of their respective obligations as guaranteed parties under the GIEK Guarantee, or which would otherwise prejudice the ECA Agent's ability to make a claim on behalf of the GIEK Guaranteed Lenders under the GIEK Guarantee;
(iii)
it has reviewed the GIEK Guarantee and is aware of its provisions; and
(iv)
the representations and warranties made by the ECA Agent on its behalf under the GIEK Guarantee are true and correct with respect to it in all respects.
(b)
Each Kexim Guaranteed Lender represents and warrants to the ECA Agent that:
(i)
no information provided by it in writing to the ECA Agent or to the Kexim Guarantor prior to the date of this Agreement was untrue or incorrect in any material respect except to the extent that it, in the exercise of reasonable care and due diligence prior to giving such information, could not have discovered the error or omission;
(ii)
it has not taken (or failed to take), and agrees that it shall not take (or fail to take), any action that would result in the ECA Agent being in breach of any of its obligations in its capacity as ECA Agent under the Kexim Guarantee or any of the Finance Documents, or result in the Kexim Guaranteed Lenders being in breach of any of their respective obligations as insured parties under the Kexim Guarantee, or which would otherwise prejudice the ECA Agent's ability to make a claim on behalf of the Kexim Guaranteed Lenders under the Kexim Guarantee;
(iii)
it has reviewed the Kexim Guarantee and is aware of its provisions; and
(iv)
the representations and warranties made by the ECA Agent on its behalf under the Kexim Guarantee are true and correct with respect to it in all respects.
33.4
Claims under ECA Support
(a)
All communication between the ECA Guaranteed Lenders and the relevant ECA shall be carried out through the ECA Agent.
(b)
Each ECA Guaranteed Lender acknowledges and agrees that it shall have no entitlement to make any claim or to take any action whatsoever under or in connection with the relevant ECA Support except through the ECA Agent and that all of the rights of the ECA Guaranteed Lenders under the relevant ECA Support shall only be exercised by the ECA Agent.
33.5
Payments by an ECA
Each ECA is irrevocably and unconditionally authorised by the Borrowers to pay any amounts under the ECA Support granted by it promptly on demand by the ECA Agent, without any reference or further authorisation from the Borrowers and, save for manifest error, without being under any duty or obligation to enquire into the justification or validity thereof and/or dispute whether any claims or demands under the relevant ECA Support are properly or validly made. Notwithstanding that the Borrowers may dispute the validity of any such claim or demand, each Obligor shall accept any claim or demand under the relevant ECA Support as binding upon the relevant ECA and as conclusive evidence that the relevant ECA is liable thereunder to pay any such amount to the Facility Agent.
33.6
ECA Guaranteed Lenders' indemnity to the ECA Agent
(a)
Each ECA Guaranteed Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the ECA Agent and every Receiver, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by reason of the ECA Agent's or Receiver's gross negligence or wilful misconduct) in acting as ECA Agent or Receiver under the Finance Documents (unless the ECA Agent or Receiver has been reimbursed by an Obligor pursuant to a Finance Document).
(b)
Subject to paragraph (c) below, the Borrowers shall immediately on demand reimburse any ECA Guaranteed Lender for any payment that ECA Guaranteed Lender makes to the ECA Agent pursuant to paragraph (a) above.
(c)
Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the ECA Guaranteed Lender claims reimbursement relates to a liability of the ECA Agent to an Obligor.
34
CONDUCT OF BUSINESS BY THE FINANCE PARTIES
No provision of this Agreement will:
(a)
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
35
SHARING AMONG THE FINANCE PARTIES
35.1
Payments to Finance Parties
If a Finance Party (a " Recovering Finance Party ") receives or recovers any amount from an Obligor other than in accordance with Clause 36 ( Payment Mechanics ) (a " Recovered Amount ") and applies that amount to a payment due to it under the Finance Documents then:
(a)
the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Facility Agent;
(b)
the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Facility Agent and distributed in accordance with Clause 36 ( Payment Mechanics ), without taking account of any Tax which would be imposed on the Facility Agent in relation to the receipt, recovery or distribution; and
(c)
the Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the " Sharing Payment ") equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 36.5 ( Application of receipts; partial payments ).
35.2
Redistribution of payments
The Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it among the Finance Parties (other than the Recovering Finance Party) (the " Sharing Finance Parties ") in accordance with Clause 36.5 ( Application of receipts; partial payments ) towards the obligations of that Obligor to the Sharing Finance Parties.
35.3
Recovering Finance Party's rights
On a distribution by the Facility Agent under Clause 35.2 ( Redistribution of payments ) of a payment received by a Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor.
35.4
Reversal of redistribution
If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a)
each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the " Redistributed Amount "); and
(b)
as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Obligor.
35.5
Exceptions
(a)
This Clause 35 ( Sharing among the Finance Parties ) shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.
(b)
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:
(i)
it notified that other Finance Party of the legal or arbitration proceedings; and
(ii)
that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

SECTION 11

ADMINISTRATION
36
PAYMENT MECHANICS
36.1
Payments to the Facility Agent
(a)
On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make an amount equal to such payment available to the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
(b)
Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in such Participating Member State or London, as specified by the Facility Agent) and with such bank as the Facility Agent, in each case, specifies.
36.2
Distributions by the Facility Agent
Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 36.3 ( Distributions to an Obligor ) and Clause 36.4 ( Clawback and pre-funding ) be made available by the Facility Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Facility Agent by not less than five Business Days' notice with a bank specified by that Party in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London), as specified by that Party or, in the case of an Advance, to such account of such person as may be specified by the Borrowers in a Utilisation Request.
36.3
Distributions to an Obligor
The Facility Agent may (with the consent of the Obligor or in accordance with Clause 37 ( Set-Off )) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
36.4
Clawback and pre-funding
(a)
Where a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
(b)
Unless paragraph (c) below applies, if the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.
(c)
If the Facility Agent is willing to make available amounts for the account of the Borrowers before receiving funds from the Lenders then if and to the extent that the Facility Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to the Borrowers:
(i)
the Borrowers shall on demand refund it to the Facility Agent; and
(ii)
the Lender by whom those funds should have been made available or, if the Lender fails to do so, the Borrowers shall on demand pay to the Facility Agent the amount (as certified by the Facility Agent) which will indemnify the Facility Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.
36.5
Application of receipts; partial payments
(a)
If the Facility Agent or the Security Agent (as applicable) receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Facility Agent or the Security Agent (as applicable) shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:
(i)
first , in or towards payment pro rata of any unpaid fees, costs and expenses of, and any other amounts owing to, the Facility Agent, the Security Agent, any Receiver or any Delegate under the Finance Documents;
(ii)
secondly , in or towards payment of any accrued interest (including the GIEK Guaranteed Premium) and fees due but unpaid to the Lenders under this Agreement; and
(iii)
thirdly , in or towards payment of any principal due but unpaid to the Lenders under this Agreement; and
(iv)
fourthly , in or towards payment of any periodical payments (not being payments as a result of termination or closing out) due but unpaid to the Hedge Counterparties under the Hedging Agreements;
(v)
fifthly , any payments as a result of termination or closing out due but unpaid to the Hedge Counterparties under the Hedging Agreements; and
(vi)
sixthly, in or towards payment pro rata of any other sum due to any Finance Party but unpaid under the Finance Documents .
(b)
The Facility Agent shall, if so directed by the Majority Lenders, vary, or instruct the Security Agent to vary (as applicable), the order set out in sub-paragraphs (i) to (iv) of paragraph (a) above.
(c)
Paragraphs (a) and (b) above will override any appropriation made by an Obligor.
36.6
No set-off by Obligors
(a)
All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
(b)
Paragraph (a) above shall not affect the operation of any payment or close-out netting in respect of any amounts owing under any Hedging Agreement.
36.7
Business Days
(a)
Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
(b)
During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
36.8
Currency of account
(a)
Subject to paragraphs (b) and (c) below, dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document.
(b)
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(c)
Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.
36.9
Change of currency
(a)
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:
(i)
any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility Agent (after consultation with the Borrowers); and
(ii)
any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility Agent (acting reasonably).
(b)
If a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and after consultation with the Borrowers) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.
36.10
Currency Conversion
(a)
For the purpose of, or pending any payment to be made by any Servicing Party under any Finance Document, such Servicing Party may convert any moneys received or recovered by it from one currency to another, at a market rate of exchange.
(b)
The obligations of any Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion.
36.11
Disruption to Payment Systems etc.
If either the Facility Agent determines (in its discretion) that a Disruption Event has occurred or the Facility Agent is notified by a Borrower that a Disruption Event has occurred:
(a)
the Facility Agent may, and shall if requested to do so by a Borrower, consult with the Borrowers with a view to agreeing with the Borrowers such changes to the operation or administration of the Facility as the Facility Agent may deem necessary in the circumstances;
(b)
the Facility Agent shall not be obliged to consult with the Borrowers in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;
(c)
the Facility Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;
(d)
any such changes agreed upon by the Facility Agent and the Borrowers shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 45 ( Amendments and Waivers );
(e)
the Facility Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 36.11 ( Disruption to Payment Systems etc. ); and
(f)
the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.
37
SET-OFF
A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
38
BAIL-IN
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
39
NOTICES
39.1
Communications in writing
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
39.2
Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents are:
(a)
in the case of the Obligors, that specified in Schedule 1 ( The Parties );
(b)
in the case of each Lender, each Hedge Counterparty or any other Obligor, that specified in Schedule 1 ( The Parties ) or, if it becomes a Party after the date of this Agreement, that notified in writing to the Facility Agent on or before the date on which it becomes a Party;
(c)
in the case of the Facility Agent, that specified in Schedule 1 ( The Parties ); and
(d)
in the case of the Security Agent, that specified in Schedule 1 ( The Parties ),
or any substitute address, fax number or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than five Business Days' notice.
39.3
Delivery
(a)
Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:
(i)
if by way of fax, when received in legible form; or
(ii)
if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,
and, if a particular department or officer is specified as part of its address details provided under Clause 39.2 ( Addresses ), if addressed to that department or officer.
(b)
Any communication or document to be made or delivered to a Servicing Party will be effective only when actually received by that Servicing Party and then only if it is expressly marked for the attention of the department or officer of that Servicing Party specified in Schedule 1 ( The Parties ) (or any substitute department or officer as that Servicing Party shall specify for this purpose).
(c)
All notices from or to an Obligor shall be sent through the Facility Agent unless otherwise specified in any Finance Document.
(d)
Any communication or document made or delivered to the Borrowers in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors.
(e)
Any communication or document which becomes effective, in accordance with paragraphs (a) to (d) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
39.4
Notification of address and fax number
Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 39.2 ( Addresses ) or changing its own address or fax number, the Facility Agent shall notify the other Parties.
39.5
Electronic communication
(a)
Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website) if those two Parties:
(i)
notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means; and
(ii)
notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice.
(b)
Any such electronic communication as specified in paragraph (a) above to be made between an Obligor and a Finance Party may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication.
(c)
Any such electronic communication as specified in paragraph (a) above made between any two Parties will be effective only when actually received (or made available) in readable form and in the case of any electronic communication made by a Party to the Facility Agent or the Security Agent only if it is addressed in such a manner as the Facility Agent or the Security Agent shall specify for this purpose.
(d)
Any electronic communication which becomes effective, in accordance with paragraph (c) above, after 5.00 p.m. in the place in which the Party to whom the relevant communication is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following day.
(e)
Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this Clause 39.5 ( Electronic communication ).
39.6
English language
(a)
Any notice given under or in connection with any Finance Document must be in English.
(b)
All other documents provided under or in connection with any Finance Document must be:
(i)
in English; or
(ii)
if not in English, and if so required by the Facility Agent, accompanied by a certified English translation prepared by a translator approved by the Facility Agent and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
39.7
Hedging Agreement
Notwithstanding anything in Clause 1.1 ( Definitions ), references to the Finance Documents or a Finance Document in this Clause do not include any Hedging Agreement entered into by a Borrower with a Hedge Counterparty in connection with the Facility.
40
CALCULATIONS AND CERTIFICATES
40.1
Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
40.2
Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
40.3
Day count convention
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
41
PARTIAL INVALIDITY
If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
42
REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of a Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.
43
SETTLEMENT OR DISCHARGE CONDITIONAL
Any settlement or discharge under any Finance Document between any Finance Party and any Obligor shall be conditional upon no security or payment to any Finance Party by any Obligor or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise.
44
IRREVOCABLE PAYMENT
If the Facility Agent considers that an amount paid or discharged by, or on behalf of, an Obligor or by any other person in purported payment or discharge of an obligation of that Obligor to a Secured Party under the Finance Documents is capable of being avoided or otherwise set aside on the liquidation or administration of that Obligor or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Finance Documents.
45
AMENDMENTS AND WAIVERS
45.1
Required consents
(a)
Subject to Clause 45.2 ( All Lender matters ) and Clause 45.3 ( Other exceptions ) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and, in the case of an amendment, the Obligors and any such amendment or waiver will be binding on all Parties.
(b)
The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 45 ( Amendments and Waivers ).
(c)
Without prejudice to the generality of Clause 31.8 ( Rights and discretions ), the Facility Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.
45.2
All Lender matters
Subject to Clause 45.4 ( Replacement of Screen Rate ), an amendment of or waiver or consent in relation to any term of any Finance Document that has the effect of changing or which relates to:
(a)
the definition of "Majority Lenders" in Clause 1.1 ( Definitions );
(b)
a postponement to or extension of the date of payment of any amount under the Finance Documents;
(c)
a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable;
(d)
a change in currency of payment of any amount under the Finance Documents;
(e)
an increase in any Commitment or the Total Commitments, an extension of any Availability Period or any requirement that a cancellation of Commitments reduces the Commitments rateably under the Facility;
(f)
a change to any Obligor other than in accordance with Clause 30 ( Changes to the Obligors );
(g)
any provision which expressly requires the consent of all the Lenders;
(h)
this Clause 45 ( Amendments and Waivers );
(i)
any change to the preamble (Background), Clause 2 ( The Facility ), Clause 3 ( Purpose ), Clause 5 ( Utilisation ), Clause 7.5 ( ECA prepayment option ), Clause 7.6 ( Mandatory cancellation on default under a Shipbuilding Contract ), Clause 7.7 ( Mandatory prepayment on sale or Total Loss ), Clause 7.8 ( Mandatory prepayment of Hedging Prepayment Proceeds ), Clause 8 ( Interest ), Clause 26.2 ( Minimum Required Security Cover ) (except for any increase to the minimum required security cover described in Clause 26.2 ( Minimum required security cover ) which shall not require the consent of the Lenders or ECAs), Clause 27 ( Accounts, application of Earnings and Hedge Receipts), Clause 29 ( Changes to the Lenders ), Clause 35 ( Sharing among the Finance Parties ), Clause 49 ( Governing Law ), Clause 50 ( Enforcement ) or Schedule 2 ( Conditions Precedent );
(j)
any release of, or material variation to, any Transaction Security, guarantee, indemnity or subordination arrangement set out in a Finance Document (except in the case of a release of Transaction Security as it relates to the disposal of an asset which is the subject of the Transaction Security and where such disposal is expressly permitted by the Majority Lenders or otherwise under a Finance Document);
(k)
(other than as expressly permitted by the provisions of any Finance Document), the nature or scope of:
(i)
the guarantees and indemnities granted under Clause 17 ( Guarantee and Indemnity – Parent Guarantor );
(ii)
the guarantees and indemnities granted under Clause 19 ( Guarantee and Indemnity – Hedge Guarantors );
(iii)
the joint and several liability of the Borrowers under Clause 18 ( Joint and Several Liability of the Borrowers );
(iv)
the Security Assets; or
(v)
the manner in which the proceeds of enforcement of the Transaction Security are distributed,
(except in the case of sub-paragraphs (iv) and (v) above, insofar as it relates to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document);
(l)
the release of the guarantees and indemnities granted under Clause 17 ( Guarantee and Indemnity – Parent Guarantor ) or Clause 19 ( Guarantee and Indemnity – Hedge Guarantors ) or the release of the joint and several liability of the Borrowers under Clause 18 ( Joint and Several Liability of the Borrowers ) or of any Transaction Security unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document,
shall not be made, or given, without the prior consent of all the Lenders.
45.3
Other exceptions
(a)
An amendment or waiver which relates to the rights or obligations of a Servicing Party, a Mandated Lead Arranger, the ECA Agent or any ECA (each in their capacity as such) may not be effected without the consent of that Servicing Party, Mandated Lead Arranger, the ECA Agent or that ECA, as the case may be.
(b)
An amendment or waiver which relates to and would adversely affect the rights or obligations of a Hedge Counterparty (in its capacity as such) may not be effected without the consent of that Hedge Counterparty.
(c)
The Borrowers and the Facility Agent or the Security Agent, as applicable, may amend or waive a term of a Fee Letter to which they are party with the consent of the other parties to that Fee Letter.
45.4
Replacement of Screen Rate
(a)
Subject to Clause 45.3 ( Other exceptions ), if the Screen Rate is not available for dollars, any amendment or waiver which relates to providing for another benchmark rate to apply in relation to dollars, in place of that Screen Rate (or which relates to aligning any provision of a Finance Document to the use of that benchmark rate) may be made with the consent of the Majority Lenders and the Obligors.
(b)
If any Lender fails to respond to a request for an amendment or waiver described in paragraph (a) above within 5 Business Days (unless the Borrowers and the Facility Agent agree to a longer time period in relation to any request) of that request being made:
(i)
its Commitment shall not be included for the purpose of calculating the Total Commitments when ascertaining whether any relevant percentage of Total Commitments has been obtained to approve that request; and
(ii)
its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.
45.5
Obligor Intent
Without prejudice to the generality of Clauses 1.2 ( Construction ), 17.4 ( Waiver of defences ), 18.2 ( Waiver of defences ) and 19.4 ( Waiver of defences ), each Obligor expressly confirms that it intends that any guarantee contained in this Agreement or any other Finance Document and any Security created by any Finance Document shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new borrowers; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.
46
CONFIDENTIAL INFORMATION
46.1
Confidentiality
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 46.2 ( Disclosure of Confidential Information ) and Clause 46.4 ( Disclosure to numbering service providers ) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
46.2
Disclosure of Confidential Information
Any Finance Party may disclose:
(a)
to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives and any ECA such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
(b)
to any person:
(i)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Facility Agent or Security Agent and, in each case, to any of that person's Affiliates, Related Funds, Representatives and professional advisers;
(ii)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;
(iii)
appointed by any Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (c) of Clause 31.15 ( Relationship with the other Finance Parties ));
(iv)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in sub-paragraph (i) or (ii) of paragraph (b) above;
(v)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
(vi)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;
(vii)
to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 29.8 ( Security over Lenders' rights );
(viii)
who is a Party, a member of the Group or any related entity of an Obligor;
(ix)
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document; or
(x)
with the consent of the Parent Guarantor;
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
(A)
in relation to sub-paragraphs (i), (ii) and (iii) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B)
in relation to sub-paragraph (iv) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(C)
in relation to sub-paragraphs (v), (vi) and (vii) of paragraph (b) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances;
(c)
to any person appointed by that Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/ Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrowers and the relevant Finance Party;
(d)
to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information;
46.3
Disclosure by GIEK
Each Obligor agrees that GIEK may, without the prior consent of any Obligor, publish key information concerning the GIEK Guarantee, this Agreement and the transactions contemplated thereby, limited to key information regarding the currency, amount and purpose of the Total Commitments, the Loan and the amount guaranteed by GIEK, the name of the Parties and their country of residence, the name of the Builder, the type of vessel, the date of this Agreement and the issuance of the GIEK Guarantee (while other information shall only be published with the prior written consent of the Obligors).
46.4
Disclosure to numbering service providers
(a)
Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:
(i)
names of Obligors;
(ii)
country of domicile of Obligors;
(iii)
place of incorporation of Obligors;
(iv)
date of this Agreement;
(v)
Clause 49 ( Governing Law );
(vi)
the names of the Facility Agent and the Mandated Lead Arrangers;
(vii)
date of each amendment and restatement of this Agreement;
(viii)
amount of Total Commitments;
(ix)
currency of the Facility;
(x)
type of Facility;
(xi)
ranking of Facility;
(xii)
Termination Date for Facility;
(xiii)
changes to any of the information previously supplied pursuant to sub-paragraphs (i) to (xii) above; and
(xiv)
such other information agreed between such Finance Party and the Borrowers,
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
(b)
The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.
(c)
Each Obligor represents that none of the information set out in sub-paragraphs (i) to (xiv) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information.
46.5
Entire agreement
This Clause 46 ( Confidential Information ) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
46.6
Inside information
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
46.7
Notification of disclosure
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers:
(a)
of the circumstances of any disclosure of Confidential Information made pursuant to sub-paragraph (v) of paragraph (b) of Clause 46.2 ( Disclosure of Confidential Information ) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and
(b)
upon becoming aware that Confidential Information has been disclosed in breach of this Clause 46 ( Confidential Information ).
46.8
Continuing obligations
The obligations in this Clause 46 ( Confidential Information ) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:
(a)
the date on which all amounts payable by the Obligors under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and
(b)
the date on which such Finance Party otherwise ceases to be a Finance Party.
47
CONFIDENTIALITY OF FUNDING RATES
47.1
Confidentiality and disclosure
(a)
The Facility Agent and each Obligor agree to keep each Funding Rate confidential and not to disclose it to anyone, save to the extent permitted by paragraphs (b) and (c) below.
(b)
The Facility Agent may disclose:
(i)
any Funding Rate to the Borrowers pursuant to Clause 8.4 ( Notification of rates of interest ); and
(ii)
any Funding Rate to any person appointed by it to provide administration services in respect of one or more of the Finance Documents to the extent necessary to enable such service provider to provide those services if the service provider to whom that information is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Facility Agent and the relevant Lender, as the case may be.
(c)
The Facility Agent may disclose any Funding Rate, and each Obligor may disclose any Funding Rate, to:
(i)
any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives, if any person to whom that Funding Rate is to be given pursuant to this sub-paragraph (i) is informed in writing of its confidential nature and that it may be price sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of that Funding Rate or is otherwise bound by requirements of confidentiality in relation to it;
(ii)
any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price sensitive information except that there shall be no requirement to so inform if, in the opinion of the Facility Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances;
(iii)
any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price sensitive information except that there shall be no requirement to so inform if, in the opinion of the Facility Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; and
(iv)
any person with the consent of the relevant Lender, as the case may be.
47.2
Related obligations
(a)
The Facility Agent and each Obligor acknowledge that each Funding Rate is or may be price sensitive information and that its use may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Facility Agent and each Obligor undertake not to use any Funding Rate for any unlawful purpose.
(b)
The Facility Agent and each Obligor agree (to the extent permitted by law and regulation) to inform the relevant Lender:
(i)
of the circumstances of any disclosure made pursuant to sub-paragraph (ii) of paragraph (c) of Clause 47.1 ( Confidentiality and disclosure ) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and
(ii)
upon becoming aware that any information has been disclosed in breach of this Clause 47 ( Confidentiality of Funding Rates ).
47.3
No Event of Default
No Event of Default will occur under Clause 28.4 ( Other obligations ) by reason only of an Obligor's failure to comply with this Clause 47 ( Confidentiality of Funding Rates ).
48
COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.




SECTION 12

GOVERNING LAW AND ENFORCEMENT
49
GOVERNING LAW
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
50
ENFORCEMENT
50.1
Jurisdiction
(a)
Unless specifically provided in another Finance Document in relation to that Finance Document, the courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with any Finance Document (including a dispute regarding the existence, validity or termination of any Finance Document or any non-contractual obligation arising out of or in connection with any Finance Document) (a " Dispute ").
(b)
The Obligors accept that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Obligor will argue to the contrary.
(c)
This Clause 50.1 ( Jurisdiction ) is for the benefit of the Secured Parties only. As a result, no Secured Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Secured Parties may take concurrent proceedings in any number of jurisdictions.
50.2
Service of process
(a)
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales):
(i)
irrevocably appoints Scorpio UK Limited at its business address for the time being, presently at 10 Lower Grosvenor Place, London, SW1W 0EN (such communication to be marked preferably and if possible on the paper envelope (not any courier exterior) with “STNG Transaction” for the urgent attention of General Counsel) as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and
(ii)
agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.
(b)
If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowers (on behalf of all the Obligors) must immediately (and in any event within three days of such event taking place) appoint another agent on terms acceptable to the Facility Agent. Failing this, the Facility Agent may appoint another agent for this purpose.
This Agreement has been entered into on the date stated at the beginning of this Agreement.

SCHEDULE 1

THE PARTIES
PART A

THE OBLIGORS
Borrowers and Hedge Guarantors
Place of Incorporation
Registration number (or equivalent, if any)
Address for Communication
STI Galata Shipping Company Limited
Marshall Islands
77908




c/o Scorpio Tankers Inc,  
Le Millenium,  
9 Boulevard Charles III,  
98000 Monaco
Attn: Mr Luca Forgione - Legal Department
Fax No: + 3 77 97 77 83 46
Email: legal@scorpiogroup.net
STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited)
Marshall Islands
77910
STI Leblon Shipping Company Limited
Marshall Islands
77911
STI La Boca Shipping Company Limited
Marshall Islands
77912
STI San Telmo Shipping Company Limited
Marshall Islands
77913
STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited)
Marshall Islands
77914
STI Esles II Shipping Company Limited
Marshall Islands
78196
STI Jardins Shipping Company Limited
Marshall Islands
77917
Parent Guarantor
Place of Incorporation
Registration number (or equivalent, if any)
Address for Communication
Scorpio Tankers Inc.
Marshall Islands
36141
Le Millenium,  
9 Boulevard Charles III, 98000 Monaco
Attn: Mr Luca Forgione - Legal Department
Fax No: + 3 77 97 77 83 46
Email: legal@scorpiogroup.net


41        
Execution Copy

PART B

THE ORIGINAL LENDERS

Name of Lender
Commitment
Address for Communication
THE ORIGINAL COMMERCIAL LENDERS
Commercial Facility A
Macquarie Factoring (UK) Limited
USD 15,000,000
Level 10
28 Ropemaker Street
London
EC2Y 9HD
England
Fax: +44 20 3037 4219
Attention:
Guido Musso
Division Director
International: +44 20 3037 2438
Business Mobile: +44 77 6682 0080
Guido.Musso@macquarie.com

Davide Alessandrini
Associate Director
International: +41 44 562 1566
Business Mobile: +41 79 210 0222
Davide.Alessandrini@macquarie.com

Jameson Gadd
Senior Manager
International: +41 44 562 1564
Business Mobile: +41 79 201 0850
Jameson.Gadd@macquarie.com

Commercial Facility B

42        
Execution Copy

DekaBank Deutsche Girozentrale
USD 25,000,000
Mainzer Landstrasse 16
60325 Frankfurt am Main
Germany

Attention: Stefan Schuett
Tel: +49 69 7147 2603
Fax: +49 69 7147 2171
Email: stefan.schuett@deka.de

With a copy to:

Attention: Nicole Holzhaeuser / Iris Menzel
Tel: +49 69 7147 5586
Fax: +49 69 7147 2171
Emails:
Kredit-Support.Kreditservice@deka.de
nicole.holzhaeuser@deka.de
iris.menzel@deka.de
Total Commercial Facilities Loan Commitment: USD 40,000,000
THE ORIGINAL GIEK GUARANTEED LENDERS
Macquarie Factoring (UK) Limited
USD 32,000,000
Level 10
28 Ropemaker Street
London
EC2Y 9HD
England
Attention:
Guido Musso
Division Director
International: +44 20 3037 2438
Business Mobile: +44 77 6682 0080
Guido.Musso@macquarie.com

Davide Alessandrini
Associate Director
International: +41 44 562 1566
Business Mobile: +41 79 210 0222
Davide.Alessandrini@macquarie.com

Jameson Gadd
Senior Manager
International: +41 44 562 1564
Business Mobile: +41 79 201 0850
Jameson.Gadd@macquarie.com

Total GIEK Guaranteed Facility Loan Commitment: USD 32,000,000
THE ORIGINAL KEXIM GUARANTEED LENDERS

43        
Execution Copy

DekaBank Deutsche Girozentrale
USD 48,000,000
Mainzer Landstrasse 16
60325 Frankfurt am Main
Germany

Attention: Stefan Schuett
Tel: +49 69 7147 2603
Fax: +49 69 7147 2171
Email: stefan.schuett@deka.de

With a copy to:

Attention: Nicole Holzhaeuser / Iris Menzel
Tel: +49 69 7147 5586
Fax: +49 69 7147 2171
Emails:
Kredit-Support.Kreditservice@deka.de
nicole.holzhaeuser@deka.de
iris.menzel@deka.de
Total Kexim Guaranteed Facility Loan Commitment: USD 48,000,000
KEXIM
The Export–Import Bank of Korea
USD 52,000,000
BIFC 20 th  floor, Munhyeongeumyung-ro 40, Namgu, Busan 608-828, Korea
Attention: Seo Hye-lim
Senior Loan Officer
Telephone: +82 51 922 8826
Facsimile: +82 51 922 8849
E-mail: hyelim@koreaexim.go.kr

With a copy to:

Attention: Kim Ji-Eun,
Loan Officer
Telephone: +82 51 922 8827
Facsimile: +82 51 922 8849
E-mail: jekim@koreaexim.go.kr
Total Kexim Direct Facility Loan Commitment: USD 52,000,000


44        
Execution Copy


 
 
THE HEDGE COUNTERPARTIES
Original Hedge Counterparty
Address for communication
Macquarie Factoring (UK) Limited
Level 10
28 Ropemaker Street
London
EC2Y 9HD
England
Attention:
Guido Musso
Division Director
International: +44 20 3037 2438
Business Mobile: +44 77 6682 0080
Guido.Musso@macquarie.com

Davide Alessandrini
Associate Director
International: +41 44 562 1566
Business Mobile: +41 79 210 0222
Davide.Alessandrini@macquarie.com

Jameson Gadd
Senior Manager
International: +41 44 562 1564
Business Mobile: +41 79 201 0850
Jameson.Gadd@macquarie.com

DekaBank Deutsche Girozentrale
Mainzer Landstrasse 16
60325 Frankfurt am Main
Germany

Attention: Stefan Schuett
Tel: +49 69 7147 2603
Fax: +49 69 7147 2171
Email: stefan.schuett@deka.de

With a copy to:

Attention: Nicole Holzhaeuser / Iris Menzel
Tel: +49 69 7147 5586
Fax: +49 69 7147 2171
Emails:
Kredit-Support.Kreditservice@deka.de
nicole.holzhaeuser@deka.de
iris.menzel@deka.de

45        
Execution Copy

The Export–Import Bank of Korea  
BIFC 20 th  floor, Munhyeongeumyung-ro 40, Namgu, Busan 608-828, Korea
Attention: Seo Hye-lim
Senior Loan Officer
Telephone: +82 51 922 8826
Facsimile: +82 51 922 8849
E-mail: hyelim@koreaexim.go.kr

With a copy to:

Attention: Kim Ji-Eun,
Loan Officer
Telephone: +82 51 922 8827
Facsimile: +82 51 922 8849
E-mail: jekim@koreaexim.go.kr


46        
Execution Copy



PART C

THE SERVICING PARTIES
Name of Facility Agent
Address for communication
Wilmington Trust (London) Limited
Third Floor
King’s Arms Yard
London
EC2R 7AF
England
Attention: Chris Hurford
Tel: +44 (0)20 7397 3600
Fax +44 (0)20 7397 3601
Email: Churford@Wilmingtontrust.com

Name of Security Agent
Address for communication
Wilmington Trust (London) Limited
Third Floor
King’s Arms Yard
London
EC2R 7AF
England
Attention: Chris Hurford
Tel: +44 (0)20 7397 3600
Fax +44 (0)20 7397 3601
Email: Churford@Wilmingtontrust.com

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

SCHEDULE 2

CONDITIONS PRECEDENT
PART A

CONDITIONS PRECEDENT TO EACH UTILISATION REQUEST
1
Obligors
1.1
A copy of the constitutional documents of each Obligor.
1.2
A copy of a resolution of the board of directors of each Obligor:
(a)
approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;
(b)
authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and
(c)
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, a Utilisation Request) to be signed and/or despatched by it under, or in connection with, the Finance Documents to which it is a party.
1.3
An original of the power of attorney of any Obligor authorising a specified person or persons to execute the Finance Documents to which it is a party.
1.4
A specimen of the signature of each person authorised by the resolution referred to in paragraph 1.2 above.
1.5
If required, a copy of a resolution signed by the Parent Guarantor as the holder of the issued shares in each Borrower, approving the terms of, and the transactions contemplated by, the Finance Documents to which that Borrower is a party.
1.6
A certificate of each Obligor (signed by a director) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on that Obligor to be exceeded.
1.7
A certificate of an authorised signatory of the relevant Obligor certifying that each copy document relating to it specified in this paragraph 1 of Part A of Schedule 2 ( Conditions Precedent ) is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.
2
Transaction Documents
2.1
Copies of any Hedging Agreement executed by a Hedge Counterparty and a Borrower, if any.
2.2
Copies of each Shipbuilding Contract and of any amendments or variations signed or issued by a Borrower or the Builder (or both of them) under or in connection with it.
3
Finance Documents
3.1
A duly executed original of any Finance Document not otherwise referred to in this Schedule 2 ( Conditions Precedent ).
3.2
A duly executed original of any other document required to be delivered by each Finance Document if not otherwise referred to this Schedule 2 ( Conditions Precedent ).
4
Security
4.1
A duly executed original of:
(a)
in respect of the first Utilisation Request only, the Account Security in relation to the Debt Service Reserve Account;
(b)
the Account Security in relation to each Account in respect of the relevant Borrower;
(c)
the Shares Security and Assignment of Intra-Group Loan Receivables in respect of the relevant Borrower,
(d)
if any Hedging Agreement has been entered into, the Hedging Agreement Security in respect of the relevant Borrower,
and of each document to be delivered under each of them.
5
GIEK documents
5.1
A duly executed original of the GIEK Guarantee on terms satisfactory to the ECA Agent and all the GIEK Guaranteed Lenders.
5.2
Evidence that any costs and expenses which are then due and payable to GIEK has been paid in accordance with the terms of the GIEK Guarantee.
5.3
Any other requirements of GIEK pursuant to the GIEK Guarantee being met.
6
Kexim documents
6.1
A duly executed original of the Kexim Guarantee on terms satisfactory to the ECA Agent and all the Kexim Guaranteed Lenders.
6.2
Evidence that any amount of the Kexim Guarantee Premium in relation to the Kexim Guarantee and any costs and expenses which are then due and payable to the Kexim Guarantor has been paid in accordance with the terms of the Kexim Guarantee.
6.3
Any other requirements of the Kexim Guarantor pursuant to the Kexim Guarantee being met.
7
Legal opinions
7.1
A legal opinion of Watson Farley & Williams LLP, legal advisers to the Mandated Lead Arrangers, the Facility Agent and the Security Agent in England, substantially in the form distributed to the Original Lenders before signing this Agreement.
7.2
If an Obligor is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Mandated Lead Arrangers, the Facility Agent and the Security Agent in the relevant jurisdiction, substantially in the form distributed to the Original Lenders before signing this Agreement.
7.3
Legal opinions of the legal advisers to the Mandated Lead Arrangers, the Facility Agent and the Security Agent in such other relevant jurisdictions as the Facility Agent may require.
7.4
A legal opinion of Loyens and Loeff, Dutch legal advisers to the MLA and Security Agent.
7.5
A legal opinion of Advokatfirmaet BAHR DA, Norwegian legal advisers to the GIEK Guaranteed Lenders, in such form as agreed between that legal adviser and the GIEK Guaranteed Lenders.
7.6
A legal opinion of Shin & Kim, Korean legal advisers to Kexim, in such form as agreed between that legal adviser and the Kexim Guaranteed Lenders.
8
Other documents and evidence
8.1
A written statement from the Parent Guarantor that there are no ongoing discussions or arrangements with the Lenders to accept any waiver or amendment on any financial covenant, except where that waiver or amendment request relates (i) directly to the interest coverage covenant, and/or (ii) to the exclusion of impairment charges from the calculation of any of the financial covenants.
8.2
A duly executed original of the Working Conditions Side Letter.
8.3
Evidence that any process agent referred to in Clause 50.2 ( Service of process ), if not an Obligor, has accepted its appointment.
8.4
A copy of any other Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by any Transaction Document or for the validity and enforceability of any Transaction Document.
8.5
Copies of the Original Financial Statements certified by any Director and / or officer of the Parent Guarantor.
8.6
Evidence that the relevant Earnings Account and Retention Account have been opened.
8.7
Evidence that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11 ( Fees ), Clause 16 ( Costs and Expenses ) and any other fees, costs or expenses payable in connection with the provision of the Facility have been paid or will be paid by its due date.
8.8
Such evidence as the Facility Agent may require for the Finance Parties to be able to satisfy each of their "know your customer" or similar identification procedures in relation to the transactions contemplated by the Finance Documents.

PART B

CONDITIONS PRECEDENT TO EACH UTILISATION
1
Borrowers
A certificate of an authorised signatory of the relevant Borrower certifying that each copy document which it provided under paragraph 1 of Part A of Schedule 2 ( Conditions Precedent ) is correct, complete and in full force and effect as at the relevant Utilisation Date.
2
Ship and other security
A duly executed original of the Mortgage and the General Assignment in respect of the relevant Ship and of each document to be delivered under or pursuant to each of them together with documentary evidence that the Mortgage in respect of the relevant Ship has been duly recorded as a valid first preferred ship mortgage in accordance with the laws of the jurisdiction of its Approved Flag.
2.1
Documentary evidence that the relevant Ship:
(a)
has been unconditionally delivered by the Builder to, and accepted by, the relevant Borrower under the relevant Shipbuilding Contract and that the full purchase price payable and all other sums due to the Builder under the relevant Shipbuilding Contract, other than the sums to be financed pursuant to the relevant Utilisation, have been paid to the Builder;
(b)
is registered in the name of the relevant Borrower under the Approved Flag.
(c)
is in the absolute and unencumbered ownership of the relevant Borrower save as contemplated by the Finance Documents;
(d)
maintains the Approved Classification with the Approved Classification Society free of all overdue recommendations and conditions of the Approved Classification Society; and
(e)
is insured in accordance with the provisions of this Agreement and all requirements in this Agreement in respect of insurances have been complied with.
2.2
Documents establishing that the relevant Ship will, as from the relevant Utilisation Date, be managed commercially by the relevant Approved Commercial Manager and managed technically by the relevant Approved Technical Manager and/or the relevant Approved Sub‑Manager (such documents the " Management Agreements "), together with:
(a)
an Approved Ship Manager's Undertaking executed by the relevant Approved Ship Manager and/or the Approved Sub‑Manager which is party to a Management Agreement with the Parent Guarantor; and
(b)
copies of the relevant Approved Technical Manager's Document of Compliance and of the relevant Ship's Safety Management Certificate (together with any other details of the applicable Safety Management System which the Facility Agent requires) and an ISSC.
2.3
Information in a form satisfactory to the Facility Agent about the relevant Ship’s employment, including copies of any Long Term Charter and of all documents signed or issued by a Borrower or the charterer (or both of them) under or in connection with it.
2.4
An opinion from an independent insurance consultant acceptable to the Facility Agent on such matters relating to the Insurances as the Facility Agent may require.
2.5
Valuations of the relevant Ship, addressed to the Facility Agent on behalf of the Finance Parties, stated to be for the purposes of this Agreement and dated not earlier than 30 days before the Delivery Date from two Approved Valuers which shows a value for that Ship of not less than 135 per cent. of the Loan (after the Advance has been utilised).
2.6
Details of the relevant Ship’s tracking device (INMARSAT number).
3
Finance Documents
A duly executed original of any Finance Document not otherwise referred to in this Schedule 2 ( Conditions Precedent ).
4
Legal opinions
Legal opinions of the legal advisers to the Mandated Lead Arrangers, the Facility Agent and the Security Agent in the jurisdiction of the Approved Flag of the Ship, England and such other relevant jurisdictions as the Facility Agent may require.
5
GIEK conditions
5.1
Confirmation from GIEK (acting through the ECA Agent) that it has received:
(a)
all necessary exporter declarations; and
(b)
evidence satisfactory to it that the Norwegian equipment manufactured by the Norwegian exporters has been delivered in accordance with the terms of the relevant equipment contracts; and
5.2
Confirmation from GIEK (acting through the ECA Agent) that it has received:
(a)
in relation to each Utilisation Date under this Agreement, a certificate, to be delivered to the Facility Agent no later than 15 Business Days prior to the relevant Utilisation Date (other than the first Utilisation Date), from the Parent Guarantor in the form set out in Schedule 13 ( Working Conditions Side Letter CP Certificate ) confirming that the Working Conditions Side Letter remains in full force and effect and that the Parent Guarantor is in compliance with its terms;
(b)
in relation to the Utilisation Date under this Agreement on or before the delivery of Ship C, a duly executed original of the “Plan” (as defined in the Working Conditions Side Letter) required to be provided pursuant to the Working Conditions Side Letter.
6
 ECA Support
6.1
Confirmation from the ECA Agent that it has not received any notification that any relevant ECA Support has been revoked and is no longer in full force and effect.
7
Other documents and evidence
7.1
Evidence that the Debt Service Reserve Account has been funded in accordance with Clause 27.2 ( Debt Service Reserve Account ).
7.2
Evidence that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11 ( Fees ) and Clause 16 ( Costs and Expenses ) have been paid or will be paid by the relevant Utilisation Date.
7.3
Evidence that the relevant Borrower (or any other member of the Group) has paid (or will pay on the Utilisation Date, as the case may be) to the Builder an amount equal to the higher of (i) 40 per cent. of the Contract Price for that Ship and (ii) the difference between the Contract Price for that Ship and 60 per cent. of the Market Value of that Ship (it being understood that in relation to amounts paid such evidence shall be provided by way of confirmation from the Builder detailing the amounts of the pre-delivery instalments received).

SCHEDULE 3

REQUESTS
PART A

UTILISATION REQUEST
From:
STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited as Borrowers
To:    Wilmington Trust (London) Limited as Facility Agent
Dated: [ l ]
Dear Sirs
STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited – [ l ] Facility Agreement dated [ l ] (the "Agreement")
1
We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
2
We wish to draw an Advance under each Facility on [ l ] in respect of Ship [A][B][C][D][E][F][G][H] (or, if that is not a Business Day, the next Business Day).
3
We wish to draw such Advances in the following amounts:
Facility
Commercial Facility A
Commercial Facility B
GIEK Guaranteed Facility
Kexim Direct Facility
Kexim Guaranteed Facility
Amount
USD [ l ]
USD [ l ]
USD [ l ]
USD [ l ]
USD [ l ]
Interest Period
3 months
3 months
3 months
3 months
3 months

4
[not applicable / You are authorised and requested to deduct from the Advance prior to funds being remitted the following amounts set out against the following items:
Deductible Items                                
Fees
Facility Agent's solicitors' fees inclusive of disbursements and VAT
[ l ] legal opinion fees (if any)
Net proceeds of Advance                         _____________]
5
We confirm that each condition specified in Clause 4.1 ( Initial conditions precedent ) and Clause 4.2 ( Further conditions precedent ) of the Agreement as they relate to the Advance to which this Utilisation Request refers is satisfied on the date of this Utilisation Request or will be satisfied when the relevant Advance is made available.
6
The [net] proceeds of this Advance should be credited to [account].
7
Subject to the provisions of paragraph (a) of Clause 5.2 ( Completion of a Utilisation Request ), this Utilisation Request is irrevocable.
Yours faithfully
____________________
[ l ]
authorised signatory for and on behalf of each of
STI Galata Shipping Company Limited (Borrower A)
STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited) (Borrower B)
STI Leblon Shipping Company Limited (Borrower C)
STI La Boca Shipping Company Limited (Borrower D)
STI San Telmo Shipping Company Limited (Borrower E)
STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited) (Borrower F)
STI Esles II Shipping Company Limited (Borrower G)
STI Jardins Shipping Company Limited (Borrower H)


SCHEDULE 4

FORM OF TRANSFER CERTIFICATE
To:    Wilmington Trust (London) Limited as Facility Agent
From:    [The Existing Lender] (the " Existing Lender ") and [The New Lender] (the " New Lender ")
Dated: [ l ]
Dear Sirs
STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited – [ l ] Facility Agreement dated [ l ] (the "Agreement")
1
We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.
2
We refer to Clause 29.5 ( Procedure for transfer ) of the Agreement:
(a)
The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all of the Existing Lender's rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender's Commitment and participation in the Loan under the Agreement as specified in the Schedule in accordance with Clause 29.5 ( Procedure for transfer ) of the Agreement.
(b)
The proposed Transfer Date is [ l ].
(c)
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 39.2 ( Addresses ) of the Agreement are set out in the Schedule.
3
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 29.4 ( Limitation of responsibility of Existing Lenders ) of the Agreement.
4
This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.
5
This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are is governed by English law.
6
This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.
Note: The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender's interest in the Transaction Security in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender's Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

THE SCHEDULE

Commitment/rights and obligations to be transferred
[ insert relevant details ]
[Facility Office address, fax number and attention details
for notices and account details for payments.]
[Existing Lender]    [New Lender]
By: [ l ]    By: [ l ]
This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [ l ].
Wilmington Trust (London) Limited as Facility Agent
By: [ l ]

SCHEDULE 5

FORM OF ASSIGNMENT AGREEMENT
To:
Wilmington Trust (London) Limited as Facility Agent and STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited as Borrowers, for and on behalf of each Obligor
From:    [the Existing Lender] (the " Existing Lender ") and [the New Lender] (the " New Lender ")
Dated: [ l ]
Dear Sirs
STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited - [ l ] Facility Agreement dated [ l ] (the "Agreement")
1
We refer to the Agreement. This is an Assignment Agreement. Terms defined in the Agreement have the same meaning in this Assignment Agreement unless given a different meaning in this Assignment Agreement.
2
We refer to Clause 29.6 ( Procedure for assignment ):
(a)
The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement, the other Finance Documents and in respect of the Transaction Security which correspond to that portion of the Existing Lender's Commitment and participations in the Loan under the Agreement as specified in the Schedule.
(b)
The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender's Commitments and participations in the Loan under the Agreement specified in the Schedule.
(c)
The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.
(d)
All rights and interests (present, future or contingent) which the Existing Lender has under or by virtue of the Finance Documents are assigned to the New Lender absolutely, free of any defects in the Existing Lender's title and of any rights or equities which the Borrowers or any other Obligor had against the Existing Lender.
3
The proposed Transfer Date is [ l ].
4
On the Transfer Date the New Lender becomes Party to the Finance Documents as a Lender.
5
The Facility Office and address, fax, number and attention details for notices of the New Lender for the purposes of Clause 39.2 ( Addresses ) are set out in the Schedule.
6
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 29.4 ( Limitation of responsibility of Existing Lenders ).
7
This Assignment Agreement acts as notice to the Facility Agent (on behalf of each Finance Party) and, upon delivery in accordance with Clause 29.7 ( Copy of Transfer Certificate or Assignment Agreement to Borrowers ), to the Borrowers (on behalf of each Obligor) of the assignment referred to in this Assignment Agreement.
8
This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment Agreement.
9
This Assignment Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
10
This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement.
Note: The execution of this Assignment Agreement may not transfer a proportionate share of the Existing Lender's interest in the Transaction Security in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender's Transaction Security in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

THE SCHEDULE
Commitment rights and obligations to be transferred by assignment, release and accession
[ insert relevant details ]
[Facility office address, fax number and attention details for notices
and account details for payments]
[Existing Lender]    [New Lender]
By: [ l ]    By: [ l ]
This Assignment Agreement is accepted by the Facility Agent and the Transfer Date is confirmed as [ l ].
Signature of this Assignment Agreement by the Facility Agent constitutes confirmation by the Facility Agent of receipt of notice of the assignment referred to herein, which notice the Facility Agent receives on behalf of each Finance Party.
Wilmington Trust (London) Limited as Facility Agent
By:

SCHEDULE 6

FORM OF HEDGE COUNTERPARTY ACCESSION LETTER
To:    Wilmington Trust (London) Limited as Facility Agent
From:    [Additional Hedge Counterparty] (the " Additional Hedge Counterparty ")
Dated:     [ l ]
Dear Sirs
STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited – [ l ] Facility Agreement dated [ l ] (the "Agreement")
1
We refer to the Agreement. This is a Hedge Counterparty Accession Letter. Terms defined in the Agreement have the same meaning in this Hedge Counterparty Accession Letter unless given a different meaning in this Hedge Counterparty Accession Letter.
2
We refer to Clause 29.11 ( Additional Hedge Counterparties ). The Additional Hedge Counterparty agrees to become an Additional Hedge Counterparty and to be bound by the terms of the Agreement as an Additional Hedge Counterparty.
3
This Hedge Counterparty Accession Letter and any non-contractual obligations arising out of or in connection with it are governed by English law.
Yours faithfully
_____________________________
[ Additional Hedge Counterparty ]
By: [ l ]
_____________________________
Wilmington Trust (London) Limited
as Facility Agent
By: [ l ]


SCHEDULE 7

FORM OF COMPLIANCE CERTIFICATE
To:    Wilmington Trust (London) Limited as Facility Agent
From:    Scorpio Tankers Inc. as Parent Guarantor
Dated: [ l ]
Dear Sirs
STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited – [ l ] Facility Agreement dated [ l ] (the "Agreement")
1
We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
2
We hereby represent that no Event of Default has occurred as at the date of this Certificate [other than [ l ]].
3
We hereby certify that, as at the date of this certificate:
3.1
the Minimum Liquidity requirement is USD[ l ],Cash and Cash Equivalents is USD [ l ];
3.2
the Consolidated Tangible Net Worth is USD [ l ];
3.3
the ratio of Net Debt to Consolidated Total Capitalization is [ l ] to [ l ];
3.4
the ratio of Consolidated EBITDA to Consolidated Net Interest Expense is [ l ] to [ l ]; and
3.5
the Market Value of the Ships plus the net realisation value of any additional security previously provided under Clause 26 (Security Cover) is USD [ l ] [as at [date of most recent half/full year certificate].
All of these thresholds and ratios are in compliance with the requirements of Clause 22 ( Financial Covenants ) and Clause 26 ( Security Cover ) of the Agreement. Copies of our calculations in relation to the financial covenants and the valuations for the purposes of determining the Market Value of the Ships is attached.


______________________________
[ l ]
[title]
Scorpio Tankers Inc.
    

SCHEDULE 8

DETAILS OF THE SHIPS
Ship name
Name
of the Borrower owner
Hull #
Dwt
Contract Price
Estimated Delivery Date
STI Galata (Ship A)
Borrower A
2601
51,000
USD 35,813,600
March 2017
STI Bosphorus (Ship B)
Borrower B
2602
51,000
USD 35,813,600
April 2017
STI Leblon (Ship C)
Borrower C
2603
51,000
USD 35,813,600
July 2017
STI La Boca (Ship D)
Borrower D
2604
51,000
USD 35,813,600
July 2017
STI San Telmo (Ship E)
Borrower E
2605
51,000
USD 36,063,600
September 2017
STI Donald C Trauscht (Ship F)
Borrower F
2606
51,000
USD 36,063,600
October 2017
STI Esles II (Ship G)
Borrower G
2607
51,000
USD 36,063,600
December 2017
STI Jardins (Ship H)
Borrower H
2608
51,000
USD 36,063,600
January 2018

SCHEDULE 9

TIMETABLES
Delivery of a duly completed Utilisation Request (Clause 5.1 ( Delivery of a Utilisation Request )
Five Business Days before the intended Utilisation Date (Clause 5.1 ( Delivery of a Utilisation Request ))
Facility Agent notifies the Lenders of the Advance in accordance with Clause 5.4 ( Lenders' participation )
Three Business Days before the intended Utilisation Date.
LIBOR is fixed
Quotation Day as of 11:00 am London time

 
 
 
 


SCHEDULE 10

REPAYMENT SCHEDULE
SHIP A

Quarter
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
(1,868,478.460)
(3,114,130.770)
(3,986,087.380)
(6,477,392.000)
(5,979,131.070)
(21,425,219.680)
(21,425,219.680)
1
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,999,621.810)
2
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,574,023.940)
3
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,148,426.070)
4
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,722,828.190)
5
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,297,230.320)
6
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,871,632.450)
7
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,446,034.580)
8
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,020,436.710)
9
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,594,838.840)
10
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,169,240.960)
11
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,743,643.090)
12
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,318,045.220)
13
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,892,447.350)
14
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,466,849.480)
15
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,041,251.610)
16
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,615,653.740)
17
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,190,055.860)
18
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,764,457.990)
19
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,338,860.120)
20
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,913,262.250)
21
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,487,664.380)
22
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,062,066.510)
23
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(11,636,468.630)
24
1,152,228.38
51,902.18
83,043.49
134,945.67
124,565.23
1,546,684.95
(10,089,783.690)
25
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,695,327.120)
26
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,300,870.560)
27
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,906,413.990)
28
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,511,957.430)
29
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,117,500.870)
30
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,723,044.300)
31
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,328,587.740)
32
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,934,131.180)
33
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,539,674.610)
34
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,145,218.050)
35
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(5,750,761.480)
36
-
1,297,554.49
83,043.49
134,945.67
124,565.23
1,640,108.87
(4,110,652.610)
37
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,768,098.230)
38
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,425,543.840)
39
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,082,989.460)
40
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,740,435.080)
41
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,397,880.690)
42
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,055,326.310)
43
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,712,771.920)
44
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,370,217.540)
45
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,027,663.150)
46
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(685,108.770)
47
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(342,554.380)
48
-
-
83,043.49
134,945.67
124,565.23
342,554.38
0.00


SHIP B
Quarter
 
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
 
(1,868,478.460)
(3,114,130.770)
(3,986,087.380)
(6,477,392.000)
(5,979,131.070)
(21,425,219.680)
(21,425,219.680)
1
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,999,621.810)
2
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,574,023.940)
3
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,148,426.070)
4
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,722,828.190)
5
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,297,230.320)
6
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,871,632.450)
7
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,446,034.580)
8
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,020,436.710)
9
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,594,838.840)
10
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,169,240.960)
11
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,743,643.090)
12
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,318,045.220)
13
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,892,447.350)
14
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,466,849.480)
15
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,041,251.610)
16
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,615,653.740)
17
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,190,055.860)
18
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,764,457.990)
19
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,338,860.120)
20
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,913,262.250)
21
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,487,664.380)
22
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,062,066.510)
23
 
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(11,636,468.630)
24
 
1,152,228.38
51,902.18
83,043.49
134,945.67
124,565.23
1,546,684.95
(10,089,783.690)
25
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,695,327.120)
26
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,300,870.560)
27
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,906,413.990)
28
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,511,957.430)
29
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,117,500.870)
30
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,723,044.300)
31
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,328,587.740)
32
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,934,131.180)
33
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,539,674.610)
34
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,145,218.050)
35
 
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(5,750,761.480)
36
 
-
1,297,554.49
83,043.49
134,945.67
124,565.23
1,640,108.87
(4,110,652.610)
37
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,768,098.230)
38
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,425,543.840)
39
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,082,989.460)
40
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,740,435.080)
41
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,397,880.690)
42
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,055,326.310)
43
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,712,771.920)
44
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,370,217.540)
45
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,027,663.150)
46
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(685,108.770)
47
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(342,554.380)
48
 
-
-
83,043.49
134,945.67
124,565.23
342,554.38
0.00


SHIP C
Quarter
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
(1,868,478.460)
(3,114,130.770)
(3,986,087.380)
(6,477,392.000)
(5,979,131.070)
(21,425,219.680)
(21,425,219.680)
1
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,999,621.810)
2
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,574,023.940)
3
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,148,426.070)
4
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,722,828.190)
5
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,297,230.320)
6
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,871,632.450)
7
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,446,034.580)
8
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,020,436.710)
9
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,594,838.840)
10
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,169,240.960)
11
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,743,643.090)
12
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,318,045.220)
13
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,892,447.350)
14
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,466,849.480)
15
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,041,251.610)
16
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,615,653.740)
17
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,190,055.860)
18
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,764,457.990)
19
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,338,860.120)
20
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,913,262.250)
21
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,487,664.380)
22
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,062,066.510)
23
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(11,636,468.630)
24
1,152,228.38
51,902.18
83,043.49
134,945.67
124,565.23
1,546,684.95
(10,089,783.690)
25
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,695,327.120)
26
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,300,870.560)
27
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,906,413.990)
28
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,511,957.430)
29
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,117,500.870)
30
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,723,044.300)
31
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,328,587.740)
32
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,934,131.180)
33
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,539,674.610)
34
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,145,218.050)
35
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(5,750,761.480)
36
-
1,297,554.49
83,043.49
134,945.67
124,565.23
1,640,108.87
(4,110,652.610)
37
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,768,098.230)
38
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,425,543.840)
39
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,082,989.460)
40
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,740,435.080)
41
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,397,880.690)
42
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,055,326.310)
43
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,712,771.920)
44
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,370,217.540)
45
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,027,663.150)
46
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(685,108.770)
47
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(342,554.380)
48
-
-
83,043.49
134,945.67
124,565.23
342,554.38
0.00



SHIP D


Quarter
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
(1,868,478.460)
(3,114,130.770)
(3,986,087.380)
(6,477,392.000)
(5,979,131.070)
(21,425,219.680)
(21,425,219.680)
1
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,999,621.810)
2
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,574,023.940)
3
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(20,148,426.070)
4
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,722,828.190)
5
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(19,297,230.320)
6
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,871,632.450)
7
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,446,034.580)
8
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(18,020,436.710)
9
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,594,838.840)
10
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(17,169,240.960)
11
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,743,643.090)
12
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(16,318,045.220)
13
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,892,447.350)
14
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,466,849.480)
15
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(15,041,251.610)
16
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,615,653.740)
17
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(14,190,055.860)
18
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,764,457.990)
19
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(13,338,860.120)
20
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,913,262.250)
21
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,487,664.380)
22
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(12,062,066.510)
23
31,141.31
51,902.18
83,043.49
134,945.67
124,565.23
425,597.87
(11,636,468.630)
24
1,152,228.38
51,902.18
83,043.49
134,945.67
124,565.23
1,546,684.95
(10,089,783.690)
25
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,695,327.120)
26
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(9,300,870.560)
27
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,906,413.990)
28
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,511,957.430)
29
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(8,117,500.870)
30
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,723,044.300)
31
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(7,328,587.740)
32
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,934,131.180)
33
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,539,674.610)
34
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(6,145,218.050)
35
-
51,902.18
83,043.49
134,945.67
124,565.23
394,456.56
(5,750,761.480)
36
-
1,297,554.49
83,043.49
134,945.67
124,565.23
1,640,108.87
(4,110,652.610)
37
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,768,098.230)
38
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,425,543.840)
39
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(3,082,989.460)
40
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,740,435.080)
41
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,397,880.690)
42
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(2,055,326.310)
43
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,712,771.920)
44
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,370,217.540)
45
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(1,027,663.150)
46
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(685,108.770)
47
-
-
83,043.49
134,945.67
124,565.23
342,554.38
(342,554.380)
48
-
-
83,043.49
134,945.67
124,565.23
342,554.38
0.00


SHIP E


Quarter
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
(1,881,521.540)
(3,135,869.230)
(4,013,912.620)
(6,522,608.000)
(6,020,868.930)
(21,574,780.320)
(21,574,780.320)
1
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(21,146,211.520)
2
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,717,642.730)
3
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,289,073.930)
4
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,860,505.140)
5
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,431,936.340)
6
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,003,367.550)
7
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,574,798.750)
8
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,146,229.960)
9
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,717,661.160)
10
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,289,092.370)
11
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,860,523.570)
12
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,431,954.780)
13
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,003,385.980)
14
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,574,817.190)
15
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,146,248.390)
16
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,717,679.600)
17
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,289,110.800)
18
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,860,542.010)
19
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,431,973.210)
20
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,003,404.420)
21
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,574,835.620)
22
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,146,266.830)
23
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(11,717,698.030)
24
1,160,271.62
52,264.49
83,623.18
135,887.67
125,434.77
1,557,481.72
(10,160,216.310)
25
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,763,006.210)
26
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,365,796.110)
27
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,968,586.010)
28
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,571,375.900)
29
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,174,165.800)
30
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,776,955.700)
31
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,379,745.590)
32
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,982,535.490)
33
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,585,325.390)
34
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,188,115.290)
35
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(5,790,905.180)
36
-
1,306,612.18
83,623.18
135,887.67
125,434.77
1,651,557.80
(4,139,347.390)
37
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,794,401.770)
38
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,449,456.160)
39
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,104,510.540)
40
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,759,564.920)
41
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,414,619.310)
42
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,069,673.690)
43
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,724,728.080)
44
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,379,782.460)
45
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,034,836.850)
46
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(689,891.230)
47
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(344,945.620)
48
-
-
83,623.18
135,887.67
125,434.77
344,945.62
0.00


SHIP F


Quarter
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
(1,881,521.540)
(3,135,869.230)
(4,013,912.620)
(6,522,608.000)
(6,020,868.930)
(21,574,780.320)
(21,574,780.320)
1
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(21,146,211.520)
2
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,717,642.730)
3
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,289,073.930)
4
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,860,505.140)
5
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,431,936.340)
6
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,003,367.550)
7
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,574,798.750)
8
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,146,229.960)
9
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,717,661.160)
10
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,289,092.370)
11
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,860,523.570)
12
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,431,954.780)
13
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,003,385.980)
14
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,574,817.190)
15
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,146,248.390)
16
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,717,679.600)
17
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,289,110.800)
18
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,860,542.010)
19
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,431,973.210)
20
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,003,404.420)
21
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,574,835.620)
22
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,146,266.830)
23
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(11,717,698.030)
24
1,160,271.62
52,264.49
83,623.18
135,887.67
125,434.77
1,557,481.72
(10,160,216.310)
25
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,763,006.210)
26
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,365,796.110)
27
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,968,586.010)
28
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,571,375.900)
29
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,174,165.800)
30
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,776,955.700)
31
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,379,745.590)
32
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,982,535.490)
33
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,585,325.390)
34
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,188,115.290)
35
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(5,790,905.180)
36
-
1,306,612.18
83,623.18
135,887.67
125,434.77
1,651,557.80
(4,139,347.390)
37
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,794,401.770)
38
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,449,456.160)
39
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,104,510.540)
40
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,759,564.920)
41
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,414,619.310)
42
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,069,673.690)
43
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,724,728.080)
44
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,379,782.460)
45
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,034,836.850)
46
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(689,891.230)
47
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(344,945.620)
48
-
-
83,623.18
135,887.67
125,434.77
344,945.62
0.00


SHIP G


Quarter
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
(1,881,521.540)
(3,135,869.230)
(4,013,912.620)
(6,522,608.000)
(6,020,868.930)
(21,574,780.320)
(21,574,780.320)
1
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(21,146,211.520)
2
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,717,642.730)
3
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,289,073.930)
4
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,860,505.140)
5
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,431,936.340)
6
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,003,367.550)
7
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,574,798.750)
8
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,146,229.960)
9
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,717,661.160)
10
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,289,092.370)
11
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,860,523.570)
12
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,431,954.780)
13
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,003,385.980)
14
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,574,817.190)
15
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,146,248.390)
16
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,717,679.600)
17
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,289,110.800)
18
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,860,542.010)
19
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,431,973.210)
20
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,003,404.420)
21
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,574,835.620)
22
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,146,266.830)
23
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(11,717,698.030)
24
1,160,271.62
52,264.49
83,623.18
135,887.67
125,434.77
1,557,481.72
(10,160,216.310)
25
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,763,006.210)
26
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,365,796.110)
27
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,968,586.010)
28
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,571,375.900)
29
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,174,165.800)
30
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,776,955.700)
31
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,379,745.590)
32
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,982,535.490)
33
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,585,325.390)
34
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,188,115.290)
35
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(5,790,905.180)
36
-
1,306,612.18
83,623.18
135,887.67
125,434.77
1,651,557.80
(4,139,347.390)
37
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,794,401.770)
38
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,449,456.160)
39
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,104,510.540)
40
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,759,564.920)
41
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,414,619.310)
42
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,069,673.690)
43
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,724,728.080)
44
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,379,782.460)
45
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,034,836.850)
46
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(689,891.230)
47
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(344,945.620)
48
-
-
83,623.18
135,887.67
125,434.77
344,945.62
0.00


SHIP H


Quarter
Commercial Facility Loan A
Commercial Facility Loan B
GIEK Guaranteed Facility Loan
Kexim Direct Facility Loan
Kexim Guaranteed Facility
Total Repayments/ (drawdowns)
Total Loan Balance
-
(1,881,521.540)
(3,135,869.230)
(4,013,912.620)
(6,522,608.000)
(6,020,868.930)
(21,574,780.320)
(21,574,780.320)
1
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(21,146,211.520)
2
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,717,642.730)
3
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(20,289,073.930)
4
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,860,505.140)
5
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,431,936.340)
6
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(19,003,367.550)
7
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,574,798.750)
8
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(18,146,229.960)
9
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,717,661.160)
10
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(17,289,092.370)
11
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,860,523.570)
12
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,431,954.780)
13
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(16,003,385.980)
14
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,574,817.190)
15
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(15,146,248.390)
16
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,717,679.600)
17
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(14,289,110.800)
18
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,860,542.010)
19
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,431,973.210)
20
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(13,003,404.420)
21
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,574,835.620)
22
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(12,146,266.830)
23
31,358.69
52,264.49
83,623.18
135,887.67
125,434.77
428,568.80
(11,717,698.030)
24
1,160,271.62
52,264.49
83,623.18
135,887.67
125,434.77
1,557,481.72
(10,160,216.310)
25
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,763,006.210)
26
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(9,365,796.110)
27
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,968,586.010)
28
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,571,375.900)
29
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(8,174,165.800)
30
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,776,955.700)
31
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(7,379,745.590)
32
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,982,535.490)
33
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,585,325.390)
34
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(6,188,115.290)
35
-
52,264.49
83,623.18
135,887.67
125,434.77
397,210.10
(5,790,905.180)
36
-
1,306,612.18
83,623.18
135,887.67
125,434.77
1,651,557.80
(4,139,347.390)
37
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,794,401.770)
38
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,449,456.160)
39
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(3,104,510.540)
40
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,759,564.920)
41
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,414,619.310)
42
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(2,069,673.690)
43
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,724,728.080)
44
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,379,782.460)
45
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(1,034,836.850)
46
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(689,891.230)
47
-
-
83,623.18
135,887.67
125,434.77
344,945.62
(344,945.620)
48
-
-
83,623.18
135,887.67
125,434.77
344,945.62
0.00






47        
Execution Copy

SCHEDULE 11

SHIP LOAN OVERVIEW

 
Borrower
STI Galata Shipping Company Limited
STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited)
STI Leblon Shipping Company Limited
STI La Boca Shipping Company Limited
STI San Telmo Shipping Company Limited
STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited)
STI Esles II Shipping Company Limited
STI Jardins Shipping Company Limited
 
 
Vessel Contract Price
35,813,600
35,813,600
35,813,600
35,813,600
36,063,600
36,063,600
36,063,600
36,063,600
287,508,800
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitment amount (USD)
 
Name of Lender
Total Commitment (USD)
Ship A
Ship B
Ship C
Ship D
Ship E
Ship F
Ship G
Ship H
 
Macquarie Factoring (UK) Limited
15,000,000
1,868,478
1,868,478
1,868,478
1,868,478
1,881,522
1,881,522
1,881,522
1,881,522
 
DekaBank Deutsche Girozentrale
25,000,000
3,114,131
3,114,131
3,114,131
3,114,131
3,135,869
3,135,869
3,135,869
3,135,869
 
Macquarie Factoring (UK) Limited
32,000,000
3,986,087
3,986,087
3,986,087
3,986,087
4,013,913
4,013,913
4,013,913
4,013,913
 
DekaBank Deutsche Girozentrale
48,000,000
5,979,131
5,979,131
5,979,131
5,979,131
6,020,869
6,020,869
6,020,869
6,020,869
 
The Export–Import Bank of Korea
52,000,000
6,477,392
6,477,392
6,477,392
6,477,392
6,522,608
6,522,608
6,522,608
6,522,608
 
Total
172,000,000
21,425,220
21,425,220
21,425,220
21,425,220
21,574,780
21,574,780
21,574,780
21,574,780
 



48        
Execution Copy



49        
Execution Copy

SCHEDULE 12

FORM OF WORKING CONDITIONS SIDE LETTER
To:    Garantiinstituttet for eksportkreditt,
reg.no: 974760908, (hereafter “GIEK”)
Støperigata 1
NO-0250 Oslo
Norway

Reference is made to a Facility Agreement dated [ ] 2017 (the “ Facility Agreement ”), made by and among, inter alios, (i) the STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (to be named STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (to be renamed STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited, STI Jardins Shipping Company Limited, as borrowers (the “ Borrowers ”), (ii) Scorpio Tankers Inc., as the parent guarantor (the “ Scorpio ”), (iii) the banks and financial institution listed in part B of schedule 1 therein, as the original lenders (the “ Lenders ”), (iv) Macquarie Bank Limited (London branch) (“ Macquarie ”), The Export-Import Bank of Korea and DekaBank Deutsche Girozentrale, as mandated lead arrangers, (v) Macquarie Bank Limited (London Branch), as global coordinator and ECA agent and (vi) Wilmington Trust (London) Limited as security agent and as facility agent pursuant to which the Lenders agreed to make available to the Borrowers, a senior secured credit facilities of up to USD 172,000,000 (in aggregate) for the financing and/or, in relation to any amount previously paid by the Borrowers and/or Scorpio refinancing (by reimbursement to the Borrowers and/or Scorpio) of the eight (8) ships (“ Ships ”) currently under construction at Hyundai Mipo Dockyard (“ Builder ”)

Unless otherwise expressly defined herein, words and expressions used in this letter shall have the same meanings designated in the Facility Agreement.

As from the date of this letter until the date ending on the last day of the Availability Period for funding the Ships under the Facility Agreement:

1
Scorpio commits to a process of engagement with the Builder in order to establish that the health, safety and labour conditions for all workers, including sub-contractors, involved in the construction of the Ships, are in accordance with applicable national laws and international standards relating to health, safety and labour (being, determined by reference to the core ILO Labour conventions).

2
Scorpio declares that it will, in good faith, conduct an assessment to identify potential risks and take measures, where necessary and practicable, to improve conditions on site at the Builder during such period in relation to the construction of the Ships.
3
Scorpio commits to provide GIEK with a plan on how it intends to assess and address any potential and/or identified risks (“Plan”). This shall include, as a minimum, the following: (1) Health and safety training, (2) Rest and working hours, (3) Due diligence and management of sub-contractors in relation to health and safety, as well as labour and working conditions, (4) Use of migrant/foreign workers (in particular the legitimacy of recruitment regimes utilized to source migrant workers), in each case in relation to the conditions on site at the Builder in relation to the construction of the Ships. In the event that any other major risks related to health, safety, and labour condition are identified by Scorpio during its assessment, these shall also be

50        
Execution Copy

incorporated in the Plan. The Plan is to include a timeline for implementation, and outline a schedule for periodic reporting.
4
The Plan, which shall be in a form acceptable to GIEK, is to be prepared and delivered to GIEK prior to delivery of third Ship to be financed pursuant to the Facility Agreement and supported under the GIEK guarantee.
5
Thereafter, up to delivery of the final Ship to be financed pursuant to the Facility Agreement, Scorpio will provide a quarterly update to GIEK on the implementation of the Plan.
6
Scorpio will also provide a completion report no later than 30 business days after delivery of the last Ship to be financed pursuant to the Facility Agreement. The completion report shall outline the status in relation to implementation of the Plan, any eventual outstanding points, and final observations.
7
It is understood that GIEK has zero tolerance for all forms of forced labour, child labour, other serious breaches of local labor laws or international standards (ILO core labour conventions). Scorpio shall inform GIEK in writing as soon as reasonably practical upon becoming aware, and shall take immediate measures to require the Builder to rectify such practices. In the event that GIEK or a 3rd party engaged by GIEK wants to visit the Builder as a follow up, Scorpio will assist in facilitating this together with GIEK.
8
GIEK will receive a written notice as soon as reasonably practical after Scorpio has become aware of any fatalities or serious injuries of personnel, including subcontracted personnel, at the Builder or when Scorpio becomes aware of any labour strikes, demonstrations, or fines/sanctions to the Builder from labour authorities.

