EX-4.1



 Exhibit 4.1 

SHARE PURCHASE AGREEMENT 

Between 
 Knutsen NYK
Offshore Tankers AS 
 (as Seller) 

And 
 KNOT Shuttle
Tankers AS 
 (as Buyer) 
  

 
 for the sale and
purchase of the shares in 
 Knutsen Shuttle Tankers 19 AS 

 
  







 SHARE PURCHASE AGREEMENT 

This agreement (this “Agreement”) is entered into the 1 November 2016 between: 

(1) Knutsen NYK Offshore Tankers AS, company registration no. 995 221 713 

(the “Seller”), and 
 (2) KNOT Shuttle
Tankers AS, company registration no. 998 942 829 
 (the “Buyer”). 

The Seller and the Buyer are hereinafter individually referred to as a “Party” and jointly the “Parties”. 

 

	1	RECITALS 

 WHEREAS: 
  

	a)	Knutsen Shuttle Tankers 19 AS, company registration no. 999 274 323, is a private limited liability company that has as its purpose to engage in shipowning activities, is duly incorporated under Norwegian law and has
its registered place of business in Haugesund, Norway (the “Company”); 

  

	b)	The Seller is the sole owner of the ownership interest in the Company, with a share capital of NOK 100,000; 

  

	c)	The Company is the owner of the MT “Raquel Knutsen”, having IMO No. 9685396 (the “Vessel”); and 

  

	d)	The Seller and the Buyer have agreed that the Buyer shall acquire 100% of the shares in the Company (the “Shares”) on the terms and conditions set forth in this Agreement. 


 

	2	DEFINITIONS 

 In this Agreement, the following definitions shall have the following meanings: 

 

					
	a)	 	Accounting Principles	 	means the applicable Norwegian generally accepted accounting principles as defined by Norwegian law and regulations and accounting standards issued by the Norwegian Accounting Standards Board (Nw: Norsk
Regnskapsstiftelse/NRS), applied on a consistent basis;
			
	b)	 	Accounts	 	means, in respect of the Company, its audited annual accounts (årsregnskap), consisting of the profit and loss account, balance sheet, statement of cash flow and the notes thereto, for the financial year ended on the
Accounts Date attached as Schedule 3;









					
	c)	 	Accounts Date	 	means 31 December 2015;
			
	d)	 	Agreement	 	shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	e)	 	Business	 	means the current business of the Company, being to own the Vessel, and charter the same under the Charter;
			
	f)	 	Business Day	 	means a day on which banks are open for general banking business in Norway;
			
	g)	 	Buyer	 	shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	h)	 	Buyer Indemnitees	 	shall have the meaning ascribed to such term in Clause 12.1;
			
	i)	 	Capitalized Fees	 	means capitalized fees and transaction costs related to the financing of the Vessel as of the Closing Date. Provided the Closing Date occurs on 1 December 2016, the Capitalized Fees will be USD 1,059,000.
			
	j)	 	Charter	 	means the Time Charterparty, dated 9 January 2013 entered into between the Company as owner and the Charterer as charterer in respect of the Vessel, as amended by Addendum No. 1, dated 27 December 2013, Addendum No. 2,
dated 1 December 2014, and Addendum No. 3, dated 24 April 2015;
			
	k)	 	Charterer	 	means Repsol Sinopec Brasil BV;
			
	l)	 	Closing	 	shall have the meaning ascribed to such term in Clause 5.1;
			
	m)	 	Closing Date	 	means the date when the Closing actually takes place according to Clause 5.1;
			
	n)	 	Companies Act	 	means the Norwegian Limited Liability Companies Act of 1997
			
	o)	 	Company	 	means Knutsen Shuttle Tankers 19 AS, Norwegian organization no.: 999 274 323;
			
	p)	 	Encumbrance	 	means any mortgage, charge, pledge, lien, option or other security interest or restriction of any kind;
			
	q)	 	Facility Prepayment Amount	 	means the amount of the Raquel Facility to be prepaid on Closing by the Company in accordance with the terms of the Raquel Facility, being USD 5,000,000, plus accumulated
interest;









					
	r)	 	Governmental Authority	 	means any domestic or foreign government, including federal, provincial, state, municipal, county or regional government or governmental or regulatory authority, domestic or foreign, and includes any department, commission, bureau,
board, administrative agency or regulatory body of any of the foregoing and any multinational or supranational organization;
			
	s)	 	Indemnified Party	 	shall have the meaning ascribed to such term in Clause 12.3;
			
	t)	 	Indemnifying Party	 	shall have the meaning ascribed to such term in Clause 12.3;
			
	u)	 	Losses	 	means any loss, liability, claim, damage, expense (including costs of investigation and defence and reasonable attorneys’ fees) or diminution of value, whether or not involving a third-party claim;
			
	v)	 	Material Adverse Effect	 	means a material adverse effect on the condition (financial, commercial, technical, legal or otherwise) of the Business, assets, results of operations or prospects of the Company;
			
	w)	 	Material Agreement	 	shall have the meaning ascribed to such term in Clause 8.11;
			
	x)	 	NYK Shareholder Loan	 	shall mean the junior secured credit facility provided by NIPPON YUSEN KABUSHIKI KAISHA to the Company pursuant to a Loan Agreement dated 25 December 2012, as amended by the Deed of Amendment, dated 27 October 2016;
			
	y)	 	Omnibus Agreement	 	means the Omnibus Agreement, dated as of 15 April 2013, by and among the Seller, the Partnership, KNOT Offshore Partners GP LLC, KNOT Shuttle Tankers 17 AS and KNOT Shuttle Tankers 18 AS;
			
	z)	 	Party	 	shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	aa)	 	Parties	 	shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	bb)	 	Partnership	 	means KNOT Offshore Partners LP, a Marshall Islands limited partnership;
			
	cc)	 	Purchase Price	 	shall have the meaning ascribed to such term in Clause 4;
			
	dd)	 	Purchase Price Adjustments	 	shall have the meaning ascribed to such term in Clause 5.4;









					
	ee)	 	Raquel Facility	 	means the USD 90,000,000 Facility Agreement in respect of the Vessel, dated 17 December 2014, made between (i) the Company as borrower, (ii) the Seller as original guarantor, (iii) the banks and financial institutions listed in
Schedule 1 thereto as lenders, (iv) Sumitomo Mitsui Banking Corporation Europe Limited and CommBank Europe Limited, as mandated lead arrangers, (v) SMBC Nikko Capital Markets Ltd and Commonwealth Bank of Australia, London Branch as hedging banks and
(vi) Sumitomo Mitsui Banking Corporation Europe Limited, as bookrunner, structuring bank and agent;
			
	ff)	 	Seller	 	shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	gg)	 	Seller Indemnitees	 	shall have the meaning ascribed to such term in Clause 12.2;
			
	hh)	 	Seller’s Credit	 	shall have the meaning ascribed to such term in Clause 4;
			
	ii)	 	Seller’s Loan	 	shall have the meaning ascribed to such term in Clause 4;
			
