Document:

Exhibit 4.21

Exhibit 4.21

DATED 15 DECEMBER 2006

GREAT EAST HULL NO. 1717 L.L.C.

GREAT EAST HULL NO. 1718 L.L.C.

H.S.H.I. HULL NO. S363 L.L.C.

H.S.H.I. HULL NO. S364 L.L.C.

(as Borrowers)

- and -

CALYON

and others

(as Senior Lenders)

- and -

CALYON

and others

(as Junior Lenders)

and

CALYON

(as Agent)

- and -

CALYON

(as Security Trustee)

- and -

CALYON

(as Swap Provider)

- and -

CALYON

(as KEIC Agent)

 

US$255,528,228.43 SENIOR LOAN AND

US$80,000,000 JUNIOR LOAN SECURED

LOAN AGREEMENT

 

	 	 	 
	

	 	One, St Paul’s Churchyard

London EC4M 8SH

Telephone +44 (0)20 7329 4422

Fax +44 (0)20 7329 7100

DX No. 64 Chancery Lane

www.shlegal.com

 

 

 

CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1 Definitions and Interpretation
	 	 	2	 
	 
	 	 	 	 
	2 The Facility and its Purpose
	 	 	24	 
	 
	 	 	 	 
	3 Conditions precedent and subsequent for the Loans
	 	 	25	 
	 
	 	 	 	 
	4 Representations and Warranties
	 	 	29	 
	 
	 	 	 	 
	5 Repayment and Prepayment
	 	 	34	 
	 
	 	 	 	 
	6 Interest
	 	 	36	 
	 
	 	 	 	 
	7 Fees
	 	 	38	 
	 
	 	 	 	 
	8 Security and Application of Moneys
	 	 	39	 
	 
	 	 	 	 
	9 Covenants
	 	 	40	 
	 
	 	 	 	 
	10 Events Of Default
	 	 	54	 
	 
	 	 	 	 
	11 Set-Off and Lien
	 	 	61	 
	 
	 	 	 	 
	12 Assignment and Sub-Participation
	 	 	62	 
	 
	 	 	 	 
	13 Payments, Mandatory Prepayment, Reserve Requirements and Illegality
	 	 	64	 
	 
	 	 	 	 
	14 Communications
	 	 	69	 
	 
	 	 	 	 
	15 General Indemnities
	 	 	72	 
	 
	 	 	 	 
	16 Miscellaneous
	 	 	74	 
	 
	 	 	 	 
	17 Law and Jurisdiction
	 	 	78	 
	 
	 	 	 	 
	SCHEDULE 1
	 	 	80	 
	The Lenders, the Commitments and the Proportionate Shares
	 	 	80	 
	 
	 	 	 	 
	SCHEDULE 2
	 	 	81	 
	The Vessels
	 	 	81	 
	 
	 	 	 	 
	SCHEDULE 3
	 	 	82	 
	Conditions Precedent and Subsequent
	 	 	82	 
	Part I: Conditions precedent
	 	 	82	 

 

 

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Part II: Conditions subsequent to Part I
	 	 	85	 
	Part III: Delivery conditions precedent
	 	 	86	 
	Part IV: Delivery conditions subsequent
	 	 	89	 
	 
	 	 	 	 
	SCHEDULE 4
	 	 	90	 
	Form of Transfer Certificate
	 	 	90	 
	 
	 	 	 	 
	SCHEDULE 5
	 	 	93	 
	Part I: Form of Drawdown Notice for the Buyer Credit
	 	 	93	 
	Part II: Form of Drawdown Notice for the Junior Loan
	 	 	95	 
	 
	 	 	 	 
	SCHEDULE 6
	 	 	97	 
	Calculation of the Mandatory Cost
	 	 	97	 
	 
	 	 	 	 
	SCHEDULE 7
	 	 	100	 
	Form of Compliance Certificate
	 	 	100	 
	 
	 	 	 	 
	SCHEDULE 8
	 	 	102	 
	Drawings under the Junior Loan
	 	 	102	 

 

 

 

LOAN FACILITY AGREEMENT

Dated: 15 DECEMBER 2006

BETWEEN:

	(1)	 	GREAT EAST HULL NO. 1717 L.L.C., GREAT EAST HULL NO. 1718 L.L.C., H.S.H.I. HULL NO. S363
L.L.C., H.S.H.I. HULL NO. S364 L.L.C., each being a limited liability company formed under the
laws of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (each a “Borrower” and together the
“Borrowers”); and

	(2)	 	the banks listed in Schedule 1 Part 1, each acting through its office at the address
indicated against its name in Schedule 1 Part 1 (together the “Senior Lenders” and each a
“Senior Lender”); and

	(3)	 	the banks listed in Schedule 1 Part 2, each acting through its office at the address
indicated against its name in Schedule 1 Part 2 (together the “Junior Lenders” and each a
“Junior Lender”); and

	(4)	 	CALYON, acting as agent through its office at 9 quai du Président Paul Doumer, 92920 Paris,
La Défense Cedex, France for the Lenders (in that capacity the “Agent”);

	(5)	 	CALYON, acting as security trustee through its office at 9 quai du Président Paul Doumer,
92920 Paris, La Défense Cedex, France for the Lenders (in that capacity the “Security
Trustee”);

	(6)	 	CALYON, acting as swap provider through its office at 9 quai du Président Paul Doumer, 92920
Paris, La Défense Cedex, France (in that capacity the “Swap Provider”); and

	(7)	 	CALYON, acting as agent for the Finance Parties under the KEIC Buyer Credit Policies through
its office at 9 quai du Président Paul Doumer, 92920 Paris, La Défense Cedex, France (in that
capacity the “KEIC Agent”).

 

 

 

WHEREAS:

	(A)	 	Each Borrower has agreed to purchase the relevant Vessel from the relevant Builder on the
terms of the relevant Building Contract and intends to register that Vessel on delivery on the
relevant flag listed opposite that Vessel in Schedule 2.

	(B)	 	Each of the Senior Lenders has agreed to advance to the Borrowers on a joint and several
basis its Commitment (aggregating, with all the other Commitments from Senior Lenders, up to
two hundred and fifty five million five hundred and twenty eight thousand two hundred and
twenty eight Dollars and forty three cents ($255,528,228.43)) to finance up to eighty per cent
(80%) of the Contract Price of the Vessels and one hundred per cent (100%) of the KEIC
Insurance Premium.

	(C)	 	Each of the Junior Lenders has agreed to advance to the Borrowers on a joint and several
basis its Commitment (aggregating, with all the other Commitments from Junior Lenders, up to
eighty million Dollars ($80,000,000)) to enable the Borrowers to benefit from a longer
effective amortisation profile on the Buyer Credit.

IT IS AGREED as follows:-

1 Definitions and Interpretation

	 	1.1	 	Definitions

In this Agreement:-

	 	1.1.1	 	“the Address for Service” means c/o Teekay Shipping (UK) Ltd of
2nd Floor, 86 Jermyn Street, London SW1Y 6JD, England or, in relation
to any of the Security Parties, such other address in England and Wales as that
Security Party may from time to time designate by no fewer than ten (10) Business
Days’ written notice to the Agent.

	 	1.1.2	 	“Administration” has the meaning given to it in paragraph 1.1.3 of
the ISM Code.

	 	1.1.3	 	“Affiliate” means, in relation to any entity, a Subsidiary of that
entity, a Holding Company of that entity or any other Subsidiary of that Holding
Company.

 

2

 

	 	1.1.4	 	“Approved Brokers” means H. Clarkson & Co. Ltd, Simpson Spence & Young
Shipbrokers Ltd, Compass Maritime Services LLC, Fearnley AS, R. S. Platou AS and
P.F. Bassoe AS.

	 	1.1.5	 	“Assigned Property” means the Insurances, the Earnings, the Charter
Rights and the Requisition Compensation in respect of a Vessel.

	 	1.1.6	 	“Assignments” means the deeds of assignment of Insurances, Earnings,
Charter Rights and Requisition Compensation in respect of each of the Vessels
referred to in Clause 8.1.4 (each an “Assignment”).

	 	1.1.7	 	“Availability Termination Date” means the Buyer Credit Availability
Termination Date or the Junior Loan Availability Termination Date, as the case may
be.

	 	1.1.8	 	“Authorisation” means an authorisation, consent, approval,
resolution, licence, exemption, filing, notarisation or registration.

	 	1.1.9	 	“the Borrowers’ Obligations” means all of the
liabilities and obligations of the Borrowers to the Finance Parties under or
pursuant to the Borrowers’ Security Documents, whether actual or contingent,
present or future, and whether incurred alone or jointly or jointly and severally
with any other and in whatever currency, including (without limitation) interest,
commission and all other charges and expenses.

	 	1.1.10	 	“the Borrowers’ Security Documents” means those of the Security Documents to
which any of the Borrowers is or is to be a party.

	 	1.1.11	 	“Break Costs” means all documented costs, losses, premiums or penalties
incurred by any of the Finance Parties in the circumstances contemplated by Clause
15.4 or as a result of any of them receiving any prepayment of all or any part of
the Facility (whether pursuant to Clause 5.4, Clause 5.5, Clause 5.7 or otherwise)
or any other payment under or in relation to the Security Documents on a day other
than the due date for payment of the sum in question, and includes (without
limitation) any losses or costs incurred in liquidating or re-employing deposits
from third parties acquired to effect or maintain the Facilities, and any
liabilities, expenses or losses incurred by any of the Finance
Parties in terminating or reversing, or otherwise in connection with, any interest rate
and/or currency swap, transaction or arrangement entered into by any of the Finance Parties
with any member of the Guarantor Group to hedge any exposure arising under this Agreement,
or in terminating or reversing, or otherwise in connection with, any open position arising
under this Agreement.

 

3

 

	 	1.1.12	 	“Builder” means in respect of Vessel A and Vessel B Samsung Heavy Industries,
South Korea and in respect of Vessel C and Vessel D Hyundai Samho Heavy
Industries, South Korea (together the “Builders”).

	 	1.1.13	 	“Building Contracts” means in respect of Vessel A and Vessel B the contracts
dated 11 July 2006 and in respect of Vessel C and Vessel D the contracts dated 7
September 2006 on the terms and subject to the conditions of which each of the
Builders has agreed to construct the relevant Vessels for, and deliver the
relevant Vessels to, the relevant Owners respectively and “Building Contract”
means any one of them.

	 	1.1.14	 	“Building Contract Assignments” means the deeds of assignment of the Building
Contracts and the Refund Guarantees referred to in Clause 8.1.1 and “Building
Contract Assignment” means any one of them.

	 	1.1.15	 	“Business Day” means a day on which banks are open for the transaction of
business of the nature contemplated by this Agreement (and not authorised by law
to close) in New York City, United States of America; London, England; Paris,
France; and any other financial centre which the Agent may reasonably consider
appropriate for the operation of the provisions of this Agreement.

	 	1.1.16	 	“Buyer Credit” means the aggregate amount advanced or to be advanced by
the Senior Lenders to the Borrowers under Clause 2 or, where the context permits,
the amount advanced and for the time being outstanding.

 

4

 

	 	1.1.17	 	“Buyer Credit Availability Termination Date” means in respect of Vessel A
31 May 2009, in respect of Vessel B 31 July 2009, in respect of Vessel C 30
November 2009 and in respect of Vessel D 31 December 2009.

	 	1.1.18	 	“Buyer Credit Margin” means nought point three per cent (0.3%) per annum.

	 	1.1.19	 	“Buyer Credit Maximum Amount” means two hundred and fifty five million five
hundred and twenty eight thousand two hundred and twenty eight Dollars and forty
three cents ($255,528,228.43).

	 	1.1.20	 	“Buyer Credit Vessel Tranches” in respect of each Vessel means that portion of
the Buyer Credit to be lent to the Borrowers in respect of that Vessel which shall
at no time exceed the relevant Buyer Credit Vessel Tranche Maximum Amount.

	 	1.1.21	 	“Buyer Credit Vessel Tranche Maximum Amount” in respect of the Buyer Credit
Vessel Tranches for Vessel A and Vessel B means sixty three million four hundred
and fifty nine thousand and nine hundred and eighty three Dollars and eighty three
cents ($63,459,983.83) each, and in respect of the Buyer Credit Vessel Tranche for
Vessel C means sixty four million three hundred thousand eight hundred and seventy
nine Dollars and fifty eight cents ($64,300,879.58) and for Vessel D means sixty
four million three hundred and seven thousand three hundred and eighty one Dollars
and nineteen cents ($64,307,381.19) each.

	 	1.1.22	 	“Change of Control” means either (i) in respect of any of the Borrowers
that the Guarantor shall cease, for any reason whatsoever (save with the prior
written consent of the Agent pursuant to Clause 9.1.19 or otherwise), to own or
control directly or indirectly, all of the shares of that Borrower or (ii) in
respect of the Guarantor any person or any two or more persons acting in
concert (excluding Resolute Investments Inc. or any successor thereto)
acquire (a) legally or beneficially and either directly or indirectly more than
fifty per cent (50%) of the entire issued share capital of the Guarantor; or (b)
the right or ability to control, either directly or indirectly the affairs or the
composition of the majority of the board of directors (or equivalent of it) of the
Guarantor.

 

5

 

	 	1.1.23	 	“Charter Rights” in relation to a Vessel means all rights and benefits accruing
to the Owner of that Vessel under or pursuant to a Qualifying Charter and not
forming part of the Earnings.

	 	1.1.24	 	“Commitment” means, in relation to a Lender, the amount of the relevant Loan
which that Lender agrees to advance to the Borrowers as its several liability as
indicated against the name of that Lender in Schedule 1 Part 1 and/or Schedule 1
Part 2 and/or, where the context permits, the amount of the relevant Loan advanced
by that Lender and remaining outstanding and “Commitments” means more than one of
them.

	 	1.1.25	 	“Commitment Commission” means the commitment commission to be paid by the
Borrowers to the Agent on behalf of the Lenders pursuant to Clause 7.

	 	1.1.26	 	a “Communication” means any notice, approval, demand, request or other
communication from one party to this Agreement to any other party to this
Agreement.

	 	1.1.27	 	“the Communications Address” means c/o Teekay Shipping (Canada) Ltd, Suite 2000,
Bentall 5, 550 Burrard Street, Vancouver, B.C., Canada V6C 2K2, fax no: +1 604 681
3011 marked for the attention of Director, Finance.

	 	1.1.28	 	“Company” means at any given time the company responsible for a Vessel’s
compliance with (i) the ISM Code under paragraph 1.1.2 of the ISM Code and or (ii)
the ISPS Code (as the case may be).

	 	1.1.29	 	“Compliance Certificate” means a certificate substantially in the form set out
in Schedule 7.

	 	1.1.30	 	“Contract Price” means the amount payable for a Vessel as set out in the
relevant Building Contract.

 

6

 

	 	1.1.31	 	“Credit Support Document” means any document described as such in the
Master Agreement and, where the context permits, any other document referred
to in any Credit Support Document which has the effect of creating an
Encumbrance in favour of any of the Finance Parties.

	 	1.1.32	 	“Credit Support Provider” means any person (other than a Borrower) described as
such in the Master Agreement.

	 	1.1.33	 	“Currency of Account” means, in relation to any payment to be made to a Finance
Party pursuant to any of the Security Documents, the currency in which that
payment is required to be made by the terms of the relevant Security Document.

	 	1.1.34	 	“Deeds of Covenants” means the deeds of covenants referred to in Clause 8.1.3
(each a “Deed of Covenant”).

	 	1.1.35	 	“Default Rate” means the rate which is the aggregate of LIBOR, any Mandatory
Cost, the Margin and one point five per centum (1.5%) per annum.

	 	1.1.36	 	“Delivery Date”, in respect of each Vessel, means the date on which that Vessel
is actually delivered by the relevant Builder to the relevant Owner.

	 	1.1.37	 	“Dollars” “US$” and “$” each means available and freely transferable and
convertible funds in lawful currency of the United States of America.

	 	1.1.38	 	“Drawdown Date” means the date on which a Drawing is advanced.

	 	1.1.39	 	“Drawdown Notice” means a notice substantially in the form set out in
the relevant part of Schedule 5.

	 	1.1.40	 	“Drawing” means a part of the Facility advanced by the Lenders to the Borrowers
in accordance with Clause 2.

 

7

 

	 	1.1.41	 	“Earnings”, in relation to a Vessel, means all hires including (without
limitation) all time charter hire and bareboat charter hire, freights, pool
income and other sums payable to or for the account of the Owner in respect of that 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 that Vessel.

	 	1.1.42	 	“Encumbrance” means any mortgage, charge, pledge, lien, assignment,
hypothecation, preferential right, option, title retention or trust
arrangement or any other agreement or arrangement which, in any of the
aforementioned instances, has the effect of creating security.

	 	1.1.43	 	“Environmental Affiliate” means an agent or employee of an Owner or a person in
a contractual relationship with an Owner in respect of the Vessel owned by it
(including without limitation, the operation of or the carriage of cargo of such
Vessel).

	 	1.1.44	 	“Environmental Approvals” means any present or future permit, licence,
approval, ruling, variance, exemption or other authorisation required under the
applicable Environmental Laws.

	 	1.1.45	 	“Environmental Claim” means any and all enforcement, clean-up, removal,
administrative, governmental, regulatory or judicial actions, orders, demands or
investigations instituted or completed pursuant to any Environmental Laws or
Environmental Approvals together with any claims made by any third person relating
to damage, contribution, loss or injury resulting from any Environmental Incident.

	 	1.1.46	 	“Environmental Incident” means:

	 	(a)	 	any release of Environmentally Sensitive Material from a Vessel; or

 

8

 

	 	(b)	 	any incident in which Environmentally Sensitive Material is released 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 the
relevant Vessel is actually or potentially liable to be arrested, attached, detained
or injuncted and/or where any guarantor, any manager (or any sub-manager of such
Vessel) or any of its officers, employees or other persons retained or instructed by
it (or such sub-manager) are 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 such Vessel and in connection with which that Vessel is actually
or potentially liable to be arrested and/or where any guarantor, any manager (or any
sub-manager of the relevant Vessel) or any of its officers, employees or other persons
retained or instructed by it (or such sub-manager) are at fault or allegedly at fault
or otherwise liable to any legal or administrative action.

	 	1.1.47	 	“Environmental Laws” means all present and future laws, regulations, treaties and
conventions of any applicable jurisdiction which:

	 	(a)	 	have as a purpose or effect the protection of, and/or prevention of harm or
damage to, the environment;

	 	(b)	 	relate to the carriage of Environmentally Sensitive Material or to actual or
threatened releases of Environmentally Sensitive Material;

	 	(c)	 	provide remedies or compensation for harm or damage to the environment; or

	 	(d)	 	relate to Environmentally Sensitive Materials or health or safety matters.

	 	1.1.48	 	“Environmentally Sensitive Material” means (i) oil and oil products and (ii) any other
waste, pollutant, contaminant or other substance (including any liquid, solid, gas, ion,
living organism or noise) that may be harmful to human health or other life or the environment
or a nuisance to any person or that may make the enjoyment, ownership or
other territorial control of any affected land, property or waters more costly for such
person to a material degree.

 

9

 

	 	1.1.49	 	“Event of Default” means any of the events set out in Clause 10.2.

	 
	 	1.1.50	 	“Execution Date” means the date on which this Agreement is executed by each of the parties hereto.

	 
	 	1.1.51	 	“Facilities” means together the Buyer Credit and the Junior Facility (each a “Facility”).

	 	1.1.52	 	“the Facility Outstandings” at any time means the total of all Drawings made at that time,
to the extent not reduced by repayments, prepayments and voluntary reductions.

	 	1.1.53	 	“the Facility Period” means the period beginning on the Execution Date and ending on the
date when the whole of the Indebtedness has been repaid in full and the Borrowers have ceased
to be under any further actual or contingent liability to the Finance Parties under or in
connection with the Security Documents.

	 	1.1.54	 	“Fee Letter” means the letter dated on or about the date hereof between the Borrowers and
the Agent setting out any of the fees referred to in Clause 7.

	 	1.1.55	 	“the Finance Parties” means the Lenders, the Security Trustee, the Swap Provider, the KEIC
Agent and the Agent.

	 	1.1.56	 	“Free Liquidity”, in relation to the Guarantor, means cash, cash equivalents and marketable
securities of maturities less than one (1) year to which the Guarantor shall have free,
immediate and direct access each as reflected in the Guarantor’s most recent quarterly
management accounts forming part of the Guarantor’s Accounts.

	 	1.1.57	 	“GAAP” means the generally accepted accounting principles in the United States of America.

	 	1.1.58	 	“the Guarantee” means the guarantee and indemnity of the Guarantor in respect of the
Borrowers’ Obligations referred to in Clause 8.1.2.

 

10

 

	 	1.1.59	 	“Guarantor” means Teekay Shipping Corporation, a company incorporated
under the laws of the Marshall Islands and with its registered office at c/o Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.

	 	1.1.60	 	“Guarantor Group” means the Guarantor and each of its Subsidiaries (including but not
limited to the Borrowers but excluding each of OPCO, TKO and TGP).

	 	1.1.61	 	“Guarantor’s Accounts” means the financial accounts of the Guarantor and the Guarantor Group
to be provided to the Agent pursuant to clause 9 of the Guarantee.

	 	1.1.62	 	“Holding Company” means, in relation to any entity, any other entity in respect of which it
is a Subsidiary.