For and on behalf of



Scorpio Tankers Inc.




















51        
Execution Copy

SCHEDULE 13

WORKING CONDITIONS SIDE LETTER CP CERTIFICATE
To:    Wilmington Trust (London) Limited as Facility Agent
Cc:    Macquarie Bank Limited (London Branch) as ECA Agent
Cc:     Garanti-Instituttet for Eksportkreditt (“GIEK”)
From:    Scorpio Tankers Inc.
Dated:     [ l ]
Dear Sirs
STI Galata Shipping Company Limited, STI Taksim Shipping Company Limited (tbn STI Bosphorus Shipping Company Limited), STI Leblon Shipping Company Limited, STI La Boca Shipping Company Limited, STI San Telmo Shipping Company Limited, STI Jurere Shipping Company Limited (tbn STI Donald C Trauscht Shipping Company Limited), STI Esles II Shipping Company Limited and STI Jardins Shipping Company Limited – [ l ] Facility Agreement dated [ l ] 2017 (the "Agreement")
1
We refer to the Agreement. Terms defined in the Agreement have the same meaning in this Certificate unless given a different meaning in this Certificate.
2
We refer to paragraph (c) of Clause 23.22 ( Compliance with ECA Support ) of the Agreement. We hereby confirm that as at the date of this Certificate the Working Conditions Side Letter remains in full force and effect and we are in compliance with its terms.
3
This certificate and any non-contractual obligations arising out of or in connection with it are governed by English law.

Yours faithfully,
_____________________________
Scorpio Tankers Inc.
as Parent Guarantor
By: [ l ]

52        
Execution Copy


SCHEDULE 14

FORM OF SWIFT MESSAGE
[ TO BE SENT BY WILMINGTON TRUST ]

Swift message to accompany MT103 payment for US$ ([●]) sent under swift reference number [●].

TO THE ATTENTION OF: WOORI BANK
ADDRESS: WOORI BANK HEAD OFFICE, 51 Sogong-ro, Jung-gu, Seoul, 04632 South Korea ATTENTION: Jo, Joon-Hwan , TEL : 82.2.2002.5113 , EMAIL : jojoonhwan@wooribank.com


RE: THE SHIPBUILDING CONTRACT DATED [●] MADE BETWEEN STI [●] SHIPPING COMPANY LIMITED WITH ADDRESS AT TRUST COMPANY COMPLEX, AJELTAKE ROAD, AJELTAKE ISLAND, MAJURO, MARSHALL ISLANDS 96960 (THE “BUYER”) AND HYUNDAI MIPO DOCKYARD CO., LTD WITH ADDRESS AT 100 BANGEOJINSUNHWAN-DORO, DONG-GU , ULSAN 682-712 KOREA (THE “BUILDER”) AS AMENDED AND/OR SUPPLEMENTED FROM TIME TO TIME, THE “SHIPBUILDING CONTRACT” AND FOR THE CONSTRUCTION OF HYUNDAI MIPO HULL [●] TO BE NAMED STI [●] (THE “VESSEL”) BEARING HULL NO. [●] .

WE CONFIRM HAVING IRREVOCABLY REMITTED TO YOU FOR VALUE [●] AN AMOUNT OF US$ [●] (UNITED STATES DOLLARS [●] ) BEING THE DELIVERY INSTALMENT IN RESPECT OF THE PURCHASE OF THE VESSEL BY THE BUYER FROM THE BUILDER PURSUANT TO THE SHIPBUILDING CONTRACT.

THIS AMOUNT IS TO BE HELD TO THE SOLE ORDER OF WILMINGTON TRUST (LONDON) LIMITED UNDER REFERENCE – HYUNDAI MIPO HULL [●] (TO BE NAMED STI [●] ) DELIVERY INSTALMENT.

YOU ARE HEREBY IRREVOCABLY AND UNCONDITIONALLY INSTRUCTED TO HOLD THESE FUNDS IN OUR NAME AND TO OUR ORDER AND RELEASE THEM TO THE BUILDER ONLY UPON PRESENTATION TO YOU BY THE BUILDER OF A FAX COPY OF THE PROTOCOL OF DELIVERY AND ACCEPTANCE FOR THE VESSEL DULY SIGNED BY THE AUTHORISED REPRESENTATIVES OF THE BUILDER AND ANY ONE OF THE FOLLOWING AUTHORISED REPRESENTATIVES OF THE BUYER:

[●] [ NOTE: NAMES OF REPRESENTATIVES FOR BUYER TO BE PROVIDED ]
[●]
[●]
[●]
[●]

AND COUNTERSIGNED ON BEHALF OF WILMINGTON TRUST (LONDON) LIMITED BY ANY ONE OF THE FOLLOWING:
[●] [ NOTE: NAMES OF REPRESENTATIVES FOR WILMINGTON TRUST (LONDON) LIMITED TO BE PROVIDED ]
[●]
[●]
[●]
[●]

53        
Execution Copy



THESE MONIES, WHEN RELEASED, MAY ONLY BE USED FOR PAYMENT TO THE ACCOUNT OF THE BUILDER W ITH WOORI BANK , SEOUL, KOREA IN OR TOWARDS SATISFACTION OF THE BALANCE OF THE PURCHASE PRICE FOR THE VESSEL, PAYMENT INSTRUCTIONS:

1.
BANK: WOORI BANK, HEAD OFFICE, SEOUL, KOREA
2.
ACCOUNT NO.: 04-022-936 (BIC CODE: HVBKKRSEXXX)
3.
CORRESPONDENT BANK: DEUTSCHE BANK TRUST COMPANY AMERICA (BIC CODE: BKTRUS33XXX)
4.
BENEFICIARY: HYUNDAI MIPO DOCKYARD CO., LTD.

IN THE EVENT THAT ALL OR ANY PART OF THE AMOUNT SO REMITTED HAS NOT BEEN RELEASED IN ACCORDANCE WITH THE FOREGOING INSTRUCTIONS BY CLOSE OF BUSINESS KOREAN LOCAL TIME ON [●] THEN ALL OF THE MONEY HELD BY YOU AND ANY INTEREST EARNED THEREON MUST BE IMMEDIATELY RETURNED BY REMITTING THE SAME TO [●] (SWIFT CODE [●] ), FOR THE ACCOUNT OF [●] , ACCOUNT NUMBER [●] FOR FURTHER CREDIT UNDER REFERENCE: RETURN OF PURCHASE PRICE OF THE VESSEL [●] UNLESS YOU HAVE RECEIVED FROM US NEW INSTRUCTIONS BY SWIFT MT199 MESSAGE TO THE CONTRATY ON OR PRIOR TO SUCH DATE.

THESE INSTRUCTIONS MAY BE AMENDED OR MODIFIED BY MEANS OF A FURTHER SWIFT MT199 MESSAGE FROM US AND NOT OTHERWISE.

[ NOTE: WILMINGTON TRUST TO PROVIDE DETAILS OF THE FACILITY AGENT'S ACCOUNT ]

IF YOU HAVE ANY QUESTIONS PLEASE CONTACT [●] AND/OR [●] : TEL: [●] : EMAIL RESP: [●]








54        
Execution Copy





55        
Execution Copy


EXECUTION PAGES
BORROWERS
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI GALATA SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI TAKSIM SHIPPING COMPANY LIMITED
 
(tbn STI BOSPHORUS SHIPPING COMPANY
 
LIMITED)
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI LEBLON SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI LA BOCA SHIPPING COMPANY LIMITED
 

56        
Execution Copy

in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI SAN TELMO SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI JURERE SHIPPING COMPANY LIMITED
 
(tbn STI DONALD C TRAUSCHT SHIPPING
 
COMPANY LIMITED)
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI ESLES II SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 

57        
Execution Copy

SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI JARDINS SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
PARENT GUARANTOR
 
 
 
SIGNED by
 
Name: Micha Withoft
/s/ Micha Withoft
Title: Attorney-in-Fact
 
for and on behalf of
 
SCORPIO TANKERS INC.
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
HEDGE GUARANTORS
 
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI GALATA SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI TAKSIM SHIPPING COMPANY LIMITED
 
(tbn STI BOSPHORUS SHIPPING COMPANY
 

58        
Execution Copy

LIMITED)
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI LEBLON SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI LA BOCA SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI SAN TELMO SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 

59        
Execution Copy

Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI JURERE SHIPPING COMPANY LIMITED
 
(tbn STI DONALD C TRAUSCHT SHIPPING
 
COMPANY LIMITED)
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI ESLES II SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
SIGNED by
 
Name: Chrysa Kitsou
/s/ Chrysa Kitsou
Title: Attorney-in-Fact
 
for and on behalf of
 
STI JARDINS SHIPPING COMPANY LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Andrew Cottrell
Witness' Name: Andrew Cottrell
 
Witness' Address:
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
ORIGINAL COMMERCIAL LENDERS
 
 
 
SIGNED by
/s/ Sarai Jacob-Whelan
 
Name: Sarai Jacob-Whelan
duly authorised
Title: Senior Manger - Legal
for and on behalf of
/s/ Huan Ke
MACQUARIE FACTORING (UK) LIMITED
Name: Huan Ke
in the presence of:
Title: Division Director
 
 

60        
Execution Copy

Witness' Signature:
/s/ Sandie Tolan
Witness' Name:
Name: Sandie Tolan
Witness' Address:
 
 
 
SIGNED by
/s/ Joanna Sissens
 
Name: Joanna Sissens
duly authorised
Title: Attorney-in-Fact
for and on behalf of
 
DEKABANK DEUTSCHE GIROZENTRALE
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Aimee Myhre
Witness' Name:
Name: Aimee Myhre
Witness' Address:
Title: Trainee Solicitor
 
Watson Farley & Williams LLP
 
15 Appold Street
 
London EC2A 2HB
 
 
ORIGINAL GIEK GUARANTEED LENDERS
 
 
 
SIGNED by
/s/ Sarai Jacob-Whelan
 
Name: Sarai Jacob-Whelan
duly authorised
Title: Senior Manger - Legal
for and on behalf of
/s/ Huan Ke
MACQUARIE FACTORING (UK) LIMITED
Name: Huan Ke
in the presence of:
Title: Division Director
 
 
Witness' Signature:
/s/ Sandie Tolan
Witness' Name:
Name: Sandie Tolan
Witness' Address:
 
 
 
KEXIM
 
 
 
SIGNED by
/s/ Tae-kyoon Lee
 
 
duly authorised
 
for and on behalf of
 
THE EXPORT-IMPORT BANK OF KOREA
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Hye-lim Seo
Witness' Name:
Name: Hye-lim-Seo
Witness' Address:
38 Eunhaeng-ro, Yeongdeungo-gu, Seoul, Korea
 
THE EXPORT-IMPORT BANK OF KOREA
 
MARITIME PROJECT FINANCE DEPARTMENT
 
 

61        
Execution Copy

ORIGINAL KEXIM GUARANTEED LENDERS
 
 
 
SIGNED by
/s/ Joanna Sissens
 
Name: Joanna Sissens
duly authorised
Title: Attorney-in-Fact
for and on behalf of
 
DEKABANK DEUTSCHE GIROZENTRALE
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Aimee Myhre
Witness' Name:
Name: Aimee Myhre
Witness' Address:
Title: Trainee Solicitor
 
Watson Farley & Williams LLP
 
15 Appold Street
 
London EC2A 2HB
 
 
ORIGINAL HEDGE COUNTERPARTIES
 
 
 
SIGNED by
/s/ Sarai Jacob-Whelan
 
Name: Sarai Jacob-Whelan
duly authorised
Title: Senior Manger - Legal
for and on behalf of
/s/ Huan Ke
MACQUARIE FACTORING (UK) LIMITED
Name: Huan Ke
in the presence of:
Title: Division Director
 
 
Witness' Signature:
/s/ Sandie Tolan
Witness' Name:
Name: Sandie Tolan
Witness' Address:
 
 
 
SIGNED by
/s/ Joanna Sissens
 
Name: Joanna Sissens
duly authorised
Title: Attorney-in-Fact
for and on behalf of
 
DEKABANK DEUTSCHE GIROZENTRALE
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Aimee Myhre
Witness' Name:
Name: Aimee Myhre
Witness' Address:
Title: Trainee Solicitor
 
Watson Farley & Williams LLP
 
15 Appold Street
 
London EC2A 2HB
 
 
SIGNED by
/s/ Tae-kyoon Lee
 
 
duly authorised
 

62        
Execution Copy

for and on behalf of
 
THE EXPORT-IMPORT BANK OF KOREA
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Hye-lim Seo
Witness' Name:
Name: Hye-lim-Seo
Witness' Address:
38 Eunhaeng-ro, Yeongdeungo-gu, Seoul, Korea
 
THE EXPORT-IMPORT BANK OF KOREA
 
MARITIME PROJECT FINANCE DEPARTMENT
 
 
MANDATED LEAD ARRANGERS
 
 
 
SIGNED by
/s/ Sarai Jacob-Whelan
 
Name: Sarai Jacob-Whelan
duly authorised
Title: Senior Manger - Legal
for and on behalf of
/s/ Huan Ke
MACQUARIE FACTORING (UK) LIMITED
Name: Huan Ke
in the presence of:
Title: Division Director
 
 
Witness' Signature:
/s/ Sandie Tolan
Witness' Name:
Name: Sandie Tolan
Witness' Address:
 
 
 
SIGNED by
/s/ Tae-kyoon Lee
 
 
duly authorised
 
for and on behalf of
 
THE EXPORT-IMPORT BANK OF KOREA
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Hye-lim Seo
Witness' Name:
Name: Hye-lim-Seo
Witness' Address:
38 Eunhaeng-ro, Yeongdeungo-gu, Seoul, Korea
 
THE EXPORT-IMPORT BANK OF KOREA
 
MARITIME PROJECT FINANCE DEPARTMENT
 
 
SIGNED by
/s/ Joanna Sissens
 
Name: Joanna Sissens
duly authorised
Title: Attorney-in-Fact
for and on behalf of
 
DEKABANK DEUTSCHE GIROZENTRALE
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Aimee Myhre
Witness' Name:
Name: Aimee Myhre
Witness' Address:
Title: Trainee Solicitor

63        
Execution Copy

 
Watson Farley & Williams LLP
 
15 Appold Street
 
London EC2A 2HB
 
 
GLOBAL COORDINATOR AND ECA AGENT
 
 
 
SIGNED by
/s/ Sarai Jacob-Whelan
 
Name: Sarai Jacob-Whelan
duly authorised
Title: Senior Manger - Legal
for and on behalf of
/s/ Huan Ke
MACQUARIE FACTORING (UK) LIMITED
Name: Huan Ke
in the presence of:
Title: Division Director
 
 
Witness' Signature:
/s/ Sandie Tolan
Witness' Name:
Name: Sandie Tolan
Witness' Address:
 
 
 
FACILITY AGENT
 
 
 
SIGNED by
/s/ Keith Reader
 
Name: Keith Reader
duly authorised
Title: Authorised Signatory
for and on behalf of
 
WILMINGTON TRUST (LONDON)
 
LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Chris Herford
Witness' Name:
Name: Chris Herford
Witness' Address:
Address: Third Floor,
 
1 King's Arms Yard,
 
London, EC2R 7AF
 
 
SECURITY AGENT
 
 
 
SIGNED by
/s/ Keith Reader
 
Name: Keith Reader
duly authorised
Title: Authorised Signatory
for and on behalf of
 
WILMINGTON TRUST (LONDON)
 
LIMITED
 
in the presence of:
 
 
 
Witness' Signature:
/s/ Chris Herford
Witness' Name:
Name: Chris Herford
Witness' Address:
Address: Third Floor,

64        
Execution Copy

 
1 King's Arms Yard,
 
London, EC2R 7AF

65        

Exhibit 4.12(a)

Execution Version

To:      Nordea Bank Finland plc, New York         
1211 Avenue of the Americas, 23 rd Floor
New York, New York 10036
    
Attention: Henning Lyche Christiansen

Facsimile: +212-421-4420


August 9, 2016
Dear Sirs:
We refer to a Loan Agreement dated as of May 3, 2011 (as amended by a First Amendatory Agreement dated as of June 27, 2011, a Letter Agreement dated September 22, 2011, a Second Amendatory Agreement dated as of December 22, 2011 and a Letter Agreement dated July 20, 2012, and as the same may be further amended or supplemented from time to time, the “ Loan Agreement ”) among (i) Scorpio Tankers Inc. as borrower (the “ Borrower ”), (ii) the companies party thereto from time to time as joint and several guarantors (collectively, the “ Guarantors ”), (iii) the banks and financial institutions listed therein as lenders (the “ Lenders ”), (iv) the banks and financial institutions listed therein as swap banks (the “ Swap Banks ”), (v) Nordea Bank Finland plc, New York Branch as agent (the “ Agent ”), (vi) Nordea Bank Finland plc as security trustee (the “ Security Trustee ”), and (vii) Nordea Bank Finland plc, New York Branch, DNB Bank ASA and ABN AMRO Bank N.V. as lead arrangers (the “ Lead Arrangers ”), upon the terms and subject to the conditions of which the Lenders have made available to the Borrower a term loan facility of up to (originally) US$150,000,000. Words and expressions defined in the Loan Agreement shall have the same meaning when used in this letter agreement (the “ Letter Agreement ”) except as expressly provided in this Letter Agreement.
We request that, by countersigning this Letter Agreement, you confirm your agreement to the following amendments to the Loan Agreement pursuant to Clause 28 of the Loan Agreement:
i.
Amendments to the Loan Agreement.
Subject to the fulfilment of the conditions to effectiveness stated in Clause 2 below, the parties agree to amend the Loan Agreement as follows:
i.
The following definitions are added to Clause 1.1 in alphabetical order:
““ Bail-In Action ” means the exercise of any Write-down and Conversion Powers;”
““ Bail-In Legislation ” means in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credits institutions and investments firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;”
““ EEA Member Country ” means any member state of the European Union, Iceland, Liechtenstein and Norway;

1


““ EU Bail-In Legislation Schedule ” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;”
““ Resolution Authority ” means any body which has authority to exercise any Write-down and Conversion Powers;”
““ Write-down and Conversion Powers ” means in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;”
ii.
Clause 12.3 of the Loan Agreement is hereby amended and restated to read as follows:
“ 12.3
Minimum tangible net worth . The Borrower shall maintain a Consolidated Tangible Net Worth of not less than $1,000,000,000 plus:
i.
25% of the Borrower’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after January 1, 2016; and
ii.
50% of the value of the Equity Proceeds realized from any issuance of Equity Interests in the Borrower occurring on or after January 1, 2016.”
iii.
Clause 12.5 of the Loan Agreement is hereby amended and restated to read as follows:
“ 12.5
Free liquidity . The Borrower shall maintain Consolidated Liquidity, including all amounts on deposit with any Lead Arranger, in an amount equal to the greater of (a) $25,000,000 and (b) the sum of (i) the product of $500,000 multiplied by the number of vessels owned by the Borrower or by a subsidiary of the Borrower at such time and (ii) the product of $250,000 multiplied by the number of vessels time chartered in by the Borrower or a subsidiary of the Borrower at such time, provided that the Free Liquidity shall at all times consist of cash.”
(d)    A new Clause 30.5 is hereby added to read as follows:
“ 30.5    Contractual Recognition of Bail-In . Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties, each party acknowledges and accepts that any liability of any party to any other party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability."
2 .     Conditions to effectiveness.

2


It is a condition precedent to the effectiveness of this Letter Agreement that the Agent receives a non-refundable amendment fee of $25,000 per Lender consenting to the outlined amendments which shall be payable to the Agent for further distribution among the consenting Lenders.
3 .     Guarantors’ confirmation.
Each Guarantor, by its signature of this Letter Agreement, confirms its consent to the amendments to the Loan Agreement set out herein and confirms that the guarantee in Clause 16 of the Loan Agreement remains in full force and effect.
4 .     No other amendments.
Other than as set forth in this Letter Agreement, the provisions of the Loan Agreement shall remain unchanged and in full force and effect.
5.    Representations and Warranties
Each of the Borrower and the Guarantors certifies that:
(a)
there is no proceeding for the dissolution or liquidation of such party;
(b)
the representations and warranties contained in the Loan Agreement, as amended hereby, are true and correct as though made on and as of the date hereof, except for (A) representations or warranties which expressly relate to an earlier date in which case such representations and warranties shall be true and correct, in all material respects, as of such earlier date or (B) representations or warranties which are no longer true as a result of a transaction expressly permitted by the Loan Agreement;
(c)
there is no material misstatement of fact in any information provided by each of the Borrower and the Guarantors to the Agent or the Lenders or the Swap Banks since June 30, 2016, and such information did not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(d)
there is no event occurring and continuing, or resulting from this Second Amendatory Agreement, that constitutes a Potential Event of Default or an Event of Default; and
(e)
there have been no amendments to the constitutional documents of any Security Party since the date such documents were delivered previously to the Agent.
6.    Finance Document
It is acknowledged and agreed that this Letter Agreement shall constitute a Finance Document for purposes of the Loan Agreement.
7 .     Governing law and jurisdiction
The provisions of Clause 32 ( Law and Jurisdiction ) of the Loan Agreement shall apply to this Letter Agreement as if set out in full but so that references to “this Agreement” are amended to read “this Letter”. All remaining provisions of the Loan Agreement and the Finance Documents shall remain in full force and effect.
8.    Execution in counterparts.

3


This Letter Agreement may be executed in counterparts.
[Signature pages follow on next page]

4


Sincerely,
SCORPIO TANKERS INC.
as Borrower


By: _/s/ Brian M. Lee_____________________
Name: Brian M. Lee
Title: Chief Financial Officer

 


5


Accepted and agreed this _ 9 ____day of ___ August ______ 2016 by:
NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Agent on behalf of the Majority Lenders, and as Agent and Security Trustee in their own rights


By: __/s/ Martin Lunder _____________________
Name: Martin Lunder
Title: Senior Vice President




By: _/s/ Lynn Sauro_________________________
Name: Lynn Sauro
Title: First Vice President

 



















6


We hereby confirm and acknowledge that we have read and understood the terms and conditions of the above Letter Agreement and agree in all respects to the same and confirm that the guarantee in Clause 16 of the Loan Agreement shall remain in full force and effect and shall continue to stand as security for the Guaranteed Obligations stated therein.
STI ONYX SHIPPING COMPANY LIMITED
STI SAPPHIRE SHIPPING COMPANY LIMITED
STI EMERALD SHIPPING COMPANY LIMITED
STI BERYL SHIPPING COMPANY LIMITED
STI LE ROCHER SHIPPING COMPANY LIMITED
STI LARVOTTO SHIPPING COMPANY LIMITED
STI DUCHESSA SHIPPING COMPANY LIMITED
as Guarantors


By: __/s/ Brian M. Lee _____________________
Name: Brian M. Lee
Title: Secretary




7


Exhibit 4.17(a)
EXECUTION VERSION
AMENDMENT NO. 2 TO LOAN AGREEMENT
THIS AMENDMENT NO. 2 TO LOAN AGREEMENT , dated as of June 01 , 2016 (this “ Amendment ”), is made by and among the companies listed in Schedule 8 to the Loan Agreement (as defined below), as joint and several borrowers (the “ Borrowers ”), Scorpio Tankers Inc., as guarantor (the “ Guarantor ”), DNB Bank ASA, New York Branch, as administrative agent (in such capacity, the “ Agent ”) and DNB Bank ASA, New York Branch as security trustee (in such capacity, the “ Security Trustee ”). Unless otherwise defined herein, all capitalized terms used herein and defined in the Loan Agreement referred to below are used herein as therein defined.
WHEREAS , the Borrowers, the Guarantor, the Lenders, the Agent, and the Security Trustee, among others, have entered into a Loan Agreement, dated as of February 28, 2014 (as amended, modified and/or supplemented from time to time, the “ Loan Agreement ”);
WHEREAS , subject to the terms and conditions of this Amendment, the parties hereto wish to amend certain provisions of the Loan Agreement as herein provided for the purpose of correcting an error in respect of the amortization for the Commercial Loan;
NOW, THEREFORE , the parties hereto agree as follows:
Section 1. Amendments to the Loan Agreement .

(a)
Clause 12.3 (Minimum Consolidated Tangible Net Worth) of the Loan Agreement is hereby amended by deleting such Clause in its entirety and replacing said Clause with the following new Clause 12.3 in lieu thereof:
“ Minimum Consolidated Tangible Net Worth .
(a)
From and including January 1, 2016, the Guarantor shall maintain a Consolidated Tangible Net Worth of not less than $1,000,000,000.00 plus:
(i)
25% of the Guarantor’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after January 1, 2016; and
(ii)
50% of the value of the Equity Proceeds realised from any issuance of Equity Interests in the Guarantor occurring on or after January 1, 2016.”
(b)
Clause 12.5 (Minimum Liquidity) is hereby amended by deleting such Clause in its entirety and replacing said Clause with the following new Clause 12.5 in lieu thereof:
“ Minimum liquidity . The Guarantor shall maintain Consolidated Liquidity, including all amounts on deposit with any bank, of not less than (a) $25,000,000 or (b) the sum of (i) the

SK 26596 0019 7121782 v2  
 
 


product of $500,000 multiplied by the number of vessels owned by the Guarantor or a subsidiary of the Guarantor at such time and (ii) the product of $250,000 multiplied by the number of vessels time chartered in by the Guarantor or a subsidiary of the Guarantor at such time, whichever is greater, provided that 100% of the Minimum Liquidity shall at all times consist of cash.”
(c)
Clause 15.2 (Collateral Maintenance Ratio) is hereby amended by deleting such Clause in its entirety and replacing said Clause with the following new Clause 15.2 in lieu thereof:
“ Collateral Maintenance Ratio . If, at any time, the Agent notifies the Guarantor that:
(a)
the aggregate Fair Market Value of the Ships; plus
(b)
the net realizable value of any additional Collateral previously provided under this Clause 15,
is below:
(i)
from February 28, 2014 to and including December 31, 2015, 135%;
(ii)
from and including January 1, 2016 to and including December 31, 2016, 165%;
(iii)
from and including January 1, 2017 to and including December 31, 2017, 160%;
(iv)
from and including January 1, 2018 to and including December 31, 2018, 155%;
(v)
from and including January 1, 2019 to and including December 31, 2019, 150%;
(vi)
thereafter, 145%,
of the aggregate of the Loans (such ratio being the “ Collateral Maintenance Ratio ”), the Borrowers shall comply with the requirements of Clause 15.3.”
(d)
A new Clause 35 (Contractual Recognition of Bail-In) is hereby inserted into the Loan Agreement as follows:
“Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

SK 26596 0019 7121782 v2  
2
)


(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
    a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
For the purpose of this Clause 35 (Contractual Recognition of bail-in):
" Bail-In Action " means the exercise of any Write-down and Conversion Powers.
" Bail-In Legislation " means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time ; and
(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
" EEA Member Country " means any member state of the European Union, Iceland, Liechtenstein and Norway.
" EU Bail-In Legislation Schedule " means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
" Party " means a party to this Loan Agreement.
" Resolution Authority " means any body which has authority to exercise any Write-down and Conversion Powers.
" Write-down and Conversion Powers " means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that

SK 26596 0019 7121782 v2  
3
)


liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.”
Section 2.      Confirmation of Security .
Each Security Party hereby ratifies, reaffirms and confirms, as of the date hereof, for the benefit of each Lender, the Agent and the Security Trustee:
(a)    the security interests, liens, pledges and assignments granted by it in the Finance Documents to which it is party, and confirms and agrees that (i) all such security interests, liens, pledges and assignments continue in full force and effect in favor of the Security Trustee (for itself and the other Lenders) and (ii) all collateral under the Finance Documents continues to constitute security for all of the obligations purported to be secured thereunder;
(b)    each Finance Document shall remain the valid and enforceable obligations of such Security Party and shall remain in full force and effect;
(c)    it has no defenses or counterclaims to its obligations under the Finance Documents; and
(d)    each Lender, the Agent and the Security Trustee are entering into this Amendment in reliance on the confirmation set forth in this Section 2.
Section 3.      Acknowledgments and Agreements .
Each of the Borrowers and the Guarantor represents and warrants to the Lenders, the Agent and the Security Trustee that:
(a)    This Amendment has been duly authorized and has been duly executed and delivered by such Security Party, and constitutes a legal, valid and binding obligation of such Security Party, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(b)    The representations and warranties of the Security Parties set forth in Clause 10 of the Loan Agreement are true and correct on and as of the date hereof, and will be true and correct on and as of the Effective Date (as defined below), both immediately before and immediately after giving effect to the amendments set forth herein, except that, to the extent such representations and warranties relate to a specific date, such representations and warranties were true and correct as of such specific date. For the avoidance of doubt, any reference in Clause 10 of the Loan Agreement to “as of the date hereof” shall be deemed to be a reference to “as of the date of this Amendment”, and all other references therein to the date of the Loan Agreement, such as “hereafter”, shall be deemed to reference to the date of this Amendment, for purposes of this Section 3(b).

SK 26596 0019 7121782 v2  
4
)


(c)    On the date hereof and on the Effective Date, and immediately after giving effect to the amendments set forth herein, no Event of Default nor Potential Event of Default shall have occurred and be continuing.
For avoidance of doubt, each Security Party hereby acknowledges and confirms its due authorization, execution and delivery of all Finance Documents (each Finance Document as amended, restated, modified and/or supplemented through and including the date hereof) to which it is a party, including all instruments, financing statements, agreements, certificates and documents executed and delivered in connection therewith, and hereby ratifies all actions heretofore taken in connection therewith.
The Security Parties shall pay all reasonable fees, costs and expenses (including, without limitation, reasonable and documented legal fees and expenses) of the Agent and each Creditor Party in connection with the negotiation, documentation and execution of this Amendment.
Section 4.      Conditions to Effectiveness .
This Amendment shall become effective as of June 01 , 2016 (the “ Effective Date ”) upon each of the following conditions having been satisfied:
(a)
each party hereto shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of facsimile or other electronic transmission) the same to the Agent in accordance with the notice requirements set forth in Clause 29 of the Loan Agreement,
(b)
The representations and warranties of the Borrower and Guarantor set forth in Section 3 above shall be true and correct on and as of the Effective Date, and    
(c)
the Security Parties shall have paid to the Agent and/or any other Creditor Party all fees, costs and expenses (including, without limitation, reasonable and documented legal fees and expenses) payable to each of the them pursuant to the terms of this Amendment to the extent then due.
Section 5.      Miscellaneous . The parties hereto agree that (i) except as amended pursuant to the terms of this Amendment, the Loan Agreement shall continue in full force and effect, and (ii) this Amendment shall be a Finance Document.
Section 6.      Governing Law . This Amendment and any claim or dispute (whether sounding in contract, tort, statute or otherwise) relating to this Amendment or that relationship shall be governed by and construed in accordance with law of the State of New York without regard to its conflict of law principles. The provisions of Clauses 32.2 and 33 of the Loan Agreement are hereby incorporated by reference and, accordingly, shall apply as if set out herein in full.
Section 7.     Counterparts . This Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
* * *


SK 26596 0019 7121782 v2  
5
)



IN WITNESS WHEREOF , each of the parties hereto has caused this Amendment to be duly executed and delivered by its authorized officer on the day and year set forth above.
 
STI ACTON SHIPPING COMPANY LIMITED
STI BRIXTON SHIPPING COMPANY LIMITED
STI BROADWAY SHIPPING COMPANY LIMITED
STI CAMDEN SHIPPING COMPANY LIMITED
STI CLAPHAM SHIPPING COMPANY LIMITED
STI COMANDANTE SHIPPING COMPANY LIMITED
STI CONDOTTI SHIPPING COMPANY LIMITED
STI ELYSEES SHIPPING COMPANY LIMITED
STI FINCHLEY SHIPPING COMPANY LIMITED
STI FULHAM SHIPPING COMPANY LIMITED
STI HACKNEY SHIPPING COMPANY LIMITED
STI MADISON SHIPPING COMPANY LIMITED
STI ORCHARD SHIPPING COMPANY LIMITED
STI PARK SHIPPING COMPANY LIMITED
STI PIMLICO SHIPPING COMPANY LIMITED
STI POPLAR SHIPPING COMPANY LIMITED
STI SLOANE SHIPPING COMPANY LIMITED
STI VENETO SHIPPING COMPANY LIMITED

as Borrowers

By: _/s/ Brian M. Lee _________________________
Name: _ Brian M. Lee __________________________
Its: _ Secretary _____________________________
 


SCORPIO TANKERS INC.  
as Guarantor


By: _/s/ Brian M. Lee   ________________ ________  
Name: __   Brian M. Lee   _______________________

Its: _ Chief Financial Officer____________________


 
 
 




 
DNB BANK ASA, NEW YORK BRANCH  
as Agent and Security Trustee


By: __/s/ Sanjiv Nayar ___________________________

Name: __ Sanjiv Nayar _________________________

Its: ___ Senior Vice President ________________________



By: __/s/ Sybille Andaur ___________________________

Name: __ Sybille Andaur    _________________________

Its: ___ First Vice President ________________________




 
 
 


Exhibit 4.18(a)

Execution Version

To:      DNB Bank ASA, New York Branch         
200 Park Avenue, 31 st Floor
New York, New York 10166
    
Attention: Sybille Andaur

Facsimile: +1 212 681 3900
Email: sybille.andaur@dnb.no


July 15, 2016
Dear Sirs:
We refer to a Loan Agreement dated as of February 24, 2014 (as the same may be amended or supplemented from time to time, the “ Loan Agreement ”) among (i) the companies listed in Schedule 10 as join and several borrowers (collectively, the “ Borrowers ”), (ii) Scorpio Tankers Inc. as guarantor (the “Guarantor ”), (iii) the banks and financial institutions listed in Schedule 1, Part A as commercial lenders (collectively, the “ Commercial Lenders ”), (iv) the banks and financial institutions listed in Schedule 1, Part B, as K-Sure Lenders (collectively, the “ K-Sure Lenders ” and, together with the Commercial Lenders, collectively, the “ Lenders ”), (v) the banks and financial institutions listed in Schedule 2 as swap banks (collectively, the “ Swap Banks ”), (vi) DNB Markets, Inc. and Skandinaviska Enskilda Banken AB (publ) as bookrunners (the “ Bookrunners ”), (vii) Korea Exchange Bank as senior manager (the “ Senior Manager ”), (viii) DNB Markets, Inc. Skandinaviska Enskilda Banken AB (publ), The Korea Development Bank, Credit Suisse AG, and ING Bank N.V., London Branch, as mandated lead arrangers (collectively, the “ Mandated Lead Arrangers ”), (ix) DNB Bank ASA, New York Branch as agent (the “ Agent ”), (x) DNB Bank ASA, New York Branch as security trustee (the “ Security Trustee ”), and (xi) DNB Bank ASA as K-Sure agent (the “ K-Sure Agent ”), upon the terms and subject to the conditions of which the Lenders have made available to the Borrowers a senior secured term loan facility of up to (originally) US$458,268,000. Words and expressions defined in the Loan Agreement shall have the same meaning when used in this letter agreement (the “ Letter Agreement ”) except as expressly provided in this Letter Agreement.
We request that, by countersigning this Letter Agreement, you confirm your agreement to the following amendments to the Loan Agreement pursuant to Clause 29 of the Loan Agreement:
i.
Amendments to the Loan Agreement.
Subject to the fulfilment of the conditions to effectiveness stated in Clause 2 below, the parties agree to amend the Loan Agreement as follows:
i.
The following definitions are added to Clause 1.1 in alphabetical order:
““ Bail-In Action ” means the exercise of any Write-down and Conversion Powers;”
““ Bail-In Legislation ” means in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the

1


recovery and resolution of credits institutions and investments firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;”
““ EEA Member Country ” means any member state of the European Union, Iceland, Liechtenstein and Norway;
““ EU Bail-In Legislation Schedule ” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;”
““ Resolution Authority ” means any body which has authority to exercise any Write-down and Conversion Powers;”
““ Write-down and Conversion Powers ” means in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;”
ii.
Clause 12.3 of the Loan Agreement is hereby amended and restated to read as follows:
“ 12.3
Minimum Consolidated Tangible Net Worth . The Guarantor shall maintain a Consolidated Tangible Net Worth of not less than $1,000,000,000 plus:
i.
25% of the Guarantor’s cumulative, positive consolidated net income for each fiscal quarter commencing on or after January 1, 2016; and
ii.
50% of the value of the Equity Proceeds realized from any issuance of Equity Interests in the Guarantor occurring on or after January 1, 2016.”
iii.
Clause 12.5 of the Loan Agreement is hereby amended and restated to read as follows:
“ 12.5
Minimum liquidity . The Guarantor shall maintain Consolidated Liquidity, including all     amounts on deposit with any bank, of not less than (a) $25,000,000 or (b) an amount equal to the aggregate of (i) the product of $500,000 multiplied by the number of vessels owned by the Guarantor or by a subsidiary of the Guarantor at such time and (ii) the product of $250,000 multiplied by the number of vessels time chartered in by the Guarantor or a subsidiary of the Guarantor at such time (the “ Minimum Liquidity ”), whichever is greater, provided that the Minimum Liquidity shall at all times consist of cash.”
iv.
Clause 15.2 of the Loan Agreement is hereby amended and restated to read as follows:
“ 15.2    Collateral Maintenance Ratio . If, at any time, the Agent notifies that Guarantor that:
i.
the aggregate Fair Market Value of the Ships; plus
ii.
the net realizable value of any additional Collateral previously provided under this Clause 15,
is below the Relevant Percentage of the Loan (such ratio being the “ Collateral Maintenance Ratio ”), the Agent (acting upon the instructions of the Majority Lenders) shall have the right to require the Borrowers to comply with the requirements of Clause 15.3.
For the purposes of this Clause 15.2, “ Relevant Percentage ” means:

2


i.
during the period from January 1, 2016 until December 31, 2016, 165 percent;
ii.
during the period from January 1, 2017 until December 31, 2017, 160 percent;
iii.
during the period from January 1, 2018 until December 31, 2018, 155 percent;
iv.
during the period from January 1, 2019 until December 31, 2019, 150 percent; and
v.
at all times thereafter, 145 percent.”
(f)    A new Clause 31.7 is hereby added to read as follows:
“ 31.7    Contractual Recognition of Bail-In . Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties, each party acknowledges and accepts that any liability of any party to any other party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability."
2.
Conditions to effectiveness.
It is a condition precedent to the effectiveness of this Letter Agreement that, pursuant to Clauses 8.4 and 8.5 of the Loan Agreement, the Borrowers partially prepay on or before July 31, 2016:
(i) the Commercial Bank Tranche in the amount of $3,634,545.19; and
(ii) the K-Sure Tranche in the amount of $12,347,615.22,
each such prepayment to be applied against each Tranche in accordance with the provisions of Clause 8.12 of the Loan Agreement.
3 .     Guarantor’s confirmation.
The Guarantor, by its signature of this Letter Agreement, confirms its consent to the amendments to the Loan Agreement set out herein and confirms that the guarantee in Clause 16 of the Loan Agreement remains in full force and effect.
4 .     No other amendments.
Other than as set forth in this Letter Agreement, the provisions of the Loan Agreement shall remain unchanged and in full force and effect.

3


5.    Finance Document
It is acknowledged and agreed that this Letter Agreement shall constitute a Finance Document for purposes of the Loan Agreement.
6 .     Governing law and jurisdiction
The provisions of Clause 34 ( Law and Jurisdiction ) of the Loan Agreement shall apply to this Letter Agreement as if set out in full but so that references to “this Agreement” are amended to read “this Letter”. All remaining provisions of the Loan Agreement and the Finance Documents shall remain in full force and effect.
7.    Execution in counterparts.
This Letter Agreement may be executed in counterparts.
[Signature pages follow on next page]

4


Sincerely,
STI BATTERSEA SHIPPING COMPANY LIMITED
STI MAYFAIR SHIPPING COMPANY LIMITED
STI HAMMERSMITH SHIPPING COMPANY LIMITED
STI ROTHERHITHE SHIPPING COMPANY LIMITED
STI TRIBECA SHIPPING COMPANY LIMITED
STI BRONX SHIPPING COMPANY LIMITED
STI SOHO SHIPPING COMPANY LIMITED
STI OXFORD SHIPPING COMPANY LIMITED
STI GRAMERCY SHIPPING COMPANY LIMITED
STI CONNAUGHT SHIPPING COMPANY LIMITED
STI MANHATTAN SHIPPING COMPANY LIMITED
STI BROOKLYN SHIPPING COMPANY LIMITED
STI QUEENS SHIPPING COMPANY LIMITED
STI WINNIE SHIPPING COMPANY LIMITED
STI NOTTING HILL SHIPPING COMPANY LIMITED
STI LAUREN SHIPPING COMPANY LIMITED
STI WESTMINSTER SHIPPING COMPANY LIMITED
as Borrowers


By: __ /s/ Brian M. Lee _____________________
Name: Brian M. Lee
Title: Secretary

 


5


Accepted and agreed this 15 day of July 2016 by:
DNB BANK ASA, NEW YORK BRANCH, as Agent on behalf of the Majority Lenders, K-Sure Agent, and as Agent and Security Trustee in their own rights


By: __/s/ Ahelia Singh________________________
Name: Ahelia Singh
Title: Assistant Vice President




By: _/s/ Mita Zalavadia_________________________
Name: Mita Zalavadia
Title: Assistant Vice President

 



















6


We hereby confirm and acknowledge that we have read and understood the terms and conditions of the above Letter Agreement and agree in all respects to the same and confirm that the guarantee in Clause 16 of the Loan Agreement shall remain in full force and effect and shall continue to stand as security for the Guaranteed Obligations stated therein.
SCORPIO TANKERS INC.
as Guarantor


By: _/s/ Brian M. Lee______________________
Name: Brian M. Lee
Title: Chief Financial Officer




7

{draft line – to be implemented in Phase 5}

Exhibit 4.24(a)
Amendment and Restatement Deed in relation to a Secured Loan Facility dated 18 December 2015 as amended by a Side Letter dated 2 February 2016

Dated 29 December 2016

(1) STI Memphis Shipping Company Limited
   STI Battery Shipping Company Limited
   (as Existing Borrowers)
(2) STI Sapphire Shipping Company Limited
   STI Emerald Shipping Company Limited
   (as New Borrowers)
(3) Scorpio Tankers Inc.
(as Guarantor)
(4) BNP Paribas
(as Arranger)
(5) BNP Paribas
(as Agent)
(6) BNP Paribas
(as Swap Provider)
(7) BNP Paribas
(as Security Agent)
(8) The Financial Institutions
listed in Schedule 1
(as Original Lenders)





     
LONLIVE\26145971.3
     
Contents
Page
1
Interpretation
3

2
Conditions
4

3
Representations
4

4
Amendments to Loan Agreement
5

5
Confirmations and Undertakings
5

6
Notices, Governing Law and Enforcement
5

Schedule 1
The Original Lenders
6

Schedule 2
Effective Date Confirmation
7

Schedule 3
Amended and Restated Loan Agreement
8




LONLIVE\26145971.3
     





LONLIVE\26145971.3
     


Amendment and Restatement Deed
Dated   29 December    2016
Between:
(1)
STI Memphis Shipping Company Limited ("Borrower A") and STI Battery Shipping Company Limited ("Borrower B") , each a company incorporated under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (together the " Existing Borrowers "); and
(2)
STI Sapphire Shipping Company Limited ("Borrower C") and STI Emerald Company Limited ("Borrower D") , each a company incorporated under the laws of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (together, the " New Borrowers " and together with the Existing Borrowers (the " Borrowers ")); and
(3)
Scorpio Tankers Inc. , a company incorporated under the laws of the Republic of the Marshall Islands, with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the " Guarantor "); and
(4)
BNP Paribas , acting as mandated lead arranger through its office at 16, rue de Hanovre, 75002 Paris, France (in that capacity, the " Arranger "); and
(5)
BNP Paribas , acting as agent through its office at 16, rue de Hanovre, 75002 Paris, France (in that capacity, the " Agent "); and
(6)
BNP Paribas, acting as swap provider through its office at 787 Seventh Avenue, 10019 New York, New York, United States of America and any Lender that from time to time enters into a Master Agreement with the Borrowers and which accedes to the Loan Agreement in its capacity as swap provider (together the " Swap Providers " and each a " Swap Provider ");
(7)
BNP Paribas , acting as security agent through its office at 16, rue de Hanovre, 75002 Paris, France (in that capacity, the " Security Agent "); and
(8)
The Financial Institutions listed in Schedule 1 ( The Original Lender ), each acting through its Facility Office (together the " Original Lenders " and each an " Original Lender ").
Supplemental to a secured loan agreement dated 18 December 2015, as supplemented by a side letter dated 2 February 2016 (the " Loan Agreement ") made between the Existing Borrowers as borrowers under the Loan Agreement, the Guarantor as guarantor, the Lenders, the Agent, the Swap Providers and the Security Agent on the terms and subject to the conditions of which each of the Lenders agreed to advance to the Existing Borrowers their respective Commitment of an aggregate amount not exceeding USD34,500,000.
Whereas :
(A)
The Existing Borrowers and the New Borrowers have requested to be joint and several borrowers under the Loan Agreement and have requested an increase to the Maximum Loan Amount to fifty nine million eight hundred thousand dollars (USD59,800,000) to

LONLIVE\26145971.3    Page 2



be split into (i) Tranche A and Tranche B, which are guaranteed by the Guarantor, to assist Borrower A and Borrower B to finance Vessel A and Vessel B and (ii) Tranche C and Tranche D which shall be advanced to the New Borrowers and guaranteed by the Guarantor, in order to assist Borrower C and Borrower D to refinance existing debt in relation to Vessel C and Vessel D (the " Request ").
(B)
The Finance Parties have agreed to give their consent to the Request and have agreed to add Borrower C and Borrower D as joint and several Borrowers together with Borrower A and Borrower B as at the Effective Date, subject to and upon the terms and conditions contained in this Amendment and Restatement Deed.
(C)
The parties to this Amendment and Restatement Deed have agreed to amend and restate the Loan Agreement on the terms and subject to the conditions set out in this Amendment and Restatement Deed in the form attached to this Amendment and Restatement Deed at Schedule 3 . The parties to this Amendment and Restatement Deed have also agreed to amend and supplement certain of the Security Documents that have been entered into prior to this Amendment and Restatement Deed in order to extend the security created by those Security Documents to secure the Borrowers' obligations under the Loan Agreement as it is amended and restated.
It is agreed that :
1
Interpretation
1.1
In this Amendment and Restatement Deed " Effective Date " means the date on which the Agent confirms to the Borrower in writing substantially in the form set out in Schedule 2 that all of the conditions referred to in Clause 2.1 have been satisfied, which confirmation the Agent shall be under no obligation to give if an Event of Default shall have occurred.
1.2
In this Amendment and Restatement Deed " Finance Parties " means the Agent, the Security Agent, the Arranger, the Swap Provider and the Lenders.
1.3
In this Amendment and Restatement Deed " Security Parties " means all parties to this Amendment and Restatement Deed other than the Finance Parties and " Security Party " means any one of them, and " Existing Security Parties " means the Existing Borrowers and the Guarantor.
1.4
All words and expressions defined in the Loan Agreement shall have the same meaning when used in this Amendment and Restatement Deed unless the context otherwise requires, and clause 1.2 of the Loan Agreement shall apply to the interpretation of this Amendment and Restatement Deed as if it is set out in full.
1.5
The Agent and the Borrowers hereby designate this Amendment and Restatement Deed as a Finance Document.
1.6
All obligations, representations, warranties, covenants and undertakings of the Borrowers under or pursuant to this Amendment and Restatement Deed shall, unless otherwise expressly provided, be entered into, made or given by them jointly and severally.

LONLIVE\26145971.3    Page 3



2
Conditions
2.1
As conditions for the agreement of the Finance Parties to the requests specified in Recital A above and for the effectiveness of Clause 4, the Borrower shall deliver or cause to be delivered to or to the order of the Agent the following documents and evidence:
2.1.1
a certificate from a duly authorised officer of each of the Existing Security Parties confirming that none of the documents previously delivered to the Agent pursuant to clauses 4.1 and 4.2 of the Loan Agreement have been amended or modified in any way since the date of their delivery to the Agent, or copies, certified by a duly authorised officer of the relevant Security Party in question as true, complete, accurate and neither amended nor revoked, of any which have been amended or modified;
2.1.2
a copy, certified by a director or the secretary of each of the Existing Security Parties as true, complete and accurate and neither amended nor revoked, of a resolution of the directors of each of the Existing Security Parties approving, and authorising or ratifying the execution of, this Amendment and Restatement Deed and any document to be executed by them pursuant to this Amendment and Restatement Deed;
2.1.3
a notarially attested and legalised power of attorney of each of the Existing Security Parties under which this Amendment and Restatement Deed and any documents required pursuant to it are to be executed by that party;
2.1.4
for each of Borrower C and Borrower D, the equivalent documents listed in paragraph 1 of Schedule 2 , Part I of the Loan Agreement; with references therein to "Guarantor and the Borrowers" being deemed to be references to Borrower C and Borrower D;
2.1.5
a duly executed mortgage addendum in respect of each of Vessel A and Vessel B in respect of the first preferred Marshall Islands mortgage over each of Vessel A and Vessel B together with evidence of the registration of the mortgage addenda with the Marshall Islands Ship Registry.
2.2
All documents and evidence delivered to the Agent pursuant to Clause 2.1 shall:
2.2.1
be in form and substance acceptable to the Agent;
2.2.2
be accompanied, if required by the Agent, by translations into the English language, certified in a manner acceptable to the Agent; and
2.2.3
if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent.
3
Representations
Each of the representations contained in clause 19 of the Loan Agreement shall be deemed repeated by the Borrower at the date of this Amendment and Restatement Deed and at the Effective Date, by reference to the facts and circumstances then

LONLIVE\26145971.3    Page 4



pertaining, as if references to the Finance Documents include this Amendment and Restatement Deed.
4
Amendments to Loan Agreement
4.1
With effect from the Effective Date the Loan Agreement shall be read and construed as if:
4.1.1
references to "this Agreement" are references to the Loan Agreement as amended and supplemented by this Amendment and Restatement Deed; and
4.1.2
references to the Finance Documents include this Amendment and Restatement Deed.
4.2
With effect from the Effective Date, Borrower C and Borrower D shall accede to the Loan Agreement as joint and several borrowers, and agree to perform and assume all of the obligations and liabilities of the Borrowers under the Loan Agreement.
4.3
All other terms and conditions of the Loan Agreement shall remain unaltered and in full force and effect.
5
Confirmations and Undertakings
5.1
Each of the Existing Security Parties confirms that all of its respective obligations under or pursuant to each of the Security Documents to which it is a party remain in full force and effect, despite the amendments to the Loan Agreement made in this Amendment and Restatement Deed, as if all references in any of the Security Documents to the Loan Agreement are references to the Loan Agreement as amended and supplemented by this Amendment and Restatement Deed.
5.2
The definition of any term defined in any of the Security Documents shall, to the extent necessary, be modified to reflect the amendments to the Loan Agreement made in or pursuant to this Amendment and Restatement Deed.
5.3
Without prejudice to or in any way limiting the general effect of Clauses  5.1 and 5.2 , each of the Existing Security Parties hereby agrees and confirms that the security and obligations created by the Finance Documents to which they are a party and their obligations thereunder shall secure and extend to the obligations of the Borrowers under the Loan Agreement as amended and restated by this Amendment and Restatement Deed and under the Finance Documents. Furthermore, the Guarantor confirms and agrees that the Guarantee shall extend to and guarantee the performance of the Borrowers of all of their obligations under the Loan Agreement as amended and restated and under any and all of the Finance Documents. In all other respects, the Existing Security Parties' obligations under the Finance Documents remain in full force and effect.
6
Notices, Governing Law and Enforcement
The provisions of clauses 31 (Notices), 38 (Counterparts), 40 (Governing law) and 41 (Enforcement) of the Loan Agreement shall apply to this Amendment and Restatement Deed as if they are set out in full and as if (a) references to each Party are references to each party to this Amendment and Restatement Deed, (b) references to the Finance Documents include this Amendment and Restatement Deed and (c) references to the Borrower are references to each Security Party other than the Guarantor

LONLIVE\26145971.3    Page 5



Schedule 1
The Original Lenders
Name of Original Lender
BNP Paribas














LONLIVE\26145971.3    Page 6



Schedule 2     
Effective Date Confirmation
To:
STI Memphis Shipping Company Limited
STI Battery Shipping Company Limited
STI Sapphire Shipping Company Limited
STI Emerald Shipping Company Limited



We, BNP Paribas , refer to the amendment and restatement deed dated                                             2016 (the " Amendment and Restatement Deed ") relating to a secured loan agreement dated 18 December 2015, as supplemented by a side letter dated 2 February 2016 (the " Loan Agreement ") made between you, the banks listed in it as the original lenders, ourselves as the agent and ourselves as the security agent.
We hereby confirm that all conditions precedent referred to in clauses 2.1 to 2.5 of the Amendment and Restatement Deed have been satisfied. In accordance with clauses 1.1 and 4 of the Amendment and restatement Deed the Effective Date (as defined in the Amendment and Restatement Deed) is [   :  ][a.m][p.m.][CET][GMT] on the date of this confirmation and the amendments to the Loan Agreement are now effective.
Dated                                             2016

Signed:___________________________________
For and on behalf of
BNP Paribas
(as agent)

LONLIVE\26145971.3    Page 7



Schedule 3      Amended and Restated Loan Agreement

LONLIVE\26145971.3    Page 8




US$59,800,000 Secured Loan Agreement
Dated 18 December 2015 as amended by a side letter dated 2 February 2016 and as amended and restated pursuant to an amendment and restatement deed dated 29 December 2016
(1) STI Memphis Shipping Company Limited
   STI Battery Shipping Company Limited
   STI Sapphire Shipping Company Limited
   STI Emerald Shipping Company Limited
   (as Borrowers)
(2) Scorpio Tankers Inc.
(as Guarantor)
(3) The Financial Institutions
listed in Schedule 1
(as Original Lenders)
(4) BNP Paribas
(as Arranger)
(5) BNP Paribas
(as Agent)
(6) BNP Paribas
(as Swap Provider)
(7) BNP Paribas
(as Security Agent)

STEPHENSONHARWOODA02.JPG

LONLIVE\26145971.3    Page 7



LONLIVE\26142366.7
Contents

 
Section 1 Interpretation
 
1
Definitions and Interpretation
 
 
Section 2 The Loan
 
2
The Loan
 
3
Purpose
 
4
Conditions of Utilisation
 
 
Section 3 Utilisation
 
5
Advance
 
 
Section 4 Repayment, Prepayment and Cancellation
 
6
Repayment
 
7
Illegality, Prepayment and Cancellation
 
 
Section 5 Costs of Utilisation
 
8
Interest
 
9
Interest Periods
 
10
Changes to the Calculation of Interest
 
11
Fees
 
 
Section 6 Additional Payment Obligations
 
12
Tax Gross Up and Indemnities
 
13
Increased Costs
 
14
Other Indemnities
 
15
Mitigation by the Lenders
 
16
Costs and Expenses
 
 
Section 7 Security and Application of Moneys
 
17
Security Documents and Application of Moneys
 
18
Guarantee and Indemnity
 
 
Section 8 Representations, Undertakings and Events of Default
 
19
Representations
 
20
Information Undertakings
 
21
Financial Covenants
 
22
General Undertakings
 
23
Events of Default
 
 
Section 9 Changes to Parties
 
24
Changes to the Lenders
 
25
Changes to the Security Parties
 
 
Section 10 The Finance Parties
 
26
Role of the Agent, the Security Agent and the Arranger
 
27
Conduct of Business by the Finance Parties
 
28
Sharing among the Finance Parties
 
 
Section 11 Administration
 
29
Payment Mechanics
 
30
Set-Off
 

LONLIVE\26142366.7


31
Notices
 
32
Calculations and Certificates
 
33
Partial Invalidity
 
34
Remedies and Waivers
 
35
Amendments and Waivers
 
36
Confidentiality
 
37
Disclosure of Lender Details by Agent
 
38
Counterparts
 
39
Joint and Several Liability
 
 
Section 12 Governing Law and Enforcement
 
40
Governing Law
 
41
Enforcement
 
42
Patriot Act Notice
 
Schedule 1
The Original Lenders
 
Schedule 2
Part I Conditions Precedent
 
Part II Conditions Subsequent
 
Schedule 3
Drawdown Request
 
Schedule 4
Form of Transfer Certificate
 
Schedule 5
Form of Assignment Agreement
 
Schedule 6
Form of Compliance Certificate
 


LONLIVE\26142366.7


Loan Agreement
Dated
2016
Between:
(9)
STI Memphis Shipping Company Limited (" Borrower A ") STI Battery Shipping Company Limited (" Borrower B "), STI Sapphire Shipping Company Limited (" Borrower C ") STI Emerald Shipping Company Limited (" Borrower D ") (each a company incorporated under the laws of the Republic of the Marshall Islands, with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960) (each a Borrower and together the " Borrowers "); and
(10)
Scorpio Tankers Inc. , a company incorporated under the laws of the Republic of the Marshall Islands, with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the " Guarantor "); and
(11)
The Financial Institutions listed in Schedule 1, Part 1 ( The Original Lenders ), each acting through its Facility Office (together the " Original Lenders " and each an " Original Lender "); and
(12)
BNP Paribas , acting as mandated lead arranger through its office at 16, rue de Hanovre, 75002 Paris, France (in that capacity, the " Arranger "); and
(13)
BNP Paribas , acting as agent through its office at 16, rue de Hanovre, 75002 Paris, France (in that capacity, the " Agent "); and
(14)
BNP Paribas, acting as swap provider through its office at 787 Seventh Avenue, 10019 New York, New York, United States of America and any Lender that from time to time enters into a Master Agreement with the Borrowers in its capacity as swap provider (together the " Swap Providers " and each a " Swap Provider "); and    
(15)
BNP Paribas , acting as security agent through its office at 16, rue de Hanovre, 75002 Paris, France (in that capacity, the " Security Agent ").
Preliminary
(D)
Each Borrower is the owner of its relevant Vessel and has registered that Vessel under an Approved Flag.
(E)
Each of the Original Lenders has agreed to advance to the relevant Borrower on a joint and several basis, its Commitment (aggregating, with all the other Commitments), up to $59,800,000 to assist the Borrowers to finance part of the purchase price of Vessel A and to refinance existing debt in relation to Vessel B, Vessel C and Vessel D.
It is agreed as follows:

LONLIVE\26142366.7    Page 1




LONLIVE\26142366.7    Page 2


Section 1
Interpretation
1
Definitions and Interpretation
1.1
Definitions In this Agreement:
" Acceptable Bank " means ABN AMRO Bank N.V., or a bank or financial institution which has a rating for its long-term unsecured and non-credit-enhanced debt obligations of BBB- or higher by Standard & Poor's Rating Services or Fitch Ratings Ltd or Baa3 or higher by Moody's Investors Service Limited or a comparable rating from an internationally recognised credit rating agency.
" Account Holder " means BNP Paribas (Suisse) S.A. acting through its branch at Place de Hollande 2, 1211 Geneva 11, Switzerland or any other bank or financial institution which at any time, with the Security Agent's prior written consent, holds the Earnings Account and/or the Retention Account
" Accounts " means the Earnings Accounts and the Retention Accounts.
" Account Security Deeds " means the account security deeds referred to in Clause 17.1.6 ( Security Documents ).
" Administration " has the meaning given to it in paragraph 1.1.3 of the ISM Code.
" Affiliate " means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term " control " (including the terms " controlling ", " controlled by " and " under common control with ") of a person means the possession, direct or indirect, of the power to vote 20% or more of the voting stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of voting stock, by contract or otherwise, and which for the avoidance of doubt includes Scorpio Bulkers Inc and each of its Affiliates.
" Annex VI " means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).
" Approved Classification Society " means, in relation to a Vessel, any of DNV GL, Lloyd’s Register of Shipping, American Bureau of Shipping, Korean Register of Shipping and Bureau Veritas or such other first-class vessel classification society that is a member of IACS that the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld or delayed), approve from time to time.
" Approved Flag " means the Marshall Islands or such other flag as the Agent may, with the consent of the Majority Lenders, approve from time to time in writing as the flag on which a Vessel shall be registered.
" Approved Pooling Arrangement " means, in relation to a Vessel, the Scorpio MR Pool and any other pooling arrangement:
(a)
proposed by the Borrowers;
(b)
run by any Affiliate of the Commercial Manager; and
(c)
approved in writing by the Agent prior to that Vessel's entry into such pooling arrangement.
" Approved Shipbroker " means each of Arrow Sale and Purchase Limited, Braemar Seascope Limited, Clarkson PLC, RS Platou, Maersk Broker, Fearnleys, Galbraith's Ltd., BRS and Simpson Spencer & Young.
" Approved Sub-manager " means any sub-manager as the Agent may approve in writing which, at the date of this Agreement, includes V. Ships Ship Management, D'Amico International Shipping, Hellespont Shipping, Anglo-Eastern Ship Management, Zenith Ship Management, Optimum Ship Services Ltd and any Affiliates or Subsidiary of the Technical Manager and the Commercial Manager or Subsidiary of the Guarantor.

LONLIVE\26142366.7    Page 3


" Assignments " means all the forms of assignment referred to in Clause 17.1.2 ( Security Documents ).
" Assignment Agreement " means an agreement substantially in the form set out in Schedule 5 ( Form of Assignment Agreement ) or any other form agreed between the relevant assignor and assignee.
" Authorisation " means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.
" Availability Period " means the period from and including the date of this Agreement to and including the date that is 60 days after the date of this Agreement or, in the case of Tranche C and Tranche D the period of 60 days from the Restatement Date.
" Balloon " means the Tranche A and Tranche B Balloon and the Tranche C and Tranche D Balloon.
" Break Costs " means the amount (if any) by which:
(a)
the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
exceeds:
(b)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
" Business Day " means a day (other than a Saturday or Sunday) on which banks are open for general business in London, New York, Rotterdam and Paris.
" Capitalized Lease " means, as applied to any person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such person, as lessee, in conformity with IFRS , is required to be capitalized on the balance sheet of such person and " Capitalized Lease Obligation " is defined to mean the rental obligations, as aforesaid, under a Capitalized Lease.
" Change of Control " means:
(a)
in respect of the Borrowers, the occurrence of any act, event or circumstance that without prior written consent of the Majority Lenders results in the Guarantor owning directly or indirectly less than 100% of the issued and outstanding equity in a Borrower; and
(b)
in respect of the Guarantor:
(i)
a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than any director or officer or any holders of 5% or more of the Guarantor's equity as of the date of this Agreement, becomes the ultimate "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act and including by reason of any change in the ultimate "beneficial ownership" of the equity of the Guarantor) of more than 35% of the total voting rights of the Guarantor (calculated on a fully diluted basis); or
(ii)
individuals who at the beginning of any period of two consecutive calendar years constituted the Board of Directors or equivalent governing body of the Guarantor (together with any new directors (or equivalent) whose election by such Board of Directors or equivalent governing body or whose nomination for election was approved

LONLIVE\26142366.7    Page 4


by a vote of at least two-thirds of the members of such Board of Directors or equivalent governing body then still in office who either were members of such Board of Directors or equivalent governing body at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least 50% of the members of such Board of Directors or equivalent governing body then in office.
" Charged Property " means all of the assets of the Security Parties which from time to time are, or are expressed to be, the subject of the Security Documents.
" Charter " means any charter or contract of employment in respect of a Vessel that, inclusive of options, is capable of exceeding 12 months in duration, but excluding:
(a)
any charter pursuant to an Approved Pooling Arrangement; and
(b)
any other charter or contract of employment in respect of a Vessel that a Borrower enters into with a company within the Group.
" Code " means the US Internal Revenue Code of 1986.
" Commercial Manager " means Scorpio Commercial Management S.A.M., a company incorporated under the laws of Monaco with its registered office at Le Millenium, 9, Boulevard Charles III, MC-98000 Monaco.
" Commitment " means:
(a)
in relation to an Original Lender, the amount set opposite its name under the heading "Commitment" in Schedule 1 ( The Original Lenders ) and the amount of any other Commitment transferred to it under this Agreement; and
(b)
in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
" Commitment Fee " means the commitment fee to be paid by the Borrowers to the Agent under Clause 11.1 ( Commitment Fee ).
" Compliance Certificate " means a certificate substantially in the form set out in Schedule 6 ( Form of Compliance Certificate ) .
" Confidential Information " means all information relating to any Security Party, the Finance Documents or the Loan of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Loan from either:
(a)
any Security Party or any of its advisers; or
(b)
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Security Party or any of its advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 36 ( Confidentiality ); or

LONLIVE\26142366.7    Page 5


(ii)
is identified in writing at the time of delivery as non-confidential by any Security Party or any of its advisers; or
(iii)
is known by that Finance Party before the date the information is disclosed to it in accordance with (a) or (b) or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with any Security Party and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
" Confidential Rate " means any quotation supplied to the Agent by a Reference Bank or any Funding Rate.
" Confidentiality Undertaking " means a confidentiality undertaking substantially in a recommended form of the Loan Market Association at the relevant time.
" Confirmation " means a Confirmation exchanged or deemed to be exchanged between a Swap Provider and Borrowers as contemplated by a Master Agreement.
" Credit Support Document " means any document described as such in a Master Agreement and any other document referred to in any such document which has the effect of creating security in favour of any of the Finance Parties.
" Credit Support Provider " means any person (other than a Borrower) described as such in a Master Agreement.
" CTA " means the Corporation Tax Act 2009.
" Default " means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
" Delegate " means any delegate, agent, attorney or co-trustee appointed by the Security Agent.
" Disruption Event " means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
" DOC " means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.
" Drawdown Date " means the date on which the relevant Tranche is advanced under Clause 5 ( Advance ).
" Drawdown Request " means a notice substantially in the form set out in Schedule 3 ( Drawdown Request ).

LONLIVE\26142366.7    Page 6


" Earnings " means all hires, freights, pool income and other sums payable to or for the account of a Borrower in respect of a Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of a Vessel.
" Earnings Accounts " means the bank accounts to be opened in the name of each Borrower with the Account Holder and designated "STI MEMPHIS – Earnings Account", "STI BATTERY – Earnings Account", "STI SAPPHIRE – Earnings Account" and "STI EMERALD– Earnings Account".
" Effective Date " means the date of this Agreement.
" Encumbrance " means a mortgage, charge, assignment, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.
" Environmental Approval " means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.
" Environmental Claim " means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, "claim" includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
" Environmental Incident " means:
(a)
any release, emission, spill or discharge into a Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from a Vessel; or
(b)
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Security Party and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Security Party and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.
" Environmental Law " means any present or future law or regulation relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.

LONLIVE\26142366.7    Page 7


" Environmentally Sensitive Material " means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
" ERISA " means the Employee Retirement Income Security Act of 1974, as amended, and any successor thereto.
" ERISA Affiliate " means each person (and defined in Section 3(9) of ERISA) which together with a Borrower or the Guarantor would be deemed to be a "single employer" within the meaning of Section 414(b), (c), (m) or (o) of the Uniform Commercial Code (as from time to time in effect in any applicable jurisdiction).
" Event of Default " means any event or circumstance specified as such in Clause 23 ( Events of Default ).
" Facility Office " means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.
" Facility Period " means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been paid in full and the Security Parties have ceased to be under any further actual or contingent liability to the Finance Parties under or in connection with the Finance Documents.
" FATCA " means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;
(b)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in (a); or
(c)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in (a) or (b) with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.
" FATCA Application Date " means:
(a)
in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;
(b)
in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2019; or
(c)
in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within (a) or (b), 1 January 2019,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
" FATCA Deduction " means a deduction or withholding from a payment under a Finance Document required by FATCA.
" FATCA Exempt Party " means a Party that is entitled to receive payments free from any FATCA Deduction.
" Fee Letter " means any letter or letters dated on or about the date of this Agreement and on or about the Restatement Date between the Arranger, the Borrowers (or any of them) and the Guarantor (or the Agent, the

LONLIVE\26142366.7    Page 8


Borrowers (or any of them) and the Guarantor or the Security Agent, the Borrowers (or any of them) and the Guarantor) setting out any of the fees referred to in Clause 11 ( Fees ).
" Finance Documents " means this Agreement, any Master Agreement, the Security Documents, the Fee Letter and any other document designated as such by the Agent and the Borrowers and " Finance Document " means any one of them.
" Finance Parties " means the Arranger, the Agent, the Security Agent, any Swap Provider and the Lenders and " Finance Party " means any one of them.
" Financial Indebtedness " means, with respect to any person (the " Debtor ") at any date of determination (without duplication):
(a)
all obligations of the Debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the Debtor;
(b)
all obligations of the Debtor evidenced by bonds, debentures, notes or other similar instruments;
(c)
all obligations of the Debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the Debtor (including reimbursement obligations with respect thereto) which in accordance with IFRS would be shown on the liability side of a balance sheet;
(d)
all obligations of the Debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;
(e)
all Capitalized Lease Obligations of the Debtor as lessee;
(f)
all such Financial Indebtedness as described in sub paragraphs (a) to (e) of persons other than the Debtor secured by an Encumbrance on any asset of the Debtor, whether or not such Financial Indebtedness is assumed by the Debtor, provided that the amount of such Financial Indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Financial Indebtedness; and
(g)
all such Financial Indebtedness as described in sub-paragraphs (a) to (e) of persons other than the Debtor under any guarantee, indemnity to similar obligation entered into by the Debtor to the extent such Financial Indebtedness is guaranteed, indemnified, etc. by the Debtor.
The amount of Financial Indebtedness of any Debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations described in (f) and (g) above, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that (i) the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount is the face amount of such Financial Indebtedness less the remaining unamortized portion of such original issue discount of such Financial Indebtedness at such time, and (ii) Financial Indebtedness shall not include any liability for taxes.
" FMV " means the fair market value of a Vessel expressed in USD as conclusively determined by the arithmetic average of valuations addressed to the Agent and issued by two Approved Shipbrokers on the basis of a charter-free sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer.
" Funding Rate " means any rate notified to the Agent by a Lender pursuant to Clause 10.2.2 ( Market disruption );
" Group " means the Guarantor and its Subsidiaries.