	jj)	 	Shares	 	shall have the meaning ascribed to such term in Clause 1;
			
	kk)	 	Signing Date	 	means the date of this Agreement;
			
	ll)	 	Swap Agreements	 	means (i) the ISDA Master Agreement dated 4 February 2015 and entered into between the Company and SMBC Nikko Capital Markets Ltd, and (ii) the ISDA Master Agreement dated 4 February 2015, and entered into between the Company and
the Commonwealth Bank of Australia, London Branch, and the Schedules thereto and all Transactions and/or Confirmations (as each of the said expressions is defined in the Master Agreements) supplemental thereto relating to the Raquel
Facility;
			
	mm)	 	Swap Balance	 	means the balance under the Swap Agreements as determined according to a mark-to-market determination as of the Closing Date, adjusted by USD 251,398 in favour of the Seller to cover the hedging margin compared to the rate at which
the Swap Agreements were entered into. As of 1 November 2016 the Swap Balance was - USD 924,229.71 (negative);
			
	nn)	 	Taxes	 	means all taxes (including value-added tax and similar taxes), however denominated, including interest, penalties and other additions to tax that may become payable or imposed by any applicable statute, rule or regulation or any
governmental agency, including all taxes, withholdings and other charges in respect of income, profits, gains, payroll, social security or other social benefit taxes, sales, use, excise, real or personal property, stamps, transfers and workers’
compensation, which the Company is required to pay, withhold or collect; and
			
	oo)	 	Third-Party Claim	 	shall have the meaning ascribed to such term in Clause 12.3; and
			
	pp)	 	Vessel	 	shall have the meaning ascribed to such term in Clause 1.









	3	SALE AND PURCHASE 

 Subject to the terms and conditions set forth in this Agreement, the Seller agrees to
sell, and the Buyer agrees to purchase, the Shares, together with all rights attached to them. 
 The Shares shall be transferred to the Buyer on the
Closing Date, free and clear from any Encumbrances, other than pursuant to the Raquel Facility. 
  

	4	PURCHASE PRICE 

 The Seller agrees to sell and transfer to the Buyer, and the Buyer agrees to purchase
from the Seller for USD 116,500,000, less USD 79,500,000 of outstanding principal under the Raquel Facility (including the Facility Prepayment Amount) and less USD 24,018,943 of outstanding principal under the NYK Shareholder Loan (the
“Purchase Price”), plus the Purchase Price Adjustments, all in accordance with and subject to the terms and conditions set forth in this Agreement, the Shares. 

The Purchase Price is to be settled by way of a seller’s credit (the “Seller’s Credit”) in the amount of USD 12,981,057 from the
Seller to the Buyer. In addition, the Seller shall extend a seller’s loan (the “Seller’s Loan”) in an amount of USD 12,018,943. The Seller’s Credit and the Seller’s Loan will be documented by way of a loan
agreement in form and with content as set forth in Schedule 1 hereto. The obligations of the Buyer under the Seller’s Credit and the Seller’s Loan shall be guaranteed in full by the Partnership. 

 

	5	CLOSING 

  

	5.1	Time and place 

 Subject to the satisfaction or waiver of the conditions set forth in Clause 6, the
completion of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of the Seller at such time and date as the Parties agree. 

 

	5.2	The Seller’s Closing obligations 

 At the Closing, the Seller shall: 

 

	a)	deliver to the Buyer a copy of the minutes of the meeting of the board of directors of the Seller authorising the execution of, and the consummation of the transaction completed by, this Agreement; and


  

	b)	in exchange for the payment of the Purchase Price, transfer the Shares to the Buyer and deliver to the Buyer the share register of the Company with the Buyer duly registered as the owner of the Shares, as well as the
related notices according to Sections 4-7 and 4-10 of the Companies Act. 

  

	c)	disburse the Seller’s Loan to the Buyer. 









	5.3	The Buyer’s Closing obligations 

 At the Closing, the Buyer shall 

 

	a)	settle the Purchase Price in accordance with Clause 4; 

  

	b)	enter into the Seller’s Credit and Seller’s Loan; 

  

	c)	procure that the Company prepays the NYK Shareholder Loan in full; and 

  

	d)	procure that the Company prepays the Facility Prepayment Amount in full. 

  

	5.4	Post-Closing Adjustment 

  

	a)	Within 30 days following the Closing Date, the Buyer and the Seller shall agree on the amount of the post-Closing adjustments to the Purchase Price based on: 


(i) the Company’s working capital as of 00:01 hours CET on the Closing Date; 

(ii) the Swap Balance; 
 (iii) the
Capitalized Fees to be paid by the Buyer; and 
 (iv) the net intercompany balance between the Company and KNOT Management AS. 

(the “Purchase Price Adjustments”). 
  

	b)	Within 15 days following the date on which the Purchase Price Adjustments have been agreed pursuant to Clause 5.4 a) above, the Buyer or the Seller (as the case may be) shall pay to the other Party an amount, in cash,
equal to the net Purchase Price Adjustments. Any amounts other than those covered by the Purchase Price Adjustments varying in the period between the Signing Date and the Closing Date shall be for Seller’s account. 


 

	6	CLOSING CONDITIONS 

  

	6.1	Conditions to the Buyer’s Closing obligations 

 The obligations of the Buyer to purchase the Shares
and to take the other actions required to be taken by it at the Closing are subject to the satisfaction of each of the following conditions (any of which may be waived in whole or in part by the Buyer) on or before the Closing Date: 

 

	a)	there is no material breach of any of the representations and warranties of the Seller set forth in Clause 8 and Clause 9; 

  

	b)	the Buyer shall have obtained the funds necessary to consummate the purchase of the Shares, to ensure prepayment by the Company of the NYK Shareholder Loan and the Facility Prepayment Amount, and to pay all related fees
and expenses; 

  

	c)	in all respects material to the transactions contemplated hereby, the Seller shall have performed or complied with all of its obligations pursuant to this Agreement to be performed or complied with by the Seller at or
prior to the Closing Date and shall have delivered each document or instrument to be delivered by it pursuant to this Agreement; and 

  

	d)	the results of the searches, surveys, tests and inspections of the Vessel referred to in Clause 10.1 h) are reasonably satisfactory to the Buyer. 









	6.2	Conditions to the Seller’s Closing obligations 

 The obligations of the Seller to sell the Shares
and to take the other actions required to be taken by it at the Closing are subject to the satisfaction of each of the following conditions (any of which may be waived in whole or in part by the Seller) on or before the Closing Date: 

 

	a)	there is no material breach of any of the representations and warranties of the Buyer set forth in Clause 7; 

  

	b)	At Closing, the Buyer shall procure that the Partnership accede to the Raquel Facility as “Guarantor” by way of an “Accession Letter” set out therein, and that the Shares are pledged as contemplated
by the Raquel Facility, and procure that relevant conditions precedent under the Raquel Facility relating to the Partnership and/or the Buyer have been satisfied. At Closing, the Seller shall be released from its guarantee obligations under the
Raquel Facility with respect to outstanding amounts relating to the Vessel; and 

  

	c)	in all respects material to the transactions contemplated hereby, the Buyer shall have performed or complied with all of its obligations pursuant to this Agreement to be performed or complied with by the Buyer at or
prior to the Closing Date and shall have delivered each document or instrument to be delivered by it pursuant to this Agreement. 