	 	1.1.63	 	“the Indebtedness” means the Facility Outstandings; the Master Agreement
Liabilities; all other sums of any nature including costs (together with all interest on any
of those sums) which from time to time may be payable by the Borrowers to the Finance Parties
pursuant to the Security Documents; any damages payable as a result of any breach by any of
the Borrowers of any of the Security Documents; and any damages or other sums payable as a
result of any of the obligations of the Borrowers under or pursuant to any of the Security
Documents being disclaimed by a liquidator or any other person, or, where the context permits,
the amount thereof for the time being outstanding.

	 	1.1.64	 	“Insurances”, in relation to a Vessel, means all policies and contracts of insurance
(including but not limited to hull and machinery, 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 that Vessel or her increased value and (where the context permits) all
benefits thereof, including all claims of any nature and returns of premium.

	 	1.1.65	 	“Intercreditor Deed” means an intercreditor deed dated on or about the date of this
agreement made between (1) the Guarantor, (2) the Agent,
(3) the Security Trustee, (4) the KEIC Agent, (5) the Swap Provider, (6) the Borrowers, (7)
the Lenders and (8) KEIC.

 

11

 

	 	1.1.66	 	“Interest Payment Date” means each date for the payment of interest in accordance with
Clause 6.

	 	1.1.67	 	“Interest Period” means each interest period selected by the Borrowers or agreed by the
Lenders pursuant to Clause 6.

	 	1.1.68	 	“the ISM Code” means the International Management Code for the Safe Operation of Ships and
for Pollution Prevention.

	 	1.1.69	 	“ISSC” means a valid international ship security certificate for a Vessel issued under the
ISPS Code.

	 	1.1.70	 	“the ISPS Code” means the International Ship and Port Security Code as adopted by the
Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13
December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974.

	 	1.1.71	 	“Junior Facility” means the credit facility made available by the Junior Lenders to the
Borrowers pursuant to this Agreement.

	 	1.1.72	 	“Junior Loan” means the aggregate amount advanced or to be advanced by the Junior
Lenders to the Borrowers under Clause 2 or, where the context permits, the amount advanced and
for the time being outstanding.

	 	1.1.73	 	“Junior Loan Availability Termination Date” means, in respect of the first Drawing under the
Junior Loan, in respect of Vessel A 31 May 2009, in respect of Vessel B 31 July 2009, in
respect of Vessel C 30 November 2009 and in respect of Vessel D 31 December 2009 and in
respect of the balance of the Junior Loan means (on a per Vessel basis) the date falling
twelve (12) years after the first Drawdown Date of the Junior Loan for that Vessel.

	 	1.1.74	 	“Junior Loan Maximum Amount” means eighty million Dollars ($80,000,000).

 

12

 

	 	1.1.75	 	“Junior Loan Margin” means nought point seven per cent (0.7%) per annum.

	 	1.1.76	 	“Junior Loan Vessel Tranches” in respect of each Vessel means that portion of the Junior
Loan to be lent to the Borrowers in respect of that Vessel which shall at no time exceed the
relevant Junior Loan Vessel Tranche Maximum Amount.

	 	1.1.77	 	“Junior Loan Vessel Tranche Maximum Amount” in respect of the Junior Loan Vessel Tranches
for each Vessel means twenty million Dollars ($20,000,000) each.

	 	1.1.78	 	“KEIC” means Korea Export Insurance Corporation of 2-16 Floors, Seoul Central Building, 136
Seorin Dong, Jongro-ku, Seoul 110-729, Korea.

	 	1.1.79	 	“KEIC Buyer Credit Policy” in relation to a Buyer Credit Vessel Tranche means the medium
and long term export insurance policy issued by KEIC setting out the terms and conditions of
KEIC buyer credit insurance for that Buyer Credit Vessel Tranche (together the “KEIC Buyer
Credit Policies”).

	 	1.1.80	 	“KEIC Insurance Premium” means in respect of Vessel A and B one point zero four per cent
1.04% of the relevant Buyer Credit Vessel Tranche Maximum Amount, in respect of Vessel C one
point zero nine per cent 1.09% of the relevant Buyer Credit Vessel Tranche Maximum Amount and
in respect of Vessel D one point one zero per cent 1.10% of the relevant Buyer Credit Vessel
Tranche Maximum Amount expected to be the amounts set out in the table at Clause 3.3.3 to be
funded by a Drawing under the Buyer Credit and paid onwards by the KEIC Agent to KEIC on the
first Drawing under each Buyer Credit Vessel Tranche.

	 	1.1.81	 	“law” or “Law” means any law, statute, treaty, convention, regulation, instrument or other
subordinate legislation or other legislative or quasi-legislative rule or measure, or any
order or decree of any government, judicial or public or other body or authority, or any
directive, code of practice, circular, guidance note or other direction issued by any competent
authority or agency (whether or not having the force of law).

 

13

 

	 	1.1.82	 	“Lenders” means together the Senior Lenders and the Junior Lenders (each a “Lender”).

	 	1.1.83	 	“LIBOR” means the rate, rounded to the nearest four decimal places downwards (if the digit
displayed in the fifth decimal place is 1,2,3 or 4) or upwards (if the digit displayed in the
fifth decimal place is 5,6,7,8 or 9) displayed on Reuters page LIBOR 01 (or such other page
or pages which replace(s) such page for the purposes of displaying offered rates of leading
banks, for deposits in Dollars of amounts equal to the amount of the relevant Drawing for a
period equal in length to the relevant Interest Period or if there is no such display rate
then available for Dollars for an amount comparable to the Drawing, the arithmetic mean
(rounded upwards, if necessary, to the nearest whole multiple of one-sixteenth per centum
(1/16%)) of the respective rates notified to the Agent by each of the Reference Banks as the
rate at which it is offered deposits in Dollars and for the required period by prime banks in
the London Interbank Market.

	 	1.1.84	 	“Loans” means the Buyer Credit and the Junior Loan (each a “Loan”).

	 	1.1.85	 	“Majority Lenders” means a Senior Lender or Senior Lenders whose Commitments in respect of
the Buyer Credit aggregate more than sixty six and two thirds per cent (66 2/3%) of the
aggregate of all the Commitments in respect of the Buyer Credit.

	 	1.1.86	 	“Managers” means Teekay Shipping Ltd, or another management company which is controlled by
Teekay Shipping Corporation nominated by the Borrowers and notified to the Agent.

	 	1.1.87	 	“Mandatory Cost” means for each Lender to which it applies, the cost imputed to that Lender
of compliance with the mandatory liquid asset requirements of the Bank of England and/or the
banking supervision or other costs imposed by the Financial Services Authority, determined in
accordance with Schedule 6 (Calculation of the Mandatory Cost).

 

14

 

	 	1.1.88	 	“Margin” means the Buyer Credit Margin or the Junior Loan Margin as applicable.

	 	1.1.89	 	“Master Agreement” means any ISDA Master Agreement (or other form of master agreement,
relating to interest or currency exchange transactions) entered into between the Swap
Provider and the Borrowers during the Facility Period including each Schedule to any Master
Agreement and each confirmation exchanged pursuant to any Master Agreement.

	 	1.1.90	 	“Master Agreement Liabilities” means at any relevant time all liabilities of the Borrowers
to the Swap Provider under or pursuant to the Master Agreement or any Transaction whether
actual or contingent, present or future.

	 	1.1.91	 	“Material Adverse Effect” means a material adverse change in, or a material adverse effect
on:

	 	(a)	 	the financial condition, assets, prospects or business of any Security
Party or on the consolidated financial condition, assets, prospects or business of
the Guarantor Group;

	 	(b)	 	the ability of any Security Party to perform and comply with its
obligations under any Security Document or to avoid any Event of Default;

	 	(c)	 	the validity, legality or enforceability of any Security Document; or

	 	(d)	 	the validity, legality or enforceability of any security expressed to
be created pursuant to any Security Document or the priority and ranking of any
such security,

provided that, in determining whether any of the forgoing circumstances shall
constitute such a material adverse change or material adverse effect for the purposes
of this definition, the Finance Parties shall consider such circumstance in the context
of (x) the Guarantor Group taken as a whole and (y) the ability of each of the
Security Parties to perform each of its obligations under the Security Documents.

 

15

 

	 	1.1.92	 	“Material Subsidiary” means:

	 	(a)	 	the Borrowers; and

	 	(b)	 	any other Subsidiary of the Guarantor whose assets, as determined in
accordance with GAAP and as shown from the most recent financial statements
available to the Agent relating to it, as multiplied by the Relevant Percentage in
respect of such Subsidiary, equal or exceed 10% of the aggregate value of the
assets of the Guarantor Group as determined in accordance with GAAP and as shown
from the most recently available financial statements of the Guarantor Group,

provided that:

	 	(i)	 	in respect of any Subsidiary of the Guarantor, only the value of its
assets as multiplied by the Relevant Percentage in respect of such Subsidiary
shall be taken into account in the computation of the value of the assets of the
Guarantor Group;

	 	(ii)	 	a statement by the auditors of the Guarantor to the effect that, in
their opinion, a Subsidiary of the Guarantor is or is not or was or was not at any
particular time a Material Subsidiary shall, in the absence of manifest error, be
conclusive and binding on each of the parties to this Agreement; and

	 	(iii)	 	for the avoidance of doubt, none of OPCO, TKO or TGP shall be a
Material Subsidiary.

	 	1.1.93	 	“Maturity Date” in respect of a Vessel Tranche means the date falling twelve (12) years
after the Delivery Date of the relevant Vessel.

	 	1.1.94	 	“Mortgages” means (i) together the first priority statutory ship mortgages together in each
case with a deed of covenants collateral thereto or (ii) the first preferred ship mortgages
(as applicable by reference to the relevant Pre-Approved Flag) over each of the Vessels made or to be
made between the relevant Owners and the Agent referred to in Clause 8.1.3 (each a
“Mortgage”).

 

16

 

	 	1.1.95	 	“Necessary Authorisations” means all Authorisations of any person
including any government or other regulatory authority required by
applicable Law to enable it to:

	 	(a)	 	lawfully enter into and perform its obligations under the Security
Documents to which it is party;

	 	(b)	 	ensure the legality, validity, enforceability or admissibility in
evidence in England and, if different, its jurisdiction of incorporation, of such
Security Documents to which it is party; and

	 	(c)	 	carry on its business from time to time.

	 	1.1.96	 	“Obligatory Insurances” means in respect of each Vessel the insurances and entries referred
to in Clause 9.3.1 and, where applicable, those referred to in Clauses 9.3.2, 9.3.5 and/or
9.4.14.

	 	1.1.97	 	“OPCO” means Teekay Offshore Operating L.P. and its Subsidiaries.

	 	1.1.98	 	“Owner” means in respect of a Vessel the Borrower whose name appears beside that Vessel in
Schedule 2.

	 	1.1.99	 	“Permitted Liens” means (i) any Encumbrance which has the prior written approval of the
Agent acting upon the instructions of all the Lenders or (ii) any Encumbrances that do not
exceed ten million Dollars ($10,000,000) and arise either by operation of law or in the
ordinary course of the business of the relevant Security Party which are discharged in the
ordinary course of business.

	 	1.1.100	 	“Potential Event of Default” means any event which, with the giving of notice and/or the
passage of time and/or the satisfaction of any materiality test, would constitute an Event of
Default.

 

17

 

	 	1.1.101	 	“Pre-Approved Classification Society” means any of Det norske Veritas, Lloyds
Register, American Bureau of Shipping (ABS), Germanischer Lloyd or Bureau Veritas.

	 	1.1.102	 	“Pre-Approved Flag” means Marshall Islands, Liberia, Panama, Cayman Islands, Bermuda, NIS
or Bahamas.

	 	1.1.103	 	“Proceedings” means any suit, action or proceedings begun by any of the Finance Parties
arising out of or in connection with the Security Documents.

	 	1.1.104	 	“Proportionate Share” in respect of a Loan means, for each Lender, the percentage that its
Commitment relating to that Loan bears to the aggregate Commitments of all Lenders for that
Loan from time to time, being initially the percentage indicated against the name of that
Lender in Schedule 1.

	 	1.1.105	 	“Qualifying Charter” in respect of a Vessel means any charter entered into by the relevant
Owner with a term of more than three (3) years (including any options to extend).

	 	1.1.106	 	“Reference Banks” means, in relation to LIBOR, the principal London offices of Calyon and
such other banks as may be appointed by the Agent in consultation with the Borrowers.

	 	1.1.107	 	“Refund Guarantees” means refund guarantees numbered M0902-607-LG-00210 in respect of
Vessel A, M0902-607-LG-00228 in respect of Vessel B, MO909609LG00057 in respect of Vessel C,
and MO909609LG00064 in respect of Vessel D each issued by the Refund Guarantor in favour of
the Borrowers respectively pursuant to the Building Contracts on 14 July 2006 in respect of
Vessel A and Vessel B and 11 September 2006 in respect of Vessel C and Vessel D and “Refund
Guarantee” means any one of them.

	 	1.1.108	 	“Refund Guarantor” means The Export-Import Bank of Korea of 16-1, Yoido-dong,
Yeongdeungpo-gu, Seoul 150-996, Korea.

 

18

 

	 	1.1.109	 	“Relevant Documents” means the Security Documents, the Building Contracts, the
Refund Guarantees, the Fee Letters, the KEIC Buyer Credit Policies and any Qualifying
Charter.

	 	1.1.110	 	“Relevant Percentage” means, in respect of any Subsidiary of the Guarantor at any time,
the percentage of the equity share capital or the partnership capital, as the case may be, of
such Subsidiary which is beneficially owned (free from Encumbrances) by the Guarantor at such
time.

	 	1.1.111	 	“Repayment Date” means any date for payment of a Repayment Instalment in accordance with
Clause 5.

	 	1.1.112	 	“Repayment Instalment” means any instalment of a Loan to be repaid by the Borrowers in
accordance with Clause 5.

	 	1.1.113	 	“Requisition Compensation”, in relation to a Vessel, means all compensation or other money
which may from time to time be payable to an Owner as a result of that Vessel being
requisitioned for title or in any other way compulsorily acquired (other than by way of
requisition for hire).

	 	1.1.114	 	“the Security Documents” means this Agreement, the Master Agreement, the Building Contract
Assignments, the Assignments, the Guarantee, the Mortgages, the Deeds of Covenants, the
Intercreditor Deed, 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 as
security for the payment of all or any part of the Indebtedness.

	 	1.1.115	 	“Security Parties” means, at any relevant time, the Borrowers, the Guarantor and any other
party who may at any time during the Facility Period be liable for, or provide security for,
all or any part of the Indebtedness, and “Security Party” means any one of them.

	 	1.1.116	 	“Subsidiary” means a subsidiary undertaking, as defined in section 736
Companies Act 1985 or any analogous definition under any other relevant system of law.

 

19

 

	 	1.1.117	 	“Taxes” means all taxes, levies, imposts, duties, charges, fees, deductions and
withholdings (including any related interest and penalties) and any restrictions or
conditions resulting in any charge, other than taxes on the overall net income of a
Finance Party or branch thereof, and “Tax” and “Taxation” shall be interpreted
accordingly.

	 	1.1.118	 	“TGP” means Teekay LNG Partners L.P. and its Subsidiaries.

	 	1.1.119	 	“Threshold Amount” means ten million Dollars ($10,000,000) or its equivalent in any other
currency.

	 	1.1.120	 	“TKO” means Teekay Offshore Partners L.P. and its Subsidiaries.

	 	1.1.121	 	“Total Debt” means the aggregate of:-

	 	(a)	 	the amount calculated in accordance with GAAP shown as each of “long
term debt”, “short term debt” and “current portion of long term debt” on the
latest consolidated balance sheet of the Guarantor (but excluding TGP, OPCO and,
once TKO is established, TKO (excluding OPCO to the extent already consolidated
into TKO) debt which is non-recourse to the Guarantor); and

	 	(b)	 	the amount of any liability in respect of any lease or hire purchase
contract entered into by the Guarantor or any of its Subsidiaries (excluding TGP,
OPCO and, once TKO is established, TKO (excluding OPCO to the extent already
consolidated into TKO)) which would, in accordance with GAAP, be treated as a
finance or capital lease (excluding any amounts applicable to leases to the extent
that the lease obligations are secured by a security deposit which is held on the
balance sheet under “Restricted Cash”).

	 	1.1.122	 	“Total Loss”, in relation to a Vessel, means:-

	 	(a)	 	an actual, constructive, arranged, agreed or compromised total loss of that Vessel; or

 

20

 

	 	(b)	 	the requisition for title, compulsory acquisition, nationalisation or
expropriation of that Vessel by or on behalf of any government or other
authority (other than by way of requisition for hire); or

	 	(c)	 	the capture, seizure, arrest, detention or confiscation of that
Vessel, unless the Vessel is released and returned to the possession of its Owner
within ninety (90) days after the capture, seizure, arrest, detention or
confiscation in question.

	 	1.1.123	 	“Transfer Certificate” means a certificate materially in the form set
forth in Schedule 4 signed by a Lender and a Transferee whereby:-

	 	(a)	 	such Lender seeks to procure the transfer to such Transferee of all or
a part of such Lender’s rights and obligations under this Agreement upon and
subject to the terms and conditions set out in Clause 12; and

	 	(b)	 	such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Agent as is contemplated in
Clause 12.

	 	1.1.124	 	“Transaction” means a transaction entered into between the Swap Provider and the Borrowers
governed by the Master Agreement.

	 	1.1.125	 	“Transfer Date” means, in relation to any Transfer Certificate, the date for the making of
the transfer specified in the schedule to such Transfer Certificate.

	 	1.1.126	 	“Transferee” means a bank or other financial institution to which a Lender seeks to
transfer all or part of such Lender’s rights and obligations under this Agreement.

	 	1.1.127	 	“the Trust Property” means:-

	 	(a)	 	the benefit of Clause 8; and

	 	(b)	 	all benefits arising under (including, without limitation, all proceeds
of the enforcement of) each of the Security
Documents (other than this Agreement), with the exception of any
benefits arising solely for the benefit of the Agent.

 

21

 

	 	1.1.128	 	“Valuation” means in relation to a Vessel, the written valuation of that Vessel
expressed in Dollars prepared by one of the Approved Brokers (or such other firms of
reputable independent shipbrokers as may be acceptable to the Majority Lenders), to
be nominated by the Borrowers, such nomination to be subject to the approval of the
Agent. Such valuations shall be prepared at the Borrowers’ expense, without a
physical inspection, on the basis of a sale for prompt delivery for cash at arm’s
length between a willing buyer and a willing seller without the benefit of any
charterparty or other engagement.

	 	1.1.129	 	“Vessels” means the vessels listed in Schedule 2 as “Vessel A”, “Vessel B”,
“Vessel C” and “Vessel D”, and everything now or in the future belonging to them on
board and ashore (each a “Vessel)”.

	 	1.1.130	 	“Vessel Tranches” means, for each Vessel, the relevant Buyer Credit Vessel Tranche
and the relevant Junior Loan Vessel Tranche (each a “Vessel Tranche”).

	 	1.1.131	 	“Vessel Tranche Maximum Amounts” means, for each Vessel, the relevant Buyer Credit
Vessel Tranche Maximum Amount and the relevant Junior Loan Vessel Tranche Maximum
Amount (each a “Vessel Tranche Maximum Amount”).

	 	1.2	 	Interpretation

In this Agreement:-

	 	1.2.1	 	words denoting the plural number include the singular and vice versa;

	 	1.2.2	 	words denoting persons include corporations, partnerships, associations of
persons (whether incorporated or not) or governmental or quasi-governmental bodies or
authorities and vice versa;

	 	1.2.3	 	references to Recitals, Clauses, Schedules and Appendices are references to
recitals and clauses of, and schedules and appendices to, this Agreement;

 

22

 

	 	1.2.4	 	references to this Agreement include the Recitals, the Schedules and the
Appendices;

	 	1.2.5	 	the headings and contents page(s) are for the purpose of reference only,
have no legal or other significance, and shall be ignored in the interpretation of
this Agreement;

	 	1.2.6	 	references to any document (including, without limitation, to all or any of
the Security Documents) are, unless the context otherwise requires, references to that
document as amended, supplemented, novated or replaced from time to time;

	 	1.2.7	 	references to statutes or provisions of statutes are references to those
statutes, or those provisions, as from time to time amended, replaced or re-enacted;

	 	1.2.8	 	references to any of the Finance Parties include its successors,
transferees and assignees;

	 	1.2.9	 	in the case of the Borrowers, references to company, incorporation, shares,
officers, directors and shareholders shall be construed as references to a limited
liability company, formation, limited liability company interests and
members/membership, respectively; and

	 	1.2.10	 	references to times of day are unless otherwise stated to London time.

	 	1.3	 	Joint and several liability

	 	1.3.1	 	All obligations, covenants, representations, warranties and undertakings in
or pursuant to the Security Documents assumed, given, made or entered into by the
Borrowers shall, unless otherwise expressly provided, be assumed, given, made or
entered into by the Borrowers jointly and severally.

	 	1.3.2	 	Each of the Borrowers agrees that any rights which it may have at any time
during the Facility Period by reason of the performance of its obligations under the
Security Documents to be indemnified by any other Borrower and/or to take the benefit
of any security taken by the Lenders or by the Agent pursuant to the Security
Documents shall be exercised in such
manner and on such terms as the Agent may require. Each of the Borrowers
agree to hold any sums received by it as a result of its having exercised
any such right on trust for the Agent (as agent for the Lenders)
absolutely.