LONLIVE\26142366.7    Page 9


" Guarantee " means the guarantee and indemnity of the Guarantor contained in Clause 18 ( Guarantee and Indemnity ) and referred to in Clause 17.1.3 ( Security Documents ).
" Holding Company " means, in relation to a person, any other person in respect of which it is a Subsidiary.
" IACS " means the International Association of Classification Societies.
" IAPPC " means a valid international air pollution prevention certificate for a Vessel issued under Annex VI.
" IFRS " means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
" Impaired Agent " means the Agent at any time when:
(a)
it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;
(b)
the Agent otherwise rescinds or repudiates a Finance Document; or
(c)
an Insolvency Event has occurred and is continuing with respect to the Agent;
unless, in the case of (a):
(i)
its failure to pay is caused by:
(A)    administrative or technical error; or
(B)    a Disruption Event; and
payment is made within three Business Days of its due date; or
(ii)
the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.
" Indebtedness " means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to any of the Finance Parties under all or any of the Finance Documents.
" Insolvency Event " in relation to an entity means that the entity:
(a)
is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(b)
becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;
(c)
makes a general assignment, arrangement or composition with or for the benefit of its creditors;
(d)
institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;
(e)
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or

LONLIVE\26142366.7    Page 10


petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in (d) and:
(i)
results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or
(ii)
is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;
(f)
has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);
(g)
seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in (d) );
(h)
has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;
(i)
causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in (a) to (h); or
(j)
takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.
" Insurances " means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with a Vessel or her increased value or her Earnings and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.
" Interest Payment Date " means each date for the payment of interest in accordance with Clause 8.2 ( Payment of interest ).
" Interest Period " means each period determined in accordance with Clause 9 ( Interest Periods ) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 ( Default interest ).
" Interpolated Screen Rate " means, in relation to LIBOR for any Tranche, the rate which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Tranche; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Tranche,
each as of 11.00 a.m. on the Quotation Day for dollars.
" ISM Code " means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention.
" ISM Company " means, at any given time, the company responsible for a Vessel's compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

LONLIVE\26142366.7    Page 11


" ISPS Code " means the International Ship and Port Facility Security Code.
" ISSC " means a valid international ship security certificate for a Vessel issued under the ISPS Code.
" ITA " means the Income Tax Act 2007.
" Joint Venture " means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.
" Legal Opinion " means any legal opinion delivered to the Agent under Clause 4.1 ( Initial conditions precedent ), Clause 4.3 ( Conditions subsequent ) or Clause 22.26 ( No dealings with Master Agreement ).
" Legal Reservations " means:
(a)
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;
(b)
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;
(c)
similar principles, rights and defences under the laws of any Relevant Jurisdiction; and
any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.
" Lender " means:
(a)
any Original Lender; and
(b)
any bank, financial institution or other entity which has become a Party as a Lender in accordance with Clause 24 ( Changes to the Lenders ),
which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.
" LIBOR " means, in relation to any Tranche:
(a)
the applicable Screen Rate; or
(b)
(if no Screen Rate is available for the Interest Period of that Tranche) the Interpolated Screen Rate for that Tranche; or
(c)
(if (i) no Screen Rate is available for the currency of the Loan or (ii) no Screen Rate is available for the Interest Period of that Tranche and it is not possible to calculate the Interpolated Screen Rate for that Tranche) the Reference Bank Rate,
as of, in the case of paragraphs (a) and (c) above, 11.00 a.m. (London time) on the Quotation Day for the offering of deposits in dollars in an amount comparable to that Tranche (or any relevant part of that Tranche) and for a period comparable to the relevant Interest Period and, if that rate is less than zero, LIBOR shall be deemed to be zero.
" Loan " means the aggregate amount of the Tranches advanced or to be advanced by the Lenders to the Borrowers under Clause 2 ( The Loan ) or, where the context permits, the principal amount of the Tranches advanced and for the time being outstanding.

LONLIVE\26142366.7    Page 12


" Majority Lenders " means a Lender or Lenders whose Commitments aggregate more than 66 2 / 3 % of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2 / 3 % of the Total Commitments immediately prior to the reduction).
" Management Agreement " means the master agreement dated 24 January 2013 (as amended, restated, supplemented, novated or modified from time to time) entered into between Scorpio Tankers Inc., the Technical Manager and the Commercial Manager:
(a)
as to be acceded to in respect of the commercial management of the Vessels pursuant to confirmation letters to be made between the relevant Borrower, Scorpio Tankers Inc. and the Commercial Manager; and
(b)
as to be acceded to in respect of the technical management of the Vessels pursuant to confirmation letters to be between the relevant Borrower, Scorpio Tankers Inc. and the Technical Manager.
" Managers " means:
(a)
in relation to the commercial management of the Vessels, the Commercial Manager; and
(b)
in relation to the technical management of the Vessels, the Technical Manager,
and/or any Approved Sub-manager, and such other commercial and/or technical managers of a Vessel nominated by the Borrowers as the Agent (acting on the instructions of the Majority Lenders) may approve (such consent not to be unreasonably withheld or delayed).
" Managers' Undertakings " means the written undertakings of the Managers whereby, throughout the Facility Period unless otherwise agreed by the Agent:
(a)
they will remain the commercial or technical managers of the Vessels (as the case may be);
(b)
they will not, without the prior written consent of the Agent, subcontract or delegate the commercial or technical management of the Vessels (as the case may be) to any third party other than an Approved Sub-manager provided that the Borrowers shall procure from such Approved Sub-manager a Manager's Undertaking;
(c)
if required by the Agent, the interests of the Managers in the Insurances will be assigned to the Security Agent with first priority; and
(d)
(following the occurrence of an Event of Default) all claims of the Managers against the Borrowers shall be subordinated to the claims of the Finance Parties under the Finance Documents.
" Margin " means 1.95% per annum in relation to Tranche A and Tranche B (and any part of the Indebtedness associated or related to those tranches) and 2.30% per annum in relation to Tranche C and Tranche D (and any part of the Indebtedness associated or related to those tranches).
" Master Agreement " means any ISDA Master Agreement (or any other form of master agreement relating to interest or currency exchange transactions) entered into between any Swap Provider and the Borrowers during the Facility Period, including each Schedule to any Master Agreement and each Confirmation exchanged under any Master Agreement.
" Master Agreement Proceeds " means any and all sums due and payable to the Borrowers or either of them under a Master Agreement following an Early Termination Date (subject always to all rights of netting and set-off contained in a Master Agreement) and all rights to require and enforce the payment of those sums.
" Master Agreement Proceeds Assignments " means the deeds of assignment referred to in Clause 17.1.5 ( Security Documents ).

LONLIVE\26142366.7    Page 13


" Material Adverse Effect " means in the reasonable opinion of the Majority Lenders a material adverse effect on:
(a)
the business, property or financial condition of a Borrower or the Guarantor; or
(b)
the ability of any Security Party to perform its obligations under any Finance Document; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Encumbrance granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents; or
(d)
the rights or remedies of any Finance Party under any of the Finance Documents.
" Maximum Tranche Amount " means the Maximum Tranche A Amount, the Maximum Tranche B Amount, Maximum Tranche C Amount and the Maximum Tranche D Amount.
" Maximum Tranche A Amount " means the amount up to the lesser of (i) $17,250,000; and (ii) 48% of the FMV of Vessel A as evidenced by the valuation received by the Agent under Clause 4.1 ( Initial conditions precedent ).
" Maximum Tranche B Amount " means the amount up to the lesser of (i) $17,250,000; and (ii) 48% of the FMV of Vessel B as evidenced by the valuation received by the Agent under Clause 4.1 ( Initial conditions precedent ).
" Maximum Tranche C Amount " means the lesser of (i) $13,800,000; and (ii) 48% of the market value of Vessel C as evidenced by the valuation received by the Agent as a condition precedent to drawdown of that Tranche.
" Maximum Tranche D Amount " means the lesser of (i) $13,800,000; and (ii) 48% of the market value of Vessel D as evidenced by the valuation received by the Agent as a condition precedent to drawdown of that Tranche.
" Maximum Loan Amount " means the lower of (i) $59,800,000 and (ii) the aggregate of the Maximum Tranche A Amount, the Maximum Tranche B Amount, the Maximum Tranche C Amount and the Maximum Tranche D Amount.
" Mortgages " means the first preferred mortgages referred to in Clause 17.1.1 ( Security Documents ) and " Mortgage " means any one of them.
" New Lender " has the meaning given to that term in Clause 24.1 ( Assignments and transfers by the Lenders ).
" Non-Consenting Lender " has the meaning given to that term in Clause 35.3.4 ( Replacement of Lender ).
" Operating Expenses " means expenses properly and reasonably incurred by a Borrower in connection with the operation, employment, maintenance, repair and insurance of a Vessel including for the avoidance of doubt, dry dock expenses.
" Original Financial Statements " means the audited consolidated financial statements of the Guarantor for the financial year ended 31 December 2014.
" Original Jurisdiction " means, in relation to a Security Party, the jurisdiction under whose laws that Security Party is incorporated as at the date of this Agreement.
" Party " means a party to this Agreement.
" Patriot Act " means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Improvement and Reauthorization Act of 2005 (H.R. 3199).

LONLIVE\26142366.7    Page 14


" Permitted Disposal " means any sale, lease, licence, transfer or other disposal which is on arm's length terms:
(a)
of assets in exchange for other assets comparable or superior as to type, value and quality;
(b)
of obsolete or redundant vehicles, plant and equipment for cash; and
(c)
arising as a result of any Permitted Encumbrance.
" Permitted Encumbrance " means:
(a)
any Encumbrance which has the prior written approval of the Agent;
(b)
any Encumbrance created pursuant to a Finance Document;
(c)
any Encumbrance arising by operation of law and in the ordinary course of trading, and not as a result of any default or omission by a Security Party, up to an aggregate amount (including when aggregated with amounts owing and secured by liens under para (e) below) that at any time does not exceed $500,000;
(d)
any Quasi-Security arising as a result of a disposal which is a Permitted Disposal; or
(e)
any liens for current crews' wages and salvage and other maritime liens incurred in the ordinary course of trading a Vessel up to an aggregate amount (including when aggregated with amounts owing and secured by liens under para (c) above) that at any time does not exceed $500,000.
" Plan " means any "employee benefit plan" as defined in Section 3(3) of ERISA that is subject to Title IV of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed to by any Security Party or any of their respective ERISA Affiliates.
" Quasi-Security " has the meaning given to that term in Clause 22.8 ( Negative pledge ).
" Quotation Day " means, in relation to any period for which an interest rate is to be determined three Business Days before the first day of that period, unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
" Receiver " means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.
" Reference Bank Rate " means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks as the rate at which the relevant Reference Banks could borrow funds in the London interbank market in dollars and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in dollars and for that period.
" Reference Banks " the principal London offices of BNP Paribas, ING Bank N.V. or such other banks as may be appointed by the Agent in consultation with the Borrowers.
" Related Fund " in relation to a fund (the " first fund "), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
" Relevant Documents " means the Finance Documents, the Management Agreements, and the Manager's Undertakings.

LONLIVE\26142366.7    Page 15


" Relevant Interbank Market " means the London interbank market.
" Relevant Jurisdiction " means, in relation to a Security Party:
(a)
its Original Jurisdiction;
(b)
any jurisdiction where any asset subject to or intended to be subject to a Security Document to be executed by it is situated; and
(c)
the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.
" Repayment Date " means the date for payment of any Repayment Instalment in accordance with Clause 6 ( Repayment ).
" Repayment Instalment " means any instalment of a Tranche to be repaid by the Borrowers under Clause 6 ( Repayment ).
" Repeating Representations " means each of the representations set out in Clause 19.1.1 ( Status ) to Clause 19.1.7 ( Insolvency ), Clause 19.1.10 ( No default ) to Clause 19.1.18 ( Pari passu ranking ) and Clause 19.1.23 ( Anti-bribery, anti-corruption and anti-money laundering) to Clause 19.1.23 ( Patriot Act ).
" Representative " means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
" Requisition Compensation " means all compensation or other money which may from time to time be payable to a Borrower as a result of a Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).
" Restatement Date " means the date on which this agreement is amended and restated, as shown on the front page.
" Retention Accounts " means the bank accounts to be opened in the name of each Borrower with the Account Holder and designated "STI MEMPHIS – Retention Account", "STI BATTERY – Retention Account", "STI SAPPHIRE – Retention Account" and "STI EMERALD – Retention Account".
" Sanctions " means any economic or trade sanctions or restrictive measures enacted, administered, imposed or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the United Nations Security Council, and/or the European Union and/or the French Republic, and/or Her Majesty’s Treasury.
" Screen Rate " means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or the service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower.
" Secured Parties " means each Finance Party from time to time party to this Agreement and any Receiver or Delegate.
" Security Documents " means the Mortgages, the Assignments, the Guarantee, the Share Charges, any Master Agreement Proceeds Assignments, the Account Security Deeds and any other Credit Support Documents or (where the context permits) any one or more of them, and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness and " Security Document " means any one of them.

LONLIVE\26142366.7    Page 16


" Security Parties " means each Borrower, the Guarantor, any other Credit Support Provider, and any other person who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness (excluding always the Managers), and " Security Party " means any one of them.
" Share Charges " means the charges of the issued share capital of the Borrowers referred to in Clause 17.1.4 ( Security Documents ).
" SMC " means a valid safety management certificate issued for a Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.
" Subsidiary " means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006.
" Tax " means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
" Technical Manager " means Scorpio Ship Management S.A.M., a company incorporated under the laws of Monaco with its registered office at 9, Rue de Gabian, MC-98000 Monaco.
" Termination Date " means, in respect to the repayment of all Tranches, 15 December 2021.
" Total Commitments " means the aggregate of the Commitments.
" Total Loss " means:
(a)
actual, constructive, compromised, agreed or arranged total loss of a Vessel;
(b)
any expropriation, confiscation, requisition or acquisition of that Vessel, 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 one (1) year without any right to an extension), unless it is within three (3) months redelivered to the full control of the Borrower owning that Vessel; or
(c)
any arrest, capture, seizure or detention of that Vessel (including any hijacking, piracy or theft) unless it is within three (3) months redelivered to the full control of the Borrower owning that Vessel;
" Tranche A " means the part of the Loan up to the Maximum Tranche A Amount to be made available in one advance pursuant to Clause 5 ( Advance ) or where the context permits, the amount thereof advanced and for the time being outstanding.
" Tranche B " means the part of the Loan up to the Maximum Tranche B Amount to be made available in one advance pursuant to Clause 5 ( Advance ) or where the context permits, the amount thereof advanced and for the time being outstanding.
" Tranche C " means the part of the Loan up to the Maximum Tranche C Amount to be made available in one advance pursuant to Clause 5 ( Advance ) or where the context permits, the amount thereof advanced and for the time being outstanding.
" Tranche D " means the part of the Loan up to the Maximum Tranche D Amount to be made available in one advance pursuant to Clause 5 ( Advance ) or where the context permits, the amount thereof advanced and for the time being outstanding.
" Tranches " means Tranche A, Tranche B, Tranche C and Tranche D and " Tranche " means any one of them.
" Transaction " means a transaction entered into between a Swap Provider and the Borrowers governed by a Master Agreement.

LONLIVE\26142366.7    Page 17


" Transfer Certificate " means a certificate substantially in the form set out in Schedule 4 ( Form of Transfer Certificate ) or any other form agreed between the Agent and the Borrowers.
" Transfer Date " means, in relation to an assignment or a transfer, the later of:
(a)
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
(b)
the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.
" Treasury Transactions " means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.
" Trust Property " means:
(a)
all benefits derived by the Security Agent from Clause 17 ( Security and Application of Moneys ); and
(a)
all benefits arising under (including, without limitation, all proceeds of the enforcement of) each of the Security Documents,
with the exception of any benefits arising solely for the benefit of the Security Agent.
" Unpaid Sum " means any sum due and payable but unpaid by any Security Party under the Finance Documents.
" US " means the United States of America.
" VAT " means:
(a)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (a), or imposed elsewhere.
" Vessels " means the following vessels each owned by the relevant Borrower and registered under an Approved Flag:
Designation
Type of Vessel
Name
IMO number
Borrower
" Vessel A "
50,000 dwt MR product tanker
"STI MEMPHIS"
9681156
Borrower A
" Vessel B "
50,000 dwt MR product tanker
"STI BATTERY"
9707807
Borrower B
"Vessel C"
50,000 dwt MR product tanker
"STI SAPPHIRE"
9650573
Borrower C
"Vessel D"
50,000 dwt MR product tanker
"STI EMERALD"
9655913
Borrower D
and " Vessel " means any one of them.
1.2
Construction Unless a contrary indication appears, any reference in this Agreement to:
1.2.1
any " Lender ", any " Borrower ", the " Guarantor ", the " Arranger ", the " Agent ", any " Swap Provider ", any " Secured Party ", the " Security Agent ", any " Finance Party " or any " Party " shall be construed so as to include its successors in title, permitted assignees and permitted transferees;
1.2.2
" assets " includes present and future properties, revenues and rights of every description;

LONLIVE\26142366.7    Page 18


1.2.3
a " Finance Document ", a " Security Document ", a " Relevant Document " or any other document is a reference to that Finance Document, Security Document, Relevant Document or other document as amended, novated, supplemented, extended or restated from time to time;
1.2.4
a " group of Lenders " includes all the Lenders;
1.2.5
" indebtedness " includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
1.2.6
a " person " includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership or other entity (whether or not having separate legal personality);
1.2.7
a " 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 of any regulatory, self-regulatory or other authority or organisation;
1.2.8
a provision of law is a reference to that provision as amended or re-enacted from time to time; and
1.2.9
a time of day (unless otherwise specified) is a reference to London time.
1.3
Headings Section, Clause and Schedule headings are for ease of reference only.
1.4
Defined terms Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
1.5
Default A Default is "continuing" if it has not been remedied or waived.
1.6
Currency symbols and definitions " $ ", " USD " and " dollars " denote the lawful currency of the United States of America.
1.7
Third party rights
A person who is not a Party or an Indemnified Person has no right under the Contracts (Rights of Third Parties) Act 1999 (the " Third Parties Act ") to enforce or to enjoy the benefit of any term of this Agreement.
1.8
Offer letter This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between any Finance Party and the Borrowers or their representatives before the date of this Agreement.
1.9
Contractual recognition of bail-in
1.9.1
In this Clause 1.9:
" Bail-In Action " means the exercise of any Write-down and Conversion Powers.
" Bail-In Legislation " means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

LONLIVE\26142366.7    Page 19


(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
" EEA Member Country " means any member state of the European Union, Iceland, Liechtenstein and Norway.
" EU Bail-In Legislation Schedule " means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
" Resolution Authority " means any body which has authority to exercise any Write-down and Conversion Powers.
" Write-down and Conversion Powers " means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.
1.9.2
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
Section 2
The Loan

LONLIVE\26142366.7    Page 20


2
The Loan
2.1
Amount Subject to the terms of this Agreement, the Lenders agree to make available to the Borrowers, on a joint and several basis, a term loan comprising Tranche A, Tranche B, Tranche C and Tranche D and not exceeding in aggregate the Maximum Loan Amount.
2.2
Finance Parties' rights and obligations
2.2.1
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
2.2.2
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from a Security Party shall be a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph 2.2.3 below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of a loan or any other amount owed by a Security Party which relates to a Finance Party's participation in the Loan or its role under a Finance Document (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by that Security Party.
2.2.3
A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.
3
Purpose
3.1
Purpose The Borrowers shall apply the Loan for the purposes referred to in Preliminary (B) .
3.2
Monitoring No Finance Party is bound to monitor or verify the application of any amount borrowed under this Agreement.
4
Conditions of Utilisation
4.1
Initial conditions precedent
4.1.1
The Lenders will only be obliged to comply with Clause 5.3 ( Lenders' participation ) in relation to the advance of a Tranche if, on or before the relevant Drawdown Date, the Agent has received all of the documents and other evidence listed in Part I of Schedule 2 ( Conditions Precedent ) in form and substance satisfactory to the Agent, save that references in Section 2 of that Part I to "the Vessel" or to any person or document relating to a Vessel shall be deemed to relate solely to the Vessel specified in the relevant Drawdown Request or to any person or document relating to that Vessel respectively and references to the "Borrowers" or "Borrower" shall mean Borrower A in the case of the Tranche that is to be used to finance Vessel A and Borrower B in the case of the Tranche that is to be used to refinance Vessel B, Borrower C in the case of the Tranche that is to be used to refinance Vessel C and Borrower D in the case of the Tranche that is to be used to refinance Vessel D in each case as specified in the relevant Drawdown request. The Agent shall notify the Borrowers and the Lenders promptly upon being so satisfied.
4.1.2
Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives the notification described in Clause 4.1.1, the Lenders authorise (but do not require) the Agent to give that notification. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

LONLIVE\26142366.7    Page 21


4.2
Further conditions precedent
4.2.1
The Lenders will only be obliged to advance a Tranche if on the date of a Drawdown Request and on the proposed Drawdown Date:
(a)
no Default has occurred and is continuing or would result from the advance of that Tranche; and
(b)
the representations made by each Borrower and the Guarantor under Clause 19 ( Representations ) are true.
4.2.2
The Lenders will only be obliged to advance a Tranche if that Tranche is not in excess of the relevant Maximum Tranche Amount
4.2.3
The Lenders will only be obliged to advance a Tranche if that Tranche will not increase the Loan to a sum in excess of the Maximum Loan Amount.
4.2.4
The Lenders will only be obliged to advance Tranche B if Borrower B has acceded to this Agreement in accordance with this Agreement.
4.3
Conditions subsequent The Borrowers undertake to deliver or to cause to be delivered to the Agent within seven days after the each Drawdown Date the additional documents and other evidence listed in Part II of Schedule 2 ( Conditions Subsequent ) except for (a) the evidence listed in paragraph 6 of Part II of Schedule 2 ( Conditions Subsequent ) which the Borrowers undertake to deliver or to cause to be delivered to the Agent within the date specified in the Fee Letter and (b) the evidence listed in paragraphs 7 to 10 of Part II of Schedule 2 ( Conditions Subsequent ) which the Borrowers undertake to deliver or to cause to be delivered to the Agent within 30 days of each Drawdown Date, save that references in that Part II to "the Vessel" or to any person or document relating to a Vessel shall be deemed to relate solely to the Vessel specified in the relevant Drawdown Request or to any person or document relating to that Vessel respectively.
4.4
No waiver If the Lenders in their sole discretion agree to advance a Tranche to the Borrowers before all of the documents and evidence required by Clause 4.1 ( Initial conditions precedent ) have been delivered to or to the order of the Agent, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Agent no later than seven days after the Drawdown Date or such other date specified by the Agent (acting on the instructions of all the Lenders).
The advance of all or any part of a Tranche under this Clause 4.4 shall not be taken as a waiver of the Lenders' right to require production of all the documents and evidence required by Clause 4.1 ( Initial conditions precedent ).
4.5
Form and content All documents and evidence delivered to the Agent under this Clause shall:
4.5.1
be in form and substance acceptable to the Agent; and
4.5.2
if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent.
Section 3
Utilisation
5
Advance
5.1
Delivery of a Drawdown Request The Borrowers may request a Tranche to be advanced, in a single advance, by delivery to the Agent of a duly completed Drawdown Request not more than ten and not fewer than three Business Days before the proposed Drawdown Date. Any Drawdown Request which becomes effective, in accordance with Clause 31.3, after 10.00 a.m. in the place of receipt shall be deemed only to become effective on the following day.

LONLIVE\26142366.7    Page 22


5.2
Completion of a Drawdown Request A Drawdown Request is irrevocable and will not be regarded as having been duly completed unless:
5.2.1
it is signed by an authorised signatory of each Borrower;
5.2.2
the proposed Drawdown Date is a Business Day within the Availability Period; and
5.2.3
the proposed Interest Period complies with Clause 9 ( Interest Periods ).
5.3
Lenders' participation
5.3.1
Subject to Clauses 2 ( The Loan ), 3 ( Purpose ) and 4 ( Conditions of Utilisation ), each Lender shall make its participation in any Tranche available by the relevant Drawdown Date through its Facility Office.
5.3.2
The amount of each Lender's participation in any Tranche will be equal to the proportion borne by its Commitment to the Total Commitments.
5.4
Cancellation of Commitment The Total Commitments shall be cancelled on the earlier of (i) the Drawdown Date of the final Tranche to be advanced and (ii) the end of the Availability Period of the final Tranche to be advanced, to the extent that it is unutilised at that time.
Section 4
Repayment, Prepayment and Cancellation
6
Repayment
6.1
Repayment of Tranche A and Tranche B With effect from the Restatement Date the Borrowers agree to repay each of Tranche A and Tranche B to the Agent for the account of the Lenders by 20 consecutive quarterly instalments. After the Restatement Date, each repayment instalment for each of Tranche A and Tranche B shall be in a sum of $575,000, and next instalment for both Tranche A and Tranche B shall fall due on the 15 June 2017, and all subsequent instalments will be due at consecutive intervals of six calendar months thereafter, together with a final payment (the " Tranche A and Tranche B Balloon ") falling due on the Termination Date, which shall be in an amount to reduce the amount outstanding in respect of Tranche A and Tranche B to nil.
6.2
Repayment of Tranche C and Tranche D The Borrowers agree to repay each of Tranche C and Tranche D to the Agent for the account of the Lenders by 10 consecutive semi annual instalments. Each repayment instalment for each of Tranche C and Tranche D shall be in a sum of $575,000 with the first instalment due on 15 June 2017 and then subsequent instalments falling due at consecutive intervals of six calendar months thereafter, together with a final payment (the " Tranche C and Tranche D Balloon ") falling due on the Termination Date, which shall be in an amount to reduce the amount outstanding in respect of each of Tranche C and Tranche D to nil.
6.3
Termination Date On the Termination Date relevant to each Tranche all Indebtedness related to that Tranche shall be repaid in full.
6.4
Reduction of Repayment Instalments in respect of Tranche A and Tranche B If the aggregate amount advanced to the Borrowers in respect of a Tranche is less than US$17,250,000, the amount of each Repayment Instalment for that Tranche shall be reduced pro rata to the amount actually advanced. For the avoidance of doubt, the Tranche A and Tranche B Balloon shall not exceed $10,350,00 for each of Tranche A and Tranche B.
6.5
Reduction of Repayment Instalments in respect of Tranche C and Tranche D If the aggregate amount advanced to the Borrowers in respect of Tranche C or Tranche D is less than US$13,800,000, the amount of each Repayment Instalment for that Tranche shall be reduced pro rata to the amount actually advanced. For

LONLIVE\26142366.7    Page 23


the avoidance of doubt, the Tranche C and Tranche D Balloon shall not exceed $ 8,050,000 for each of Tranche C and Tranche D.
6.6
Reborrowing The Borrowers may not reborrow any part of a Tranche which is repaid or prepaid.
7
Illegality, Prepayment and Cancellation
7.1
Illegality If it becomes unlawful in any jurisdiction (other than by reason of Sanctions) for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:
7.1.1
that Lender shall promptly notify the Agent upon becoming aware of that event;
7.1.2
upon the Agent notifying the Borrowers, the Commitment of that Lender will be immediately cancelled; and
7.1.3
the Borrowers shall repay that Lender's participation in each Tranche on the last day of its current Interest Period or, if earlier, the date specified by that Lender in the notice delivered to the Agent and notified by the Agent to the Borrowers (being no earlier than the last day of any applicable grace period permitted by law).
7.2
Voluntary cancellation The Borrowers may, if they give the Agent not less than 30 days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being an amount which is an integral multiple of $2,000,000 of the undrawn amount of a Tranche. Any cancellation under this Clause 7.2 shall reduce the Commitments of the Lenders rateably.
7.3
Voluntary prepayment of the Loan The Borrowers may prepay the whole or any part of the Loan (but, if in part, being an amount which is an integral multiple of $2,000,000) subject as follows:
7.3.1
they give the Agent not less than 30 days' (or such shorter period as the Majority Lenders may agree) prior notice; and
7.3.2
any prepayment under this Clause 7.3 shall be applied in prepayment of the remaining Repayment Instalments in respect of each Tranche (including the relevant Balloon) on a pro rata basis and then in inverse order of maturity in respect of that Tranche.
7.4
Right of cancellation and prepayment in relation to a single Lender
7.4.1
If:
(a)
any sum payable to any Lender by the Borrowers is required to be increased under Clause 12.2.2 ( Tax gross-up ); or
(b)
any Lender claims indemnification from the Borrowers under Clause 12.3 ( Tax indemnity ) or Clause 13.1 ( Increased costs ),
the Borrowers may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Agent notice of cancellation of the Commitment(s) of that Lender and their intention to procure the repayment of that Lender's participation in the Loan.
7.4.2
On receipt of a notice referred to in Clause 7.4.1 in relation to a Lender, the Commitment(s) of that Lender shall immediately be reduced to zero.
7.4.3
On the last day of the Interest Period in respect of each Tranche which ends after the Borrowers have given notice under Clause 7.4.1 in relation to a Lender (or, if earlier, the date specified by the

LONLIVE\26142366.7    Page 24


Borrowers in that notice), the Borrowers shall repay that Lender's participation in that Tranche together with all interest and other amounts accrued under the Finance Documents.
7.5
Mandatory prepayment on sale or Total Loss If a Vessel is sold by a Borrower or becomes a Total Loss, the Borrowers shall, simultaneously with any such sale or on the earlier of the date falling 180 days after any such Total Loss and the date on which the proceeds of any such Total Loss are realised, prepay the whole of the Tranche in respect of that Vessel then outstanding. Any such prepayment shall be applied:
7.5.1
firstly, in respect of any Break Costs;
7.5.2
secondly, in payment of any accrued but unpaid interest due to the Lenders under this Agreement;
7.5.3
thirdly, in prepayment of the remaining Repayment Instalments in respect of that Tranche (including the relevant Balloon) and any amounts due under any Master Agreement on a pro-rata basis and then in inverse order of maturity;
7.5.4
fourthly, any surplus shall be released to the order of the Borrowers provided that the Borrowers are in compliance with Clause 17.16 ( Additional security ).
7.6
Mandatory prepayment on Change of Control If a Change of Control occurs:
7.6.1
the relevant Borrower and/or the Guarantor (as the case may be) shall promptly notify the Agent upon having knowledge of that event;
7.6.2
no Lender shall be obliged to fund or continue to fund the relevant Tranche; and
7.6.3  
the Agent, acting on the instructions of the Majority Lenders, may, by not less than 10 Business Days' notice to the Borrowers:
(a)
in the case of a Change of Control in respect of a Borrower, cancel the Commitments in respect of the Tranche relating to the Vessel owned by that Borrower and declare all amounts outstanding under that Tranche immediately due and payable together with accrued interest (and any other amount payable under Clause 14 or otherwise); and
(b)
in the case of a Change of Control in respect of the Guarantor, cancel the loan facility provided for under this Agreement and declare the Loan, together with accrued interest (and any other amount payable under Clause 14 or otherwise), and all other amounts accrued under the Finance Documents, immediately due and payable, whereupon the Total Commitments shall be cancelled and all such outstanding amounts will become immediately due and payable by the Borrowers.
7.7
Restrictions Any notice of prepayment or cancellation given under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment or cancellation is to be made and the amount of that prepayment or cancellation.
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs and subject to Clause 7.3 ( Voluntary prepayment of the Loan ), without premium or penalty.
In the event of a prepayment under this Agreement the Borrowers shall, if applicable, terminate such Transactions as to ensure compliance with the provisions of Clause 22.27 ( Permitted Transactions ).
The Borrowers shall not repay, prepay or cancel all or any part of the Tranche except at the times and in the manner expressly provided for in this Agreement.
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

LONLIVE\26142366.7    Page 25


If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to the Borrowers or the affected Lender, as appropriate.
Section 5
Costs of Utilisation
8
Interest
8.1
Calculation of interest The rate of interest on each Tranche for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
8.1.1
the relevant Margin applicable to that Tranche; and
8.1.2
LIBOR.
8.2
Payment of interest Interest shall accrue day to day, shall be calculated on the basis of a 360 day year, and the Borrowers shall pay accrued interest on each Tranche on the last day of each Interest Period.
8.3
Default interest If the Borrowers fail to pay any amount payable by them under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent per annum higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Tranche in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 shall be immediately payable by the Borrowers on demand by the Agent.
Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
8.4
Notification of rates of interest The Agent shall promptly notify the Borrowers of the determination of a rate of interest under this Agreement.
9
Interest Periods
9.1
Duration of Interest Periods The duration of each Interest Period for each Tranche shall be six (6) months, subject as follows:
9.1.1
the period of an Interest Period may be varied by agreement between the Borrowers and the Agent (acting on the instructions of all of the Lenders);
9.1.2
the fixed duration of an Interest Period is subject to Clauses 9.2 ( Interest Periods to meet Repayment Dates ) and 9.3 ( Non-Business Days );
9.1.3
the Interest Period that is current at the time of the Restatement Date and which is applicable to Tranche A and Tranche B shall end on 28 February 2017, and the immediately following Interest Period for Tranche A and Tranche B shall run from 1 March 2017 to 15 June 2017;
9.1.4
the first interest periods applicable to Tranche C and Tranche D shall each be for a period commencing on the respective Drawdown Date for Tranche C or Tranche D, as applicable, and ending on 15 June 2017;
9.1.5
an Interest Period for a Tranche shall not extend beyond the relevant Termination Date in relation to the relevant Tranche; and
9.1.6
each Interest Period shall start on the Drawdown Date of the Tranche or (if the Tranche is already made) on the last day of the preceding Interest Period of that Tranche and end on the date which numerically corresponds to the Drawdown Date of that Tranche or the last day of the preceding

LONLIVE\26142366.7    Page 26


Interest Period of that Tranche in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period of that Tranche shall end on the last Business Day in that month.
9.2
Interest Periods to meet Repayment Dates If an Interest Period will expire after the next Repayment Date, there shall be a separate Interest Period for a part of the relevant Tranche equal to the Repayment Instalment due in respect of that Tranche on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date. If a Borrower enters into a Master Agreement and a hedging contract in relation to interest payable on all or part of the Loan, that Borrower shall procure that the terms of such hedging contract provide that each calculation period under that hedging contract is, at all times, aligned with each corresponding Interest Period.
9.3
Non-Business Days If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
9.4
Confidential Rates
9.4.1
The Agent and each Borrower agree to keep each Confidential Rate confidential and not to disclose it to anyone, save to the extent permitted by Clauses 9.4.2, 9.4.3 and 9.4.4 below.
9.4.2
The Agent may disclose:
(a)
any Funding Rate to the relevant Borrower pursuant to Clause 8.4 ( Notification of rates of interest ); and
(b)
any Confidential Rate to any person appointed by it to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, to the extent necessary to enable such service provider to provide any of the services referred to in this Clause 9.4.2(b) if the service provider to whom the Confidential Rate is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Agent and the relevant Reference Bank or Lender, as the case may be.
9.4.3
The Agent may disclose any Confidential Rate, and each Borrower may disclose my Funding Rate, to:
(a)
any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives if any person to whom that Confidential Rate is to be given pursuant to this Clause 9.4.3(a) is informed in writing of its confidential nature and that the Confidential Rate may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of that Confidential Rate or is otherwise bound by requirements of confidentiality in relation to that Confidential Rate;
(b)
Any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation if the person to whom that Confidential Rate is to be given is informed in writing of its confidential nature and that the Confidential Rate may be price-sensitive information except that there shall be no requirement to so inform if, in

LONLIVE\26142366.7    Page 27


the opinion of the Agent or the relevant Borrower, as the case may be, it is not practicable to do so in the circumstances;
(c)
Any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes if the person to whom that confidential Rate is to be given is informed in writing of its confidential nature and that the Confidential Rate may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Agent or the relevant Borrower, as the case may be, it is not practicable to do so in the circumstances; and
(d)
Any person with the consent of the relevant Reference Bank or Lender, as the case may be.
9.4.4
The Agent's obligations in this Clause 9.4 relating to quotations provided by Reference Banks are without prejudice to its obligations to make notifications under Clause 8.4 ( Notification of rates of interest ) provided that (other than pursuant to Clause 9.4.2(a) above) the Agent shall not include the details of any individual quotation provided by a Reference Bank as part of any such notification.
9.4.5
The Agent and each Borrower acknowledge that each Confidential Rate is or may be price-sensitive information and that the use of such a Confidential Rate may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Agent and each Borrower undertake not to use any Confidential Rate for any unlawful purpose.
9.4.6
The Agent and each Borrower agree (to the extent permitted by law and regulation) to inform the relevant Reference Bank or Lender, as the case may be:
(a)
of the circumstances of any disclosure of any Confidential Rate made pursuant to Clause 9.4.3(b) above except where such disclosure is made to any of the persons referred to in that Clause 9.4.3(b) during the ordinary course of its supervisory or regulatory function; and
(b)
upon becoming aware that any Confidential Rate has been disclosed in breach of this Clause 9.4 .
10
Changes to the Calculation of Interest
10.1
Absence of quotations Subject to Clause 10.2 ( Market disruption ), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11.00 am on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.
10.2
Market disruption If a Market Disruption Event occurs for any Interest Period, then the rate of interest on each Lender's share of the relevant Tranche for that Interest Period shall be the percentage rate per annum which is the sum of:
10.2.1
the relevant Margin; and
10.2.2
the rate notified to the Agent by that Lender as soon as practicable, and in any event by close of business on the date falling three Business Days after the Quotation Day (or, if earlier, on the date falling three Business Days prior to the date on which interest is due to be paid in respect of that Interest Period), to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the relevant Tranche from whatever source it may reasonably select.
In this Agreement " Market Disruption Event " means:

LONLIVE\26142366.7    Page 28


(a)
no Screen Rate is available for an Interest Period and two (2) or more of the Reference Banks do not, before 1:00 p.m. (London time) on the Quotation Date, provide quotations to the Agent in order to fix LIBOR; or
(b)
at least one (1) Business Day before the start of an Interest Period, Lenders having Commitments together amounting to 50% or more of the Loan (or, if an Advance has not been made, Commitments amounting to 50% or more of the Total Commitments) notify the Agent that the cost to those Lenders of funding their respective Commitments (or any part of them) from whatever source such Lenders may reasonably select 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 would exceed the LIBOR fixed by the Agent for that Interest Period.
10.3
Alternative basis of interest or funding
10.3.1
If a Market Disruption Event occurs and the Agent or the Borrowers so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.
10.3.2
Any alternative basis agreed pursuant to Clause 10.3.1 shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties.
10.4
Break Costs The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Tranche or Unpaid Sum being paid by the Borrowers on a day other than the last day of an Interest Period for that Tranche or Unpaid Sum.
Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
11
Fees
11.1
Commitment Fee The Borrowers shall pay to the Agent (for the account of the Lenders in proportion to their Commitments) a fee computed at the rate of forty per cent. (40%) of the relevant Margin per annum of the undrawn portion of the Total Commitments during the period commencing on the date of this Agreement (in relation to the undrawn amount of Tranche A and Tranche B) or on the Restatement Date (in relation to the undrawn amount of Tranche C and Tranche D) to and including the earlier to occur of (i) the Drawdown Date in respect of the final Tranche to be advanced and (ii) the latest date on which the Availability Period may end.
The accrued commitment fee is payable on the last day of each successive period of six months which ends during the period commencing on the date of this Agreement to and including the earlier to occur of (i) the Drawdown Date in respect of the final Tranche to be advanced and (ii) the end of the Availability Period of the final Tranche; and
11.2
Upfront fee The Borrowers shall pay to the Arranger fees in the amount and at the times agreed in the Fee Letters.
Section 6
Additional Payment Obligations
12
Tax Gross Up and Indemnities
12.1
Definitions In this Agreement:

LONLIVE\26142366.7    Page 29


" Protected Party " means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
" Tax Credit " means a credit against, relief or remission for, or repayment of any Tax.
" Tax Deduction " means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
" Tax Payment " means either the increase in a payment made by a Security Party to a Finance Party under Clause 12.2 ( Tax gross-up ) or a payment by a Borrower under Clause 12.3 ( Tax indemnity ).
Unless a contrary indication appears, in this Clause 12 a reference to "determines" or "determined" means a determination made in the absolute discretion of the person making the determination.
12.2
Tax gross-up Each Borrower shall (and shall procure that each other Security Party shall) make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law, subject as follows:
12.2.1
a Borrower shall promptly upon becoming aware that it or any other Security Party must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrowers and any such other Security Party;
12.2.2
if a Tax Deduction is required by law to be made by a Borrower or any other Security Party, the amount of the payment due from that Borrower or that other Security Party shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required;
12.2.3
if a Borrower or any other Security Party is required to make a Tax Deduction, that Borrower shall (and shall procure that such other Security Party shall) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law; and
12.2.4
within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower making that Tax Deduction shall (and shall procure that such other Security Party shall) deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
12.3
Tax indemnity
12.3.1
Each Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
12.3.2
Clause 12.3.1 shall not apply:
(a)
with respect to any Tax assessed on a Finance Party:
(i)
under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

LONLIVE\26142366.7    Page 30


(ii)
under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or
(b)
to the extent a loss, liability or cost:
(i)
is compensated for by an increased payment under Clause 12.2 ( Tax gross-up ); or
(ii)
relates to a FATCA Deduction required to be made by a Party.
12.3.3
A Protected Party making, or intending to make a claim under Clause 12.3.1 shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrowers.
12.3.4
A Protected Party shall, on receiving a payment from a Borrower under this Clause 12.3, notify the Agent.
12.4
Tax Credit If a Borrower or any other Security Party makes a Tax Payment and the relevant Finance Party determines that:
12.4.1
a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and
12.4.2
that Finance Party has obtained and utilised that Tax Credit,
that Finance Party shall pay an amount to that Borrower or to that other Security Party which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by that Borrower or that other Security Party.
12.5
Stamp taxes The Borrowers shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
12.6
VAT
12.6.1
All amounts expressed to be payable under a Finance Document by any Party or any Security Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 12.6.2, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party or any Security Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party or Security Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to the Borrowers).
12.6.2
If VAT is or becomes chargeable on any supply made by any Finance Party (the " Supplier ") to any other Finance Party (the " Recipient ") under a Finance Document, and any Party other than the Recipient (the " Relevant Party ") is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):

LONLIVE\26142366.7    Page 31


(a)
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this Clause 12.6.2(a) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(b)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
12.6.3
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
12.6.4
Any reference in this Clause 12.6 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the Value Added Tax Act 1994).
12.6.5
In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party's VAT registration and such other information as is reasonably requested in connection with such Finance Party's VAT reporting requirements in relation to such supply.
12.7
FATCA information
12.7.1
Subject to Clause 12.7.3, each Party shall, within ten Business Days of a reasonable request by another Party:
(a)
confirm to that other Party whether it is:
(i)
a FATCA Exempt Party; or
(ii)
not a FATCA Exempt Party;
(b)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and
(c)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation, or exchange of information regime.
12.7.2
If a Party confirms to another Party pursuant to Clause 12.7.1(a)(i) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

LONLIVE\26142366.7    Page 32


12.7.3
Clause 12.7.1 shall not oblige any Finance Party to do anything, and Clause 12.7.1(c) shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:
(a)
any law or regulation;
(b)
any fiduciary duty; or
(c)
any duty of confidentiality.
12.7.4
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with Clause 12.7.1(a) or 12.7.1(b) (including, for the avoidance of doubt, where Clause 12.7.3 applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
12.8
FATCA Deduction
12.8.1
Each Party 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 shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
12.8.2
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrowers and the Agent and the Agent shall notify the other Finance Parties.
13
Increased Costs
13.1
Increased costs Subject to Clause 13.3 ( Exceptions ) the Borrowers shall, within three Business Days of a demand by the Agent, pay to the Agent for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation or any request from or requirement of any central bank or other fiscal, monetary or other authority made after the date of this Agreement (including Basel III and any other which relates to capital adequacy or liquidity controls or which affects the manner in which that Finance Party allocates capital resources to obligations under this Agreement and/or a Master Agreement) or (iii) the implementation or application of or compliance with Basel III, CRR or CRD IV or any other law or regulation which implements Basel III, CRR or CRD IV (whether such implementation, application or compliance is by a government, regulator, a Lender or any Affiliate of a Lender) or (iv) any change in the risk weight allocated by that Finance Party to the Borrowers after the date of this Agreement.
In this Agreement:
(a)     " Increased Costs " means:
(i)
a reduction in the rate of return from the Loan or on a Finance Party's (or its Affiliate's) overall capital;
(ii)
an additional or increased cost; or
(iii)
a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document;
(b)
" Basel III " means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated, (b) the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III";
13.1.2
" CRR " means Regulation EU No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU No 648/2012), as amended, supplemented or restated; and
13.1.3
" CRD IV " means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended, supplemented or restated.
13.2
Increased cost claims
13.2.1
A Finance Party intending to make a claim pursuant to Clause 13.1 ( Increased costs ) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrowers.
13.2.2
Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.
13.3
Exceptions Clause 13.1 ( Increased costs ) does not apply to the extent any Increased Cost is:
13.3.1
attributable to a Tax Deduction required by law to be made by a Borrower;
13.3.2
attributable to a FATCA Deduction required to be made by a Party;
13.3.3
compensated for by Clause 12.3 ( Tax indemnity ) (or would have been compensated for under Clause 12.3 but was not so compensated solely because any of the exclusions in Clause 12.3 applied);
13.3.4
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or
13.3.5
attributable to the implementation or application of or compliance with the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (but excluding any amendment arising out of Basel III) (" Basel II ") or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).
In this Clause 13.3, a reference to a " Tax Deduction " has the same meaning given to the term in Clause 12.1 ( Definitions ).
14
Other Indemnities
14.1
Currency indemnity If any sum due from a Borrower or the Guarantor under the Finance Documents (a " Sum "), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the " First Currency ") in which that Sum is payable into another currency (the " Second Currency ") for the purpose of:
14.1.1
making or filing a claim or proof against that Borrower or the Guarantor (as the case may be), or
14.1.2
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Borrower or the Guarantor (as the case may be) shall as an independent obligation, within three Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (a) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (b) the rate or rates of exchange available to that Finance Party at the time of its receipt of that Sum.
Each Borrower and the Guarantor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
14.2
Other indemnities
14.2.1
The Borrowers shall, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:
(a)
the occurrence of any Event of Default;
(b)
a failure by a Borrower to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 28 ( Sharing among the Finance Parties );
(c)
funding, or making arrangements to fund, a Tranche following delivery by the Borrowers of a Drawdown Request but that Tranche not being advanced by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by a Finance Party alone); or
(d)
a Tranche (or part of a Tranche) not being prepaid in accordance with a notice of prepayment given by the Borrowers.
14.2.2
The Borrowers shall promptly indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 an " Indemnified Person ") against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Encumbrance constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, a Vessel, unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.
14.2.3
Subject to any limitations set out in Clause 14.2.2, the indemnity in that Clause shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
(a)
arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any applicable Sanctions; or
(b)
in connection with any Environmental Claim.
14.3
Indemnity to the Agent The Borrowers shall promptly indemnify the Agent against:
14.3.1
any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:
(a)
investigating any event which it reasonably believes is a Default provided always that the Agent shall: (i) notify the Borrowers of any such investigation in writing and (ii) the Borrowers do not provide the Agent with any documentation or information reasonably requested by the Agent within three (3) Business Days of such request; or
(b)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or
(c)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and
14.3.2
any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agent's gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 29.12 ( Disruption to Payment Systems etc .) notwithstanding the Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent under the Finance Documents.
14.4
Indemnity to the Security Agent The Borrowers and the Guarantor shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:
14.4.1
any failure by the Borrowers to comply with their obligations under Clause 16 ( Costs and Expenses );
14.4.2
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;
14.4.3
the taking, holding, protection or enforcement of the Security Documents;
14.4.4
the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;
14.4.5
any default by any Security Party in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; or
14.4.6
acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Charged Property (otherwise, in each case, than by reason of the relevant Security Agent's, Receiver's or Delegate's gross negligence or wilful misconduct).
14.5
Indemnity survival The indemnities contained in this Agreement shall survive repayment of the Loan.
15
Mitigation by the Lenders
15.1
Mitigation Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to any of Clause 7.1 ( Illegality ), Clause 12 ( Tax Gross Up and Indemnities ) or Clause 13 ( Increased Costs ) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. The above does not in any way limit the obligations of any Security Party under the Finance Documents.
15.2
Limitation of liability The Borrowers shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 ( Mitigation ). A Finance Party is not obliged to take any steps under Clause 15.1 if, in its opinion (acting reasonably), to do so might be prejudicial to it.
16
Costs and Expenses
16.1
Transaction expenses The Borrowers shall promptly on demand pay the Agent, the Security Agent and the Arranger the amount of all costs and expenses (including legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate) in connection with:
16.1.1
the negotiation, preparation, printing, execution, syndication, perfection and amendment and restatement of this Agreement and any other documents referred to in this Agreement;
16.1.2
the negotiation, preparation, printing, execution and perfection of any other Finance Documents executed after the date of this Agreement;
16.1.3
any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of a Vessel); and
16.1.4
any discharge, release or reassignment of any of the Security Documents.
16.2
Amendment costs If (a) a Security Party requests an amendment, waiver or consent or (b) an amendment is required under Clause 29.11 ( Change of currency ), the Borrowers shall, within three Business Days of demand, reimburse each of the Agent and the Security Agent for the amount of all duly documented expenses (including legal fees) reasonably incurred by the Agent and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.
16.3
Enforcement and preservation costs The Borrowers shall, within three Business Days of demand, pay to each Finance Party and each other Secured Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Security Documents or enforcing those rights including (without limitation) any losses, costs and expenses which that Finance Party or other Secured Party may from time to time sustain, incur or become liable for by reason of that Finance Party or other Secured Party being mortgagee of a Vessel and/or a lender to a Borrower, or by reason of that Finance Party or other Secured Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of a Vessel.
16.4
Other costs The Borrowers shall, within three Business Days of demand, pay to each Finance Party and each other Secured Party the amount of all sums which that Finance Party or other Secured Party may pay or become actually or contingently liable for on account of a Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which that Finance Party or other Secured Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by that Finance Party or other Secured Party in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which that Finance Party or other Secured Party may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.
Section 7
Security and Application of Moneys
17
Security Documents and Application of Moneys
17.1
Security Documents As security for the payment of the Indebtedness, the Borrowers shall execute and deliver to the Security Agent or cause to be executed and delivered to the Security Agent the following documents in such forms and containing such terms and conditions as the Security Agent shall require:
17.1.1
first preferred mortgages over the Vessels;
17.1.2
first priority deeds of assignment of the Insurances, Earnings . Requisition Compensation and any Charters of the Vessels; and the first priority assignments of Insurances from the Managers contained in the Managers' Undertakings;
17.1.3
the guarantee and indemnity from the Guarantor;
17.1.4
first priority charges of all the issued shares of the Borrowers;
17.1.5
first priority deeds of assignment over any Master Agreement Proceeds; and
17.1.6
first priority account security deeds in respect of all amounts from time to time standing to the credit of the Accounts.
17.2
Earnings and Retention Accounts The Borrowers shall maintain the Accounts with the Account Holder for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.
For the avoidance of doubt, the Borrowers are permitted to maintain their existing bank accounts held with ABN AMRO Bank N/V and these accounts are not to be pledged to the Security Agent.
17.3
Earnings The Borrowers shall procure that all Earnings (after deduction only of Operating Expenses) and any Requisition Compensation are credited to the Earnings Account.
17.4
Application of Earnings Subject to no Event of Default continuing, each of the Borrowers shall be entitled to freely withdraw and transfer any credit balance held in the Earnings Accounts for the payment of Operating Expenses.
17.5
Transfers to Retention Account As described in clauses 17.5.1 to 17.5.6 during the Facility Period and at the times set out, the Borrowers shall procure for each Tranche that there is transferred from the Earnings Account to the Retention Account:
17.5.1
one-third of the amount of the Repayment Instalment plus interest due on next Repayment Date, on 15 April of each year during the Facility Period.
17.5.2
one-third of the amount of the Repayment Instalment plus interest due on next Repayment Date, on 15 May of each year during the Facility Period.
17.5.3
one-third of the amount of the Repayment Instalment plus interest due on next Repayment Date, on 15 June of each year during the Facility Period.
17.5.4
one-third of the amount of the Repayment Instalment plus interest due on next Repayment Date, on 15 October of each year during the Facility Period.
17.5.5
one-third of the amount of the Repayment Instalment plus interest due on next Repayment Date, on 15 November of each year during the Facility Period.
17.5.6
one-third of the amount of the Repayment Instalment plus interest due on next Repayment Date, on 15 December of each year during the Facility Period.
17.5.7
any amount due under any Master Agreement,
and the Borrowers irrevocably authorise the Security Agent to instruct the Account Holder to make those transfers.
17.6
Additional payments to Retention Account If for any reason the amount standing to the credit of the Earnings Account is insufficient to make any transfer to the Retention Account required by Clause 17.5 ( Transfers to Retention Account ), the Borrowers shall, without demand, procure that there is credited to the Retention Account, on the date on which the relevant amount would have been transferred from the Earnings Account, an amount equal to the amount of the shortfall.
17.7
Application of Retention Account The Borrowers shall procure that there is transferred from the Retention Account to the Agent for the account of the Lenders or the Swap Provider as the case may be:
17.7.1
on each Repayment Date, the amount of the Repayment Instalment then due; and
17.7.2
on each Interest Payment Date, the amount of interest then due,
and the Borrowers irrevocably authorise the Security Agent to instruct the Account Holder to make those transfers.
17.8
Borrowers' obligations not affected If for any reason the amount standing to the credit of the Retention Account is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrowers' obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.
17.9  
Release of surplus Any amount remaining to the credit of the Earnings Account following the making of any transfer under Clause 17.4 ( Application of Earnings ) or required by Clause 17.5 ( Transfers to Retention Account ) shall (unless a Default is continuing) be released to or to the order of the Borrowers and may, for the avoidance of doubt be withdrawn by the Borrowers.
17.10
Restriction on withdrawal During the Facility Period no sum may be withdrawn from the Accounts (except in accordance with this Clause 17 ) without the prior written consent of the Security Agent. The Accounts shall not be overdrawn.
17.11
Relocation of Accounts On and at any time after the occurrence of a Default which is continuing, the Security Agent may without the consent of the Borrowers instruct the Account Holder to relocate any or all of the Accounts to any other branch of the Account Holder, without prejudice to the continued application of this Clause 17 and the rights of the Finance Parties under the Finance Documents.
17.12
Access to information The Borrowers agree that the Security Agent (and its nominees) may from time to time during the Facility Period review the records held by the Account Holder (whether in written or electronic form) in relation to the Accounts, and irrevocably waive any right of confidentiality which may exist in relation to those records.
17.13  
Statements Without prejudice to the rights of the Security Agent under Clause 17.11 ( Access to information ), the Borrowers shall procure that the Account Holder provides to the Security Agent, no less frequently than each calendar month during the Facility Period, written statements of account showing all entries made to the credit and debit of each of the Accounts during the immediately preceding calendar month.
17.14
Application after acceleration From and after the giving of notice to the Borrowers by the Agent under Clause 23.2 ( Acceleration ), the Borrowers shall procure that all sums from time to time standing to the credit of any of the Accounts are immediately transferred to the Security Agent or any Receiver or Delegate for application in accordance with Clause 17.14 Application of moneys by Security Agent ) and the Borrowers irrevocably authorise the Security Agent to instruct the Account Holder to make those transfers.
17.15
Application of moneys by Security Agent The Borrowers and the Finance Parties irrevocably authorise the Security Agent or any Receiver or Delegate to apply all moneys which it receives and is entitled to receive:
17.15.1
pursuant to a sale or other disposition of a Vessel or any right, title or interest in a Vessel; or
17.15.2
by way of payment of any sum in respect of any Master Agreement Proceeds, the Insurances, Earnings or any Requisition Compensation; or
17.15.3
by way of transfer of any sum from any of the Accounts; or
17.15.4
otherwise under or in connection with any Security Document,
in or towards satisfaction of the Indebtedness in the following order:
17.15.5
first, any unpaid fees, costs, expenses and default interest due to the Agent and the Security Agent (and, in the case of the Security Agent, to any Receiver or Delegate) under all or any of the Finance Documents, such application to be apportioned between the Agent and the Security Agent pro rata to the aggregate amount of such items due to each of them;
17.15.6
second, any unpaid fees, costs, expenses (including any sums paid by the Lenders under Clause 26.11 ( Indemnity )) of the Lenders due under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such items due to each of them;
17.15.7
third, any accrued but unpaid default interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such default interest due to each of them;
17.15.8
fourth, any other accrued but unpaid interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such interest due to each of them;
17.15.9
fifth, any principal of the Loan due and payable but unpaid under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such principal due to each of them; and
17.15.10
sixth, any other sum due and payable to any Finance Party but unpaid under all or any of the Finance Documents, such application to be apportioned between the Finance Parties pro rata to the aggregate amount of any such sum due to each of them,
Provided that any part of the Indebtedness arising out of a Master Agreement shall be satisfied on a pari passu basis with any repayment of the principal of the Loan.
17.16
Additional security If at any time the aggregate of the FMV of the Vessels (that are at that time subject to a Mortgage) and the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers appointed by the Agent (in the case of other charged assets), and determined by the Agent in its discretion (in all other cases)) for the time being provided to the Security Agent under this Clause 17.16 is less than 140% of the amount of the Loan then outstanding (the " VTL Coverage "), the Borrowers shall, within 30 days of the Agent's request, at the Borrowers' option:
17.16.1
pay to the Security Agent or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Security Agent as additional security for the payment of the Indebtedness; or
17.16.2
give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its discretion; or
17.16.3
prepay the Loan in the amount of the shortfall.
Clauses 6.4 ( Reborrowing ), 7.3.2 ( Voluntary prepayment of the Loan ) and 7.8 ( Restrictions ) shall apply, mutatis mutandis , to any prepayment made under this Clause 17.15 and the value of any additional security provided shall be determined by the Agent in its discretion.
If the Borrowers have provided additional security in accordance with the Agent's request under this Clause 17.15, the Borrowers may no less than 90 days after the Borrowers have provided additional security in accordance with the Agent's request under this Clause 17.15 request that the Agent test compliance with the VTL Coverage. The Borrowers shall bear the cost of valuations obtained by the Agent pursuant to this paragraph to determine the FMV of a Vessel and the value of any additional security provided in accordance with the Agent's request under this Clause 17.15. If the Agent shall determine when testing compliance with the VTL Coverage pursuant to this paragraph that all or any part of that additional security may be released without resulting in a shortfall in the VTL Coverage, provided that no Event of Default is continuing then the Security Agent shall effect a release of all or any part of that additional security in accordance with the Agent's instructions, but this shall be without prejudice to the Agent's right to make a further request under this Clause 17.15 should the value of the remaining security subsequently merit it.
The Agent may obtain valuations to determine the FMV of a Vessel for the purpose of testing compliance of this Clause 17.15 at any time. Subject to Clause 20.2 ( Compliance Certificate ), the Agent shall bear the cost of valuations obtained by the Agent to determine the FMV of a Vessel for the purpose of testing compliance of this Clause 17.15 provided that if an Event of Default is continuing the Borrowers shall bear the cost of valuations obtained by the Agent to determine the FMV of a Vessel for the purpose of testing compliance of this Clause 17.15.
17.17
Contingent Amount If the Borrowers and a Swap Provider enter into a Master Agreement for the hedging of the Borrowers' exposure to interest rate fluctuations, the Borrowers and the Swap Providers agree that the Mortgages shall secure any obligations payable by the Borrowers to the Swap Providers at any time pursuant to any Master Agreement in a maximum aggregate amount of up to $17,250,000 and the Swap Providers further agree that each of the other Security Documents shall not have any limitation as to the amount payable by the Borrowers to the Swap Providers at any time pursuant to any Master Agreement which is secured by such other Security Documents.
18
Guarantee and Indemnity
18.1
Guarantee and indemnity The Guarantor irrevocably and unconditionally:
18.1.1
guarantees to each Finance Party punctual performance by each other Security Party of all that Security Party's obligations under the Finance Documents;
18.1.2
undertakes with each Finance Party that whenever another Security Party does not pay any amount when due under or in connection with any Finance Document, the Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and
18.1.3
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of a Security Party not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by the Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 18 if the amount claimed had been recoverable on the basis of a guarantee.
18.2
Continuing Guarantee This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Security Party under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
18.3
Reinstatement If any discharge, release or arrangement (whether in respect of the obligations of any Security Party or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Guarantor under this Clause 18 will continue or be reinstated as if the discharge, release or arrangement had not occurred.
18.4
Waiver of defences The obligations of the Guarantor under this Clause 18 will not be affected by an act, omission, matter or thing which, but for this Clause 18.4, would reduce, release or prejudice any of its obligations under this Clause 18 (without limitation and whether or not known to it or any Finance Party) including:
18.4.1
any time, waiver or consent granted to, or composition with, any Security Party or other person;
18.4.2
the release of any other Security Party or any other person under the terms of any composition or arrangement with any creditor of any Security Party;
18.4.3
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Security Party or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
18.4.4
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Security Party or any other person;
18.4.5
any amendment, novation, supplement, extension restatement (however fundamental and whether or not more onerous) or replacement of a Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or increase in any facility or the addition of any new facility under any Finance Document or other document or security;
18.4.6
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
18.4.7
any insolvency or similar proceedings.
18.5
Guarantor intent Without prejudice to the generality of Clause 18.4 ( Waiver of defences ), the Guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new borrowers; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.
18.6
Immediate recourse The Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Guarantor under this Clause 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
18.7
Appropriations Until all amounts which may be or become payable by the Security Parties under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:
18.7.1
refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and
18.7.2
hold in an interest-bearing suspense account any moneys received from the Guarantor or on account of the Guarantor's liability under this Clause 18.
18.8
Deferral of Guarantor's rights Until all amounts which may be or become payable by the Security Parties under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, the Guarantor will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 18:
18.8.1
to be indemnified by a Security Party;
18.8.2
to claim any contribution from any other guarantor of any Security Party's obligations under the Finance Documents;
18.8.3
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;
18.8.4
to bring legal or other proceedings for an order requiring any Security Party to make any payment, or perform any obligation, in respect of which the Guarantor has given a guarantee, undertaking or indemnity under Clause 18.1 ( Guarantee and indemnity );
18.8.5
to exercise any right of set-off against any Security Party; and/or
18.8.6
to claim or prove as a creditor of any Security Party in competition with any Finance Party.
If the Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Security Parties under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 29 ( Payment mechanics ).
18.9  
Additional security This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.
18.10
Subordination The Guarantor agrees and undertakes with the Finance Parties that all claims of whatsoever nature which it has or may have at any time against the Borrowers or either of them or any other Security Party or any of their respective property or assets shall rank after and be in all respects subordinate to any and all claims, whether actual or contingent, which the Finance Parties have or may have at any time against the Borrowers or either of them or such other Security Party or any of its property or assets and that it will not without the prior written consent of the Agent (acting on the instructions of the Majority Lenders):
18.10.1
demand or accept payment in whole or in part of any moneys owing to it by the Borrowers or either of them or any other Security Party;
18.10.2
take any steps to enforce its rights to recover any moneys owing to it by the Borrowers or any of them or any other Security Party and more particularly (but without limitation) take or issue any judicial or other legal proceedings against the Borrowers or either of them or other Security Party or any of their respective property or assets; or
18.10.3
prove in the liquidation or other dissolution of the Borrowers or either of them or other Security Party in competition with a Finance Party.
Section 8
Representations, Undertakings and Events of Default
19
Representations
19.1
Representations Each Borrower and the Guarantor make the representations and warranties set out in this Clause 19 to each Finance Party.
19.1.1
Status Each of the Security Parties:
(a)
is a corporation duly incorporated and validly existing under the law of its jurisdiction of incorporation; and
(b)
has the power to own its assets and carry on its business as it is being conducted.
19.1.2
Binding obligations Subject to the Legal Reservations:
(a)
the obligations expressed to be assumed by each of the Security Parties in each of the Relevant Documents to which it is a party are legal, valid, binding and enforceable obligations; and
(b)
(without limiting the generality of Clause 19.1.2(a)) each Security Document to which it is a party creates the security interests which that Security Document purports to create and those security interests are valid and effective.
19.1.3
Non-conflict with other obligations The entry into and performance by each of the Security Parties of, and the transactions contemplated by, the Relevant Documents do not conflict with:
(a)
any law or regulation applicable to such Security Party;
(b)
the constitutional documents of such Security Party; or
(c)
any agreement or instrument binding upon such Security Party or any of such Security Party's assets or constitute a default or termination event (however described) under any such agreement or instrument.
19.1.4
Power and authority
(a)
Each of the Security Parties has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Relevant Documents to which it is or will be a party and the transactions contemplated by those Relevant Documents.
(b)
No limit on the powers of any Security Party will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Relevant Documents to which it is a party.
19.1.5
Validity and admissibility in evidence All Authorisations required or desirable:
(a)
to enable each of the Security Parties lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party or to enable each Finance Party to enforce and exercise all its rights under the Relevant Documents; and
(b)
to make the Relevant Documents to which any Security Party is a party admissible in evidence in its Relevant Jurisdictions,
have been obtained or effected and are in full force and effect.
19.1.6
Governing law and enforcement
(a)
The choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Security Party.
(b)
Any judgment obtained in relation to any Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Security Party.
19.1.7
Insolvency No corporate action, legal proceeding or other procedure or step described in Clause 23.1.7 ( Insolvency proceedings ) or creditors' process described in Clause 23.1.8 ( Creditors' process ) has been taken or threatened in relation to a Security Party; and none of the circumstances described in Clause 23.1.6 ( Insolvency ) applies to a Security Party.
19.1.8
No filing or stamp taxes Under the laws of the Relevant Jurisdictions of each relevant Security Party it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in any of those jurisdictions or that any stamp, registration, notarial or similar tax or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except registration of each Mortgage at the Ships Registry where title to the relevant Vessel is registered in the ownership of the relevant Borrower and payment of associated fees, which registration, filing, taxes and fees will be made and paid promptly after the date of the relevant Finance Document.
19.1.9
Deduction of Tax None of the Security Parties is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender.
19.1.10
No default
(a)
No Event of Default and, on the date of this Agreement and each Drawdown Date, no Default has occurred and is continuing or is reasonably likely to result from the advance of any Tranche or the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents.
(b)
No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (howsoever described) under any other agreement or instrument which is binding on any of the Security Parties or to which its assets are subject which has or is reasonably likely to have a Material Adverse Effect.
19.1.11
No misleading information Save as disclosed in writing to the Agent and the Arranger prior to the date of this Agreement:
(a)
all material information provided to a Finance Party by or on behalf of any of the Security Parties on or before the date of this Agreement and not superseded before that date is accurate and not misleading in any material respect and all projections provided to any Finance Party on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and
(b)
all other written information provided by any of the Security Parties (including its advisers) to a Finance Party was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.
19.1.12
Financial statements
(a)
The Original Financial Statements were prepared in accordance with IFRS consistently applied.
(b)
The audited Original Financial Statements give a true and fair view of the Guarantor's financial condition and results of operations during the relevant financial year.
(c)
There has been no material adverse change in the Guarantor's assets, business or financial condition since the date of the Original Financial Statements.
(d)
The Guarantor's most recent financial statements delivered pursuant to Clause 20.1 ( Financial statements ):
(i)
have been prepared in accordance with IFRS as applied to the Original Financial Statements; and
(ii)
give a true and fair view of (if audited) or fairly represent (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.
(e)
Since the date of the most recent financial statements delivered pursuant to Clause 20.1 ( Financial statements ) there has been no material adverse change in the business, assets or financial condition of the Guarantor.
19.1.13
No proceedings pending or threatened No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which are reasonably likely to have a Material Adverse Effect have been started or threatened against any of the Security Parties.
19.1.14
No breach of laws None of the Security Parties has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
19.1.15
Environmental laws
(a)
Each of the Security Parties is in compliance with Clause 22.3 ( Environmental compliance ) and no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.
(b)
No Environmental Claim has been commenced or is threatened against any of the Security Parties where that claim has or is reasonably likely, if determined against that Security Party, to have a Material Adverse Effect.
19.1.16
Taxation
(a)
None of the Security Parties is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax.
(b)
No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Security Parties with respect to Taxes.
(c)
Each of the Security Parties is resident for Tax purposes only in its Original Jurisdiction.
19.1.17
No Encumbrance or Financial Indebtedness
(a)
No Encumbrance exists over all or any of the present or future assets of the Borrowers.
(b)
The Borrowers do not have any Financial Indebtedness outstanding other than as permitted by this Agreement.
19.1.18
Pari passu ranking The payment obligations of each of the Security Parties under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
19.1.19
No adverse consequences
(a)
It is not necessary under the laws of the Relevant Jurisdictions of any of the Security Parties:
(i)
in order to enable any Finance Party to enforce its rights under any Finance Document; or
(ii)
by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,
that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of the Relevant Jurisdictions of any of the Security Parties.
(b)
No Finance Party is or will be deemed to be resident, domiciled or carrying on business in any of the Relevant Jurisdictions of any of the Security Parties by reason only of the execution, performance and/or enforcement of any Finance Document.
19.1.20
Disclosure of material facts No Borrower nor the Guarantor is aware of any material facts or circumstances which have not been disclosed to the Agent and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrowers.
19.1.21
Completeness of Relevant Documents The copies of any Relevant Documents provided or to be provided by the Borrowers to the Agent in accordance with Clause 4 ( Conditions of Utilisation ) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Agent.
19.1.22  
No Immunity No Security Party or any of its assets is immune to any legal action or proceeding
19.1.23
Anti-bribery, anti-corruption and anti-money laundering None of the Security Parties nor any of their Subsidiaries, directors or officers, or, to the best knowledge of the Borrowers and the Guarantor or any Affiliate, agent or employee of a Security Party, has engaged in any activity or conduct which would violate any applicable anti-bribery, anti-corruption or anti-money laundering laws, regulations or rules in any applicable jurisdiction and each Security Party has instituted and maintains policies and procedures designed to prevent violation of such laws, regulations and rules.
19.1.24
Sanctions    None of the Security Parties, any of their Subsidiaries, directors or officers, or, to the best knowledge of the Borrowers and the Guarantor, any Affiliate, agent or employee of a Security Party is an individual or entity (a " Person "), that is, or is owned or controlled by Persons that are: (i) the target of any Sanctions (a " Sanctioned Person "), or (ii) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions prohibiting any dealings with such government, country, or territory (a " Sanctioned Country ").
19.1.25
Patriot Act To the extent applicable the Borrowers and the Guarantor are in compliance with (i) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R, Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto and (ii) the Patriot Act.  No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
19.2
Repetition Each Repeating Representation is deemed to be repeated by each Borrower and the Guarantor by reference to the facts and circumstances then existing on the date of each Drawdown Request, on each Drawdown Date and on the first day of each Interest Period and on the Restatement Date.
20
Information Undertakings
The undertakings in this Clause 20 remain in force for the duration of the Facility Period.
20.1
Financial statements The Guarantor shall supply to the Agent in sufficient copies for all of the Lenders:
20.1.1
as soon as the same become available, but in any event within 120 days after the end of each of its financial years, its audited consolidated financial statements for that financial year; and
20.1.2
as soon as the same become available, but in any event within 60 days after the end of each quarter during each of its financial years, its unaudited consolidated quarterly financial statements for that quarter.
20.2
Compliance Certificate
20.2.1
The Guarantor shall supply to the Agent, with each set of its financial statements delivered pursuant to Clause 20.1 ( Financial statements ) a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 21 ( Financial Covenants ) as at the date as at which those financial statements were drawn up.
20.2.2
The Guarantor shall supply to the Agent, with each set of its annual financial statements, and every 6 months thereafter, delivered pursuant to Clause 20.1.1 ( Financial statements ), valuations issued no more than 30 days prior to such date by two Approved Shipbrokers evidencing the FMV of the Vessels which the Agent shall use in order to determine compliance with Clause 17.15 ( Additional Security ), such valuations being at the cost of the Borrowers.
20.2.3  
Each Compliance Certificate shall be signed by a director or officer of the Guarantor.
20.3
Requirements as to financial statements
Each set of financial statements delivered by the Guarantor under Clause 20.1 ( Financial statements ):
20.3.1
shall be certified by a director of the Guarantor as giving a true and fair view of (in the case of annual financial statements), or fairly representing (in other cases), its financial condition as at the date as at which those financial statements were drawn up; and
20.3.2
shall be prepared using IFRS, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in IFRS, the accounting practices or reference periods and its auditors deliver to the Agent:
(a)
a description of any change necessary for those financial statements to reflect the IFRS, accounting practices and reference periods upon which the Original Financial Statements were prepared; and
(b)
sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to determine whether Clause 21 ( Financial Covenants ) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements. If, at any time after the Effective Date, the IFRS requirements materially change so as to impact the financial covenants set out in Clauses 21.1, 21.2, 21.3 and 21.4, the Borrowers shall notify the Agent and the Lenders and, if agreed between the Borrowers and the Lenders, this Agreement shall be amended and/or supplemented to reflect these changes.
Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.
20.4
Information: miscellaneous Each Borrower and the Guarantor shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):
20.4.1
at the same time as they are dispatched, copies of all documents dispatched by a Security Party to its shareholders generally (or any class of them) or dispatched by any Security Party to its creditors generally (or any class of them);
20.4.2
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which are reasonably likely to have a Material Adverse Effect;
20.4.3
promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Security Parties with the terms of any Security Documents including without limitation cash flow analyses and details of the operating costs of any Vessel;
20.4.4
promptly on request, such further information regarding the financial condition, assets and operations of any Security Party (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Security Party under this Agreement, any changes to management of a Borrower or the Guarantor and an up to date copy of its shareholders' register (or equivalent in its Original Jurisdiction)) as any Finance Party through the Agent may reasonably request; and
20.4.5
promptly on request, such further information as any Finance Party through the Agent may reasonably request.
20.5
Notification of default
20.5.1
Each Borrower and the Guarantor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.
20.5.2
Promptly upon a request by the Agent, each Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
20.6
"Know your customer" checks
20.6.1
If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(b)
any change in the status of a Security Party after the date of this Agreement; or
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of Clause 20.6.1(c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Borrower shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in Clause 20.6.1(c), on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in Clause 20.6.1(c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and any Lender to identify each Security Party in accordance with the requirements to the Patriot Act.
20.6.2
Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
21
Financial Covenants
The following financial covenants shall apply to the Guarantor on a consolidated basis throughout the Facility Period, to be tested by reference to each set of its annual financial statements delivered pursuant to Clause 20.1.1 ( Financial statements ) and each set of its management accounts delivered pursuant to Clause 20.1.2 ( Financial statements ):
21.1
Minimum Liquidity Cash and Cash Equivalents shall at all times be the greater of (i) $25,000,000 and (ii) $500,000 per vessel owned by the Group (the " Minimum Liquidity "). For the purpose of this test, Cash and Cash Equivalents can include unutilised and freely available parts of revolving credit facilities (where no default or termination event has occurred and is continuing and there is no restriction on borrowing under such facilities) with a maturity date in excess of 12 months after the date of the annual financial statements delivered pursuant to Clause 20.1.1 ( Financial statements ) or the financial statements delivered pursuant to Clause 20.1.2 ( Financial statements ) (as the case may be) provided that 50% of the Minimum Liquidity shall at all times consist of Cash.
21.2
Minimum Tangible Net Worth The Guarantor shall maintain a Consolidated Tangible Net Worth of not less than $677,286,768 plus (a) 25% of the Guarantor's cumulative, positive consolidated net income for each fiscal quarter commencing on or after 1 October 2013 and (b) 50% of the value of the equity proceeds realized from any issuance of equity interests in the Guarantor occurring on or after 1 October 2013.
21.3
Maximum Leverage A ratio of Net Debt to Consolidated Total Capitalisation of not more than 0.60 to 1.00.
21.4
Minimum Interest Coverage A ratio of Consolidated EBITDA to Consolidated Net Interest Expense calculated on a four quarter trailing basis equal to or greater than 2.50 to 1.00.
Following the date of this Agreement, should IFRS requirements materially change so as to impact the covenants detailed in this Clause 21, the Guarantor and the Agent shall discuss the required amendments to the covenants detailed in this Clause 21 so as to reflect such changes to IFRS.
The following definitions shall apply to this Clause 21:
" Cash " means any credit balance on any deposit, savings, current or other account, and any cash in hand held with banks or other financial institutions of the Group which is:
(a)
freely withdrawable on demand;
(b)
    not subject to any Encumbrance (other than pursuant to any Security Document);
(c)
    denominated and payable in a freely transferable and freely convertible currency; and
(d)
    capable of being remitted to the Group.
" Cash Equivalents " means:
(a)
unencumbered securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)
time deposits, certificates of deposit or deposits (in each case, unencumbered) in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
(c)
such other securities or instruments as the Majority Lenders shall agree in writing,
and in respect of both (a) and (b) above, with a rating category of at least "A - " by Standard & Poor's Rating Services and "A" by Moody's Investors Service Limited (or the equivalent used by another rating agency) ( provided that , in the case of (b) above only, such rating category shall not be applicable for time deposits, certificates of deposit or deposits (in each case, unencumbered) in the interbank market of any commercial bank which is a Lender), and in each case having maturities of not more than ninety (90) days from the date of acquisition.
" Consolidated EBITDA " means, for any accounting period, the consolidated net income of the Guarantor for that accounting period:
(a)
plus , to the extent deducted in computing the net income of the Guarantor for that accounting period, the sum, without duplication, of:
(i)
    all federal, state, local and foreign income taxes and tax distributions;
(ii)
Consolidated Net Interest Expense;
(iii)
depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)
expenses incurred in connection with a special or intermediate survey (including any underwater survey done in lieu thereof) of a vessel owned by the Group during such period; and
(v)
any drydocking expenses;
(b)
minus , to the extent added in computing the consolidated net income of the Guarantor for that accounting period, (i) any non-cash income, non-cash gains and (ii) any extraordinary gains on asset sales not incurred in the ordinary course of business.
" Consolidated Funded Debt " means, for any accounting period, the sum of the following for the Guarantor determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:
(a)
all Financial Indebtedness; and
(a)
all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet),
provided that balance sheet accruals for future dry docking expenses shall not be classified as Consolidated Funded Debt.
" Consolidated Net Interest Expense " means the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Guarantor and all of its Subsidiaries during the relevant accounting period less (i) interest income received, (ii) commitment fees and (iii) amortization of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Guarantor.
" Consolidated Tangible Net Worth " means, on a consolidated basis, the total shareholders’ equity (including retained earnings) of the Guarantor, minus goodwill.
" Consolidated Total Capitalization " means Consolidated Tangible Net Worth plus Consolidated Funded Debt.
" Net Debt " means Financial Indebtedness less Cash and Cash Equivalents.
22
General Undertakings
The Borrowers covenant with the Agent that:
22.1
not during the Facility Period to change the classification society of the Vessels without the prior written consent of the Agent (such consent not to be unreasonably withheld); and
22.2
to keep proper books of account in respect of the Vessels and the Earnings and as and when required by the Agent to make such books available for inspection on behalf of the Agent; and
22.3
not during the Facility Period to change the flag of the Vessels without the prior written consent of the Agent, not to be unreasonably withheld; and
22.4
to comply in relation to the Vessels with the International Ship and Port Facility Security Code adopted by the International Maritime Organisation (as the same may be amended from time to time) (the "ISPS Code") or any replacement of the ISPS Code and in particular, without limitation, to:
22.4.1
procure that the Vessels and the company responsible for the Vessels' compliance with the ISPS Code comply with the ISPS Code; and
22.4.2
maintain for the Vessels throughout the Facility Period a valid and current International Ship Security Certificate issued under the ISPS Code ("ISSC") and provide a copy to the Agent; and
22.4.3
notify the Mortgagee immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
The undertakings in this Clause 22 remain in force for the duration of the Facility Period.
22.5
Authorisations Each Borrower and the Guarantor shall promptly:
22.5.1
obtain, comply with and do all that is necessary to maintain in full force and effect; and
22.5.2
supply certified copies to the Agent of,
any Authorisation required under any law or regulation of a Relevant Jurisdiction to:
(a)
enable any Security Party to perform its obligations under the Finance Documents to which it is a party;
(b)
ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and
(c)
enable any Security Party to carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.
22.6
Compliance with laws
Each Borrower and the Guarantor shall comply (and shall procure that each other Security Party and each Affiliate of any of them shall comply), in all respects with all laws to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
22.7
Environmental compliance
Each Borrower and the Guarantor shall:
22.7.1
comply with all Environmental Laws;
22.7.2
obtain, maintain and ensure compliance with all requisite Environmental Approvals; and
22.7.3
implement procedures to monitor compliance with and to prevent liability under any Environmental Law,
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
22.8
Environmental Claims
Each Borrower and the Guarantor shall promptly upon becoming aware of the same, inform the Agent in writing of:
22.8.1
any Environmental Claim against any of the Security Parties which is current, pending or threatened; and
22.8.2
any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any of the Security Parties,
where the claim, if determined against that Security Party, has or is reasonably likely to have a Material Adverse Effect.
22.9
Taxation
22.9.1
Each Borrower and the Guarantor shall (and shall procure that each other Security Party shall) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
(a)
such payment is being contested in good faith;
(b)
adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Agent under Clause 20.1 ( Financial statements ); and
(c)
such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.
22.9.2
No Borrower nor the Guarantor may (and no other Security Party may) change its residence for Tax purposes.
22.10
Existence and good standing Each Borrower and the Guarantor shall procure that each Security Party shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence in good standing under the laws of its jurisdiction of incorporation or formation and each Borrower will from time to time if requested by the Agent provide the Agent with evidence in form and substance satisfactory to the Agent that the Security Parties and all corporate shareholders of any of the Security Parties remain in good standing
22.11
Pari passu ranking Each Borrower and the Guarantor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
22.12
Negative pledge
In this Clause 22.12 " Quasi-Security " means an arrangement or transaction described in Clause 22.12.2.
Except as permitted under Clause 22.12.3:
22.12.1
no Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will) create nor permit to subsist any Encumbrance over any of its assets; and
22.12.2
no Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will):
(a)
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by a Security Party;
(b)
sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(c)
enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(d)
enter into any other preferential arrangement having a similar effect,
(e)
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
22.12.3
Clauses 22.12.1 and 22.12.2 do not apply to any Encumbrance or (as the case may be) Quasi-Security, which is a Permitted Encumbrance.
22.13
Disposals
22.13.1
Except as permitted under Clause 22.13.2, no Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will) without the prior written consent of the Agent enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.
22.13.2
Clause 22.13.1 does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal.
22.14
Arm's length basis
22.14.1
Except as permitted under Clause 22.14.2, no Borrower shall (and shall procure that no other Security Party will) enter into any transaction with any person except on arm's length terms and for full market value.
22.14.2
Fees, costs and expenses payable under the Relevant Documents in the amounts set out in the Relevant Documents delivered to the Agent under Clause 4.1 ( Initial conditions precedent) or agreed by the Agent shall not be a breach of this Clause 22.14.
22.15
Affiliate transactions None of the Borrowers or the Guarantor shall enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate other than on terms and conditions substantially as favorable to such Borrower or the Guarantor as would be obtainable by it at the time in a comparable arm’s-length transaction with a person other than an Affiliate.
22.16
Merger No Borrower shall (and shall procure that no other Security Party will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction.
22.17
Change of business No Borrower shall (and shall procure that no other Security Party will) make any substantial change to the general nature of its business from that carried on at the date of this Agreement.
22.18
No other business No Borrower shall engage in any business other than the ownership, operation, chartering and management of the relevant Vessel.
22.19
No acquisitions No Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will) acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or incorporate a company.
22.20
No Joint Ventures No Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will):
22.20.1
enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or
22.20.2
transfer any assets or lend to or guarantee or give an indemnity for or give security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).
22.21
No borrowings
22.21.1
No Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will) incur or allow to remain outstanding any Financial Indebtedness except for:
(a)
the Loan; or
(b)
under any Master Agreement; or
(c)
any Financial Indebtedness arising in the ordinary course of business in connection with the chartering, operation or repair of a Vessel; or
(d)
any Financial Indebtedness existing on the Effective Date which has been disclosed to and approved by the Majority Lenders in writing; or
(e)
subject to Clause 22.22, loans made to a Borrower by an Affiliate, parent or subsidiary.
22.21.2
None of the Borrowers shall incur unsecured trade credit except in the ordinary course of business.
22.22
Subordination of loans Each of the Borrowers and the Guarantor shall cause all loans made to it or to any other Security Party by any Affiliate and all sums and other obligations (financial or otherwise) owed by it to any Affiliate be unsecured and fully subordinated to the rights of the Finance Parties under the Finance Documents on terms acceptable to the Majority Lenders.
22.23
No substantial liabilities Except in the ordinary course of business, no Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will) incur any liability to any third party which is in the Agent's opinion of a substantial nature.
22.24
No loans or credit No Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will) be a creditor in respect of any Financial Indebtedness unless it is a loan made in the ordinary course of business in connection with the chartering, operation or repair of the relevant Vessel.
22.25
No guarantees or indemnities No Borrower shall (and shall procure that no other Security Party (other than the Guarantor) will) incur or allow to remain outstanding any guarantee in respect of any obligation of any person.
22.26
Dividends
22.26.1
If an Event of Default has occurred and is continuing, or if an Event of Default would result therefrom, or if the Guarantor is not in compliance with any of the covenants in Clause 21 ( Financial covenants ) hereof or any payment of dividends or any form of distribution or return of capital would result in the Guarantor not being in compliance with any of the covenants in Clause 21 ( Financial covenants ), the Guarantor shall not declare or pay any dividends or return any capital to its equity holders or authorize or make any other distribution, payment or delivery of property or cash to its equity holders, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any interest of any class or series of its share capital (or acquire any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding, or repay any subordinated loans to equity holders or set aside any funds for any of the foregoing purposes.
22.26.2
If an Event of Default has occurred and is continuing, or if an Event of Default would result therefrom, no Borrower shall declare or pay any dividends or return any capital to its equity holders or authorize or make any other distribution, payment or delivery of property or cash to its equity holders, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any interest of any class or series of its share capital (or acquire any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding, or repay any subordinated loans to equity holders or set aside any funds for any of the foregoing purposes.
22.27
Maintenance and Inspection of records Each of the Borrowers and the Guarantor shall keep separate and proper books of record and account in which full and materially correct entries shall be made of all financial transactions and the assets and business of each of the Guarantor and the Borrowers in accordance with IFRS, and the Agent shall have the right to inspect the books and records of each of the Guarantor and the Borrowers wherever the same may be kept from time to time as it sees fit, in its sole reasonable discretion, or to cause an examination to be made by a firm of accountants selected by it, provided that any examination shall be done without undue interference with the day to day business operations of the Guarantor or the Borrowers, as the case may be.
22.28
No change in Relevant Documents No Borrower nor the Guarantor shall (and shall procure that no other Security Party will) amend, vary, novate, supplement, supersede, waive or terminate any term of, any of the Relevant Documents which are not Finance Documents and excluding the Management Agreement, or any other document delivered to the Agent pursuant to Clause 4.1 ( Initial conditions precedent ) or Clause 4.2 ( Further conditions precedent ) or Clause 4.3 ( Conditions subsequent ).
22.29
Further assurance
22.29.1
Each Borrower and the Guarantor shall (and shall procure that each other Security Party shall) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):
(a)
to perfect any Encumbrance created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Encumbrance over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;
(b)
to confer on the Security Agent or confer on the Finance Parties an Encumbrance over any property and assets of that Borrower (or that other Security Party as the case may be) located in any jurisdiction equivalent or similar to the Encumbrance intended to be conferred by or pursuant to the Security Documents; and/or
(c)
to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents.
22.29.2
Each Borrower and the Guarantor shall (and shall procure that each other Security Party shall) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Encumbrance conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.
22.30  
No dealings with Master Agreement No Borrower shall assign, novate or encumber or in any other way transfer any of its rights or obligations under a Master Agreement (other than a Master Agreement Proceeds Assignment), nor enter into any interest rate exchange or hedging agreement with anyone other than a Swap Provider for an amount equal to that Swap Provider's Commitment (in its capacity as a Lender) and provided that the Swap Provider has a minimum credit rating of A3 by Moody's Investor Service Limited or A- by Standard & Poor's Rating Services . If a Borrower enters into a Master Agreement with a Swap Provider it shall simultaneously enter into a Master Agreement Proceeds Assignment and shall deliver to the Agent such supporting corporate authorisations, legal opinions and other supporting documents reasonably requested by the Agent, and if required by the Agent acting on appropriate legal advice, an amendment to the relevant Mortgage and the Account Security Deed.
22.31  
Permitted Transactions No Borrower shall maintain outstanding Transactions the aggregate notional amount of which shall exceed the amount of the relevant Tranche from time to time.
22.32  
Employees and ERISA Compliance No Borrower nor the Guarantor shall employ any individuals, sponsor, maintain or become obligated to contribute to any Plan or any other pension scheme.  Each Borrower and the Guarantor shall provide prompt written notice to the Agent in the event that such Borrower or the Guarantor becomes aware that it has incurred or is reasonably likely to incur any liability with respect to any Plan or any other pension scheme, that, individually or in the aggregate with any other such liability would be reasonably expected to have a Material Adverse Effect.
22.33  
Sanctions   Neither the Borrowers or the Guarantor  will, directly or indirectly, use the proceeds of the Loan, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or any other person,  (i) to fund any activities or business of or with any person, or in any country or territory, that, at the time of such funding, is, a Sanctioned Person and that would result in a violation of Sanctions, or a Sanctioned Country or (ii) in any other manner that would result in a violation of Sanctions by any person (including any person participating in the Loan, whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise).
22.34
Assignment of Claims The Guarantor shall not assign any claims that it may have against another Security Party, against a Vessel or in respect of a Relevant Document.
22.35
NYSE listing The Guarantor shall maintain its listing on the New York Stock Exchange.
22.36
Vessel Scrapping Any decision regarding the scrapping of any Vessel shall take into account the environmental impact of such decision and the Borrowers will explore commercially and technically viable opportunities to lessen such impact, including through utilization of "green" scrap yards.