  

	6.3	Conditions of the Parties.  

 The obligations of Seller to sell the Shares and the obligations of
Buyer to purchase the Shares are subject to the satisfaction (or waiver by each of Seller and Buyer) on or prior to the Closing Date of the following conditions: 
  

	a)	The Seller shall have received any and all written consents, permits, approvals or authorizations of any Governmental Authority or any other Person (including, but not limited to, with respect to the Charter, the Raquel
Facility, the NYK Shareholder Loan and the Swap Agreements) and shall have made any and all notices or declarations to or filing with any Governmental Authority or any other Person, including those related to any environmental laws or regulations,
required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereunder, including the transfer of the Shares; and 


 

	b)	No legal or regulatory action or proceeding shall be pending or threatened by any Governmental Authority to enjoin, restrict or prohibit the purchase and sale of the Shares. 









	7	REPRESENTATIONS AND WARRANTIES OF THE BUYER 

 The Buyer represents and warrants to the Seller that as of
the Signing Date and on the Closing Date, unless otherwise expressly stated: 
  

	7.1	Corporate existence and power 

 The Buyer is duly incorporated, validly existing and in good standing
under the laws of Norway. 
 The Buyer has not been declared insolvent; become the subject of a petition in bankruptcy; had a receiver appointed with
respect to it or to the Business or part thereof; entered into any arrangement with, or made an assignment for the benefit of, its creditors; or ceased to function as a going concern. 

 

	7.2	Corporate authorisation and non-contravention 

 This Agreement and each other document or instrument
delivered or to be delivered in connection with this Agreement has been duly authorised by all necessary corporate action(s) of the Buyer and constitutes or will, when executed, constitute valid and binding obligations of the Buyer enforceable in
accordance with its respective terms. 
 The execution by the Buyer of this Agreement and each other document or instrument delivered or to be delivered in
connection with it, and the performance by the Buyer of its obligations under this Agreement and the consummation of the transactions provided for in this Agreement, do not and will not result in a breach of any provision of the articles of
association of the Buyer or of any applicable law, order, judgment or decree of any court or Governmental Authority or of any agreement to which the Buyer is bound. 

The Buyer is not required to obtain any authorisations, consents, approvals or exemptions by any Governmental Authority in connection with the entering into
or performance of its obligations under this Agreement. 
  

	8	REPRESENTATIONS AND WARRANTIES OF THE SELLER 

 The Seller represents and warrants to the Buyer as of the
Signing Date and on the Closing Date, unless otherwise expressly stated: 
  

	8.1	Corporate existence and power 

 Each of the Company and the Seller is duly incorporated, validly existing
and in good standing under the laws of Norway. 
 Each of the Company and the Seller has not been declared insolvent; become the subject of a petition in
bankruptcy; had a receiver appointed with respect to it or to the Business or part thereof; entered into any arrangement with, or made an assignment for the benefit of, its creditors; or ceased to function as a going concern. 

 

	8.2	Corporate authorisation and non-contravention 

 This Agreement and each other document or instrument
delivered or to be delivered in connection with this Agreement has been duly authorised by all necessary corporate action(s) of each of the Company and the Seller, as appropriate, and constitutes or will, when executed, constitute valid and binding
obligations of each of the Company and the Seller, as appropriate, enforceable in accordance with its respective terms. 
 The execution by each of the
Company and the Seller, as appropriate, of this Agreement and each other document or instrument delivered or to be delivered in connection with it, and the 







 
performance by each of the Company and the Seller, as appropriate, of its obligations under this Agreement and the consummation of the transactions provided for in this Agreement, do not and will
not result in a breach of any provision of the articles of association of each of the Company and the Seller, as appropriate, or of any applicable law, order, judgment or decree of any court or Governmental Authority or of any agreement to which
each of the Company and the Seller, as appropriate, is bound. 
 Each of the Company and the Seller, as appropriate, is not required to obtain any
authorisations, consents, approvals or exemptions by any Governmental Authority in connection with the entering into or performance of its obligations under this Agreement. 
  

	8.3	Capitalisation and title 

 The Seller has full ownership to the Shares. The Shares are fully authorised,
validly issued, fully paid and at Closing, free and clear from any Encumbrances, other than pursuant to the Raquel Facility. 
 There is no outstanding
subscription, option or similar rights relating to the Shares. 
  

	8.4	Records 

 The Company’s articles of association and shareholders’ register are true, accurate,
up-to-date and complete. 
  

	8.5	Charter documents; validity of the Charter 

 The Seller has supplied to the Buyer true and correct copies
of the Charter and any related documents, as amended to the Closing Date. The Charter is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms and, to the knowledge of the Seller, the Charter is a
valid and binding agreement of all other parties thereto enforceable against such parties in accordance with its terms. 
  

	8.6	Accounts 

 The Accounts have been prepared in accordance with the Accounting Principles and in accordance
with the books and records of the Company. The Accounts give a true and accurate view of the financial position, solvency, assets, liabilities, liquidity, cash flow and the result of the operations of the Company as of the Accounts Date. 

 

	8.7	No undisclosed liabilities 

 Neither the Company nor the Vessel has any Encumbrances, or other
liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due (including, without limitation, any liability for Taxes and interest, penalties and other charges payable with respect to
any such liability or obligation), except for such liabilities or obligations arising under the Charter, the Raquel Facility, the NYK Shareholder Loan, the Swap Agreements, the management agreement relating to the Vessel with KNOT Management AS, the
inter-company balances described in Clause 8.8 c) and the Encumbrances appearing in the ship registry of the Vessel and arising under the Raquel Facility and the Swap Agreements. 








	8.8	Loans and other financial facilities 

 All loans and other financial facilities available to the Company
have been made available for review by the Buyer. 
  

	a)	As of the Signing Date, the principal outstanding amount under the Raquel Facility for which the Company will be responsible at the time of Closing is USD 79,500,000 (provided Closing takes place on or before
28 December 2016), including the Facility Prepayment Amount which the Company will be responsible to prepay at the time of Closing; 

  

	b)	As of the Signing Date, the principal outstanding amount under the NYK Shareholder Loan for which the Company will be responsible to prepay at the time of Closing is USD 24,018,943 (provided Closing takes place on or
before 15 December 2016) ; and 

  

	c)	As of the Signing Date, the non-interest bearing inter-company balance between the Company (as borrower) and KNOT Management AS (as lender) is NOK 1,596,684.46. 


No event has occurred which gives, or after notice or lapse of time, or both, would give any third party the right to call for repayment from the Company
prior to normal maturity of any loan or other financial facility. The Company shall not be indebted, directly or indirectly, to any person who is an officer, director, stockholder or employee of any of the Seller or any spouse, child or other
relative or any affiliate of any such person, nor shall any such officer, director, stockholder, employee, relative or affiliate be indebted to the Company. 
  