 

23

 

	 	1.3.3	 	Each of the Borrowers agrees that it will not at any time
during the Facility Period claim any set-off or counterclaim against any
other Borrower in respect of any liability owed to it by that other Borrower
under or in connection with the Security Documents, nor prove in competition
with the Finance Parties in any liquidation of (or analogous proceeding in
respect of) any other Borrower in respect of any payment made under the
Security Documents or in respect of any sum which includes the proceeds of
realisation of any security held by the Lenders or the Agent for the
repayment of the Indebtedness.

	2	 	The Facility and its Purpose

	 	2.1	 	Agreement to lend Subject to the terms and conditions of this Agreement, and
in reliance on each of the representations and warranties made or to be made in or in
accordance with each of the Security Documents:

	 	2.1.1	 	each of the Senior Lenders agrees to advance to the Borrowers
its Commitment of an aggregate principal amount not exceeding the Buyer Credit
Maximum Amount to be used by the Borrowers for the purposes referred to in
Recital (B), with the relevant Buyer Credit Vessel Tranche Maximum Amount
being the maximum amount that may be drawn down for each Vessel; and

	 	2.1.2	 	each of the Junior Lenders agrees to advance to the Borrowers
its Commitment of an aggregate principal amount not exceeding the Junior Loan
Maximum Amount to be used by the Borrowers for the purposes referred to in
Recital (C), with the relevant Junior Loan Vessel Tranche Maximum Amount being
the maximum amount that may be drawn down for each Vessel.

	 	2.2	 	Drawdown Request The Borrowers may request a Drawing to be advanced in
one amount on any Business Day prior to the relevant Availability Termination
Date by delivering to the Agent a duly completed Drawdown Notice not more than ten
(10) and not fewer than three (3) Business Days before the proposed Drawdown Date.

 

24

 

	 	2.3	 	Lenders’ participation Subject to Clauses 2 and 3, the Agent shall promptly
notify each relevant Lender of the receipt of a Drawdown Notice, following which each
relevant Lender shall advance its Proportionate Share of the relevant Drawing to the
Borrowers through the Agent on the relevant Drawdown Date.

	 	2.4	 	Availability Termination Date No Lender shall be under any obligation to
advance all or any part of its Commitment after the relevant Availability Termination
Date.

	 	2.5	 	Several obligations The obligations of the Lenders under this Agreement are
several. The failure of a Lender to perform its obligations under this Agreement shall
not affect the obligations of the Borrowers to any Finance Party nor shall any Finance
Party be liable for the failure of another Lender to perform any of its obligations
under or in connection with this Agreement.

	 	2.6	 	Application of Facility Without prejudice to the obligations of the Borrowers
under this Agreement, no Finance Party shall be obliged to concern itself with the
application of the Facility by the Borrowers.

	 	2.7	 	Loan facility and control accounts The Agent will open and maintain such loan
facility account or such other control accounts as the Agent shall in its discretion
consider necessary or desirable in connection with the Facility.

	3	 	Conditions precedent and subsequent for the Loans

	 	3.1	 	Conditions precedent Before any Lender shall have any obligation to advance
any Drawing under the Loans the Borrowers shall deliver or cause to be delivered to or
to the order of the Agent all of the documents and other evidence listed in Part I of
Schedule 3, 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 any Vessel
specified in the relevant Drawdown Notice or to any person or document relating to
that Vessel respectively.

 

25

 

	 	3.2	 	Further conditions precedent The Lenders will only be obliged to advance a
Drawing if on the date of the Drawdown Notice and on the proposed Drawdown
Date:

	 	3.2.1	 	no Event of Default or Potential Event of Default is continuing unremedied
or unwaived or would result from the advance of that Drawing; and

	 	3.2.2	 	the representations made by the Borrowers under Clause 4 are true in all
material respects.

	 	3.3	 	Drawing limit The Lenders will only be obliged to advance a Drawing if:

	 	3.3.1	 	that Drawing will not increase the outstanding amount of the total Drawings
in respect of that Vessel to a sum in excess of the relevant Vessel Tranche Maximum
Amount, and will not increase the outstanding amount of the Buyer Credit to a sum in
excess of the Buyer Credit Maximum Amount or of the Junior Loan to a sum in excess of
the Junior Loan Maximum Amount.

	 	3.3.2	 	in respect of the Buyer Credit the proposed Drawdown Date of the relevant
Drawing coincides with the due date for payment by a Borrower of an instalment of the
purchase price of a Vessel under a Building Contract and/or of a payment to KEIC in
respect of the KEIC Insurance Premium and that Drawing will be applied in payment of,
and does not exceed the amount of, that instalment and/or the KEIC Insurance Premium,
as the case may be; and

 

26

 

	 	3.3.3	 	in the case of a Buyer Credit Drawing, it will be applied in or towards
payment of either (i) one of the following instalments of the purchase price of a
Vessel under a Building Contract or (ii) the KEIC Insurance Premium and shall amount
to a maximum of the sum set out below opposite the relevant instalment:

	 	 	 	 	 	 	 	 	 
	Payments due under	 	 	 	 	 	 
	the Building Contracts	 	 	 	 	 	 
	(or KEIC Insurance	 	 	Drawings under the	 	 	 	Drawings under the	 
	Premium where	 	 	Buyer Credit	 	 	 	Buyer Credit	 
	indicated)	 	 	Vessel A and Vessel B	 	 	 	Vessel C and Vessel D	 
	Signing instalment (due on date Building Contract is signed)
	 	 	$0	 	 	 	$0	 
	6 months after signing instalment
	 		$0	 	 	 	$7,950,000	 
	KEIC Insurance Premium (due 6 months after signing instalment)
	 	 	Not applicable	 	 	 	$700,879.58 in respect of Vessel C $707,381.19 in respect of Vessel D	 
	Steel Cutting instalment
	 	 	$7,850,000	 	 	 	$7,950,000	 
	KEIC Insurance Premium (due together with the Steel Cutting instalment)
	 		$659,983.83	 	 	 	Not applicable	 
	Keel laying instalment
	 	 	$7,850,000	 	 	 	$7,950,000	 
	Delivery instalment
	 	 	$47,100,000	 	 	 	$39,750,000	 

	 	3.3.4	 	in respect of the Junior Loan the proposed Drawdown Dates shall be on the dates
set out in Schedule 8 (or within a maximum of five (5) Business Days after the
relevant date) and shall amount to a maximum of the sum set out opposite such
dates in Schedule 8.

	 	3.4	 	Conditions subsequent The Borrowers undertake to deliver or to cause to be delivered to
the Agent on, or as soon as practicable after, the relevant Drawdown Date the additional
documents and other evidence listed in Part II of Schedule 3, 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 any Vessel specified in the relevant Drawdown Notice or to any
person or document relating to that Vessel respectively.

 

27

 

	 	3.5	 	Delivery conditions precedent Whether or not a Drawing is advanced on a Delivery Date,
the Borrowers undertake to deliver or to cause to be delivered to the Agent on each
Delivery Date the additional documents and other evidence listed in Part III of Schedule
3, save that references in that Part III to “the Vessel” or to any person or document
relating to a Vessel shall be deemed to relate solely to the Vessel being delivered on
that Delivery Date.

	 	3.6	 	Delivery conditions subsequent Whether or not a Drawing is advanced on a Delivery Date, the
Borrowers undertake to deliver or to cause to be delivered to the Agent on, or as soon as
practicable after, each Delivery Date the additional documents and other evidence listed in
Part IV of Schedule 3, save that references in that Part IV to “the Vessel” or to any person
or document relating to a Vessel shall be deemed to relate solely to the Vessel delivered on
that Delivery Date.

	 	3.7	 	No Waiver If the Lenders in their sole discretion agree to advance a Drawing to the
Borrowers before all of the documents and evidence required by Clause 3.1 and/or Clause 3.5
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 thirty (30)
days after the relevant Drawdown Date or such other date specified by the Agent.

The advance of a Drawing under this Clause 3.7 shall not be taken as a waiver of the
Lenders’ right to require production of all the documents and evidence required by Clauses
3.1 and 3.5.

	 	3.8	 	Form and content All documents and evidence delivered to the Agent under
this Clause 3 shall:

	 	3.8.1	 	be in form and substance reasonably acceptable to the Agent (and in the
case of paragraph 2(b) of Schedule 3 Part 1 in form and substance acceptable to both
the Agent and the KEIC Agent); and

	 	3.8.2	 	if reasonably required by the Agent, be certified, notarised, legalised or
attested in a manner acceptable to the Agent.

 

28

 

	4	 	Representations and Warranties

	 
	 	 	Each of the Borrowers represents and warrants jointly and severally to each of the Finance
Parties at the Execution Date and (by reference to the facts and circumstances then
pertaining) at the date of each Drawdown Notice, at each Drawdown Date and at each Interest
Payment Date as follows (except that the representation and warranty contained at Clause
4.6 shall only be made on the first Drawdown Date in respect of each Loan and that the
representations and warranties contained at Clauses 4.2 and 4.21 shall only be made on the
Execution Date):-

	 	4.1	 	Status and Due Authorisation Each of the Security Parties is a corporation or
limited liability company duly organised or formed under the laws of its jurisdiction
of incorporation, organisation or formation (as the case may be) with power to enter
into the Security Documents and to exercise its rights and perform its obligations
under the Security Documents and all corporate and other action required to authorise
its execution of the Security Documents and its performance of its obligations
thereunder has been duly taken.

	 	4.2	 	No Deductions or Withholding Under the laws of the Security Parties’ respective
jurisdictions of incorporation or formation in force at the date hereof, none of the
Security Parties will be required to make any deduction or withholding from any payment
it may make under any of the Security Documents.

	 	4.3	 	Claims Pari Passu Under the laws of the Security Parties’ respective
jurisdictions of incorporation or formation in force at the date hereof, the
Indebtedness will, to the extent that it exceeds the realised value of any security
granted in respect of the Indebtedness, rank at least pari passu with all the Security
Parties’ other unsecured indebtedness save that which is preferred solely by any
bankruptcy, insolvency or other similar laws of general application.

	 	4.4	 	No Immunity In any proceedings taken in any of the Security Parties’
respective jurisdictions of incorporation or formation in relation to any of the
Security Documents, none of the Security Parties will be entitled to claim for itself
or any of its assets immunity from suit, execution, attachment or other legal process.

 

29

 

	 	4.5	 	Governing Law and Judgments In any proceedings taken in any of the Security Parties’
jurisdiction of incorporation or formation in relation to any of the Security Documents in
which there is an express choice of the law of a particular country as the governing law
thereof, that choice of law and any judgment or (if applicable) arbitral award obtained in
that country will be recognised and enforced.

	 	4.6	 	Validity and Admissibility in Evidence As at the date hereof, all acts, conditions and
things required to be done, fulfilled and performed in order (a) to enable each of the
Security Parties lawfully to enter into, exercise its rights under and perform and comply
with the obligations expressed to be assumed by it in the Security Documents, (b) to ensure
that the obligations expressed to be assumed by each of the Security Parties in the Security
Documents are legal, valid and binding and (c) to make the Security Documents admissible in
evidence in the jurisdictions of incorporation or formation of each of the Security Parties,
have been done, fulfilled and performed.

	 	4.7	 	No Filing or Stamp Taxes Under the laws of the Security Parties’ respective jurisdictions of
incorporation or organisation in force at the date hereof, it is not necessary that any of
the Security Documents be filed, recorded or enrolled with any court or other authority in
its jurisdiction of incorporation or formation (other than the Registrar of Companies for
England and Wales or the relevant maritime registry, to the extent applicable) or that any
stamp, registration or similar tax be paid on or in relation to any of the Security
Documents.

	 	4.8	 	Binding Obligations The obligations expressed to be assumed by each of the Security Parties
in the Security Documents are legal and valid obligations, binding on each of them in
accordance with the terms of the Security Documents and no limit on any of their powers will
be exceeded as a result of the borrowings, granting of security or giving of guarantees
contemplated by the Security Documents or the performance by any of them of any of their
obligations thereunder.

	 	4.9	 	No Winding-up Neither the Borrowers, the Guarantor nor any Material Subsidiary of the
Guarantor have taken any limited liability company or corporate action nor have any other
steps been taken or legal proceedings been started or (to the best of the Borrowers’
knowledge and belief) threatened against the
Borrowers, the Guarantor, or any Material Subsidiary of the Guarantor for its winding-up,
dissolution, administration or reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of it or of any or all
of its assets or revenues which might have a material adverse effect on the business or
financial condition of the Guarantor Group taken as a whole.

 

30

 

	 	4.10	 	Solvency

	 	4.10.1	 	Neither the Borrowers, the Guarantor nor the Guarantor Group taken as a whole is
unable, or admits or has admitted its inability, to pay its debts or has suspended
making payments in respect of any of its debts.

	 	4.10.2	 	Neither the Borrowers, the Guarantor nor any Material Subsidiary of the Guarantor
by reason of actual or anticipated financial difficulties, has commenced, or intends
to commence, negotiations with one or more of its creditors with a view to
rescheduling any of its indebtedness.

	 	4.10.3	 	The value of the assets of each of the Borrowers, the Guarantor and the Guarantor
Group taken as a whole is not less than the liabilities of such entity or the
Guarantor Group taken as a whole (as the case may be) (taking into account contingent
and prospective liabilities).

	 	4.10.4	 	No moratorium has been, or may, in the reasonably foreseeable future be, declared in
respect of any indebtedness of the Borrowers, the Guarantor or any Material Subsidiary
of the Guarantor.

	 	4.11	 	No Material Defaults

	 	4.11.1	 	Without prejudice to Clause 4.11.2, neither the Borrowers, the Guarantor
nor any Material Subsidiary of the Guarantor is in breach of or in default
under any agreement to which it is a party or which is binding on it or any
of its assets to an extent or in a manner which might have a material
adverse effect on the business or financial condition of the Guarantor
Group taken as a whole.

	 	4.11.2	 	No Event of Default is continuing or might reasonably be expected to
result from the advance of any Drawing.

 

31

 

	 	4.12	 	No Material Proceedings No action or administrative proceeding of or before any
court, arbitral body or agency which is not covered by adequate insurance or which might
have a material adverse effect on the business or financial condition of the Guarantor
Group taken as a whole has been started or is reasonably likely to be started.

	 	4.13	 	Guarantor’s Accounts The first set of Guarantor’s Accounts and all other annual financial
statements relating to the Guarantor Group required to be delivered under clause 9 of the
Guarantee, were each prepared in accordance with GAAP, give (in conjunction with the notes
thereto) a true and fair view of (in the case of annual financial statements) or fairly
represent (in the case of quarterly accounts) the financial condition of the Guarantor Group
at the date as of which they were prepared and the results of the Guarantor Group’s
operations during the financial period then ended.

	 	4.14	 	No Material Adverse Change Since the publication of the last financial statements relating
to the Guarantor Group delivered pursuant to clause 9 of the Guarantee, there has been no
change that has a Material Adverse Effect.

	 	4.15	 	No Undisclosed Liabilities As at the date to which the Guarantor’s Accounts were prepared
neither the Borrowers, the Guarantor nor any Material Subsidiary of the Guarantor had any
material liabilities (contingent or otherwise) which were not disclosed thereby (or by the
notes thereto) or reserved against therein nor any unrealised or anticipated losses arising
from commitments entered into by it which were not so disclosed or reserved against therein.

	 	4.16	 	No Obligation to Create Security The execution of the Security Documents by the Security
Parties and their exercise of their rights and performance of their obligations thereunder
will not result in the existence of nor oblige the Borrowers or the Guarantor to create any
Encumbrance over all or any of their present or future revenues or assets, other than pursuant
to the Security Documents.

	 	4.17	 	No Breach The execution of the Security Documents by each of the Security Parties and their
exercise of their rights and performance of their obligations under any of the Security
Documents do not constitute and will not result in any breach of any agreement or treaty to
which any of them is a party.

 

32

 

	 	4.18	 	Ownership and Security

	 	4.18.1	 	Each of the Security Parties (other than the Guarantor) is a wholly owned
Subsidiary of the Guarantor.

	 	4.18.2	 	Each of the Security Parties is the legal and beneficial owner of all assets and
other property which it purports to charge, mortgage, pledge, assign or otherwise
secure pursuant to each Security Document and those Security Documents to which it is
a party create and give rise to valid and effective security having the ranking
expressed in those Security Documents.

	 	4.19	 	Necessary Authorisations The Necessary Authorisations required by each Security Party, are
in full force and effect, and each Security Party is in compliance with the material
provisions of each such Necessary Authorisation relating to it and, to the best of its
knowledge, none of the Necessary Authorisations relating to it are the subject of any pending
or threatened proceedings or revocation.

	 	4.20	 	Money Laundering Any amount borrowed hereunder, and the performance of the obligations of
the Security Parties under the Security Documents, will be for the account of members of the
Guarantor Group and will not involve any breach by any of them of any law or regulatory
measure relating to “money laundering” as defined in Article 1 of the Directive (91/308/EEC)
of the Council of the European Communities.

	 	4.21	 	Disclosure of material facts The Borrowers are not aware of any material facts or
circumstances which have not been disclosed to the Agent and which might, if disclosed, have
reasonably been expected to adversely affect the decision of a person considering whether or
not to make loan facilities of the nature contemplated by this Agreement available to the
Borrowers.

	 	4.22	 	Use of Facility The Facility will be used for the purposes specified in the Recitals.

 

33

 

	 	4.23	 	Representations Limited The representation and warranties of the Borrowers in this Clause 4
are subject to:

	 	4.23.1	 	the principle that equitable remedies are remedies which may be
granted or refused at the discretion of the court;

	 	4.23.2	 	the limitation of enforcement by laws relating to bankruptcy, insolvency,
liquidation, reorganisation, court schemes, moratoria, administration and
other laws generally affecting or limiting the rights of creditors;

	 	4.23.3	 	the time barring of claims under any applicable limitation acts;

	 	4.23.4	 	the possibility that a court may strike out provisions for a contract as
being invalid for reasons of oppression, undue influence or similar; and

	 	4.23.5	 	any other reservations or qualifications of law expressed in any legal
opinions obtained by the Agent in connection with the Facility.

	5	 	Repayment and Prepayment

	 	5.1	 	Repayment of Loan The Borrowers agree:

	 	5.1.1	 	to repay the Buyer Credit Vessel Tranches to the Agent for the
account of the Senior Lenders by twenty four consecutive half-yearly Repayment
Instalments each in the sum of two million six hundred and forty four thousand
one hundred and sixty five Dollars and ninety nine cents ($2,644,165.99) in
respect of the Buyer Credit Vessel Tranche relating to each of Vessel A and
Vessel B, two million six hundred and seventy nine thousand two hundred and
three Dollars and thirty two cents ($2,679,203.32) in respect of the Buyer
Credit Vessel Tranche relating to Vessel C and two million six hundred and
seventy nine thousand four hundred and seventy four Dollars and twenty two
cents ($2,679,474.22) in respect of the Buyer Credit Vessel Tranche relating to
Vessel D, the first Repayment Instalment in respect of each Buyer Credit Vessel
Tranche falling due on the date which is six calendar months after the Delivery
Date in respect of the relevant Vessel and subsequent Repayment Instalments
falling due at consecutive intervals of six calendar months thereafter; and

 

34

 

	 	5.1.2	 	to repay each of the Junior Loan Vessel Tranches to the Agent for the
account of the Junior Lenders in one Repayment Instalment on the relevant
Maturity Date.

	 	5.2	 	Reduction of Repayment Instalments If, following each Buyer Credit Availability Termination
Date, the aggregate amount advanced to the Borrowers under the relevant Buyer Credit Vessel
Tranche is less than the relevant Buyer Credit Vessel Tranche Maximum Amount, the amount of
each Repayment Instalment in respect of that Buyer Credit Vessel Tranche shall be reduced pro
rata to the amount actually advanced.

	 	5.3	 	Reborrowing The Borrowers may not reborrow any part of either Loan which is repaid or
prepaid.

	 	5.4	 	Prepayment and Cancellation The Borrowers may prepay the Facility Outstandings in whole or
in part, or cancel the Buyer Credit and/or the Junior Loan in whole or in part, in each case
in integral multiples of one million Dollars ($1,000,000) (or as otherwise may be agreed by
the Agent) provided that they have first given to the Agent not fewer than five (5) Business
Days’ prior written notice expiring on a Business Day of their intention to do so. Any notice
pursuant to this Clause 5.4 once given shall be irrevocable and shall (in the case of a
prepayment) oblige the Borrowers to make the prepayment referred to in the notice on the
Business Day specified in the notice, together with all interest accrued on the amount
prepaid up to and including that Business Day and any sum payable under Clause 5.6. Any part
of the Junior Loan that is not drawn down within five (5) Business Days of the relevant date
set out in Schedule 8 shall automatically be cancelled.

	 	5.5	 	Mandatory Prepayment In the event that any Vessel becomes a Total Loss, on the earlier to
occur of (a) the date of receipt of the proceeds of the Total Loss and (b) the date falling
one hundred and eighty (180) days after the occurrence of the Total Loss (the “Reduction
Date”), the Borrowers shall prepay the relevant Vessel Tranche together with all interest
accrued thereon up to and including the day of prepayment, and any sum payable under Clause
5.6. Any such prepayment shall not be reborrowed.

 

35

 

	 	5.6	 	Master Agreement Simultaneously with any prepayment under Clauses 5.4 or 5.5,
any transaction carried out under the Master Agreement relating to that part of the
Loan being prepaid will be terminated unless the Borrowers and the Swap Provider
otherwise agree and the Borrowers will pay to the Swap Bank any sums payable under
the Master Agreement pursuant to that early termination.