LONLIVE\26142366.7    Page 33


23
Events of Default
23.1
Events of Default Each of the events or circumstances set out in this Clause 23.1 is an Event of Default.
23.1.1
Non-payment A Security Party does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
(a)
its failure to pay is caused by:
(i)
administrative or technical error; or
(ii)
a Disruption Event; and
(b)
payment is made within three Business Days of its due date.
23.1.2
Other specific obligations
(a)
Any requirement of Clause 21 ( Financial Covenants ) is not satisfied.
(b)
A Security Party does not comply with any obligation in a Finance Document relating to the Insurances or with Clause 17.15 ( Additional security ).
23.1.3
Other obligations
(a)
A Security Party does not comply with any provision of a Finance Document (other than those referred to in Clause 23.1.1 ( Non-payment ) and Clause 23.1.2 ( Other specific obligations ).
(b)
No Event of Default under this Clause 23.1.3 will occur if the failure to comply is capable of remedy and is remedied within ten Business Days of the earlier of (i) the Agent giving notice to the Borrowers and (ii) the Borrowers becoming aware of the failure to comply.
23.1.4
Misrepresentation Any representation or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.
23.1.5
Cross default Any Financial Indebtedness of the Borrowers or the Guarantor:
(a)
is not paid when due nor within any originally applicable grace period; or
(b)
is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described); or
(c)
is capable of being declared by a creditor to be due and payable prior to its specified maturity as a result of such an event.
No Event of Default will occur under this Clause 23.1.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within (a) to (c) is in the case of the Guarantor, less than $10,000,000 or its equivalent in any other currency or currencies (unless such sum is being contested in good faith and through appropriate proceedings for which adequate reserves in accordance with IFRS have been established and maintained on the books and records of the Guarantor).
23.1.6
Insolvency

LONLIVE\26142366.7    Page 34


(a)
A Borrower or the Guarantor is unable or admits inability to pay its debts as they fall due, is deemed to, or is declared to, be unable to pay its debts under applicable law, suspends or threatens to suspend making payments on any of its debts, or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.
(b)
The value of the assets of a Security Party is less than its liabilities (taking into account contingent and prospective liabilities).
(c)
A moratorium is declared in respect of any indebtedness of a Security Party. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.
23.1.7
Insolvency proceedings Any corporate action, legal proceedings or other procedure or step is taken for:
(a)
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Borrower or the Guarantor;
(b)
a composition, compromise, assignment or arrangement with any creditor of a Borrower or the Guarantor;
(c)
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of a Borrower or the Guarantor or any of its assets; or
(d)
enforcement of any Encumbrance over any assets of a Borrower or the Guarantor,
or any analogous procedure or step is taken in any jurisdiction.
This Clause 23.1.7 shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within five days of commencement.
23.1.8
Creditors' process Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Security Party.
23.1.9
Unlawfulness and invalidity
(a)
It is or becomes unlawful for a Security Party to perform any of its obligations under the Finance Documents or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be effective.
(b)
Any obligation or obligations of any Security Party under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lenders under the Finance Documents.
(c)
Any Finance Document ceases to be in full force and effect or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective.
23.1.10
Cessation of business A Borrower or the Guarantor ceases, or threatens to cease, to carry on all or a substantial part of its business.

LONLIVE\26142366.7    Page 35


23.1.11
Expropriation The authority or ability of a Borrower or the Guarantor to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to a Borrower or the Guarantor or any of its assets.
23.1.12
Repudiation and rescission of agreements
(a)
A Security Party rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or evidences an intention to rescind or repudiate a Finance Document.
(b)
Subject to Clause 23.1.12(c), any party to any of the Relevant Documents that is not a Finance Document rescinds or purports to rescind or repudiates or purports to repudiate that Relevant Document in whole or in part where to do so has or is, in the reasonable opinion of the Majority Lenders, likely to have a material adverse effect on the interests of the Lenders under the Finance Documents.
(c)
The Management Agreement is terminated, cancelled or otherwise ceases to remain in full force and effect at any time prior to its contractual expiry date and is not immediately replaced by a similar agreement in form and substance satisfactory to the Majority Lenders.
23.1.13
Conditions subsequent Any of the conditions referred to in Clause 4.3 ( Conditions subsequent ) is not satisfied within the time reasonably required by the Agent.
23.1.14
Revocation or modification of Authorisation Any Authorisation of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Security Parties or any other person (except a Finance Party) to comply with any of their obligations under any Relevant Document is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be, prejudicial to the interests of any Finance Party, or ceases to remain in full force and effect.
23.1.15
Reduction of capital A Borrower reduces its authorised or issued or subscribed capital.
23.1.16
Loss of Vessel A Vessel suffers a Total Loss or is otherwise destroyed or abandoned, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Security Agent as security for the payment of all or any part of the Indebtedness, except that a Total Loss (which term shall for the purposes of the remainder of this Clause 23.1.16 include an event similar to a Total Loss in relation to any other vessel) shall not be an Event of Default if:
(a)
that Vessel or other vessel is insured in accordance with the Security Documents and a claim for Total Loss is available under the terms of the relevant insurances; and
(b)
no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Agent in its discretion that any such refusal or dispute is likely to occur; and
(c)
payment of all insurance proceeds in respect of the Total Loss is made in full to the Security Agent within 180 days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Agent may in its discretion agree.
23.1.17
Challenge to registration The registration of a Vessel or a Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of a Mortgage is contested.

LONLIVE\26142366.7    Page 36


23.1.18
War The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Agent in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced.
No Event of Default under this Clause 23.1.18 will occur if within ten Business Days of the earlier of (i) the Agent giving notice to the Borrowers and (ii) the Borrowers becoming aware of such events and circumstances described in this Clause 23.1.18 occurring, the relevant Borrower registers that Vessel under a different flag acceptable to the Agent (acting reasonably), registers a Mortgage over that Vessel with first priority in favour of the Security Agent (such Mortgage being in a form and substance acceptable to the Agent (acting reasonably)) and provides such supporting corporate authorisations, legal opinions and other supporting documents reasonably requested by the Agent.
23.1.19  
Master Agreement termination A notice is given by a Swap Provider under section 6(a) of a Master Agreement, or by any person under section 6(b)(iv) of a Master Agreement, in either case designating an Early Termination Date for the purpose of the relevant Master Agreement, or a Master Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect.
This Clause 23.1.19 shall not apply to any Transactions that are terminated pursuant to Clause 7.8 ( Restrictions ).
23.1.20  
Notice of determination The Guarantor gives notice to the Security Agent to determine any obligations under the Guarantee.
23.1.21
Litigation Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened in relation to the Relevant Documents or the transactions contemplated in the Relevant Documents or against a Security Party or its assets which have or are reasonably likely to have a Material Adverse Effect.
This Clause 23.1.21 shall not apply to any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes which are frivolous or vexatious and is discharged, stayed or dismissed within 30 days of commencement.
23.1.22
Material adverse change Any event or circumstance occurs which the Majority Lenders reasonably believe has or is reasonably likely to have a Material Adverse Effect.
23.1.23
Sanctions
(a)
Any of the Security Parties, any of their Subsidiaries, directors or officers, the Guarantor or any Affiliate, agent or employee of a Security Party becomes a Sanctioned Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Sanctioned Person or any of such persons becomes the owner or controller of a Sanctioned Person. .
(b)
Any proceeds of the Loan are made available, directly or indirectly, to or for the benefit of a Sanctioned Person or otherwise is, directly or indirectly, applied in a manner or for a purpose prohibited by the applicable Sanctions.
(c)
Any of the Security Parties, any of their Subsidiaries, directors or officers, the Guarantor or any Affiliate, agent or employee of a Security Party is not in compliance with all applicable Sanctions.
23.2
Acceleration On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders:

LONLIVE\26142366.7    Page 37


23.2.1
by notice to the Borrowers cancel the Total Commitments, at which time they shall immediately be cancelled;
23.2.2
by notice to the Borrowers declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, at which time they shall become immediately due and payable;
23.2.3
by notice to the Borrowers declare that the Loan is payable on demand, at which time it shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders; and/or
23.2.4
exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.
Section 9
Changes to Parties
24
Changes to the Lenders
24.1
Assignments and transfers by the Lenders Subject to this Clause 24, a Lender (the " Existing Lender ") may:
24.1.1
assign any of its rights; or
24.1.2
transfer by novation any of its rights and obligations,
under any Finance Document to another bank or financial institution which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the " New Lender ").
24.2
Conditions of assignment or transfer
24.2.1
An Existing Lender must obtain the prior written consent of the Borrowers prior to making an assignment or transfer in accordance with Clause 24.1 ( Assignments and transfers by the Lenders ) unless the assignment or transfer is:
(a)
to another Lender or an Affiliate of a Lender; or
(b)
made at a time when an Event of Default is continuing.
24.2.2
The consent of the Agent is required for any assignment or transfer to a New Lender which is not a FATCA Exempt Party.
24.2.3  
The consent of the Borrowers to an assignment or transfer must not be unreasonably withheld or delayed (however it shall be deemed reasonable for the Borrowers to withhold their consent in circumstances where the proposed New Lender is a trust, fund or similar entity which is regularly engaged in or established for the purpose of making, purchasing or investing in securities or other financial assets). The Borrowers will be deemed to have given their consent five Business Days after the Lender has requested it unless consent is expressly refused by the Borrowers within that time.
24.2.4
An assignment will only be effective on:
(a)
receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender; and
(b)
performance by the Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.
24.2.5
A transfer will only be effective if the procedure set out in Clause 24.5 ( Procedure for transfer ) is complied with.
24.2.6
If:
(a)
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(b)
as a result of circumstances existing at the date the assignment, transfer or change occurs, a Borrower would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 12 ( Tax Gross Up and Indemnities ) or Clause 13 ( Increased Costs ),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred. This Clause 24.2.6 shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Loan.
24.2.7
Each New Lender confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.
24.3
Assignment or transfer fee Unless the Agent otherwise agrees and excluding an assignment or transfer (i) to an Affiliate of a Lender or (ii) made in connection with primary syndication of the Loan, the New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of $3,000.
24.4
Limitation of responsibility of Existing Lenders
24.4.1
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:
(a)
the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;
(b)
the financial condition of any Security Party;
(c)
the performance and observance by any Security Party of its obligations under the Relevant Documents or any other documents; or
(d)
the accuracy of any statements (whether written or oral) made in or in connection with any of the Relevant Documents or any other document,
and any representations or warranties implied by law are excluded.
24.4.2
Each New Lender confirms to the Existing Lender and the other Finance Parties that it:
(a)
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Security Party and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any of the Relevant Documents; and
(b)
will continue to make its own independent appraisal of the creditworthiness of each Security Party and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.
24.4.3
Nothing in any Finance Document obliges an Existing Lender to:
(a)
accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 24; or
(b)
support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Security Party of its obligations under the Relevant Documents or otherwise.
24.5
Procedure for transfer
24.5.1
Subject to the conditions set out in Clause 24.2 ( Conditions of assignment or transfer ) a transfer is effected in accordance with Clause 24.5.3 when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to Clause 24.2.4(b), as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.
24.5.2
The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New 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 such New Lender.
24.5.3
Subject to Clause 24.9 ( Pro rata interest settlement ), on the Transfer Date:
(a)
to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each Borrower and the Guarantor and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another shall be cancelled (being the "Discharged Rights and Obligations");
(b)
each Borrower and the Guarantor and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Borrower and the Guarantor and the New Lender have assumed and/or acquired the same in place of that Borrower and the Guarantor and the Existing Lender;
(c)
the Agent, the Security Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Security Agent, the Arranger, and the Existing Lender shall each be released from further obligations to each other under this Agreement; and
(d)
the New Lender shall become a Party as a "Lender".
24.6
Procedure for assignment
24.6.1
Subject to the conditions set out in Clause 24.2 ( Conditions of assignment or transfer ) an assignment may be effected in accordance with Clause 24.6.3 when the Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to Clause 24.6.2, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.
24.6.2
The Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.
24.6.3
Subject to Clause 24.9 ( Pro rata interest settlement ), on the Transfer Date:
(a)
the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of any Encumbrance created or expressed to be created or evidenced by the Security Documents and expressed to be the subject of the assignment in the Assignment Agreement;
(b)
the Existing Lender will be released from the obligations (the " Relevant Obligations ") expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of any Encumbrance created or expressed to be created or evidenced by the Security Documents); and
(c)
the New Lender shall become a Party as a "Lender" and will be bound by obligations equivalent to the Relevant Obligations.
24.6.4
Lenders may utilise procedures other than those set out in this Clause 24.6 to assign their rights under the Finance Documents (but not, without the consent of the relevant Security Party or unless in accordance with Clause 24.5 ( Procedure for transfer ), to obtain a release by that Security Party from the obligations owed to that Security Party by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in Clause 24.2 ( Conditions of assignment or transfer ).
24.7
Copy of Transfer Certificate or Assignment Agreement to Borrowers The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send to the Borrowers a copy of that Transfer Certificate or Assignment Agreement.
24.8
Security over Lenders' rights In addition to the other rights provided to Lenders under this Clause 24, each Lender may without consulting with or obtaining consent from any Security Party, at any time charge, assign or otherwise create Encumbrances 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:
24.8.1
any charge, assignment or other Encumbrance to secure obligations to a federal reserve or central bank;
24.8.2
any assignment to any securitisation vehicle, trust or fund for the purpose of a Lender refinancing or hedging its exposure in respect of the Loan; and
24.8.3
in the case of any Lender which is a fund, any charge, assignment or other Encumbrance 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 Encumbrance shall:
(a)
release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Encumbrance for the Lender as a party to any of the Finance Documents; or
(b)
require any payments to be made by a Security Party other than or in excess of, 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.
24.9
Pro rata interest settlement
24.9.1
If the Agent has notified the Lenders that it is able to distribute interest payments on a "pro rata basis" to Existing Lenders and New Lenders then (in respect of any transfer pursuant to Clause 24.5 ( Procedure for transfer ) or any assignment pursuant to Clause 24.6 ( Procedure for assignment ) the Transfer Date of which is after the date of such notification and is not on the last day of an Interest Period):
(a)
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date (" Accrued Amounts ") and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six months, on the next of the dates which falls at six monthly intervals after the first day of that Interest Period); and
(b)
the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:
(i)
when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and
(ii)
the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 24.9, have been payable to it on that date, but after deduction of the Accrued Amounts.
24.9.2
In this Clause 24.9 references to "Interest Period" shall be construed to include a reference to any other period for accrual of fees.
25
Changes to the Security Parties
25.1
No assignment or transfer by Security Parties No Security Party may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
Section 10
The Finance Parties
26
Role of the Agent, the Security Agent and the Arranger
26.1
Appointment of the Agent and the Security Agent
26.1.1
Each of the Arranger and the Lenders appoints the Agent to act as its agent under and in connection with the Finance Documents and each of the Arranger, the Lenders and the Agent appoints the Security Agent to act as its security agent for the purpose of the Security Documents.
26.1.2
Each of the Arranger and the Lenders authorises the Agent and each of the Arranger and the Lenders and the Agent authorises the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Agent or the Security Agent (as the case may be) under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
26.1.3  
Each Swap Provider appoints the Security Agent to act as its security agent for the purpose of the Security Documents and authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Security Documents together with any other incidental rights, powers, authorities and discretions.
26.1.4  
Except in Clause 26.14 ( Replacement of the Agent ) or where the context otherwise requires, references in this Clause 26 to the " Agent " shall mean the Agent, the Security Agent individually and collectively and references in this Clause 26 to the " Finance Documents " or to any " Finance Document " shall not include a Master Agreement.
26.2
Instructions
26.2.1
The Agent shall:
(a)
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by:
(i)
all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and
(ii)
in all other cases, the Majority Lenders; and
(b)
not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with Clause 26.2.1(a).
26.2.2
The Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Lender or group of Lenders, from that Lender or group of Lenders) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
26.2.3
Save in the case of decisions stipulated to be a matter for any other Lender or group of Lenders under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.
26.2.4
The Agent may refrain from acting in accordance with any instructions of any Lender or group of Lenders until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions.
26.2.5
In the absence of instructions, the Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders.
26.2.6
The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings relating to any Finance Document. This Clause 26.2.6 shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Finance Documents or the enforcement of the Finance Documents.
26.3
Duties of the Agent
26.3.1
The Agent's duties under the Finance Documents are solely mechanical and administrative in nature.
26.3.2
Subject to Clause 26.3.3, the Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.
26.3.3
Without prejudice to Clause 24.7 ( Copy of Transfer Certificate or Assignment Agreement to Borrowers ), Clause 26.3.1 shall not apply to any Transfer Certificate or any Assignment Agreement.
26.3.4
Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
26.3.5
If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.
26.3.6
If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent, the Arranger or the Security Agent) under this Agreement it shall promptly notify the other Finance Parties.
26.3.7
The Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
26.4
Role of the Arranger Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.
26.5
No fiduciary duties
26.5.1
Subject to Clause 26.12 ( Trust ) which relates to the Security Agent only, nothing in any Finance Document constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.
26.5.2
Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.
26.6
Business with Security Parties The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with either Borrower and any other Security Party or its Affiliate.
26.7
Rights and discretions of the Agent
26.7.1
The Agent may:
(a)
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;
(b)
assume that:
(i)
any instructions received by it from the Majority Lenders, any Lenders or any group of Lenders are duly given in accordance with the terms of the Finance Documents; and
(ii)
unless it has received notice of revocation, that those instructions have not been revoked; and
(iii)
rely on a certificate from any person:
(A)
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or
(B)
to the effect that such person approves of any particular dealing, transaction, step, action or thing,
as sufficient evidence that that is the case and, in the case of (A), may assume the truth and accuracy of that certificate.
26.7.2
The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders or security agent for the Finance Parties (as the case may be)) that:
(a)
no Default has occurred (unless it has actual knowledge of a Default arising under Clause 23.1 ( Events of Default ));
(b)
any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and
(c)
any notice or request made by the Borrowers (other than a Drawdown Request) is made on behalf of and with the consent and knowledge of all the Security Parties.
26.7.3
The Agent may engage and pay for the advice or services of any lawyers, accountants, surveyors or other experts.
26.7.4
Without prejudice to the generality of Clause 26.7.3 or Clause 26.7.5, the Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Agent (and so separate from any lawyers instructed by the Lenders) if the Agent in its reasonable opinion deems this to be desirable.
26.7.5
The Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.
26.7.6
The Agent may act in relation to the Finance Documents through its officers, employees and agents and the Agent shall not:
(a)
be liable for any error of judgment made by any such person; or
(b)
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part, of any such person,
unless such error or such loss was directly caused by the Agent's gross negligence or wilful misconduct.
26.7.7
Unless a Finance Document expressly provides otherwise the Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.
26.7.8
Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor an Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
26.7.9
The Agent is not obliged to disclose to any Finance Party any details of the rate notified to the Agent by any Lender or the identity of any such Lender for the purpose of Clause 10.2.2 ( Market Disruption ).
26.7.10
Notwithstanding any provision of any Finance Document to the contrary, the Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
26.8
Responsibility for documentation Neither the Agent nor any Arranger is responsible or liable for:
26.8.1
the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, an Arranger, a Security Party or any other person given in or in connection with any Relevant Document or the transactions contemplated in the Finance Documents; or
26.8.2
the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Relevant Document; or
26.8.3
any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
26.9
No duty to monitor The Agent shall not be bound to enquire:
26.9.1
whether or not any Default has occurred;
26.9.2
as to the performance, default or any breach by any Party of its obligations under any Finance Document; or
26.9.3
whether any other event specified in any Finance Document has occurred.
26.10
Exclusion of liability
26.10.1
Without limiting Clause 26.10.2 (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Agent) the Agent shall not be liable (including, without limitation, for negligence or any other category of liability whatsoever) for:
(a)
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document or any Encumbrance created or expressed to be created or evidenced by the Security Documents, unless directly caused by its gross negligence or wilful misconduct;
(b)
exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document, any Encumbrance created or expressed to be created or evidenced by the Security Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document or any Encumbrance created or expressed to be created or evidenced by the Security Documents;
(c)
any shortfall which arises on the enforcement or realisation of the Trust Property; or
(d)
without prejudice to the generality of Clauses 26.10.1(a), 26.10.1(b) and 26.10.1(c), any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:
(i)
any act, event or circumstance not reasonably within its control; or
(ii)
the general risks of investment in, or the holding of assets in, any jurisdiction,
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
26.10.2
No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Relevant Document and any officer, employee or agent of the Agent may rely on this Clause subject to Clause 1.7 ( Third Party Rights ) and the provisions of the Third Parties Act.
26.10.3
The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.
26.10.4
Nothing in this Agreement shall oblige the Agent or an Arranger to carry out:
(a)
any "know your customer" or other checks in relation to any person;
(b)
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Lender,
on behalf of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arranger.
26.10.5
Without prejudice to any provision of any Finance Document excluding or limiting the Agent's liability, any liability of the Agent arising under or in connection with any Finance Document or any Encumbrance created or expressed to be created or evidenced by the Security Documents shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Agent at any time which increase the amount of that loss. In no event shall the Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Agent has been advised of the possibility of such loss or damages.
26.11
Lenders' indemnity to the Agent
26.11.1
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent and every Receiver and Delegate, within three Business Days of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by any of them (otherwise than by reason of the relevant Agent's, Receiver's or Delegate's gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 29.12 ( Disruption to payment systems etc. ) notwithstanding the Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent, Receiver or Delegate under, or exercising any authority conferred under, the Finance Documents (unless the relevant Agent, Receiver or Delegate has been reimbursed by a Security Party pursuant to a Finance Document).
26.11.2
Subject to Clause 26.11.3, the Borrowers shall immediately on demand reimburse any Lender for any payment that Lender makes to the Agent pursuant to Clause 26.11.1.
26.11.3
Clause 26.11.2 shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Agent to a Security Party.
26.12
Trust The Security Agent agrees and declares, and each of the other Finance Parties acknowledges, that, subject to the terms and conditions of this Clause 26.12, the Security Agent holds the Trust Property on trust for the Finance Parties absolutely. Each of the other Finance Parties agrees that the obligations, rights and benefits vested in the Security Agent shall be performed and exercised in accordance with this Clause 26.12. The Security Agent shall have the benefit of all of the provisions of this Agreement benefiting it in its capacity as security agent for the Finance Parties, and all the powers and discretions conferred on trustees by the Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:
26.12.1
the Security Agent and any Delegate may indemnify itself or himself out of the Trust Property against all liabilities, costs, fees, damages, charges, losses and expenses sustained or incurred by it or him in relation to the taking or holding of any of the Trust Property or in connection with the exercise or purported exercise of the rights, trusts, powers and discretions vested in the Security Agent or any Delegate by or pursuant to the Security Documents or in respect of anything else done or omitted to be done in any way relating to the Security Documents;
26.12.2
the other Finance Parties acknowledge that the Security Agent shall be under no obligation to insure any property nor to require any other person to insure any property and shall not be responsible for any loss which may be suffered by any person as a result of the lack or insufficiency of any insurance;
26.12.3
the Finance Parties agree that the perpetuity period applicable to the trusts declared by this Agreement shall be the period of 125 years from the date of this Agreement;
26.12.4
the Security Agent shall not be liable for any failure, omission, or defect in perfecting the security constituted or created by any Finance Document including, without limitation, any failure to register the same in accordance with the provisions of any of the documents of title of any Security Party to any of the assets thereby charged or effect or procure registration of or otherwise protect the security created by any Security Document under any registration laws in any jurisdiction and may accept without enquiry such title as any Security Party may have to any asset;
26.12.5
the Security Agent shall not be under any obligation to hold any title deed, Finance Document or any other documents in connection with the Finance Documents or any other documents in connection with the property charged by any Finance Document or any other such security in its own possession or to take any steps to protect or preserve the same, and may permit any Security Party to retain all such title deeds, Finance Documents and other documents in its possession; and
26.12.6
save as otherwise provided in the Finance Documents, all moneys which under the trusts therein contained are received by the Security Agent may be invested in the name of or under the control of the Security Agent in any investment for the time being authorised by English law for the investment by trustees of trust money or in any other investments which may be selected by the Security Agent, and the same may be placed on deposit in the name of or under the control of the Security Agent at such bank or institution (including the Security Agent) and upon such terms as the Security Agent may think fit.
The provisions of Part I of the Trustee Act 2000 shall not apply to the Security Agent or the Trust Property.
26.13
Resignation of the Agent
26.13.1
The Agent may resign and appoint one of its Affiliates acting through an office as successor by giving notice to the other Finance Parties and the Borrowers.
26.13.2
Alternatively the Agent may resign by giving 30 days' notice to the other Finance Parties and the Borrowers, in which case the Majority Lenders (after consultation with the Borrowers) may appoint a successor Agent.
26.13.3
If the Majority Lenders have not appointed a successor Agent in accordance with Clause 26.13.2 within 20 days after notice of resignation was given, the retiring Agent (after consultation with the Borrowers) may appoint a successor Agent.
26.13.4
If the Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Agent is entitled to appoint a successor Agent under Clause 26.13.3, the Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor Agent to become a party to this Agreement as Agent) agree with the proposed successor Agent amendments to this Clause 26 and any other term of this Agreement dealing with the rights or obligations of the Agent consistent with then current market practice for the appointment and protection of corporate trustees.
26.13.5
The retiring Agent shall, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. The Borrowers shall, within three Business Days of demand, reimburse the retiring Agent for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance.
26.13.6
The Agent's resignation notice shall only take effect upon the appointment of a successor and (in the case of the Security Agent) the transfer of all the Trust Property to that successor.
26.13.7
Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under Clause 26.13.5) but shall remain entitled to the benefit of Clause 14.3 ( Indemnity to the Agent ) and this Clause 26. Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
26.13.8
The Agent shall resign in accordance with Clause 26.13.2 (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to Clause 26.13.3) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either:
(a)
the Agent fails to respond to a request under Clause 12.7 ( FATCA information ) and a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
(b)
the information supplied by the Agent pursuant to Clause 12.7 ( FATCA information ) indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or
(c)
the Agent notifies the Borrowers and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
and (in each case) a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCA Exempt Party, and that Lender, by notice to the Agent, requires it to resign.
26.14
Replacement of the Agent
26.14.1
After consultation with the Borrowers, the Majority Lenders may, by giving 30 days' notice to the Agent (or, at any time the Agent is an Impaired Agent, by giving any shorter notice determined by the Majority lenders) replace the Agent by appointing a successor Agent.
26.14.2
The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its function as Agent under the Finance Documents.
26.14.3
The appointment of the successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Agent. As from this date, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under Clause 26.14.2 but shall remain entitled to the benefit of Clause 14.3 ( Indemnity to the Agent ) and this Clause 26.
26.14.4
Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
26.15
Confidentiality
26.15.1
In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
26.15.2
If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.
26.15.3
Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor an Arranger is obliged to disclose to any other person (i) any Confidential Information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any laws or a breach of a fiduciary duty.
26.16
Relationship with the Lenders
26.16.1
Subject to Clause 24.9 ( Pro rata interest settlement ), the Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Agent's principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:
(a)
entitled to or liable for any payment due under any Finance Document on that day; and
(b)
entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,
unless it has received not less than five Business Days' prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
26.16.2
Any Lender may by notice to the Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or dispatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 31.6 ( Electronic communication )) electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address, department and officer by that Lender for the purposes of Clause 31.2 ( Addresses ) and Clause 31.6.1(b) ( Electronic communication ) and the Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.
26.17
Credit appraisal by the Lenders Without affecting the responsibility of any Security Party for information supplied by it or on its behalf in connection with any Relevant Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Relevant Document including but not limited to:
26.17.1
the financial condition, status and nature of each Security Party;
26.17.2
the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document;
26.17.3
whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Relevant Document, the transactions contemplated by the Relevant Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of under or in connection with any Relevant Document; and
26.17.4
the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any Encumbrance created or expressed to be created or evidenced by the Security Documents or the existence of any Encumbrance affecting the Charged Property.
26.18
Deduction from amounts payable by the Agent If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
26.19
Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceased to be a Lender, the Agent shall (in consultation with the Borrower) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.
26.20
Role of Reference Banks
(a)
No Reference Bank is under any obligation to provide a quotation or any other information to the Agent but may do so at the Agent's request.
(b)
No Reference Bank will be liable for any action taken by it under or in connection with any Finance Document, or for any quotation provided to the Agent.
(c)
No Party (other than the relevant Reference Bank) may take any proceedings against any officer, employee or agent of any Reference Bank in respect of any claim it might have against that Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document, or to any quotation provided to the Agent, and any officer, employee or agent of each Reference Bank may rely on this Clause subject to Clause 1.7( Third party rights ) and the provision of the Third Parties Act.
26.21
Third party Reference Banks
Any Reference Bank which is not a Party may rely on Clause 26.21 ( Role of Reference Banks ) and Clause 9.4 ( Confidential Rates ) subject to Clause 1.7 ( third party rights ) and the provisions of the Third Parties Act.
27
Conduct of Business by the Finance Parties
No provision of this Agreement will:
27.1
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
27.2
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
27.3
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
28
Sharing among the Finance Parties
28.1
Payments to Finance Parties If a Finance Party (a " Recovering Finance Party ") receives or recovers any amount from a Security Party other than in accordance with Clause 29 ( Payment Mechanics ) (a " Recovered Amount ") and applies that amount to a payment due under the Finance Documents then:
28.1.1
the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent;
28.1.2
the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 29 ( Payment Mechanics ), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and
28.1.3
the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the " Sharing Payment ") equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 29.6 ( Partial payments ).
28.2
Redistribution of payments The Agent shall treat the Sharing Payment as if it had been paid by the relevant Security Party and distribute it between the Finance Parties (other than the Recovering Finance Party) (the " Sharing Finance Parties ") in accordance with Clause 29.6 ( Partial payments ) towards the obligations of that Security Party to the Sharing Finance Parties.
28.3
Recovering Finance Party's rights On a distribution by the Agent under Clause 28.2 ( Redistribution of payments ) of a payment received by a Recovering Finance Party from a Security Party, as between the relevant Security Party and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Security Party.
28.4
Reversal of redistribution If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
28.4.1
each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the " Redistributed Amount "); and
28.4.2
as between the relevant Security Party and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Security Party.
28.5
Exceptions
28.5.1
This Clause 28 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Security Party.
28.5.2
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:
(a)
it notified that other Finance Party of the legal or arbitration proceedings; and
(b)
that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.
Section 11
Administration
29
Payment Mechanics
29.1
Payments to the Agent On each date on which a Security Party or a Lender is required to make a payment under a Finance Document (other than a Master Agreement), that Security Party or that Lender shall make the same available to the Agent for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
Payment shall be made to such account in the principal financial centre of the country of that currency with such bank as the Agent specifies.
29.2
Distributions by the Agent Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 29.3 ( Distributions to a Security Party ) and Clause 29.4 ( Clawback and pre-funding ) be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days' notice with a bank specified by that Party in the principal financial centre of the country of that currency.
29.3
Distributions to a Security Party The Agent may (with the consent of a Security Party or in accordance with Clause 30 ( Set-Off )) apply any amount received by it for that Security Party in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Security Party under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
29.4
Clawback and pre-funding
29.4.1
Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
29.4.2
Unless Clause 29.4.3 applies, if the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.
29.4.3
If the Agent is willing to make available amounts for the account of a Borrower before receiving funds from the Lenders then if and to the extent that the Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to a Borrower:
(a)
the Borrower to whom that sum was made available shall on demand refund it to the Agent; and
(b)
the Lender by whom those funds should have been made available or, if that Lender fails to do so, the Borrower to whom that sum was made available, shall on demand pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.
29.5
Impaired Agent
29.5.1
If, at any time, the Agent becomes an Impaired Agent, a Security Party or a Lender which is required to make a payment under the Finance Documents to the Agent in accordance with Clause 29.1 ( Payments to the Agent ) may instead either:
(a)
pay that amount direct to the required recipient(s); or
(b)
if in its absolute discretion it considers that it is not reasonably practicable to pay that amount direct to the required recipient(s), pay that amount or the relevant part of that amount to an interest-bearing account held with an Acceptable Bank in relation to which no Insolvency Event has occurred and is continuing, in the name of the Security Party or the Lender making the payment (the " Paying Party ") and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance Documents (the " Recipient Party " or " Recipient Parties ").
In each case such payments must be made on the due date for payment under the Finance Documents.
29.5.2
All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the Recipient Party or the Recipient Parties pro rata to their respective entitlements.
29.5.3
A Party which has made a payment in accordance with this Clause 29.5 shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the trust account.
29.5.4
Promptly upon the appointment of a successor Agent in accordance with Clause 26.14 ( Replacement of the Agent ), each Paying Party shall (other than to the extent that that Party has given an instruction pursuant to Clause 29.5.5) give all requisite instructions to the bank with whom the trust account is held to transfer the amount (together with any accrued interest) to the successor Agent for distribution to the relevant Recipient Party or Recipient Parties in accordance with Clause 29.2 ( Distributions by the Agent ).
29.5.5
A Paying Party shall, promptly upon request by a Recipient Party and to the extent:
(a)
that it has not given an instruction pursuant to Clause 29.5.4; and
(b)
that it has been provided with the necessary information by that Recipient Party,
give all requisite instructions to the bank with whom the trust account is held to transfer the relevant amount (together with any accrued interest) to that Recipient Party.
29.6
Partial payments
29.6.1
If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by a Security Party under the Finance Documents, the Agent shall apply that payment towards the obligations of that Security Party under the Finance Documents in the following order:
(a)
first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent or the Security Agent under the Finance Documents;
(b)
secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement and any periodic payments then due under a Master Agreement;
(c)
thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement and any termination payment then due under a Master Agreement; and
(d)
fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents
29.6.2
The Agent shall, if so directed by the Majority Lenders, vary the order set out in Clauses 29.6.1(b) to 29.6.1(d).
29.6.3
Clauses 29.6.1 and 29.6.2 will override any appropriation made by a Security Party.
29.7
No set-off by Security Parties All payments to be made by a Security Party under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
29.8
Business Days Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
29.9
Currency of account
29.9.1  
Subject to Clauses 29.9.2 to 29.9.5, dollars is the currency of account and payment for any sum due from a Security Party under any Finance Document.
29.9.2
A repayment or payment of all or part of a Tranche or an Unpaid Sum shall be made in the currency in which that Tranche or Unpaid Sum is denominated on its due date.
29.9.3
Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.
29.9.4
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
29.9.5
Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.
29.10
Control account The Agent shall open and maintain on its books a control account in the names of the Borrowers showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrowers' obligations to repay the Loan and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 29.10 and those entries will, in the absence of manifest error, be conclusive and binding.
29.11
Change of currency
29.11.1
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:
(a)
any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Borrowers); and
(b)
any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).
29.11.2
If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Borrowers) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.
29.12
Disruption to payment systems etc. If either the Agent determines in its discretion that a Disruption Event has occurred or the Agent is notified by the Borrowers that a Disruption Event has occurred:
29.12.1
the Agent may, and shall if requested to do so by the Borrower, consult with the Borrowers with a view to agreeing with the Borrowers such changes to the operation or administration of the Loan as the Agent may deem necessary in the circumstances;
29.12.2
the Agent shall not be obliged to consult with the Borrowers in relation to any changes mentioned in Clause 29.12.1 if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to any such changes;
29.12.3
the Agent may consult with the Finance Parties in relation to any changes mentioned in Clause 29.12.1 but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;
29.12.4
any such changes agreed upon by the Agent and the Borrowers shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 35 ( Amendments and Waivers );
29.12.5
the Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation, for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 29.12; and
29.12.6
the Agent shall notify the Finance Parties of all changes agreed pursuant to Clause 29.12.4.
30
Set-Off
30.1
Set-off A Finance Party may set off any matured obligation due from a Borrower or any of them or the Guarantor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Borrower or the Guarantor (as the case may be), regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
30.2  
Master Agreement rights The rights conferred on the Swap Providers by this Clause 30 shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Swap Providers by any Master Agreement.
31
Notices
31.1
Communications in writing Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax, letter or electronic mail.
31.2
Addresses The address, fax number and electronic mail address (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:
31.2.1
in the case of each Borrower, that identified with its name below;
31.2.2
in the case of the Guarantor, that identified with its name below;
31.2.3
in the case of each Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party;
31.2.4
in the case of the Swap Providers, that identified with their names below;
31.2.5
in the case of an Arranger, that identified with its name below; and
31.2.6
in the case of the Agent or the Security Agent, that identified with its name below,
or any substitute address, fax number, or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days' notice.
31.3
Delivery Any communication or document made or delivered by one Party to another under or in connection with the Finance Documents will only be effective:
31.3.1
if by way of fax, when received in legible form;
31.3.2
if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address; or
31.3.3
if by way of electronic mail, then in accordance with Clause 31.6.2 and Clause 31.6.3,
and, if a particular department or officer is specified as part of its address details provided under Clause 31.2 ( Addresses ), if addressed to that department or officer.
Any communication or document to be made or delivered to the Agent or the Security Agent will be effective only when actually received by the Agent or the Security Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent's or the Security Agent's signature below (or any substitute department or officer as the Agent or the Security Agent shall specify for this purpose).
All notices from or to a Security Party (save in respect of any Master Agreement) shall be sent through the Agent.
Subject to Clause 5.1 ( Delivery of a Drawdown Request ), any communication or document which becomes effective, in accordance with this Clause 31.3, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
31.4
Notification of address and fax number Promptly upon changing its address, fax number or electronic mail address, the Agent shall notify the other Parties.
31.5
Communication when Agent is Impaired Agent If the Agent is an Impaired Agent the Parties may, instead of communicating with each other through the Agent, communicate with each other directly and (while the Agent is an Impaired Agent) all the provisions of the Finance Documents which require communications to be made or notices to be given to or by the Agent shall be varied so that communications may be made and notices given to or by the relevant Parties directly. This provision shall not operate after a replacement Agent has been appointed.
31.6
Electronic communication
31.6.1
Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:
(a)
notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(b)
notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice.
31.6.2
Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Agent or the Security Agent only if it is addressed in such a manner as the Agent or the Security Agent shall specify for this purpose.
31.6.3
Any electronic communication which becomes effective, in accordance with Clause 31.6.2, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.
31.7
English language Any notice given under or in connection with any Finance Document must be in English. All other documents provided under or in connection with any Finance Document must be:
31.7.1
in English; or
31.7.2
if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
32
Calculations and Certificates
32.1
Accounts In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Agent pursuant to Clause 29.10 ( Control account ) are prima facie evidence of the matters to which they relate.
32.2
Certificates and determinations Any certification or determination by the Agent of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
32.3
Day count convention Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
33
Partial Invalidity
If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

LONLIVE\26142366.7    Page 38


34
Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of any Finance Party or Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.
35
Amendments and Waivers
35.1
Required consents
35.1.1
Subject to Clause 35.2 ( Exceptions ) any term of the Finance Documents (other than a Master Agreement) may be amended or waived only with the consent of the Majority Lenders and the Borrowers and any such amendment or waiver will be binding on all Parties.
35.1.2
The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 35.
35.1.3
Without prejudice to the generality of Clauses 26.7.3, 26.7.4 and 26.7.5 ( Rights and discretions of the Agent ), the Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.
35.2
Exceptions
35.2.1
An amendment, waiver or (in the case of a Security Document) a consent of, or in relation to, any term of any Finance Document that has the effect of changing or which relates to:
(a)
the definition of " Majority Lenders " in Clause 1.1 ( Definitions );
(b)
an extension to the date of payment of any amount under the Finance Documents;
(c)
a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;
(d)
a change in currency of payment of any amount under the Finance Documents;
(e)
an increase in any Commitment, an extension of the Availability Period or any requirement that a cancellation of Commitments reduces the Commitments of the Lenders rateably;
(f)
any provision which expressly requires the consent of all the Lenders;
(g)
Clause 2.2 ( Finance Parties' rights and obligations ), Clause 24 ( Changes to the Lenders ), this Clause 35, Clause 40 ( Governing Law ) or Clause 41.1 ( Jurisdiction of English courts );
(h)
(other than as expressly permitted by the provisions of any Finance Document) the nature or scope of:
(i)
any Guarantee;
(ii)
the Charged Property; or
(iii)
the manner in which the proceeds of enforcement of the Security Documents are distributed; or
(i)
the release of the Guarantee or of any Encumbrance created or expressed to be created or evidenced by the Security Documents unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of any Encumbrance created or expressed to be created or evidenced by the Security Documents where such sale or disposal is expressly permitted under this Agreement or any other Finance Document;
shall not be made, or given, without the prior consent of all the Lenders.
35.2.2
An amendment or waiver which relates to the rights or obligations of the Agent, the Security Agent or the Arranger (each in their capacity as such) may not be effected without the consent of the Agent, the Security Agent or, as the case may be, the Arranger.
35.3
Replacement of Lender
35.3.1
If:
(a)
any Lender becomes a Non-Consenting Lender (as defined in Clause 35.3.4); or
(b)
a Borrower or any other Security Party becomes obliged to repay any amount in accordance with Clause 7.1 ( Illegality ) or to pay additional amounts pursuant to Clause 12.2 ( Tax gross-up ), Clause 12.3 ( Tax Indemnity ) or Clause 13.1 ( Increased costs ) to any Lender,
then the Borrowers may, on ten Business Days' prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to Clause 24 ( Changes to the Lenders ) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a " Replacement Lender ") selected by the Borrower, which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 24 ( Changes to the Lenders ) for a purchase price in cash payable at the time of transfer in an amount equal to the outstanding principal amount of such Lender's participation in the outstanding Loan and all accrued interest (to the extent that the Agent has not given a notification under Clause 24.9 ( Pro rata interest settlement ), Break Costs and other amounts payable in relation thereto under the Finance Documents.
35.3.2
The replacement of a Lender pursuant to this Clause 35.3 shall be subject to the following conditions:
(a)
the Borrowers shall have no right to replace the Agent or Security Agent;
(b)
neither the Agent nor the Lender shall have any obligation to the Borrowers to find a Replacement Lender;
(c)
in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 15 Business Days after the date on which that Lender is deemed a Non-Consenting Lender;
(d)
in no event shall the Lender replaced under this Clause 35.3 be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents; and
(e)
the Lender shall only be obliged to transfer its rights and obligations pursuant to Clause 35.3.1 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.
35.3.3
A Lender shall perform the checks described in Clause 35.3.2(e) as soon as reasonably practicable following delivery of a notice referred to in Clause 35.3.1 and shall notify the Agent and the Borrowers when it is satisfied that it has complied with those checks.
35.3.4
In the event that:
(a)
the Borrowers or the Agent (at the request of the Borrowers) have requested the Lenders to give a consent in relation to, or to agree to a waiver or amendment of, any provisions of the Finance Documents;
(b)
the consent, waiver or amendment in question requires the approval of all the Lenders; and
(c)
Lenders whose Commitments aggregate more than 66 2 / 3 % of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2 / 3 % of the Total Commitments prior to that reduction) have consented or agreed to such waiver or amendment,
then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a " Non-Consenting Lender ".
36
Confidentiality
36.1
Confidential Information Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 36.2 ( Disclosure of Confidential Information ) and Clause 36.3 ( Disclosure to numbering service providers ), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
36.2
Disclosure of Confidential Information Any Finance Party may disclose:
36.2.1
to any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this Clause 36.2.1 is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
36.2.2
to any person:
(a)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Agent or Security Agent and, in each case, to any of that person's Affiliates, Representatives and professional advisers;
(b)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Security Parties and to any of that person's Affiliates, Representatives and professional advisers;
(c)
appointed by any Finance Party or by a person to whom Clause 36.2.2(a) or 36.2.2(b) applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under Clause 26.16.2 ( Relationship with the Lenders ));
(d)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in Clause 36.2.2(a) or 36.2.2(b);
(e)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
(f)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;
(g)
to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 24.8 ( Security over Lenders' rights );
(h)
who is either an insurance company, a reinsurance company, an insurance broker or a reinsurance broker that in either case is providing or may potentially provide insurance cover either (i) in respect of the assets that are the subject of the Finance Document or (ii) pursuant to and in accordance with the terms of the Finance Documents;
(i)
who is a Party; or
(j)
with the consent of the Borrowers;
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
(i)
in relation to Clauses 36.2.2(a), 36.2.2(b) and 36.2.2(c), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(ii)
in relation to Clause 36.2.2(d), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(iii)
in relation to Clauses 36.2.2(e), 36.2.2(f) and 36.2.2(g), the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances;
36.2.3
to any person appointed by that Finance Party or by a person to whom Clause 36.2.2(a) or 36.2.2(b) applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this Clause 36.2.3 if the service provider to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking; and
36.2.4
to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Security Parties if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.
36.3
Disclosure to numbering service providers
36.3.1
Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Loan and/or one or more Security Parties the following information:
(a)
names of Security Parties;
(b)
country of domicile of Security Parties;
(c)
place of incorporation of Security Parties;
(d)
date of this Agreement;
(e)
Clause 40 ( Governing Law );
(f)
the names of the Agent and the Arranger;
(g)
date of each amendment and restatement of this Agreement;
(h)
amount of Total Commitments;
(i)
currencies of the Loan;
(j)
type of Loan;
(k)
ranking of the Loan;
(l)
Termination Date;
(m)
changes to any of the information previously supplied pursuant to (a) to (l); and
(n)
such other information agreed between such Finance Party and that Security Party,
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
36.3.2
The Parties acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or one or more Security Parties by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.
36.3.3
Each Borrower represents that none of the information set out in Clauses 36.3.1(a) to 36.3.1(n) is, nor will at any time be, unpublished price-sensitive information.
36.3.4
The Agent shall notify the Borrowers and the other Finance Parties of:
(a)
the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Loan and/or one or more Security Parties; and
(b)
the number or, as the case may be, numbers assigned to this Agreement, the Loan and/or one or more Security Parties by such numbering service provider.
36.4
Entire agreement This Clause 36 constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
36.5
Inside information Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
36.6
Notification of disclosure Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrower:
36.6.1
of the circumstances of any disclosure of Confidential Information made pursuant to Clause 36.2.2(e) ( Disclosure of Confidential Information ) except where such disclosure is made to any of the persons referred to in that Clause during the ordinary course of its supervisory or regulatory function; and
36.6.2
upon becoming aware that Confidential Information has been disclosed in breach of this Clause 36.
36.7
Continuing obligations The obligations in this Clause 36 are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:
36.7.1
the date on which all amounts payable by the Security Parties under or in connection with the Finance Documents have been paid in full and the Loan has been cancelled or otherwise ceases to be available; and
36.7.2
the date on which such Finance Party otherwise ceases to be a Finance Party.
37
Disclosure of Lender Details by Agent
37.1
Supply of Lender details to Borrowers The Agent shall provide to the Borrowers within ten Business Days of a request by the Borrowers (but no more frequently than once per calendar month) a list (which may be in electronic form) setting out the names of the Lenders as at the date of that request, their respective Commitments, the address and fax number (and the department or officer, if any, for whose attention any communication is to be made) of each Lender for any communication to be made or document to be delivered under or in connection with the Finance Documents, the electronic mail address and/or any other information required to enable the sending and receipt of information by electronic mail or other electronic means to and by each Lender to whom any communication under or in connection with the Finance Documents may be made by that means and the account details of each Lender for any payment to be distributed by the Agent to that Lender under the Finance Documents.
37.2
Supply of Lender details at Borrowers' direction
37.2.1
The Agent shall, at the request of the Borrowers, disclose the identity of the Lenders and the details of the Lenders' Commitments to any:
(a)
other Party or any other person if that disclosure is made to facilitate, in each case, a refinancing of the Financial Indebtedness arising under the Finance Documents or a material waiver or amendment of any term of any Finance Document; and
(b)
Security Party.
37.2.2
Subject to Clause 37.2.3, the Borrowers shall procure that the recipient of information disclosed pursuant to Clause 37.2.1 shall keep such information confidential and shall not disclose it to anyone and shall ensure that all such information is protected with security measures and a degree of care that would apply to the recipient's own confidential information.
37.2.3
The recipient may disclose such information to any of its officers, directors, employees, professional advisers, auditors and partners as it shall consider appropriate if any such person is informed in writing of its confidential nature, except that there shall be no such requirement to so inform if that person is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by duties of confidentiality in relation to the information.
37.3
Supply of Lender details to other Lenders
37.3.1
If a Lender (a " Disclosing Lender ") indicates to the Agent that the Agent may do so, the Agent shall disclose that Lender's name and Commitment to any other Lender that is, or becomes, a Disclosing Lender.
37.3.2
The Agent shall, if so directed by the Requisite Lenders, request each Lender to indicate to it whether it is a Disclosing Lender.
37.4
Lender enquiry If any Lender believes that any entity is, or may be, a Lender and:
37.4.1
that entity ceases to have an Investment Grade Rating; or
37.4.2
an Insolvency Event occurs in relation to that entity,
the Agent shall, at the request of that Lender, indicate to that Lender the extent to which that entity has a Commitment.
37.5
Lender details definitions In this Clause 37:
" Investment Grade Rating " means, in relation to an entity, a rating for its long-term unsecured and non-credit-enhanced debt obligations of BBB- or higher by Standard & Poor's Rating Services or Fitch Ratings Ltd or Baa3 or higher by Moody's Investors Service Limited or a comparable rating from an internationally recognised credit rating agency.
" Requisite Lenders " means a Lender or Lenders whose Commitments aggregate 15 per cent (or more) of the Total Commitments (or if the Total Commitments have been reduced to zero, aggregated 15 per cent (or more) of the Total Commitments immediately prior to that reduction).
38
Counterparts
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.
39
Joint and Several Liability
39.1
Nature of liability The representations, warranties, covenants, obligations and undertakings of the Borrowers contained in this Agreement shall be joint and several so that each Borrower shall be jointly and severally liable with all the Borrowers for all of the same and such liability shall not in any way be discharged, impaired or otherwise affected by:
39.1.1
any forbearance (whether as to payment or otherwise) or any time or other indulgence granted to any other Borrower or any other Security Party under or in connection with any Finance Document;
39.1.2
any amendment, variation, novation or replacement of any other Finance Document;
39.1.3
any failure of any Finance Document to be legal valid binding and enforceable in relation to any other Borrower or any other Security Party for any reason;
39.1.4
the winding-up or dissolution of any other Borrower or any other Security Party;
39.1.5
the release (whether in whole or in part) of, or the entering into of any compromise or composition with, any other Borrower or any other Security Party; or
39.1.6
any other act, omission, thing or circumstance which would or might, but for this provision, operate to discharge, impair or otherwise affect such liability.
39.2
No rights as surety Until the Indebtedness has been unconditionally and irrevocably paid and discharged in full, each Borrower agrees that it shall not, by virtue of any payment made under this Agreement on account of the Indebtedness or by virtue of any enforcement by a Finance Party of its rights under this Agreement or by virtue of any relationship between, or transaction involving, the relevant Borrower and any other Borrower or any other Security Party:
39.2.1
    exercise any rights of subrogation in relation to any rights, security or moneys held or received or receivable by a Finance Party or any other person; or
39.2.2
    exercise any right of contribution from any other Borrower or any other Security Party under any Finance Document; or
39.2.3
    exercise any right of set-off or counterclaim against any other Borrower or any other Security Party; or
39.2.4
    receive, claim or have the benefit of any payment, distribution, security or indemnity from any other Borrower or any other Security Party; or
39.2.5
    unless so directed by the Agent (when the relevant Borrower will prove in accordance with such directions), claim as a creditor of any other Borrower or any other Security Party in competition with any Finance Party
and each Borrower shall hold in trust for the Finance Parties and forthwith pay or transfer (as appropriate) to the Agent any such payment (including an amount equal to any such set-off), distribution or benefit of such security, indemnity or claim in fact received by it.

Section 12
Governing Law and Enforcement
40
Governing Law
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
41
Enforcement
41.1
Jurisdiction of English courts The courts of England have exclusive jurisdiction to settle 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) (a " Dispute "). Each Party agrees 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 41.1 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, any Finance Party may take concurrent proceedings in any number of jurisdictions.
41.2
Waiver of Jury Trial EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MIGHT HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE FINANCE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS BY, AMONGST OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS CLAUSE 41.
41.3
Service of process
41.3.1
Without prejudice to any other mode of service allowed under any relevant law, each Borrower and the Guarantor:
(a)
irrevocably appoints Scorpio UK Limited at its business address currently at 10 Lower Grosvenor Place, London SW1W 0EN, England (Attention: General Counsel) to act as its agent to receive and accept on its behalf service of process in relation to any proceedings before the English courts which are connected with any Finance Document provided that any communication is expressly marked on outside as “[name of the file] File – For the immediate attention of the General Counsel”; and
(b)
agrees that failure by a process agent to notify that Borrower or the Guarantor (as the case may be) of the process will not invalidate the proceedings concerned.
41.3.2
If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process or terminates its appointment as agent for service of process, the relevant Borrower or the Guarantor (as the case may be) must immediately (and in any event within five days of such event taking place) appoint another agent on terms acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose.
42
Patriot Act Notice
Each of the Finance Parties hereby notifies the Borrowers and the Guarantor that pursuant to the requirements of the Patriot Act and the policies and practices of the Finance Parties, the Finance Parties are required to obtain, verify and record certain information and documentation that identifies each Security Party, which information includes the name and address of each Security Party  and such other information that will allow the Finance Parties to identify each Security Party  in accordance with the Patriot Act.
This Agreement has been entered into on the date stated at the beginning of this Agreement.
Schedule 4     
The Original Lenders

Name of Original Lender
Commitment
BNP Paribas
$59,800,000

Schedule 5     
Part I
Conditions Precedent
1
Security Parties
(a)
Constitutional documents Copies of the constitutional documents of each Borrower and the Guarantor together with such other evidence that each Borrower and the Guarantor are each duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.
(b)
Certificates of good standing A certificate of good standing in respect of each Borrower and the Guarantor (if such a certificate can be obtained).
(c)
Board resolutions A copy of a resolution of the board of directors of the each Borrower and the Guarantor:
(i)
approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute those Relevant Documents; and
(ii)
authorising a specified person or persons to execute those Finance Documents (and all documents and notices to be signed and/or dispatched under those documents) on its behalf.
(d)
Specimen signatures A specimen of the signature of each person authorised by the resolutions referred to in (c).
(e)
Officer's certificates An original certificate of a duly authorised officer of each Borrower and the Guarantor:
(i)
certifying that each copy document relating to it specified in this Part I of Schedule 2 is correct, complete and in full force and effect;
(ii)
setting out the names of the directors, officers and shareholders of each Borrower and the Guarantor (as the case may be) and the proportion of shares held by each shareholder; and
(iii)
confirming that borrowing or guaranteeing or securing, as appropriate, the Loan would not cause any borrowing, guarantee, security or similar limit binding on that Security Party to be exceeded.
(f)
Powers of attorney The original notarially attested, and if required by the Agent acting on appropriate legal advice legalised, power of attorney of each of the Borrowers and the Guarantor under which the Relevant Documents to which it is or is to become a party are to be executed or transactions undertaken by each Borrower and the Guarantor.
2
Security and related documents
(a)
Vessel documents Photocopies, certified as true, accurate and complete by a director, the secretary or the legal advisers of the Borrower, of:
(i)
any Charter;
(ii)
the Management Agreement together with a confirmation from the parties thereto that the Vessel has been delivered into the Management Agreement;
(iii)
the Vessel's current Safety Construction, Safety Equipment, Safety Radio and Load Line Certificates;
(iv)
evidence of the Vessel's current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;
(v)
the Vessel's current SMC;
(vi)
the ISM Company's current DOC;
(vii)
the Vessel's current ISSC;
(viii)
the Vessel's current IAPPC;
(ix)
the Vessel's current Tonnage Certificate;
in each case together with all addenda, amendments or supplements.
(b)
Evidence of Borrower's title In relation to the Vessel, a certificate of ownership of encumbrance (or equivalent) issued by the Registrar of an Approved Flag confirming that (i) the Vessel is owned by the relevant Borrower under the laws and flag of an Approved Flag and free of registered Encumbrances and (ii) the Mortgage will be capable of being registered against the Vessel with first priority.
(c)
Evidence of insurance and insurance report Evidence that the Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Agent) the written approval of the Insurances by way of a written report from an insurance adviser appointed by the Agent, but at the expense of the Borrower.
(d)
Confirmation of class An interim Class Certificate for hull and machinery confirming that the Vessel is classed with the highest class applicable to vessels of her type with an Approved Classification Society.
(e)
Valuation Two valuations dated not more than 30 days prior to the Drawdown Date evidencing the FMV of the Vessel, certifying that the amount of the Tranche requested to be advanced pursuant to the Drawdown Request is no greater than the lesser of the relevant Maximum Tranche Amount and 48% of the FMV of the Vessel, such valuations to be obtained by the Agent at the expense of the Borrower.
(f)
Security Documents The Security Documents (except the Account Security Deed), together with all other documents required by any of them, including, without limitation, (i) all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients and (ii) all share certificates, certified copy share registers or registers of members, transfer forms, proxy forms, letters of resignation and letters of undertaking.
(g)
No disputes The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.
(h)
Managers' Undertakings The Managers' Undertakings.
3
Legal opinions
The following legal opinions, each addressed to the Agent, the Security Agent, the Swap Providers and the Lenders and capable of being relied upon by any persons who become Lenders pursuant to the primary syndication of the Loan or confirmation satisfactory to the Agent that such opinions will be given:
(a)
a legal opinion of Stephenson Harwood LLP, legal advisers to the Agent as to English law substantially in the form distributed to the Lenders prior to signing this Agreement;
(b)
a legal opinion of Watson Farley & Williams LLP (New York) as to Marshall Islands law;
(c)
a legal opinion of Schellenberg Wittmer as to Swiss Law.
4
Other documents and evidence
(a)
Drawdown Request A duly completed Drawdown Request.
(b)
Process agent Evidence that any process agent referred to in Clause 41.3 ( Service of process ) and any process agent appointed under any other Finance Document has accepted its appointment.
(c)
Other Authorisations A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by any Relevant Document or for the validity and enforceability of any Relevant Document.
(d)
Financial statements A copy of the Original Financial Statements of the Guarantor.
(e)
Fees The Fee Letter and evidence that the fees, costs and expenses then due from the Borrower under Clause 11 ( Fees ) and Clause 16 ( Costs and Expenses ) have been paid or will be paid by the relevant Drawdown Date.
(a)
"Know your customer" documents Such documentation and other evidence needed in order for the Lenders to comply with all necessary "know your customer" or similar identification procedures in relation to the transactions contemplated in the Finance Documents.
Part II
Conditions Subsequent
1
Evidence of Borrower's title Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of an Approved Flag confirming that (a) the Vessel is permanently registered under that flag in the ownership of the Borrower, (b) the Mortgage has been registered with first priority against the Vessel and (c) there are no further Encumbrances registered against the Vessel.
2
Letters of undertaking Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Finance Parties.
3
Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Agent pursuant to Part I of this Schedule 2 .
4
Legal opinions Such of the legal opinions specified in Part I of this Schedule 2 as have not already been provided to the Agent.
5
Master's receipt The master's receipt for the Mortgage.
6
Fees Evidence that the upfront fee due from the Borrower pursuant to the Fee Letter has been paid or will be paid by the date specified in the Fee Letter.
7
Account Security Deed The Account Security Deed, together with all other documents required by it, including, without limitation, all notices of charge and evidence that those notices will be duly acknowledged by the recipients.
8
Mandates Such duly signed forms of mandate, and/or other evidence of the opening of the Accounts, as the Security Agent may require.
9
Account Holder's confirmation The written confirmation of the Account Holder that the Accounts have been opened with the Account Holder and to its actual knowledge are free from Encumbrances other than as created by or pursuant to the Security Documents and rights of set off in favour of the Account Holder as account holder.