	8.9	Assets 

 At the Closing Date, the Company shall not be using assets in the Business that it neither owns
nor has the right to use pursuant to written agreements with third parties. At the Closing Date, the assets of the Company will comprise all the assets necessary for carrying on the Business fully and effectively to the extent to which it is
conducted at the Signing Date. 
  

	8.10	Absence of certain changes or events 

 Since the Accounts Date, there has not occurred or arisen: 

 

	a)	any change of accounting methods, principles or practices, accounting, invoicing and supplier practice or procedures for the Company; 


 

	b)	any acquisition or disposal of, or the entering into any agreement to acquire or dispose of, any asset, other than the sale of products in the ordinary course of business; 


 

	c)	the termination of any Material Agreement; 

  

	d)	any obligations, commitments or liabilities, contingent or otherwise, whether for Taxes or otherwise, except obligations, commitments and liabilities arising in the ordinary course of business; 


 

	e)	any event or condition, whether covered by insurance or not, which has resulted in or may result in a Material Adverse Effect; or 

  

	f)	the entering into of any agreements or commitments other than on customary terms. 

  

	8.11	Agreements 

 Each Material Agreement is in full force and effect. No other Material Agreements will be
entered into by the Company prior the Closing Date without the prior consent of the Buyer (such consent not to be unreasonably withheld). The Company has fulfilled all material obligations required pursuant to the Material Agreements to have been
performed by it prior to the Signing Date and has not waived any material rights thereunder. 







 There has not occurred any material default on the part of the Company under any of the Material Agreements, or
to the knowledge of the Seller, on the part of any other party thereto, nor has any event occurred that with the giving of notice or the lapse of time, or both, would constitute any material default on the part of the Company under any of the
Material Agreements nor, to the knowledge of the Seller, has any event occurred that with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any other party to any of the Material Agreements.

 The term “Material Agreement” means each agreement, contract or other undertaking by or of the Company (a) that is of material
importance to the Business or (b) the value of which, in respect of total turnover during one year, is not less than NOK 500,000, provided, however, that such term includes the Charter, the Raquel Facility, the NYK Shareholder Loan and the
Swap Agreements. 
  

	8.12	Insurance 

 The Company maintains insurance policies on fire, theft, loss, disruption, product and
general liability and other forms of insurance with reputable insurers that would reasonably be judged to be sound and required for the Business. 
 The
Company’s insurance policies do not contain any provisions regarding a change of control or ownership of the insured. 
 The Company is in compliance
with all terms and conditions contained in the insurance policies, and nothing has been done or omitted to be done that would make any insurance policy or insurance void or voidable or that would result in a reduction of the coverage (No:
avkortning). 
  

	8.13	Environmental matters 

 The Company is not and has not been in breach of any applicable laws (whether
civil, criminal or administrative), statutes, regulations, directives, codes, judgments, orders or any other measures imposed by any governmental, statutory or regulatory body with regard to the pollution or the protection of the environment or to
the protection of human health or human safety, or any other living organisms supported by the environment. 
 There is no current governmental
investigation or disciplinary proceeding relating to any alleged breach of any law or permit by the Company, and none is pending, nor threatened. 
 The
Company has not, other than as permitted under applicable permits or applicable laws or regulations held from time to time, disposed of, discharged, released, placed, dumped or emitted any hazardous substances, such as pollutants, contaminants,
hazardous or toxic materials, wastes or chemicals. Neither the Seller nor the Company has received any formal or informal notice or other communication from which it appears that the Company may be or has been in violation of any laws or permits.
There are no actual or contingent obligations on the Company to pay money or carry out any work in order to keep or be granted an extension or renewal of any existing permit. There are no facts or circumstances that could result in such an
obligation. The properties used by the Company are not made of or do not contain any form of asbestos or any other toxic substance that may cause damage to the health of the persons working or visiting the premises. 








	8.14	Compliance with laws 

 The Company has at all times conducted the Business in accordance with and has
complied with any applicable laws in Norway and in any other relevant countries relating to its operations and the Business. 
 All necessary licences,
consents, permits and authorisations have been obtained by the Company to enable the Company to carry on the Business in the places and in the manner in which such Business is now conducted and all such licences, consents, permits and authorisations
are valid and subsisting and have been complied with in all respects. 
  

	8.15	Litigation 

 There are no claims, actions, lawsuits, administrative, governmental, arbitration or other
legal proceedings (including but not limited to proceedings related to Taxes) pending or threatened against or involving the Company, the Business or properties or assets of the Company and which would result in a Material Adverse Effect if
adversely determined. 
  

	8.16	Taxes 

 The Company has properly filed with the appropriate Tax authorities all Tax returns and reports
required to be filed for all Tax periods ending prior to the Closing Date. Such filings are true, correct and complete. All information required for a correct assessment of Taxes has been provided. 

The Tax returns of the Company have been assessed and approved by the Tax authorities through the Tax years up to and including the years for which such
assessment and approval is required, and the Company is not subject to any dispute with any such authority. 
 All Taxes that have become due have been
fully paid or fully provided for in the Accounts, and the Company shall not be liable for any additional Tax pertaining to the period before the Accounts Date. All Taxes for the period after the Accounts Date have been fully paid when due. 

There are no Tax audits, Tax disputes or Tax litigation pending or threatened against or involving the Company. There is no basis for assessment of any
deficiency in any Taxes against the Company that has not been provided for in the Accounts or that has not been paid. 
 The Company is not and has not been
involved in any transaction that could be considered as Tax-evasive. All losses for Tax purposes incurred by of the Company are trading losses and are available to be carried forward and set off against income in succeeding periods without
limitation and have been accepted by the relevant Tax authorities. 
 The Company is not and has not been subject to any Tax outside its respective country
of fiscal residence. 
  

	8.17	Relationship with the Seller 

 Except as disclosed to the Buyer, there are no written or oral agreements
or arrangements between the Company and the Seller, and no liabilities or obligations (contingent or otherwise) owed by the Company to the Seller. 
 No
services provided by the Seller to the Company are necessary in the ordinary course of business. 







 No payments of any kind, including, but not limited to management charges, have been made by the Company to the
Seller, save for payments under agreements or arrangements made on an arm’s-length basis in accordance with applicable law and regulations. 
  

	8.18	Information 

 All documents provided to the Buyer by or on behalf of the Seller or the Company are true
and correct, and no document provided to the Buyer by or on behalf of the Seller or the Company contains any untrue statement of a relevant fact or omits to state a relevant fact necessary to make the statements contained in the document not
misleading. 
 There are no facts or circumstances known to the Seller, relating to the affairs of the Company, that have not been disclosed to the Buyer,
which, if disclosed, reasonably could have been expected to influence the decision of the Buyer to purchase the Shares on the terms of this Agreement. 

The Seller confirms that the Seller, prior to the Signing Date, has made, and until the Closing Date, shall continue to make, all investigations necessary in
order to ensure that the statements in Clauses 7, 8 and 9 are correct. 
  