	 	5.7	 	Termination of KEIC Buyer Credit Policy If, for any reason, the obligations of
KEIC under a KEIC Buyer Credit Policy shall terminate, become unenforceable or
otherwise cease to be in full force and effect in respect of a Vessel, then the
Borrowers shall (after the expiry of a thirty (30) day period in which the Agent, the
Borrowers and the Guarantor agree to discuss in good faith the potential restructuring
of the Loans and/or arrange a new financing facility for the Vessels, on such terms
and conditions that are acceptable by the Lenders’ credit committees) prepay the
affected Vessel Tranches in full together with accrued interest to the date of
prepayment and all other sums then due and payable, in respect of that Vessel under
this Agreement and the other Security Documents or any of them (including without
limitation any sum payable under the indemnities in Clause 15). Following any such
prepayment, the Agent shall, on the request of and at the expense of the Borrowers,
release the Building Contract Assignment, the Mortgage, the Deed of Covenants and the
Assignment (or such of them as shall then be subsisting) relating to the relevant
Vessel(s).

	 	5.8	 	Prepayment indemnity If the Borrowers shall make a prepayment on a Business
Day other than the last day of an Interest Period, they shall pay to the Agent on
behalf of the Lenders any amount which is necessary to compensate the Lenders for any
Break Costs incurred by the Agent or any of the Lenders as a result of the prepayment
in question.

	 	5.9	 	Application of prepayments Any prepayment in an amount less than the
Indebtedness shall be applied in accordance with the Intercreditor Deed.

	6	 	Interest

	 	6.1	 	Interest Periods The period during which any Drawing shall be outstanding
pursuant to this Agreement shall be divided into consecutive Interest Periods of three
or six months’ duration, as selected by the Borrowers by written notice to the Agent
not later than 11.00 a.m. on the fourth Business Day before the beginning
of the Interest Period in question, or such other duration as may be agreed by the Lenders
in their discretion.

 

36

 

	 	6.2	 	Beginning and end of Interest Periods The first Interest Period in respect of each Drawing
shall begin on the Drawdown Date of that Drawing and shall end on the last day of the Interest
Period selected in accordance with Clause 6.1. Any subsequent Interest Period selected in
respect of each Drawing shall commence on the day following the last day of its previous
Interest Period and shall end on the last day of its current Interest Period selected in
accordance with Clause 6.1. Following each Delivery Date, the next Interest Period for the
relevant Vessel Tranche shall be selected so that it ends on the last day of any then current
Interest Period for the Vessel Tranches relating to any other delivered Vessel.

	 	6.3	 	Interest Periods to meet Repayment Date and Maturity Date If an interest Period would
otherwise expire after the next Repayment Date for a Vessel Tranche, there shall be a
separate Interest Period for a part of the relevant Vessel Tranche equal to the relevant
Repayment Instalment which shall expire on the next Repayment Date, and the Interest Period
determined shall apply only to the balance of the relevant Vessel Tranche. If an Interest
Period for a Vessel Tranche would otherwise expire after the relevant Maturity Date, the
Interest Period for that Vessel Tranche shall expire on that Maturity Date.

	 	6.4	 	Failure to select Interest Period If the Borrowers at any time fail to select or agree an
Interest Period in accordance with Clause 6.1, the interest rate applicable shall be three
(3) months.

	 	6.5	 	Interest rate During each Interest Period, interest shall accrue on each Vessel Tranche at
the rate determined by the Agent to be the aggregate of (a) the Margin and (b) LIBOR
determined at or about 11:00 am (London time) on the second Business Day prior to the
beginning of the Interest Period relating to that Vessel Tranche.

	 	6.6	 	Accrual and payment of interest During the Facility Period, interest shall accrue from day
to day, shall be calculated on the basis of a 360 day year and the actual number of days
elapsed (or, in any circumstance where market practice differs, in accordance with the
prevailing market practice) and shall be paid by the Borrowers to the Agent on behalf of the
Lenders on the last day of each Interest
Period and additionally, during any Interest Period exceeding three months, on the
last day of each successive three month period after the beginning of that Interest
Period.

 

37

 

	 	6.7	 	Ending of Interest Periods If any Interest Period would end on a day which is
not a Business Day, that Interest Period shall end on the next succeeding Business
Day (unless the next succeeding Business Day falls in the next calendar month, in
which event the Interest Period in question shall end on the immediately
preceding Business Day).

	 	6.8	 	Default Rate If an Event of Default shall occur, the whole of the Indebtedness
shall, from the date of the occurrence of the Event of Default, bear interest up to
the date of actual payment (both before and after judgment) at the Default Rate,
compounded at such intervals as the Agent shall in its reasonable discretion
determine, which interest shall be payable from time to time by the Borrowers to the
Agent on behalf of the Lenders on demand.

	 	6.9	 	Determinations conclusive Each determination of an interest rate made by the
Agent in accordance with Clause 6 shall (save in the case of manifest error or on any
question of law) be final and conclusive.

	 	6.10	 	Mandatory Costs If applicable the Borrowers shall reimburse the Agent for any
Mandatory Costs relating to the Vessel Tranche in question incurred by a Lender as a
result of funding its Commitment of the Loan.

	7	 	Fees

	 	7.1	 	In respect of the Buyer Credit the Borrowers shall pay the following fees:

	 	7.1.1	 	Arrangement fee The Borrowers shall pay to the Agent for
the account of the Senior Lenders in such proportions as may be agreed an
arrangement fee in the amounts and at the times agreed in a Fee Letter.

	 	7.1.2	 	Commitment fee The Borrowers shall pay to the Agent (for the
account of the Senior Lenders in proportion to their Commitments) a commitment
fee computed at the rate of nought point one two five per cent (0.125%) per
annum on the undrawn and uncancelled amount of the Buyer Credit Maximum Amount
from time to time from the date of this Agreement
until the earlier to occur of the Drawdown Date in respect of the final
Buyer Credit Drawing and the last Buyer Credit Availability Termination
Date. The accrued commitment fee is payable on the last day of each
successive period of three months from the Execution Date and on such Buyer
Credit Availability Termination Date.

 

38

 

	 	7.1.3	 	Agency fee The Borrowers shall pay to the Agent (for its own
account) an agency fee in the amount and at the times agreed in a Fee Letter.

	 	7.2	 	In respect of the Junior Loan the Borrowers shall pay the following fees:

	 	7.2.1	 	Arrangement fee The Borrowers shall pay to the Agent for the
account of the Junior Lenders in such proportions as may be agreed an
arrangement fee in the amounts and at the times agreed in a Fee Letter.

	 	7.2.2	 	Commitment fee The Borrowers shall pay to the Agent (for the
account of the Junior Lenders in proportion to their Commitments) a commitment
fee computed at the rate of nought point one two five per cent (0.125%) per
annum on the undrawn and uncancelled amount of the Junior Loan Maximum Amount
from time to time from the date of this Agreement until the earlier to occur of
the Drawdown Date in respect of the final Junior Loan Drawing and the Junior
Loan Availability Termination Date. The accrued commitment fee is payable on
the last day of each successive period of three months from the Execution Date
and on the Junior Loan Availability Termination Date.

	8	 	Security and Application of Moneys

	 	8.1	 	Security Documents As security for the repayment of the Indebtedness, the
Borrowers shall execute and deliver to the Security Trustee or cause to be executed and
delivered to the Security Trustee the following documents in such forms and containing
such terms and conditions as the Security Trustee shall require:

	 	8.1.1	 	first priority deeds of assignment of the Building Contracts
and Refund Guarantees

	 	8.1.2	 	a guarantee and indemnity from the Guarantor;

 

39

 

	 	8.1.3	 	a first priority statutory mortgage over each of the Vessels
together with a collateral deed of covenants; and

	 	8.1.4	 	a first priority deed of assignment of the Insurances,
Earnings, Charter Rights and Requisition Compensation of each of the Vessels.

	 	8.2	 	Remittance of Earnings Immediately upon the occurrence of an Event of Default
which is continuing unremedied or unwaived the Borrowers shall procure that all
Earnings are paid to such account as the Agent shall from time to time specify by
notice in writing to the Borrowers.

	 	8.3	 	General application of moneys Whilst an Event of Default is continuing
unremedied or unwaived each Borrower irrevocably authorises the Agent and the Security
Trustee to apply all sums which either of them may receive:

	 	8.3.1	 	pursuant to a sale or other disposition of a Vessel or any
right, title or interest in the Vessel; or

	 	8.3.2	 	by way of payment of any sum in respect of the Insurances,
Earnings, Charter Rights or Requisition Compensation; or

8.3.3 otherwise arising under or in connection with any Security Document,

in accordance with the terms of the Intercreditor Deed.

	9	 	Covenants

The Borrowers covenant with the Finance Parties in the following terms.

	 	9.1	 	General Undertakings

	 	9.1.1	 	Maintenance of Legal Validity The Borrowers shall obtain,
comply with the terms of and do all that is necessary to maintain in full force
and effect all authorisations, approvals, licences and consents required in or
by the laws and regulations of their respective jurisdictions of incorporation
or formation and all other applicable jurisdictions, to enable them lawfully to
enter into and perform their obligations under the Security Documents and to
ensure the legality, validity, enforceability or admissibility in
evidence of the Security Documents in their respective jurisdictions of incorporation or
organisation and all other applicable jurisdictions.

 

40

 

	 	9.1.2	 	Notification of Default The Borrowers shall promptly, upon becoming aware of the same,
inform the Agent in writing of the occurrence of any Event of Default and, upon receipt of a
written request to that effect from the Agent, confirm to the Agent that, save as previously
notified to the Agent or as notified in such confirmation, no Event of Default has occurred.

	 	9.1.3	 	Claims Pari Passu The Borrowers shall ensure that at all times the claims of the Finance
Parties against any of them under the Security Documents rank at least pari passu with the
claims of all their other unsecured creditors save those whose claims are preferred by any
bankruptcy, insolvency, liquidation, winding-up or other similar laws of general
application.

	 	9.1.4	 	Management of Vessels The Borrowers shall ensure that each Vessel which they own is at
all times technically and commercially managed by the Manager or by a management company
approved by the Agent acting on the instructions of the Majority Lenders.

	 	9.1.5	 	Classification The Borrowers shall ensure that each Vessel which they own maintains the
highest classification required for the purpose of the relevant trade of such Vessel which
shall be with a Pre-Approved Classification Society or such other society as may be
acceptable to the Agent acting on the instructions of the Majority Lenders, in each case,
free from any overdue recommendations and conditions affecting that Vessel’s class.

	 	9.1.6	 	Certificate of Financial Responsibility Each Borrower shall obtain and maintain a
certificate of financial responsibility in relation to any Vessel which it owns which is to
call at the United States of America.

	 	9.1.7	 	Negative Pledge The Borrowers shall not create, or permit to subsist, any Encumbrance
(other than pursuant to the Security Documents) over all or
any part of their present or future revenues or assets (including but not limited to
their shares), other than a Permitted Lien.

 

41

 

	 	9.1.8	 	Registration No Borrower shall change or permit a change to the flag of the Vessel owned by
it other than to a Pre-Approved Flag or under such other flag as may be approved by the Agent
acting on the instructions of the Majority Lenders, such approval not to be unreasonably
withheld or delayed.

	 	9.1.9	 	ISM and ISPS Compliance The Borrowers shall ensure that the relevant Company complies in
all material respects with the ISM Code and the ISPS Code or any replacements thereof and in
particular (without prejudice to the generality of the foregoing) shall ensure that the
Company holds (i) a valid and current Document of Compliance issued pursuant to the ISM Code,
(ii) a valid and current Safety Management Certificate issued in respect of such Vessel
pursuant to the ISM Code, and (iii) an ISSC in respect of such Vessel, and the Borrowers
shall promptly, upon request, supply the Agent with copies of the same.

	 	9.1.10	 	Necessary Authorisations Without prejudice to Clause 9.1.9 or any other specific provision
of the Security Documents relating to an Authorisation, the Borrowers shall (i) obtain,
comply with and do all that is necessary to maintain in full force and effect all Necessary
Authorisations if a failure to do the same may cause a Material Adverse Effect; and (ii)
promptly upon request, supply certified copies to the Agent of all Necessary Authorisations.

	 	9.1.11	 	Compliance with Applicable Laws Each Borrower shall comply with all applicable laws to
which it may be subject if a failure to do the same may have a Material Adverse Effect.

	 	9.1.12	 	Loans and Guarantees Each of the Borrowers shall be permitted to make loans and grant credit
upon such terms as it may determine to any other member of the Guarantor Group and may
otherwise give any guarantee or indemnity to procure financing for other members of the
Guarantor Group, but shall not otherwise make any loans or grant any credit (save in the
ordinary course of business) or give any guarantee or
indemnity (except pursuant to the Security Documents); Provided that the Borrowers shall
not make any such loans following the occurrence of an Event of Default which is
continuing unremedied or unwaived.

 

42

 

	 	9.1.13	 	Dividends Following the occurrence of an Event of Default which is continuing unremedied or
unwaived, the Borrowers shall not pay, make or declare any dividend or other distribution.

	 	9.1.14	 	Other Business Except to the extent expressly permitted by the Security Documents, the
Borrowers shall not carry on any business other than that of owning, chartering and operating
vessels.

	 	9.1.15	 	Further Assurance The Borrowers shall at their own expense, promptly take all such action
as the Agent may reasonably require for the purpose of perfecting or protecting any Finance
Party’s rights with respect to the security created or evidenced (or intended to be created
or evidenced) by the Security Documents.

	 	9.1.16	 	Other information The Borrowers will promptly supply to the Agent such information and
explanations as the relevant Majority Lenders may from time to time reasonably require in
connection with the operation of the Vessels and the Guarantor’s profit and liquidity and will
procure that the Agent be given the like information and explanations relating to all other
Security Parties.

	 	9.1.17	 	Inspection of records The Borrowers will permit the inspection of its financial records and
accounts on reasonable notice from time to time during business hours by the Agent or its
nominee.

	 	9.1.18	 	Valuations The Borrowers will deliver to the Agent a Valuation of each of the Vessels (i)
on the due date for delivery of the annual Guarantor’s Accounts pursuant to clause 9 of the
Guarantee (ii) following the occurrence of an Event of Default which is continuing unremedied
or unwaived on such other occasions as the Agent may request.

	 	9.1.19	 	Change of Control The Borrowers shall procure that throughout the Facility Period there is
no change in the legal or beneficial ownership of the Borrowers from that advised to the
Agent at the date of this
Agreement without the Agent’s prior written consent provided that Teekay Offshore
Partners LP or its controlled Subsidiary and /or Teekay LNG Partners LP or its controlled
Subsidiary (each a “Permitted New Shareholder”) may acquire the shareholding in the
Borrowers subject to the Lenders’ consent (which the Lenders shall consider in good faith
but may give or withhold their consent in their absolute discretion) and provided that
the Borrowers procure that such Permitted New Shareholder provides a corporate guarantee
in favour of the Agent for the Borrowers obligations under the Finance Documents in form
satisfactory to the Lenders and any other documentation required by the Lenders in
connection with such re-structuring, on the execution of which the Security Trustee will
release the Guarantor from its obligations under the Guarantee.

 

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	 	9.1.20	 	“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 Borrowers 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 (c) 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, the Borrowers 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 (c) above, on
behalf of any prospective new Lender) in order for the Agent or that Lender (or, in the
case of (c) 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.

 

44

 

	 	9.1.21	 	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 the Master Agreement,
nor enter into any interest rate exchange or hedging agreement with anyone other than
the Swap Provider.

	 	9.1.22	 	Intercompany borrowings The Borrowers will only borrow from other members of the
Guarantor Group on a subordinated and unsecured basis.

	 	9.2	 	Financial covenants

	 
	 	 	 	Throughout the Facility Period the Borrower shall procure that the Guarantor shall comply
with the financial covenants set out in clause 9 of the Guarantee.

	 	9.3	 	Insurances

	 	9.3.1	 	Each Borrower covenants to ensure at its own expense throughout the
Facility Period that the Vessel which it owns:-

	 	(a)	 	remains insured against marine risks and war risks
(including blocking and trapping) for an amount which when aggregated with
the insured value of the other Vessels is not less than one hundred and ten
per centum (110%) of the amount of the Indebtedness (the “Insurance Amount”);

	 	(b)	 	remains entered in a protection and indemnity association in
both protection and indemnity classes, or remains otherwise insured against
protection and indemnity risks and liabilities (including, without
limitation, protection and indemnity war risks);

	 	(c)	 	remains insured against oil pollution caused by that Vessel
for one billion Dollars (US$1,000,000,000) or such amounts as the Agent may
from time to time approve unless that risk is covered to the satisfaction of
the Agent by that Vessel’s protection and indemnity entry or insurance.

 

45

 

	 	9.3.2	 	The Agent agrees that, if and for so long as a Vessel may be laid up, the relevant
Owner may at its own expense take out port risk insurance on that Vessel in place of hull
and machinery insurance.

	 	9.3.3	 	Each Borrower undertakes to place the Obligatory Insurances in such markets, in such
currency, on such terms and conditions, and with such brokers, underwriters and associations
as the Agent shall have previously approved in writing. The Borrowers shall not alter the
terms of any of the Obligatory Insurances without the prior written consent of the Agent, and
will supply the Agent from time to time on request with such information as the Agent may
reasonably require with regard to the Obligatory Insurances and the brokers, underwriters or
associations through or with which the Obligatory Insurances are placed.

	 	9.3.4	 	The Borrowers undertake duly and punctually to pay all premiums, calls and contributions,
and all other sums at any time payable in connection with the Obligatory Insurances, and, at
their own expense, to arrange and provide any guarantees from time to time required by any
protection and indemnity or war risks association. From time to time at the Agent’s request,
the Borrower will provide the Agent with evidence satisfactory to the Agent that such
premiums, calls, contributions and other sums have been duly and punctually paid; that any
such guarantees have been duly given; and that all declarations and notices required by the
terms of any of the Obligatory Insurances to be made or given by or on behalf of the
Borrowers to brokers, underwriters or associations have been duly and punctually made or
given.

	 	9.3.5	 	The Borrowers will comply in all respects with all terms and conditions of the Obligatory
Insurances and will make all such declarations to brokers, underwriters and associations as
may be required to enable the Vessels to operate in accordance with the terms and conditions
of the Obligatory Insurances. The Borrowers will not do, nor permit to be done, any act, nor
make, nor permit to be made, any omission, as a result of which any of the Obligatory
Insurances may become liable to be suspended, cancelled or avoided, or may become
unenforceable, or as a result of which any sums payable under or in connection with any
of the
Obligatory Insurances may be reduced or become liable to be repaid or rescinded in whole
or in part. In particular, but without limitation, the Borrowers will not permit the
Vessels to be employed other than in conformity with the Obligatory Insurances without
first taking out additional insurance cover in respect of that employment in all respects
to the satisfaction of the Agent.

 

46

 

	 	9.3.6	 	The Borrowers will, no later than seven days before the expiry of any of the Obligatory
Insurances (other than entry in a protection and indemnity association) and one day before
the expiry of entry in the protection and indemnity association renew them and shall
immediately give the Agent such details of those renewals as the Agent may require.

	 	9.3.7	 	The Borrowers shall deliver to the Agent upon its request certified copies of all policies,
certificates of entry and other documents relating to the Insurances (including, without
limitation, receipts for premiums, calls or contributions) and shall procure that letters of
undertaking in the customary form for the market in which such brokers or managers operate
shall be issued to the Agent by the brokers through which the Insurances are placed (or, in
the case of protection and indemnity or war risks associations, by their managers). If any of
the Vessels are at any time during the Facility Period insured under any form of fleet cover,
the Borrowers shall procure that those letters of undertaking contain confirmation that the
brokers, underwriters or association (as the case may be) will not set off claims relating to
the relevant Vessel or Vessels against premiums, calls or contributions in respect of any
other vessel or other insurance, and that the insurance cover of the relevant Vessel or
Vessels will not be cancelled by reason of non-payment of premiums, calls or contributions
relating to any other vessel or other insurance. Failing receipt of those confirmations, the
Borrowers will instruct the brokers, underwriters or association concerned to issue a separate
policy or certificate for the relevant Vessel or Vessels in the sole name of the relevant
Owner or of the relevant Owner’s brokers as agents for the relevant Owner.

 

47

 

	 	9.3.8	 	The Borrowers shall promptly upon becoming aware thereof provide the Agent with
full information regarding any casualty or other accident or damage to a Vessel unless
the Borrowers reasonably expect the cost thereof not to exceed the Threshold Amount.

	 	9.3.9	 	The Borrowers agree that, at any time after the occurrence and during the continuation of
an Event of Default which is unremedied or unwaived, the Agent shall be entitled to collect,
sue for, recover and give a good discharge for all claims in respect of any of the
Insurances; to pay collecting brokers the customary commission on all sums collected in
respect of those claims; to compromise all such claims or refer them to arbitration or any
other form of judicial or non-judicial determination; and otherwise to deal with such claims
in such manner as the Agent shall in its discretion think fit.

	 	9.3.10	 	Whether or not an Event of Default shall have occurred or be continuing unremedied or
unwaived, the proceeds of any claim under any of the Insurances in respect of a Total Loss
shall be paid to the Agent and applied by the Agent in accordance with the Intercreditor
Deed.