Schedule 6     
Drawdown Request
From:
STI Memphis Shipping Company Limited
STI Battery Shipping Company Limited
STI Sapphire Shipping Company Limited
STI Emerald Shipping Company Limited

To:
BNP Paribas
Dated:
Dear Sirs
From:
STI Memphis Shipping Company Limited, STI Battery Shipping Company Limited, STI Sapphire Shipping Company Limited and STI Emerald Shipping Company Limited $59,800,000 Loan Agreement dated 2 February 2016 as amended and restated on [ ] 2016 (the "Loan Agreement")

1
We refer to the Agreement. This is the Drawdown Request. Terms defined in the Agreement have the same meaning in this Drawdown Request unless given a different meaning in this Drawdown Request.
2
We wish to borrow Tranche [C/D] in respect of the Vessel specified below on the following terms:
Tranche
[C/D]
Proposed Drawdown Date:
[        ] (or, if that is not a Business Day, the next Business Day)
Amount:    [        ]
Interest Period:    from Drawdown Date to 15 June 2017
Vessel    [        ]
3
We confirm that each condition specified in Clause 4.2 ( Further conditions precedent ) is satisfied on the date of this Drawdown Request.
4
The proceeds of the Tranche should be paid as follows:
[ ]
5
This Drawdown Request is irrevocable.
Yours faithfully
…………………………………
authorised signatory for
STI Memphis Shipping Company Limited

…………………………………
authorised signatory for
STI Battery Shipping Company Limited

LONLIVE\26142366.7    Page 39




…………………………………
authorised signatory for
STI Sapphire Shipping Company Limited


…………………………………
authorised signatory for
STI Emerald Shipping Company Limited

 

LONLIVE\26142366.7    Page 40



Schedule 7     

Form of Transfer Certificate
To:    [        ] as Agent and [ ] as Security Agent
From:
[ The Existing Lender ] (the " Existing Lender ") and [ The New Lender ] (the " New Lender ")
Dated:
STI Memphis Shipping Company Limited, STI Battery Shipping Company Limited, STI Sapphire Shipping Company Limited and STI Emerald Shipping Company Limited $59,800,000 Loan Agreement dated 2 February 2016, as amended and restated on [     ] 2016 (the "Loan Agreement")

1
We refer to the Loan Agreement. This agreement (the " Agreement ") shall take effect as a Transfer Certificate for the purposes of the Loan Agreement. Terms defined in the Loan Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
2
We refer to Clause 24.5 ( Procedure for transfer ) of the Loan Agreement:
(a)
The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation and in accordance with Clause 24.5 ( Procedure for transfer ) all of the Existing Lender's rights and obligations under the Loan Agreement and the other Finance Documents which relate to that portion of the Existing Lender's Commitment(s) and participations in the Loan under the Loan Agreement as specified in the Schedule.
(b)
The proposed Transfer Date is [            ].
(c)
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 31.2 ( Addresses ) are set out in the Schedule.
3
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in Clause 24.4.1(c) ( Limitation of responsibility of Existing Lenders ).
4
This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
5
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
6
This Agreement has been entered into on the date stated at the beginning of this Agreement.
Note:
The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender's interest in any Encumbrance created or expressed to be created or evidenced by the Security Documents in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

LONLIVE\26142366.7    Page 41



The Schedule
Commitment/rights and obligations to be transferred
[ insert relevant details ]
[ Facility Office address, fax number and attention details for notices and account details for payments, ]
[Existing Lender]    [New Lender]
By:    By:
This Agreement is accepted as a Transfer Certificate for the purposes of the Loan Agreement by the Agent and the Transfer Date is confirmed as [            ].
[Agent]
By:

[Security Agent]
By:        

LONLIVE\26142366.7    Page 42



Schedule 8     
Form of Assignment Agreement
To:
[ ] as Agent, [ ] as Security Agent and [ ] as Borrower, for and on behalf of each Security Party
From:
[the Existing Lender ] (the " Existing Lender ") and [the New Lender ] (the " New Lender ")
Dated:
STI Memphis Shipping Company Limited, STI Battery Shipping Company Limited, STI Sapphire Shipping Company Limited and STI Emerald Shipping Company Limited $59,800,000 Loan Agreement dated 2 February 2016, as amended and restated on [      ] 2016 (the "Loan Agreement")

1
We refer to the Loan Agreement. This is an Assignment Agreement. This agreement (the " Agreement ") shall take effect as an Assignment Agreement for the purpose of the Loan Agreement. Terms defined in the Loan Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
2
We refer to Clause 24.6 ( Procedure for assignment ) of the Loan Agreement:
(a)
The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Loan Agreement, the other Finance Documents and in respect of any Encumbrance created or expressed to be created or evidenced by the Security Documents which correspond to that portion of the Existing Lender's Commitment(s) and participations in the Loan under the Loan Agreement as specified in the Schedule.
(b)
The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender's Commitment(s) and participations in the Loan under the Loan Agreement specified in the Schedule.
(c)
The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b).
3
The proposed Transfer Date is [ ].
4
On the Transfer Date the New Lender becomes Party to the relevant Finance Documents as a Lender.
5
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 31.2 ( Addresses ) are set out in the Schedule.
6
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in Clause 24.4.3 ( Limitation of responsibility of Existing Lenders ).
7
This Agreement acts as notice to the Agent (on behalf of each Finance Party) and, upon delivery in accordance with Clause 24.7 ( Copy of Transfer Certificate or Assignment Agreement to Borrowers ), to the Borrowers (on behalf of each Security Party) of the assignment referred to in this Agreement.
8
This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
9
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
10
This Agreement has been entered into on the date stated at the beginning of this Agreement.

LONLIVE\26142366.7    Page 43


Note:
The execution of this Assignment Agreement may not transfer a proportionate share of the Existing Lender's interest in any Encumbrance created or expressed to be created or evidenced by the Security Documents in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

LONLIVE\26142366.7    Page 44



The Schedule
Commitment/rights and obligations to be transferred by assignment and release
[ insert relevant details ]
[ Facility office address, fax number and attention details for notices and account details for payments ]
[Existing Lender]    [New Lender]
By:    By:
This Agreement is accepted as an Assignment Agreement for the purposes of the Loan Agreement by the Agent and the Transfer Date is confirmed as [                    ].
Signature of this Agreement by the Agent constitutes confirmation by the Agent of receipt of notice of the assignment referred to in this Agreement, which notice the Agent receives on behalf of each Finance Party.
[Agent]
By:

[Security Agent]
By:                    
Schedule 9     
Form of Compliance Certificate
To:    [ Agent ]
From:    Scorpio Tankers Inc.
Dated:
Dear Sirs
STI Memphis Shipping Company Limited, STI Battery Shipping Company Limited, STI Sapphire Shipping Company Limited and STI Emerald Shipping Company Limited $59,800,000 Loan Agreement dated 2 February 2016, as amended and restated on [    ] 2016 (the "Loan Agreement")

We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
1
We confirm that we maintain:
(a)
Cash of $[  ];
(b)
Cash Equivalents of $[  ];
(c)
Minimum Liquidity of $[  ], of which [  ]% consists of Cash;
(d)
Consolidated Tangible Net Worth of $[  ];
(e)
a ratio of Net Debt to Consolidated Total Capitalisation of [  ]:1.0; and
(f)
a ratio of Consolidated EBITDA to Consolidated Net Interest Expense of [  ]:1.0.
2
[We confirm that no Default is continuing.] *  

Signed:
………………………………………………
 
 
Chief Financial Officer
 
 
of
 
 
Scorpio Tankers Inc.
 


LONLIVE\26142366.7    Page 45



Signatures
The Borrowers
STI Memphis Shipping Company Limited
 
 
 
By:
 
 
 
Address:
 
c/o Scorpio Tankers Inc.
 
9, Boulevard Charles III
 
 
 
MC 98000 Monaco
 
Fax: +377 97 77 8346
 
Department Officer: General Counsel)
 
 
 
 
 
STI Battery Shipping Company Limited
 
 
 
By:
 
 
 
Address:
 
c/o Scorpio Tankers Inc.
 
9, Boulevard Charles III
 
 
 
MC 98000 Monaco
 
Fax: +377 97 77 8346
 
Department Officer: General Counsel)
 
 
 
 
 
STI Sapphire Shipping Company Limited
 
 
 
By:
 
 
 
Address:
 
c/o Scorpio Tankers Inc.
 
9, Boulevard Charles III
 
 
 
MC 98000 Monaco
 
Fax: +377 97 77 8346
 
Department Officer: General Counsel)
 
 
 
 
 
 
 
 
 

LONLIVE\26142366.7    Page 46


STI Emerald Shipping Company Limited
 
 
 
By:
 
 
 
Address:
 
c/o Scorpio Tankers Inc.
 
9, Boulevard Charles III
 
 
 
MC 98000 Monaco
 
Fax: +377 97 77 8346
 
Department Officer: General Counsel)
 
 
 
 
 
The Guarantor
 
Scorpio Tankers Inc.
 
 
 
By:
 
 
 
Address:
 
c/o Scorpio Tankers Inc.
 
9, Boulevard Charles III
 
 
 
MC 98000 Monaco
 
Fax: +377 97 77 8346
 
Department Officer: General Counsel
 
 
 
 
 
The Arranger
 
BNP Paribas
 
 
 
By:
 
 
 
Address:
 
16, rue de Hanovre
 
75002 Paris
 
France
 
Fax: +33 (0) 1 42 98 48 17    
 
E-mail: mouna.felfel@bnpparibas.com
 
Copy to: dl.pariscibcbetgmoshipping@
 
bnpparibas.com    
 
Attention: Middle Office Shipping &
 
Offshore - Transportation Group
 
 
 
 
 
 
 
 
 

LONLIVE\26142366.7    Page 47


 
 
The Agent
 
BNP Paribas
 
 
 
By:
 
 
 
Address:
 
16, rue de Hanovre
 
75002 Paris
 
France
 
Fax: +33 (0) 1 42 98 48 17    
 
E-mail: mouna.felfel@bnpparibas.com
 
Copy to: dl.pariscibcbetgmoshipping@
 
bnpparibas.com    
 
Attention: Middle Office Shipping &
 
Offshore - Transportation Group
 
 
 
 
 
The Security Agent
 
BNP Paribas
 
 
 
By:
 
 
 
Address:
 
16, rue de Hanovre
 
75002 Paris
 
France
 
Fax: +33 (0) 1 42 98 48 17    
 
E-mail: mouna.felfel@bnpparibas.com
 
Copy to: dl.pariscibcbetgmoshipping@
 
bnpparibas.com    
 
Attention: Middle Office Shipping &
 
Offshore - Transportation Group
 
 
 
 
 
The Original Lenders
 
BNP Paribas
 
 
 
By:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

LONLIVE\26142366.7    Page 48


 
 
The Swap Providers
 
BNP Paribas
 
 
 
By:
 
 
 
Address: 787 Seventh Avenue
 
10019 New York
 
New York
 
United States of America
 
Fax: + 1 (212) 841-3561
 
Attention: CIB Legal– ISDA Documentation
 
Team
 
 
 
With a copy to:
 
 
 
BNP Paribas
 
Address: 3, rue Taibout
 
75009 Paris
 
France    
 
Fax: +(33) (0) 1 55 77 75 11
 
Attention: CIB Legal– ISDA Documentation
 
Team    
 
 
 


LONLIVE\26142366.7    Page 49


In witness of which the parties to this Amendment and Restatement Deed have executed this Amendment and Restatement Deed as a deed the day and year first before written.

LONLIVE\26142366.7    Page 9


The Existing Borrowers
 
STI Memphis Shipping Company Limited
 
acting by Micha Withoft, Attorney-in-Fact
/s/ Micha Withoft
the duly authorised
 
in the presence of:
 
 
 
Witness signature:… /s/ Andrew Cottrell
 
Name: Andrew Cottrell, Legal Intern
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 9800 Monaco
 
 
STI Battery Shipping Company Limited
 
acting by Micha Withoft, Attorney-in-Fact
/s/ Micha Withoft
the duly authorised
 
in the presence of:
 
 
 
Witness signature:… /s/ Andrew Cottrell
 
Name: Andrew Cottrell, Legal Intern
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 9800 Monaco
 
 
The New Borrowers
 
 
 
STI Sapphire Shipping Company Limited
 
acting by Luca Forgione, Director
 
in the presence of:
/s/ Luca Forgione
 
 
Witness signature:… /s/ Andrew Cottrell
 
Name: Andrew Cottrell, Legal Intern
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 9800 Monaco
 
 
STI Emerald Shipping Company Limited
 
acting by Luca Forgione, Director
 
in the presence of:
/s/ Luca Forgione
 
 
Witness signature:… /s/ Andrew Cottrell
 
Name: Andrew Cottrell, Legal Intern
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 9800 Monaco
 
 
 
 




LONLIVE\26142366.7    Page 10


The Guarantor
 
Scorpio Tankers Inc.
 
acting by Luca Forgione, Director
/s/ Luca Forgione
its duly authorised
 
in the presence of:
 
 
 
Witness signature:… /s/ Andrew Cottrell
 
Name: Andrew Cottrell, Legal Intern
 
Address: “Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco
 
 
The Original Lenders
 
BNP Paribas
 
acting by
 
the duly authorised
/s/ Meimunah Peeroo
in the presence of:
Name: Meimunah Peeroo
 
Title: Attorney-In-Fact
Witness signature:…… /s/ Christina Sarrou ……
 
Name: Christina Sarrou
 
Address: Stephenson Harwood LLP
 
            1 Finsbury Circus
 
            London
 
            EC2M 7SH
 
 
 
The Agent
 
BNP Paribas
 
acting by
 
the duly authorised
/s/ Meimunah Peeroo
in the presence of:
Name: Meimunah Peeroo
 
Title: Attorney-In-Fact
Witness signature:…… /s/ Christina Sarrou ……
 
Name: Christina Sarrou
 
Address: Stephenson Harwood LLP
 
            1 Finsbury Circus
 
            London
 
            EC2M 7SH
 







LONLIVE\26142366.7    Page 11



The Security Agent
 
BNP Paribas
 
acting by
 
the duly authorised
/s/ Meimunah Peeroo
in the presence of:
Name: Meimunah Peeroo
 
Title: Attorney-In-Fact
Witness signature:…… /s/ Christina Sarrou ……
 
Name: Christina Sarrou
 
Address: Stephenson Harwood LLP
 
            1 Finsbury Circus
 
            London
 
            EC2M 7SH
 
 
 
The Swap Provider
 
BNP Paribas
 
acting by
 
the duly authorised
/s/ Meimunah Peeroo
in the presence of:
Name: Meimunah Peeroo
 
Title: Attorney-In-Fact
Witness signature:…… /s/ Christina Sarrou ……
 
Name: Christina Sarrou
 
Address: Stephenson Harwood LLP
 
            1 Finsbury Circus
 
            London
 
            EC2M 7SH
 




LONLIVE\26142366.7    Page 12


The Security Agent
BNP Paribas      )
acting by    ) /s/ Meimunah Peeroo
its duly authorised    ) Name: Meimunah Peeroo
in the presence of:    ) Title: Attorney-In-Fact

Witness signature:… /s/ Christina Sarrou …………………………………
Name: Christina Sarrou
Address: Stephenson Harwood LLP
1 Finsbury Circus
London    
EC2M 7SH



The Swap Provider
BNP Paribas      )
acting by    ) /s/ Meimunah Peeroo
its duly authorised    ) Name: Meimunah Peeroo
in the presence of:    ) Title: Attorney-In-Fact

Witness signature:… /s/ Christina Sarrou …………………………………
Name: Christina Sarrou
Address: Stephenson Harwood LLP
1 Finsbury Circus
London    
EC2M 7SH






LONLIVE\26142366.7    Page 12
Execution Version

Exhibit 4.25(a)
Dated 2 June 2016

SCORPIO TANKERS INC.
as Guarantor
and
SCOTIABANK EUROPE PLC
as Security Trustee








GUARANTEE
relating to
a Loan Agreement dated 2 June 2016


WATSONFARLEYWILLIAMS.JPG



Index
Clause    
1
Interpretation
2
Guarantee
3
Liability as Principal and Independent Debtor
4
Expenses
5
Adjustment of Transactions
6
Payments
7
Interest
8
Subordination
9
Enforcement
10
Representations and Warranties
11
Financial Covenants
12
Undertakings
13
Judgments and Currency Indemnity
14
Set-Off
15
Supplemental
16
Assignment
17
Notices
18
Invalidity of Loan Agreement or master agreements
19
Governing Law and Jurisdiction

Execution

Execution Page





57475071v6


THIS GUARANTEE is made on 2 June 2016
PARTIES
(1)
SCORPIO TANKERS INC. , a corporation incorporated in the Republic of the Marshall Islands whose registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (the " Guarantor ")
(2)
SCOTIABANK EUROPE PLC , acting through its office at 201 Bishopsgate, 6 th Floor, London, England EC2M 3NS (the " Security Trustee ", which expression includes its successors and assigns)
BACKGROUND
(A)
By a loan agreement dated 2 June 2016 and made between (i) STI Rose Shipping Company Limited as Borrower, (ii) the Lenders, (iii) the Agent and (iv) the Security Trustee, it was agreed that the Lenders would make available to the Borrower a facility of up to US$36,000,000.
(B)
In relation to each Swap Bank and pursuant to Master Agreements each to be made between (i) the Borrower and (ii) a Swap Bank, the Borrower and a Swap Bank may enter into Designated Transactions for the purpose of hedging the Borrower's exposure under the Loan Agreement to interest rate fluctuations and currency exposure.
(C)
By the Agency and Trust Deed entered into pursuant to the Loan Agreement, it was agreed that the Security Trustee would hold the Trust Property (including the benefit of this Guarantee) on trust for the Lenders and the Swap Banks.
(D)
The execution and delivery to the Security Trustee of this Guarantee is one of the conditions precedent to the availability of the facility under the said Loan Agreement.
OPERATIVE PROVISIONS
INTERPRETATION
Defined expressions
Words and expressions defined in the Loan Agreement shall have the same meanings when used in this Guarantee unless the context otherwise requires.
" Accounting Period " means each consecutive quarterly period during the Security Period ending on 31 March, 30 June, 30 September and 31 December of each financial year of the Guarantor.
" Cash " means any credit balance on any deposit, savings, current or other account, and any cash in hand held with banks or other financial institutions of the Guarantor and/or any subsidiary of the Guarantor which is:
(a)
freely withdrawable on demand;
(b)
not subject to any Security Interest (other than pursuant to the Finance Documents);
(c)
denominated and payable in freely transferable and freely convertible currency; and
(d)
capable of being remitted to the Guarantor or such subsidiary of the Guarantor.

57475071v6


" Cash Equivalents " means:
(a)
unencumbered securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)
time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognised standing organised under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
(c)
such other securities or instruments as the Agent shall, with the authorisation of all the Lenders, agree in writing,
provided that in respect of (a) and (b) above such Cash Equivalents shall have a rating of at least "A-" given by S&P or "A" given by Moody's (or the equivalent rating given by another Rating Agency), in each case having maturities of not more than ninety (90) days from the date of acquisition.
" Consolidated EBITDA " means, for any Accounting Period, the consolidated net income of the Guarantor for that Accounting Period:
(a)
plus , to the extent deducted in computing the net income of the Guarantor for that Accounting Period, the sum, without duplication, of:
(i)
all federal, state, local and foreign income taxes and tax distributions;
(ii)
Consolidated Net Interest Expense;
(iii)
depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortisation of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)
expenses incurred in connection with a special or intermediate survey (including any underwater survey done in lieu thereof) of a Fleet Vessel during such period; and
(v)
any drydocking expenses;
(b)
minus , to the extent added in computing the consolidated net income of the Guarantor for that Accounting Period:
(i)
any non-cash income or non-cash gains; and
(ii)
any extraordinary gains on asset sales not received in the ordinary course of business.
" Consolidated Funded Debt " means, for any Accounting Period, the sum of the following for the Guarantor determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:
(a)
all Financial Indebtedness; and

2     57475071v6


(b)
all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet),
provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt.
" Consolidated Net Interest Expense " means, for any Accounting Period, the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Guarantor and all of its subsidiaries during the relevant Accounting Period less:
(a)
commitment fees;
(b)
interest income received; and
(c)
amortisation of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Guarantor.
" Consolidated Tangible Net Worth " means, on a consolidated basis, the total shareholders' equity (including retained earnings) of the Guarantor, minus goodwill and other non-tangible items.
" Consolidated Total Capitalisation " means the Consolidated Tangible Net Worth plus Consolidated Funded Debt.
" Equity Interests " of any person means:
(a)
any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)
all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person.
" Equity Proceeds " means the net cash proceeds from the issuance of common or preferred stock of the Guarantor.
" Fleet Vessel " means each vessel owned by the Guarantor and/or any of its wholly owned direct or indirect subsidiaries.
" Loan Agreement " means the loan agreement dated 2 June 2016 referred to in Recital (A) and includes any existing or future amendments or supplements, whether made with the Guarantor's consent or otherwise.
" Master Agreements " means each master agreement referred to in Recital (B) and includes any existing or future amendments or supplements whether made with the Guarantor's consent or otherwise (including 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.
" Net Debt " means Consolidated Funded Debt less Cash and Cash Equivalents of the Guarantor and its subsidiaries.

3     57475071v6


Construction of certain terms
In this Guarantee:
" bankruptcy " includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
Application of construction and interpretation provisions of Loan Agreement
Clauses 1.2, 1.5 and 1.6 of the Loan Agreement apply, with any necessary modifications, to this Guarantee.
GUARANTEE
Guarantee and indemnity
The Guarantor unconditionally and irrevocably:
guarantees the due payment of all amounts payable by the Borrower under or in connection with the Loan Agreement and every other Finance Document and any Designated Transactions under any Master Agreement;
undertakes to pay to the Security Trustee, on the Security Trustee's demand, any such amount which is not paid by the Borrower when payable; and
fully indemnifies the Security Trustee and each other Creditor Party on the Security Trustee's demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Security Trustee or the other Creditor Party concerned as a result of or in connection with any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Security Trustee or the other Creditor Party concerned would otherwise have been entitled to recover.
No limit on number of demands
The Security Trustee may serve more than one demand under Clause 2.1 ( Guarantee and indemnity ).
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR
Principal and independent debtor
The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety.
Waiver of rights and defences
Without limiting the generality of Clause 3.1 ( Principal and independent debtor ), the Guarantor shall neither be discharged by, nor have any claim against any Creditor Party in respect of:
any amendment or supplement being made to the Finance Documents or the Master Agreements;
any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, the Finance Documents or the Master Agreements;

4     57475071v6


any release or loss (even though negligent) of any right or Security Interest created by the Finance Documents or the Master Agreements;
any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; or
any other Finance Document, either Master Agreement or any Security Interest now being or later becoming void, unenforceable, illegal or invalid or otherwise defective for any reason, including a neglect to register it.
EXPENSES
Costs of preservation of rights, enforcement etc.
The Guarantor shall pay to the Security Trustee within three (3) Banking Days after its written demand the amount of all expenses incurred by the Security Trustee or any other Creditor Party in connection with any matter arising out of this Guarantee or any Security Interest connected with it, including any advice, claim or proceedings relating to this Guarantee or such a Security Interest.
Fees and expenses payable under Loan Agreement
Clause 4.1 ( Costs of preservation of rights, enforcement etc. ) is without prejudice to the Guarantor's liabilities in respect of the Borrower's obligations under clause 20 (fees and expenses) of the Loan Agreement and under similar provisions of other Finance Documents and the Master Agreements.
ADJUSTMENT OF TRANSACTIONS
Reinstatement of obligation to pay
The Guarantor shall pay to the Security Trustee on its demand any amount which any Creditor Party is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of the Borrower (or similar person) on the ground that the Loan Agreement or the Master Agreements, or a payment by the Guarantor, was invalid or on any similar ground.
PAYMENTS
Method of payments
Any amount due under this Guarantee shall be paid:
in immediately available funds;
to such account as the Security Trustee may from time to time notify to the Guarantor;
without any form of set‑off, cross‑claim or condition; and
free and clear of any tax deduction except a tax deduction which the Guarantor is required by law to make.
Grossing-up for taxes

5     57475071v6


If the Guarantor is required by law to make a tax deduction, the amount due to the Security Trustee shall be increased by the amount necessary to ensure that the Security Trustee and (if the payment is not due to the Security Trustee for its own account) the Creditor Party beneficially interested in the payment receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received.
INTEREST
Accrual of interest
Any amount due under this Guarantee shall carry interest after the date on which the Security Trustee demands payment of it until it is actually paid, unless interest on that same amount also accrues under the Loan Agreement or (as the case may be) any Master Agreement.
Calculation of interest
Interest under this Guarantee shall be calculated and accrue in the same way as interest under clause 7 (default interest) of the Loan Agreement.
Guarantee extends to interest payable under Loan Agreement
For the avoidance of doubt, it is confirmed that this Guarantee covers all interest payable under the Loan Agreement and the Master Agreements, including that payable under clause 7 (default interest) of the Loan Agreement and section 2(e) of the Master Agreement.
SUBORDINATION
Subordination of rights of Guarantor
All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against the Borrower, any other Security Party or their respective assets shall be fully subordinated to the rights of the Creditor Parties under the Finance Documents and the Master Agreements; and in particular, the Guarantor shall not:
claim, or in a bankruptcy of the Borrower or any other Security Party prove for, any amount payable to the Guarantor by the Borrower or any other Security Party, whether in respect of this Guarantee or any other transaction;
take or enforce any Security Interest for any such amount;
claim to set-off any such amount against any amount payable by the Guarantor to the Borrower or any other Security Party; or
claim any subrogation or other right in respect of any Finance Document or any Master Agreement or any sum received or recovered by any Creditor Party under a Finance Document or a Master Agreement.
ENFORCEMENT
No requirement to commence proceedings against Borrower
Neither the Security Trustee nor any other Creditor Party will need to commence any proceedings under, or enforce any Security Interest created by, the Loan Agreement or any other Finance Document or any Master Agreement before claiming or commencing proceedings under this Guarantee.

6     57475071v6


Conclusive evidence of certain matters
However, as against the Guarantor:
any judgment or order of a court in England, the Republic of the Marshall Islands, the Principality of Monaco or the State of New York in the United States of America in connection with the Loan Agreement and/or the Master Agreement; and
any statement or admission of the Borrower in connection with the Loan Agreement and/or the Master Agreement,
shall be binding and conclusive as to all matters of fact and law to which it relates.
Suspense account
The Security Trustee and any Creditor Party may, for the purpose of claiming or proving in a bankruptcy of the Borrower or any other Security Party, place any sum received or recovered under or by virtue of this Guarantee or any Security Interest connected with it on a separate suspense or other nominal account without applying it in satisfaction of the Borrower's obligations under the Loan Agreement or, as the case may be, any Master Agreement.
REPRESENTATIONS AND WARRANTIES
General
The Guarantor represents and warrants to the Security Trustee as follows.
Status
The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands.
Corporate power
The Guarantor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
to execute this Guarantee; and
to make all the payments contemplated by, and to comply with, this Guarantee.
Consents in force
All the consents referred to in Clause 10.3 ( Corporate power ) remain in force and nothing has occurred which makes any of them liable to revocation.
Legal validity and effective Security Interests
The Finance Documents to which the Guarantor is a party do now or, as the case may be, will upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

7     57475071v6


constitute the Guarantor's legal, valid and binding obligations enforceable against the Guarantor in accordance with their respective terms and subject to any relevant insolvency laws affecting creditors' rights generally; and
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.
No third party Security Interests
Without limiting the generality of Clause 10.5 ( Legal validity and effective Security Interests ), at the time of the execution and delivery of each Finance Document to which the Guarantor is a party:
the Guarantor will have the right to create all the Security Interests which that Finance Document purports to create; and
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.
No conflicts
The execution by the Guarantor of the Finance Documents to which it is a party and its compliance with the Finance Documents to which it is a party will not involve or lead to a contravention of:
any law or regulation; or
the constitutional documents of the Guarantor; or
any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets.
No withholding taxes
All payments which the Guarantor is liable to make under the Finance Documents 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.
No default
To the knowledge of the Guarantor, no Event of Default or Potential Event of Default has occurred.
Information
All information which has been provided in writing by or on behalf of the Guarantor to the Security Trustee or any other Creditor Party in connection with any Finance Document satisfied the requirements of Clause 12.2 ( Information provided to be accurate ); all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 12.4 ( Form of financial statements ); and there has been no material adverse change in the financial position or state of affairs of the Guarantor from that disclosed in the latest of those accounts.
No litigation

8     57475071v6


No legal or administrative action involving the Guarantor has been commenced or taken or, to the Guarantor's knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Guarantor's financial position or profitability.
FINANCIAL COVENANTS
Minimum liquidity
The Guarantor shall, at all times, maintain Cash and Cash Equivalents on a consolidated basis, including all amounts on deposit with any bank, of not less than the greater of (a) $25,000,000 or (b) $500,000 per Fleet Vessel (the " Minimum Liquidity "), provided that for the purpose of this Clause 11.1 ( Minimum liquidity ), " Cash Equivalents " shall include unutilised and freely available amounts under any revolving credit facility (where no default or termination event has occurred and is continuing and there is no restriction on borrowing under such facilities) with a maturity date in excess of 12 months after the date of the financial statements delivered pursuant to Clause 12.3.
Minimum Consolidated Tangible Net Worth
The Guarantor shall maintain a Consolidated Tangible Net Worth of not less than $1,000,000,000 plus:
25 per cent. of the Guarantor 's cumulative, positive consolidated net income for each Accounting Period commencing on or after 1 January 2016; and
50 per cent. of the Equity Proceeds realised from any issuance of Equity Interests in the Guarantor occurring on or after 1 January 2016.
Maximum leverage
The Guarantor shall maintain a ratio of Net Debt to Consolidated Total Capitalisation of not more than 0.60 to 1.00, to be tested on the last day of each Accounting Period.
Minimum interest coverage
The Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense greater than 2.50 to 1.00. Such ratio shall be calculated on the last day of each Accounting Period on a trailing four quarter basis.
Most favoured Lenders
In the event at any time prior to the date falling 18 months after the date of the Loan Agreement the Guarantor agrees to the incorporation of any additional financial covenants or financial covenants which are more onerous than those contained in Clause 11 (Financial covenants) (excluding Clause 11.1 ( Minimum liquidity )) into any financial contract or financial document relating to any other senior secured indebtedness of the Guarantor, the Guarantor shall provide details of such financial covenants to the Security Trustee within thirty (30) days of the Guarantor granting such financial covenants to other financing parties and those financial covenants shall be deemed to apply to this Agreement as if set out in full herein with effect from the date of such financial contract or financial document for a period ending on the date on which those financial covenants cease to have effect or otherwise be valid under that financial contract or financial document. The Guarantor shall enter into additional documentation as the Security Trustee may reasonably require in respect of such incorporation.

9     57475071v6


UNDERTAKINGS
General
The Guarantor undertakes with the Security Trustee to comply with the following provisions of this Clause 12 ( Undertakings ) at all times during the Security Period, except as the Agent may, with the authority of the Majority Lenders, otherwise permit.
Information provided to be accurate
All financial and other information which is provided in writing by or on behalf of the Guarantor under or in connection with this Guarantee will be true and not misleading and will not omit any material fact or consideration.
Provision of financial statements
The Guarantor will send to the Security Trustee:
as soon as possible, but in no event later than 120 days after the end of each financial year of the Guarantor, the audited consolidated accounts of the Guarantor;
as soon as possible, but in no event later than 90 days after the end of each quarter in each financial year of the Guarantor, unaudited consolidated accounts of the Guarantor and which are certified as to their correctness by the chief financial officer of the Guarantor;
as soon as possible, but in no event later than 90 days after the end of each financial year of the Guarantor, consolidated cash flow projections for the following 3 years in a format approved by the Agent which shows balance sheets, statements of anticipated profit and loss and cash flow; and
together with the annual audited accounts referred to in paragraph (a) and with each set of quarterly unaudited accounts referred to in paragraph (b), a compliance certificate (together with supporting schedules, if any) signed by the chief financial officer of the Guarantor in the form attached as Schedule 8 ( Form of Certificate of Compliance ) of the Loan Agreement (or in any other format which the Agent may approve and with such other information as the Agent may require) evidencing compliance with the financial undertakings in Clause 11 ( Financial Covenants ) and, in the case of the compliance certificates provided together with the annual audited accounts referred to in paragraph (a) and with the second set of quarterly unaudited accounts of each financial year referred to in paragraph (b), also listing the Fair Market Value of the Ship.
Form of financial statements
All accounts (audited and unaudited) delivered under Clause 12.3 ( Provision of financial statements ) will:
be prepared in accordance with all applicable laws and IFRS consistently applied;
fairly represent the financial condition of the Guarantor and its subsidiaries (as the case may be) at the date of those accounts and of its profit for the period to which those accounts relate; and
fully disclose or provide for all significant liabilities of the Guarantor and its subsidiaries (as the case may be).
Consents

10     57475071v6


The Guarantor will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Security Trustee of, all consents required:
for the Guarantor to perform its obligations under any Finance Document to which it is a party; and
for the validity or enforceability of any Finance Document to which it is a party,
and the Guarantor will comply with the terms of all such consents.
Maintenance of Security Interests
The Guarantor will:
at its own cost, do all that it reasonably can to ensure that any Finance Document to which it is a party validly creates the obligations and the Security Interests which it purports to create; and
without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document to which it is a party 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 to which it is a party, give any notice or take any other step which may be or become necessary or desirable for any Finance Document to which it is a party to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.
Notification of litigation
The Guarantor will provide the Security Trustee with details of any legal or administrative action involving the Guarantor as soon as such action is instituted or it becomes apparent to the Guarantor that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of this Guarantee.
Notification of default
The Guarantor will notify the Security Trustee as soon as the Guarantor becomes aware of:
the occurrence of an Event of Default or a Potential Event of Default; or
any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,
and will thereafter keep the Security Trustee fully up-to-date with all developments.
Maintenance of status
The Guarantor will:
maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands; and
remain listed on the New York Stock Exchange.
No disposal of assets, change of business
The Guarantor will not make any substantial change to the nature of its business from that existing at the date of this Guarantee.
No merger etc.

11     57475071v6


The Guarantor shall not, and shall procure that none of its subsidiaries will, enter into any form of merger, sub-division, amalgamation or other reorganisation.
Maintenance of ownership of Borrower
The Guarantor shall remain the legal holder and direct beneficial owner of the entire issued and allotted share capital of the Borrower, free from any Security Interest, except that created by the Finance Documents.
Dividends and distributions of share capital
The Guarantor will not pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital unless, in the case of a dividend, no Event of Default has occurred or will occur as a result of the payment of such dividend.
JUDGMENTS AND CURRENCY INDEMNITY
Judgments relating to Loan Agreement or Master Agreements
This Guarantee shall cover any amount payable by the Borrower under or in connection with any judgment relating to the Loan Agreement or any Master Agreement.
Currency indemnity
In addition, clause 21.4 (currency indemnity) of the Loan Agreement shall apply, with any necessary adaptations, in relation to this Guarantee.
SET-OFF
Application of credit balances
Each Creditor Party may without prior notice:
apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Guarantor at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Guarantor to that Creditor Party under any of the Finance Documents; and
for that purpose:
break, or alter the maturity of, all or any part of a deposit of the Guarantor;
convert or translate all or any part of a deposit or other credit balance into Dollars; and
enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.
Existing rights unaffected
No Creditor Party shall be obliged to exercise any of its rights under Clause 14.1 ( Application of credit balances ); 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).
Sums deemed due to a Lender or a Swap Bank

12     57475071v6


For the purposes of this Clause 14 ( Set-Off ), a sum payable by the Guarantor to the Agent or the Security Trustee for distribution to, or for the account of, a Lender or a Swap Bank shall be treated as a sum due to that Lender or, as the case may be, that Swap Bank; and each Lender's or, as the case may be, each Swap Bank’s proportion of a sum so payable for distribution to, or for the account of, the Lenders or, as the case may be, the Swap Banks shall be treated as a sum due to that Lender or, as the case may be, the Swap Banks.
SUPPLEMENTAL
Continuing guarantee
This Guarantee shall remain in force as a continuing security at all times during the Security Period.
Rights cumulative, non-exclusive
The Security Trustee's rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law.
No impairment of rights under Guarantee
If the Security Trustee omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Security Trustee under this Guarantee.
Severability of provisions
If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions.
Guarantee not affected by other security
This Guarantee shall not impair, nor be impaired by, any other guarantee, any Security Interest or any right of set-off or netting or to combine accounts which the Security Trustee or any other Creditor Party may now or later hold in connection with the Loan Agreement or any Master Agreement.
Guarantor bound by Loan Agreement
The Guarantor agrees with the Security Trustee to be bound by all provisions of the Loan Agreement which are applicable to the Security Parties in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee.
Applicability of provisions of Guarantee to other Security Interests
Any Security Interest which the Guarantor creates (whether at the time at which it signs this Guarantee or at any later time) to secure any liability under this Guarantee shall be a principal and independent security, and Clauses 3 ( Liability as Principal and Independent Debtor ) and 18 ( Invalidity of Loan Agreement ) shall, with any necessary modifications, apply to it, notwithstanding that the document creating the Security Interest neither describes it as a principal or independent security nor includes provisions similar to Clauses 3 ( Liability as Principal and Independent Debtor ) and 18 ( Invalidity of Loan Agreement ).

13     57475071v6


Applicability of provisions of Guarantee to other rights
Clauses 3 ( Liability as Principal and Independent Debtor ) and 18 ( Invalidity of Loan Agreement ) shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 ( Liability as Principal and Independent Debtor ) and 18 ( Invalidity of Loan Agreement )), being an agreement referring to this Guarantee.
Third party rights
A person (other than a Creditor Party) who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee.
ASSIGNMENT
Assignment by Security Trustee
The Security Trustee may assign its rights under and in connection with this Guarantee to the same extent as it may assign its rights under the Loan Agreement.
NOTICES
Notices to Guarantor
Any notice or demand to the Guarantor under or in connection with this Guarantee shall be given by letter or fax at:
SCORPIO TANKERS INC
Fax No: + 3 77 97 77 83 46
or to such other address which the Guarantor may notify to the Security Trustee.
Application of certain provisions of Loan Agreement
Clauses 28.3, 28.4 and 28.5 of the Loan Agreement apply to any notice or demand under or in connection with this Guarantee.
Validity of demands
A demand under this Guarantee shall be valid notwithstanding that it is served:
on the date on which the amount to which it relates is payable by the Borrower under the Loan Agreement or, as the case may be, any Master Agreement;
at the same time as the service of a notice under clause 19.2 (events of default) of the Loan Agreement;
and a demand under this Guarantee may refer to all amounts payable under or in connection with the Loan Agreement and any Master Agreement without specifying a particular sum or aggregate sum.
Notices to Security Trustee

14     57475071v6


Any notice to the Security Trustee under or in connection with this Guarantee shall be sent to the same address and in the same manner as notices to the Security Trustee under the Loan Agreement.
INVALIDITY OF LOAN AGREEMENT OR MASTER AGREEMENTS
Invalidity of Loan Agreement
In the event of:
the Loan Agreement now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or
without limiting the scope of paragraph (a), a bankruptcy of the Borrower, the introduction of any law or any other matter resulting in the Borrower being discharged from liability under the Loan Agreement, or the Loan Agreement ceasing to operate (for example, by interest ceasing to accrue),
this Guarantee shall cover any amount which would have been or become payable under or in connection with the Loan Agreement if the Loan Agreement had been and remained entirely valid, legal and enforceable, or the Borrower had not suffered bankruptcy, or any combination of such events or circumstances, as the case may be, and the Borrower had remained fully liable under it for liabilities whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by the Borrower under or in connection with the Loan Agreement shall include references to any amount which would have so been or become payable as aforesaid.
Invalidity of Master Agreements and Finance Documents
Clause 18.1 ( Invalidity of Loan Agreement ) also applies to any Master Agreement and each of the other Finance Documents to which the Borrower is a party.
GOVERNING LAW AND JURISDICTION
English law
This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
Exclusive English jurisdiction
Subject to Clause 19.3 ( Choice of forum for the exclusive benefit of the Security Trustee ), the courts of England shall have exclusive jurisdiction to settle any Dispute.
Choice of forum for the exclusive benefit of the Security Trustee
Clause 19.2 ( Exclusive English jurisdiction ) is for the exclusive benefit of the Security Trustee, which reserves the rights:
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
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.

15     57475071v6


The Guarantor shall not commence any proceedings in any country other than England in relation to a Dispute.
Process agent
The Guarantor irrevocably appoints Scorpio UK Limited at its business address, presently at 10 Lower Grosvenor Place, London, SW1W 0EN (for the attention of the General Counsel), 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 provided that any communication is expressly marked on the outside as "for the immediate attention of the General Counsel".
Creditor Parties' rights unaffected
Nothing in this Clause 19 ( Governing Law and Jurisdiction ) 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.
Meaning of "proceedings"
In this Clause 19 ( Governing Law and Jurisdiction ), " 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 Guarantee (including a dispute relating to the existence, validity or termination of this Guarantee) or any non-contractual obligation arising out of or in connection with this Guarantee.
THIS GUARANTEE has been entered into on the date stated at the beginning of this Guarantee.


16     57475071v6



EXECUTION PAGE
GUARANTOR
 
 
 
SIGNED  by Brian M. Lee
/s/ Brian M. Lee
For and on behalf of
 
SCORPIO TANKERS INC.
 
In the presence of:
 
/s/ Vikram Hiranandani
 
 
 
SECURITY TRUSTEE
 
 
 
SIGNED  by
/s/ Philippos Arcoumanis
For and on behalf of
Name: Philippos Arcoumanis
SCOTIABANK EUROPE PLC
Title: Attorney-in-Fact
In the presence of:
/s/ Tanpreet Rooprai
 
Name: Tanpreet Rooprai
 
Title: Trainee Solicitor
 
15 Appold Street
 
London EC2A 2HB



17     57475071v6


Exhibit 4.26(a)

Execution Version








Date 30 June 2016







SCORPIO TANKERS INC.
as Guarantor


– and –


NIBC BANK N.V.
as Security Trustee








                                                                                  
GUARANTEE
                                                                                  

relating to
a Loan Agreement dated 30 th June 2016



NIBCGUARANTEESCORPIOT_IMAGE1.JPG


INDEX
Clause
1
INTERPRETATION
2
GUARANTEE
3
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR
4
EXPENSES
5
ADJUSTMENT OF TRANSACTIONS
6
PAYMENTS
7
INTEREST
8
SUBORDINATION
9
ENFORCEMENT
10
REPRESENTATIONS AND WARRANTIES
11
UNDERTAKINGS
12
FINANCIAL COVENANTS
13
JUDGMENTS AND CURRENT INDEMNITY
14
SET-OFF
15
SUPPLEMENTAL
16
ASSIGNMENT
17
NOTICES
18
INVALIDITY OF LOAN AGREEMENT
19
GOVERNING LAW AND JURISDICTION
EXECUTION PAGE
SCHEDULE 1 FORM OF COMPLIANCE CERTIFICATE










    
    




THIS GUARANTEE is made on 30 June 2016
BETWEEN
(1)
SCORPIO TANKERS INC. , a corporation incorporated in the Republic of the Marshall Islands whose registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (the “ Guarantor ”); and
(2)
NIBC BANK N.V. , a company incorporated in The Netherlands, acting through its office at Carnegieplein 41, 2517 KJ, The Hague, The Netherlands (the “ Security Trustee ”, which expression includes its successors and assigns).
BACKGROUND
(A)
By a loan agreement dated 30 June 2016 and made between, amongst others, (i) STI Fontvieille Shipping Company Limited and STI Ville Shipping Company Limited as joint and several Borrowers, (ii) the Lenders, (iii) the Agent and (iv) the Security Trustee, it was agreed that the Lenders would make available to the Borrowers a facility of up to US$44,000,000.
(B)
By master agreements each entered or to be entered into at the Borrower’s option between a Borrower and a Swap Bank, the Swap Banks may provide the Borrowers with interest rate hedging facilities in relation to each Borrower’s obligations under the Loan Agreement (the said master agreements (including their schedules) and all Designated Transactions from time to time entered into and all Confirmations from time to time exchanged pursuant thereto hereinafter referred to as the " Master Agreements ").

(C)
By the Agency and Trust Deed entered into pursuant to the Loan Agreement, it was agreed that the Security Trustee would hold the Trust Property on trust for the Lenders and the Swap Banks.

(D)
The execution and delivery to the Security Trustee of this Guarantee is one of the conditions precedent to the availability of the facility under the said Loan Agreement.
IT IS AGREED as follows:
1
INTERPRETATION
1.1
Defined expressions . Words and expressions defined in the Loan Agreement shall have the same meanings when used in this Guarantee unless the context otherwise requires.
1.2      Construction of certain terms
In this Guarantee:
" Accounting Period " means each consecutive quarterly period during the Security Period ending on 31 March, 30 June, 30 September and 31 December of each financial year of the Guarantor.
“ bankruptcy ” includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
" Cash " means any credit balance on any deposit, savings, current or other account, and any cash in hand held with banks or other financial institutions of the Guarantor and/or any subsidiary of the Guarantor which is:
(a)    freely withdrawable on demand;
(b)
not subject to any Security Interest (other than pursuant to the Finance Documents);
(c)    denominated and payable in freely transferable and freely convertible currency; and
(d)    capable of being remitted to the Guarantor or such subsidiary of the Guarantor.
" Cash Equivalents " means:
(a)
unencumbered securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
(b)
time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognised standing organised under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and
(c)
such other securities or instruments as the Agent shall, with the authorisation of all the Lenders, agree in writing,
provided that in respect of (a) and (b) above such Cash Equivalents shall have a rating of at least "A-" given by S&P or "A" given by Moody's (or the equivalent rating given by another Rating Agency), in each case having maturities of not more than ninety (90) days from the date of acquisition.
“ Compliance Certificate ” means a certificate executed by the chief financial officer of the Guarantor in the form set out in Schedule 1.
" Consolidated EBITDA " means, for any Accounting Period, the consolidated net income of the Guarantor for that Accounting Period:
(a)
plus , to the extent deducted in computing the net income of the Guarantor for that Accounting Period, the sum, without duplication, of:
(i)    all federal, state, local and foreign income taxes and tax distributions;
(ii)    Consolidated Net Interest Expense;
(iii)
depreciation, depletion, amortisation of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortisation of debt discounts) and any extraordinary losses not incurred in the ordinary course of business;
(iv)
expenses incurred in connection with a special or intermediate survey (including any underwater survey done in lieu thereof) of a Fleet Vessel during such period; and
(v)    any drydocking expenses;
(b)
minus , to the extent added in computing the consolidated net income of the Guarantor for that Accounting Period:
(i)    any non-cash income or non-cash gains; and
(ii)
any extraordinary gains on asset sales not received in the ordinary course of business.
" Consolidated Funded Debt " means, for any Accounting Period, the sum of the following for the Guarantor determined (without duplication) on a consolidated basis for such period and in accordance with IFRS consistently applied:
(a)    all Financial Indebtedness; and
(b)
all obligations to pay a specific purchase price for goods or services whether or not delivered or accepted (including take-or-pay and similar obligations which in accordance with IFRS would be shown on the liability side of a balance sheet),
provided that balance sheet accruals for future drydock expenses shall not be classified as Consolidated Funded Debt.
" Consolidated Net Interest Expense " means, for any Accounting Period, the aggregate of all interest, commissions, discounts and other costs, charges or expenses accruing that are due from the Guarantor and all of its subsidiaries during the relevant Accounting Period less:
(a)
commitment fees;
(b)
interest income received; and
(c)
amortisation of deferred charges and arrangement fees, determined on a consolidated basis in accordance with IFRS and as shown in the consolidated statements of income for the Guarantor.
" Consolidated Tangible Net Worth " means, on a consolidated basis, the total shareholders' equity (including retained earnings) of the Guarantor, minus goodwill and other non-tangible items.
" Consolidated Total Capitalisation " means the Consolidated Tangible Net Worth plus Consolidated Funded Debt.
" Equity Interests " of any person means:
(a)
any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and
(b)
all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person.
" Equity Proceeds " means the net cash proceeds from the issuance of common or preferred stock of the Guarantor.
" Fleet Vessel " means each vessel owned by a wholly owned direct or indirect subsidiary of the Guarantor (including, but not limited to, the Ships).
"Intercompany Loan" means any transaction constituting Financial Indebtedness entered into by the Guarantor (" Party A ") as lender with the Borrowers or either of them (" Party B ") as borrowers whereby Party A is entitled to receive any payment in cash or in kind from Party B.
" Loan " means the principal amount for the time being outstanding under the Loan Agreement.
“ Loan Agreement ” means the loan agreement referred to in Recital (A) and includes any existing or future amendments or supplements, made with the Guarantor's consent or otherwise.
“ Master Agreements ” means the master agreements referred to in Recital (B) and includes any existing or future amendments or supplements, whether made with the Guarantor’s consent or otherwise.
“ Minimum Liquidity ” has the meaning given to it in clause 12.1 of this Guarantee.
" Moody's " means Moody's Investors Service, Inc., a subsidiary of Moody's Corporation.
" Net Debt " means Consolidated Funded Debt less Cash and Cash Equivalents of the Guarantor and its Subsidiaries.
“ Party ” means a party to this Guarantee.
" Rating Agency " means S&P, Moody's or, if both of them are not making ratings of securities publically available, an internationally recognised rating agency selected by the Agent which shall be substituted for S&P or Moody's.
" Secured Liabilities " means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of the Borrowers and any Security Party to the Security Trustee under or in connection with each Finance Document.
" Security Period " means the period starting on the date of this Guarantee and ending on the date on which the Security Trustee is satisfied that there is no outstanding Commitment in force and that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
" S&P " means Standard & Poor's Rating Services, a division of the McGraw Hill Companies Inc.
1.3
Application of construction and interpretation provisions of Loan Agreement. Clauses 1.1 to 1.6 (inclusive) of the Loan Agreement apply, with any necessary modifications, to this Guarantee.
1.4
Inconsistency between Loan Agreement provisions and this Guarantee . This Guarantee shall be read together with the Loan Agreement, but in case of any conflict between the Loan Agreement and this Guarantee, unless expressly provided to the contrary in this Guarantee, the provisions of the Loan Agreement shall prevail.
2
GUARANTEE
2.1      Guarantee and indemnity. The Guarantor unconditionally and irrevocably:
(a)
guarantees the due payment of all amounts payable by the Borrowers under or in connection with the Loan Agreement, the Master Agreements and every other Finance Document;
(b)
undertakes to pay within three (3) Business Days after the Security Trustee’s written demand, any such amount which is not paid by the Borrowers when payable; and
(c)
fully indemnifies the Security Trustee and each other Creditor Party on the Security Trustee’s demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Security Trustee or the other Creditor Party concerned as a result of or in connection with any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Security Trustee or the other Creditor Party concerned would otherwise have been entitled to recover.
2.2
No limit on number of demands. The Security Trustee may serve more than one demand under Clause 2.1.
3
LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR
3.1
Principal and independent debtor. The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety.
3.2
Waiver of rights and defences. Without limiting the generality of Clause 3.1, the Guarantor shall neither be discharged by, nor have any claim against any Creditor Party in respect of:
(a)
any amendment or supplement being made to the Finance Documents or the Master Agreements;
(b)
any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, the Finance Documents or the Master Agreements;
(c)
any release or loss (even though negligent) of any right or Security Interest created by the Finance Documents or the Master Agreements;
(d)
any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; or
(e)
any other Finance Document or any Master Agreement or any Security Interest now being or later becoming void, unenforceable, illegal or invalid or otherwise defective for any reason, including a neglect to register it.
4
EXPENSES
4.1
Costs of preservation of rights, enforcement etc. The Guarantor shall pay to the Security Trustee within three (3) Business Days of the Security Trustee’s written demand the amount of all expenses incurred by the Security Trustee or any other Creditor Party in connection with any matter arising out of this Guarantee or any Security Interest connected with it, including any advice, claim or proceedings relating to this Guarantee or such a Security Interest.
4.2
Fees and expenses payable under Loan Agreement. Clause 4.1 is without prejudice to the Guarantor’s liabilities in respect of the Borrower’s obligations under clause 20 of the Loan Agreement ( fees and expenses ) and under similar provisions of other Finance Documents and the Master Agreements.
5
ADJUSTMENT OF TRANSACTIONS
5.1
Reinstatement of obligation to pay. The Guarantor shall pay to the Security Trustee on its demand any amount which any Creditor Party is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of either Borrower or of another Security Party (or similar person) on the ground that the Loan Agreement, a Master Agreement or a payment by either Borrower or of another Security Party, was invalid or on any similar ground.
6
PAYMENTS
6.1      Method of payments. Any amount due under this Guarantee shall be paid:
(a)
in immediately available funds;
(b)
to such account as the Security Trustee may from time to time notify to the Guarantor;
(c)
without any form of set‑off, cross‑claim or condition; and
(d)
free and clear of any tax deduction except a tax deduction which the Guarantor is required by law to make.
6.2
Grossing-up for taxes. If the Guarantor is required by law to make a tax deduction, the amount due to the Security Trustee shall be increased by the amount necessary to ensure that the Security Trustee and (if the payment is not due to the Security Trustee for its own account) the Creditor Party beneficially interested in the payment receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received.
7
INTEREST
7.1
Accrual of interest. Any amount due under this Guarantee shall carry interest after the date on which the Security Trustee demands payment of it until it is actually paid, unless interest on that same amount also accrues under the Loan Agreement.
7.2
Calculation of interest. Interest under this Guarantee shall be calculated and accrue in the same way as interest under clause 7 ( default interest ) of the Loan Agreement.
7.3
Guarantee extends to interest payable under Loan Agreement. For the avoidance of doubt, it is confirmed that this Guarantee covers all interest payable under the Loan Agreement, including that payable under clause 7 ( default interest ) of the Loan Agreement.
8
SUBORDINATION
8.1
Subordination of rights of Guarantor. All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against either Borrower, any other Security Party or their respective assets shall be fully subordinated to the rights of the Creditor Parties under the Finance Documents and the Master Agreements; and in particular the Guarantor shall not:
(a)
claim, or in a bankruptcy of either Borrower or any other Security Party prove for, any amount payable to the Guarantor by either Borrower or any other Security Party, whether in respect of this Guarantee or any other transaction;
(b)
take or enforce any Security Interest for any such amount;
(c)
claim to set-off any such amount against any amount payable by the Guarantor to either Borrower or any other Security Party; or
(d)
claim any subrogation or other right in respect of any Finance Document or any Master Agreement or any sum received or recovered by any Creditor Party under a Finance Document or any Master Agreement.
9
ENFORCEMENT
9.1
No requirement to commence proceedings against Borrowers. Neither the Security Trustee nor any other Creditor Party will need to commence any proceedings under, or enforce any Security Interest created by, the Loan Agreement or any other Finance Document or any Master Agreement before claiming or commencing proceedings under this Guarantee.
9.2      Conclusive evidence of certain matters. However, as against the Guarantor:
(a)
any judgment or order of a court in England, the Principality of Monaco, the United States of America, the Republic of the Marshall Islands or The Netherlands in connection with the Loan Agreement or any Master Agreement; and
(b)
any statement or admission of either Borrower in connection with the Loan Agreement or any Master Agreement,
shall be binding and conclusive as to all matters of fact and law to which it relates.
9.3
Suspense account. The Security Trustee and any Creditor Party may, for the purpose of claiming or proving in a bankruptcy of either Borrower or any other Security Party, place any sum received or recovered under or by virtue of this Guarantee or any Security Interest connected with it on a separate suspense or other nominal account without applying it in satisfaction of the Borrower’s obligations under the Loan Agreement or the Master Agreements.
10
REPRESENTATIONS AND WARRANTIES
10.1      General. The Guarantor represents and warrants to the Security Trustee as follows.
10.2
Status. The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands.
10.3
Ownership of the Borrowers. The Guarantor is the direct legal and beneficial owner of all the issued share capital and voting rights in respect of each Borrower free of Security Interests save for the Security Interests created pursuant to the Finance Documents and the Existing Facility which, in the case of the Security Interests created pursuant to the Existing Facility shall be fully discharged in the case of Borrower A no later than the first Drawdown Date and, in the case of Borrower B, no later than the second Drawdown Date .
10.4
Corporate power. The Guarantor has the corporate capacity, and has taken all corporate action and obtained all Authorisations necessary for it:
(a)
to execute the Finance Documents to which the Guarantor is a party; and
(b)
to make all the payments contemplated by, and to comply with, this Guarantee and the Finance Documents to which the Guarantor is a party.
10.5
Consents in force. All the Authorisations 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 and effective Security Interests. This Guarantee and each of the other Finance Documents to which the Guarantor is a party:
(a)
constitute the Guarantor’s legal, valid and binding obligations enforceable against the Guarantor 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 to which the Guarantor is a party:
(a)
the Guarantor 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 Guarantor of this Guarantee and each of the other Finance Documents to which the Guarantor is a party and its compliance with this Guarantee and each of the other Finance Documents to which the Guarantor is a party will not involve or lead to a contravention of:
(a)
any law or regulation; or
(b)
the constitutional documents of the Guarantor; or
(c)
any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets.
10.9
No withholding taxes. All payments which the Guarantor is liable to make under this Guarantee or any other Finance Document to which the Guarantor 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. To the knowledge of the Guarantor, no Event of Default or Latent Event of Default has occurred.
10.11
Information. All information which has been provided in writing by or on behalf of the Guarantor to the Security Trustee or any other Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.2; 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 Guarantor from that disclosed in the latest of those accounts.
10.12
No litigation. No legal or administrative action involving the Guarantor has been commenced or taken or, to the Guarantor’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a Material Adverse Effect or which would prevent the Guarantor from meeting its obligations under the Finance Documents to which it is a party.
10.13
Taxes paid . The Guarantor has paid all taxes applicable to, or imposed on or in relation to it and its business.
10.14
No money laundering . In relation to the performance and discharge by the Guarantor of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements affected or contemplated by the Finance Documents to which the Guarantor is a party, the Guarantor confirms (i) that it is acting for its own account; and (ii) 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).
10.15
No immunity . The Guarantor is not and no assets of the Guarantor are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceedings (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
10.16      Sanctions .
The Guarantor:
(i)    is not a Prohibited Person; and/or
(ii)    does not own or control a Prohibited Person.
10.17      Pari passu
The obligations of the Guarantor under the Finance Documents to which it is a party rank at least pari passu with all other unsecured indebtedness of the Guarantor other than indebtedness mandatorily preferred by law.
10.18      Validity and admissibility in evidence. All Authorisations required or desirable:
(a)
to enable the Guarantor lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and
(b)
to make the Finance Documents to which the Guarantor is a party admissible in evidence in its Pertinent Jurisdictions,
have been obtained or effected and are in full force and effect.
10.19      Governing law and enforcement.
(a)
The choice of governing law of each Finance Document to which the Guarantor is a party will be recognised and enforced in its Pertinent Jurisdictions.
(b)
Any judgment obtained in relation to a Finance Document to which the Guarantor is a party in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in its Pertinent Jurisdictions.
10.20
Insolvency. No corporate action, legal proceeding, creditors' process or other procedure or step described in paragraph (g) and (h) of clause 19.1 of the Loan Agreement has been taken or, to its knowledge, threatened in relation to the Guarantor, either Borrower and any other Security Party.
10.21
No breach of law. The Guarantor has not breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
10.22
Anti-terrorism compliance. The Guarantor, each Borrower and each other Security Party is in compliance with any and all anti-terrorism law applicable to it.
10.23
Good title to assets. The Guarantor has good, title to its assets.
11
UNDERTAKINGS
11.1
General. The Guarantor undertakes with the Security Trustee to comply with the following provisions of this Clause 11 at all times during the Security Period, except as the Security Trustee may, with the authority of the Majority Lenders, otherwise permit.
11.2      Title; negative pledge. The Guarantor will:
(a)
own directly and maintain ownership of the entire legal and beneficial interest in the entire issued share capital of each Borrower free from all Security Interests and other interests and rights of every kind except for (i) those created by the Finance Documents and (ii) any Security Interests created pursuant to the Existing Facility which such Security Interests shall be discharged in full in the case of the share capital of Borrower A no later than the first Drawdown Date and, in the case of the share capital of Borrower B, no later than the second Drawdown Date ;
(b)
procure that each Borrower will:
(i)
hold the legal title to, and own the entire beneficial interest in the Ship owned by it, the Insurances and Earnings relating to that Ship and the Earnings Account in its name, free from all Security Interests and other interests and rights of every kind, except for (i) those created by the Finance Documents and the effect of assignments contained in the Finance Documents, (ii) Permitted Security Interests and (iii) any Security Interests created pursuant to the Existing Facility which such Security Interests shall be discharged in full in the case of Ship A no later than the first Drawdown Date and, in the case of Ship B, no later than the second Drawdown Date; and
(ii)
not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and
(iii)
procure that its liabilities under the Finance Documents to which it is a party do and will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.
11.3
No disposal of assets. The Guarantor will procure that no Borrower will transfer, lease or otherwise dispose of:
(a)
all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or
(b)
any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation except for demurrage claims and otherwise in the ordinary course of conducting its business as a ship owner; or
(c)
make any substantial change to the nature of its business from that existing at the date of this Guarantee,
but paragraph (a) does not apply to any charter of either Ship to which clauses 14.13 and 14.17 of the Loan Agreement apply or to the sale of a Ship on arm’s length for its Market Value if the Borrowers can demonstrate prior to such sale to the Agent's satisfaction that the net proceeds of such sale shall be sufficient to enable the relevant Borrower to comply with its mandatory prepayment obligation under clause 8.9 of the Loan Agreement and, upon such sale, the net proceeds of such sale are sufficient to enable the relevant Borrower to comply with its mandatory prepayment obligation under clause 8.9 of the Loan Agreement.
11.4
No other liabilities or obligations to be incurred. The Guarantor will procure that no Borrower will, incur any liability or obligation (including, without limitation, any contingent liability) except liabilities and obligations:
(a)
under the Finance Documents to which it is a party;
(b)
reasonably incurred in the ordinary course of operating, upgrading, maintaining and chartering its Ship; and
(c)
in respect of Intercompany Loans made to the relevant Borrower provided these comply with the requirements of Clause 11.18,
it being acknowledged that up to the first Drawdown Date, each Borrower has obligations and liabilities under the Existing Facility and, in the case of Borrower B, those obligations and liabilities under the Existing Facility shall continue up to the second Drawdown Date.
11.5
Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of a Borrower, the Guarantor or any other Security Party under or in connection with this Guarantee and each Finance Document will be true, complete and not misleading and will not omit any material fact or consideration.
11.6      Provision of financial statements . The Guarantor will send to the Agent:
(a)
as soon as possible, but in no event later than 120 days after the end of each financial year of the Guarantor, the audited consolidated accounts of the Guarantor and its subsidiaries;
(b)
as soon as possible, but in no event later than 60 days after the end of the first three Accounting Periods, unaudited consolidated accounts of the Guarantor and its subsidiaries which are certified as to their correctness by the chief financial officer of the Guarantor;
(c)
as soon as possible, but in no event later than 60 days after the commencement of each financial year of the Guarantor, the annual budget (including consolidated profit & loss, balance sheet and cash flow forecast for the Guarantor and its subsidiaries) for that financial year;
(d)
a Compliance Certificate together with the quarterly reports that the Guarantor delivers in (b) above each certified by the chief financial officer of the Guarantor; and
(e)
any other information and financial statements as the Agent may request regarding the financial condition, assets and operations of the Guarantor.
11.7
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 consistently applied;
(b)
fairly represent the financial condition of the Guarantor and its subsidiaries at the date of those accounts and of its profit for the period to which those accounts relate; and
(c)
fully disclose or provide for all significant liabilities of the Guarantor and its subsidiaries.
11.8
Shareholder and creditor notices. The Guarantor will send the Security Trustee, at the same time as they are despatched, copies of all communications which are despatched to the Guarantor’s shareholders or creditors or any class of them provided that the Guarantor shall be deemed compliant with this Clause 11.8 if the Guarantor releases that information in accordance with the disclosure procedure applicable to New York listed companies in compliance with the United States securities laws and regulations.
11.9
Authorisations. The Guarantor will and will procure that each Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Security Trustee of, all Authorisations required:
(a)
for it to perform its obligations under any Finance Document to which it is a party; and
(b)
for the validity or enforceability of any Finance Document to which it is a party,
and the Guarantor will and will procure that each Borrower will comply with the terms of all such Authorisations.
11.10      Maintenance of Security Interests. The Guarantor 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) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or 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.
11.11
Notification of litigation. The Guarantor will provide the Security Trustee with details of any legal or administrative action involving the Guarantor, the Borrowers (or either of them), any other Security Party, either Ship, its Earnings or its Insurances as soon as such action is instituted or it becomes apparent to the Guarantor that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.
11.12
Chief Executive Office. The Guarantor will maintain its chief executive office in the Principality of Monaco.
11.13
Notification of default. The Guarantor will notify the Security Trustee as soon as the Guarantor becomes aware of:
(a)
the occurrence of an Event of Default or a Latent Event of Default; or
(b)
any matter which indicates that an Event of Default may have occurred,
and will thereafter keep the Security Trustee fully up-to-date with all developments.
11.14      Provision of further information
The Guarantor will, as soon as practicable after receiving the request, provide the Security Trustee with any additional financial or other information relating to:
(a)
the financial condition, business and operations of the Guarantor and each Borrower;
(b)
the Ship owned by a Borrower, its Earnings or its Insurances; or
(c)
any other matter relevant to, or to any provision of, a Finance Document to which it is a party;
which may be requested by the Security Trustee, at any time and the Guarantor shall promptly, provide such further information and/or documents as the Security Trustee may request so as to enable the Security Trustee to comply with any laws applicable to it or any other Creditor Party (including, without limitation, compliance with FATCA).
11.15      " Know your customer" checks
The Guarantor shall notify the Security Trustee immediately if it becomes aware of any actual or intended change in its status or the status of either Borrower and any other Security Party after the date of this Guarantee. If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Guarantee;
(b)
any change in the status of the Guarantor, either Borrower or any other Security Party after the date of this Guarantee; or
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Guarantor shall promptly upon the request of the Security Trustee (acting on the instructions of the Agent or the Lender concerned) supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Security Trustee (for the Agent or on behalf of any Lender or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender or 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.
11.16      Compliance with laws
The Guarantor shall comply and shall procure that each Borrower shall, comply in all material respects with all applicable laws, including, without limitation, all Sanctions and regulations relating thereto and will conduct its business in compliance with applicable anti-corruption laws and maintain policies and procedures designed to promote and achieve compliance with such anti-corruption laws.
11.17
Taxes . The Guarantor shall prepare and timely file all tax returns required to be filed by it and pay and discharge all taxes imposed upon it or in respect of any of its property and assets before the same shall become in default.
11.18      Intercompany Loans . The Guarantor shall:
(a)
procure that any Intercompany Loan it provides shall be made directly to a Borrower and shall:
(i)
be fully subordinated to any and all obligations of the Borrowers and the rights of the Creditor Parties under the Finance Documents;
(ii)
not require the payment of interest prior to expiry of the Maturity Date;
(iii)
mature at least 1 year after the Maturity Date; and
(iv)
not be secured by any asset which is already, or is to be, the subject of a Security Interest created by either Borrower, the Guarantor or any other Security Party pursuant to any Finance Document,
(b)
furnish promptly to the Agent a true and complete copy of any instrument evidencing any Intercompany Loan, all other documents related thereto and a true and complete copy of each material amendment or other modification thereof; and
(c)
in respect of any such Intercompany Loan, execute and deliver to the Agent an Intercompany Loan Assignment and deliver to the Agent such other documents equivalent to those referred to in paragraphs 4, 5 and 6 of Part A of Schedule 4 of the Loan Agreement as the Agent may require.
11.19      Maintenance of status. The Guarantor will:
(a)
maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands;
(b)
remain listed on the New York Stock Exchange; and
(c)
procure that each Borrower shall maintain its separate corporate existence and remain in goodstanding under the laws of the Republic of the Marshall Islands.
11.20      Negative undertakings. The Guarantor will not:
(a)
change its name, its type of organisation or the nature of its business; or
(b)
change its Fiscal Year.
11.21      No merger etc.
The Guarantor shall not enter into any form of merger, de-merger, amalgamation or any form of reconstruction or reorganisation.
11.22
Dividends. The Guarantor may pay a dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital provided that:
(a)
no Event of Default has occurred and is continuing at the time of the payment of such dividends or the making of such distributions, redemptions, purchase or return or will result from the payment of such dividend or the making of such distribution, redemption, purchase or return; and/or
(b)
any payment of such dividend or the making of such distribution, redemption, purchase or return , shall not result in a breach of the financial covenants set out in Clauses 12.1 to 12.5.
11.23
Green scrapping . Guarantor shall maintain a policy that provides that any ships owned by any member of the STI Group and which are due to be scrapped shall be scrapped in compliance with (i) the International Maritime Organization's convention for the Safe and Environmentally Sound Recycling of ships to the extent that are issued and in force at the time of such scrapping and (ii) the guidelines to be issued by the International Maritime Organization in connection with such convention.
12
FINANCIAL COVENANTS
12.1
General. The Guarantor also undertakes with the Security Trustee to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Security Trustee may, with the authority of the Majority Lenders, otherwise permit.
12.2
Minimum liquidity . The Guarantor shall, at all times, maintain Cash and Cash Equivalents equal to or greater than (i) $25,000,000 and (ii) $500,000 per Fleet Vessel plus $250,000 per vessel time chartered to a member of the STI Group (the “ Minimum Liquidity ”), provided that:
(a)
for the purpose of this Clause 12.2, “ Cash ” and " Cash Equivalents " shall include unutilised and freely available amounts under any revolving credit facility made available to the Guarantor (where no default or termination event has occurred and is continuing and no restriction on borrowing exists under any such facility) which has a maturity date in excess of 12 months after the date of the then most recent financial statements delivered by the Guarantor; and
(b)
50 per cent. of the Minimum Liquidity shall at all times consist of Cash.
12.3
Minimum Consolidated Tangible Net Worth . The Guarantor shall, at all times, maintain a Consolidated Tangible Net Worth of not less than $1,000,000,000 plus:
(a)
25 per cent. of the Guarantor 's cumulative, positive consolidated net income for each Accounting Period commencing on or after 1 January 2016; and
(b)
50 per cent. of the Equity Proceeds realised from any issuance of Equity Interests in the Guarantor occurring on or after 1 January 2016.
12.4
Maximum leverage . The Guarantor shall maintain a ratio of Net Debt to Consolidated Total Capitalisation of not more than 0.60 to 1.00, to be tested on the last day of each Accounting Period.
12.5
Minimum interest coverage . The Guarantor shall maintain a ratio of Consolidated EBITDA to Consolidated Net Interest Expense greater than 2.50:1.00. Such ratio shall be calculated on the last day of each Accounting Period on a trailing four quarter basis.
12.6
Material Changes in IFRS requirements . If, at any time after the date of this Guarantee, the IFRS requirements materially change so as to impact the financial covenants set out in this Clause 12 the Guarantor shall notify the Agent and, if agreed between the Guarantor and the Agent, this Guarantee shall be amended and/or supplemented to reflect these changes.
13
JUDGMENTS AND CURRENCY INDEMNITY
13.1
Judgments relating to Loan Agreement and the Master Agreements. This Guarantee shall cover any amount payable by the Borrowers under or in connection with any judgment relating to the Loan Agreement or the Master Agreements.
13.2
Currency indemnity. In addition, clause 21.4 (currency indemnity) of the Loan Agreement shall apply, with any necessary adaptations, in relation to this Guarantee.
14
SET‑OFF
14.1      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 Guarantor at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Guarantor to that Creditor Party under this any of the Finance Documents; and
(b)
for that purpose:
(i)
break, or alter the maturity of, all or any part of a deposit of the Guarantor;
(ii)
convert or translate all or any part of a deposit or other credit balance into Dollars; and
(iii)
enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.
14.2
Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 14.1; 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).
14.3
Sums deemed due to a Lender. For the purposes of this Clause 14, a sum payable by the Guarantor 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 that Lender.
15
SUPPLEMENTAL
15.1
Continuing guarantee. This Guarantee shall remain in force as a continuing security at all times during the Security Period.
15.2
Rights cumulative, non-exclusive. The Security Trustee’s rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law.
15.3
No impairment of rights under Guarantee. If the Security Trustee omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Security Trustee under this Guarantee.
15.4
Severability of provisions. If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions.
15.5
Guarantee not affected by other security. This Guarantee shall not impair, nor be impaired by, any other guarantee, any Security Interest or any right of set-off or netting or to combine accounts which the Security Trustee or any other Creditor Party may now or later hold in connection with the Loan Agreement or any Master Agreement.
15.6
Guarantor bound by Loan Agreement, Master Agreements. The Guarantor agrees with the Security Trustee to be bound by all provisions of the Loan Agreement and the Master Agreements which are applicable to the Security Parties in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee.
15.7
Applicability of provisions of Guarantee to other Security Interests. Any Security Interest which the Guarantor creates (whether at the time at which it signs this Guarantee or at any later time) to secure any liability under this Guarantee shall be a principal and independent security, and Clauses 3 and 18 shall, with any necessary modifications, apply to it, notwithstanding that the document creating the Security Interest neither describes it as a principal or independent security nor includes provisions similar to Clauses 3 and 18.
15.8
Applicability of provisions of Guarantee to other rights. Clauses 3 and 18 shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 and 18), being an agreement referring to this Guarantee.
15.9
Third party rights. A person (other than a Creditor Party) who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee.
16
ASSIGNMENT
16.1
Assignment by Security Trustee. The Security Trustee may transfer and assign its rights under and in connection with this Guarantee to the same extent as it may transfer and assign its rights under the Loan Agreement.
17
NOTICES
17.1
Notices to Guarantor. Any notice or demand to the Guarantor under or in connection with this Guarantee shall be given by letter or fax at:
Scorpio Tankers Inc.

c/o Scorpio Commercial Management S.A.M.
“Le Millenium”

9 Boulevard Charles III, 98000 Monaco

Attn. Mr Luca Forgione / Legal Department
Fax No: +377 97 77 8346
Email: legal@scorpiogroup.net
or to such other address which the Guarantor may notify to the Security Trustee.
17.2
Application of certain provisions of Loan Agreement. Clauses 28.3, 28.4 and 28.5 of the Loan Agreement apply to any notice or demand under or in connection with this Guarantee.
17.3
Validity of demands. A demand under this Guarantee shall be valid notwithstanding that it is served:
(a)
on the date on which the amount to which it relates is payable by either Borrower under the Loan Agreement or a Master Agreement;
(b)
at the same time as the service of a notice under clause 19.2 (events of default) of the Loan Agreement or a Master Agreement;
and a demand under this Guarantee may refer to all amounts payable under or in connection with the Loan Agreement or the Master Agreements without specifying a particular sum or aggregate sum.
17.4
Notices to Security Trustee. Any notice to the Security Trustee under or in connection with this Guarantee shall be sent to the same address and in the same manner as notices to the Security Trustee under the Loan Agreement.
18
INVALIDITY OF LOAN AGREEMENT
18.1      Invalidity of Loan Agreement. In the event of:
(a)
the Loan Agreement now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or
(b)
without limiting the scope of paragraph (a), a bankruptcy of either Borrower, the introduction of any law or any other matter resulting in either Borrower being discharged from liability under the Loan Agreement, or the Loan Agreement ceasing to operate (for example, by interest ceasing to accrue),
this Guarantee shall cover any amount which would have been or become payable under or in connection with the Loan Agreement if the Loan Agreement had been and remained entirely valid, legal and enforceable, or either Borrower had not suffered bankruptcy, or any combination of such events or circumstances, as the case may be, and each Borrower had remained fully liable under it for liabilities whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by the Borrowers under or in connection with the Loan Agreement shall include references to any amount which would have so been or become payable as aforesaid.
18.2
Invalidity of Finance Documents or the Master Agreements. Clause 18.1 also applies to each of the other Finance Documents to which either Borrower is a party and the Master Agreements.
19
GOVERNING LAW AND JURISDICTION
19.1
English law. This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
19.2
Exclusive English jurisdiction. Subject to Clause 19.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.
19.3
Choice of forum for the exclusive benefit of the Security Trustee. Clause 19.2 is for the exclusive benefit of the Security Trustee, 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 Guarantor shall not commence any proceedings in any country other than England in relation to a Dispute.
19.4
Process agent. The Guarantor irrevocably appoints Scorpio UK Limited of 10 Lower Grosvenor Place, London, SW1W 0EN, England (such communication to be marked preferably and if possible on the paper envelope (not any courier exterior) with “STNG Transaction” for the urgent attention of General Counsel) 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.
19.5
Creditor Parties’ rights unaffected. Nothing in this Clause 19 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.
19.6
Meaning of “proceedings”. In this Clause 19, “ 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 Guarantee (including a dispute relating to the existence, validity or termination of this Guarantee) or any non-contractual obligation arising out of or in connection with this Guarantee.