	9	REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THE VESSEL 

 The Seller represents and warrants to
the Buyer as of the Signing Date and on the Closing Date, unless otherwise expressly stated: 
  

	9.1	Flag and title 

 The Company is the registered owner of the Vessel and has good and marketable title to
the Vessel, free and clear of any and all Encumbrances, other than those arising under the Raquel Facility and the Swap Agreements. The Vessel is properly registered in the name of the Seller under and pursuant to the flag and law of Malta, and all
fees due and payable in connection with such registration have been paid. 
  

	9.2	Classification 

 The Vessel is entered with DNV GL and has the highest classification rating. The Vessel
is in class without any recommendations or notation as to class or other requirement of the relevant classification society, and if the Vessel is in a port, it is in such condition that it cannot be detached by any port state authority or the flag
state authority for any deficiency. 
  

	9.3	Maintenance 

 The Vessel has been maintained in a proper and efficient manner in accordance with
internationally accepted standards for good ship maintenance, is in good operating order, condition and repair and is seaworthy, and all repairs made to the Vessel during the last two years and all known scheduled repairs due to be made and all
known deficiencies have been disclosed to the Buyer. 
  

	9.4	Liens 

 The Vessel is not (a) under arrest or otherwise detained, (b) other than in the
ordinary course of business, in the possession of any person (other than her master and crew) or (c) subject to a possessory lien. 








	9.5	Safety 

 The Vessel is supplied with valid and up-to-date safety, safety construction, safety equipment,
radio, loadline, health, tonnage, trading and other certificates or documents as may for the time being be prescribed by the law of Malta or of any other pertinent jurisdiction, or that would otherwise be deemed necessary by a shipowner acting in
accordance with internationally accepted standards for good ship management and operations. 
  

	9.6	No blacklisting or boycotts 

 No blacklisting or boycotting of any type has been applied or currently
exists against or in respect of the Vessel. 
  

	9.7	No options 

 There are not outstanding any options or other rights to purchase the Vessel. 

 

	9.8	Insurance 

 The insurance policies relating to the Vessel are as set forth on Schedule 2 hereto,
each of which is in full force and effect and, to the Seller’s knowledge, not subject to being voided or terminated for any reason. 
  

	10	COVENANTS PRIOR TO THE CLOSING 

  

	10.1	Covenants of the Seller Prior to the Closing 

 From the Signing Date to the Closing Date, the Seller
shall cause the Company to conduct its business in the usual, regular and ordinary course in substantially the same manner as previously conducted. The Seller shall not permit the Company to enter into any contracts or other written or oral
agreements prior to the Closing Date, other than such contracts and agreements as have been disclosed to the Buyer prior to the Signing Date, without the prior consent of the Buyer (such consent not to be unreasonably withheld). In addition, the
Seller shall not permit the Company to take any action that would result in any of the conditions to the purchase and sale of the Shares set forth in Clause 6 not being satisfied. Furthermore, the Seller hereby agrees and covenants that it: 

 

	a)	shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to consummate and make effective as promptly as possible the transactions contemplated by this
Agreement and to co-operate with the Buyer and others in connection with the foregoing; 

  

	b)	shall use its best efforts to obtain the authorisations, consents, orders and approvals of regulatory bodies and officials that may be or become necessary for the performance of its obligations pursuant to this
Agreement and the completion of the transactions contemplated by it; 

  

	c)	shall co-operate with the Buyer and promptly seek to obtain such authorisations, consents, orders and approvals as may be necessary for the performance of the Parties’ respective obligations pursuant to this
Agreement; 

  

	d)	shall not amend, alter or otherwise modify or permit any amendment, alteration or modification of any material provision of or terminate the Charter or any other contract prior to the Closing Date without the prior
written consent of the Buyer, such consent not to be unreasonably withheld or delayed; 









	e)	shall not exercise or permit any exercise of any rights or options contained in the Charter, without the prior written consent of the Buyer, not to be unreasonably withheld or delayed; 


 

	f)	shall observe and perform in a timely manner, all of its covenants and obligations under the Charter, the Raquel Facility, the NYK Shareholder Loan and the Swap Agreements, if any, and in the case of a default by
another party thereto, it shall forthwith advise the Buyer of such default and shall, if requested by the Buyer, enforce all of its rights under such Charter, the Raquel Facility, the NYK Shareholder Loan or the Swap Agreements, as applicable, in
respect of such default; 

  

	g)	shall not cause or, to the extent reasonably within its control, permit any Encumbrances to attach to the Vessel other than in connection with the Raquel Facility and the Swap Agreements; and 


 

	h)	shall permit representatives of the Buyer to make, prior to the Closing Date, at the Buyer’s risk and expense, such surveys, tests and inspections of the Vessel as the Buyer may deem desirable, so long as such
surveys, tests or inspections do not damage the Vessel or interfere with the activities of the Seller, the Company or the Charterer thereon and so long as the Buyer shall have furnished the Seller with evidence that adequate liability insurance is
in full force and effect. 

  

	10.2	Covenants of the Buyer Prior to the Closing 

 The Buyer hereby agrees and covenants that during the
period of time after the Signing Date and prior to the Closing Date, the Buyer shall, in respect of the Shares to be transferred on the Closing Date, take, or cause to be taken, all necessary company action, steps and proceedings to approve or
authorize validly and effectively the purchase and sale of the Shares and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby. 

 

	11	TERMINATION 

  

	11.1	Termination 

 This Agreement may be terminated, and the transactions contemplated by this Agreement may
be abandoned, at any time prior to the Closing Date: 
  

	a)	by either Party if a breach of any provision of this Agreement has been committed by the other Party, such breach has not been waived and such breach is material to the transactions contemplated hereby, the Business or
the assets, financial condition or prospect of the Company; 

  

	b)	by the Buyer if satisfaction of any of the conditions in Clause 6.1 is or becomes impossible (other than through the failure of the Buyer to comply with its obligations under this Agreement) and the Buyer has not waived
such condition; 

  

	c)	by the Seller if satisfaction of any of the conditions in Clause 6.2 is or becomes impossible (other than through the failure of the Seller to comply with its obligations under this Agreement) and the Seller has not
waived such condition; 

  

	d)	by either Party if satisfaction of any of the conditions in Clause 6.3 is or becomes impossible and Buyer and Seller have not waived such condition; 


 

	e)	by the Buyer due to a change having occurred that has resulted or may result in a Material Adverse Effect; or 

  

	f)	by mutual written consent of the Seller and the Buyer. 









	11.2	Rights on termination 

 If this Agreement is terminated pursuant to Clause 11.1, all further obligations
of the Parties pursuant to this Agreement shall terminate without further liability of a Party to the other, provided, however, that the obligations of the Parties contained in Clause 13 (Costs) and Clause 17 (Governing Law and arbitration) shall
survive such termination, and further provided, that if this Agreement is terminated by a Party because of the breach of this Agreement by the other Party or because one or more of the conditions to the terminating Party’s obligations under
this Agreement is not satisfied as a result of the other Party’s failure to comply with its obligations under this Agreement, the terminating Party’s right to pursue all legal remedies will survive such termination unimpaired. 