	 	9.3.11	 	The Agent agrees that any amounts which may become due under any protection and indemnity
entry or insurance shall be paid to the relevant Owner to reimburse the relevant Owner for,
and in discharge of, the loss, damage or expense in respect of which they shall have become
due, unless, at the time the amount in question becomes due, an Event of Default shall have
occurred and be continuing unwaived or unremedied, in which event the Agent shall be entitled
to receive the amounts in question and to apply them either in reduction of the Indebtedness
or, at the option of the Agent, to the discharge of the liability in respect of which they
were paid.

	 	9.3.12	 	The Borrowers shall not settle, compromise or abandon any claim under or in connection with
any of the Insurances (other than a claim of less than the Threshold Amount arising other
than from a Total Loss) without the prior written consent of the Agent.

 

48

 

	 	9.3.13	 	If the relevant Owner fails to effect or keep in force the Obligatory Insurances,
the Agent may (but shall not be obliged to) effect and/or keep in force such insurances
on the Vessel and such entries in protection and indemnity or war risks associations as
the Agent in its discretion considers desirable, and the Agent may (but shall not be
obliged to) pay any unpaid premiums, calls or contributions. The Borrowers will reimburse
the Agent from time to time on demand for all such premiums, calls or contributions paid
by the Agent, together with interest at the Default Rate from the date of payment by the
Agent until the date of reimbursement.

	 	9.3.14	 	The Borrowers shall comply strictly with the requirements of any legislation relating to
pollution or protection of the environment which may from time to time be applicable to the
Vessels in any jurisdiction in which the Vessels shall trade and in particular (if a Vessel
is to trade in the United States of America and Exclusive Economic Zone (as defined in the
Act)) the relevant Owner shall comply strictly with the requirements of the United States Oil
Pollution Act 1990 (“the Act”). Before any such trade is commenced and during the entire
period during which such trade is carried on, the relevant Owner shall:-

	 	(a)	 	pay any additional premiums required to maintain protection and indemnity
cover for oil pollution up to the limit available to the Owner for that Vessel in
the market; and

	 	(b)	 	make all such quarterly or other voyage declarations as may from time to
time be required by that Vessel’s protection and indemnity association in order to
maintain such cover; and

	 	(c)	 	submit that Vessel to such additional periodic, classification, structural
or other surveys which may be required by that Vessel’s protection and indemnity
insurers to maintain cover for such trade; and

	 	(d)	 	implement any recommendations contained in the reports issued following the
surveys referred to in Clause 9.3.14(c) within the time limit specified therein; and

 

49

 

	 	(e)	 	in addition to the foregoing (if such trade is in the United
States of America and Exclusive Economic Zone):

	 	(i)	 	obtain and retain a certificate of
financial responsibility under the Act in form and substance
satisfactory to the United States Coast Guard and upon request
provide the Agent with a copy; and

	 	(ii)	 	procure that the protection and indemnity
insurances do not contain a US Trading Exclusion Clause or any other
provision analogous thereto and upon request provide the Agent with
evidence that this is so; and

	 	(iii)	 	comply strictly with any operational or
structural regulations issued from time to time by any relevant
authorities under the Act so that at all times that Vessel falls
within the provisions which limit strict liability under the Act for
oil pollution.

	 	9.4	 	Operation and Maintenance

	 
	 	 	 	Each Borrower covenants with the Agent in respect of the Vessel owned by it:-

	 	9.4.1	 	to keep the Vessel seaworthy and in a state of good repair and in
compliance with the requirements from time to time of all applicable laws,
conventions and regulations and of her insurers; and

	 	9.4.2	 	to maintain the registration of that Vessel under its current flag or
another Pre-approved Flag; to effect and maintain registration of the Mortgage at
that Vessel’s Ship Registry; and not cause nor permit to be done any act or omission
as a result of which either of those registrations might be defeated or imperilled;
and

	 	9.4.3	 	to maintain that Vessel in a condition entitling that Vessel to the highest
class applicable to vessels of her type with a Pre-approved Classification Society
free of overdue recommendations and qualifications; and

	 	9.4.4	 	to comply with all laws, conventions and regulations applicable to the Owner
or to that Vessel and to carry on board that Vessel all certificates
and other documents which may from time to time be required to evidence such compliance;
and

 

50

 

	 	9.4.5	 	not without the prior written consent of the Agent to make, nor permit nor cause to be
made, any material change in the structure, type or speed of that Vessel; and

	 	9.4.6	 	to procure that all repairs to that Vessel or replacements of parts or equipment of that
Vessel are effected in such a way as not to diminish the value of that Vessel and with
replacement parts or equipment the property of the Owner and free of all Encumbrances (other
than the Mortgage, the Deed of Covenants and Permitted Encumbrances); and

	 	9.4.7	 	to permit the Agent and all persons appointed by the Agent, upon reasonable notice and at
reasonable times, to board that Vessel from time to time during the Facility Period to
inspect that Vessel’s state and condition and, if that Vessel shall not be in a state and
condition which complies with the requirements of this Agreement, to effect such repairs as
shall in the reasonable opinion of the Agent be desirable to ensure such compliance, without
prejudice to the Agent’s other rights under or pursuant this Agreement; and

	 	9.4.8	 	immediately to notify the Agent of any arrest or detention of that Vessel, and to cause that
Vessel to be released from arrest or detention as quickly as possible, and in any event within
thirty (30) days from the date of arrest or detention, and immediately to notify the Agent in
the same manner of the release of that Vessel; and

	 	9.4.9	 	that it will promptly notify the Agent in writing of a change of name of that Vessel during
the Facility Period; and

	 	9.4.10	 	in the event of any requisition or seizure of that Vessel, to take all lawful steps to
recover possession of that Vessel as soon as it is entitled to do so; and

	 	9.4.11	 	to give to the Agent from time to time during the Facility Period on request such
information as the Agent may require with regard to that Vessel’s employment, position and
state of repair and, on the Agent’s
request, to supply the Agent with copies of all charterparties and other contracts of
employment relating to that Vessel; and

 

51

 

	 	9.4.12	 	to comply with all requirements from time to time of that Vessel’s classification society
and to give to the Agent from time to time during the Facility Period on request copies of
all classification certificates of the Vessel and reports of surveys required by that
Vessel’s classification society and to notify the Agent immediately of any requirement or
recommendation imposed by that Vessel’s Classification Society which is not complied with
within any relevant time limit; and

	 	9.4.13	 	not during hostilities (whether or not a state of war shall formally have been declared and
including, without limitation, any civil war) to permit that Vessel to be employed in
carrying any goods which may be declared to be contraband of war or which may render that
Vessel liable to confiscation, seizure, detention or destruction, nor to permit that Vessel
to enter any area which is declared a war zone by any governmental authority or by that
Vessel’s insurers unless the Owner has effected at its own expense such additional insurances
as shall be necessary or customary for first class shipowners. The Owner shall promptly
notify the Agent thereof and, if required by the Agent, specifically assign those insurances
to the Agent by such documents as the Agent, acting reasonably, may require; and

	 	9.4.14	 	not without the prior written consent of the Agent to let that Vessel on any demise
charter; and

	 	9.4.15	 	not without the prior written consent of the Agent to enter into any agreement or
arrangement for sharing the Earnings, other than by entry of a Vessel into a pool where the
Guarantor or a Subsidiary of the Guarantor acts as pool manager; and

	 	9.4.16	 	to pay and discharge when due from time to time all taxes, levies, duties, fines and
penalties imposed on that Vessel or the Earnings, or on the Owner, its income, profits,
capital gains or any of its property; and

 

52

 

	 	9.4.17	 	not at any time during the Facility Period without the prior written consent of
the Agent (and then subject to such conditions as the Agent may impose) to create nor
grant nor permit to exist any Encumbrance over that Vessel or any share in that Vessel or
any of the Assigned Property other than any Permitted Encumbrances existing from time to
time; and

	 	9.4.18	 	to notify the Agent immediately the Owner becomes aware of any legal proceedings or
arbitration involving that Vessel or the Owner where the amount claimed by any party (ignoring
any counterclaim or defence of set-off) exceeds or may reasonably be expected to exceed the
Threshold Amount; and

	 	9.4.19	 	not without the prior written consent of the Agent (such consent not to be unreasonably
withheld or delayed) to put that Vessel into the possession of any person for the purpose of
work or repairs estimated to cost more than the Threshold Amount (except for repairs the cost
of which is recoverable under the Insurances and in respect of which the insurers have agreed
to make payment in accordance with any applicable loss payable clause) unless that person
shall have given an undertaking to the Agent in such terms as the Agent shall require not to
exercise a lien on that Vessel for the cost of the work; and

	 	9.4.20	 	not without the prior written consent of the Agent to appoint anyone other than the
Manager, as commercial or technical managers of that Vessel; and

	 	9.4.21	 	to take all reasonable precautions to prevent any infringements of any anti drug
legislation in any jurisdiction in which that Vessel shall trade and in particular (if that
Vessel is to trade in the United States of America) to take all reasonable precautions to
prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America
and for this purpose, if required, to enter into a “Carrier Initiative Agreement” with the
United States’ Customs Service and to procure that the same or a similar agreement is
maintained in full force and effect and that the Owner’s obligations thereunder are performed
in respect of that Vessel; and

 

53

 

	 	9.4.22	 	to comply, or procure compliance with, in all material respects all
Environmental Laws and Environmental Approvals relating to that
Vessel, its operation or management and the business of the Owner from
time to time and to notify the Agent promptly upon becoming aware of:-

	 	(a)	 	any Environmental Claim being made against the
Owner and/or the manager, for the time being of that Vessel, or
otherwise in connection with the Vessel; and

	 	(b)	 	any Environmental Incident occurring;

	 	 	 	which in either case has or will have a Material Adverse Effect; and

	 	9.4.23	 	to keep the Agent advised, in writing on such regular basis and in such
detail as the Agent shall reasonably require, of the Owner’s response to
any Environmental Claim made in connection with that Vessel or any
Environmental Incident which in either case has or will have a Material
Adverse Effect; and

	 	9.4.24	 	promptly to notify the Agent in writing of any claim for breach of the ISM
Code or the ISPS Code being made against the Owner, the manager or otherwise
in connection with that Vessel; and

	 	9.4.25	 	to comply (and procure that its Environmental Affiliates shall) comply in
all material respects with the ISM Code and the ISPS Code.

	10	 	Events Of Default

	 	10.1	 	The Agent’s rights If any of the events set out in Clause 10.2 occurs,
the Agent may at its discretion (and, on the instructions of the Majority Lenders,
will):

	 	10.1.1	 	by notice to the Borrowers declare the Lenders to be under no further
obligation to the Borrowers under or pursuant to this Agreement and may (and,
on the instructions of the Majority Lenders, will) declare all or any part of
the Indebtedness (including such unpaid interest as shall have accrued and any
Break Costs incurred by the Finance Parties) to be immediately payable,
whereupon the Indebtedness (or the part of the Indebtedness referred to in the
Agent’s notice) shall immediately become
due and payable without any further demand or notice of any kind; and/or

 

54

 

	 	10.1.2	 	declare that any undrawn portion of the Facility shall be cancelled,
whereupon the same shall be cancelled and the corresponding Commitment of each
Lender shall be reduced to zero; and/or

	 
	 	10.1.3	 	exercise any rights and remedies in existence or arising under the
Security Documents.

	 	10.2	 	Events of Default The events referred to in Clause 10.1 are:-

	 	10.2.1	 	Borrowers’ Failure to Pay under this Agreement The Borrowers fail to pay any amount
of principal due from them under this Agreement at the time, in the currency and
otherwise in the manner specified herein provided that, if the Borrowers can
demonstrate to the reasonable satisfaction of the Agent that all necessary
instructions were given to effect such payment and the non-receipt thereof is
attributable solely to an error in the banking system, such payment shall instead be
deemed to be due, solely for the purposes of this paragraph 10.2.1, within three (3)
Business Days of the date on which it actually fell due under this Agreement; or

	 
	 	10.2.2	 	Security Parties’ Failure to Pay under the Security Documents A
Security Party fails to pay any other amount due from it under a Security
Document and such failure continues unremedied for five (5) Business Days or, in
the case of sums payable on demand, ten (10) Business Days, after such demand
has been duly made on the relevant Security Party; or

	 
	 	10.2.3	 	Misrepresentation Any representation or statement made by any
Security Party in any Security Document to which it is a party or in any
notice or other document, certificate or statement delivered by it
pursuant thereto or in connection therewith is or proves to have been
incorrect or misleading, where the circumstances causing the same give
rise to a Material Adverse Effect; or

 

55

 

	 	10.2.4	 	Specific Covenants A Security Party fails duly to perform or comply with any of
the obligations expressed to be assumed by or procured by the Borrowers under Clauses
9.1.1, 9.1.3, 9.1.7 or 9.1.13 or clauses 8.3, 8.4, 8.5, 8.7, 8.8 or 8.10 of the
Guarantee; or

	 
	 	10.2.5	 	Financial Covenants The Guarantor is in breach of the Guarantor’s financial covenants set
out in clause 9 of the Guarantee at any time; or

	 
	 	10.2.6	 	Other Obligations A Security Party fails duly to perform or comply with any of the
obligations expressed to be assumed by it in any Security Document (other than those referred
to in Clause 10.2.3 or Clause 10.2.4) and such failure is not remedied within thirty (30)
days after the Agent has given notice thereof to the Borrowers; or

	 
	 	10.2.7	 	Cross Default Any indebtedness of a member of the Guarantor Group is not paid when due (or
within any applicable grace period) or any indebtedness of a member of the Guarantor Group is
declared to be or otherwise becomes due and payable prior to its specified maturity where (in
either case) the aggregate of all such unpaid or accelerated indebtedness (i) of the
Guarantor is equal to or greater than fifty million Dollars ($50,000,000) or its equivalent
in any other currency; or (ii) of any of the Borrowers is equal to or greater than two
million five hundred thousand Dollars ($2,500,000) or its equivalent in any other currency;
or

	 
	 	10.2.8	 	Insolvency and Rescheduling A Security Party is unable to pay its debts as they fall due,
commences negotiations with any one or more of its creditors with a view to the general
readjustment or rescheduling of its indebtedness or makes a general assignment for the benefit
of its creditors or a composition with its creditors; or

	 
	 	10.2.9	 	Winding-up A Security Party takes any corporate action or other steps are taken or legal
proceedings are started for its winding-up, dissolution, administration or re-organisation or
for the appointment of a liquidator, receiver, administrator, administrative receiver,
conservator, custodian, trustee or similar officer of it or of any or all of its revenues or
assets or
any moratorium is declared or sought in respect of any of its indebtedness; or

 

56

 

	 	10.2.10	 	Execution or Distress

	 	(a)	 	Any Security Party fails to comply with or pay any sum due from it
(within thirty (30) days of such amount falling due) under any final judgment or
any final order made or given by any court or other official body of a competent
jurisdiction in an aggregate (i) in respect of the Guarantor equal to or greater
than fifty million Dollars ($50,000,000) or its equivalent in any other currency;
or (ii) in respect of any of the Borrowers is equal to or greater than two million
five hundred thousand Dollars ($2,500,000) or its equivalent in any other
currency, being a judgment or order against which there is no right of appeal or
if a right of appeal exists, where the time limit for making such appeal has
expired.

	 	(b)	 	Any execution or distress is levied against, or an encumbrancer takes
possession of, the whole or any part of, the property, undertaking or assets of a
Security Party in an aggregate amount (i) in respect of the Guarantor equal to or
greater than fifty million Dollars ($50,000,000) or its equivalent in any other
currency; or (ii) in respect of any of the Borrowers is equal to or greater than
two million five hundred thousand Dollars ($2,500,000) or its equivalent in any
other currency, other than any execution or distress which is being contested in
good faith and which is either discharged within thirty (30) days or in respect of
which adequate security has been provided within thirty (30) days to the relevant
court or other authority to enable the relevant execution or distress to be lifted
or released.

	 	(c)	 	Notwithstanding the foregoing paragraphs of this Clause 10.2.10, any
levy of any distress on or any arrest, condemnation, confiscation, requisition
for title or use, compulsory acquisition, seizure, detention or forfeiture of a
Vessel (or any part thereof) or any exercise or purported exercise of any lien or
claim on or against a Vessel where the release of or discharge the lien or
claim on or against such Vessel has not been procured within thirty (30) days;
or

 

57

 

	 	10.2.11	 	Similar Event Any event occurs which, under the laws of any jurisdiction, has a similar or
analogous effect to any of those events mentioned in Clauses 10.2.8, 10.2.9 and 10.2.10; or

	 	10.2.12	 	Insurance Insurance is not maintained in respect of any Vessel in accordance with the
terms of the relevant Security Document in respect of that Vessel; or

	 	10.2.13	 	Environmental Matters

	 	(a)	 	Any Environmental Claim is pending or made against an Owner or any of
the Owner’s Environmental Affiliates or in connection with a Vessel, where such
Environmental Claim has a Material Adverse Effect; or

	 	(b)	 	Any actual Environmental Incident occurs in connection with a Vessel,
where such Environmental Incident has a Material Adverse Effect; or

	 	10.2.14	 	Repudiation Any Security Party repudiates any Security Document to which it is a party or
does or causes to be done any act or thing evidencing an intention to repudiate any such
Security Document; or

	 	10.2.15	 	Validity and Admissibility At any time any act, condition or thing required to be done,
fulfilled or performed in order:

	 	(a)	 	to enable any Security Party lawfully to enter into, exercise its
rights under and perform the respective obligations expressed to be assumed by it
in the Security Documents;

	 	(b)	 	to ensure that the obligations expressed to be assumed by each of the
Security Parties in the Security Documents are legal, valid and binding; or

	 	(c)	 	to make the Security Documents admissible in evidence in any
applicable jurisdiction is not done, fulfilled or performed within
thirty (30) days after notification from the Agent to the relevant Security
Party requiring the same to be done, fulfilled or performed; or

 

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	 	10.2.16	 	Illegality At any time it is or becomes unlawful for any Security Party to perform or
comply with any or all of its obligations under the Security Documents to which it is a party
or any of the obligations of the Borrowers hereunder are not or cease to be legal, valid and
binding and such illegality is not remedied or mitigated to the satisfaction of the Agent
within thirty (30) days after it has given notice thereof to the relevant Security Party; or

	 	10.2.17	 	Material Adverse Change At any time there shall occur a change in the business or
operations of a Security Party or a change in the financial condition of any Security Party
which, in the reasonable opinion of the Majority Lenders, materially impairs such Security
Party’s ability to discharge its obligations under the Security Documents to which it is a
party in the manner provided therein and such change, if capable of remedy, is not so remedied
within fifteen (15) Business Days of the delivery of a notice confirming such change by the
Agent to the relevant Security Party; or

	 	10.2.18	 	Qualifications of Financial Statements The auditors of the Guarantor Group qualify their
report on any audited consolidated financial statements of the Guarantor Group in any regard
which, in the reasonable opinion of the Agent, has a Material Adverse Effect; or

	 	10.2.19	 	Change of Control A Change of Control occurs in relation to the Guarantor or any of the
Borrowers; or

	 	10.2.20	 	Conditions Subsequent if any of the conditions set out in Clauses 3.4 or 3.6 is not
satisfied within thirty (30) days or such other time period specified by the Agent in its
discretion; or

	 
	 	10.2.21	 	Revocation or Modification of consents etc. if any Necessary
Authorisation which is now or which at any time during the Facility Period becomes
necessary to enable any of the Security Parties to
comply with any of their obligations in or pursuant to any of the Security Documents is
revoked, withdrawn or withheld, or modified in a manner which the Agent reasonably
considers is, or may be, prejudicial to the interests of a Finance Party in a material
manner, or if such Necessary Authorisation ceases to remain in full force and effect;
or

 

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	 	10.2.22	 	Curtailment of Business if the business of any of the Security Parties is wholly or
materially curtailed by any intervention by or under authority of any government, or if all
or a substantial part of the undertaking, property or assets of any of the Security Parties
is seized, nationalised, expropriated or compulsorily acquired by or under authority of any
government or any Security Party disposes or threatens to dispose of a substantial part of
its business or assets; or

	 	10.2.23	 	Reduction of Capital if any of the Borrowers or the Guarantor reduces its authorised or
issued or subscribed capital except reductions effected in compliance with clause 8.4 of the
Guarantee or as part of a share buy-back, whilst solvent, by the Guarantor; or

	 
	 	10.2.24	 	Challenge to Registration if the registration of any Vessel or any
Mortgage becomes void or voidable or liable to cancellation or termination; or

	 	10.2.25	 	War if the country of registration of any Vessel becomes involved in war (whether or not
declared) or civil war or is occupied by any other power and the Agent reasonably considers
that, as a result, the security conferred by the Security Documents is materially prejudiced;
or

	 	10.2.26	 	Master Agreement termination if a notice is given by the Swap Provider under section 6(a)
of the Master Agreement, or by any relevant person under section 6(b)(iv) of the Master
Agreement, in either case designating an Early Termination Date for the purpose of the Master
Agreement, or the Master Agreement is for any other reason terminated, cancelled, suspended,
rescinded, revoked or otherwise ceases to remain in full force and effect; or

	 	10.2.27	 	Notice of Termination if the Guarantor gives notice to the Agent to
determine its obligations under the Guarantee.

 

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	11	 	Set-Off and Lien

	 	11.1	 	Set-off The Borrowers irrevocably authorise each of the Finance Parties at any
time after all or any part of the Indebtedness shall have become due and payable to set
off without notice any liability of the Borrowers to any of the Finance Parties
(whether present or future, actual or contingent, and irrespective of the branch or
office, currency or place of payment) against any credit balance from time to time
standing on any account of the Borrowers (whether current or otherwise and whether or
not subject to notice) with any branch of any of the Finance Parties in or towards
satisfaction of the Indebtedness and, in the name of that Finance Party or the
Borrowers, to do all acts (including, without limitation, converting or exchanging any
currency) and execute all documents which may be required to effect such application.