THIS GUARANTEE has been entered into on the date stated at the beginning of this Guarantee.

EXECUTION PAGE




GUARANTOR
 
 
 
SIGNED  by
 
Name: Francesca Gianfranchi
/s/ Francesca Gianfranchi
for and on behalf of
 
SCORPIO TANKERS INC.
 
in the presence of:
 
Name: Micha Withoft
/s/ Micha Withoft
 
 
 
 
SECURITY TRUSTEE
 
 
 
SIGNED  by
/s/ Cameron Johnstone-Browne
for and on behalf of
Name: Cameron Johnstone-Browne
 
Attorney-in-Fact
NIBC BANK N.V.
 
in the presence of:
/s/ Rohan Inamdar
 
Name: Roham Inamdar
 
Trainee Solicitor
 
London EC2A 2HB


SCHEDULE 1

FORM OF COMPLIANCE CERTIFICATE

To: NIBC Bank N.V.
4 Carnegieplein,
2517 KJ, The Hague
The Netherlands

[date]
Dear Sirs,

We refer to:

(a)
a loan agreement dated [ l ] 2016 (the " Loan Agreement ") made between (i) STI Fontvieille Shipping Company Limited and STI Ville Shipping Company Limited as joint and several borrowers (the " Borrowers "), (2) the Lenders named therein, (3) the Swap Banks named therein, (4) yourselves as Mandated Lead Arrangers and (5) yourselves as Agent and Security Trustee; and
(b)
a guarantee dated [ l ] 2016 (the " Guarantee ") made between us as guarantor and yourselves as Security Trustee whereby we agreed, amongst other things, to guarantee the Borrowers' obligations under the Loan Agreement.
Words and expressions defined in each of the Loan Agreement and in the Guarantee shall have the same meaning when used in this Compliance Certificate.

We hereby represent that no Event of Default has occurred as at the date of this Certificate [other than [ l ]].

We hereby certify that, as at the date of this certificate:

(a)
the Minimum Liquidity is $[ l ], $[ l ] of which consists of Cash;
(b)
the Consolidated Tangible Net Worth is $[ l ];
(c)
the ratio of Net Debt to Consolidated Total Capitalisation is [ l ] to [ l ]; and
(d)
the ratio of Consolidated EBITDA to Consolidated Net Interest Expense is [ l ] to [ l ].
All of these thresholds and ratios are in compliance with the requirements of clauses [12.1 to 12.5] of the Guarantee. Copies of our calculations in relation to the financial covenants are attached together with copies of the financial statements of the Guarantor and its subsidiaries for the Accounting Period ending [ l ].

This Certificate and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.



______________________________
[ l ]
Chief Financial Officer
SCORPIO TANKERS INC.

2    

Exhibit 4.6(a)
THIS DEED OF AMENDMENT (“ Deed of Amendment ”) is dated 29 September 2016 and entered into by and between

(1)
SCORPIO TANKERS INC. a Marshall Islands corporation whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (“ STNG ”) on its own account and as agent for and on behalf of each of its existing wholly owned subsidiaries as well as any future wholly owned subsidiaries of STNG as the context requires (together, the “ STNG SPVs ”);

(2)
SCORPIO SERVICES HOLDING LIMITED, a Marshall Islands corporation whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (“ SSH” );

(3)
SCORPIO COMMERCIAL MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Boulevard Charles III, Monaco 98000 (“ SCM ”); and

(4)
SCORPIO SHIP MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Rue du Gabian, Monaco 98000 (“ SSM ”),

each a “ Party ” and together the “ Parties ”.

WHEREAS

STNG, on its own account and as agent for and on behalf of each of the STNG SPVs, SCM and SSM have entered into a master agreement with an effective date of 24 January 2013, as amended or modified from time to time, for the provision by each of SCM and SSM of commercial and technical management services (respectively) to certain vessels controlled by the STNG SPVs (the “ Master Agreement ”);

STNG and SSH are party to an administrative services agreement with an effective date of 1 December 2009, as amended or modified from time to time, for the provision by SSH to STNG of certain administrative services (the “ Administrative Agreement ”);

The Parties now wish to amend the terms of the Master Agreement and Administrative Agreement as detailed herein.

NOW THEREFORE in consideration of the mutual promises contained in this Deed of Amendment, the Parties agree as follows :

1.
Defined terms shall have the meaning ascribed to them in either the Master Agreement or the Administrative Agreement as the context requires, unless otherwise indicated herein.
2.
With effect from the date of this Deed of Amendment:

(a)
The Administrative Agreement is amended so that SSH shall not be entitled to receive and STNG shall not be obliged to pay the Sale and Purchase Fee with respect to the Services provided on




or following the date of this Deed of Amendment other than with respect to the 8 vessels that are currently under construction;

(b)
Except in the case of (i) a Change of Control (as defined in Schedule A hereto) of STNG or (ii) any termination by any STNG SPV, SCM or SSM (as applicable) under Section 21 of each of the Standard Commercial Management Terms or the Standard Technical Management Terms, the Master Agreement is amended such that any termination provisions and termination fees payable by the relevant STNG SPV to SCM and/or SSM (as applicable) pursuant to the terms of the Master Agreement on or following the date of this Deed of Amendment, are amended to be a termination upon the expiration of a period of three months from the date upon which such notice of termination is received and a fee equal to three months of management fees will be payable by STNG SPV to SCM and/or SSM (as applicable) upon termination; provided that , with respect to any event covered by (i) or (ii) in this clause 2(b) the amendments in this clause 2(b) will not apply and the existing terms of the Master Agreement will remain in full force and effect.

3.
Except as expressly set forth herein, both the Master Agreement and the Administrative Agreement are ratified and confirmed in all respects and shall remain in full force and effect in accordance with their terms.
4.
If the respective provisions of either of the Master Agreement or the Administrative Agreement and this Deed of Amendment conflict, then the terms of this Deed of Amendment shall prevail; provided that , the Master Agreement, as amended, shall be amended and restated in its entirety within two months from the date hereof to reflect the agreement of the parties hereto.
5.
Upon demand by any Party or Parties (each a “ Requesting Party ”), any or all of the other Parties will at their own expense, execute and register all further documents and do all acts and things as any Requesting Party shall deem reasonably necessary to enable the Requesting Party to obtain the full benefit of the Deed of Agreement for the purposes contemplated by the Parties.
6.
This Deed of Amendment and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and interpreted in accordance with the law of England and Wales and be subject to arbitration in London pursuant to the terms of the Master Agreement.
7.
The Parties shall pay their own costs and expenses incurred in connection with this Deed of Amendment.
8.
The Parties do not intend that any term of this Deed of Amendment should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Deed of Amendment.
9.
This Deed of Amendment may be executed in any number of counterparts (including by facsimile or electronic mail), with the same effect as if all Parties had signed the same document. All such




counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.



IN WITNESS WHEREOF this Deed of Amendment has been duly executed as a deed and delivered with effect from the date written above.

Executed as a deed by                     /s/Luca Forgione
For and on behalf of                    Name: Luca Forgione
Title: General Counsel
SCORPIO TANKERS INC.                -----------------------------------
                        
In the presence of          Name: Andrew Cottrell      /s/ Andrew Cottrell
Signature of Witness         Title: Legal Intern
Name, address and occupation of witness
 
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

Executed as a deed by            
For and on behalf of                     /s/Luca Forgione
SCORPIO TANKERS INC.                 Name: Luca Forgione
As agent for and on behalf of each of the STNG SPVs     Title: General Counsel
-----------------------------------
In the presence of          Name: Andrew Cottrell      /s/ Andrew Cottrell
Signature of Witness         Title: Legal Intern
Name, address and occupation of witness


“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

Executed as a deed by        
For and on behalf of            
SCORPIO SERVICES HOLDING LIMITED         /s/ Filippo Lauro
Name: Filippo Lauro
Title: Executive Chairman- Vice President
-----------------------------------
                            
In the presence of          Name: Andrew Cottrell          /s/ Andrew Cottrell
Signature of Witness         Title: Legal Intern
Name, address and occupation of witness
 
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

Executed as a deed by            
For and on behalf of
SCORPIO COMMERCIAL MANAGEMENT S.A.M. /s/ Aldo Poma




Name: Aldo Poma
Title: Administrateur Delegue
-----------------------------------
                            
In the presence of          Name: Andrew Cottrell          /s/ Andrew Cottrell
Signature of Witness         Title: Legal Intern
Name, address and occupation of witness
 
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

Executed as a deed by
For and on behalf of
SCORPIO SHIP MANAGEMENT S.A.M.         /s/ Francesco Bellusci
Name: Francesco Bellusci    
Title: Administrateur Delegue
-----------------------------------
                            
In the presence of          Name: Andrew Cottrell          /s/ Andrew Cottrell
Signature of Witness         Title: Legal Intern
Name, address and occupation of witness
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco





Schedule A


For the purposes of this Deed of Amendment, “ Change of Control ” means the occurrence of any of the following:
(A) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of STNG’s or its subsidiaries’ assets, taken as a whole, to any Person other than to a Permitted Owner;
(B) an order made for, or the adoption by the Board of Directors of a plan of, liquidation or dissolution of STNG;
(C) the consummation of any transaction (including any merger or consolidation) the result of which is that any Person, other than a Permitted Owner, becomes the beneficial owner, directly or indirectly, of a majority of STNG’s Voting Securities, measured by voting power rather than number of shares;
(D) if, at any time, STNG becomes insolvent, admits in writing its inability to pay its debts as they become due, is adjudged bankrupt or declares bankruptcy or makes an assignment for the benefit of creditors, or makes a proposal or similar action under the bankruptcy, insolvency or other similar laws of any applicable jurisdiction or commences or consents to proceedings relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction;
(E) the consolidation of STNG with, or the merger of STNG with or into, any Person, other than a Permitted Owner or the consolidation of any Person, other than a Permitted Owner, with, or the merger of any Person, other than a Permitted Owner, with or into, STNG, in any such event pursuant to a transaction in which any of the common stock outstanding immediately prior to such transaction are converted into or exchanged for cash, securities or other property or receive a payment of cash, securities or other property, other than any such transaction where STNG’s Voting Securities outstanding immediately prior to such transaction are converted into or exchanged for Voting Securities of the surviving or transferee Person constituting a majority (measured by voting power rather than number of shares) of the outstanding Voting Securities of such surviving or transferee Person immediately after giving effect to such issuance; or
(F) a change in directors after which a majority of the members of the Board of Directors are not directors who were either nominated by, appointed by or otherwise elected with the approval of current board members at the time of such election.
“ Affiliates ” means, with respect to any Person as at any particular date, any other Persons that directly or indirectly, through one or more intermediaries, are Controlled by, Control or are under common Control with the Person in question, and “Affiliate” means any one of them.
“ Control ” or “ Controlled ” means, with respect to any Person, the right to elect or appoint, directly or indirectly, a majority of the directors of such Person or a majority of the Persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such Person, or the possession 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.




“ Governmental Authority ” means any domestic or foreign government, including any federal, provincial, state, territorial or municipal government, any multinational or supranational organization, any government agency (including the U.S. Securities and Exchange Commission), any tribunal, labor relations board, commission or stock exchange (including the New York Stock Exchange), and any other authority or organization exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government.
“ Permitted Owner ” means SSH and all Affiliates thereof.
“ Person ” shall have the meaning ascribed to it as such term is used in Section 13(d)(3) of the Securities Exchange Act, as amended.
“ Voting Securities ” means securities of all classes of a Person entitling the holders thereof to vote on a regular basis in the election of members of the board of directors or other governing body of such Person.


SK 26596 0004 7266033





EXECUTION COPY


Exhibit 4.7(a)        
        
THIS DEED OF AMENDMENT AND RESTATEMENT (THE “DEED OF AMENDMENT AND RESTATEMENT”) AMENDS AND RESTATES THE MASTER AGREEMENT DATED 24 JANUARY 2013 AS AMENDED BY ADDENDUM NUMBER ONE EFFECTIVE 1 JUNE 2013, AS AMENDED AND RESTATED BY A DEED OF AMENDMENT AND RESTATEMENT EFFECTIVE AS OF 31 DECEMBER 2014 (COLLECTIVELY, THE “ORIGINAL MASTER”)

This Deed of Amendment and Restatement to the Original Master is effective as of 29 September 2016 (the “ Amendment Date ”)

BETWEEN:


(1)
SCORPIO TANKERS INC. , a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“ STNG ”) on its own account and as agent for and on behalf of each of its existing wholly owned subsidiaries (as set out in Schedule 1 ) (“ SPVs ”) and certain of its future wholly-owned subsidiaries (“ Future SPVs ”) (the SPVs and Future SPVs jointly referred to as the “ STNG SPVs ”);

(2)
SCORPIO COMMERCIAL MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Boulevard Charles III, Monaco 98000 (“ SCM ”); and

(3)
SCORPIO SHIP MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Rue du Gabian, Monaco 98000 (“ SSM ”);

(each a “ Party ” and together the “ Parties ”).

WHEREAS:
(1)
The Original Master governs the terms upon which SSM and SCM provide technical and commercial services (respectively) to the STNG SPVs. Pursuant to the terms of the Original Master the Vessels (as therein defined) are managed pursuant to standard technical management terms (the “ Technical Management Terms ”) and/or standard commercial management terms (the “ Commercial Management Terms ” ) , which are set forth in the Original Master, each as amended and supplemented by the applicable confirmation a form of which is included in Schedule 2 of the Original Master (the “ Confirmation ”, together with the Technical Management Terms and the Commercial Management Terms, the “ Management Agreements ”). The Original Master was amended by the Deed of Amendment dated 29 September 2016 (the “ DoA ”).
(2)
Pursuant to the DoA the Parties have agreed to amend certain termination and other provisions contained in the Original Master, including the Management Agreements, as set forth in this Deed of Amendment and Restatement.
NOW THEREFORE in consideration of the mutual covenants contained in this Deed of Amendment and Restatement, the Parties agree as follows:
1.
The Original Master, including the Management Agreements contained therein, shall with effect from the Amendment Date be amended and restated to fully effectuate the intent of the DoA and shall include the amended and restated commercial management terms (the “ New Commercial Management Terms ”) and the amended and restated technical
management terms (the “ New Technical Management Terms ” and together with the New Commercial Management Terms, each as amended and supplemented by the applicable confirmation, the “ New Management Agreements ”) (collectively, the “ Amended Master ”), as attached hereto as Annex A .


EXECUTION COPY


2.
The Management Agreements relating to the STNG SPVs that own vessels listed in Schedule 2 Section A – Owned Vessels (the “ Owned Vessel Management Agreements ”) will with effect from the Amendment Date, be replaced with the New Management Agreements. An addendum to each of the Owned Vessel Management Agreements confirming certain changes shall be issued in the form attached hereto at Schedule 3 Section A and B (as applicable). STNG agrees to cause all subsidiaries of STNG that own Vessels on or after the Amendment Date to enter into and be bound by the Amended Master including for the avoidance of doubt, entering into a confirmation. .
3.
The Management Agreements relating to the time chartered in vessels set out at Schedule 2 Section B – Time chartered in Vessels shall remain unchanged by this Deed of Amendment and Restatement. The Parties agree to cause all vessels that are time-chartered into STNG’s fleet on or after the Amendment Date to enter into and be bound by the Amended Master, including for the avoidance of doubt, entering into a confirmation.
4.
STNG, in its capacity as guarantor, hereby confirms that the guarantees effective 31 December 2014 issued pursuant to the Original Master remain in full force and effect notwithstanding this Deed of Amendment and Restatement.
5.
This Deed of Amendment and Restatement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
6.
This Deed of Amendment and Restatement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Deed of Amendment and Restatement 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. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Terms current at the time when the arbitration proceedings are commenced.

7.
No provision of this Deed of Amendment and Restatement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any person who is not a party to this Deed of Amendment and Restatement.

IN WITNESS WHEREOF this Deed of Amendment and Restatement has been duly executed as a deed and delivered with effect from 15 November 2016.

Executed as a deed by
Name: Luca Forgione
/s/ Luca Forgione
For and on behalf of
Title: General Counsel
 
Scorpio Tankers Inc.
 
 
 
 
 
in the presence of
Name: Andrew Cottrell
/s/ Andrew Cottrell
Signature of Witness
Title: Legal Intern
 
 
 
 
Name, address and occupation of witness
 
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

 
 
 
 
Executed as a deed by
Name: Luca Forgione
/s/ Luca Forgione
For and on behalf of
Title: General Counsel
 
Scorpio Tankers Inc.
 
 
As agent for and on behalf of each of the STNG SPVs:
 


EXECUTION COPY


 
 
 
in the presence of
Name: Andrew Cottrell
/s/ Andrew Cottrell
Signature of Witness
Title: Legal Intern
 
Name, address and occupation of witness
 
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

 
Executed as a deed by
Name: Aldo Poma
/s/ Aldo Puma
For and on behalf of
Title: Administrateur Délégué
 
Scorpio Commercial Management S.A.M.:
 
 
 
 
in the presence of
Name: Andrew Cottrell
/s/ Andrew Cottrell
Signature of Witness
Title: Legal Intern
 
 
 
 
Name, address and occupation of witness
 
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

 
Executed as a deed by
Name: Francesco Bellusci
/s/ Francesco Bellusci
For and on behalf of
Title: Administrateur Délégué
 
Scorpio Ship Management S.A.M.:
 
 
 
 
in the presence of
Name: Andrew Cottrell
/s/ Andrew Cottrell
Signature of Witness
Title: Legal Intern
 
Name, address and occupation of witness
 
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco

 
 
 
 
 
 
 



EXECUTION COPY


    
    
Schedule 1
            
            

1.
SBI Parejo Shipping Company Limited
2.
SBI Tuscamina Shipping Company Limited
3.
STI Acton Shipping Company Limited
4.
STI Alexis Shipping Company Limited
5.
STI Amber Shipping Company Limited
6.
STI Aqua Shipping Company Limited
7.
STI Battersea Shipping Company Limited
8.
STI Battery Shipping Company Limited
9.
STI Bayonne Shipping Company Limited
10.
STI Benicia Shipping Company Limited
11.
STI Beryl Shipping Company Limited
12.
STI Black Hawk Shipping Company Limited
13.
STI Botafogo Shipping Company Limited
14.
STI Brixton Shipping Company Limited
15.
STI Broadway Shipping Company Limited
16.
STI Bromley Shipping Company Limited
17.
STI Bronx Shipping Company Limited
18.
STI Brooklyn Shipping Company Limited
19.
STI Camden Shipping Company Limited
20.
STI Carnaby Shipping Company Limited
21.
STI Cartaret Shipping Company Limited
22.
STI Chartering and Trading Ltd
23.
STI Clapham Shipping Company Limited
24.
STI Comandante Shipping Company Limited
25.
STI Condotti Shipping Company Limited
26.
STI Connaught Shipping Company Limited
27.
STI Croydon Shipping Company Limited
28.
STI Dama Shipping Company Limited
29.
STI Duchessa Shipping Company Limited
30.
STI Ealing Shipping Company Limited
31.
STI Elysees Shipping Company Limited
32.
STI Emerald Shipping Company Limited
33.
STI Esles II Shipping Company Limited
34.
STI Finchley Shipping Company Limited
35.
STI Fontvieille Shipping Company Limited
36.
STI Fulham Shipping Company Limited
37.
STI Galata Shipping Company Limited
38.
STI Garnet Shipping Company Limited
39.
STI Gavia Shipping Company Limited
40.
STI Grace Shipping Company Limited (formerly SBI Macanudo Shipping Company Limited)
41.
STI Gramercy Shipping Company Limited
42.
STI Hackney Shipping Company Limited
43.
STI Hammersmith Shipping Company Limited
44.
STI Hounslow Shipping Company Limited
45.
STI Ipanema Shipping Company Limited
46.
STI Jardins Shipping Company Limited

47.
STI Jasper Shipping Company Limited


EXECUTION COPY


48.
STI Jermyn Shipping Company Limited (formerly SBI Cuaba Shipping Company Limited)
49.
STI Jurere Shipping Company Limited
50.
STI Kingsway Shipping Company Limited
51.
STI La Boca Shipping Company Limited
52.
STI Larvotto Shipping Company Limited
53.
STI Lauren Shipping Company Limited
54.
STI Le Rocher Shipping Company Limited
55.
STI Leblon Shipping Company Limited
56.
STI Lombard Shipping Company Limited
57.
STI Madison Shipping Company Limited
58.
STI Manhattan Shipping Company Limited
59.
STI Marianne Shipping Company Limited
60.
STI Mayfair Shipping Company Limited
61.
STI Memphis Shipping Company Limited
62.
STI Meraux Shipping Company Limited
63.
STI Millenium Shipping Company Limited
64.
STI Milwaukee Shipping Company Limited
65.
STI Notting Hill Shipping Company Limited
66.
STI Onyx Shipping Company Limited
67.
STI Opera Shipping Company Limited
68.
STI Orchard Shipping Company Limited
69.
STI Osceola Shipping Company Limited
70.
STI Oxford Shipping Company Limited
71.
STI Park Shipping Company Limited
72.
STI Pimlico Shipping Company Limited
73.
STI Pontiac Shipping Company Limited
74.
STI Poplar Shipping Company Limited
75.
STI Queens Shipping Company Limited
76.
STI Rambla Shipping Company Limited
77.
STI Recoleta Shipping Company Limited
78.
STI Regina Shipping Company Limited
79.
STI Rose Shipping Company Limited
80.
STI Rotherhithe Shipping Company Limited
81.
STI Ruby Shipping Company Limited
82.
STI San Antonio Shipping Company Limited
83.
STI San Telmo Shipping Company Limited
84.
STI Sapphire Shipping Company Limited
85.
STI Savile Row Shipping Company Limited
86.
STI Seneca Shipping Company Limited
87.
STI Sloane Shipping Company Limited
88.
STI Soho Shipping Company Limited
89.
STI Spiga Shipping Company Limited
90.
STI St. Charles Shipping Company Limited
91.
STI Stamford Shipping Company Limited
92.
STI Susana Shipping Company Limited
93.
STI Taksim Shipping Company Limited
94.
STI Texas City Shipping Company Limited
95.
STI Topaz Shipping Company Limited
96.
STI Tribeca Shipping Company Limited
97.
STI Venere Shipping Company Limited
98.
STI Veneto Shipping Company Limited
99.
STI Ville Shipping Company Limited
100.
STI Virtus Shipping Company Limited
101.
STI Wembley Shipping Company Limited


EXECUTION COPY


102.
STI Westminster Shipping Company Limited
103.
STI Winnie Shipping Company Limited
104.
STI Yorkville Shipping Company Limited
105.
Yellowjacket I Limited
106.
Yellowjacket II Limited
107.
Yellowjacket III Limited
108.
Yellowjacket IV Limited
109.
Yellowjacket V Limited
110.
Yellowjacket VI Limited


EXECUTION COPY



Schedule 2 Confirmations


Section A - Owned Vessels

Vessel name             Date of Confirmation


1.
STI ACTON            25-Aug-14
2.
STI AMBER            24-Jan-13
3.
STI AQUA            02-Jul-14
4.
STI BATTERSEA            13-Oct-14
5.
STI BATTERY            11-Nov-14
6.
STI BENICIA            02-Jul-14
7.
STI BERYL            24-Jan-14
8.
STI BRIXTON            11-Jun-14
9.
STI BROADWAY            04-Nov-14
10.
STI CAMDEN            15-Sep-14
11.
STI CLAPHAM            11-Nov-14
12.
STI COMANDANTE        22-May-14    
13.
STI CONDOTTI            11-Nov-14
14.
STI DAMA            02-Jul-14
15.
STI DUCHESSA             24-Jan-13
16.
STI ELYSEES            02-Jul-14
17.
STI EMERALD            24-Jan-13
18.
STI FINCHLEY            11-Nov-14
19.
STI FONTVIEILLE        17-Jun-13
20.
STI FULHAM            15-Sep-14
21.
STI GARNET            24-Jan-13
22.
STI HACKNEY            02-Jul-14
23.
STI LARVOTTO            17-Jun-13
24.
STI LE ROCHER            17-Jun-13
25.
STI MADISON            25-Aug-14
26.
STI MAYFAIR            03-Sep-14
27.
STI MERAUX            30-Apr-13
28.
STI MILWAUKEE        04-Nov-14
29.
STI ONYX            24-Jan-14
30.
STI OPERA            24-Jan-13
31.
STI ORCHARD            25-Aug-14
32.
STI PARK            15-Sep-14
33.
STI PIMLICO            02-Jul-14
34.
STI POPLAR            11-Nov-14
35.
STI REGINA            25-Aug-14


EXECUTION COPY


36.
STI RUBY            24-Jan-14
37.
STI SAN ANTONIO        22-May-14    
38.
STI SAPPHIRE            24-Jan-13
39.
STI SLOANE            13-Oct-14
40.
STI SOHO            21-Nov-14
41.
STI ST CHARLES        15-Sep-14
42.
STI TEXAS CITY            19-Mar-14
43.
STI TOPAZ            24-Jan-13

44.
STI VENERE            11-Jun-14
45.
STI VILLE            17-Jun-13
46.
STI VIRTUS            11-Jun-14
47.
STI WEMBLEY            13-Oct-14
48.
STI YORKVILLE            13-Oct-14
49.
STI MEMPHIS     11-Dec-15
50.
STI VENETO     15-Jan-15
51.
STI CONNAUGHT     09-Mar-15
52.
STI OXFORD     22-Jan-15
53.
STI GRAMERCY     06-Jan-15
54.
STI TRIBECA     21-Nov-14
55.
STI LOMBARD     06-Apr-16
56.
STI LAUREN     09-Mar-15
57.
STI WINNIE     09-Mar-15
58.
STI CARNABY     28-Jul-15
59.
STI KINGSWAY     28-Jul-15
60.
STI SPIGA     20-May-15
61.
STI SAVILE ROW     20-May-15
62.
STI ROTHERHITHE     16-Dec-14
63.
STI HAMMERSMITH     21-Nov-14
64.
STI MANHATTAN     09-Mar-15
65.
STI WESTMINSTER     08-Jun-15
66.
STI ROSE         16-Dec-14
67.
STI OSCEOLA     09-Mar-15
68.
STI SENECA     20-May-15
69.
STI BROOKLYN     08-Jun-15
70.
STI ALEXIS     15-Jan-15
71.
STI NOTTING HILL     09-Mar-15
72.
STI QUEENS     09-Mar-15
73.
STI BLACK HAWK     10-Aug-15
74.
STI GRACE     01-Mar-16
75.
STI JERMYN     25-Apr-16
76.
STI BRONX       15-Jan-15


EXECUTION COPY


77.
STI PONTIAC     09-Mar-15.
            

Section B - Time chartered in vessels



1.
DENSA ALLIGATOR        17-Sep-2013        
2.
GAN TRUST            31-Jan-2013    
3.
HELLESPONT PROGRESS    14-Mar-2014            
4.
KRASLAVA            24-Jan-2013    
5.
KRISJANIS VALDEMARS        24-Jan-2013            
6.
TARGALE            24-Jan-2013
7.
DENSA CROCODILE        07-Feb-2015
8.
VUKOVAR            01-May-2015
9.
MISS MARIAROSARIA        26-May-2015
10.
SINGLE                24-Mar-2016
11.
SILENT                21-Mar-2016

12.
STAR I                27-Mar-2016
13.
ZEFYROS            08-Jul-2016
14.
CPO AUSTRALIA        01-Sep-2016
15.
CPO NEW ZEALAND        12-Sep-2016
16.
ANCE                13-Sep-2016


EXECUTION COPY


Schedule 3 Form of deed of addendum number two to each of the Management Agreements

Section A Commercial Management Form

This Deed of Addendum number two to the CMA (as defined below) (the “ Addendum ”) is effective as of 29 September 2016

BETWEEN:

(i)
SCORPIO COMMERCIAL MANAGEMENT S.A.M , a company incorporated under the laws of Monaco and having its registered office at 9 Boulevard Charles III, Monaco MC 98000 (“ SCM ”);

(ii)
[*], a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“ STNG SPV ”); and

(iii)
SCORPIO TANKERS INC. , a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“ STNG ”)

(each a “ Party ” and together the “ Parties ”).

WHEREAS:
(1)
SCM and STNG SPV have previously entered into a standard form commercial management agreement including the confirmation dated [*] (the “ Confirmation ”) and addendum number one dated effective as of 31 December 2014 (being together, the “ CMA ”) pursuant to the terms of the master agreement dated 24 January 2013 as amended by an addendum number 1 effective 1 June 2013 as amended and restated by a deed of amendment and restatement effective as of 31 December 2014 (together, the “ Original Master ”) and as amended by the deed of amendment dated 29 September 2016 (the “ DoA ”) entered into by or on behalf of each of the Parties; and
(2)
To fully effectuate the intent of the DoA, the Parties have amended the terms of the Original Master pursuant to a deed of amendment and restatement effective 29 September 2016 (the “ Amended Master ”) and the commercial management terms included therein (the “ New Standard Form CMA ”). This Addendum confirms the changes effective to the terms of the CMA.
NOW THEREFORE in consideration of the mutual covenants contained herein and the payment of $1 by each Party to the other, the receipt and sufficiency of which is acknowledged by each IT IS AGREED as follows:
(a)
With effect from 29 September 2016 the CMA will be amended and restated and replaced by the New Standard Form CMA;
(b)
The Confirmation as amended by addendum number one shall continue to apply as is except that: (i) any reference to “ Clause 22 (g) and (h) ” in the Confirmation shall be changed to “ Clause 22 ” and (ii) where a Vessel is entered into a Scorpio Handymax Tanker Pool, Scorpio LR2 Pool or Scorpio Aframax Pool the following wording from the Confirmation
“ From the period commencing as of the date that [●] becomes a Pool Participant (as defined in the Scorpio [●] Pool Agreement) and the Vessel becomes a Pool Vessel (as




EXECUTION COPY



defined in the Scorpio [●] Pool Agreement) until the date that [●] ceases to be a Pool Participant and the Vessel ceases to be a Pool Vessel the Managers shall be remunerated in accordance with the terms of the Scorpio [●] Pool Agreement (and for the avoidance of doubt shall not be remunerated in accordance with the terms of this Agreement), except, in the event of the application of clause 9.3.A of the Scorpio [●] Pool Agreement the Manager shall receive a flat daily management fee of US$[●] throughout the duration of the Vessel’s Off Pool Time Charter period (as defined in the Scorpio [●] Pool Agreement) which shall be payable monthly in advance against an invoice. Further provided always that for the purposes of calculating the management fee amount which may be due and payable under Clause 22 of this Agreement the management fee set out at Clause 12(a)(i) and (a)(ii) shall expressly apply and the Vessel shall not be deemed to be a Pool Vessel (as defined in the Scorpio [●] Pool Agreement) .”.

shall be deleted and replaced by:
“ From the period commencing as of the date that Owners become a Pool Participant (as defined in the Scorpio [●] Pool Agreement (“ Pool Agreement ”)) and the Vessel becomes a Pool Vessel (as defined in the Pool Agreement) until the date that Owners cease to be a Pool Participant and the Vessel ceases to be a Pool Vessel the Managers shall be remunerated in accordance with the terms of the Pool Agreement (and for the avoidance of doubt shall not be remunerated in accordance with the terms of this Agreement) unless the Vessel is in an Off Pool Time Charter (as defined in the Pool Agreement) in which case the Manager shall receive a flat daily management fee of US [●] payable monthly in advance against an invoice, throughout the duration of the Vessel’s Off Pool Time Charter. Provided always that the applicable termination fees payable by Owners pursuant to Clause 22 of this Agreement shall be calculated by using the management fee set out under Clause 12(a)(i) and 12(a) (ii) as if they expressly applied and the Vessel shall not be deemed to be a Pool Vessel (as defined in the applicable pool agreement) ”.
(c)
STNG confirms its guarantee of the performance of the STNG SPV remains in full force and effect notwithstanding the New Standard Form CMA and this Addendum.
(d)
This Addendum may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
(e)
The law and dispute resolution clause at clause 23 of the New Standard Form CMA shall apply to this Addendum.
(f)
No provision of this Addendum shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Addendum.


IN WITNESS WHEREOF this Addendum has been duly executed as a deed and delivered with effect from [November] 2016.

Executed as a deed by Aldo Poma            )
For and on behalf of                     )
Scorpio Commercial Management S.A.M.:        )

in the presence of                    )    
Signature of Witness                    )
Name, address and occupation of witness        )


Executed as a deed by Luca Forgione            )


EXECUTION COPY


For and on behalf of                     )
[STNG SPV]:                        )

in the presence of                    )        
Signature of Witness                    )
Name, address and occupation of witness        )

Executed as a deed by Luca Forgione            )
For and on behalf of                     )
Scorpio Tankers Inc.                    )

in the presence of                    )        
Signature of Witness                    )
Name, address and occupation of witness        )







EXECUTION COPY


Section B Technical Management Addendum

This Deed of Addendum number two to the TMA (the “ Addendum ”) is effective as of 29 September 2016

BETWEEN:

(i)
SCORPIO SHIP MANAGEMENT S.A.M , a company incorporated under the laws of Monaco and having its registered office at 9 Rue du Gabian, Monaco MC 98000 (“ SSM ”);

(ii)
[*], a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“ STNG SPV ”); and

(iii)
SCORPIO TANKERS INC. , a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“ STNG ”)

(each a “ Party ” and together the “ Parties ”).

WHEREAS:
(1)
SSM and STNG SPV have previously entered into a standard form technical management agreement including the confirmation dated [*] (the “ Confirmation ”) and addendum number one dated effective as of 31 December 2014 (being together, the “ TMA ”) pursuant to the terms of the master agreement dated 24 January 2013 as amended by an addendum number 1 effective 1 June 2013 as amended and restated by a deed of amendment and restatement effective as of 31 December 2014 (together, the “ Original Master ”) and as amended by the deed of amendment dated 29 September 2016 (the “ DoA ”) entered into by or on behalf of each of the Parties; and
(2)
To fully effectuate the intent of the DoA, the Parties have amended the terms of the Original Master pursuant to a deed of amendment and restatement effective 29 September 2016 (the “ Amended Master ”) and the technical management terms included therein (the “ New Standard Form TMA ”). This Addendum confirms the changes effective to the terms of the TMA.
NOW THEREFORE in consideration of mutual covenants contained herein and the payment of $1 by each Party to the other, the receipt and sufficiency of which is acknowledged by each IT IS AGREED as follows:
(a)
With effect from 29 September 2016, the TMA will be amended and restated and replaced by the New Standard Form TMA.
(b)
The Confirmation shall continue to apply as is.
(c)
STNG confirms its guarantee of the performance of the STNG SPV remains in full force and effect notwithstanding the New Standard Form TMA and this Addendum.
(d)
This Addendum may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
(e)
The law and dispute resolution clause at clause 23 of the New Standard Form TMA shall apply to this Addendum.
(f)
No provision of this Addendum shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Addendum.
IN WITNESS WHEREOF this Addendum has been duly executed as a deed and delivered with effect from [November] 2016.

Executed as a deed by Francesco Bellusci        )
For and on behalf of                     )


EXECUTION COPY


Scorpio Ship Management S.A.M.:            )

in the presence of                    )    
Signature of Witness                    )
Name, address and occupation of witness        )


Executed as a deed by Luca Forgione            )
For and on behalf of                     )
[STNG SPV]:                        )

in the presence of                    )        
Signature of Witness                    )
Name, address and occupation of witness        )

Executed as a deed by Luca Forgione            )
For and on behalf of                     )
Scorpio Tankers Inc.                    )


in the presence of                    )        
Signature of Witness                    )
Name, address and occupation of witness        )



EXECUTION COPY




Annex A: Form of amended and restated master agreement (the “ Amended Master ”) effective as of 29 September 2016

MASTER AGREEMENT

This deed of master agreement (the “ Master ”) is effective as of 29 September 2016 (the “ Amendment Date ”)


BETWEEN:


(1)
SCORPIO TANKERS INC. , a company incorporated under the laws of The Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“ STNG ”) on its own account and as agent for and on behalf of each of its existing wholly owned subsidiaries (as set out in Schedule 1 ) (“ SPVs ”) and certain of its future wholly-owned subsidiaries (“ Future SPVs ”) (the SPVs and Future SPVs jointly referred to as the “ STNG SPVs ”);

(2)
SCORPIO COMMERCIAL MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Boulevard Charles III, Monaco 98000 (“ SCM ”); and

(3)
SCORPIO SHIP MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Rue Du Gabian, Monaco 98000 (“ SSM ”);

(each a “ Party ” and together the “ Parties ”).

WHEREAS:
(1)
the Parties have previously entered into a master agreement with an effective date of 24 January 2013 as amended by addendum number one dated 1 June 2013, amended and restated by a deed of amendment and restatement effective as of 31 December 2014, amended by a deed of amendment dated 29 September 2016 (the “ DoA ”) and amended and restated by a deed of amendment and restatement effective as of 29 September 2016 (the “ Deed of Amendment and Restatement ”).
(2)
The STNG SPVs: (i) control a number of vessels already on the water; (ii) will control vessels to be delivered from various shipyards; and (iii) may in the future control vessels purchased or chartered in from third parties (together the “ Vessels ”). References to “control” or “controlled” herein means owned or chartered.
(3) SSM and SCM provide technical and commercial management services (respectively). The Vessels require technical and/or commercial management services from SSM and/or SCM (respectively) and the Parties have agreed on a standard set of terms for technical and commercial management services, which shall be applicable to all Vessels.
(4) Certain STNG SPVs, SSM and SCM have prior to the Amendment Date entered into various technical and commercial management agreements, as amended and supplemented from time to time (the “ Original Management Agreements ”).
(5)
The Parties agreed to amend certain termination provisions contained in the Original Management Agreements by entering into the DoA and the Deed of Amendment and Restatement.
(6)
The revised standard set of terms for the commercial management of the Vessels is hereby attached as Annex I (the “ Standard Commercial Management Terms ”) and the revised standard set of terms for the technical management of the Vessels is hereby attached as Annex II (the “ Standard Technical Management Terms ”). Both the Standard Commercial Management Terms and the Standard Technical Management Terms (together, the “ Standard Management Terms ”) form an integral part of this Master.


EXECUTION COPY


NOW THEREFORE in consideration of the mutual covenants contained herein IT IS AGREED with effect from the Amendment Date as follows:
(1)
the Standard Management Terms contain the terms and conditions concerning the commercial and/or technical management provided by SCM and SSM respectively, to each Vessel controlled by the STNG SPVs.
(2)
STNG will procure all future Vessels (being any Vessels in respect of which a Confirmation has as of the Amendment Date not yet been issued), to be governed by the Standard Commercial Management Terms and/or Standard Technical Management Terms, in each case as amended by the terms detailed in a Confirmation (as defined below), (each a “ Management Agreement ” and together the “ Management Agreements ”). The entry by a Vessel under management by SCM and/or SSM and any amendments to those terms, will be evidenced by a written confirmation (substantially in the form set out in Schedule 2 ) executed by and between STNG SPV (or alternatively, STNG as agent for and on behalf of the relevant STNG SPV), STNG as guarantor and SCM and/or SSM (the “ Confirmation ”). The entry of a time chartered Vessel into management by SCM and/or SSM and any amendments to the Standard Management Terms, will be evidenced by a written confirmation (substantially in the form set out at Schedule 3 ) executed by and between STNG SPV (or alternatively, STNG as agent for and on behalf of the relevant STNG SPV), STNG as guarantor and SSM and/or SCM (as applicable) (the “ TC Confirmation ”).
(3)
the Deed of Amendment and Restatement sets out the amendments (if any) to the Original Management Agreements for all existing Vessels managed by SSM and/or SCM prior to the Amendment Date.
(4)
The management by SCM and/or SSM pursuant to the Standard Management Terms (as applicable) as amended by the terms detailed in the Confirmation shall be effective as of the date prescribed in the Confirmation or TC Confirmation, as applicable (the “ Effective Date ”).
(5)
It is hereby agreed that in each and any of the following circumstances:
a.
any termination or actual or purported withdrawal by STNG or applicable STNG SPV of a Confirmation and/or Management Agreement prior to the relevant Effective Date;
b.
a Vessel not being delivered into the respective Management Agreement within 100 days of the respective Effective Date for any reason whatsoever, other than: (i) the insolvency of the yard where the Vessel is being built provided that the insolvency prevents and not merely delays construction and delivery of the Vessel; or (ii) the total loss (actual constructive or compromised) of the vessel whilst
under construction at the yard (the aforementioned (5)(b)(i) and (ii) being together “ Extraordinary Events ”); or
c.
on or prior to the Effective Date (as applicable) the respective Confirmation and/or Management Agreement being declared void or ineffective for any other reason whatsoever,
an early termination fee in respect of each Management Agreement being the equivalent of three (3) months of management fees payable to SCM and/or SSM (as applicable) according to the provisions of clause 12 of each Management Agreement (the “ Management Fees ”) shall be immediately due and payable by the relevant STNG SPV to SCM and/or SSM (as applicable) and in the event SCM and/or SSM (as applicable) does not receive at least three months prior written notice of the termination event, the early termination fee shall be increased by three (3) months of Management Fees reduced by the pro rata amount where prior written notice of the termination event was given.
Notwithstanding the foregoing, on or following a Change of Control (as defined at Annex IV hereto) and in each of the circumstances set out in Clause 5(a), (b) and (c), the early termination fee amount set out in the paragraph above shall not apply and shall be replaced with an early termination fee in respect of each Management Agreement being the equivalent of twenty-four (24) months of management fees payable to the Managers according to the provisions


EXECUTION COPY


of clause 12 of each Management Agreement, which fee shall be immediately due and payable by the relevant STNG SPV to SCM and/or SSM.
For the purpose of calculating the early termination fees referred to in this Clause 5:
(i)
References to management fees shall be the flat management fees and Commissions (as defined therein) payable pursuant to clause 12 of each Management Agreement; and
(ii)
For the purpose of calculating the early termination fee relating only to the Standard Commercial Management Terms:
(a) the flat management fee applicable to that type of Vessel set out in the applicable Confirmation or where no Confirmation has been issued, the flat management fee applicable to that type of Vessel then in effect; and
(b) the amounts which comprise the Commission (as defined at clause 12 of the Standard Commercial Management Terms) as calculated pursuant to clause 22(g)(vi) for a Part Period (as defined therein) of the Standard Commercial Management Terms shall be applied as from the date the Vessel was scheduled to be delivered pursuant to the applicable purchase agreement, newbuilding contract, or equivalent document.

Further notwithstanding the foregoing, upon the occurrence of any Extraordinary Events, the early termination fees set out above shall not apply and will be replaced with an early termination fee of United States Dollars Sixty Two Thousand Five Hundred (US$62,500) in respect of each Management Agreement and shall immediately become due and payable by the relevant STNG SPV to SCM and/or SSM (as applicable).
(6)
    STNG agrees to guarantee and indemnify each of SCM and SSM in respect of the performance by each of the STNG SPVs of its respective obligations under this Master and each of the Management Agreements and has issued in favour of each of SCM and SSM guarantees effective as of 31 December 2014, copies of which are attached at Annex III hereto.
(7)
The Parties hereby acknowledge and agree that in the event of any inconsistency between the provisions of this Master and any of the Management Agreements: (i) prior to the applicable Effective Date, the provisions of the Master shall prevail; and (ii) on and after the applicable Effective Date the provisions of the relevant Management Agreement shall prevail.
(8)
This Master may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
(9)
If any provision or part-provision of this Master is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of this Master.
(10)
The governing law and dispute resolution provisions in Clause 23 of the Standard Management Terms shall apply to this Master.
(11)
No provision of this Master shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any person who is not a party to this Master.

IN WITNESS WHEREOF this Master has been duly executed as a deed and delivered with effect from the date written above.


EXECUTION COPY



Executed as a deed by    Luca Forgione            )
For and on behalf of                     )
Scorpio Tankers Inc.                     )


in the presence of                        
Signature of Witness                    )
Name, address and occupation of witness        )

Executed as a deed Luca Forgione            )
For and on behalf of                     )
Scorpio Tankers Inc.
As agent for and on behalf of each of the STNG SPVs:    )

in the presence of                        
Signature of Witness                    )
Name, address and occupation of witness        )

Executed as a deed by     Aldo Poma        )
For and on behalf of                     )
Scorpio Commercial Management S.A.M.:         )


in the presence of                        
Signature of Witness                    )
Name, address and occupation of witness        )

Executed as a deed by     Francesco Bellusci    )
For and on behalf of                     )
Scorpio Ship Management S.A.M.:             )


in the presence of                        
Signature of Witness                    )
Name, address and occupation of witness        )



EXECUTION COPY



Schedule 1 – LIST OF SPVs
1.
SBI Parejo Shipping Company Limited
2.
SBI Tuscamina Shipping Company Limited
3.
STI Acton Shipping Company Limited
4.
STI Alexis Shipping Company Limited
5.
STI Amber Shipping Company Limited
6.
STI Aqua Shipping Company Limited
7.
STI Battersea Shipping Company Limited
8.
STI Battery Shipping Company Limited
9.
STI Bayonne Shipping Company Limited
10.
STI Benicia Shipping Company Limited
11.
STI Beryl Shipping Company Limited
12.
STI Black Hawk Shipping Company Limited
13.
STI Botafogo Shipping Company Limited
14.
STI Brixton Shipping Company Limited
15.
STI Broadway Shipping Company Limited
16.
STI Bromley Shipping Company Limited
17.
STI Bronx Shipping Company Limited
18.
STI Brooklyn Shipping Company Limited
19.
STI Camden Shipping Company Limited
20.
STI Carnaby Shipping Company Limited
21.
STI Cartaret Shipping Company Limited
22.
STI Chartering and Trading Ltd
23.
STI Clapham Shipping Company Limited
24.
STI Comandante Shipping Company Limited
25.
STI Condotti Shipping Company Limited
26.
STI Connaught Shipping Company Limited
27.
STI Croydon Shipping Company Limited
28.
STI Dama Shipping Company Limited
29.
STI Duchessa Shipping Company Limited
30.
STI Ealing Shipping Company Limited
31.
STI Elysees Shipping Company Limited
32.
STI Emerald Shipping Company Limited
33.
STI Esles II Shipping Company Limited
34.
STI Finchley Shipping Company Limited
35.
STI Fontvieille Shipping Company Limited
36.
STI Fulham Shipping Company Limited
37.
STI Galata Shipping Company Limited
38.
STI Garnet Shipping Company Limited
39.
STI Gavia Shipping Company Limited


EXECUTION COPY


40.
STI Grace Shipping Company Limited (formerly SBI Macanudo Shipping Company Limited)
41.
STI Gramercy Shipping Company Limited
42.
STI Hackney Shipping Company Limited
43.
STI Hammersmith Shipping Company Limited
44.
STI Hounslow Shipping Company Limited
45.
STI Ipanema Shipping Company Limited
46.
STI Jardins Shipping Company Limited
47.
STI Jasper Shipping Company Limited



48.
STI Jermyn Shipping Company Limited (formerly SBI Cuaba Shipping Company Limited)
49.
STI Jurere Shipping Company Limited
50.
STI Kingsway Shipping Company Limited
51.
STI La Boca Shipping Company Limited
52.
STI Larvotto Shipping Company Limited
53.
STI Lauren Shipping Company Limited
54.
STI Le Rocher Shipping Company Limited
55.
STI Leblon Shipping Company Limited
56.
STI Lombard Shipping Company Limited
57.
STI Madison Shipping Company Limited
58.
STI Manhattan Shipping Company Limited
59.
STI Marianne Shipping Company Limited
60.
STI Mayfair Shipping Company Limited
61.
STI Memphis Shipping Company Limited
62.
STI Meraux Shipping Company Limited
63.
STI Millenium Shipping Company Limited
64.
STI Milwaukee Shipping Company Limited
65.
STI Notting Hill Shipping Company Limited
66.
STI Onyx Shipping Company Limited
67.
STI Opera Shipping Company Limited
68.
STI Orchard Shipping Company Limited
69.
STI Osceola Shipping Company Limited
70.
STI Oxford Shipping Company Limited
71.
STI Park Shipping Company Limited
72.
STI Pimlico Shipping Company Limited
73.
STI Pontiac Shipping Company Limited
74.
STI Poplar Shipping Company Limited
75.
STI Queens Shipping Company Limited
76.
STI Rambla Shipping Company Limited
77.
STI Recoleta Shipping Company Limited
78.
STI Regina Shipping Company Limited
79.
STI Rose Shipping Company Limited


EXECUTION COPY


80.
STI Rotherhithe Shipping Company Limited
81.
STI Ruby Shipping Company Limited
82.
STI San Antonio Shipping Company Limited
83.
STI San Telmo Shipping Company Limited
84.
STI Sapphire Shipping Company Limited
85.
STI Savile Row Shipping Company Limited
86.
STI Seneca Shipping Company Limited
87.
STI Sloane Shipping Company Limited
88.
STI Soho Shipping Company Limited
89.
STI Spiga Shipping Company Limited
90.
STI St. Charles Shipping Company Limited
91.
STI Stamford Shipping Company Limited
92.
STI Susana Shipping Company Limited
93.
STI Taksim Shipping Company Limited
94.
STI Texas City Shipping Company Limited
95.
STI Topaz Shipping Company Limited
96.
STI Tribeca Shipping Company Limited
97.
STI Venere Shipping Company Limited
98.
STI Veneto Shipping Company Limited
99.
STI Ville Shipping Company Limited

100.
STI Virtus Shipping Company Limited
101.
STI Wembley Shipping Company Limited
102.
STI Westminster Shipping Company Limited
103.
STI Winnie Shipping Company Limited
104.
STI Yorkville Shipping Company Limited
105.
Yellowjacket I Limited
106.
Yellowjacket II Limited
107.
Yellowjacket III Limited
108.
Yellowjacket IV Limited
109.
Yellowjacket V Limited
110.
Yellowjacket VI Limited



EXECUTION COPY



Schedule 2 – FORM OF CONFIRMATION TO THE AMENDED AND RESTATED MASTER AGREEMENT WITH EFFECTIVE DATE 29 SEPTEMBER 2016

VESSEL NAME

VESSEL DETAILS

REGISTERED OWNER

DATE OF ENTRY INTO STNG FLEET

DATE OF ENTRY INTO MANAGEMENT BY [SCM AND/OR SSM] PURSUANT TO WHICH THE STNG SPV AND [SCM AND/OR SSM] AGREE TO BE BOUND BY THE [STANDARD COMMERCIAL MANAGEMENT TERMS AND STANDARD TECHNICAL MANAGEMENT TERMS (RESPECTIVELY)] (the “Effective Date”)

NOTES / AMENDMENTS TO STANDARD MANAGEMENT TERMS


EXECUTION COPY


 
 
 
 
[Drafting note: If this is a newbuilding then delivery date as per SBC should be inserted here - actual date NOT on or around]

•     In respect of the Standard Technical Management Terms, see the attached Annexes.

•     Notices Address (Box 22, Part I of the Standard Technical Management Terms and Standard Commercial Management Terms) for the Owners is as follows:

[●]
   C/O 9 Boulevard Charles III, 98000 Monaco MC
   Tel +377 97985850
   Email: management@scorpiogroup.net

•     In respect of the Standard Commercial Management Terms, the flat management fees payable as per clause 12(a)(i): US$[●] per day pro rata.

The Standard Commercial Management Terms are amended with the addition of the following text in clause 12:
1.     Applicable for Scorpio original form pool agreement:
“From the period commencing as of the date that [●] becomes a Pool Participant (as defined in the Scorpio [●] Pool Agreement) and the Vessel becomes a Pool Vessel (as defined
in the Scorpio [●] Pool Agreement) until the date that [●] ceases to be a Pool Participant and the Vessel ceases to be a Pool Vessel the Managers shall be remunerated in accordance with the terms of the Scorpio [●] Pool Agreement (and for the avoidance of doubt shall not be remunerated in accordance with the terms of this Agreement), except, in the event of the application of clause 9.3.A of the Scorpio [●] Pool Agreement the Manager shall receive a flat daily management fee of US$[●] throughout the duration of the Vessel’s Off Pool Time Charter period (as defined in the Scorpio [●] Pool Agreement) which shall be payable monthly in advance against an invoice. Provided always that the applicable termination fees payable by Owners pursuant to Clause 22 of this Agreement shall be calculated by using the management fee set out under Clause 12(a)(i) and 12(a) (ii) and the Vessel shall not be deemed to be a Pool Vessel (as defined in the applicable pool agreement)”.or
2.     Applicable for new Scorpio form pool agreement:
  From the period commencing as of the date that Owners become a Pool Participant (as defined in the Scorpio [●] Pool Agreement (“ Pool Agreement ”)) and the Vessel becomes a Pool Vessel (as defined in the Pool Agreement) until the date that Owners cease to be a Pool Participant and the Vessel ceases to be a Pool Vessel the Managers shall be remunerated in accordance with the terms of the Pool Agreement (and for the avoidance of doubt shall not be remunerated in accordance with the terms of this
 
 
 
 
 Agreement) unless   the   Vessel is in an Off Pool Time Charter (as defined in the Pool Agreement) in which case the Manager shall receive a flat daily management fee of US [●]payable monthly in advance against an invoice, throughout the duration of the Vessel’s Off Pool Time Charter.   Provided always that the applicable termination fees payable by Owners pursuant to Clause 22 of this Agreement shall be calculated by using the management fee set out under Clause 12(a)(i) and 12(a) (ii) and the Vessel shall not be deemed to be a Pool Vessel (as defined in the applicable pool agreement)”.



EXECUTION COPY



In respect of the Amended and Restated Master Agreement with effective date of 29 September 2016 and entered into by Scorpio Tankers Inc., Scorpio Tankers Inc., for and on behalf of existing and future wholly owned vessel owning subsidiaries, Scorpio Commercial Management S.A.M. and Scorpio Ship Management S.A.M. (the “Master”), [STNG SPV] hereby acknowledges, confirms and accepts the terms of the Master.
Further, [Insert name of STNG SPV] acknowledges that in the event of any inconsistency between the provisions of the Master and this Management Agreement: (i) prior to the Effective Date, the provisions of the Master shall prevail; and (ii) on and after the Effective Date the provisions of this Management Agreement shall prevail.
Scorpio Tankers Inc. as agent for and on behalf of [ insert name of STNG SPV ]:
Name:
Position:
Date:
[Scorpio Commercial Management S.A.M.] [if applicable]
Name:
Position:
Date:
[Scorpio Ship Management S.A.M.] [if applicable]
Name:
Position:
Date:

Scorpio Tankers Inc. as guarantor             )
Name:
Position:
Date:



EXECUTION COPY


Schedule 3 – FORM OF TC CONFIRMATION TO THE AMENDED AND RESTATED MASTER AGREEMENT WITH EFFECTIVE DATE 29 SEPTEMBER 2016 DATE OF CONFIRMATION [X] of Commercial and/or Technical Management Agreement (“Management Agreement”)

VESSEL NAME

VESSEL DETAILS

DISPONENT OWNER

DATE OF ENTRY INTO SALT FLEET

DATE OF ENTRY INTO MANAGEMENT BY [SCM AND/OR SSM] PURSUANT TO WHICH THE STNG SPV AND [SCM AND/OR SSM] AGREE TO BE BOUND BY THE [STANDARD COMMERCIAL MANAGEMENT TERMS AND STANDARD TECHNICAL MANAGEMENT TERMS (RESPECTIVELY)] (the “Effective Date”)

NOTES / AMENDMENTS TO STANDARD MANAGEMENT TERMS

 
 
 
 
 
Only Standard Commercial Management Terms are amended as follows:
Both Standard Commercial and/or Technical Management Terms are amended as follows:
Clause 1 “Time Charter”: definition of time charter to be added.
[Clause 12 to be amended on an individual basis depending on the relevant pool agreement terms to address payment of the management fee during the period where the Vessel is considered a pool vessel]
Clause 21(a): delete and replace with
“This Agreement shall come into effect at the date stated in Box 2 and shall continue until terminated by either party giving notice to the other; in which event this Agreement shall terminate on the date on which the Vessel is re-delivered under the Time Charter unless terminated earlier in accordance with Clause 22 (“Termination”)
Clause 22 (all sub-para): delete all references to ET1, ET2, ET3 and ET4.
Clause 22(g)(i) delete “an ET2 event, or for” and “or an ET1, ET3 or ET4 event,”
Clause 22(g) sub clauses (ii) - (vi) inclusive delete



EXECUTION COPY



[ insert name of Owner/Disponent Owner ]:
Name:
Position:
Date:


[Scorpio Commercial Management S.A.M.] [if applicable]
Name:
Position:
Date:
[Scorpio Ship Management S.A.M.] [if applicable]
Name:
Position:
Date:


EXECUTION COPY



Annex I – STANDARD COMMERCIAL MANAGEMENT TERMS






















INTERMANAGER.JPG


BIMCO.JPG


SHIPMAN 2009
STANDARD SHIP MANAGEMENT AGREEMENT





1. Place and date of Agreement    2. Date of commencement of Agreement (Cls. 2 , 12 , 21 and 25 )
As per Confirmation

PART I



3. Owners (name, place of registered office and law of registry) ( Cl. 1 ) (i) Name: As per Confirmation

(ii) Place of registered office: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands 96960

(iii) Law of registry: Marshall Islands


Guaranteed by Scorpio Tankers Inc. Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, 96960 (Guarantor)

4. Managers (name, place of registered office and law of registry) ( Cl. 1 ) (i) Name: Scorpio Commercial Management sam

(ii) Place of registered office: 9 blvd Charles III, MC98000, Monaco, Principality of Monaco





(iii) Law of registry: Principality of Monaco







5. The Company (with reference to the ISM/ISPS Codes) (state name and IMO Unique Company Identification number. If the Company is a third party then also state registered office and principal place of business) (Cls. 1 and 9(c)(i ) )
(i) Name: Scorpio Ship Management sam

(ii) IMO Unique Company Identification number: 0631141

(iii) Place of registered office: 9 Rue du Gabian, 98000, Monaco - MC

(iv) Principal place of business: Principality of Monaco

6. Technical Management (state “yes” or “no” as agreed) ( Cl. 4 )
No

7. Crew Management (state “yes” or “no” as agreed) ( Cl. 5(a ) )
No

8. Commercial Management (state “yes” or “no” as agreed) ( Cl. 6 )
Yes


9. Chartering Services period (only to be filled in if “yes” stated in Box 8 ) ( Cl.6(a ) )
Up to twelve (12) months


10. Crew Insurance arrangements (state “yes” or “no” as agreed)
(i) Crew Insurances* ( Cl. 5(b ) ): No

(ii) Insurance for persons proceeding to sea onboard ( Cl. 5(b)(i ) ): No

*only to apply if Crew Management ( Cl. 5(a ) ) agreed (see Box 7 )




11. Insurance arrangements (state “yes” or “no” as agreed) ( Cl. 7 )
No


12. Optional insurances (state optional insurance(s) as agreed, such as piracy, kidnap and ransom, loss of hire and FD & D) ( Cl. 10(a)(iv ) )
n/a





13. Interest (state rate of interest to apply after due date to outstanding sums) ( Cl. 9(a ) )
n/a

14. Annual management fee (state annual amount) ( Cl. 12(a ) )
See Clause 12 (a) and Confirmation






15. Manager’s nominated account ( Cl.12(a ) )
Beneficiary name and address: Scorpio Commercial Management sam, 9 blvd. Charles III, MC98000 Monaco
Bank full name and address: XXXXXXXXXXXXXXXX

16. Daily rate (state rate for days in excess of those agreed in budget) ( Cl. 12(c ) )
n/a






17. Lay-up period / number of months ( Cl.12(d ) )
n/a



18. Minimum contract period (state number of months) ( Cl. 21(a ) )
Approved by the International Ship Managers' Association
First published 1988. Revised 1998 and 2009
Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w w.bimco.org
Copyright, published by BIMCO
See clause 21(a)

19. Management fee on termination (state number of months to apply) ( Cl. 22(g ) )
Three (3) months of flat management fee plus any Commissions payable to Managers or accrued due or agreed shall remain payable under Clause 22(g). See also Clause 22 (g).





Printed by BIMCO’s idea     SHIPMAN 2009
Standard ship management agreement    PART 1

(Continued)



20. Severance Costs (state maximum amount) ( Cl. 22(h)(ii ) )
n/a

21. Dispute Resolution (state alternative Cl. 23(a ) , 23(b ) or 23(c ) ; if Cl. 23(c ) place of arbitration must be stated) ( Cl. 23 )
Clause 23(a) to apply


Approved by the International Ship Managers' Association


22. Notices (state full style contact details for serving notice and communication to the Owners) ( Cl. 24 )
As per Confirmation

23. Notices (state full style contact details for serving notice and communication to the Managers) Cl. 24 )
Scorpio Commercial Management sam, 9 blvd Charles III, MC98000 Monaco. Phone +377
97985850 E-mail: management@scorpiogroup.net





INTERMANAGER.JPG


It is mutually agreed between the party stated in Box 3 and the party stated in Box 4 that this Agreement consisting of PART l and PART ll as well as Annexes “A” (Details of Vessel or Vessels), “B” (Details of Crew), “C” (Budget), “D” (Associated Vessels) and “E” (Fee Schedule) attached hereto, shall be performed subject to the conditions contained herein. In the event of a conflict of conditions, the provisions of PART l and Annexes “A”, “B”, “C”, “D” and “E” shall prevail over those of PART ll to the extent of such conflict but no further.
Signature(s) (Owners)
Signature(s) (Managers)
Signature(s) (Guarantor)
 








First published 1988. Revised 1998 and 2009








Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO





    


INTERMANAGER.JPG




ANNEX “A” (DETAILS OF VESSEL OR VESSELS)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     

Approved by the International Ship Managers' Association
Date of Agreement: Name of Vessel(s):
Particulars of Vessel(s): As per Confirmation













First published 1988. Revised 1998 and 2009










Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO








INTERMANAGER.JPG



ANNEX “B” (DETAILS OF CREW)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     


Approved by the International Ship Managers' Association
Date of Agreement: Details of Crew:
Numbers    Rank    Nationality




NOT APPLICABLE








First published 1988. Revised 1998 and 2009










Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO










INTERMANAGER.JPG

ANNEX “C” (BUDGET)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     

Date of Agreement:
Approved by the International Ship Managers' Association

Managers´ initial budget with effect from the commencement date of this Agreement (see Box 2 ):





NOT APPLICABLE









First published 1988. Revised 1998 and 2009






Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO








INTERMANAGER.JPG




ANNEX “D” (ASSOCIATED VESSELS)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     

Approved by the International Ship Managers' Association
NOTE: PARTIES SHOULD BE AWARE THAT BY COMPLETING THIS ANNEX “D” THEY WILL BE SUBJECT TO THE PROVISIONS OF SUB- CLAUSE 22(b)(i) OF THIS AGREEMENT.