 

	12	INDEMNIFICATION 

  

	12.1	Indemnity by the Seller 

 Following the Closing, the Seller shall be liable for, and shall indemnify,
defend and hold harmless the Buyer and its respective officers, directors, employees, agents and representatives (the “Buyer Indemnitees”) from and against, any Losses, suffered or incurred by such Buyer Indemnitees: 

 

	a)	by reason of, arising out of or otherwise in respect of any inaccuracy in, breach of any representation or warranty, or a failure to perform or observe fully any covenant, agreement or obligation of, the Seller in or
under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement by the Seller; 

  

	b)	subject to Clause 13 b), any fees, expenses or other payments incurred or owed by the Seller to any brokers, financial advisors or comparable other persons retained or employed by it in connection with the transaction
contemplated by this Agreement; 

  

	c)	any Losses of the Company or the Vessel incurred prior to or on the Closing Date arising from any violation of any applicable law or regulation relating to protection of natural resources, health and safety and the
environment; 

  

	d)	all federal, state, foreign and local income tax liabilities attributable to the Company or operation of the Vessel prior to the Closing Date; or 


 

	e)	any Losses suffered or incurred by such Buyer Indemnitees in connection with any claim for the repayment of hire or Losses in relation to the Vessel for periods prior to the Closing. 


 

	12.2	Indemnity by the Buyer 

 Following the Closing, the Buyer shall be liable for, and shall indemnify,
defend and hold harmless the Seller and its respective officers, directors, employees, agents and representatives (the “Seller Indemnitees”) from and against, any Losses, suffered or incurred by such Seller Indemnitees by reason of,
arising out of or otherwise in respect of any inaccuracy in, breach of any representation or warranty, or a failure to perform or observe fully any covenant, agreement or obligation of, the Buyer in or under this Agreement or in or under any
document, instrument or agreement delivered pursuant to this Agreement by the Buyer. 








	12.3	Indemnification procedures with respect to third-party claims 

 If the Seller or the Buyer, as the case
may be (an “Indemnified Party”), shall receive notice of any claim by a third party that is or may be subject to indemnification or compensation from the other Party pursuant to this Agreement (a “Third-Party
Claim”), the Indemnified Party shall give the other Party (the “Indemnifying Party”) prompt written notice of such Third-Party Claim and the Indemnifying Party shall, at the Indemnifying Party’s option, have the right
to participate in the defence thereof by counsel at the Indemnifying Party’s own cost and expense. If the Indemnifying Party acknowledges within 30 days from such written notice in writing its obligation to indemnify the Indemnified Party
against all Losses that may result from such Third-Party Claim, the Indemnifying Party shall be entitled, at the Indemnifying Party’s option, to assume and control the defence of such Third-Party Claim at the Indemnifying Party’s cost and
expense and through counsel of the Indemnifying Party’s choice. No such Third-Party Claim may be settled by the Indemnifying Party without the written consent of the Indemnified Party, unless the settlement involves only the payment of money by
the Indemnifying Party. No Third-Party Claim that is being defended in good faith by the Indemnifying Party shall be settled by the Indemnified Party without the written consent of the Indemnifying Party. The Indemnifying Party shall have no
obligation to indemnify the Indemnified Party for any losses resulting from the settlement of Third-Party Claims in violation of the provisions of this Clause 12.3. 
  

	12.4	Omnibus Agreement Indemnification 

 Notwithstanding any other provision of this Agreement, the Seller
shall be liable for, and shall indemnify, defend and hold harmless the Partnership and any person controlled by the Partnership, including the Buyer, from and against the matters set forth in Section 7.2 c) and Article XIII of the Omnibus
Agreement, subject to the terms and conditions set forth therein. 
 The Seller’s indemnification obligations under this Clause 12.4 shall
(a) only be subject to limitations insofar as such limitations are set forth in Section 7.2 c) and Article XIII of the Omnibus Agreement and (b) be in addition to and independent of its indemnification obligations pursuant to Clause
12.1. For the avoidance of doubt, the indemnification provided pursuant to this Clause 12.4 shall be without duplication of any other amounts payable to the Buyer Indemnities pursuant to Clause 12.1. 

 

	13	COSTS 

  

	a)	Subject to Clause 13b), each party shall pay its own costs and expenses in connection with the preparation for and completion of the transactions contemplated by this Agreement, including but not limited to all fees and
expenses of its own representatives, agents, brokers, legal and financial advisers and authorities and no such costs or expenses shall be charged to or paid by, neither directly or indirectly, the Company. 


 

	b)	The fees and expenses related to the fairness opinion of Pareto Securities Ltd dated 28 October 2016 will be divided equally between the Buyer and the Seller. 


 

	14	NOTICES 

 All notices, requests, demands, approvals, waivers and other communications required or
permitted under this Agreement must be in writing in the English language and shall be deemed to have been received by a Party when: 
  

	a)	delivered by post, unless actually received earlier, on the third Business Day after posting, if posted within Norway, or the fifth Business Day, if posted to or from a place outside Norway; 


 

	b)	delivered by hand, on the day of delivery; or 

  

	c)	delivered by fax, on the day of dispatch if supported by a written confirmation from the sender’s fax machine that the message has been properly transmitted. 








 All such notices and communications shall be addressed as set forth below or to such other addresses as may be
given by written notice in accordance with this Clause 14. 
 If to the Seller: 

Knutsen NYK Offshore Tankers AS 
 Attention: CEO 

Smedasundet 40, Postboks 2017, 5504 Haugesund, Norway 
 Fax no.:
+47 52 70 40 40 
 If to the Buyer: 
 KNOT Shuttle Tankers AS

 Attention: Chairman of the Board 
 Smedasundet 40, Postboks
2017, 5504 Haugesund, Norway 
 Fax no.: +47 52 70 40 40 
  

	15	ASSIGNMENT 

 This Agreement shall be binding upon and inure to the benefit of the successors of the
Parties, but shall not be assignable by any of the Parties without the prior written consent of the other Party. The benefit of this Agreement may, however, be assigned by either of the Parties to any group directly or indirectly controlling,
controlled by or under common control of the assignor, provided that the assignor shall remain liable for its own debt and for all obligations under this Agreement. 
  

	16	MISCELLANEOUS 

  

	16.1	Further Assurances 

 From time to time after the Signing Date, and without any further consideration, the
Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and shall do all such other acts and things, all in accordance
with applicable law, as may be necessary or appropriate (a) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are
intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and their respective successors and assigns beneficial and record title to the interests contributed and assigned by this Agreement or intended so to be
and (c) more fully and effectively to carry out the purposes and intent of this Agreement. 
  

	16.2	Integration 

 This Agreement, the Schedules hereto and the instruments referenced herein supersede all
previous understandings or agreements among the Parties, whether oral or written, with respect to its subject matter hereof. This Agreement, the Schedules hereto and the instruments referenced herein contain the entire understanding of the Parties
with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written
amendment hereto executed by the Parties hereto after the Signing Date. 








	16.3	No Broker’s Fees 

 No one is entitled to receive any finder’s fee, brokerage or other
commission in connection with the purchase of the Shares or the consummation of the transactions contemplated by this Agreement. 
  