	 	11.2	 	Lien If an Event of Default has occurred and is continuing, unremedied or
unwaived, each Finance Party shall have a lien on and be entitled to retain and
realise as additional security for the repayment of the Indebtedness any cheques,
drafts, bills, notes or negotiable or non-negotiable instruments and any stocks,
 shares or marketable or other securities and property of any kind of any of the
Borrowers (or of that Finance Party as agent or nominee of the Borrowers) from time to
time held by that Finance Party, whether for safe custody or otherwise.

	 	11.3	 	Restrictions on withdrawal Despite any term to the contrary in relation to any
deposit or credit balance at any time on any account of any of the Borrowers with any
of the Finance Parties, no such deposit or balance shall be repayable or capable of
being assigned, mortgaged, charged or otherwise disposed of or dealt with by the
Borrower in question after an Event of Default has occurred and while such Event of
Default is continuing unremedied or unwaived, but any Finance Party may from time to
time permit the withdrawal of all or any part of any such deposit or balance without
affecting the continued application of this Clause.

	 	11.4	 	Master Agreement Rights The rights conferred on the Swap Provider by this
Clause 11 shall be in addition to and without prejudice or limitation to the rights of
netting and set off conferred on the Swap Provider by the Master Agreement.

 

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	12	 	Assignment and Sub-Participation

	 	12.1	 	Right to assign Each of the Lenders may:

	 	12.1.1	 	assign or transfer all or any of its rights under or pursuant to the
Security Documents or assign or grant sub-participations in all or any part of
its Commitment (i) to any other branch or Affiliate of that Lender or (ii)
with the prior written consent of the Agent and the Guarantor (which shall not
be unreasonably withheld and which consent shall not be required from the
Guarantor following an Event of Default which is continuing unremedied or
unwaived) to any other bank or financial institution; and

	 	12.1.2	 	assign or transfer all or any part of its rights under or pursuant to this
Agreement and/or any of the other Security Documents to KEIC following the
occurrence of an Event of Default which is continuing unremedied or unwaived
or otherwise if required to do so by KEIC pursuant to the terms of the KEIC
Buyer Credit Policies provided that KEIC pays the insurance proceeds in full
in accordance with the KEIC Buyer Credit Policies.

	 	12.2	 	Borrowers’ co-operation The Borrowers will co-operate fully and will procure
that the Guarantor co-operates fully with the Lenders in connection with any
assignment, transfer or sub-participation pursuant to Clause 12.1; will execute and
procure the execution of such documents as the Lenders may require in
connection therewith; and irrevocably authorise each of the Finance Parties to
disclose to any proposed assignee, transferee or sub-participant (whether before or
after any assignment, transfer or sub-participation and whether or not any
assignment, transfer or sub-participation shall take place) all information
relating
to the Security Parties, the Facility or the Security Documents which each such
Finance Party may in its discretion consider necessary or desirable (subject to any
duties of confidentiality applicable to the Lenders generally).

	 	12.3	 	Rights of assignee Any assignee, transferee or sub-participant of a Lender
shall
(unless limited by the express terms of the assignment, transfer or sub-participation) take the full benefit of every provision of the Security Documents
benefiting that Lender.

 

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	 	12.4	 	Transfer Certificates If any Lender wishes to transfer all or any of its Commitment as
contemplated in Clause 12.1 then such transfer may be effected by the delivery to the Agent of
a duly completed and duly executed Transfer Certificate in which event, on the later of the
Transfer Date specified in such Transfer Certificate and the fifth Business Day after the date
of delivery of such Transfer Certificate to the Agent:

	 	12.4.1	 	to the extent that in such Transfer Certificate the Lender which is a party thereto
seeks to transfer its Commitment in whole, the Borrowers and such Lender shall be
released from further obligations towards each other under this Agreement and their
respective rights against each other shall be cancelled other than existing claims
against such Lender for breach of this Agreement (such rights, benefits and
obligations being referred to in this Clause 12.4 as “discharged rights and
obligations”);

	 	12.4.2	 	the Borrowers and the Transferee which is a party thereto shall assume obligations
towards each other and/or acquire rights against each other which differ from such
discharged rights and obligations only insofar as the Borrowers and such Transferee
have assumed and/or acquired the same in place of the Borrowers and such Lender;

	 	12.4.3	 	the Finance Parties and the Transferee shall acquire the same rights and benefits
and assume the same obligations between themselves as they would have acquired and
assumed had such Transferee been an original party to this Agreement as a Lender with
the rights, benefits and/or obligations acquired or assumed by it as a result of such
transfer; and

	 	12.4.4	 	the Transferee shall pay to the Agent a transfer fee of three thousand Dollars
($3,000).

	 	12.5	 	Power of Attorney In order to give effect to each Transfer Certificate the Finance Parties
and the Borrowers each hereby irrevocably and unconditionally appoint the Agent as its true
and lawful attorney with full power to execute on their respective behalves each Transfer
Certificate delivered to the Agent pursuant to Clause 12.4 without the Agent being under any
obligation to take any further instructions from or give any prior notice to, any of the
Finance Parties or, subject to the Borrowers’ rights under Clause 12.1, the Borrowers before
doing so and the
Agent shall so execute each such Transfer Certificate on behalf of the other Finance
Parties and the Borrowers immediately on their receipt of the same pursuant to
Clause 12.4.

 

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	 	12.6	 	Notification The Agent shall promptly notify the other Finance Parties, the
Transferee and the Borrowers on the execution by it of any Transfer Certificate
together with details of the amount transferred, the Transfer Date and the parties to
such transfer.

	 	12.7	 	No Assignment or transfer by the Borrowers The Borrowers may not assign any
of their rights or transfer any of their rights or obligations under the Security
Documents.

	 	12.8	 	Insurances Notwithstanding any provisions to the contrary in the Guarantee
and this Agreement, in the event KEIC pays the insurance proceeds in accordance with
the KEIC Buyer Credit Policies, (i) the obligations of the Borrowers and the Guarantor
under this Agreement and the Guarantee shall not be reduced or affected in any manner,
(ii) KEIC shall be entitled to exercise the rights the Lenders may hold (whether
presently or in future) against the Borrowers and/or the Guarantor pursuant to this
Agreement and the Guarantee or any relevant laws and/or regulations, as the case may
be (but without prejudice to the exercise of such rights by the Security Trustee, the
Agent and the Lenders) unless and until such insurance proceeds and the interest
accrued thereon are fully reimbursed to KEIC and (iii) with respect to the obligations
of the Borrowers and the Guarantor owed to the Agent and/or the Lenders under the
Security Documents (or any of them), such obligations shall additionally be owed to
KEIC by way of subrogation of the rights of the Lenders.

	13	 	Payments, Mandatory Prepayment, Reserve Requirements and Illegality

	 	13.1	 	Payments All amounts payable by the Borrowers under or pursuant to any of
the Security Documents shall be paid to such accounts at such banks as the Agent may
from time to time direct to the Borrowers and shall be paid in Dollars in same day
funds (or such funds as are required by the authorities in the United States of
America for settlement of international payments for immediate value). Payments shall
be deemed to have been received by the Agent on the date on which the Agent receives
authenticated advice of receipt, unless that advice is
received by the Agent on a day other than a Business Day or at a time of day (whether on a
Business Day or not) when the Agent in its reasonable discretion considers that it is
impossible or impracticable for the Agent to utilise the amount received for value that
same day, in which event the payment in question shall be deemed to have been received by
the Agent on the Business Day next following the date of receipt of advice by the Agent.

 

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	 	13.2	 	No deductions or withholdings All payments (whether of principal or interest or otherwise) to
be made by the Borrowers pursuant to the Security Documents shall, subject only to Clause
13.3, be made free and clear of and without deduction for or on account of any Taxes or other
deductions, withholdings, restrictions, conditions or counterclaims of any nature, and the
Borrowers will not claim any equity in respect of any payment due from them to the Lenders or
to the Agent under or in relation to any of the Security Documents.

	 	13.3	 	Grossing-up If at any time any law requires (or is interpreted to require) the Borrowers to
make any deduction or withholding from any payment, or to change the rate or manner in which
any required deduction or withholding is made, the Borrowers will promptly notify the Agent
and, simultaneously with making that payment, will pay to the Agent whatever additional amount
(after taking into account any additional Taxes on, or deductions or withholdings from,
or restrictions or conditions on, that additional amount) is necessary to ensure that, after
making the deduction or withholding, the Agent and the Lenders receive a net sum equal to the
sum which they would have received had no deduction or withholding been made.

	 	13.4	 	Evidence of deductions If at any time the Borrowers are required by law to make any
deduction or withholding from any payment to be made by it pursuant to any of the Security
Documents, the Borrowers will pay the amount required to be deducted or withheld to the
relevant authority within the time allowed under the applicable law and will, no later than
thirty (30) days after making that payment, deliver to the Agent an original receipt issued by
the relevant authority, or other evidence reasonably acceptable to the Agent, evidencing the
payment to that authority of all amounts required to be deducted or withheld. If the Borrowers
make any deduction or withholding from any payment under or pursuant to any of the Security
Documents, and a Lender subsequently receives a refund or allowance

 

65

 

from any tax authority which that Lender at its sole discretion identifies as being
referable to that deduction or withholding, that Lender shall, as soon as reasonably
practicable, pay to the Borrowers an amount equal to the amount of the refund or allowance
received, if and to the extent that it may do so without prejudicing its right to retain
that refund or allowance and without putting itself in any worse financial position than
that in which it would have been had the deduction or withholding not been required to
have been made. Nothing in this Clause shall be interpreted as imposing any obligation on
any Lender to apply for any refund or allowance nor as restricting in any way the manner
in which any Lender organises its tax affairs, nor as imposing on any Lender any
obligation to disclose to the Borrowers any information regarding its tax affairs or tax
computations. All costs and expenses incurred by any Lender in obtaining or seeking to
obtain a refund or allowance from any tax authority pursuant to this Clause shall be for
the Borrowers’ account.

	 	13.5	 	Adjustment of due dates If any payment to be made under any of the Security Documents, other
than a payment of interest on the Facility (to which Clause 6.7 applies), shall be due on a
day which is not a Business Day, that payment shall be made on the next succeeding Business
Day (unless the next succeeding Business Day falls in the next calendar month in which event
the payment shall be made on the next preceding Business Day). Any such variation of time
shall be taken into account in computing any interest in respect of that payment.

	 	13.6	 	Change in law If, by reason of the introduction of any law, or any change in any law, or the
interpretation or administration of any law, or in compliance with any request or requirement
from any central bank or any fiscal, monetary or other authority:-

	 	13.6.1	 	any Finance Party (or the Holding Company of any Finance Party) shall be subject to
any Tax with respect to payments of all or any part of the Indebtedness; or

	 	13.6.2	 	the basis of Taxation of payments to any Finance Party in respect of all or any part
of the Indebtedness shall be changed; or

	 	13.6.3	 	any reserve requirements shall be imposed, modified or deemed applicable
against assets held by or deposits in or for the account of or
loans by any branch of any Finance Party or its direct or indirect Holding
Company; or

 

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	 	13.6.4	 	any ratio (whether cash, capital adequacy, liquidity or otherwise) which any Finance
Party or its direct or indirect Holding Company is required or requested to maintain
shall be affected; or

	 	13.6.5	 	there is imposed on any Finance Party (or on the direct or indirect Holding Company
of any Finance Party) any other condition in relation to the Indebtedness or the
Security Documents;

and the result of any of the above shall be to increase the cost to any Lender (or to the
direct or indirect Holding Company of any Lender) of that Lender making or maintaining its
Commitment or its Drawing, or to cause any Finance Party to suffer (in its reasonable
opinion) a material reduction in the rate of return on its overall capital below the level
which it reasonably anticipated at the Execution Date and which it would have been able to
achieve but for its entering into this Agreement and/or performing its obligations under
this Agreement, the Finance Party affected shall notify the Agent and, on demand to the
Borrowers by the Agent, the Borrowers shall from time to time pay to the Agent for the
account of the Finance Party affected the amount which shall compensate that Finance Party
or the Agent (or the relevant Holding Company) for such additional cost or reduced return.
A certificate signed by an authorised signatory of the Agent or of the Finance Party
affected setting out the amount of that payment and the basis of its calculation shall be
submitted to the Borrowers and shall be conclusive evidence of such amount save for
manifest error or on any question of law.

	 	13.7	 	Illegality and impracticality Notwithstanding anything contained in the Security Documents,
the obligations of a Lender to advance or maintain its Commitment shall terminate in the
event that a change in any law or in the interpretation of any law by any authority charged
with its administration shall make it unlawful for that Lender to advance or maintain its
Commitment. In such event the Lender affected shall notify the Agent and the Agent shall, by
written notice to the Borrowers, declare that Lender’s obligations to be immediately
terminated. If all or any part of the Facility shall have been advanced by the Lenders to the
Borrowers, the portion of the Indebtedness (including all accrued interest) advanced by the
Lender so affected shall be prepaid within thirty (30)
days from the date of such notice, or sooner if illegality is determined. Clause 5.4 shall
apply to that prepayment if it is made on a day other than the last day of an Interest
Period. During that period, the affected Lender shall negotiate in good faith with the
Borrowers to find an alternative method or lending base in order to maintain the Facility.

 

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	 	13.8	 	Changes in market circumstances If at any time a Lender determines (which determination
shall be final and conclusive and binding on the Borrowers) that, by reason of changes
affecting the London Interbank market, adequate and fair means do not exist for ascertaining
the rate of interest on the Facility or any part thereof pursuant to this Agreement:-

	 	13.8.1	 	that Lender shall give notice to the Agent and the Agent shall give notice to the
Borrowers of the occurrence of such event; and

	 	13.8.2	 	the Agent shall as soon as reasonably practicable certify to the Borrowers in
writing the effective cost to that Lender of maintaining its Commitment for such
further period as shall be selected by that Lender and the rate of interest payable by
the Borrowers for that period; or, if that is not acceptable to the Borrowers,

	 	13.8.3	 	the Agent in accordance with instructions from that Lender and subject to that
Lender’s approval of any agreement between the Agent and the Borrowers, will negotiate
with the Borrowers in good faith with a view to modifying this Agreement to provide a
substitute basis for that Lender’s Commitment which is financially a substantial
equivalent to the basis provided for in this Agreement.

If, within thirty (30) days of the giving of the notice referred to in Clause 13.8.1, the
Borrowers and the Agent fail to agree in writing on a substitute basis for such Lender’s
Commitment the Borrowers will immediately prepay the amount of such Lender’s Commitment
and the Maximum Facility Amount will automatically decrease by the amount of such
Commitment and such decrease shall not be reversed. Clause 5.4 shall apply to that
prepayment if it is made on a day other than the last day of an Interest Period.

 

68

 

	 	13.9	 	Non-availability of currency If a Lender is for any reason unable to obtain
Dollars in the London Interbank market and is, as a result, or as a result of any
other contingency affecting the London Interbank market, unable to advance or
maintain its Commitment in Dollars, that Lender shall give notice to the Agent and
the Agent shall give notice to the Borrowers and that Lender’s obligations to make
the Facility available shall immediately cease. In that event, if all or any part
of the Facility shall have been advanced by that Lender to the Borrowers, the Agent
in accordance with instructions from that Lender and subject to that Lender’s
approval of any agreement between the Agent and the Borrower, will negotiate with
the Borrowers in good faith with a view to establishing a mutually acceptable basis
for funding the Facility or relevant part thereof from an alternative source. If
the Agent and the Borrowers have failed to agree in writing on a basis for funding
the Facility or relevant part thereof from an alternative source by 11.00 a.m. on
the second Business Day prior to the end of the then current relevant Interest
Period, the Borrowers will (without prejudice to its other obligations under or
pursuant to this Agreement, including, without limitation, its obligation to pay
interest on the Facility, arising on the expiry of the then relevant Interest
Period) prepay the Indebtedness (or relevant part thereof) to the Agent on behalf
of that Lender on the expiry of the then current relevant Interest Period.

	14	 	Communications

	 	14.1	 	Method Any Communication may be given, delivered, made or served (as the
case may be) under or in relation to this Agreement by letter or fax or (subject to
Clause 14.3) electronic mail and shall be in the English language and sent
addressed:-

	 	14.1.1	 	in the case of any of the Lenders to the Agent at Calyon, 9 quai du Président
Paul Doumer, 92920 Paris, La Défense Cedex, France, Fax: (+33) 1 41 89 29 87,
Attn: Shipping Department, copy to: Calyon, London Shipping Department,
Broadwalk House, 5 Appold Street, London EC2A 2DA, Fax: (+44) (0) 20 7214 6689,
Attn: Head of Shipping;

	 	14.1.2	 	in the case of the Agent, at Calyon, 9 quai du Président Paul Doumer, 92920
Paris, La Défense Cedex, France, Fax: (+33) 1 41 89 29 87, Attn: Shipping
Department, copy to: Calyon, London Shipping Department,
Broadwalk House, 5 Appold Street, London EC2A 2DA, Fax: (+44) (0) 20 7214 6689,
Attn: Head of Shipping;

 

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	 	14.1.3	 	in the case of the Security Trustee, at Calyon, 9 quai du Président Paul Doumer,
92920 Paris, La Défense Cedex, France, Fax: (+33) 1 41 89 29 87, Attn: Shipping
Department, copy to: Calyon, London Shipping Department, Broadwalk House, 5 Appold
Street, London EC2A 2DA, Fax: (+44) (0) 20 7214 6689, Attn: Head of Shipping;

	 	14.1.4	 	in the case of the Swap Provider, at Calyon, 9 quai du Président Paul Doumer, 92920
Paris, La Défense Cedex, France, Fax: (+33) 1 41 89 29 87, Attn: Shipping Department,
copy to: Calyon, London Shipping Department, Broadwalk House, 5 Appold Street, London
EC2A 2DA, Fax: (+44) (0) 20 7214 6689, Attn: Head of Shipping;

	 	14.1.5	 	in the case of the KEIC Agent, at Calyon, 9 quai du Président Paul Doumer, 92920
Paris, La Défense Cedex, France, Fax: (+33) 1 41 89 29 87, Attn: Shipping Department,
copy to: Calyon, London Shipping Department, Broadwalk House, 5 Appold Street, London
EC2A 2DA, Fax: (+44) (0) 20 7214 6689, Attn: Head of Shipping;

	 	14.1.6	 	in the case of the Borrowers and/or the Guarantor to the
Communications Address;

or to such other address or fax number as the Agent or the Borrowers may designate for
themselves by written notice to the others.

	 	14.2	 	Timing A Communication shall be deemed to have been duly given, delivered, made or served
to or on, and received by a party to this Agreement:-

	 	14.2.1	 	in the case of a fax when the sender receives one or more transmission reports
showing the whole of the Communication to have been transmitted to the correct
fax number;

	 	14.2.2	 	if delivered to an officer of the relevant party or (in the case of the Borrowers)
left at the Communications Address at the time of delivery or leaving; or

 

70

 

	 	14.2.3	 	if posted, at 9.00 a.m. on the fifth Business Day after posting by
prepaid first class post. PROVIDED ALWAYS that Communications to the
Agent and (to the extent that they relate to the matters specified in
clause 2.16 of the Intercreditor Deed only) the Lenders shall be effective
only upon receipt; or

	 	14.2.4	 	if by electronic mail, in accordance with Clause 14.3;

	 	 	 	Any Communication by fax shall be promptly confirmed in writing by post or hand
delivery.

	 	14.3	 	Electronic communication

	 	14.3.1	 	Any communication to be made in connection with this Agreement may be made
by electronic mail or other electronic means, if the Borrowers and the
relevant Finance Party:

	 	(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
address or any other such information supplied by them.

	 	14.3.2	 	Any electronic communication made between the Borrowers and the relevant
Finance Party will be effective only when actually received in readable form
and acknowledged by the recipient (it being understood that any system
generated responses do not constitute an acknowledgement) and in the case of
any electronic communication made by the Borrowers to a Finance Party only if
it is addressed in such a manner as the Finance Party shall specify for this
purpose.

 

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	15	 	General Indemnities

	 	15.1	 	Currency In the event of any Finance Party receiving or recovering any
amount payable under any of the Security Documents in a currency other than the
Currency of Account, and if the amount received or recovered is insufficient when
converted into the Currency of Account at the date of receipt to satisfy in full the
amount due, the Borrowers shall, on the Agent’s written demand, pay to the Agent such
further amount in the Currency of Account as is sufficient to satisfy in full the amount
due and that further amount shall be due to the Agent on behalf of the Finance Parties as
a separate debt under this Agreement.

	 	15.2	 	Costs and expenses The Borrowers will, within fourteen days of the Agent’s written demand,
reimburse the Agent (on behalf of each of the Finance Parties and KEIC) for all reasonable out
of pocket expenses including internal and external legal costs (including stamp duty, Value
Added Tax or any similar or replacement tax if applicable) of and incidental to:-

	 	15.2.1	 	the negotiation, syndication, preparation, execution and registration of the
Security Documents (whether or not any of the Security Documents are actually executed
or registered and whether or not all or any part of the Facility is advanced);

	 	15.2.2	 	any amendments, addenda or supplements to any of the Security Documents (whether or
not completed);

	 	15.2.3	 	any other documents which may at any time be required by any Finance Party to give
effect to any of the Security Documents or which any Finance Party is entitled to call
for or obtain pursuant to any of the Security Documents; and

	 	15.2.4	 	the exercise of the rights, powers, discretions and remedies of the Finance Parties
under or pursuant to the Security Documents.