Date of Agreement:

Details of Associated Vessels : As per Confirmation










First published 1988. Revised 1998 and 2009







Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO








INTERMANAGER.JPG




ANNEX “E” (FEE SCHEDULE)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     






NOT APPLICABLE





ANNEX F (CHANGE OF CONTROL DEFINITION)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT CODE NAME: SHIPMAN 2009


(A) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidati on), in one or a series of related transactions, of all or substantially all of STNGs or its subsidiaries assets, taken as a whole, to any Person other than to a Permitted Owner;
(B) an order made for, or the adoption by the Board of Directors of a plan of, liquidation or dissolution of STNG;
Approved by the International Ship Managers' Assoiation
(C) the consummation of any transaction (including any merger or consolidation) the result of which is that any Person, other than a Permitted Owner, becomes the beneficial owner, directly or indirectly, of a majority of STNGs Voting Securities, measured by voting power rather than number of shares;


(D) if, at any time, STNG becomes insolvent, admits in writing its inability to pay its debts as they become due, is adjudged bankrupt or declares bankruptcy or makes an assignment for the benefit of creditors, or makes a proposal or similar action under the bankruptcy, insolvency or other similar l aws of any applicable jurisdiction or commences or consents to proceedings relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction;
First publshed 1988. Revised 1998 and 2009
(E) the consolidation of STNG with, or the merger of STNG with or into, any Person, other than a Permitted Owner or the consolidation of any Person, other than a Perm itted Owner, with, or the merger of any Person, other than a Permitted Owner, with or into, STNG, in any such event pursuant to a t ransaction in which any of the common stock outstanding immediately prior to such transaction are converted into or exchanged for cash, securities or other property or receive a payment of cash , securities or other property, other than any such transaction where STNGs Voting Securities outstanding immediately prior to such transaction are converted into or exchanged for Voting Se curities of the surviving or transferee Person constituting a majority (measured by voting power rather than number of shares) of the outstanding Voting Securities of such surviving or transferee Person immediately after giving effect to such issuance; or
(F) a change in directors after which a majority of the members of the Board of Directors are not directors who were either n ominated by, appointed by or otherwise elected with the approval of current board members at the time of such election.

“Affiliates” means, with respect to any Person as at any particular date, any other Persons that directly or indirectly, through one or mo re intermediaries, are Controlled by, Control or are under common Control with the Person in question, and Affiliate means any one of them.

“Control” or “Controlled” means, with respect to any Person, the right to elect or appoint, directly or indirectly, a majority of the directors of such Person or a majority of the Persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such Person, or the possession of the power to direct or cause the d irection of the management and policies of a Person, whether through ownership of Voting Securities, by contract, or otherwise.

“Governmental Authority” means any domestic or foreign government, including any federal, provincial, state, territorial or municipal government, any multinational or supranational organization, any government agency (including the U.S. Securities and Exchange Commission), any tribunal, labor relations board, commission or stock exchange (including the New York Stock Exchange), and any other authority or organization exercising executive, legislative, judicial, regulatory or admi nistrative functions of, or pertaining to, government.



“Permitted Owner” means SSH and all Affiliates thereof.

“Person” shall have the meaning ascribed to it as such term is used in Section 13(d)(3) of the Securities Exchange Act, as amended.

“SSH” shall mean Scorpio Services Holding Limited, a Marshall Islands corporation whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Islan d, Majuro, Marshall
Islands MH 96960.

“STNG” shall mean Scorpio Tankers Inc., a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.

“Voting Securities” means securities of all classes of a Person entitling the holders thereof to vote on a regular basi s in the election of members of the board of directors or other governing body of such Person.





Printed by BIMCO’s idea     SHIPMAN 2009


INTERMANAGER.JPG


Standard ship management agreement    PART 1

(Continued)





pproved by the International Ship Managers' Association



















First published 1988. Revised 1998 and 2009






Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO







SECTION 1 – Basis of the Agreement


1. Definitions and Interpretation

1
In this Shipman 2009 form (together with the Confirmation, any additional clauses of even date herewith and
2
any Annexes hereto (the “ Agreement ” ) save where the context otherwise requires, the following words and expressions shall have
the meanings hereby assigned to them:



3

“Approved Brokers” means any of Clarksons Platou, ICAP, Braemer ACM, McQuilling, Poten, Affinity and
Arrow.
 

“Change of Control” means the definition given to it in Annex F attached hereto.
 

“Company” (with reference to the ISM Code and the ISPS Code) means the organization identified in   Box 5

4
or any replacement organization appointed by the Owners from time to time (see Sub- clauses 9(b)(i)   or   9(c)
5
(ii) , whichever is applicable).
6
“Crew” means the personnel of the numbers, rank and nationality specified in Annex “B” hereto.
7
“Crew Insurances” means insurance of liabilities in respect of crew risks which shall include but not be limited
8
to death, permanent disability, sickness, injury, repatriation, shipwreck unemployment indemnity and loss
9
of personal effects (see Sub- clause 5(b)   (Crew Insurances) and   Clause 7   (Insurance Arrangements) and
10
Clause 10   (Insurance Policies) and Boxes   10   and 11 ).
11
“Crew Support Costs” means all expenses of a general nature which are not particularly referable to any
12
individual vessel for the time being managed by the Managers and which are incurred by the Managers for the
13
purpose of providing an efficient and economic management service and, without prejudice to the generality
14
of the foregoing, shall include the cost of crew standby pay, training schemes for officers and ratings, cadet
15
training schemes, sick pay, study pay, recruitment and interviews.
16

“Guarantor” means Scorpio Tankers Inc.
 

“Flag State” means the State whose flag the Vessel is flying.

17
“ISM Code” means the International Management Code for the Safe Operation of Ships and for Pollution
18
Prevention and any amendment thereto or substitution therefor.
19
“ISPS Code” means the International Code for the Security of Ships and Port Facilities and the relevant
20
amendments to Chapter XI of SOLAS and any amendment thereto or substitution therefor.
21
“Managers” means the party identified in   Box 4 .
22
“Management Services” means the services specified in SECTION 2 - Services ( Clauses 4   through 7 ) as
23
indicated affirmatively in   Boxes 6   through   8 , 10   and 11 , and all other functions performed by the Managers
24
under the terms of this Agreement.
25
“Master Agreement” means the deed of Master Agreement as amended and restated effective as of 29
September 2016 entered into by and between the Guarantor, the Guarantor on behalf of any existing and future wholly owned subsidiaries, Scorpio Ship Management S.A.M and the Managers.
 

“Owners” means the party identified in   Box 3 .

26
“Severance Costs” means the costs which are legally required to be paid to the Crew as a result of the early
27
termination of any contracts for service on the Vessel.
28




“SMS” means the Safety Management System (as defined by the ISM Code).
29
“STCW 95” means the International Convention on Standards of Training, Certification and Watchkeeping
30
for Seafarers, 1978, as amended in 1995 and any amendment thereto or substitution therefor.
31






“Vessel” means the vessel or vessels details of which are set out in Annex “A” attached hereto.    32

Interpretation: the Managers, Owners and Guarantor acknowledge and agree that in the event of any inconsistency between the provisions of the Master Agreement and this Agreement: (i) prior to and including the Effective Date (as defined in the Master Agreement) the provisions of the Master Agreement shall prevail; and (ii) after the Effective Date the provisions of this Agreement shall prevail.
2. Commencement and Appointment     33
With effect from the date stated in Box 2 for the commencement of the Management Services and continuing    34 unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers    35 hereby agree to act as the Managers of the Vessel in respect of the Management Services.    36

3. Authority of the Managers     37
Subject to the terms and conditions herein provided, during the period of this Agreement the Managers shall    38 carry out the Management Services in respect of the Vessel as agents for and on behalf of the Owners. The    39
Managers shall have authority to take such actions as they may from time to time in their absolute discretion    40
consider to be necessary to enable them to perform the Management Services in accordance with sound    41 ship management practice, including but not limited to compliance with all relevant rules and regulations.    42







SECTION 2 – Services


4. Technical Management

43
( only applicable if agreed according to Box 6 ).
44
The Managers shall provide technical management which includes, but is not limited to, the following
45
services:
46
(a) ensuring that the Vessel complies with the requirements of the law of the Flag State;
47
(b) ensuring compliance with the ISM Code;
48
(c) ensuring compliance with the ISPS Code;
49
(d) providing competent personnel to supervise the maintenance and general efficiency of the Vessel;
50
(e) arranging and supervising dry dockings, repairs, alterations and the maintenance of the Vessel to the
51
standards agreed with the Owners provided that the Managers shall be entitled to incur the necessary
52
expenditure to ensure that the Vessel will comply with all requirements and recommendations of the
53
classification society, and with the law of the Flag State and of the places where the Vessel is required to
54
;
55
(f) arranging the supply of necessary stores, spares and lubricating oil;
56
(g) appointing surveyors and technical consultants as the Managers may consider from time to time to be
57
;
58
(h ) in accordance with the Owners’ instructions, supervising the sale and physical delivery of the Vessel  
59
under the sale agreement. However services under this Sub-clause 4(h)  shall not include negotiation of the
60
;
61
(i) arranging for the supply of provisions unless provided by the Owners; and
62
(j) arranging for the sampling and testing of bunkers.
63
5. Crew Management and Crew Insurances
64
(a) Crew Management
65
(only applicable if agreed according to Box 7 )
66
The Managers shall provide suitably qualified Crew who shall comply with the requirements of STCW 95.
67
The provision of such crew management services includes, but is not limited to, the following services:
68
(i) selecting, engaging and providing for the administration of the Crew, including, as applicable, payroll
69
arrangements, pension arrangements, tax, social security contributions and other mandatory dues related
70
;
71
(ii) ensuring that the applicable requirements of the law of the Flag State in respect of rank, qualification
72
and certification of the Crew and employment regulations, such as Crew’s tax and social insurance, are
73
;
74





(iii)      ensuring that all Crew have passed a medical examination with a qualified doctor certifying that they are     75
fit for the duties for which they are engaged and are in possession of valid medical certificates issued in
76
accordance with appropriate Flag State requirements or such higher standard of medical examination
77
as may be agreed with the Owners. In the absence of applicable Flag State requirements the medical
78
certificate shall be valid at the time when the respective Crew member arrives on board the Vessel and
79
;
80

(iv)      ensuring that the Crew shall have a common working language and a command of the English language     81
;
82
(v) arranging transportation of the Crew, including repatriation;
83
(vi) training of the Crew;
84






(vii) conducting union negotiations; and
85
(viii) if the Managers are the Company, ensuring that the Crew, on joining the Vessel, are given proper
86
familiarisation with their duties in relation to the Vessel’s SMS and that instructions which are essential
87
to the SMS are identified, documented and given to the Crew prior to sailing.
88
(ix) if the Managers are not the Company:
89
(1) ensuring that the Crew, before joining the Vessel, are given proper familiarisation with their duties
90
;
91
(2) instructing the Crew to obey all reasonable orders of the Company in connection with the operation
92
of the SMS.
93
(x) Where Managers are not providing technical management services in accordance with Clause 4
94
(Technical Management):
95
(1) ensuring that no person connected to the provision and the performance of the crew management
96
services shall proceed to sea on board the Vessel without the prior consent of the Owners (such consent
97
not to be unreasonably withheld); and
98
(2) ensuring that in the event that the Owners’ drug and alcohol policy requires measures to be taken
99
;
100
(b) Crew Insurances
101
( only applicable if Sub-clause 5(a) applies   and if agreed according to Box 10 )
102
The Managers shall throughout the period of this Agreement provide the following services:
103
(i) arranging Crew Insurances in accordance with the best practice of prudent managers of vessels of a
104
similar type to the Vessel, with sound and reputable insurance companies, underwriters or associations.
105
Insurances for any other persons proceeding to sea onboard the Vessel may be separately agreed by
106
the Owners and the Managers (see Box 10 );
107
(ii) ensuring that the Owners are aware of the terms, conditions, exceptions and limits of liability of the
108
insurances in Sub- clause 5(b)(i) ;
109
(iii) ensuring that all premiums or calls in respect of the insurances in Sub- clause 5(b)(i)  are paid by their
110
;
111
(iv) if obtainable at no additional cost, ensuring that insurances in Sub- clause 5(b)(i)  name the Owners as
112
a joint assured with full cover and, unless otherwise agreed, on terms such that Owners shall be under
113
no liability in respect of premiums or calls arising in connection with such insurances.
114
(v) providing written evidence, to the reasonable satisfaction of the Owners, of the Managers’ compliance with
115
their obligations under Sub- clauses 5(b)(ii) , and 5(b)(iii)  within a reasonable time of the commencement
116
of this Agreement, and of each renewal date and, if specifically requested, of each payment date of the
117
insurances in Sub- clause 5(b)(i) .
118
6. Commercial Management
119
(only applicable if agreed according to   Box 8 ).
120
The Managers shall provide the following services for the Vessel in accordance with the Owners’ instructions,
121
which shall include but not be limited to:
122
(a) seeking and negotiating employment for the Vessel and the conclusion (including the execution thereof)
123
of charter parties or other contracts relating to the employment of the Vessel. If such a contract exceeds the
124




period stated in   Box 9 , consent thereto in writing shall first be obtained from the Owners;
125
(b) arranging , in the name and for the account of the Owners, for the provision of bunker fuels of the quality
126
specified by the Owners as required for the
Vessel’s trade (see Annex A) ;

127
(c) voyage estimating and accounting and calculation of hire, freights, demurrage and/or despatch monies
128
;
129






related to the commercial operation of the Vessel in accordance with   Clause 11   (Income Collected and
130
Expenses Paid on Behalf of Owners);
131
If any of the services under Sub- clauses 6(a) , 6(b)  and 6(c)  are to be excluded from the Management Fee, remuneration
132
for these services must be stated in Annex E (Fee Schedule). See Sub- clause 12(e) .
133
(d) issuing voyage instructions including, but not limited to, authorising the Master to release cargoagainst relevant letter(s) of indemnity ;
134
(e) appointing agents;
135
(f) appointing stevedores; and
136
(g) arranging surveys associated with the commercial operation of the Vessel.
137


7. Insurance Arrangements
138
(only applicable if agreed according to Box 11 ).
139
The Managers shall arrange insurances in accordance with Clause 10  (Insurance Policies), on such terms as
140
the Owners shall have instructed or agreed, in particular regarding conditions, insured values, deductibles,
141
franchises and limits of liability.
142







SECTION 3 – Obligations


8. Managers’ Obligations

143
(a) The Managers undertake to use their best endeavours to provide the Management Services as agents
144
for and on behalf of the Owners in accordance with sound ship management practice and to protect and
145
promote the interests of the Owners in all matters relating to the provision of services hereunder.
146
Provided however, that in the performance of their management responsibilities under this Agreement, the
147
Managers shall be entitled to have regard to their overall responsibility in relation to all vessels as may from
148
time to time be entrusted to their management and in particular, but without prejudice to the generality of
149
the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such
150
manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and
151
reasonable.
152

(b) Where the Managers are providing technical management services in accordance with Clause 4 (Technical

153
Management), they shall procure that the requirements of the Flag State are satisfied and they shall agree
154
to be appointed as the Company, assuming the responsibility for the operation of the Vessel and taking over
155
the duties and responsibilities imposed by the ISM Code and the ISPS Code, if applicable.
156
9. Owners’ Obligations
157
(a) The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this
158
Agreement. In the event of payment after the due date of any outstanding sums the Manager shall be entitled
159
to charge interest at the rate stated in   Box 13 .
160
(b) Where the Managers are providing technical management services in accordance with Clause 4 (Technical
161
Management), the Owners shall:
162
(i) report (or where the Owners are not the registered owners of the Vessel procure that the registered
163
owners report) to the Flag State administration the details of the Managers as the Company as required
164
;
165
(ii) procure that any officers and ratings supplied by them or on their behalf comply with the requirements
166
;
167
(iii) instruct such officers and ratings to obey all reasonable orders of the Managers (in their capacity as the
168
Company) in connection with the operation of the Managers’ safety management system .
169
(c) Where the Managers are not providing technical management services in accordance with   Clause 4
170
(Technical Management), the Owners shall:
171
(i) procure that the requirements of the Flag State are satisfied and notify the Managers upon execution of
172
this Agreement of the name and contact details of the organization that will be the Company by completing
173
Box 5 ;
174




(ii) if the Company changes at any time during this Agreement, notify the Managers in a timely manner of
175
;
176
(iii) procure that the details of the Company, including any change thereof, are reported to the Flag State
177
administration as required to comply with the ISM and ISPS Codes. The Owners shall advise the Managers
178
;
179
(iv) unless otherwise agreed, arrange for the supply of provisions at their own expense.
180
(d) Where the Managers are providing crew management services in accordance with Sub- clause 5(a)  the
181
Owners shall:
182
(i) inform the Managers prior to ordering the Vessel to any excluded or additional premium area under
183
any of the Owners’ Insurances by reason of war risks and/or piracy or like perils and pay whatever
184
additional costs may properly be incurred by the Managers as a consequence of such orders including,
185
if necessary, the costs of replacing any member of the Crew. Any delays resulting from negotiation
186
with or replacement of any member of the Crew as a result of the Vessel being ordered to such an area
187






shall be for the Owners’ account. Should the Vessel be with in an area which becomes an excluded or      188 additional premium area the above provisions relating to cost and delay shall apply;      189

(ii) agree with the Managers prior to any change of flag of the Vessel and pay whatever additional costs
190
may properly be incurred by the Managers as a consequence of such change. If agreement cannot be
191
reached then either party may terminate this Agreement in accordance with Sub- clause 22(e) ; and
192
(iii) provide, at no cost to the Managers, in accordance with the requirements of the law of the Flag State,
193 or higher standard, as mutually agreed, adequate Crew accommodation and living standards.      194

(e) Where the Managers are not the Company, the Owners shall ensure that Crew are properly familiarised
195
with their duties in accordance with the Vessel’s SMS and that instructions which are essential to the SMS
196
are identified, documented and given to the Crew prior to sailing.
197







SECTION 4 – Insurance, Budgets, Income, Expenses and Fees





































some cases, such as

10. Insurance Policies

198
The Owners shall procure , whether by instructing the Managers under     Clause 7   ( Insurance Arrangements)
199
or otherwise,   that throughout the period of this Agreement:
200
(a) at the Owners’ expense, the Vessel is insured for not less than its sound market value or entered for its
201
full gross tonnage, as the case may be for:
202
(i) hull and machinery marine risks (including but not limited to crew negligence) and excess liabilities;
203
(ii) protection and indemnity risks (including but not limited to pollution risks, diversion expenses and,
204
except to the extent insured separately by the Managers in accordance with Sub - clause 5(b)(i) , Crew
205
;
206
NOTE: If the Managers are not providing crew management services under Sub - clause 5(a)   (Crew
207
Management) or have agreed not to provide Crew Insurances separately in accordance with Sub-clause
208
5 (b)(i) , t hen such insurances must be included in the protection and indemnity risks cover for the Vessel (see
209
Sub - clause 10(a)(ii)   a bove).
210
(iii) war risks (including but not limited to blocking and trapping, protection and indemnity, terrorism and crew
211
risks); and
212




(iv) such optional insurances as may be agreed (such as piracy, kidnap and ransom, loss of hire and
213
FD & D) (see Box 12 )
214
Sub - clauses 10(a)(i)   t hrough 1 0(a)(iv)   a ll in accordance with the best practice of prudent owners of vessels
215
of a similar type to the Vessel, with sound and reputable insurance companies, underwriters or associations
216
(“the Owners’ Insurances”);
217
(b) all premiums and calls on the Owners’ Insurances are paid by their due date;
218
(c) the Owners’ Insurances name the Managers and, subject to underwriters’ agreement, any third party
219
designated by the Managers as a joint assured co-assured (mis-direct arrow) , with full cover.   It is understood that in
220

protection and indemnity, the normal terms for such cover may impose on the Managers and any such third

221
party a liability in respect of premiums or calls arising in connection with the Owners’ Insurances .
222
If obtainable at no additional cost, however, the Owners shall procure such insurances on terms such that
223
neither the Managers nor any such third party shall be under any liability in respect of premiums or calls arising
224
in connection with the Owners’ Insurances. In any event, on termination of this Agreement in accordance
225
with   Cl ause 21   (Du ration of the Agreement) and   Cl ause 22   ( Termination), the Owners shall procure that the
226
Managers and any third party designated by the Managers as joint assured co-assured shall cease to be joint
227

and, if reasonably achievable, that they shall be released from any and all liability for premiums and calls

228
that may arise in relation to the period of this Agreement; and
229
(d) written evidence is provided, to the reasonable satisfaction of the Managers, of the Owners’ compliance
230
with their obligations under this   Cl ause 10   w ithin a reasonable time of the commencement of the Agreement,
231
and of each renewal date and, if specifically requested, of each payment date of the Owners’ Insurances.
232

10.1 The Owners may, from time to time, require the Managers to arrange, in the name and for the account of
 
the Owners, operational insurance as envisaged in clause 10(a)(iv).
 

11. Income Collected and Expenses Paid on Behalf of Owners

233
(a) Except as provided in Sub - clause 11(c)   a ll monies collected by the Managers under the terms of this
234
Agreement (other than monies payable by the Owners to the Managers) (if any) and any interest thereon shall be
235
held to the credit of the Owners in a separate bank account.
236
(b) All expenses incurred by the Managers under the terms of this Agreement on behalf of the Owners
237










assured co-assured







(including expenses as provided in Clause 12(c) ) (if any) may be debited against the Owners in the account referred to

238

under Sub- clause 11(a) but shall in any event remain payable by the Owners to the Managers on demand.    239

(c)     All monies collected by the Managers under Clause 6 (Commercial Management) (if any) shall be paid into a    240 bank account in the name of the Owners or as may be otherwise advised by the Owners in writing.    241

12. Management Fee and Expenses     242
(a)     The Owners shall pay to the Managers an annual management fee as stated in Box 14 for their services    243

as Managers under this Agreement, (i) a flat management fee as stated in the Confirmation and which shall be payable monthly in advance against proper invoice in equal monthly instalments in advance, the first

244

instalment (pro rata if appropriate) being payable on the commencement of this Agreement (see Clause 2      245 (Commencement and Appointment) and Box 2 ) and subsequent instalments being payable at the beginning      246

of every calendar month ; and
(ii) for providing chartering services in accordance with clause 6(a) a commission of one and a quarter percent (1.25%) on all monies earned by the Owners on each Vessel fixture (“Commission”) . The flat management fee and Commission shall be payable to the Managers’ nominated account stated
in Box 15 and shall become due and payable from the Owners to the Managers as from the Effective Date .
As of the Effective Date any Commission shall be payable on the date when any freight, hire or other monies are received (“Revenues”) in respect of which Commission is due and Owners hereby authorise
Managers to deduct the Commission part of the management fee from Revenues when received.

247




248

(b) The management fee shall be subject to an annual review and the proposed fee shall be presented in      249 the annual budget in accordance with Sub- clause 13 (a).      250

(c)     The Managers shall, at no extra cost to the Owners, provide their own office accommodation, office staff,    251 facilities and stationery. Without limiting the generality of this Clause 12 (Management Fee and Expenses) the    252
Owners shall reimburse the Managers for postage and communication expenses, travelling expenses, and    253 other out of pocket expenses properly incurred by the Managers in pursuance of the Management Services.    254
Any days used by the Managers’ personnel travelling to or from or attending on the Vessel or otherwise used      255 in connection with the Management Services in excess of those agreed in the budget shall be charged at     256 the daily rate stated in Box 16 .      257

(d) If the Owners decide to layup the Vessel and such layup lasts for more than the number of months      258 stated in Box 17 , an appropriate reduction of the Management Fee for the period exceeding such period      259 until one month before the Vessel is again put into service shall be mutually agreed between the parties. If      260 the Managers are providing crew management services in accordance with Sub- clause 5(a) , consequential      261
costs of reduction and reinstatement of the Crew shall be for the Owners’ account. If agreement cannot be      262 reached then either party may terminate this Agreement in accordance with Sub- clause 22(e) .      263

(e) Save as otherwise provided in this Agreement, all discounts and commissions obtained by the Managers      264

in the course of the performance of the Management Services shall be credited to the Owners.

265

(d) Payment of the flat management fee set out above at Clause 12(a)(i) and the Commission set out at Clause




12(a)(ii) is fully guaranteed by the Guarantor and the Guarantor as the ultimate parent of the Owner acknowledges that the Management Services, the Managers will provide to the Owners, are due consideration for the giving of this guarantee.
13. Budgets and Management of Funds
266 (a) The Managers’ initial budget is set out in Annex “C” hereto. Subsequent budgets shall be for twelve      267 month periods and shall be prepared by the Managers and presented to the Owners not less than three      268 months before the end of the budget year.      269

(b) The Owners shall state to the Managers in a timely manner, but in any event within one month of      270 presentation, whether or not they agree to each proposed annual budget. The parties shall negotiate in good      271 faith and if they fail to agree on the annual budget, including the management fee, either party may terminate      272 this Agreement in accordance with Sub- clause 22(e) .      273

(c) Following the agreement of the budget, the Managers shall prepare and present to the Owners their      274






estimate of the working capital requirement for the Vessel and shall each month request the Owners in writing
275
to pay the funds required to run the Vessel for the ensuing month, including the payment of any occasional or
276
extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers
277
or provisions. Such funds shall be received by the Managers within ten running days after the receipt by the
278
Owners of the Managers’ written request and shall be held to the credit of the Owners in a separate bank
279
account.
280
(d) The Managers shall at all times maintain and keep true and correct accounts in respect of the Management
281
Services in accordance with the relevant International Financial Reporting Standards or such other standard
282
as the parties may agree, including records of all costs and expenditure incurred, and produce a comparison
283
between budgeted and actual income and expenditure of the Vessel in such form and at such intervals as
284
shall be mutually agreed.
285
The Managers shall make such accounts available for inspection and auditing by the Owners and/or their
286
representatives in the Managers’ offices or by electronic means, provided reasonable notice is given by the
287
Owners.
288
(e) Notwithstanding anything contained herein, the Managers shall in no circumstances be required to use
289
or commit their own funds to finance the provision of the Management Services.
290






SECTION 5 – Legal, General and Duration of Agreement
 

14. Trading Restrictions

291
If the Managers are providing crew management services in accordance with Sub- clause 5(a)  (Crew
292
Management), the Owners and the Managers will, prior to the commencement of this Agreement, agree on any
293
trading restrictions to the Vessel that may result from the terms and conditions of the Crew’s employment.
294
15. Replacement
295
If the Managers are providing crew management services in accordance with Sub- clause 5(a)  (Crew
296
Management), the Owners may require the replacement, at their own expense, at the next reasonable
297
opportunity, of any member of the Crew found on reasonable grounds to be unsuitable for service. If the
298
Managers have failed to fulfil their obligations in providing suitable qualified Crew within the meaning of Sub-
299
clause 5(a)  (Crew Management), then such replacement shall be at the Managers’ expense .
300
16. Managers’ Right to Sub-Contract
301
Save as provided herein,   T t he Managers shall not subcontract any of their obligations hereunder without the prior
302
written consent of
the Owners which shall not be unreasonably withheld. The Owners consent to the subcontract of (a) the chartering

303
;
 
Management (India) Pvt Ltd. In the event of such a sub-contract the Managers
 
shall remain fully liable for the due performance of their obligations under this Agreement.
304
17. Responsibilities
305
(a) Force Majeure
306
Neither party shall be liable for any loss, damage or delay due to any of the following force majeure events
307
and/or conditions to the extent that the party invoking force majeure is prevented or hindered from
308
performing any or all of their obligations under this Agreement, provided they have made all
309
reasonable efforts to avoid, minimize or prevent the effect of such events and/or conditions:
310
(i) acts of God;
311
(ii) any Government requisition, control, intervention, requirement or interference;
312
(iii) any circumstances arising out of war, threatened act of war or warlike operations, acts of terrorism,
313
sabotage or piracy, or the consequences thereof;
314
(iv) riots, civil commotion, blockades or embargoes;
315
(v) epidemics;
316
(vi) earthquakes, landslides, floods or other extraordinary weather conditions;
317
(vii) strikes, lockouts or other industrial action, unless limited to the employees (which shall not include the
318
Crew) of the party seeking to invoke force majeure;
319
(viii) fire, accident, explosion except where caused by negligence of the party seeking to invoke force majeure;
320
and
321




(ix) any other similar cause beyond the reasonable control of either party.
322
(b) Liability to Owners
323
(i) Without prejudice to Sub- clause 17(a) , the Managers shall be under no liability whatsoever to the Owners
324
for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but
325
not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and
326
howsoever arising in the course of performance of the Management Services UNLESS same is proved
327
to have resulted solely from the negligence, gross negligence or wilful default of the Managers or their
328
employees or agents, or sub-contractors employed by them in connection with the Vessel, in which case
329
(save where loss, damage, delay or expense has resulted from the Managers’ personal act or omission
330
committed with the intent to cause same or recklessly and with knowledge that such loss, damage,
331
delay or expense would probably result) the Managers’ liability for each incident or series of incidents
332
giving rise to a claim or claims shall never exceed a total of ten (10) times the annual management fee as per Clause
12(a)(i)
333






payable hereunder.    334

(ii) Acts or omissions of the Crew - Notwithstanding anything that may appear to the contrary in this
335
Agreement, the Managers shall not be liable for any acts or omissions of the Crew, even if such acts
336
or omissions are negligent, grossly negligent or wilful , except only to the extent that they are shown to
337
have resulted from a failure by the Managers to discharge their obligations under Clause 5(a)  (Crew
338
Management), in which case their liability shall be limited in accordance with the terms of this Clause
339
17  (Responsibilities).
340

(c) Indemnity
Except to the extent and solely for the amount therein set out that the Managers would be liable under
341
342
Sub- clause 17(b) , the Owners hereby undertake to keep the Managers and their employees,
343
agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims,
344
demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or
345
suffered by them arising out of or in connection with the performance of this Agreement, and against and in
346
respect of all costs, loss, damages and expenses (including legal costs and expenses on a full indemnity
347
basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance
348
of this Agreement.
349
(d) “Himalaya”
350
It is hereby expressly agreed that no employee or agent of the Managers (including every
351
sub-contractor from time to time employed by the Managers) shall in any circumstances whatsoever be
352
under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or
353
resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in
354
connection with his employment and, without prejudice to the generality of the foregoing provisions in this
355
Clause 17   (Responsibilities), every exemption, limitation, condition and liberty herein contained and every
356
right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to
357
which the Managers are entitled hereunder shall also be available and shall extend to protect every such
358
employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions
359
of this   Clause 17   (Responsibilities) the Managers are or shall be deemed to be acting as agent or trustee
360
on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time
361
(including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be
362
parties to this Agreement.
363
18. General Administration
364
(a) The Managers shall keep the Owners and, if appropriate, the Company informed in a timely manner of
365
any incident of which the Managers become aware which gives or may give rise to delay to the Vessel or
366
claims or disputes involving third parties and which individually are reasonably estimated to be in excess of
US$15,000 .
367
(b) The Managers shall handle and settle all claims and disputes arising out of the Management Services
368
hereunder, unless the Owners instruct the Managers otherwise. The Managers shall keep the Owners
369
appropriately informed in a timely manner throughout the handling of such claims and disputes.
370




(c) The Owners may request the Managers to bring or defend other   actions,   suits or proceedings related
371
to the Management Services, on terms to be agreed and subject to the provisions of clause 18(a) and 18(b) .
372
(d) The Managers shall have power to obtain appropriate legal or technical or other outside expert advice in
373
relation to the handling and settlement of claims in relation to Sub- clauses 18(a)   and 18(b)   and disputes and
374
any other matters affecting the interests of the Owners in respect of the Vessel, save Managers should obtain
Owners approval prior to taking any action if time permits and unless the Owners instruct
375
the Managers otherwise.
376
(e) On giving reasonable notice, the Owners may request, and the Managers shall in a timely manner make
377
available, all documentation, information and records in respect of the matters covered by this Agreement and in respect of the Management Services.
378
either related to mandatory rules or regulations or other obligations applying to the Owners in respect of
379
the Vessel (including but not limited to STCW 95, the ISM Code and ISPS Code) to the extent permitted by
380
relevant legislation.
381
On giving reasonable notice, the Managers may request, and the Owners shall in a timely manner make
382






available, all documentation, information and records reasonably required by the Managers to enable them
383
to perform the Management Services.
384
(f) The Owners shall arrange for the provision of any necessary guarantee bond or other security.
385
(g) Any costs incurred by the Managers in carrying out their obligations according to this   Clause 18 (General
386
Administration) shall be reimbursed by the Owners.
387
19. Inspection of Vessel
388
The Owners may at any time after giving reasonable notice to the Managers inspect the Vessel for any reason
389
they consider necessary.
390
20. Compliance with Laws and Regulations
391
The parties will not do or permit to be done anything which might cause any breach or infringement of the
392
laws and regulations of the Flag State, or of the places where the Vessel trades.
393
21. Duration of the Agreement
394
(a) This Agreement shall come into effect at the date stated in   Box 2   and shall continue until terminated by
395
either party by giving notice to the other; in which event this Agreement shall terminate upon the expiration
396
of   the later of the number of months stated in    Box 18   or     a period of   two (2)     twenty-four (24) months from the date on
397
which
 
such notice is received, unless terminated earlier in accordance with   Clause 22   (Termination).
398
(b) Where the Vessel is not at a mutually convenient port or place on the expiry of such period, this Agreement
399
shall terminate on the subsequent arrival of the Vessel at the next mutually convenient port or place.
400
22. Termination
401
(a) Owners’ or Managers’ default
402
If either party fails to meet their obligations under this Agreement, the other party may give notice to the
403
party in default requiring them to remedy it. In the event that the party in default fails to remedy it within a
404
reasonable time to the reasonable satisfaction of the other party, that party shall be entitled to terminate this
405
Agreement with immediate effect by giving notice to the party in default.
406
(b) Notwithstanding Sub- clause 22(a) :
407
(i) The Managers shall be entitled to terminate the Agreement with immediate effect by giving notice to the
408
Owners if any monies payable by the Owners and/or the owners of any associated vessel, details of
409
which are listed in Annex “D”, shall not have been received in the Managers’ nominated account within
410
ten days (10) of receipt by the Owners of the Managers’ written request, or if the Vessel is repossessed by
411
the Mortgagee(s).
412
(ii) If the Owners proceed with the employment of or continue to employ the Vessel in the carriage of
413
contraband, blockade running, or in an unlawful trade, or on a voyage which in the reasonable opinion
414
of the Managers is unduly hazardous or improper, the Managers may give notice of the default to the
415




Owners, requiring them to remedy it as soon as practically possible. In the event that the Owners fail to
416
remedy it within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled
417
to terminate the Agreement with immediate effect by notice.
418
(iii) If either party fails to meet their respective obligations under Sub- clause 5(b)   (Crew Insurances) and
419
Clause 10   (Insurance Policies), the other party may give notice to the party in default requiring them to
420
remedy it within ten (10) days, failing which the other party may terminate this Agreement with immediate
421
effect by giving notice to the party in default.
422
(iv) If the Managers are convicted of, or admit guilt for, a crime, then the Owners shall be entitled to terminate
 
this Agreement with immediate effect by notice in writing.
 
(c) Extraordinary Termination
423
This Agreement shall be :
(i) terminated in the case of a sale of the Vessel (“ET1”), and the date upon which the Vessel is to be treated as
424
having been sold or otherwise disposed of shall be the date on which the Vessel’s owners cease to be the
 
registered owners of the Vessel;
 
(ii) deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or
 






compromised or arranged total loss or is requisitioned or has been declared missing, or the Vessel is bareboat chartered for a period of less than three (3) years, when the bareboat charter comes to an end (in either case, “ET2”);

(iii) terminated if the Vessel is bareboat chartered for a period of three (3) years or more, unless otherwise agreed, when the bareboat charter comes to an end (“ET3”); or

(iv) terminated if the Vessel is not delivered to the Owners within 100 days of the Effective Date (“ET4”).



deemed to be terminated in the case of the sale of the Vessel or, if the Vessel
becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned      425 or has been declared missing or, if bareboat chartered, unless otherwise agreed, when the bareboat charter      426 comes to an end.      427

(d)     For the purpose of Sub- clause 22(c) hereof:     428

(i)      the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be      429 the date on which the Vessel’s owners cease to be the registered owners of the Vessel;      430

(ii)     the Vessel shall be deemed to be lost either when it has become an actual total loss or agreement has    431 been reached with the Vessel’s underwriters in respect of its constructive total loss or if such agreement    432 with the Vessel’s underwriters is not reached it is adjudged by a competent tribunal that a constructive    433 loss of the Vessel has occurred; and    434

(iii)     the date upon which the Vessel is to be treated as declared missing shall be ten (10) days after the Vessel    435 was last reported or when the Vessel is recorded as missing by the Vessel’s underwriters, whichever    436 occurs first. A missing vessel shall be deemed lost in accordance with the provisions of Sub- clause 22(d)      437 (ii) .        438

(e) In the event the parties fail to agree the annual budget in accordance with Sub- clause 13(b) , or to agree      439 a change of flag in accordance with Sub- clause 9(d)(ii) , or to agree to a reduction in the Mangement Fee in      440 accordance with Sub- clause 12(d) , either party may terminate this Agreement by giving the other party not      441 less than one month’s notice, the result of which will be the expiry of the Agreement at the end of the current     442 budget period or on expiry of the notice period, whichever is the later.      443

(f)     This Agreement shall terminate forthwith in the event of an order being made or resolution passed      444 for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than for the purpose of      445
reconstruction or amalgamation) or if a receiver or administrator is appointed, or if it suspends payment,      446

ceases to carry on business or makes any special arrangement or composition with its creditors. Either party shall have the right to terminate this Agreement forthwith if the other party: has ceased to trade; suspend payment(s); has an order made or resolution passed for its winding up, dissolution, liquidation or bankruptcy (otherwise than for the purpose of solvent reconstruction or amalgamation); has a receiver, administrative receiver, administrator or other similar official appointed over all or substantially all of its assets or undertakings; has a secured party take possession of all or substantially all its assets; has become insolvent or gone into liquidation (unless such liquidation is for the purpose of a solvent reconstruction or amalgamation); makes a general assignment, arrangement or composition with or for the benefit of its creditors; is unable to pay its debts as they become due; causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in the foregoing text; or, takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

447



(g)

(i) In the event of a termination of this Agreement for an ET2 event or for any other reason except: (i) in the
case of default by the Managers; or (ii) an ET1, ET3 or ET4 event, the management fee payable to the Managers according to the provisions of Clause 12 (Management Fee and Expenses) shall continue to be payable for a
further period of the number of months stated in Box 19 as from the date of termination. If Box 19 is left blank,
then ninety (90) days shall apply.

(ii) In the event of a termination of this Agreement for an ET1, ET3 or ET4 event (and absent a Change of
Control):




(aa) the management fee payable to the Managers according to the provisions of Clause 12 (Management Fee and Expenses), shall continue to be payable for a futher period of three (3) months as from the date of

448






termination; and
(bb) the Owners are to provide written notice of termination to Managers at least three (3) months prior to the date of termination. Where Managers do not receive at least three (3) months prior written notice of the date of termination the management fee in (aa) shall be increased by three (3) months of management fees, reduced
by the pro rata amount where prior written notice of the date of termination was given.

(iii) On or following a Change of Control, clauses (ii)(aa) and (bb) above shall not apply and in the event of a termination of this Agreement for an ET1, ET3 or ET4 event, the management fee payable to the Managers according to the provisions of Clause 12 (Management Fee and Expenses), shall continue to be payable for a further period of twenty-four (24) months as from the date of termination.

(iv) In the event of a termination of this Agreement for an ET4 event, no termination fee shall be due and payable hereunder where the Owner is required to pay an early termination fee as the same is described in the Master Agreement.

(v) All amounts due and payable under this Clause 22(g) shall be accelerated and immediately payable in one lump sum on the date of termination.

(vi) In respect of the amounts which make up the Commission as set out in Clause 12(a)(ii), this shall be calculated so that the Commission is deemed payable for the period detailed in (ii)(aa) and (bb) or (iii) above (the “Remaining Period”). Therefore any Commission amounts which have accrued due or been agreed shall remain payable. For any part of the Remaining Period where no actual Commission has accrued or is due
(“Part Period”), the amount of the Commission due under this clause shall be calculated by reference to: (i) tce revenue, taken from the projected market rates from a reliable source (e.g. Clarksons), or if not promptly
agreed by the Owners and Managers, the average projected market rates for this type of vessel for the Part
Period from three Approved Brokers; and (ii) voyage expenses, based on the average daily voyage expenses taken from the Scorpio pool data for this type of vessel for the prior twelve (12) months (ending with the most recent quarter end) which shall be adjusted taking into consideration the forward curve of bunker prices obtained from market data e.g. Ice Futures Europe (Preliminary VE). The Preliminary VE shall then be utilized in the calculation so as to reflect the Part Period.

In the event of the termination of this Agreement for any reason other than default by the Managers the
management fee payable to the Managers according to the provisions of Clause 12 (Management Fee and      449
Expenses), shall continue to be payable for a further period of the number of months stated in Box 19 as      450 from the effective date of termination. If Box 19 is left blank then ninety (90) days shall apply.      451

(h) In addition, where the Managers provide Crew for the Vessel in accordance with Clause 5(a) (Crew      452
Management):      453

(i)      the Owners shall continue to pay Crew Support Costs during the said further period of the number of      454 months stated in Box 19 ; and      455

(ii)      the Owners shall pay an equitable proportion of any Severance Costs which may be incurred, not      456 exceeding the amount stated in Box 20 . The Managers shall use their reasonable endeavours to minimise      457 such Severance Costs.      458

(i)     On the termination, for whatever reason, of this Agreement, the Managers shall release to the Owners,    459 if so requested, the originals where possible, or otherwise certified copies, of all accounts and all documents    460 specifically relating to the Vessel and its operation.    461

(j)     The termination of this Agreement shall be without prejudice to all rights accrued due between the parties    462 prior to the date of termination.    463

23. BIMCO Dispute Resolution Clause
464 (a)     This Agreement shall be governed by and construed in accordance with English law and any dispute    465 arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with    466 the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary    467 to give effect to the provisions of this Clause.    468

The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA)    469
Terms current at the time when the arbitration proceedings are commenced.    470

The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its    471 arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint    472 its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole    473






arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the
474
14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so
475
within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any
476
further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party
477
accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by
478
agreement.
479
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the
480
appointment of a sole arbitrator.
481
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum
482
as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims
483
Procedure current at the time when the arbitration proceedings are commenced.
484
(b) This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code
485
and the Maritime Law of the United States and any dispute arising out of or in connection with this Agreement
486
shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the
487
;
488
enforcing any award, judgment may be entered on an award by any court of competent jurisdiction. The
489
proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc.
490
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum
491
as the parties may agree) the arbitration shall be conducted in accordance with the Shortened Arbitration
492
Procedure of the Society of Maritime Arbitrators, Inc. current at the time when the arbitration proceedings
493
are commenced.
494
(c) This Agreement shall be governed by and construed in accordance with the laws of the place mutually
495
agreed by the parties and any dispute arising out of or in connection with this Agreement shall be referred
496
to arbitration at a mutually agreed place, subject to the procedures applicable there.
497
(d) Notwithstanding Sub- clause s   23(a) ,   23(b)   or   23(c)     above, the parties may agree at any time to refer to
498
mediation any difference and/or dispute arising out of or in connection with this Agreement.
499
(i) In the case of a dispute in respect of which arbitration has been commenced under Sub-clause s   23(a) ,
23(b)   or   23(c)     above, the following shall apply:
500
501
(ii) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to
mediation by service on the other party of a written notice (the “Mediation Notice”) calling on the other
502
503
party to agree to mediation.
504
(iii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that
505
they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14
506
calendar days, failing which on the application of either party a mediator will be appointed promptly by
507




the Arbitration Tribunal (“the Tribunal”) or such person as the Tribunal may designate for that purpose.
508
The mediation shall be conducted in such place and in accordance with such procedure and on such
509
terms as the parties may agree or, in the event of disagreement, as may be set by the mediator.
510
(iv) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal
511
and may be taken into account by the Tribunal when allocating the costs of the arbitration as between
512
the parties.
513
(v) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest.
514
515
(vi) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall
516
continue during the conduct of the mediation but the Tribunal may take the mediation timetable into
517
account when setting the timetable for steps in the arbitration.
518
(vii) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred
519
in the mediation and the parties shall share equally the mediator’s costs and expenses.
520
(viii) The mediation process shall be without prejudice and confidential and no information or documents
521






disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under
522
the law and procedure governing the arbitration.
523
(Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.)
524
(e) If   Box 21   in Part I is not appropriately filled in, Sub- clause 23(a)   of this Clause shall apply.
525
Note: Sub- clauses 23(a) , 23(b)   and   23(c)   are alternatives; indicate alternative agreed in   Box 21 . Sub-clause
526
23(d)   shall apply in all cases.
527
24. Notices
528
(a) All notices given by either party or their agents to the other party or their agents in accordance with the
529
provisions of this Agreement shall be in writing and shall, unless specifically provided in this Agreement to
530
the contrary, be sent to the address for that other party as set out in   Boxes 22   and 23   or as appropriate or
531
to such other address as the other party may designate in writing.
532
A notice may be sent by registered or recorded mail, facsimile, electronically or delivered by hand in accordance
533
with this Sub- clause 24(a) .
534
(b) Any notice given under this Agreement shall take effect on receipt by the other party and shall be deemed
535
to have been received:
536
(i) if posted, on the seventh (7th) day after posting;
537
(ii) if sent by facsimile or electronically, on the day of transmission; and
538
(iii) if delivered by hand, on the day of delivery.
539
And in each case proof of posting, handing in or transmission shall be proof that notice has been given,
540
unless proven to the contrary.
541
25. Entire Agreement
542
This Agreement and Master Agreement constitutes the entire agreement between the parties and no promise, undertaking,
representation, warranty or statement by either party prior to the date stated in   Box 2   shall affect this
543

544
Agreement. Any modification of this Agreement shall not be of any effect unless in writing signed by or on
545
behalf of the parties.
546
26. Third Party Rights
547
Except to the extent provided in Sub- clauses 17(c)   (Indemnity) and   17(d)   (Himalaya), no third parties may
548
enforce any term of this Agreement.
549
27. Partial Validity
550
If any provision of this Agreement is or becomes or is held by any arbitrator or other competent body to be
551
illegal, invalid or unenforceable in any respect under any law or jurisdiction, the provision shall be deemed
552
to be amended to the extent necessary to avoid such illegality, invalidity or unenforceability, or, if such
553
amendment is not possible, the provision shall be deemed to be deleted from this Agreement to the extent
554




of such illegality, invalidity or unenforceability, and the remaining provisions shall continue in full force and
555
effect and shall not in any way be affected or impaired thereby.
556
28. Interpretation
557
In this Agreement:
558
(a) Singular/Plural
559
The singular includes the plural and vice versa as the context admits or requires.
560
(b) Headings
561
The index and headings to the clauses and appendices to this Agreement are for convenience only and shall not affect
562
its construction or interpretation.
563
(c) Day
564
“Day” means a calendar day unless expressly stated to the contrary.
565
Any additional clauses attached hereto together with the Confirmation, any subsequent addenda, schedules,
 






appendices or otherwise, shall be construed as an integral part of this Agreement and shall be interpreted accordingly.

























Annex II – STANDARD TECHNICAL MANAGEMENT TERMS


















INTERMANAGER.JPG

BIMCO.JPG


SHIPMAN 2009
STANDARD SHIP MANAGEMENT AGREEMENT





1. Place and date of Agreement    2. Date of commencement of Agreement (Cls. 2 , 12 , 21 and 25 )
As per Confirmation



PART I


3. Owners (name, place of registered office and law of registry) ( Cl. 1 ) (i) Name: As per confirmation

(ii) Place of registered office: Trust Company Complex, Ajeltake Road,Ajeltake Island,Majuro, MH96960, Marshall Islands

(iii) Law of registry: Marshall Islands







Guaranteed by Scorpio Tankers Inc. Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, 96960 (Guarantor)


4. Managers (name, place of registered office and law of registry) ( Cl. 1 ) (i) Name: Scorpio Ship Management sam

(ii) Place of registered office:     9 Rue Du Gabian, 98000, Monaco - MC

(iii) Law of registry: Monaco

5. The Company (with reference to the ISM/ISPS Codes) (state name and IMO Unique Company Identification number. If the Company is a third party then also state registered office and principal place of business) (Cls. 1 and 9(c)(i ) )
(i) Name: Scorpio Ship Management sam

(ii) IMO Unique Company Identification number: 0631141

(iii) Place of registered office: 9 Rue du Gabian, 98000, Monaco - MC

(iv) Principal place of business: Monaco

6. Technical Management (state “yes” or “no” as agreed) ( Cl. 4 )
yes

7. Crew Management (state “yes” or “no” as agreed) ( Cl. 5(a ) )
yes

8. Commercial Management (state “yes” or “no” as agreed) ( Cl. 6 )
no



9. Chartering Services period (only to be filled in if “yes” stated in Box 8 ) ( Cl.6(a ) )
no

10. Crew Insurance arrangements (state “yes” or “no” as agreed)
(i) Crew Insurances* ( Cl. 5(b ) ): within owner cover as per 10(a)(ii)


(ii) Insurance for persons proceeding to sea onboard ( Cl. 5(b)(i ) ): within owner cover as per
10(a)(ii)

*only to apply if Crew Management ( Cl. 5(a ) ) agreed (see Box 7 )


11. Insurance arrangements (state “yes” or “no” as agreed) ( Cl. 7 )
yes

12. Optional insurances (state optional insurance(s) as agreed, such as piracy, kidnap and ransom, loss of hire and FD & D) ( Cl. 10(a)(iv ) )
FD&D, Kidnap and Ransom while transiting extended GOA





13. Interest (state rate of interest to apply after due date to outstanding sums) ( Cl. 9(a ) )
1% per month

14. Annual management fee (state annual amount) ( Cl. 12(a ) )
250,000 USD





15. Manager’s nominated account ( Cl.12(a ) )
Approved by the International Ship Managers' Association
First published 1988. Revised 1998 and 2009
Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO
Beneficiary: SCORPIO SHIP MANAGEMENT
XXXXXXXXXXXXXXXXXXXXXX













18. Minimum contract period (state number of months) ( Cl. 21(a ) )
See clause 21(a)

16. Daily rate (state rate for days in excess of those agreed in budget) ( Cl. 12(c ) )
400 USD in excess of 20 days per year travel included


17. Lay-up period / number of months ( Cl.12(d ) )
2 months







19. Management fee on termination (state number of months to apply) ( Cl. 22(g ) )
3 (three) months . See also Clause 22 (g).





Printed by BIMCO’s idea     SHIPMAN 2009
Standard ship management agreement    PART 1

(Continued)



20. Severance Costs (state maximum amount) ( Cl. 22(h)(ii ) )
80,000 USD

21. Dispute Resolution (state alternative Cl. 23(a ) , 23(b ) or 23(c ) ; if Cl. 23(c ) place of arbitration must be stated) ( Cl. 23 )
23(a)


Approved by the International Ship Managers' Association


22. Notices (state full style contact details for serving notice and communication to the Owners) ( Cl. 24 )
As per Confirmation

23. Notices (state full style contact details for serving notice and communication to the Managers) Cl. 24 )
Scorpio Ship Management sam
9 Rue Du Gabian, 98000 Monaco-MC
tel +377 97985700 email fbellusci@scorpio.mc





INTERMANAGER.JPG

It is mutually agreed between the party stated in Box 3 and the party stated in Box 4 that this Agreement consisting of PART l and PART ll as well as Annexes “A” (Details of Vessel or Vessels), “B” (Details of Crew), “C” (Budget), “D” (Associated Vessels) and “E” (Fee Schedule) attached her eto, shall be performed subject to the conditions contained herein. In the event of a conflict of conditions, the provisions of PART l and Annexes “A”, “B”, “C”, “D” and “E” shall prevail over those of PART ll to the extent of such conflict but no further.
Signature(s) (Owners)
Signature(s) (Managers) Francesco Bellusci Administrateur Delegue
Signature(s) (Guarantor)
 









First published 1988. Revised 1998 and 2009







Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO








INTERMANAGER.JPG




ANNEX “A” (DETAILS OF VESSEL OR VESSELS)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     

Date of Agreement: Name of Vessel(s): Particulars of Vessel(s):
Approved by theInternational Ship Managers' Association

As per Confirmation










First published 1988. Revised 1998 and 2009










Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO








INTERMANAGER.JPG





ANNEX “B” (DETAILS OF CREW)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     


Date of Agreement: Details of Crew:
Numbers    Rank    Nationality







First published 1988. Revised 1998 and 2009















Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO








INTERMANAGER.JPG



ANNEX “C” (BUDGET)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     

Date of Agreement:
Approved by the International Ship Managers' Association

Managers´ initial budget with effect from the commencement date of this Agreement (see Box 2 ):















First published 1988. Revised 1998 and 2009






Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org
Copyright, published by BIMCO








INTERMANAGER.JPG



ANNEX “D” (ASSOCIATED VESSELS)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     

Approved by the International Ship Managers' Associaton
NOTE: PARTIES SHOULD BE AWARE THAT BY COMPLETING THIS ANNEX “D” THEY WILL BE SUBJECT TO THE PROVISIONS OF
SUB- CLAUSE 22(b)(i) OF THIS AGREEMENT.

Date of Agreement:

Details of Associated Vessels :









First published 1988. Revised 1998 and 2009








Copyright, published by BIMCO
Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org








INTERMANAGER.JPG




ANNEX “E” (FEE SCHEDULE)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
CODE NAME: SHIPMAN 2009     

NOT APPLICABLE


ANNEX F (CHANGE OF CONTROL DEFINITION)
TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT CODE NAME: SHIPMAN 2009

(A) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidati on), in one or a series of related transactions, of all or substantially all of STNGs or its subsidiaries assets, taken as a whole, to any Person other than to a Permitted Owner;
(B) an order made for, or the adoption by the Board of Directors of a plan of, liquidation or dissolution of STNG;
(C) the consummation of any transaction (including any merger or consolidation) the result of which is that any Person, other than a Permitted Owner, becomes the beneficial owner, directly or indirectly, of a majority of STNGs Voting Securities, measured by voting power rather than number of shares;
(D) if, at any time, STNG becomes insolvent, admits in writing its inability to pay its debts as they become due, is adjudged bankrupt or declares bankruptcy or makes an assignment for the benefit of creditors, or makes a proposal or similar action under the bankruptcy, insolvency or other similar l aws of any applicable jurisdiction or commences or consents to proceedings relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction;
(E) the consolidation of STNG with, or the merger of STNG with or into, any Person, other than a Permitted Owner or the consolidation of any Person, other than a Perm itted Owner, with, or the merger of any Person, other than a Permitted Owner, with or into, STNG, in any such event pursuant to a t ransaction in which any of the common stock outstanding immediately prior to such transaction are converted into or exchanged for cash, securities or other property or receive a payment of cash , securities or other property, other than any such transaction where STNGs Voting Securities outstanding immediately prior to such transaction are converted into or exchanged for Voting Se curities of the surviving or transferee Person constituting a majority (measured by voting power rather than number of shares) of the outstanding Voting Securities of such surviving or transferee Person immediately after giving effect to such issuance; or
(F) a change in directors after which a majority of the members of the Board of Directors are not directors who were either n ominated by, appointed by or otherwise elected with the approval of current board members at the time of such election.



“Affiliates” means, with respect to any Person as at any particular date, any other Persons that directly or indirectly, through one or more intermediaries, are Controlled by, Control or are under common Control with the Person in question, and Affiliate means any one of them.

“Control” or “Controlled” means, with respect to any Person, the right to elect or appoint, directly or indirectly, a majority of the directors of such Person or a majority of the Persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such Person, or the possession 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.

“Governmental Authority” means any domestic or foreign government, including any federal, provincial, state, territorial or municipal government, any multinational or supranational organization, any government agency (including the U.S. Securities and Exchange Commission), any tr ibunal, labor relations board, commission or stock exchange (including the New York Stock Exchange), and any other authority or organization exercising executive, legislative, judicial, regulatory or admi nistrative functions of, or pertaining to, government.

“Permitted Owner” means SSH and all Affiliates thereof.

“Person” shall have the meaning ascribed to it as such term is used in Section 13(d)(3) of the Securities Exchange Act, as amended.
First published 1988. Revised 1998 and 2009

“SSH” shall mean Scorpio Services Holding Limited, a Marshall Islands corporation whose registered office is at Trust Company Compl ex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands MH 96960.

“STNG” shall mean Scorpio Tankers Inc., a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.


Explanatory Notes for SHIPMAN 2009 are available from BIMCO at w ww.bimco.org

“Voting Securities” means securities of all classes of a Person entitling the holders thereof to vote on a regular basis in the election of members of the board of directors or other governing body of such Person.
Copyright, published by BIMCO







SECTION 1 – Basis of the Agreement


1. Definitions and Interpretation     1
In this Shipman 2009 form (together with the Confirmation, any additional clauses of even date herewith and
2 any Annexes hereto    (the “ Agreement ”) save where the context otherwise requires, the following words and expressions shall have
the meanings hereby assigned to them:    3

“Change of Control” means the definition given to it in Annex F attached hereto.

“Company” (with reference to the ISM Code and the ISPS Code) means the organization identified in Box 5      4 or any replacement organization appointed by the Owners from time to time (see Sub- clauses 9(b)(i) or 9(c)      5 (ii) , whichever is applicable).    6

“Crew” means the personnel of the numbers, rank and nationality specified in Annex “B” hereto.    7

“Crew Insurances” means insurance of liabilities in respect of crew risks which shall include but not be limited        8 to death, permanent disability, sickness, injury, repatriation, shipwreck unemployment indemnity and loss        9 of personal effects (see Sub- clause 5(b) (Crew Insurances) and Clause 7 (Insurance Arrangements) and    10
Clause 10 (Insurance Policies) and Boxes 10 and 11 ).    11

“Crew Support Costs” means all expenses of a general nature which are not particularly referable to any    12 individual vessel for the time being managed by the Managers and which are incurred by the Managers for the    13 purpose of providing an efficient and economic management service and, without prejudice to the generality    14
of the foregoing, shall include the cost of crew standby pay, training schemes for officers and ratings, cadet    15
training schemes, sick pay, study pay, recruitment and interviews as pertain only to the Vessel and her     16
requirements. .

“Guarantor” means Scorpio Tankers Inc.

“Flag State” means the State whose flag the Vessel is flying.    17

“ISM Code” means the International Management Code for the Safe Operation of Ships and for Pollution    18
Prevention and any amendment thereto or substitution therefor.    19

“ISPS Code” means the International Code for the Security of Ships and Port Facilities and the relevant    20 amendments to Chapter XI of SOLAS and any amendment thereto or substitution therefor.    21

“Managers” means the party identified in Box 4 .    22

“Management Services” means the services specified in SECTION 2 - Services ( Clauses 4 through 7 ) as    23 indicated affirmatively in Boxes 6 through 8 , 10 and 11 , and all other functions performed by the Managers    24
under the terms of this Agreement.    25

“Master Agreement” means the deed of Master Agreement as amended and restated effective as of 29
September 2016 entered into by and between the Guarantor, the Guarantor on behalf of any existing and future wholly owned subsidiaries, Scorpio Commercial Management S.A.M and the Managers.

“Owners” means the party identified in Box 3 .    26

“Severance Costs” means the costs which are legally required to be paid to the Crew as a result of the early    27 termination of any contracts for service on the Vessel.    28

“SMS” means the Safety Management System (as defined by the ISM Code).    29

“STCW 95” means the International Convention on Standards of Training, Certification and Watchkeeping    30 for Seafarers, 1978, as amended in 1995 and any amendment thereto or substitution therefor.    31

“Vessel” means the vessel or vessels details of which are set out in Annex “A” attached hereto.    32







Interpretation: the Managers, Owners and Guarantor acknowledge and agree that in the event of any inconsistency between the provisions of the Master Agreement and this Agreement: (i) prior to and including the Effective Date (as the same is defined in the Master Agreement) the provisions of the Master Agreement shall prevail; and (ii) after the Effective Date the provisions of this Agreement shall prevail.

2. Commencement and Appointment
33
With effect from the date stated in   Box 2   for the commencement of the Management Services and continuing
34
unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers
35
hereby agree to act as the Managers of the Vessel in respect of the Management Services.
36

3. Authority of the Managers
37
Subject to the terms and conditions herein provided, during the period of this Agreement the Managers shall
38
carry out the Management Services in respect of the Vessel as agents for and on behalf of the Owners. The
39
Managers shall have authority to take such actions as they may from time to time in their absolute discretion
40
consider to be necessary to enable them to perform the Management Services in accordance with sound
41
ship management practice, including but not limited to compliance with all relevant rules and regulations.
42







SECTION 2 – Services


4. Technical Management

43
( only applicable if agreed according to   Box 6 ).
44
The Managers shall provide technical management which includes, but is not limited to, the following
45
services:
46

(a) ensuring that the Vessel complies with the requirements of the law of the Flag State;
47
(b) ensuring compliance with the ISM Code;
48
(c) ensuring compliance with the ISPS Code;
49
(d) providing competent personnel to supervise the maintenance and general efficiency of the Vessel;
50
(e) arranging and supervising dry dockings, repairs, alterations and the maintenance of the Vessel to the
51
standards agreed with the Owners provided that the Managers shall be entitled to incur the necessary
52
expenditure to ensure that the Vessel will comply with all requirements and recommendations of the
53
classification society, and with the law of the Flag State and of the places where the Vessel is required to
54
;
55
(f) arranging the supply of necessary stores, spares and lubricating oil;
56
(g) appointing surveyors and technical consultants as the Managers may consider from time to time to be
57
;
58
(h) in accordance with the Owners’ instructions, supervising the sale and physical delivery of the Vessel
59
under the sale agreement. However services under this   Sub-clause 4(h)   shall not include negotiation of the
60
;
61
(i) arranging for the supply of provisions unless provided by the Owners; and
62
(j) arranging for the sampling and testing of bunkers.
63
5. Crew Management and Crew Insurances
(a) Crew Management
64
65
(only applicable if agreed according to   Box 7 )
66
The Managers shall provide suitably qualified Crew who shall comply with the requirements of STCW 95.
67
The provision of such crew management services includes, but is not limited to, the following services:
68
(i) selecting, engaging and providing for the administration of the Crew, including, as applicable, payroll
69
arrangements, pension arrangements, tax, social security contributions and other mandatory dues related
70
;
71
(ii) ensuring that the applicable requirements of the law of the Flag State in respect of rank, qualification
72
and certification of the Crew and employment regulations, such as Crew’s tax and social insurance, are
73




;
74
(iii) ensuring that all Crew have passed a medical examination with a qualified doctor certifying that they are
75
fit for the duties for which they are engaged and are in possession of valid medical certificates issued in
76
accordance with appropriate Flag State requirements or such higher standard of medical examination
77
as may be agreed with the Owners. In the absence of applicable Flag State requirements the medical
78
certificate shall be valid at the time when the respective Crew member arrives on board the Vessel and
79
;
80
(iv) ensuring that the Crew shall have a common working language and a command of the English language
81
;
82
(v) arranging transportation of the Crew, including repatriation;
83
(vi) training of the Crew;
84






(vii) conducting union negotiations; and
85
(viii) if the Managers are the Company, ensuring that the Crew, on joining the Vessel, are given proper
86
familiarisation with their duties in relation to the Vessel’s SMS and that instructions which are essential
87
to the SMS are identified, documented and given to the Crew prior to sailing.
88
(ix) if the Managers are not the Company:
89
(1) ensuring that the Crew, before joining the Vessel, are given proper familiarisation with their duties
90
;
91
(2) instructing the Crew to obey all reasonable orders of the Company in connection with the operation
92
of the SMS.
93
(x) Where Managers are not providing technical management services in accordance with Clause 4
94
(Technical Management):
95
(1) ensuring that no person connected to the provision and the performance of the crew management
96
services shall proceed to sea on board the Vessel without the prior consent of the Owners (such consent
97
not to be unreasonably withheld); and
98
(2) ensuring that in the event that the Owners’ drug and alcohol policy requires measures to be taken
99
;
100
(b) Crew Insurances
101
( only applicable if Sub-clause 5(a) applies   and if agreed according to Box 10 )
102
The Managers shall throughout the period of this Agreement provide the following services:
103
(i) arranging Crew Insurances in accordance with the best practice of prudent managers of vessels of a
104
similar type to the Vessel, with sound and reputable insurance companies, underwriters or associations.
105
Insurances for any other persons proceeding to sea onboard the Vessel may be separately agreed by
106
the Owners and the Managers (see Box 10 );
107
(ii) ensuring that the Owners are aware of the terms, conditions, exceptions and limits of liability of the
108
insurances in Sub- clause 5(b)(i) ;
109
(iii) ensuring that all premiums or calls in respect of the insurances in Sub- clause 5(b)(i)  are paid by their
110
;
111
(iv) if obtainable at no additional cost, ensuring that insurances in Sub- clause 5(b)(i)  name the Owners as
112
a joint assured with full cover and, unless otherwise agreed, on terms such that Owners shall be under
113
no liability in respect of premiums or calls arising in connection with such insurances.
114
(v) providing written evidence, to the reasonable satisfaction of the Owners, of the Managers’ compliance with
115
their obligations under Sub- clauses 5(b)(ii) , and 5(b)(iii)  within a reasonable time of the commencement
116
of this Agreement, and of each renewal date and, if specifically requested, of each payment date of the
117
insurances in Sub- clause 5(b)(i) .
118
6. Commercial Management
119
(only applicable if agreed according to   Box 8 ).
120
The Managers shall provide the following services for the Vessel in accordance with the Owners’ instructions,
121
which shall include but not be limited to:
122
(a) seeking and negotiating employment for the Vessel and the conclusion (including the execution thereof)
123
of charter parties or other contracts relating to the employment of the Vessel. If such a contract exceeds the
124




period stated in Box 9 , consent thereto in writing shall first be obtained from the Owners;
125
(b) arranging for the provision of bunker fuels of the quality specified by the Owners as required for the
126
  Vessel’s trade;      127
(c) voyage estimating and accounting and calculation of hire, freights, demurrage and/or despatch monies
128
;
129
related to the commercial operation of the Vessel in accordance with     Clause 11   (Income Collected and
130






Expenses Paid on Behalf of Owners);
131
I f any of the services under Sub- clauses 6(a) ,    6(b)   and    6(c)   are to be excluded from the Management Fee, remuneration
132
for these services must be stated in Annex E (Fee Schedule). See Sub- clause 12(e) .
133
(d) issuing voyage instructions;
134
(e) appointing agents;
135
(f) appointing stevedores; and
136
(g) arranging surveys associated with the commercial operation of the Vessel.
137
7. Insurance Arrangements
138
(only applicable if agreed according to   Box 11 ).
139
The Managers shall arrange insurances in accordance with   Clause 10   (Insurance Policies), on such terms as
140
the Owners shall have instructed or agreed, in particular regarding conditions, insured values, deductibles,
141
franchises and limits of liability.
142







SECTION 3 – Obligations


8. Managers’ Obligations

143
(a) The Managers undertake to use their best endeavours to provide the Management Services as agents
144
for and on behalf of the Owners in accordance with sound ship management practice and to protect and
145
promote the interests of the Owners in all matters relating to the provision of services hereunder.
146
Provided however, that in the performance of their management responsibilities under this Agreement, the
147
Managers shall be entitled to have regard to their overall responsibility in relation to all vessels as may from
148
time to time be entrusted to their management and in particular, but without prejudice to the generality of
149
the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such
150
manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and
151
reasonable.
152
(b) Where the Managers are providing technical management services in accordance with   Clause 4 (Technical
153
Management), they shall procure that the requirements of the Flag State are satisfied and they shall agree
154
to be appointed as the Company, assuming the responsibility for the operation of the Vessel and taking over
155
the duties and responsibilities imposed by the ISM Code and the ISPS Code, if applicable.
156
9. Owners’ Obligations
157
(a) The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this
158
Agreement. In the event of payment after the due date of any outstanding sums the Manager shall be entitled
159
to charge interest at the rate stated in   Box 13 .
160
(b) Where the Managers are providing technical management services in accordance with   Clause 4 (Technical
161
Management), the Owners shall:
162
(i) report (or where the Owners are not the registered owners of the Vessel procure that the registered
163
owners report) to the Flag State administration the details of the Managers as the Company as required
164
;
165
(ii) procure that any officers and ratings supplied by them or on their behalf comply with the requirements
166
;
167
(iii) instruct such officers and ratings to obey all reasonable orders of the Managers (in their capacity as the
168
Company) in connection with the operation of the Managers’ safety management system.
169
 
 
(c)     Where the Managers are   not   providing technical management services in accordance with     Clause 4
170
(Technical Management), the Owners shall:
171
(i) procure that the requirements of the Flag State are satisfied and notify the Managers upon execution of
172
this Agreement of the name and contact details of the organization that will be the Company by completing
173
Box 5 ;
174




(ii) if the Company changes at any time during this Agreement, notify the Managers in a timely manner of
175
;
176
(iii) procure that the details of the Company, including any change thereof, are reported to the Flag State
177
administration as required to comply with the ISM and ISPS Codes. The Owners shall advise the Managers
178
;
179
(iv) unless otherwise agreed, arrange for the supply of provisions at their own expense.
180
(d) Where the Managers are providing crew management services in accordance with Sub- clause 5(a)   the
181
Owners shall:
182
(i) inform the Managers prior to ordering the Vessel to any excluded or additional premium area under
183
any of the Owners’ Insurances by reason of war risks and/or piracy or like perils and pay whatever
184
additional costs may properly be incurred by the Managers as a consequence of such orders including,
185
if necessary, the costs of replacing any member of the Crew. Any delays resulting from negotiation
186
with or replacement of any member of the Crew as a result of the Vessel being ordered to such an area
187






shall be for the Owners’ account. Should the Vessel be within an area which becomes an excluded or    188 additional premium area the above provisions relating to cost and delay shall apply;    189

(ii) agree with the Managers prior to any change of flag of the Vessel and pay whatever additional costs
190
may properly be incurred by the Managers as a consequence of such change ; . If agreement cannot be
191
reached then either party may terminate this Agreement in accordance with Sub- clause 22(e) ;     and
192
(iii)
provide, at no cost to the Managers, in accordance with the requirements of the law of the Flag State,    193 or higher standard, as mutually agreed, adequate Crew accommodation and living standards.    194

(e) Where the Managers are not the Company, the Owners shall ensure that Crew are properly familiarised
195
with their duties in accordance with the Vessel’s SMS and that instructions which are essential to the SMS
196
are identified, documented and given to the Crew prior to sailing.
197







SECTION 4 – Insurance, Budgets, Income, Expenses and Fees


10. Insurance Policies

198
The Owners shall procure, whether by instructing the Managers under   C lause 7   ( Insurance Arrangements)
199
or otherwise, that throughout the period of this Agreement:
200
(a) at the Owners’ expense, the Vessel is insured for not less than its sound market value or entered for its
201
full gross tonnage, as the case may be for:
202
(i) hull and machinery marine risks (including but not limited to crew negligence) and excess liabilities;
203
(ii) protection and indemnity risks (including but not limited to pollution risks, diversion expenses and,
204
except to the extent insured separately by the Managers in accordance with Sub - clause 5(b)(i) , Crew
205
;
206
NOTE: If the Managers are not providing crew management services under Sub - clause 5(a)   (Crew
207
Management) or have agreed not to provide Crew Insurances separately in accordance with Sub-clause
208
5(b)(i) , t hen such insurances must be included in the protection and indemnity risks cover for the Vessel (see
209
Sub - clause 10(a)(ii)   a bove).
210
(iii) war risks (including but not limited to blocking and trapping, protection and indemnity, terrorism and crew
211
risks); and
212
(iv) such optional insurances as may be agreed (such as piracy, kidnap and ransom, loss of hire and FD &
213
D) (see   B ox 12 )
214
Sub - clauses 10(a)(i)   t hrough 10(a)(iv)   a ll in accordance with the best practice of prudent owners of vessels
215
of a similar type to the Vessel, with sound and reputable insurance companies, underwriters or associations
216
(“the Owners’ Insurances”);
217
(b) all premiums and calls on the Owners’ Insurances are paid by their due date;
218
(c) the Owners’ Insurances name the Managers and, subject to underwriters’ agreement, any third party
219
designated by the Managers as a joint assured (or co-assured, as the case may be) , with full cover. It is understood
220

protection and indemnity, the normal terms for such cover may impose on the Managers and any such third

221
party a liability in respect of premiums or calls arising in connection with the Owners’ Insurances.
222
If obtainable at no additional cost, however, the Owners shall procure such insurances on terms such that
223
neither the Managers nor any such third party shall be under any liability in respect of premiums or calls arising
224
in connection with the Owners’ Insurances. In any event, on termination of this Agreement in accordance
225
with   Cl ause 21   (Du ration of the Agreement) and   Cl ause 22   ( Termination), the Owners shall procure that the
226




Managers and any third party designated by the Managers as joint assured (or co-assured, as the case may be)
           shall cease to be joint assured  (or co-assured, as the case may be)  




227

and, if reasonably achievable,   that they shall be released from any and all liability for premiums and calls

228
that may arise in relation to the period of this Agreement; and
229
(d) written evidence is provided, to the reasonable satisfaction of the Managers, of the Owners’ compliance
230
with their obligations under this   Cl ause 10   w ithin a reasonable time of the commencement of the Agreement,
231
and of each renewal date and, if specifically requested, of each payment date of the Owners’ Insurances.
232
11. Income Collected and Expenses Paid on Behalf of Owners
233
(a) Except as provided in Sub - clause 11(c)   a ll monies collected by the Managers under the terms of this
234
Agreement (other than monies payable by the Owners to the Managers) and any interest thereon shall be
235
held to the credit of the Owners in a separate bank account.
236
(b) All expenses incurred by the Managers under the terms of this Agreement on behalf of the Owners
237
(including expenses as provided in   Cl ause 12(c) )  may be debited against the Owners in the account referred to
238
under Sub - clause 11(a)   b ut shall in any event remain payable by the Owners to the Managers on demand.
239
(c) All monies collected by the Managers under     Clause 6  ( Commercial Management) shall be paid into a
240









































that in some cases, such as
















bank account in the name of the Owners or as may be otherwise advised by the Owners in writing.      241

12. Management Fee and Expenses
242
(a) The Owners shall pay to the Managers an annual management fee as stated in   B ox 14   f or their services
243
as Managers under this Agreement, which shall be payable in equal monthly instalments in advance, the first
244
instalment (pro rata if appropriate) being payable on the commencement of this Agreement (see   C lause 2
245
(Commencement and Appointment) and   B ox 2 )  and subsequent instalments being payable at the beginning
246
of every calendar month. The management fee shall be payable to the Managers’ nominated account stated
247
in   B ox 15 .
248
(b) The management fee shall be subject to an annual review and the proposed fee shall be presented in
249
the annual budget in accordance with Sub - clause 13 ( a).
250
(c) The Managers shall, at no extra cost to the Owners, provide their own office accommodation, office staff,
251
facilities and stationery. Without limiting the generality of this   Cl ause 12   ( Management Fee and Expenses) the

252
Owners shall reimburse the Managers for postage and communication expenses, travelling expenses, and
253
other out of pocket expenses properly incurred by the Managers in pursuance of the Management Services.
254
Any days used by the Managers’ personnel travelling to or from or attending on the Vessel or otherwise used
255
in connection with the Management Services in excess of those agreed in the budget shall be charged at
256
the daily rate stated in   B ox 16 .
257
(d) If the Owners decide to layup the Vessel and such layup lasts for more than the number of months
258
stated in B ox 17 , a n appropriate reduction of the Management Fee for the period exceeding such period
259
until one month before the Vessel is again put into service shall be mutually agreed between the parties. If
260
the Managers are providing crew management services in accordance with Sub - clause 5(a) , c onsequential
261
costs of reduction and reinstatement of the Crew shall be for the Owners’ account.   If agreement cannot be
262
reached then either party may terminate this Agreement in accordance with Sub- clause 22(e) .
263
(e) Save as otherwise provided in this Agreement, all discounts and commissions obtained by the Managers
264
in the course of the performance of the Management Services shall be credited to the Owners.
265

(f) Payment of the Management Fee and Expenses set out under this Clause 12(a) is fully guaranteed by the
 
Services, the Managers will provide to the Owners, are due consideration for the giving of this
 
guarantee.