	17	GOVERNING LAW AND ARBITRATION 

 This Agreement shall be governed by and construed in accordance with
Norwegian law. 
 The Parties shall seek to solve through negotiations any dispute, controversy or claim arising out of or relating to this Agreement, or
the breach, termination or invalidity hereof. If the Parties fail to solve such dispute, controversy or claim by a written agreement within 60 days after one of the Parties has requested such negotiations by notice to the other Party, such dispute,
controversy or claim shall be finally settled by arbitration in Haugesund in the English language in accordance with the Norwegian Arbitration Act. The arbitration tribunal shall consist of three arbitrators, of which the Buyer shall appoint one
arbitrator and the Seller shall appoint one arbitrator. The arbitrators so appointed shall appoint the third arbitrator, who shall be the chairman of the arbitration tribunal. In the event of failure by a Party to appoint its arbitrator within 30
days after the request for arbitration first is given, or the failure by the first two arbitrators to appoint the third arbitrator within 30 days after appointment of the last of the first two arbitrators to be appointed, such arbitrator or
arbitrators shall be appointed by the district judge (No: “Sorenskriver”) of Haugesund District Court. Any Party may seek judgement upon any award in any court having jurisdiction, or an application may be made to such court for the
judicial acceptance of the award and for an order of enforcement. 
 Notwithstanding the above, either Party may bring an action in any court of competent
jurisdiction (a) for provisional relief pending the outcome of arbitration, including, without limitation, provisional injunctive relief or pre-judgement attachment of assets, or (b) to compel arbitration or enforce any arbitral award. For
purposes of any proceeding authorised by this Clause 17, each Party hereby consents to the non-exclusive jurisdiction of Haugesund, Norway. 

* * * 







 This Agreement has been executed in two original copies, of which each Party has retained one copy. 

 

									
	            Knutsen NYK Offshore Tankers AS	 		 	            KNOT Shuttle Tankers AS
					
	By:	 	 /s/ Trygve Seglem
	 		 	By:	 	 /s/ Øystein Emberland

	Name:	 	 Trygve Seglem
	 		 	Name:	 	 Øystein Emberland

	Title:	 	 CEO
	 		 	Title:	 	 Controller

					
	By:	 	 /s/ Fumitake Shishido
	 		 		 	
	Name:	 	 Fumitake Shishido
	 		 		 	
	Title:	 	 Director and Executive Vice President
	 		 		 	








 Schedule 1 

FORM OF SELLER’S CREDIT AND SELLER’S LOAN 

THE UNDERSIGNED, KNOT SHUTTLE TANKERS AS, of Smedasundet 40, 5529 Haugesund, Norway, a company registered in Norway with registration number 998 942
829 (the “Borrower”) 
 HEREBY ACKNOWLEDGES that it owes to KNUTSEN NYK OFFSHORE TANKERS AS, of Smedasundet 40, 5529 Haugesund,
Norway, a company registered in Norway with registration number 995 221 713 (the “Creditor”) 
 THE INITIAL PRINCIPAL AMOUNT
of USD 25,000,000 (the “Loan Amount”), pursuant to the terms and conditions of a seller’s credit in the amount of USD 12,981,057 (the “Seller’s Credit”) and a Seller’s Loan in the amount of USD
12,018,943 (the “Seller’s Loan”) as set out below (the “Seller’s Credit and Seller’s Loan”): 
  

			
	Interpretation:	  	Capitalised terms not otherwise defined in this Seller’s Credit and Seller’s Loan shall have the meanings ascribed to them in Schedule 1.
		
	Undertaking to pay:	  	The Borrower irrevocably and unconditionally undertakes to pay to the Creditor the Loan Amount together with any other amount outstanding under this Seller’s Credit and Seller’s Loan on the Maturity Date.
		
	Maturity Date:	  	The date falling 5 years after the date of signing of this Seller’s Credit and Seller’s Loan , or such other date as mutually agreed between the Borrower and the Creditor.
		
	Interest:	  	 Until this Seller’s Credit and Seller’s Loan is repaid in accordance with the terms set out herein, interest shall accrue on the
Loan Amount and be payable in accordance with the following conditions:
  

a)        Interest shall accrue during the period from and including Closing
(as defined in the SPA) and ending on the day preceding the due date for repayment of this Seller’s Credit and Seller’s Loan.
  

b)        The interest on the Loan Amount is fixed semi-annually based on the
6 months forward swap LIBOR, plus a margin fixed to 450 bps (4.50%) per annum.
  

c)        Accrued interest on the Loan Amount shall accumulate, be compounded
with the Loan Amount at the end of each consecutive six month period (the first of which starting on the date on which the Loan is made available to the Borrower) and be payable at the end of each such consecutive six month period.

 

d)        Interest is calculated from day to day on the basis of the actual
number of days elapsed and a year of 360 days.
  

e)        Interest ceases to accrue on this Seller’s Credit and
Seller’s Loan as from the date on which this Seller’s Credit and Seller’s Loan is fully repaid.










			
	Default interest:	  	If the Borrower fails to pay any amount payable by it under this Seller’s Credit and Seller’s Loan , or if an Event of Default occurs, the applicable interest on the overdue Loan Amount and accrued interest upon such
failure to pay or Event of Default shall accrue at a rate of eight per cent (8.00%) per annum from the due date or the date an Event of Default occurred (as the case may be), to the date of actual payment.
		
	No set-off by Borrower:	  	All payments to be made by the Borrower under this Seller’s Credit and Seller’s Loan shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim, unless explicitly agreed in
a separate agreement.
		
	Repayment:	  	 Unless previously repaid, the Borrower shall repay this Seller’s Credit and Seller’s Loan in full on the Maturity Date at par
together with accrued interest up to (but excluding) the Maturity Date.
  
 The Borrower
may at any time, prepay in whole or in part this Seller’s Credit and Seller’s Loan with five (5) Business Days notice. No prepayment fee applies to any such early prepayment.

 
 All payments under this Seller’s Credit and Seller’s Loan shall be made to such
account as the Creditor from time to time notifies to the Borrower.

		
	Priority and subordination:	  	This Seller’s Credit and Seller’s Loan shall constitute senior debt obligations of the Borrower and have priority over any shareholder loans (to the Borrower) and equity provided by its owners.
		
		  	Notwithstanding the foregoing, the obligations of the Borrower and the claims of the Creditor under this Seller’s Credit and Seller’s Loan shall – if the Borrower, the Guarantor or the Target becomes insolvent or
enters into bankruptcy proceedings - be fully subordinated to claims of the Banks in respect of the Bank Debt Guarantee Obligations.
		
	Guarantee:	  	The obligations of the Borrower under this Seller’s Credit and Seller’s Loan shall at all times until the Loan Amount, together with any and all amounts outstanding hereunder are repaid in full, be fully and irrevocably
guaranteed by KNOT Offshore Partners LP, a Marshall Islands limited partnership (the “Guarantor”). Such guarantee shall be made by the Guarantor’s co-signature on this Seller’s Credit and Seller’s
Loan.