	 	15.3	 	Events of Default The Borrowers shall indemnify the Finance Parties and KEIC from time to
time on demand against all losses and costs incurred or sustained by any Finance Party or KEIC
as a consequence of any Event of Default, including (without limitation, but not in the case
of KEIC) any Break Costs.

	 	15.4	 	Funding costs The Borrowers shall indemnify the Finance Parties from time to time on demand
against all losses and costs incurred or sustained by any Finance Party if, for any reason due
to a default or other action by the Borrowers, any Drawing is not advanced to the Borrowers
after the relevant Drawdown Notice
has been given to the Agent, or is advanced on a date other than that requested in the
Drawdown Notice, including (without limitation), any Break Costs.

 

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	 	15.5	 	Protection and enforcement The Borrowers shall indemnify the Finance Parties and KEIC from
time to time on demand against all losses, costs and liabilities which any Finance Party or
KEIC may from time to time sustain, incur or become liable for in or about the protection,
maintenance or enforcement of the rights conferred on the Finance Parties and KEIC by the
Security Documents or in or about the exercise or purported exercise by the Finance Parties or
KEIC of any of the rights, powers, discretions or remedies vested in them under or arising out
of the Security Documents, including (without limitation) any losses, costs and liabilities
which any Finance Party may from time to time sustain, incur or become liable for by reason of
any Finance Party or KEIC being mortgagees of any Vessel, assignees of any Mortgage and/or a
lender to the Borrowers, or by reason of any Finance Party or KEIC being deemed by any court
or authority to be an operator or controller, or in any way concerned in the operation or
control, of any Vessel. No such indemnity will be given to a Finance Party or KEIC where any
such loss, cost or liability has occurred due to gross negligence or wilful misconduct on the
part of that Finance Party or KEIC; however this shall not affect the right of any other
Finance Party or KEIC to receive any such indemnity.

	 	15.6	 	Liabilities of Finance Parties The Borrowers will from time to time reimburse the Finance
Parties on demand for all sums which any Finance Party may pay on account of any of the
Security Parties or in connection with any Vessel (whether alone or jointly or jointly and
severally with any other person) including (without limitation) all sums which any Finance
Party may pay or guarantees which any Finance Party may give in respect of the Insurances, any
expenses incurred by any Finance Party in connection with the maintenance or repair of any
Vessel or in discharging any lien, bond or other claim relating in any way to any Vessel, and
any sums which any Finance Party may pay or guarantees which they may give to procure the
release of any Vessel from arrest or detention.

	 	15.7	 	Taxes The Borrowers shall pay all Taxes to which all or any part of the Indebtedness or
any of the Security Documents may be at any time subject and shall indemnify the Finance
Parties on demand against all liabilities, costs, claims
and expenses incurred in connection therewith, including but not limited to any such
liabilities, costs, claims and expenses resulting from any omission to pay or delay
in paying any such Taxes. The indemnity contained in this Clause shall survive the
repayment of the Indebtedness.

 

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	16	 	Miscellaneous

	 	16.1	 	Waivers No failure or delay on the part of any Finance Party in exercising
any right, power, discretion or remedy under or pursuant to any of the Security
Documents, nor any actual or alleged course of dealing between any Finance Party and
any of the Security Parties, shall operate as a waiver of, or acquiescence in, any
default on the part of any Security Party, unless expressly agreed to do so in writing
by the Agent, nor shall any single or partial exercise by any Finance Party of any
right, power, discretion or remedy preclude any other or further exercise of that
right, power, discretion or remedy, or the exercise by a Finance Party of any other
right, power, discretion or remedy.

	 	16.2	 	No oral variations No variation or amendment of any of the Security Documents
shall be valid unless in writing and signed on behalf of the Agent, the KEIC Agent and
the relevant Security Party.

	 	16.3	 	Severability If at any time any provision of any of the Security Documents
is invalid, illegal or unenforceable in any respect that provision shall be severed
from the remainder and the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired in any way.

	 	16.4	 	Successors etc. The Security Documents shall be binding on the Security
Parties and on their successors and permitted transferees and assignees, and shall
inure to the benefit of the Finance Parties and their respective successors,
transferees and assignees. The Borrowers may not assign or transfer any of its
rights or duties under or pursuant to any of the Security Documents without the prior
written consent of the Lenders.

	 	16.5	 	Further assurance If any provision of the Security Documents shall be invalid
or unenforceable in whole or in part by reason of any present or future law or any
decision of any court, or if the documents at any time held by the Finance Parties on
their behalf are considered by the Lenders for any reason insufficient to carry
out the terms of this Agreement, then from time to time the Borrowers will promptly, on
demand by the Agent, execute or procure the execution of such further documents as in the
reasonable opinion of the Lenders are necessary to provide adequate security for the
repayment of the Indebtedness.

 

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	 	16.6	 	Other arrangements The Finance Parties may, without prejudice to their rights under or
pursuant to the Security Documents, at any time and from time to time, on such terms and
conditions as they may in their discretion determine, and without notice to the Borrowers,
grant time or other indulgence to, or compound with, any other person liable (actually or
contingently) to the Finance Parties or any of them in respect of all or any part of the
Indebtedness, and may release or renew negotiable instruments and take and release securities
and hold funds on realisation or suspense account without affecting the liabilities of the
Borrowers or the rights of the Finance Parties under or pursuant to the Security Documents.

	 	16.7	 	Advisers The Borrowers irrevocably authorise the Agent, at any time and from time to time
during the Facility Period, to consult insurance advisers on any matters relating to the
Insurances, including, without limitation, the collection of insurance claims, and from time
to time to consult or retain advisers or consultants to monitor or advise on any other
claims relating to the Vessels. The Borrowers will provide such advisers and consultants with
all information and documents which they may from time to time reasonably require and will
reimburse the Agent on demand for all reasonable costs and expenses incurred by the Agent in
connection with the consultation or retention of such advisers or consultants.

	 	16.8	 	Delegation The Finance Parties may at any time and from time to time delegate to any person
any of their rights, powers, discretions and remedies pursuant to the Security Documents,
other than rights relating to actions to be taken by the Majority Lenders or the Lenders as a
group on such terms as they may consider appropriate (including the power to sub-delegate).

	 	16.9	 	Rights etc. cumulative Every right, power, discretion and remedy conferred on the Finance
Parties under or pursuant to the Security Documents shall be cumulative and in addition to
every other right, power, discretion or remedy to which they may at any time be entitled by
law or in equity. The Finance Parties may exercise each of their rights, powers, discretions
and remedies as often and in
such order as they deem appropriate subject to obtaining the prior written consent of the
Majority Lenders. The exercise or the beginning of the exercise of any right, power,
discretion or remedy shall not be interpreted as a waiver of the right to exercise any
other right, power, discretion or remedy either simultaneously or subsequently.

 

75

 

	 	16.10	 	No enquiry The Finance Parties shall not be concerned to enquire into the powers of the
Security Parties or of any person purporting to act on behalf of any of the Security Parties,
even if any of the Security Parties or any such person shall have acted in excess of their
powers or if their actions shall have been irregular, defective or informal, whether or not
any Finance Parties had notice thereof.

	 	16.11	 	Continuing security The security constituted by the Security Documents shall be continuing
and shall not be satisfied by any intermediate payment or satisfaction until the Indebtedness
shall have been repaid in full and none of the Finance Parties shall be under any further
actual or contingent liability to any third party in relation to the Vessels, the Insurances,
Earnings or Requisition Compensation or any other matter referred to in the Security
Documents.

	 	16.12	 	Security cumulative The security constituted by the Security Documents shall be in addition
to any other security now or in the future held by the Finance Parties or any of them for or
in respect of all or any part of the Indebtedness, and shall not merge with or prejudice or be
prejudiced by any such security or any other contractual or legal rights of any of the Finance
Parties, nor affected by any irregularity, defect or informality, or by any release, exchange
or variation of any such security. Section 93 of the Law of Property Act 1925 and all
provisions which the Agent considers analogous thereto under the law of any other relevant
jurisdiction shall not apply to the security constituted by the Security Documents.

	 	16.13	 	Re-instatement If any Finance Party takes any steps to exercise any of its rights, powers,
remedies or discretions pursuant to the Security Documents and the result shall be adverse to
the Finance Parties, the Borrowers and the Finance Parties shall be restored to their former
positions as if no such steps had been taken.

	 	16.14	 	No liability None of the Finance Parties, nor any agent or employee of any Finance Party,
nor any receiver and/or manager appointed by the Agent, shall be liable for any losses which
may be incurred in or about the exercise of any of the
rights, powers, discretions or remedies of the Finance Parties under or pursuant to the
Security Documents nor liable as mortgagee in possession for any loss on realisation or
for any neglect or default of any nature for which a mortgagee in possession might
otherwise be liable unless such Finance Party’s action constitutes gross negligence or
wilful misconduct.

 

76

 

	 	16.15	 	Rescission of payments etc. Any discharge, release or reassignment by any of the Finance
Parties of any of the security constituted by, or any of the obligations of any Security Party
contained in, any of the Security Documents shall be (and be deemed always to have been) void
if any act (including, without limitation, any payment) as a result of which such discharge,
release or reassignment was given or made is subsequently wholly or partially rescinded or
avoided by operation of any law, unless such Finance Party’s action constitutes gross
negligence or wilful misconduct.

	 	16.16	 	Subsequent Encumbrances If the Agent receives notice of any subsequent Encumbrance (other
than any Encumbrance permitted by the terms of this Agreement) affecting any Vessel or all or
any part of the Insurances, Earnings or Requisition Compensation, the Agent may open a new
account in its books for the Borrowers. If the Agent does not open a new account, then
(unless the Encumbrance is permitted by the terms of this Agreement or the Agent gives written
notice to the contrary to the Borrowers) as from the time of receipt by the Agent of notice of
such subsequent Encumbrance, all payments made to the Agent shall be treated as having been
credited to a new account of the Borrowers and not as having been applied in reduction of the
Indebtedness.

	 	16.17	 	Releases If any Finance Party shall at any time in its discretion release any party from all
or any part of any of the Security Documents or from any term, covenant, clause, condition or
obligation contained in any of the Security Documents, the liability of any other party to the
Security Documents shall not be varied or diminished.

	 	16.18	 	Certificates Any certificate or statement signed by an authorised signatory of the Agent
purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any
other amount referred to in any of the Security Documents shall, save for manifest error or on
any question of law, be conclusive evidence as against the Borrowers of that amount.

 

77

 

	 	16.19	 	Survival of representations and warranties The representations and warranties
on the part of the Borrowers contained in this Agreement shall survive the execution
of this Agreement and the advance of the Facility or any part thereof.

	 	16.20	 	Counterparts This Agreement may be executed in any number of counterparts
each of which shall be original but which shall together constitute the same
instrument.

	 	16.21	 	Third Party Rights Notwithstanding the provisions of the Contracts (Rights
of Third Parties) Act 1999, no term of this Agreement is enforceable by a person who
is not a party to it.

	 	16.22	 	Building Contract Disputes The Borrowers acknowledge and agree that their
obligations under this Agreement are independent from the applicable Building Contract
and that the performance of these obligations shall in no event be affected by any
dispute whatsoever that may arise between the Builder and the Borrowers or any of them
in relation to any applicable Building Contract or in any other respect.

	17	 	Law and Jurisdiction

	 	17.1	 	Governing law This Agreement shall in all respects be governed by and
interpreted in accordance with English law.

	 	17.2	 	Jurisdiction For the exclusive benefit of the Finance Parties, the parties to
this Agreement irrevocably agree that the courts of England are to have jurisdiction
to settle any disputes which may arise out of or in connection with this Agreement and
that any Proceedings may be brought in those courts. The Borrowers irrevocably
waive any objection which they may now or in the future have to the laying of the
venue of any Proceedings in any court referred to in this Clause, and any claim that
those Proceedings have been brought in an inconvenient or inappropriate forum.

 

78

 

	 	17.3	 	Alternative jurisdictions Nothing contained in this Clause shall limit the
right of the Finance Parties to commence any Proceedings against the Borrowers in any
other court of competent jurisdiction nor shall the commencement of any Proceedings
against the Borrowers in one or more jurisdictions preclude the
commencement of any Proceedings in any other jurisdiction, whether
concurrently or not.

	 	17.4	 	Service of process Without prejudice to any other mode of service allowed
under any relevant law, the Borrowers:

	 	17.4.1	 	irrevocably appoint Teekay Shipping (UK) Ltd of 2nd Floor, 86
Jermyn Street, London SW1Y 6JD England as their agent for service of process
in relation to any proceedings before the English courts in connection with
this Agreement; and

	 	17.4.2	 	agree that failure by a process agent to notify the Borrowers of the process
will not invalidate the proceedings concerned.

IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year
first before written.

 

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SCHEDULE 1

The Lenders, the Commitments and the Proportionate Shares

Part I: the Senior Lenders

	 	 	 	 	 	 	 	 	 
	The Senior Lenders	 	The Commitments ($)	 	 	The Proportionate Shares (%)	 
	 
	 	 	 	 	 	 	 	 
	Calyon
	 	 	255,528,228.43	 	 	 	100	 
	For administration matters:
	 	 	 	 	 	 	 	 
	9. Quai, du President Paul Doumer

92920 Paris La Defense

France

Fax no: +33 141 89 19 34

Attention: Middle Office/Shipping/

Ms Marie-Claire Vanderperre/

M. Godet-Couery
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	For credit matters:
	 	 	 	 	 	 	 	 
	Broadwalk House

5 Appold Street

London EC2A 2DA

Fax no: +44 207 214 6689

Attention: Jerome Duval/Oliver Hermanns
	 	 	 	 	 	 	 	 

Part II: the Junior Lenders

	 	 	 	 	 	 	 	 	 
	The Junior Lenders	 	The Commitments ($)	 	 	The Proportionate Shares (%)	 
	 
	 	 	 	 	 	 	 	 
	Calyon
	 	 	80,000,000	 	 	 	100	 
	For administration matters:

9. Quai, du President Paul Doumer

92920 Paris La Defense

France

Fax no: +33 141 89 19 34

Attention: Middle Office/Shipping/

Ms Marie-Claire Vanderperre/

M. Godet-Couery
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	For credit matters:
	 	 	 	 	 	 	 	 
	Broadwalk House

5 Appold Street

London EC2A 2DA

Fax no: +44 207 214 6689

Attention: Jerome Duval/Oliver Hermanns
	 	 	 	 	 	 	 	 

 

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SCHEDULE 2

 The Vessels

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Country of	 	 	 	 
	Vessel	 	Owner	 	Incorporation	 	Hull No	 	Flag
	Vessel A

	 	Great East Hull No.
1717 L.L.C.
	 	Marshall Islands
	 	Hull 1717
	 	Bahamas
	 
	 	 	 	 	 	 	 	 
	Vessel B

	 	Great East Hull No.
1718 L.L.C.
	 	Marshall Islands
	 	Hull 1718
	 	Bahamas
	 
	 	 	 	 	 	 	 	 
	Vessel C

	 	H.S.H.I. Hull No.
S363 L.L.C.
	 	Marshall Islands
	 	Hull S363
	 	Bahamas
	 
	 	 	 	 	 	 	 	 
	Vessel D

	 	H.S.H.I. Hull No.
S364 L.L.C.
	 	Marshall Islands
	 	Hull S364
	 	Bahamas

 

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SCHEDULE 3

Conditions Precedent and Subsequent

Part I: Conditions precedent

	1	 	Security Parties

	 	(a)	 	Constitutional Documents Copies of the constitutional documents of each
Security Party together with such other evidence as the Agent may reasonably require
that each Security Party is 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 Security Party (if such a certificate can be obtained).

	 	(c)	 	Board resolutions A copy of a resolution of the board of directors of each
Security Party:

	 	(i)	 	approving the terms of, and the transactions contemplated by,
the Relevant 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
Relevant Documents (and all documents and notices to be signed and/or
despatched under those documents) on its behalf.

	 	(d)	 	deliberately not used.

	 	(e)	 	Officer’s certificates A certificate of a duly authorised officer or
representative of each Security Party certifying that each copy document relating to it
specified in this Part I of Schedule 3 is correct, complete and in full force and
effect as at a date no earlier than the date of this Agreement and setting out the
names of the directors, officers and (other than in the case of the Guarantor)
shareholders of that Security Party and the proportion of shares held by each
shareholder.

	 	(f)	 	Powers of attorney The notarially attested and legalised (where necessary
for registration purposes) power of attorney of each Security Party under which any
documents are to be executed or transactions undertaken by that Security Party.

 

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	2	 	Security and related documents

	 	(a)	 	Vessel documents In respect of Drawings under the Buyer Credit only,
photocopies, certified as true, accurate and complete by a director, the secretary or
the legal advisers of the Owner, of:

	 	(i)	 	the Building Contract; and

	 	(ii)	 	in respect of the third and fourth instalments due under the
Building Contract a copy of the fax notice issued by the Builder:

	 	(aa)	 	in respect of Vessel A and Vessel B such
notice to be accompanied with a copy of the certificate signed by the
Classification Society; and

	 	(bb)	 	in respect of Vessel C and Vessel D such
notice to be countersigned by the Classification Society;

in accordance with Article II 4 (c) or (d) of the relevant Building
Contract (as applicable)) evidencing the obligation of the relevant
Borrower to pay the relevant instalment to the Builder under the Building
Contract on a date no later than the proposed Drawdown Date of the Drawing
in question.

	 	(b)	 	Refund Guarantee In respect of Drawings under the Buyer Credit only, the
original Refund Guarantee.

	 	(c)	 	Security and Finance Documents The relevant Building Contract Assignment (in
respect of a Drawing under the Buyer Credit only), the Guarantee, the Master Agreement
and any other Credit Support Documents, together with all other documents required by
any of them, including, without limitation, all notices of assignment and/or charge
and evidence that those notices will be duly acknowledged by the
recipients.

	 	(d)	 	KEIC documents An original counterpart of the relevant KEIC Buyer Credit
Policy, duly executed by KEIC, together with evidence that such policy has been duly
authorised by KEIC and that the representative of KEIC who has signed it has been duly
authorised to sign and deliver it.

 

83

 

	3	 	Legal opinions

If a Security Party is incorporated in a jurisdiction other than England and Wales or if
any Finance Document is governed by the laws of a jurisdiction other than England and
Wales, a legal opinion of the legal advisers to the Lenders in each relevant jurisdiction,
substantially in the form or forms provided to the Agent prior to signing this Agreement or
confirmation satisfactory to the Agent that such an opinion will be given, and to include:-

	 	(a)	 	an opinion of Stephenson Harwood on matters of English law;

	 
	 	(b)	 	an opinion of Watson Farley & Williams on matters of Marshall Islands law;

	 
	 	(c)	 	an opinion of Kim & Chang on matters of Korean law;

	 
	 	(d)	 	an opinion of Lee & Ko, special legal advisers to KEIC; and

	 
	 	(e)	 	an opinion of Lennox Patton on matters of Bahamas law.

	4	 	Other documents and evidence

	 	(a)	 	Drawdown Notice A duly completed Drawdown Notice.

	 	(b)	 	Process agent Evidence that any process agent referred to in Clause 17.4.1
and any process agent appointed under any other Finance Document has accepted its
appointment.

	 	(c)	 	Other authorisations A copy of any other consent, licence, approval,
authorisation or other document, opinion or assurance which the Agent considers to be
necessary or reasonable (if it has notified the Borrowers accordingly) in connection
with the entry into and performance of the transactions contemplated by any of the
Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.

 

84

 

	 	(d)	 	Financial statements Copies of latest Guarantor’s Accounts.

	 	(e)	 	Fees Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 7 and Clause 15 have been paid or will be paid by the relevant Drawdown
Date.

	 	(f)	 	“Know your customer” documents Such documentation and other evidence as is
reasonably requested by the Agent 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 to Part I

	1	 	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 3.

	2	 	Legal opinions Such of the legal opinions specified in Part I of this Schedule 3 as have
not already been provided to the Agent.

	3	 	Companies Act registrations Evidence that the prescribed particulars of any Security
Documents received by the Agent pursuant to Part I of this Schedule 3 have been delivered to
the Registrar of Companies of England and Wales within the statutory time limit.

 

85

 

Part III: Delivery conditions precedent

	1	 	Officer’s certificate A certificate signed by a duly authorised officer of each Security
Party dated no later than five (5) Business Days before the Delivery Date confirming that none
of the documents and evidence delivered to the Agent pursuant to Clauses 3.1 and 3.4 has been
amended, modified or revoked in any way since its delivery to the Agent.

	2	 	Security and related documents

	 	(a)	 	Vessel documents Photocopies, certified as true, accurate and complete by a
duly authorised representative of the relevant Owner (or, in the case of paragraphs
(i), (ii) and (iii) below, faxed copies), of:

	 	(i)	 	the builder’s certificate and/or bill of sale transferring
title in the Vessel to the Owner free of all encumbrances, maritime liens or
other debts;

	 	(ii)	 	the protocol of delivery and acceptance evidencing the
unconditional physical delivery of the Vessel by the Builder to the Owner
pursuant to the relevant Building Contract;

	 	(iii)	 	the commercial invoice issued by the Builder in respect of
the final contract price of the Vessel; and

	 	(iv)	 	any Qualifying Charter of the Vessel which will be in force on
the Delivery Date.

in each case together with all addenda, amendments or supplements.