 
13. Budgets and Management of Funds
266
(a) The Managers’ initial budget is set out in Annex “C” hereto. Subsequent budgets shall be for twelve
267
month periods and shall be prepared by the Managers and presented to the Owners not less than one   three
268
month s   before the end of the budget year.
269
(b) The Owners shall state to the Managers in a timely manner, but in any event within one month of
270




presentation, whether or not they agree to each proposed annual budget. If the Owners do not respond within one month of presentation, the proposed annual budget shall be deemed to be accepted.   The parties shal l
271
negotiate in good
 
faith and if they fail to agree on the annual budget, including the management fee, either party may terminate
272
this Agreement in accordance with Sub- clause 22(e) .
273
(c) Following the agreement of the budget, the Managers shall prepare and present to the Owners their
274
estimate of the working capital requirement for the Vessel and   and shall each month request the Owners in writing
275
to pay the    funds required to run the Vessel for the ensuing month,   including the payment of any unbudgeted, contingency and occasional or
276
extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers
277
or provisions.   Such funds shall be received by the Managers within ten running days after the receipt by the
278
Owners of the Managers’ written request and shall be held to the credit of the Owners in a separate bank
279
account.
280
(d) The Managers shall at all times maintain and keep true and correct accounts in respect of the Management
281
Services in accordance with the relevant International Financial Reporting Standards or such other standard
282
as the parties may agree, including records of all costs and expenditure incurred, and produce a comparison
283




































Guarantor and the Guarantor as the ultimate parent of the Owners acknowledges that the Management






between budgeted and actual income and expenditure of the Vessel in such form and at such intervals as
284
shall be mutually agreed.
285
The Managers shall make such accounts available for inspection and auditing by the Owners and/or their
286
representatives in the Managers’ offices or by electronic means, provided reasonable notice is given by the
287
Owners.
288
(e) Notwithstanding anything contained herein, the Managers shall in no circumstances be required to use
289
or commit their own funds to finance the provision of the Management Services.
290







SECTION 5 – Legal, General and Duration of Agreement


14. Trading Restrictions

291
If the Managers are providing crew management services in accordance with Sub- clause 5(a)   (Crew
292
Management), the Owners will use reasonable efforts to honour any requirement and trading restriction as per
293
contract of employment of the crew provided same do not violate any laws applicable to Owners. and the
Managers will, prior to the commencement of this Agreement, agree on any
trading restrictions to the Vessel that may result from the terms and conditions of the Crew’s employment .    294

15. Replacement
295
If the Managers are providing crew management services in accordance with Sub- clause 5(a)   (Crew
296
Management), the Owners may require the replacement, at their own expense, at the next reasonable
297
opportunity, of any member of the Crew found on reasonable grounds to be unsuitable for service. If the
298
Managers have failed to fulfil their obligations in providing suitable qualified Crew within the meaning of Sub-
299
clause 5(a)   (Crew Management), then such replacement shall be at the Managers’ expense.
300
16. Managers’ Right to Sub-Contract     301
The Managers shall not subcontract any of their obligations hereunder without the prior written consent of    302 the Owners which shall not be unreasonably withheld. In the event of such a sub-contract the Managers    303

shall remain fully liable for the due performance of their obligations under this Agreement. It is understood by and between the Parties, and Owners hereby expressly consent to it, that the Managers may subcontract certain of the services listed in clause 5 to its affiliates Scorpio Crewing Services Pte ("SCS"), Scorpio Marine Management (India) Pvt Ltd (“SMM”), Optimum Ship Services Ltd. (“Optimum”) and Zenith Gemi Isletmeciligi Anonim Sirketi (“Zenith”). The Owner hereby expressly authorizes SCS, SMM, Optimum and Zenith to execute, as agents only for and on behalf of Owners, the employment agreement with each and every seafarer to be embarked on board the Vessel.
17. Responsibilities
305
(a) Force Majeure - Neither party shall be liable for any loss, damage or delay due to any of the following
306
force majeure events and/or conditions to the extent that the party invoking force majeure is prevented or
307
hindered from performing any or all of their obligations under this Agreement, provided they have made all
308
reasonable efforts to avoid, minimize or prevent the effect of such events and/or conditions:
309


304












(i)
;
310
(ii)
;
311
(iii)
any circumstances arising out of war, threatened act of war or warlike operations, acts of terrorism,
312
 
sabotage or piracy, or the consequences thereof;
313
(iv)
;
314
(v)
;
315
(vi)
;
316
(vii)
strikes, lockouts or other industrial action, unless limited to the employees (which shall not include the
317
 
;
318
(viii)
;
319
 
and
320
(ix)
any other similar cause beyond the reasonable control of either party.
321
(b)
Liability to Owners
322
(i)
Without prejudice to Sub- clause 17(a) , the Managers shall be under no liability whatsoever to the Owners
323
 
for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but
324
 
not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and
325
 
howsoever arising in the course of performance of the Management Services UNLESS same is proved
326
 
to have resulted solely from the negligence, gross negligence or wilful default of the Managers or their
327
 
employees or agents, or sub-contractors employed by them in connection with the Vessel, in which case
328






 
(save where loss, damage, delay or expense has resulted from the Managers’ personal act or omission
329
committed with the intent to cause same or recklessly and with knowledge that such loss, damage,
330
delay or expense would probably result) the Managers’ liability for each incident or series of incidents
331
giving rise to a claim or claims shall never exceed a total of ten (10) times the annual management fee
332
payable hereunder.
333
(ii)
Acts or omissions of the Crew - Notwithstanding anything that may appear to the contrary in this
334
 
Agreement, the Managers shall not be liable for any acts or omissions of the Crew, even if such acts
335
 
or omissions are negligent, grossly negligent or wilful, except only to the extent that they are shown to
336
 
have resulted from a failure by the Managers to discharge their obligations under   Clause 5(a)   (Crew
337
 
Management), in which case their liability shall be limited in accordance with the terms of this Clause
338
 
17   (Responsibilities).
339
(c)
Indemnity - Except to the extent and solely for the amount therein set out that the Managers would be
340
 
liable under Sub- clause 17(b) , the Owners hereby undertake to keep the Managers and their employees,
341
 
agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims,
342
 
demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or
343
 
suffered by them arising out of or in connection with the performance of this Agreement, and against and in
344
 
respect of all costs, loss, damages and expenses (including legal costs and expenses on a full indemnity
345
 
basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance
346
 
of this Agreement.
347
(d)
“Himalaya” - It is hereby expressly agreed that no employee or agent of the Managers (including every
348
 
sub-contractor from time to time employed by the Managers) shall in any circumstances whatsoever be
349
 
under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or
350
 
resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in
351
 
connection with his employment and, without prejudice to the generality of the foregoing provisions in this
352
 
Clause 17   (Responsibilities), every exemption, limitation, condition and liberty herein contained and every
353
 
right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to
354
 
which the Managers are entitled hereunder shall also be available and shall extend to protect every such
355
 
employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions
356
 
of this   Clause 17   (Responsibilities) the Managers are or shall be deemed to be acting as agent or trustee
357
 
on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time
358
 
(including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be
359
 
parties to this Agreement.
360





18. General Administration
361
(a) The Managers shall keep the Owners and, if appropriate, the Company informed in a timely manner of
362
any incident of which the Managers become aware which gives or may give rise to delay to the Vessel or
363
claims or disputes involving third parties.
364
(b) The Managers shall handle and settle all claims and disputes arising out of the Management Services
365
hereunder, unless the Owners instruct the Managers otherwise. The Managers shall keep the Owners
366
appropriately informed in a timely manner throughout the handling of such claims and disputes.
367
(c) The Owners may request the Managers to bring or defend other actions, suits or proceedings related
368
to the Management Services, on terms to be agreed.
369
(d) The Managers shall have power to obtain appropriate legal or technical or other outside expert advice in
370
relation to the handling and settlement of claims in relation to Sub- clauses 18(a)   and 18(b)   and disputes and
371
any other matters affecting the interests of the Owners in respect of the Vessel, unless the Owners instruct
372
the Managers otherwise.
373
(e) On giving reasonable notice, the Owners may request, and the Managers shall in a timely manner make
374
available, all documentation, information and records in respect of the matters covered by this Agreement
375
either related to mandatory rules or regulations or other obligations applying to the Owners in respect of
376
the Vessel (including but not limited to STCW 95, the ISM Code and ISPS Code) to the extent permitted by
377
relevant legislation.
378
On giving reasonable notice, the Owners may request, and the Managers shall in a timely manner make
379






available, all documentation, information and records reasonably required by the Managers to enable them
380
to perform the Management Services.
381
(f) The Owners shall arrange for the provision of any necessary guarantee bond or other security.
382
(g) Any costs incurred by the Managers in carrying out their obligations according to this   Clause 18 (General
383
Administration) shall be reimbursed by the Owners.
384
19. Inspection of Vessel
385
The Owners may at any time after giving reasonable notice to the Managers inspect the Vessel for any reason
386
they consider necessary.
387
20. Compliance with Laws and Regulations
388
The parties will not do or permit to be done anything which might cause any breach or infringement of the
389
laws and regulations of the Flag State, or of the places where the Vessel trades.
390
21. Duration of the Agreement
391
(a) This Agreement shall come into effect at the date stated in Box 2 and shall continue until terminated by either party by giving notice to the other; in which event this Agreement shall terminate upon the expiration of
392
a period of twenty four (24) months from the date on which such notice is received, unless terminated earlier in
 
accordance with Clause 22 (Termination).
 
This Agreement shall come into effect at the date stated in Box 2  and shall continue until terminated by
 
;
393
of the later of the number of months stated in Box 18  or a period of two (2) months from the date on which
394
such notice is received, unless terminated earlier in accordance with Clause 22  (Termination).
395
(b) Where the Vessel is not at a mutually convenient port or place on the expiry of such period, this Agreement
396
shall terminate on the subsequent arrival of the Vessel at the next mutually convenient port or place.
397
22. Termination
398
(a) Owners’ or Managers’ default
399
If either party fails to meet their obligations under this Agreement, the other party may give notice to the
400
party in default requiring them to remedy it. In the event that the party in default fails to remedy it within a
401
reasonable time to the reasonable satisfaction of the other party, that party shall be entitled to terminate this
402
Agreement with immediate effect by giving notice to the party in default.
403
(b) Notwithstanding Sub- clause 22(a) :
404
(i) The Managers shall be entitled to terminate the Agreement with immediate effect by giving notice to the
405
Owners if any monies payable by the Owners and/or the owners of any associated vessel, details of
406
which are listed in Annex “D”, shall not have been received in the Managers’ nominated account within
407
ten days of receipt by the Owners of the Managers’ written request, or if the Vessel is repossessed by
408
the Mortgagee(s).
409
(ii) If the Owners proceed with the employment of or continue to employ the Vessel in the carriage of
410




contraband, blockade running, or in an unlawful trade, or on a voyage which in the reasonable opinion
411
of the Managers is unduly hazardous or improper, the Managers may give notice of the default to the
412
Owners, requiring them to remedy it as soon as practically possible. In the event that the Owners fail to
413
remedy it within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled
414
to terminate the Agreement with immediate effect by notice.
415
(iii) If either party fails to meet their respective obligations under Sub- clause 5(b)   (Crew Insurances) and
416
Clause 10   (Insurance Policies), the other party may give notice to the party in default requiring them to
417
remedy it within ten (10) days, failing which the other party may terminate this Agreement with immediate
418
effect by giving notice to the party in default.
419

(iv) If the Managers are convicted of, or admit guilt for, a crime, then the Owners shall be entitled to
 
terminate this Agreement with immediate effect by notice in writing.

(c)     Extraordinary Termination     420






This Agreement shall be:
(i) terminated in the case of a sale of the Vessel (“ET1”), and the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the Vessels owners cease to be the registered owners of the Vessel;

(ii) deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned or has been declared missing, or the Vessel is bareboat chartered for a period of less than three (3) years, when the bareboat charter comes to an end (in either case, “ET2”);

(iii) terminated if the Vessel is bareboat chartered for a period of three (3) years or more, unless otherwise agreed, when the bareboat charter comes to an end (“ET3”); or

(iv) terminated if the Vessel is not delivered to the Owners within 100 days of the Effective Date (“ET4”).

This Agreement shall be deemed to be terminated in the case of the sale of the Vessel or, if the Vessel      421 becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned      422 or has been declared missing or, if bareboat chartered, unless otherwise agreed, when the bareboat charter      423 comes to an end.      424

(d)     For the purpose of Sub- clause 22(c) hereof:     425

(i)      the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be      426
the date on which the Vessel’s owners cease to be the registered owners of the Vessel;      427

(ii)
the Vessel shall be deemed to be lost either when it has become an actual total loss or agreement has    428 been reached with the Vessel’s underwriters in respect of its constructive total loss or if such agreement    429 with the Vessel’s underwriters is not reached it is adjudged by a competent tribunal that a constructive    430 loss of the Vessel has occurred; and    431

(iii)
the date upon which the Vessel is to be treated as declared missing shall be ten (10) days after the Vessel    432 was last reported or when the Vessel is recorded as missing by the Vessel’s underwriters, whichever    433 occurs first. A missing vessel shall be deemed lost in accordance with the provisions of Sub- clause 22(d)      434 (ii) .    435

(e) In the event the parties fail to agree the annual budget in accordance with Sub- clause 13(b) , or to agree      436 a change of flag in accordance with Sub- clause 9(d)(ii) , or to agree to a reduction in the Mangement Fee in      437 accordance with Sub- clause 12(d) , either party may terminate this Agreement by giving the other party not      438 less than one month’s notice, the result of which will be the expiry of the Agreement at the end of the current     439 budget period or on expiry of the notice period, whichever is the later.      440

(f)     This Agreement shall terminate forthwith in the event of an order being made or resolution passed      441 for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than for the purpose of      442
reconstruction or amalgamation) or if a receiver or administrator is appointed, or if it suspends payment ,    443

ceases to carry on business or makes any special arrangement or composition with its creditors. Either party shall have the right to terminate this Agreement forthwith if the other party: has ceased to trade; suspends payment(s); has an order made or resolution passed for its winding up, dissolution, liquidation or bankruptcy (otherwise than for the purpose of solvent reconstruction or amalgamation); has a receiver, administrative receiver, administrator or other similar official appointed over all or substantially all of its assets or undertakings; has a secured party take possession of all or substantially all its assets; has become insolvent or gone into liquidation (unless such liquidation is for the purpose of a solvent reconstruction or amalgamation); makes a general assignment, arrangement or composition with or for the benefit of its creditors; is unable to pay its debts as they become due; causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in the foregoing text; or, takes any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts.

444




445

(g) (i) In the event of a termination of this Agreement for an ET2 event or for any other reason except: (i) in
the case of default by the Manager; or (ii) an ET1, ET3 or ET4 event, the management fee payable to the






Managers according to the provisions of Clause 12 (Management Fee and Expenses) shall continue to be payable for a further period of the number of months stated in Box 19 as from the date of termination. If Box 19 is left blank, then ninety (90) days shall apply.

(ii) In the event of a termination of this Agreement for an ET1, ET3 or ET4 event (and absent a Change of
Control):

(aa) the management fee payable to the Managers according to the provisions of Clause 12 (Management Fee and Expenses), shall continue to be payable for a further period of three (3) months as from the date of termination; and

(bb) the Owners are to provide written notice of termination to Managers at least three months prior to the date of termination. Where Managers do not receive at least three (3) months prior written notice of the date of termination the management fee in (aa) shall be increased by three (3) months of management fees, reduced by the pro rata amount where prior written notice of the date of termination was given.

(iii) On or following a Change of Control, clauses (ii)(aa) and (bb) above shall not apply and in the event of a termination of this Agreement for an ET1, ET3 or ET4 event, the management fee payable to the Managers according to the provisions of Clause 12 (Management Fee and Expenses), shall continue to be payable for a further period of twenty-four (24) months as from the date of termination.

(iv) In the event of a termination of this Agreement for an ET4 event, no termination fee shall be due and payable hereunder where the Owner is required to pay an early termination fee as the same is described in the Master Agreement.

(v) All amounts due and payable under this Clause 22(g) shall be accelerated and immediately payable in one lump sum on the date of termination.






In the event of the termination of this Agreement for any reason other than default by the Managers the   management fee payable to the Managers according to the provisions of   Clause 12   (Management Fee and


446
Expenses), shall continue to be payable for a further period of the number of months stated in Box 19  as
447
from the effective date of termination. If Box 19  is left blank then ninety (90) days shall apply.
448
(h) In addition, where the Managers provide Crew for the Vessel in accordance with   Clause 5(a)   (Crew
449
Management):
450
(i) the Owners shall continue to pay Crew Support Costs during the said further period of the number of
451
months stated in   Box 19 ; and
452
(ii) the Owners shall pay an equitable proportion of any Severance Costs which may be incurred, not
453
exceeding the amount stated in   Box 20 . The Managers shall use their reasonable endeavours to minimise
454
such Severance Costs.
455
(i) On the termination, for whatever reason, of this Agreement, the Managers shall release to the Owners,
456
if so requested, the originals where possible, or otherwise certified copies, of all accounts and all documents
457
specifically relating to the Vessel and its operation.
458
(j) The termination of this Agreement shall be without prejudice to all rights accrued due between the parties
459
prior to the date of termination.
460
23. BIMCO Dispute Resolution Clause
461
(a) This Agreement shall be governed by and construed in accordance with English law and any dispute
462
arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with
463
the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary
464
to give effect to the provisions of this Clause.
465
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA)
466






Terms current at the time when the arbitration proceedings are commenced.
467
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its
468
arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint
469
its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole
470
arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the
471
14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so
472
within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any
473
further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party
474
accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by
475
agreement.
476
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the
477
appointment of a sole arbitrator.
478
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum
479
as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims
480
Procedure current at the time when the arbitration proceedings are commenced.
481
(b) This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code
482
and the Maritime Law of the United States and any dispute arising out of or in connection with this Agreement
483
shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the
484
;
485
enforcing any award, judgment may be entered on an award by any court of competent jurisdiction. The
486
proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc.
487
In cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (or such other sum
488
as the parties may agree) the arbitration shall be conducted in accordance with the Shortened Arbitration
489
Procedure of the Society of Maritime Arbitrators, Inc. current at the time when the arbitration proceedings
490
are commenced.
491
(c) This Agreement shall be governed by and construed in accordance with the laws of the place mutually
492
agreed by the parties and any dispute arising out of or in connection with this Agreement shall be referred
493
to arbitration at a mutually agreed place, subject to the procedures applicable there .
494
(d) Notwithstanding Sub- clauses 23(a) ,   23(b)   or   23(c)     above, the parties may agree at any time to refer to
495
mediation any difference and/or dispute arising out of or in connection with this Agreement.
496
(i) In the case of a dispute in respect of which arbitration has been commenced under Sub-clauses 23(a) ,
497
23(b)   or   23(c)     above, the following shall apply:
498
(ii) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to
499
mediation by service on the other party of a written notice (the “Mediation Notice”) calling on the other
500
party to agree to mediation.
501




(iii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that
502
they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14
503
calendar days, failing which on the application of either party a mediator will be appointed promptly by
504
the Arbitration Tribunal (“the Tribunal”) or such person as the Tribunal may designate for that purpose.
505
The mediation shall be conducted in such place and in accordance with such procedure and on such
506
terms as the parties may agree or, in the event of disagreement, as may be set by the mediator.
507
(iv) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal
508
and may be taken into account by the Tribunal when allocating the costs of the arbitration as between
509
the parties.
510
(v) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers
511
necessary to protect its interest.
512
(vi) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall
513
continue during the conduct of the mediation but the Tribunal may take the mediation timetable into
514






account when setting the timetable for steps in the arbitration.    515

(vii) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred    516
in the mediation and the parties shall share equally the mediator’s costs and expenses.    517

(viii) The mediation process shall be without prejudice and confidential and no information or documents
518
disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under
519
the law and procedure governing the arbitration.
520
(Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.)
521
(e) If   Box 21   in Part I is not appropriately filled in, Sub- clause 23(a)   of this Clause shall apply.
522
Note: Sub- clauses 23(a) , 23(b)   and   23(c)   are alternatives; indicate alternative agreed in   Box 21 . Sub-clause
523
23(d)   shall apply in all cases.
524
24. Notices
525
(a) All notices given by either party or their agents to the other party or their agents in accordance with the
526
provisions of this Agreement shall be in writing and shall, unless specifically provided in this Agreement to
527
the contrary, be sent to the address for that other party as set out in   Boxes 22   and 23   or as appropriate or
528
to such other address as the other party may designate in writing.
529
A notice may be sent by registered or recorded mail, facsimile, electronically or delivered by hand in accordance
530
with this Sub- clause 24(a) .
531
(b) Any notice given under this Agreement shall take effect on receipt by the other party and shall be deemed
532
to have been received:
533
(i) if posted, on the seventh (7th) day after posting;
534
(ii) if sent by facsimile or electronically, on the day of transmission; and
535
(iii) if delivered by hand, on the day of delivery.
536
And in each case proof of posting, handing in or transmission shall be proof that notice has been given,
537
unless proven to the contrary.
538
25. Entire Agreement see additional clauses.
539

Any additional clauses attached hereto together with the Confirmation, any subsequent addenda, schedules,
 
appendices or otherwise, shall be construed as an integral part of this Agreement and shall be interpreted
 
accordingly.
 
This Agreement constitutes the entire agreement between the parties and no promise, undertaking,
540
representation, warranty or statement by either party prior to the date stated in Box 2  shall affect this
541
Agreement. Any modification of this Agreement shall not be of any effect unless in writing signed by or on
542
behalf of the parties .
543
26. Third Party Rights
544
Except to the extent provided in Sub- clauses 17(c)   (Indemnity)   and   17(d)   (Himalaya) and see additional clauses
545
, no third parties may
 
enforce any term of this Agreement.
546




27. Partial Validity
547
If any provision of this Agreement is or becomes or is held by any arbitrator or other competent body to be
548
illegal, invalid or unenforceable in any respect under any law or jurisdiction, the provision shall be deemed
549
to be amended to the extent necessary to avoid such illegality, invalidity or unenforceability, or, if such
550
amendment is not possible, the provision shall be deemed to be deleted from this Agreement to the extent
551
of such illegality, invalidity or unenforceability, and the remaining provisions shall continue in full force and
552
effect and shall not in any way be affected or impaired thereby.
553
28. Interpretation
554
In this Agreement:
555






(a) Singular/Plural
556
The singular includes the plural and vice versa as the context admits or requires.
557
(b) Headings
558
The index and headings to the clauses and appendices to this Agreement are for convenience only and shall not affect
559
its construction or interpretation.
560
(c) Day
561
“Day” means a calendar day unless expressly stated to the contrary.
562


















RIDER CLAUSES
FOR SHIPMAN 2009 STANDARD SHIP MANAGEMENT
AGREEMENT

DATED:
MADE BETWEEN “THE OWNER”:
AND “THE MANAGER”:             Scorpio Ship Management S.A.M
VESSEL:


29.
OPA
29.1
The Managers will:-
(i)
arrange for the preparation, filing and updating of a contingency Vessel Response Plan in accordance with the requirements of OPA and instruct the Crew in all aspects of the operation of such plan;
(ii)
identify and ensure the availability by contract or otherwise of a Qualified Individual, a Spill Management Team, an Oil Spill Removal Organisation, resources having salvage, fire fighting, lightering and, if applicable, dispersant capabilities, and public relations/media personnel to assist the Owners to deal with the media in the event of discharges of oil.
29.2
The Managers are expressly authorised as agents for the Owners to enter into such arrangements by contract or otherwise as are required to ensure the availability of the services outlined in Clause 29.1. The Managers are further expressly authorised as agents for the Owners to enter into such other arrangements as may from time to time be necessary to satisfy the requirements of OPA or other US Federal or State laws.
29.3
The Owners will pay the fees due to third parties providing the services described above. The third party fees will be included in the Vessel's running costs.
29.4
On termination of this Agreement, the Vessel Response Plan and all documentation will be returned to the Managers at the expense of the Owners.
30.
IT Services
30.1
The Managers will, subject to the remaining provisions of this Clause 30, provide the Vessel with the Management System Software.
30.2
The main features of the Management System Software at the date of this Agreement are:
(i)
comprehensive management software providing single point of entry to the Vessel incorporating crew management, defect and deficiency reporting and performance monitoring;




(ii)
a ship to shore and shore to ship e-mail package providing cost efficient communications available to both Managers and their charterers; and
(iii)
a computerised maintenance system including inventory control and automated purchase order handling.
30.3
The costs for the Management System Software are included in the Vessel's operating costs, as follows:
(i)
the annual maintenance fee;
(ii)
maintenance and upgrades;
(iii)
24 hour support;
(iv)
provision of anti-virus software and regular upgrades;
(v)
operational manuals and regular updates;
(vi)
annual audit on board the Vessel providing a system health check;
(vii)
user manuals and training of the Crew in the use of the Management System Software; and
(viii)
e-mail on board the Vessel.
30.4
Such costs do not include the costs of appropriate hardware, licence fee and installation/set-up on board the Vessel which will be included in the taking over cost.
30.5
Installation and set-up of the Information System Software will be undertaken on a date agreed between the Managers and the Owners having regard to the Vessel's schedule and the availability of the Managers' personnel.
30.6
The Management System Software is protected by applicable copyright and patent laws.
30.7
The Managers do not warrant that the use or operation of the Information System Software will be uninterrupted or error free.
31.      Management Fee
31.1
Without prejudice to the generality of clause 12 (Management Fee), it is agreed that the remuneration provided for by that clause shall be deemed to cover the Manager's administrative and general expenses and any other expenses which are not directly and exclusively applicable to the operation or conduct of the business of the Vessel and shall include:
Salaries of corporate officers, executives, department heads, administrative, clerical and office employees, port engineers, port captain, port stewards, paymaster and other employees of the shore side establishment, payroll taxes, group insurance and pension annuity payments applicable to personnel in the above named categories, office and administrative expenses, including insurance, rent, heat, light, power, office stationary, office services, depreciation and repair of office equipment, janitor services and expenses, accounting expenses, the Managers' outside auditing fees, dues and membership in trade associations, office subscriptions, contributions and donations and franchise




taxes, as well as legal fees in connection with the Managers' corporate and management functions, excluding all and any legal fees or other expenses incurred by the Managers in connection with any claims arising out of any matter related with the Vessel.
31.2
In addition to the remuneration payable to the Managers under the provision of clause 12 and this clause, the Owners shall reimburse the Managers for, inter alia, the amount of such necessary travelling expenses (outside Monaco), seafarers interviewing costs, costs of telephone calls, communication, vessel's postage, freight and forwarding, warehousing, agency services and fees which are not included in budget and will be treated as contingency costs. For estimation purpose only and without guarantee, contingencies could amount to a 5% of annual total budget.
32.
Dry docking
Dry docking to be carried out with prior approval of costs by the Owners. The drydocking specification shall be prepared by the Managers and approved by the Owners.

33.     Benefit of Existing and Future Contracts
Where possible, the Owners shall (for the duration of this Agreement) have the advantage of any existing or future contracts of the Managers for the purchase or renewal of materials, facilities, services or equipment, by way of the benefit of discounts (if any).
34.     Passing of Title
34.1
To the extent already paid for by the Managers using funds specifically provided by the Owners for such a purpose, title to any goods, materials or supplies purchased by the Managers for use in the performance of this Agreement shall belong to the Owners.
34.2
Upon termination of this Agreement all such goods, materials or supplies in the hands of the Managers shall be delivered to the Vessel or if requested by the Owners the Managers shall sell or dispose of such goods, materials or supplies at such price, terms and conditions as may be approved by the Owners and remit the proceeds thereof less any expenses incurred in selling or disposing of such goods to an account of the Owners, to be advised separately in writing to the Managers.
35.     Termination on Bareboat Charter of Vessel
The Managers shall be entitled to terminate this Agreement by notice in writing in the event that the Vessel is bareboat chartered by the Owners. The date upon which the Vessel is to be treated as having been bareboat chartered, shall be the date on which the Owners deliver the Vessel to bareboat charterer, notwithstanding the fact that the Managers may learn of the bareboat charter at a later date.
36.
Slop and any other disposal ashore
Disposal of slop, sludge, bilge, garbage produced for whatever reason (including but not limited to tank inspection, repairs, drydock preparation, tank cleaning) and any other disposal ashore compulsory as per local regulation is considered out of budget and the Owners shall provide the Managers with such additional funds as may be required.
37.
ISPS Code

37.1
The Manager shall comply with the requirements of the International Code for the Security of Ships and of Port Facilities and the relevant amendments to Chapter XI of SOLAS (ISPS Code) relating to the Vessel and “the Company” (as defined by the ISPS Code). If trading to or from the United States or passing through United States waters, in addition to ensure that the Vessel has been issued with a COFR, the Manager shall also comply with the requirements of the US Maritime




Transportation Security Act 2002 (the “MTSA”) relating to the Vessel and the “Owner” (as defined by the MTSA).

37.2
Where sub-chartering, the Owner shall ensure that the contact details of all sub-charterers are provided to the Managers and the Master. Furthermore, the Owners shall ensure that all charter parties entered into during the period of this Agreement contain the following provision:

“The Charterers shall provide the Owners with their full style contact details and, where sub-chartering is permitted under the terms of the charter party, shall ensure that the contact details of all sub-charterers are likewise provided to the Owners”.

37.3
Notwithstanding anything else contained in this Agreement all costs or expenses whatsoever arising out of or related to security regulations or measures required by the port facility or any relevant authority in accordance with the ISPS Code and/or the MTSA including, but not limited to, security guards, launch services, vessel escorts, security fees, waiting costs and associated expenses, taxes and inspections, shall be out of budget. All measures required by the Manager to comply with the Ship Security Plan shall be for the Manager’s account excluding costs associated with calls at non ISPS compliant port, facilities, installations, vessels or port, facilities, installations, vessels included in any relevant authority warning list (i.e. USCG Port Security Advisory) as applicable in which case Owners shall provide Managers with such additional funds as may be required.

38.
Additional Costs

The Owners’ representative’s meals and slop chest, charterers’ meal and slop chest, representation costs, gratuity (either official or not official) provided with the aim to safeguard Vessel’s operation and given in the sole discretion of Master will be separately debited to the Owners at cost. Any extraordinary trading cost (including but not limited to AMPD, COFR, ENOA/D, ICB, EWR coverage, Ransom and Kidnap coverage, security guard, special arrangement for transiting pirate infested areas etc.), will be debited to Owners at cost, out of budget, under contingency accounting code.


39.
Provision of Information

The Owners undertake to provide to the Managers directly or through the charterers all information and instruction necessary for the Master to efficiently perform his duties including but not limited to: charterers name and full style, cargo information including MSDS, cargo carriage instruction relevant to that particular cargo (loading, segregating, carrying, heating, discharging, purging, ventilating, tank cleaning, inerting, stripping, COW washing instruction), port and terminal information and requirements, navigation instruction, speed to be attained, notification requirement, agency full style, fuel MSDS, bunker delivery notes, information necessary for AMS reporting, chartering contracts the Owners will enter into, voyage instructions including service speeds to attain.

40.
HSQEEn blanket approval clause

The Owner undertakes to provide full support for the implementation and approval of the Managers’ health, safety, quality, environmental and energy management policy including extra costs which could be from time to time communicated to Owners.





41.
Cabotage, storage and STS

Cabotage, storage and frequent STS are not considered normal operations and a special evaluation of risk and extra costs will be provided on a case by case basis by the Managers. The Owners shall make available to the Managers such additional funds as may be required in order for such additional duties to be carried out.

42.
Payments

All payments to the Managers shall be made in (i) full without any withholdings and (ii) US Dollars, to the account of the Managers from time to time advised to the Owners by the Managers.

43.
Third Party Rights

43.1
Any person (other than parties to this Agreement) who is given any rights or benefits under Clauses 17(c) or 17(d) (a "Third Party") shall be entitled to enforce those rights or benefits against the parties in accordance with the Contracts (Rights of Third Parties) Act 1999.

43.2
Save as provided in Clause 43.1 above the operation of the Contracts (Rights of Third Parties) Act 1999 is hereby excluded.

43.3
The parties may amend vary or terminate this Agreement in such a way as may affect any rights or benefits of any Third Party which are directly enforceable against the parties under the Contracts (Rights of Third Parties) Act 1999 without the consent of any such Third Party.

43.4
Any Third Party entitled pursuant to the Contracts (Rights of Third Parties) Act 1999 to enforce any rights or benefits conferred on it by this Agreement may not veto any amendment, variation or termination of this Agreement which is proposed by the parties and which may affect the rights or benefits of any such Third Party.

44.
Bunker Quality

44.1
The Owners or its agent shall provide that bunkers supplied comply with ISO 8217:2010 RMG 380, where available, or alternatively ISO 8217:2005(E) for heavy fuel and DMA for distillate, and comply with Marpol Annex VI reg 14 and 18 as amended. Where these standards are not available, the Owners or its agent shall submit to the Managers the specifications of the available fuels in order for the Managers to recommend an alternative course of action.

44.2
At the time of delivery of the Vessel the Owners or its agent shall place at the disposal of the Managers, the bunker delivery note(s) and any samples relating to the fuels existing on board. During the currency of the contract, the Owner or its agent shall ensure that bunker delivery notes are presented to the Vessel on the delivery of fuel(s) and that during bunkering representative samples of the fuel(s) supplied shall be taken at the Vessel's bunkering manifold and sealed in the presence of competent representatives of the fuel supplier and the Vessel as foreseen by Marpol.

44.3
Without prejudice to anything else contained in this contract, the Owners or its agent shall provide that fuel supplied is of such specifications and grades to permit the Vessel, at all times, to comply with any requirements (i.e. the maximum sulphur content) of any emission control zone when the Vessel is ordered to trade within that zone.





44.4
The Owners or its agent also warrant that any bunker suppliers, bunker craft operators and bunker surveyors used by the Owners or its agent to supply such fuels shall comply with Regulations 14 and 18 of MARPOL Annex VI as applicable, including the Guidelines in respect of sampling and the provision of bunker delivery notes.

44.5
Owners or its agent to provide that the quantity of the bunker kept on board is sufficient for the intended voyage plus a 20% margin. If the next voyage is less than 10 days, the minimum extra margin of bunker fuel is at least for 2 days of navigation. For vessel with a single boiler system, minimum 30 tons of distillate to be always kept on board. Commingling of bunker is not recommended. Managers not to be held responsible for any consequence of commingling.

44.6
In the event of a dispute with bunkers suppliers regarding the bunker's quality, the Managers will advise the Owners for their consideration/decision.


45.
War, war risk areas trading.

45.1
Managers will, upon the request of either the Owner or his agents, provide an assessment on the occasion the Vessel may be ordered to trade in any war, warlike area as defined by JWC, and any cost directly or indirectly incurred as a consequence of such an order will be out of budget and debited to the Owners as ‘contingency cost’.

45.2
For the purpose of this clause, the words war risk shall include any actual, threatened or reported war; act of war; civil war; hostilities; revolution; rebellion; civil commotion; warlike operations; laying of mines; acts of piracy; acts of terrorists; acts of hostility or malicious damage; blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever); by any person, body, terrorist or political group, or the Government of any state whatsoever, which, in the reasonable judgment of the Managers, may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel.

46.
Ice trading.

Managers will, upon the request of either the Owner or his agents, provide an assessment on the occasion the Vessel may be ordered to trade in any ice bound area as defined by IWL or by prevailing local condition, and any cost directly or indirectly incurred as a consequence of such order will be out of budget and debited to Owners as ‘contingency cost’.

47.
Sub-let.

Any extra cost and expenses necessary for Owner to perform any sub letting charterer contract are excluded from budget. Take over cost are excluded from budget and vessel is supposed to be fully stocked at delivery

48.
Entire Agreement

48.1
This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter of this Agreement; and (in relation to such subject matter) supersedes all prior




discussions, understandings and agreements between the parties and all prior representations and expressions of opinion by the parties.

48.2
Each of the parties acknowledges that it is not relying on any statements, warranties, representations or understandings (whether negligently or innocently made) given or made by or on behalf of the other in relation to the subject matter hereof and that it shall have no rights or remedies with respect to such subject matter otherwise than under this Agreement. The only remedy available shall be for breach of contract under the terms of this Agreement. Nothing in this Clause shall, however, operate to limit or exclude any liability or fraud.

49.
Managers compliance with governing laws

The Managers, in the performance of their duties and responsibilities on behalf of the Owners hereunder, undertake that they shall take no action that will violate anti-bribery laws applicable to the Owners.

The Owners shall not be liable to the Managers for any fines or similar penalties incurred by the Managers as a result of any breach by the Managers of anti-bribery laws applicable to the Owners.

The Managers shall immediately notify the Owners of any violation of any governing law claimed to have been committed by the Managers.

Any expenses submitted by the Managers for payment under this Agreement shall have been legally incurred in connection with the management services performed under this Agreement. No money or other items of value, whether or not reimbursable under this Agreement, will be paid, promised, offered or authorised by the Managers to any person employed by or acting on behalf of any government or government agency for the purpose of or having the effect of: (i) bribery, kickback or other corrupt practices; (ii) influencing any act or decision of such person or agency; (iii) inducing any such person or agency to do any act in violation of their lawful duty.

The Owners shall have the right to audit the Managers’ books and records at any reasonable time to determine Managers' compliance with the Managers' commitments under this clause 49. Notwithstanding anything to the contrary in this Agreement regarding the parties termination rights, the Owners may unilaterally terminate this Agreement if the Managers admit violating or there has been a proven violation of any commitment by the Managers under this clause 49.




For the Owners:
For the Managers:
Scorpio Ship Management S.A.M.
By:                         By: Francesco Bellusci


















Annex III – SCORPIO TANKERS INC (“STNG”) GUARANTEES




DEED OF GUARANTEE (“Guarantee”)
To:
SCORPIO COMMERCIAL MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Boulevard Charles III, Monaco 98000 (the “Beneficiary ”)

Effective as of: 31 December 2014

(A)
Background:

(1)
The STNG SPVs being each of the existing wholly owned STNG subsidiaries (as set out in Schedule 1 ) (“ SPVs ”) as well as any future vessel owning subsidiaries wholly owned by STNG (“ Future SPVs ”) (the SPVs and Future SPVs jointly referred to as the “ STNG SPVs ”) (i) control a number of vessels already on the water; (ii) will control vessels to be delivered from Hyundai Mipo Dockyard of South Korea or other shipyards; and (iii) may in the future control vessels purchased or chartered in from third parties (together the “ Vessels ”). References to “control” or “controlled” herein means owned or chartered.

(2)
A Master Agreement dated 24 January 2013 as amended by addendum number one effective 1 June 2013 and amended and restated effective as of 31 December 2014 has been entered into amongst others, ourselves, Scorpio Tankers Inc., Scorpio Tankers Inc., for and on behalf of existing and future wholly owned subsidiaries, Scorpio Ship Management S.A.M (“ SSM ”) and the Beneficiary, to govern the relationship of the aforementioned parties prior to delivery of any of the Vessels and the Management Agreements, as defined below, becoming effective (the “ Master ”).

(3)
The Vessels will following delivery be technically and commercially managed by SSM and the Beneficiary (respectively).

(B)
OPERATIVE PROVISIONS

1.
Payment Guarantee

In consideration of the Beneficiary having entered and entering into commercial management agreements (“ Management Agreements ”) with any of the STNG SPVs in respect of the Vessels we, Scorpio Tankers Inc., for ourselves and our successors from time to time (the “ Grantor ”) hereby irrevocably and unconditionally guarantee as primary obligor and not merely as the surety, the due and punctual performance of any obligations and payment of any amounts due to the Beneficiary by any of the STNG SPVs under or in connection with the Management Agreements and Master Agreement.

2.
Liability Unconditional:
The Grantor's liability under this Guarantee shall not be discharged, reduced or otherwise affected in any way by any reason (without limitation and whether or not known to the Grantor or the Beneficiary) including (i) the Beneficiary giving the Grantor time or any other concession, (ii) any composition, discharge, release or other variation of liability entered into with, or








granted to, any STNG SPVs, (iii) the Beneficiary taking, holding, varying, realising or not enforcing any other security for the liabilities of any STNG SPVs or the Grantor under the Master and the Management Agreements (as amended, varied, supplemented, replaced or restated from time to time), (iv) any amendment, variation or waiver (however fundamental) of any provision of any of the Master and the Management Agreements, (v) any legal limitation or incapacity relating to any STNG SPVs or the Grantor, (vi) any invalidity or unenforceability of the obligations of any party under any of the Master and the Management Agreements or (vii) any other act or omission of the Beneficiary or any other circumstances which, but for this provision, might discharge the Grantor.
3.
Continuing guarantee
This Guarantee and the obligations of the Grantor hereunder are a continuing guarantee and shall continue in effect until all obligations and liabilities whatsoever which fall to be discharged by the Grantor under the Master and the Management Agreements, have been finally discharged in full, notwithstanding any intermediate payment, partial settlement or other matter.
The Grantor’s obligations hereunder shall be in addition to and shall not in any way be prejudiced by any other guarantees granted or covenants assumed now or in the future by Grantor in favour of the Beneficiary with respect to any claim the Beneficiary has or may have against any STNG SPVs or the Grantor under either of the Master and/or the Management Agreements.
4.
Other security
The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, any STNG SPVs or any other person first or resorting to any other security, guarantee or other means of payment. The Grantor waives any right it may have of first requiring the Beneficiary to proceed against or claim payment from any STNG SPVs before claiming from the Grantor hereunder. No action (or inaction) by the Beneficiary in respect of any such security, guarantee or other means of payment shall prejudice or affect the liability of the Grantor hereunder.
5.
No set-off or counterclaim
All payments by the Grantor hereunder shall be made in full, without set‑off or counterclaim and free and clear of any deductions or withholdings or taxes or charges whatsoever in immediately available, freely transferable, cleared funds in United States Dollars for value on the date specified in the Beneficiary’s demand to the account notified to the Grantor by the Beneficiary.
6.
Assignment
The Grantor may not assign or transfer any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to a person in favour of whom an assignment has been made under the Master and the Management Agreements.
7.
Notices and demands
Any notice or demand by the Beneficiary under this Guarantee shall be in writing by letter or by fax, marked for the attention of the General Counsel, and shall be deemed to have been served on the Grantor (in the case of a letter) when delivered at its principal executive office address of Le Millenium, 9 Boulevard Charles III, MC 98000 Monaco and (in the case of a telefax) when received at +377 9777 8346 in complete and legible form. Any notice or demand sent by telex shall be deemed to have been served at the time of despatch with confirmed answerback of the Grantor appearing on the transmission.
8.
Law and Disputes
This Guarantee shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Guarantee 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.




The arbitration shall be conducted in accordance with the London Maritime Arbitrators Terms current at the time when the arbitration proceedings are commenced.

IN WITNESS WHEREOF this Guarantee has been duly executed as a deed and delivered on this 14 November 2016


Executed as a deed by        Luca Forgione            ) /s/ Luca Forgione
For and on behalf of          Scorpio Tankers Inc.         )
in the presence of          General Counsel
Signature of Witness    Andrew Cottrell, Legal Intern        ) /s/ Andrew Cottrell
Name, address and occupation of witness            )
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco





DEED OF GUARANTEE (“Guarantee”)
To:
SCORPIO SHIP MANAGEMENT S.A.M. , a company incorporated under the laws of Monaco and having its registered office at 9 Rue du Gabian, Monaco 98000 (the “Beneficiary ”)

Effective as of: 31 December 2014

(A)
Background:

(1)
The STNG SPVs being each of the existing wholly owned STNG subsidiaries (as set out in Schedule 1 ) (“ SPVs ”) as well as any future vessel owning subsidiaries wholly owned by STNG (“ Future SPVs ”) (the SPVs and Future SPVs jointly referred to as the “ STNG SPVs ”) (i) control a number of vessels already on the water; (ii) will control vessels to be delivered from Hyundai Mipo Dockyard of South Korea or other shipyards; and (iii) may in the future control vessels purchased or chartered in from third parties (together the “ Vessels ”). References to “control” or “controlled” herein means owned or chartered.

(2)
A Master Agreement dated 24 January 2013 as amended by addendum number one effective 1 June 2013 and amended and restated effective as of 31 December 2014 has been entered into amongst others, ourselves, Scorpio Tankers Inc., Scorpio Tankers Inc., for and on behalf of existing and future wholly owned subsidiaries, the Beneficiary and Scorpio Commercial Management S.A.M. (“ SCM ”), to govern the relationship of the aforementioned parties prior to delivery of any of the Vessels and the Management Agreements, as defined below, becoming effective (the “ Master ”).

(3)
The Vessels will following delivery be technically and commercially managed by the Beneficiary and SCM (respectively).

(B)
OPERATIVE PROVISIONS

1.
Payment Guarantee

In consideration of the Beneficiary having entered and entering into technical management agreements (“ Management Agreements ”) with any of the STNG SPVs in respect of the Vessels we, Scorpio Tankers Inc., for ourselves and our successors from time to time (the “ Grantor ”) hereby irrevocably and unconditionally guarantee as primary obligor and not merely as the surety, the due and punctual performance of any obligations and payment of any amounts due to the Beneficiary by any of the STNG SPVs under or in connection with the Management Agreements and Master Agreement.

2.
Liability Unconditional:
The Grantor's liability under this Guarantee shall not be discharged, reduced or otherwise affected in any way by any reason (without limitation and whether or not known to the Grantor or the Beneficiary) including (i) the Beneficiary giving the Grantor time or any other concession, (ii) any composition, discharge, release or other variation of liability entered into with, or granted to, any STNG SPVs, (iii) the Beneficiary taking, holding, varying, realising or not








enforcing any other security for the liabilities of any STNG SPVs or the Grantor under the Master and the Management Agreements (as amended, varied, supplemented, replaced or restated from time to time), (iv) any amendment, variation or waiver (however fundamental) of any provision of any of the Master and the Management Agreements, (v) any legal limitation or incapacity relating to any STNG SPVs or the Grantor, (vi) any invalidity or unenforceability of the obligations of any party under any of the Master and the Management Agreements or (vii) any other act or omission of the Beneficiary or any other circumstances which, but for this provision, might discharge the Grantor.
3.
Continuing guarantee
This Guarantee and the obligations of the Grantor hereunder are a continuing guarantee and shall continue in effect until all obligations and liabilities whatsoever which fall to be discharged by the Grantor under the Master and the Management Agreements, have been finally discharged in full, notwithstanding any intermediate payment, partial settlement or other matter.
The Grantor’s obligations hereunder shall be in addition to and shall not in any way be prejudiced by any other guarantees granted or covenants assumed now or in the future by Grantor in favour of the Beneficiary with respect to any claim the Beneficiary has or may have against any STNG SPVs or the Grantor under either of the Master and/or the Management Agreements.
4.
Other security
The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, any STNG SPVs or any other person first or resorting to any other security, guarantee or other means of payment. The Grantor waives any right it may have of first requiring the Beneficiary to proceed against or claim payment from any STNG SPVs before claiming from the Grantor hereunder. No action (or inaction) by the Beneficiary in respect of any such security, guarantee or other means of payment shall prejudice or affect the liability of the Grantor hereunder.
5.
No set-off or counterclaim
All payments by the Grantor hereunder shall be made in full, without set‑off or counterclaim and free and clear of any deductions or withholdings or taxes or charges whatsoever in immediately available, freely transferable, cleared funds in United States Dollars for value on the date specified in the Beneficiary’s demand to the account notified to the Grantor by the Beneficiary.
6.
Assignment
The Grantor may not assign or transfer any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to a person in favour of whom an assignment has been made under the Master and the Management Agreements.
7.
Notices and demands
Any notice or demand by the Beneficiary under this Guarantee shall be in writing by letter or by fax, marked for the attention of the General Counsel, and shall be deemed to have been served on the Grantor (in the case of a letter) when delivered at its principal executive office address of Le Millenium, 9 Boulevard Charles III, MC 98000 Monaco and (in the case of a telefax) when received at +377 9777 8346 in complete and legible form. Any notice or demand sent by telex shall be deemed to have been served at the time of despatch with confirmed answerback of the Grantor appearing on the transmission.




8.
Law and Disputes
This Guarantee shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Guarantee 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. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Terms current at the time when the arbitration proceedings are commenced.

IN WITNESS WHEREOF this Guarantee has been duly executed as a deed and delivered on this 14 November 2016


Executed as a deed by        Luca Forgione            ) /s/ Luca Forgione
For and on behalf of          Scorpio Tankers Inc.         )
in the presence of        General Counsel
Signature of Witness    Andrew Cottrell, Legal Intern        ) /s/ Andrew Cottrell
Name, address and occupation of witness            )
“Le Millenium” 9 Boulevard Charles III, MC 98000 Monaco







Annex IV – CHANGE OF CONTROL DEFINITION
For the purposes of this Master, “ Change of Control ” means the occurrence of any of the following:
(A) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of STNG’s or its subsidiaries’ assets, taken as a whole, to any Person other than to a Permitted Owner;
(B) an order made for, or the adoption by the Board of Directors of a plan of, liquidation or dissolution of STNG;
(C) the consummation of any transaction (including any merger or consolidation) the result of which is that any Person, other than a Permitted Owner, becomes the beneficial owner, directly or indirectly, of a majority of STNG’s Voting Securities, measured by voting power rather than number of shares;
(D) if, at any time, STNG becomes insolvent, admits in writing its inability to pay its debts as they become due, is adjudged bankrupt or declares bankruptcy or makes an assignment for the benefit of creditors, or makes a proposal or similar action under the bankruptcy, insolvency or other similar laws of any applicable jurisdiction or commences or consents to proceedings relating to it under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction;
(E) the consolidation of STNG with, or the merger of STNG with or into, any Person, other than a Permitted Owner or the consolidation of any Person, other than a Permitted Owner, with, or the merger of any Person, other than a Permitted Owner, with or into, STNG, in any such event pursuant to a transaction in which any of the common stock outstanding immediately prior to such transaction are converted into or exchanged for cash, securities or other property or receive a payment of cash, securities or other property, other than any such transaction where STNG’s Voting Securities outstanding immediately prior to such transaction are converted into or exchanged for Voting Securities of the surviving or transferee Person constituting a majority (measured by voting power rather than number of shares) of the outstanding Voting Securities of such surviving or transferee Person immediately after giving effect to such issuance; or
(F) a change in directors after which a majority of the members of the Board of Directors are not directors who were either nominated by, appointed by or otherwise elected with the approval of current board members at the time of such election.
“ Affiliates ” means, with respect to any Person as at any particular date, any other Persons that








directly or indirectly, through one or more intermediaries, are Controlled by, Control or are under common Control with the Person in question, and “Affiliate” means any one of them.
“ Control ” or “ Controlled ” means, with respect to any Person, the right to elect or appoint, directly or indirectly, a majority of the directors of such Person or a majority of the Persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such Person, or the possession 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.
“ Governmental Authority ” means any domestic or foreign government, including any federal, provincial, state, territorial or municipal government, any multinational or supranational organization, any government agency (including the U.S. Securities and Exchange Commission), any tribunal, labor relations board, commission or stock exchange (including the New York Stock Exchange), and any other authority or organization exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government.
“ Permitted Owner ” means SSH and all Affiliates thereof.
“ Person ” shall have the meaning ascribed to it as such term is used in Section 13(d)(3) of the Securities Exchange Act, as amended.
“SSH” shall mean Scorpio Services Holding Limited, a Marshall Islands corporation whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960.

“ STNG ” shall mean Scorpio Tankers Inc., a company incorporated under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.

“ Voting Securities ” means securities of all classes of a Person entitling the holders thereof to vote on a regular basis in the election of members of the board of directors or other governing body of such Person.


SK 26596 0004 7312574 v2




Exhibit 8.1
SUBSIDIARIES OF SCORPIO TANKERS INC
Company
Incorporated in
SBI Tuscamina Shipping Company Limited
The Republic of The Marshall Islands
STI Acton Shipping Company Limited
The Republic of The Marshall Islands
STI Alexis Shipping Company Limited
The Republic of The Marshall Islands
STI Amber Shipping Company Limited
The Republic of The Marshall Islands
STI Aqua Shipping Company Limited
The Republic of The Marshall Islands
STI Battersea Shipping Company Limited
The Republic of The Marshall Islands
STI Battery Shipping Company Limited
The Republic of The Marshall Islands
STI Benicia Shipping Company Limited
The Republic of The Marshall Islands
STI Beryl Shipping Company Limited
The Republic of The Marshall Islands
STI Black Hawk Shipping Company Limited
The Republic of The Marshall Islands
STI Brixton Shipping Company Limited
The Republic of The Marshall Islands
STI Broadway Shipping Company Limited
The Republic of The Marshall Islands
STI Bronx Shipping Company Limited
The Republic of The Marshall Islands
STI Brooklyn Shipping Company Limited
The Republic of The Marshall Islands
STI Camden Shipping Company Limited
The Republic of The Marshall Islands
STI Carnaby Shipping Company Limited
The Republic of The Marshall Islands
STI Chartering and Trading Ltd
The Republic of The Marshall Islands
STI Chelsea Shipping Company Limited
The Republic of The Marshall Islands
STI Clapham Shipping Company Limited
The Republic of The Marshall Islands
STI Comandante Shipping Company Limited
The Republic of The Marshall Islands
STI Condotti Shipping Company Limited
The Republic of The Marshall Islands
STI Connaught Shipping Company Limited
The Republic of The Marshall Islands
STI Dama Shipping Company Limited
The Republic of The Marshall Islands
STI Duchessa Shipping Company Limited
The Republic of The Marshall Islands
STI Elysees Shipping Company Limited
The Republic of The Marshall Islands
STI Emerald Shipping Company Limited
The Republic of The Marshall Islands
STI Esles II Shipping Company Limited
The Republic of The Marshall Islands
STI Finchley Shipping Company Limited
The Republic of The Marshall Islands
STI Fontvieille Shipping Company Limited
The Republic of The Marshall Islands
STI Fulham Shipping Company Limited
The Republic of The Marshall Islands
STI Galata Shipping Company Limited
The Republic of The Marshall Islands
STI Garnet Shipping Company Limited
The Republic of The Marshall Islands
STI Grace Shipping Company Limited
The Republic of The Marshall Islands
STI Gramercy Shipping Company Limited
The Republic of The Marshall Islands
STI Hackney Shipping Company Limited
The Republic of The Marshall Islands
STI Hammersmith Shipping Company Limited
The Republic of The Marshall Islands
STI Jardins Shipping Company Limited
The Republic of The Marshall Islands
STI Jermyn Shipping Company Limited
The Republic of The Marshall Islands
STI Jurere Shipping Company Limited
The Republic of The Marshall Islands
STI Kingsway Shipping Company Limited
The Republic of The Marshall Islands
STI La Boca Shipping Company Limited
The Republic of The Marshall Islands
STI Larvotto Shipping Company Limited
The Republic of The Marshall Islands
STI Lauren Shipping Company Limited
The Republic of The Marshall Islands




STI Le Rocher Shipping Company Limited
The Republic of The Marshall Islands
STI Leblon Shipping Company Limited
The Republic of The Marshall Islands
STI Lexington Shipping Company Limited
The Republic of The Marshall Islands
STI Lombard Shipping Company Limited
The Republic of The Marshall Islands
STI Madison Shipping Company Limited
The Republic of The Marshall Islands
STI Manhattan Shipping Company Limited
The Republic of The Marshall Islands
STI Mayfair Shipping Company Limited
The Republic of The Marshall Islands
STI Memphis Shipping Company Limited
The Republic of The Marshall Islands
STI Meraux Shipping Company Limited
The Republic of The Marshall Islands
STI Milwaukee Shipping Company Limited
The Republic of The Marshall Islands
STI Mythos Shipping Company Limited
The Republic of The Marshall Islands
STI Notting Hill Shipping Company Limited
The Republic of The Marshall Islands
STI Olivia Shipping Company Limited
The Republic of The Marshall Islands
STI Onyx Shipping Company Limited
The Republic of The Marshall Islands
STI Opera Shipping Company Limited
The Republic of The Marshall Islands
STI Orchard Shipping Company Limited
The Republic of The Marshall Islands
STI Osceola Shipping Company Limited
The Republic of The Marshall Islands
STI Oxford Shipping Company Limited
The Republic of The Marshall Islands
STI Park Shipping Company Limited
The Republic of The Marshall Islands
STI Pimlico Shipping Company Limited
The Republic of The Marshall Islands
STI Pontiac Shipping Company Limited
The Republic of The Marshall Islands
STI Poplar Shipping Company Limited
The Republic of The Marshall Islands
STI Powai Shipping Company Limited
The Republic of The Marshall Islands
STI Queens Shipping Company Limited
The Republic of The Marshall Islands
STI Regina Shipping Company Limited
The Republic of The Marshall Islands
STI Rose Shipping Company Limited
The Republic of The Marshall Islands
STI Rotherhithe Shipping Company Limited
The Republic of The Marshall Islands
STI Ruby Shipping Company Limited
The Republic of The Marshall Islands
STI San Antonio Shipping Company Limited
The Republic of The Marshall Islands
STI San Telmo Shipping Company Limited
The Republic of The Marshall Islands
STI Sapphire Shipping Company Limited
The Republic of The Marshall Islands
STI Savile Row Shipping Company Limited
The Republic of The Marshall Islands
STI Selatar Shipping Company Limited
The Republic of The Marshall Islands
STI Seneca Shipping Company Limited
The Republic of The Marshall Islands
STI Sloane Shipping Company Limited
The Republic of The Marshall Islands
STI Soho Shipping Company Limited
The Republic of The Marshall Islands
STI Spiga Shipping Company Limited
The Republic of The Marshall Islands
STI St. Charles Shipping Company Limited
The Republic of The Marshall Islands
STI Taksim Shipping Company Limited
The Republic of The Marshall Islands
STI Texas City Shipping Company Limited
The Republic of The Marshall Islands
STI Topaz Shipping Company Limited
The Republic of The Marshall Islands
STI Tribeca Shipping Company Limited
The Republic of The Marshall Islands
STI Venere Shipping Company Limited
The Republic of The Marshall Islands
STI Veneto Shipping Company Limited
The Republic of The Marshall Islands
STI Ville Shipping Company Limited
The Republic of The Marshall Islands
STI Virtus Shipping Company Limited
The Republic of The Marshall Islands




STI Wembley Shipping Company Limited
The Republic of The Marshall Islands
STI Westminster Shipping Company Limited
The Republic of The Marshall Islands
STI Winnie Shipping Company Limited
The Republic of The Marshall Islands
STI Yorkville Shipping Company Limited
The Republic of The Marshall Islands
Sting LLC
State of Delaware, United States of America
STNGR Singapore (Pte) Ltd
The Republic of Singapore






Exhibit 11.1

Effective June 8, 2016

SCORPIO TANKERS INC.

CODE OF ETHICS
    
The Board of Directors of Scorpio Tankers Inc. (the Company) has adopted this Code of Ethics (the Code) for all of the Company’s employees, directors, officers and agents (Employees).

I.      Conflicts of Interest

A conflict of interest occurs when an Employee’s private interests interfere, or even appears to interfere, with the interests of the Company as a whole. While it is not possible to describe every situation in which a conflict of interest may arise, Employees must never use or attempt to use their position with the Company to obtain improper personal benefits. Any Employee who is aware of a conflict of interest, or is concerned that a conflict might develop, should discuss the matter with the Audit Committee or the office of the General Counsel immediately.

II.      Corporate Opportunities

Employees owe a duty to advance the legitimate interests of the Company when the opportunities to do so arise. Employees may not take for themselves personally opportunities that are discovered through the use of corporate property, information or position.

III.      Confidentiality and Privacy

It is important that Employees protect the confidentiality of Company information. Employees may have access to proprietary and confidential information concerning the Company’s business, clients and suppliers. Confidential information includes such items as non-public information concerning the Company’s business, financial results and prospects and potential corporate transactions. Employees are required to keep such information confidential during employment as well as thereafter, and not to use, disclose, or communicate that confidential information other than in the course of employment. The consequences to the Company and the Employee concerned can be severe where there is unauthorized disclosure of any non-public, privileged or proprietary information.

To ensure the confidentiality of any personal information collected and to comply with applicable laws, any Employee in possession of non-public, personal information about the Company’s customers, potential customers, or Employees, must maintain the highest degree of confidentiality and must not disclose any personal information unless authorization is obtained.


IV.      Director Confidentiality

Pursuant to their fiduciary duties of loyalty and care, directors are required to protect and hold confidential all non-public information obtained due to their directorship position absent the express or implied permission of the board of directors to disclose such information. Accordingly,

(i) no director shall use Confidential Information for his or her own personal benefit or to benefit persons or entities outside the Company; and





(ii) no director shall disclose Confidential Information outside the Company, either during or after his or her service as a director of the Company, except with authorization of the board of directors or as may be otherwise required by law.

"Confidential Information" for purpose of this Section IV is all non-public information entrusted to or obtained by a director by reason of his or her position as a director of the Company. It includes, but is not limited to, non-public information that might be of use to competitors or harmful to the Company or its customers if disclosed, such as:

• non-public information about the Company’s financial condition, prospects or plans, its marketing and sales programs and research and development information, as well as information relating to mergers and acquisitions, stock splits and divestitures;

• non-public information concerning possible transactions with other companies or information about the Company’s customers, suppliers or joint venture partners, which the Company is under an obligation to maintain as confidential; and
        
• non-public information about discussions and deliberations relating to business issues and decisions, between and among Employees.

V.      Honest and Fair Dealing

Employees must endeavor to deal honestly, ethically and fairly with the Company’s customers, suppliers, competitors and employees. No Employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice. Honest conduct is considered to be conduct that is free from fraud or deception. Ethical conduct is considered to be conduct conforming to accepted professional standards of conduct.

VI.      Protection and Proper Use of Company Assets
    
The Company’s assets are only to be used for legitimate business purposes and only by authorized Employees or their designees. This applies to tangible assets (such as office equipment, telephone, copy machines, etc.) and intangible assets (such as trade secrets and confidential information). Employees have a responsibility to protect the Company’s assets from theft and loss and to ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. If you become aware of theft, waste or misuse of the Company’s assets you should report this to your manager.

VII.      Compliance with Laws, Rules and Regulations

It is the Company’s policy to comply with all applicable laws, rules and regulations. It is the personal responsibility of each Employee to adhere to the standards and restrictions imposed by those laws, rules and regulations, and in particular, those relating to accounting and auditing matters.

Any Employee who is unsure whether a situation violates any applicable law, rule, regulation or Company policy should contact the office of the General Counsel.





VIII.      Anti-Corruption and Anti-Bribery

The UK Bribery Act 2010 (the Bribery Act) and the Foreign Corrupt Practices Act (the FCPA) (together the Anti-Corruption Legislation) prohibit the Company and its employees and agents (and generally any person performing services on behalf of the Company) from offering, promising or giving money or any other item of value to win or retain business or to influence any act or decision of a third party and, in the case of the Bribery Act, regardless of whether such third party is a public official. Violation of the Bribery Act and/ or the FCPA is a crime that can result in severe fines and criminal penalties for both the relevant individual, the Company its Management and Directors. The Company takes compliance with the Anti-Corruption Legislation very seriously. Accordingly in addition to other existing and future measures the Company has tasked an independent third party auditor to run annual and spot checks aimed at detecting and eventually preventing any impropriety.Employees with specific queries on either the Bribery Act and/ or the FCPA should contact the office of the General Counsel.

IX.      Securities Trading

Because we are a public company, we are subject to a number of laws concerning the purchase of our shares and other publicly traded securities. Company policy prohibits Employees and their family members from trading securities while in possession of material, non-public information relating to the Company or any other company, including a customer or supplier that has a significant relationship with the Company.

Information is material when there is a substantial likelihood that a reasonable investor would consider the information important in deciding whether to buy, hold or sell securities. In short, any information that could reasonably affect the price of securities is material. Information is considered to be public only when it has been released to the public through appropriate channels and enough time has elapsed to permit the investment market to absorb and evaluate the information. If you have any doubt as to whether you possess material nonpublic information, you should contact your manager or contact the office of the General Counsel.

X.      Disclosure

Employees are responsible for ensuring that the disclosure in the Company’s periodic reports is full, fair, accurate, timely and understandable. In doing so, Employees shall take such action as is reasonably appropriate to (i) establish and comply with disclosure controls and procedures and accounting and financial controls that are designed to ensure that material information relating to the Company is made known to them; (ii) confirm that the Company’s periodic reports comply with applicable law, rules and regulations; and (iii) ensure that information contained in the Company’s periodic reports fairly presents in all material respects the financial condition and results of operations of the Company.

Employees will not knowingly (i) make, or permit or direct another to make, materially false or misleading entries in the Company’s, or any of its subsidiary’s, financial statements or records; (ii) fail to correct materially false and misleading financial statements or records; (iii) sign, or permit another to sign, a document containing materially false and misleading information; or (iv) falsely respond, or fail to respond, to specific inquiries of the Company’s independent auditor or outside legal counsel.


XI.      Procedures Regarding Waivers
    
Because of the importance of the matters involved in this Code, waivers will be granted only in limited circumstances and where such circumstances would support a waiver. Waivers of the Code may only be made by the Audit Committee and will be disclosed by the Company.





XII.      Internal Reporting

Employees shall take all appropriate action to stop any known misconduct by fellow Employees or other Company personnel that violate this Code. Employees shall report any known or suspected misconduct to the Chairman of the Audit Committee or the office of the General Counsel. The Company will not retaliate or allow retaliation for reports made in good faith.
    





Exhibit 12.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Emanuele Lauro, certify that:
1. I have reviewed this annual report on Form 20-F of Scorpio Tankers Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: March 16, 2017
 
/s/ Emanuele Lauro
 
Emanuele Lauro
Chief Executive Officer (Principal Executive Officer)






Exhibit 12.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Brian Lee, certify that:
1. I have reviewed this annual report on Form 20-F of Scorpio Tankers Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: March 16, 2017
 
/s/ Brian Lee
Brian Lee
Chief Financial Officer (Principal Financial Officer)






Exhibit 13.1
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this Annual Report of Scorpio Tankers Inc. (the “company”) on Form 20-F for the year ended December 31, 2016 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Emanuele Lauro, Chief Executive Officer of the company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
A signed original of this written statement has been provided to the company and will be retained by the company and furnished to the SEC or its staff upon request.
Date: March 16, 2017
 
/s/ Emanuele Lauro
Emanuele Lauro
Chief Executive Officer (Principal Executive Officer)






Exhibit 13.2
PRINCIPAL FINANCIAL OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this Annual Report of Scorpio Tankers Inc. (the “company”) on Form 20-F for the year ended December 31, 2016 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Brian Lee, Chief Financial Officer of the company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
A signed original of this written statement has been provided to the company and will be retained by the company and furnished to the SEC or its staff upon request.
Date: March 16, 2017
 
/s/ Brian Lee
Brian Lee
Chief Financial Officer (Principal Financial Officer)






Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form F-3 (N°. 333-210284) of Scorpio Tankers Inc. of our report dated March 16, 2017 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.


/s/ PricewaterhouseCoopers Audit
 
PricewaterhouseCoopers Audit
Monaco, Principality of Monaco
March 16, 2017





Exhibit 15.2

DREWRY2A01.JPG
Scorpio Tankers Inc.
9, Boulevard Charles III
Monaco 98000

March 16, 2017

Dear Sir/Madam:

Reference is made to the annual report on Form 20-F of Scorpio Tankers Inc. (the “Company”) for the year ended December 31, 2016 (the “Annual Report”) and the registration statement on Form F-3 (Registration No. Registration No. 333-210284) of the Company, as may be amended, including the prospectus contained therein and any prospectus supplement related thereto (the “Registration Statement”). We hereby consent to the incorporation by reference in the Registration Statement of all references to our name in the Annual Report and to the use of the statistical information supplied by us set forth in the Annual Report. We further advise the Company that our role has been limited to the provision of such statistical data supplied by us. With respect to such statistical data, we advise you that:

(1) we have accurately described the information and data of the oil tanker shipping industry, subject to the availability and reliability of the data supporting the statistical and graphical information presented; and

(2) our methodologies for collecting information and data may differ from those of other sources and does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the oil tanker shipping industry.

We hereby consent to the filing of this letter as an exhibit to the Annual Report, which is incorporated by reference into the Registration Statement and any related prospectus.


Yours faithfully,



DREWRYA01.JPG
Nigel Gardiner
Group Managing Director
Drewry Shipping Consultants Ltd.


LONDON | DELHI | SINGAPORE | SHANGHAI
Drewry Shipping Consultants, 15-17 Christopher Street, London EC2A 2BS, United Kingdom
t: +44 (0) 20 7538 0191 f: +44 (0) 20 7987 9396 e: enquiries@drewry.co.uk
Registered in England No. 3289135 Registered VAT No. 830 3017 77
www.drewry.co.uk