			
	Events of Default:	  	 The Loan Amount becomes immediately and automatically due for payment in full (together with accrued interest) upon the occurrence of an
Event of Default, where “Event of Default” means:
  

a)      any non-payment by the Borrower under this Seller’s Credit and
Seller’s Loan; or
  

b)      upon the Borrower becoming insolvent or entering into bankruptcy proceedings,
any liquidator or trustee in bankruptcy or similar officer is appointed in respect of the Borrower or any of its assets, any preparations are taken by its shareholders, directors or other officers for its winding up or dissolution.

 
 For the avoidance of doubt, the provisions regarding subordination set forth in paragraph
“Priority and subordination” applies in case of an Event of Default as set out in item b) above.

		
	Transferability:	  	 The Borrower may not transfer this Seller’s Credit and Seller’s Loan (or any of its obligations and liabilities hereunder) to
any third party.
  
 The Creditor may transfer this Seller’s Credit and Seller’s
Loan , subject to the Borrower’s consent.

		
	Governing law and enforcement:	  	This Seller’s Credit and Seller’s Loan shall be governed by the laws of Norway, with the courts of Haugesund, Norway as legal venue.

 THIS SELLER’S CREDIT AND SELLER’S LOAN have been entered into on [●] December 2016. 

 

			
	KNOT SHUTTLE TANKERS AS
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	KNUTSEN NYK OFFSHORE TANKERS AS
		
	By:	 	  

	Name:	 	
	Title:	 	








 Guarantee 

By our co-signature on this Seller’s Credit and Seller’s Loan we, KNOT Offshore Partners LP, hereby unconditionally and irrevocably guarantee, as
primary obligor as and for its own debt and not merely as surety to the Creditor the due and punctual payment by the Borrower of any and all sums which are now or at any time hereafter will be payable by the Borrower under or in respect of the
Seller’s Credit and Seller’s Loan. 
 If and whenever the Borrower shall make default in the payment of any sums due and payable under the terms
of the Seller’s Credit and Seller’s Loan, we shall forthwith, following demand by Creditor to us, pay to the Creditor in such manner as notified by the Creditor the moneys in regard to which such default has been made, with the default
interest (if any) thereon. 
 Our total liability under this Guarantee shall, in the aggregate, always be limited to the Loan Amount plus all unpaid
interest and default interest. 
  

			
	KNOT OFFSHORE PARTNERS LP
		
	By:	 	  

	Name:	 	
	Title:	 	








 Schedule 1: Definitions 

 

			
	Business Day:	  	Any day on which banks are generally open for commercial business in Norway.
		
	Banks:	  	Sumitomo Mitsui Banking Corporation Europe Limited, CommBank Europe Limited and SMBC Nikko Capital Markets Ltd and/or such other banks as may become creditors in respect of the Bank Debt from time to time.
		
	Bank Debt:	  	The USD 90,000,000 Facility Agreement in respect of the vessel “Raquel Knutsen”, dated 17 December 2014, made between (i) the Company as borrower, (ii) the Seller as original guarantor, (iii) the banks and
financial institutions listed in Schedule 1 thereto as lenders, (iv) Sumitomo Mitsui Banking Corporation Europe Limited and CommBank Europe Limited, as mandated lead arrangers (v) SMBC Nikko Capital Markets Ltd and Commonwealth Bank of Australia,
London Branch as hedging banks and (vi) Sumitomo Mitsui Banking Corporation Europe Limited, as structuring bank, bookrunner and agent (as amended, supplemented or varied from time to time).
		
	Bank Debt Guarantee Obligations:	  	The Guarantor’s potential payment obligations as guarantor for the Target’s fulfilment of its obligations under the Bank Debt.
		
	SPA:	  	The share purchase agreement entered into between the Borrower and the Creditor dated 1 November 2016, whereby the Borrower agreed to purchase and the Creditor agreed to sell all shares in Target.
		
	Target:	  	Knutsen Shuttle Tankers 19 AS, of Smedasundet 40, 5529 Haugesund, Norway a company registered in Norway with registration number 999 274 323.








 Schedule 2 

INSURANCES 
  

					
	 Insurance Policies (all quoted values are
USD)

	Hull & Machinery	 		 	
	Hull	 	Insured Value: $120 000 000	 	Policy Renewal: 01.11.2015-31.10.2016
	Hull Interest	 	Insured Value: $30 000 000	 	Policy Renewal: 01.11.2015-31.10.2016
	Freight Interest	 	Insured Value: $30 000 000	 	Policy Renewal: 01.11.2015-31.10.2016
			
	P&I Insurance	 		 	
	Gross Tonnage: 83936	 		 	Policy Renewal: 20.02.2016-20.02.2017
			
	War Risk	 		 	
		 	Insured Value: $180 000 000	 	Policy Renewal: 01.01.2016-31.12.2016

 Hull & Machinery 

			
	10,0%	    	Aon London Broking Center
	10%	    	XL Insurance Company Ltd.
	5,0%	    	Aon London Broking Center
	5%	    	Arch Insurance Comp. (Europe) Ltd.
	10,0%	    	Aon London Broking Center
	10%	    	Swiss Re International SE, UK Branch
	2,5%	    	Aon London Broking Center
	2,5%	    	Lloyds Syndicate 1884 Standard
	7,5%	    	Aon London Broking Center
	7,5%	    	Lloyds Syndicate 2987 BRT
	5,0%	    	Aon Singapore Pte. Ltd.
	5%	    	India International Insurance Pte Ltd
	10,0%	    	Gard AS, as agents only for Gard M&E Ltd
	2,5%	    	International Insurance Company of Hannover SE
	2,0%	    	Mitsui Sumitomo Ins. Co. Ltd.
	12,5%	    	Norwegian Hull Club
	4,0%	    	Skuld 1897
	4,0%	    	The Swedish Club
	25,0%	    	Tokio Marine & Nichido Fire Insurance Co., Ltd.
	  
	    	
	100,0%	    	Total

 Hull Interest/Freight Interest 

			
	10%	    	Aon London Broking Center
	10%	    	XL Insurance Company Ltd.
	5,0%	    	Aon London Broking Center
	5%	    	Arch Insurance Comp. (Europe) Ltd.
	12,0%	    	Aon London Broking Center
	12%	    	Swiss Re International SE, UK Branch
	7,5%	    	Aon London Broking Center
	7,5%	    	Lloyds Syndicate 2987 BRT
	15,0%	    	 Gard AS, as agents only for Gard M&E Ltd

	2,5%	    	 International Insurance Company of Hannover SE

	15,0%	    	 Norwegian Hull Club

	4,0%	    	 Skuld 1897

	4,0%	    	 The Swedish Club

	25,0%	    	 Tokio Marine & Nichido Fire Insurance Co., Ltd.

	  
	    	
	100,0%	    	 Total


 War Risk 

			
	100%	  	Den Norske Krigsforsikring for Skib
		
	P&I	  	
	100%	  	Den Norske Krigsforsikring for Skib








 Schedule 3 

ACCOUNTS 
  

 
 [Separate attachment]