	 	(b)	 	Evidence of Owner’s title Evidence that any prior registration of the Vessel
in the ownership of the Builder and any Encumbrance registered against that ownership
have been cancelled (or confirmation from the Builder that there was no such prior
registration) and evidence that on the Delivery Date (i) the Vessel will be at least
provisionally registered under the flag stated in Schedule 2 in the ownership of the
relevant Owner and (ii) the Mortgage will be capable of being registered against the
Vessel with first priority.

	 	(c)	 	Evidence of insurance 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 an insurance adviser appointed by
the Agent.

 

86

 

	 	(d)	 	Confirmation of class A Certificate of Confirmation of Class for hull and
machinery confirming that the Vessel is classed with the highest class applicable to
vessels of her type with a Pre-Approved Classification Society or such other
classification society as may be acceptable to the Lenders.

	 	(e)	 	Security Documents The Mortgage and the Assignment in respect of the Vessel
and any other Credit Support Documents, together with all other documents required by
any of them, including, without limitation, all notices of assignment and/or charge and
evidence that those notices will be duly acknowledged by the recipients.

	 	(f)	 	Other Relevant Documents Copies of each of the Relevant Documents not
otherwise comprised in the documents listed in Part I of Schedule 3 or this Part III of
Schedule 3.

	3	 	Legal opinions

If a Security Party is incorporated in a jurisdiction other than England and Wales or if any
Finance Document is governed by the laws of a jurisdiction other than England and Wales, a
legal opinion of the legal advisers to the Lenders in each relevant jurisdiction,
substantially in the form or forms provided to the Agent prior to signing this Agreement or
confirmation satisfactory to the Agent that such an opinion will be given, and to include:-

	 	(a)	 	an opinion of Stephenson Harwood on matters of English law;

	 
	 	(b)	 	an opinion of Watson Farley & Williams on matters of Marshall Islands law;

	 
	 	(c)	 	an opinion of Kim & Chang on matters of Korean law;

	 
	 	(d)	 	an opinion of Lee & Ko, special legal advisers to KEIC; and

	 
	 	(e)	 	an opinion of Lennox Patton on matters of Bahamas law.

 

87

 

	4	 	Other documents and evidence

	 	(a)	 	Process agent Evidence that any process agent appointed under any Finance
Document has accepted its appointment.

	 	(b)	 	Other authorisations A copy of any other consent, licence, approval,
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 of the
Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.

	 
	 	(c)	 	Drawdown Notice A duly completed Drawdown Notice.

 

88

 

Part IV: Delivery conditions subsequent

	1	 	Evidence of Owner’s title Certificate of ownership and encumbrance (or equivalent) issued
by the Registrar of Ships (or equivalent official) of the Vessel’s flag state confirming that
(a) the Vessel is permanently registered under that flag in the ownership of the Owner, (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 III of this
Schedule 3.

	4	 	Legal opinions Such of the legal opinions specified in Part III of this Schedule 3 as have
not already been provided to the Agent.

	5	 	Companies Act registrations Evidence that the prescribed particulars of any Security
Documents received by the Agent pursuant to Part III of this Schedule 3 have been delivered to
the Registrar of Companies of England and Wales within the statutory time limit.

	6	 	Vessel documents Photocopies, certified as true, accurate and complete by a duly
authorised representative of the relevant Owner, of those documents listed in Schedule 3, Part
III, 2(a)(i),(ii) and (iii).

 

89

 

SCHEDULE 4

Form of Transfer Certificate

			
	To:	 	Calyon as agent (the “Agent”)

TRANSFER CERTIFICATE

This transfer certificate relates to a facility agreement (as the same may be from time to time
amended, varied, novated or supplemented, the “Facility Agreement”) dated    
           2006 whereby a buyer credit facility of up to $255,528,228.43 and a
junior facility of up to $80,000,000 was made available to the Companies listed in Schedule 1 of
the Facility Agreement as joint and several borrowers by a group of banks on whose behalf the Agent
acts as agent and security trustee.

	1	 	Terms defined in the Facility Agreement shall, subject to any contrary indication, have the
same meanings herein. The terms “Lender” and “Transferee” are defined in the schedule to
this transfer certificate.

	2	 	The Lender (i) confirms that the details in the Schedule hereto under the heading “Bank’s
Commitment” accurately summarises its Commitment in the Facility Agreement and (ii) requests
the Transferee to accept and procure the transfer to the Transferee of the portion of such
Commitment specified in the Schedule hereto by counter-signing and delivering the Transfer
Certificate to the Agent at its address for the service of Communications specified in the
Facility Agreement.

	3	 	The Transferee requests the Agent to accept this Transfer Certificate as being delivered to
the Agent pursuant to and for the purposes of Clause 12.4 of the Facility Agreement so as to
take effect in accordance with the terms thereof on the Transfer Date or on such later date as
may be determined in accordance with the terms thereof.

	4	 	The Transferee confirms that it has received a copy of the Facility Agreement together with
such other information as it has required in connection with this transaction and that it has
not relied and will not in the future rely on the Lender or any other party to the Facility
Agreement to check or enquire on its behalf into the legality, validity, effectiveness,
adequacy, accuracy or completeness of any such information and further
agrees that it has not relied and will not rely on the Lender or any other party to the
Facility Agreement to access or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the Borrowers or any other party
to the Facility Agreement.

 

90

 

	5	 	Execution of this Transfer Certificate by the Transferee constitutes its representation to
the Transferor and all other parties to the Facility Agreement that it has power to become a
party to the Facility Agreement as a Lender on the terms herein and therein set out and has
taken all steps to authorise execution and delivery of this Transfer Certificate.

	6	 	The Transferee undertakes with the Lender and each of the other parties to the Facility
Agreement that it will perform in accordance with their terms all those obligations which by
the terms of the Facility Agreement will be assumed by it after delivery of this Transfer
Certificate to the Agent and satisfaction of the conditions (if any) subject to which the
Transfer Certificate is expressed to take effect.

	7	 	The Lender makes no representation or warranty and assumes no responsibility with respect to
the legality, validity, effectiveness, adequacy or enforceability of the Facility Agreement or
any document relating thereto and assumes no responsibility for the financial condition of the
Borrowers or for the performance and observance by the Borrowers of any of their obligations
under the Facility Agreement or any document relating thereto and any and all such conditions
and warranties, whether express or implied by law or otherwise, are hereby excluded.

	8	 	The Lender gives notice that nothing in this transfer certificate or in the Facility
Agreement (or any document relating thereto) shall oblige the Lender to (i) accept a re-transfer from the Transferee of the whole or any part of its rights, benefits and/or
obligations under the Facility Agreement transferred pursuant hereto or (ii) support any
losses directly or indirectly sustained or incurred by the Transferee for any reason
whatsoever including, without limitation, the non-performance by the Borrowers or any other
party to the Facility Agreement (or any document relating thereto) of its obligations under
any such document. The Transferee acknowledges the absence of any such obligation as is
referred to in (i) or (ii) above.

	9	 	This Transfer Certificate and the rights and obligations of the parties hereunder shall be
governed by and interpreted in accordance with English law.

 

91

 

THE SCHEDULE

	 	 	 
	1       Lender:
	 	 
	 
	 	 
	2       Transferee:
	 	 
	 
	 	 
	3       Transfer Date:
	 	 
	 
	 	 
	4       Commitment:

	 	       Portion Transferred
	 
	 	 
	[Transferor Bank]

	 	[Transferee Bank]
	 
	 	 
	By:

	 	By:
	 
	 	 
	Date:

	 	Date:
	 
	 	 
	Calyon
	 	 

As agent for and on behalf of itself,

the Borrowers and the other Finance Parties in the presence of:-

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 

Date: [                                                        ]

 

92

 

SCHEDULE 5

Part I: Form of Drawdown Notice for the Buyer Credit

	 	 	 
	To:

	 	Calyon
	 
	 	 
	From:

	 	Great East Hull No 1717 L.L.C.
	 

	 	Great East Hull No 1718 L.L.C.
	 

	 	H.S.H.I. Hull No S363 L.L.C.
	 

	 	H.S.H.I. Hull No S364 L.L.C.

[Date]

Dear Sirs,

Drawdown Notice

We refer to the Loan Agreement dated            2006 made between, amongst others, ourselves and
yourselves (the “Agreement”).

Words and phrases defined in the Agreement have the same meaning when used in this Drawdown
Notice.

Pursuant to Clause 2.2 of the Agreement, we irrevocably request that you in respect of the
Buyer Credit Vessel Tranche in respect of Vessel [A, B, C or D] insert description of the
instalment and / or details of the KEIC Insurance Premium being financed] advance a Drawing in the
sum of [          ] to us on            200_, which is a Business Day, by paying the amount of the
advance to [insert bank details of where the Drawing should be paid depending on the purpose
stated above].

We warrant that the representations and warranties contained in Clause 4 (other than those in
Clauses 4.2, 4.6 and 4.21) of the Agreement are true and correct at the date of this Drawdown
Notice and will be true and correct on            200_, that no Event of Default or Potential Event of
Default has occurred and is continuing, and that no Event of Default or Potential Event of Default
will result from the advance of the sum requested in this Drawdown Notice.

 

93

 

We select the period of [          ] months as the Interest Period in respect of the said
Drawing.

Yours faithfully

 

For and on behalf of

Great East Hull No 1717 L.L.C.

Great East Hull No 1718 L.L.C.

H.S.H.I. Hull No S363 L.L.C.

H.S.H.I. Hull No S364 L.L.C.

 

94

 

Part II: Form of Drawdown Notice for the Junior Loan

	 	 	 
	To:

	 	Calyon
	 
	 	 
	From:

	 	Great East Hull No 1717 L.L.C.
	 

	 	Great East Hull No 1718 L.L.C.
	 

	 	H.S.H.I. Hull No S363 L.L.C. 
	 

	 	H.S.H.I. Hull No S364 L.L.C.

[Date]

Dear Sirs,

Drawdown Notice

We refer to the Loan Agreement dated            2006 made between, amongst others, ourselves and
yourselves (the “Agreement”).

Words and phrases defined in the Agreement have the same meaning when used in this Drawdown
Notice.

Pursuant to Clause 2.2 of the Agreement, we irrevocably request that you in respect of the
Junior Loan Vessel Tranche in respect of Vessel [A, B, C or D] advance a Drawing in the sum of [          ] to us on [          ], which is a Business Day, by paying the amount of the advance to
[insert bank details of where the Drawing should be paid depending on the purpose stated above].

We warrant that the representations and warranties contained in Clause 4 (other than those in
Clauses 4.2, 4.6 and 4.21) of the Agreement are true and correct at the date of this Drawdown
Notice and will be true and correct on [          ], that no Event of Default or Potential Event
of Default has occurred and is continuing, and that no Event of Default or Potential Event of
Default will result from the advance of the sum requested in this Drawdown Notice.

 

95

 

We select the period of [          ] months as the Interest Period in respect of the said
Drawing.

Yours faithfully

 

For and on behalf of

Great East Hull No 1717 L.L.C.

Great East Hull No 1718 L.L.C.

H.S.H.I. Hull No S363 L.L.C.

H.S.H.I. Hull No S364 L.L.C.

 

96

 

SCHEDULE 6

Calculation of the Mandatory Cost

	1	 	The Mandatory Cost is an addition to the interest rate to compensate the 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 Facility 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
Facility Office) of complying with the minimum reserve requirements of the European Central
Bank in respect of loans made from that Facility Office.

	4	 	The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom
will be calculated by the Agent as follows:

	 	 	 	 	 	 
	 	E x 0.01
	 	 	 	 
	 	300

	 	per
cent. per annum.
	 	 

Where E is the rate of charge payable by a Lender to the Financial Services Authority under
the Fees Rules in respect of the relevant financial year of the Financial Services Authority
(calculated for this purpose by the Agent as being the average of the Fee Tariffs applicable
to that Lender for that financial year).

	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;

 

97

 

	 	(b)	 	“Facility Office” means the office notified by a Lender to the Agent in writing
on or before the date it becomes a Lender as the office through which it will
perform its obligations under the Agreement;

	 	(c)	 	“Fee 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;

	 	(d)	 	“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 Fee Rules but taking into account any applicable discount
rate); and

	 	(e)	 	“Participating Member State” means any member state of the European
Communities that adopts or has adopted the euro as its lawful currency in accordance
with legislation of the European Union relating to European Monetary Union;

	 	(f)	 	“Parties” means any party to the Agreement, including its successors in title
permitted assigns and permitted transferees; and

	 	(g)	 	“Tariff Base” has the meaning given to it in, and will be calculated in
accordance with, the Fees Rules.

	6	 	If requested by the Agent, each Lender shall, as soon as practicable after publication by the
Financial Services Authority, supply to the Agent, the rate of charge payable by that Lender
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 Lender
as being the average of the Fee Tariffs applicable to that Lender for that financial year).

	7	 	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 Facility Office; and

	 
	 	(b)	 	any other information that the Agent may reasonably require for such purpose.

 

98

 

Each Lender shall promptly notify the Agent of any change to the information provided by it
pursuant to this paragraph.

	8	 	The percentages of each Lender for the purpose of E above shall be determined by the Agent
based upon the information supplied to it pursuant to paragraphs 6 and 7 above and on the
assumption that, unless the 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 Facility Office in the same
jurisdiction as in its Facility Office.

	9	 	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 pursuant to paragraphs 3, 6 and 7 above is
true and correct in all respects.

	10	 	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 pursuant to paragraphs 3, 6 and 7 above.

	11	 	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.

	12	 	The Agent may from time to time, after consultation with the Borrowers and the Lenders
determine and notify to all Parties 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.

 

99

 

SCHEDULE 7

Form of Compliance Certificate

	 	 	 
	To:

	 	Calyon (the “Agent”)
	 
	 	 
	From:

	 	Teekay Shipping Corporation (the “Guarantor”)

Date: [•]

Dear Sirs,

We refer to an agreement (the “Agreement”) dated            2006 and made between (1) the companies listed at
Schedule 2 of the Agreement as borrowers (2) the banks and financial institutions listed in
Schedule 1 of the Agreement as banks, (3) yourselves as Agent (4) yourselves as Security Trustee
(5) yourselves as Swap Provider and (6) yourselves as KEIC Agent (as from time to time amended,
varied, novated or supplemented).

We also refer to the guarantee (the “Guarantee”) dated            2006 made between ourselves as Guarantor and
yourselves as Agent.

Terms defined or construed in the Agreement have the same meanings and constructions in this
Certificate.

We attach the relevant calculation details applicable on the last day of our financial
[year][quarter] ending [•] (the “Relevant Period”) which confirm that:-

	1	 	Free Liquidity (excluding
that portion attributable to TGP, OPCO and, once TKO is
established, TKO (excluding OPCO to the extent already consolidated into TKO)) [was at all
times equal to or greater than/fell below] $50,000,000. Therefore the condition contained in
clause [8.1] of the Guarantee [has/has not] been complied with in respect of the Relevant
Period.

 

100

 

	2	 	The aggregate of the Guarantor’s Free Liquidity and undrawn committed revolving credit lines
available to be drawn by the Guarantor and its Subsidiaries (excluding that portion
attributable to TGP, OPCO and, once TKO is established, TKO (excluding OPCO to the
extent already consolidated into TKO) and excluding undrawn committed revolving credit
lines with less than six (6) months to maturity) [was at all times equal to or greater
than/fell below] 5% of Total Debt. Therefore the condition contained in clause [8.2] of the
Guarantee [has/has not] been complied with.

	 	 	 	 	 
	Signed:
	 	 	 	 
	 

	 	 

Duly authorised representative of
	 	 
	 

	 	TEEKAY SHIPPING CORPORATION	 	 

 

101

 

SCHEDULE 8

Drawings under the Junior Loan

	 	 	 	 	 	 	 	 	 
	Months from	 	Amounts available for drawdowns	 	 	Amounts available for drawdowns	 
	Delivery	 	for each of Vessel A and Vessel B	 	 	for each of Vessel C and Vessel D	 
	6
	 	$	1,371,536	 	 	$	1,381,856	 
	12
	 	$	1,335,178	 	 	$	1,344,801	 
	18
	 	$	1,297,631	 	 	$	1,306,534	 
	24
	 	$	1,258,855	 	 	$	1,267,014	 
	30
	 	$	1,218,810	 	 	$	1,226,201	 
	36
	 	$	1,177,454	 	 	$	1,184,053	 
	42
	 	$	1,134,745	 	 	$	1,140,525	 
	48
	 	$	1,090,639	 	 	$	1,095,573	 
	54
	 	$	1,045,089	 	 	$	1,049,149	 
	60
	 	$	998,048	 	 	$	1,001,207	 
	66
	 	$	949,468	 	 	$	951,695	 
	72
	 	$	899,299	 	 	$	900,563	 
	78
	 	$	847,487	 	 	$	847,758	 
	84
	 	$	793,980	 	 	$	793,225	 
	90
	 	$	738,722	 	 	$	736,908	 
	96
	 	$	681,656	 	 	$	678,747	 
	102
	 	$	622,722	 	 	$	618,683	 
	108
	 	$	561,859	 	 	$	556,654	 
	114
	 	$	499,005	 	 	$	492,594	 
	120
	 	$	434,094	 	 	$	426,438	 
	126
	 	$	367,059	 	 	$	358,118	 
	132
	 	$	297,830	 	 	$	287,561	 
	138
	 	$	226,335	 	 	$	214,696	 
	144
	 	$	152,499	 	 	$	139,447	 

 

102

 

IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year
first before written.

	 	 	 	 	 	 	 
	Kavita Shah
	 	 	 	 	 	 
	SIGNED by Attorney-in-Fact

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Kavita Shah
	of GREAT EAST HULL NO 1717 L.L.C.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	Kavita Shah
	 	 	 	 	 	 
	SIGNED by Attorney-in-Fact

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Kavita Shah
	of GREAT EAST HULL NO 1718 L.L.C.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	Kavita Shah
	 	 	 	 	 	 
	SIGNED by Attorney-in-Fact

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Kavita Shah
	of H.S.H.I. HULL NO S363 L.L.C.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	Kavita Shah
	 	 	 	 	 	 
	SIGNED by Attorney-in-Fact

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Kavita Shah
	of H.S.H.I. HULL NO S364 L.L.C.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Oliver Hermanns & Jerome Duval

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Oliver Hermanns & Jerome Duval
	of CALYON (as a Senior Lender)

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Oliver Hermanns & Jerome Duval

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Oliver Hermanns & Jerome Duval
	of CALYON (as a Junior Lender)

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Oliver Hermanns & Jerome Duval

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Oliver Hermanns & Jerome Duval
	of CALYON (as the Agent)

	 	 	)	 	 	 

 

103

 

	 	 	 	 	 	 	 
	SIGNED by Oliver Hermanns & Jerome Duval

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Oliver Hermanns & Jerome Duval
	of CALYON (as the Security Trustee)

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Oliver Hermanns & Jerome Duval

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Oliver Hermanns & Jerome Duval
	of CALYON (as Swap Provider)

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Oliver Hermanns & Jerome Duval

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Oliver Hermanns & Jerome Duval
	of CALYON (as KEIC Agent)

	 	 	)	 	 	 

 

104exv10w1

Exhibit 10.1

May 20, 2010

Mr. Ashit Jain

Global Industries Asia Pacific Pte. Ltd.

41 Science Park Road

#03-24/28, the Gemini

Singapore Science Park 11

Singapore 117610

			
	     Re:	 	Promotion and Relocation to Houston

Dear AJ:

     This Letter of Appointment sets out the terms and conditions on which you are being
transferred from Singapore to Houston, Texas.

	1.	 	Position
	 
	 	 	Title: Chief Operating Officer
	 
	 	 	Salary: US$325,000 per year
	 
	 	 	Effective Date: June 16, 2010
	 
	2.	 	Annual Incentive

     You will continue to be eligible for participation in the Company’s Annual Stock Incentive
Plan for 2010 (Bonus Plan). The target participation level is 50% of your revised annual salary.

	3.	 	Benefits

     The Company offers a variety of employee benefits designed to protect you and your dependants
from financial loss due to sickness, disability or death. A summary of executive level benefits is
attached. Our most current informational brochure on general benefits is attached.

	4.	 	Equity Awards

     As an executive with the Company, you are eligible for awards of stock-based compensation.
Generally, such awards are made in February following approval by the Board of
Directors. While the number of shares granted and the components of our equity award program
may vary, our current annual program consists of performance share units. As you commence

Initials                     

11490
Westheimer • Suite 400 • Houston, Texas 77077 • (281) 529-7979 • Fax # (281) 529-7980

 

 

			
	 	 	 
	Mr. Ashit Jain

May 20, 2010

Page 2
	 	

your new
position with the Company, an additional target award of 12,000 Performance Share Units under the
2010-2011 cycle has been approved by the Board. These shares may be earned based upon achievement
of the EPS goals established by the Committee for the cycle. Assuming that the Board follows prior
practice, you can anticipate another equity award in February 2011.

	5.	 	Foreign Resident Allowance 
	 
	 	 	This allowance will be discontinued on June 15, 2010.
	 
	6.	 	Foreign Service Premium
	 
	 	 	This allowance will be discontinued on June 15, 2010.
	 
	7.	 	Housing

     While assigned in Singapore, you and your family resided in Company-provided housing that will
remain under lease following your relocation. Please arrange an inspection of the home after you
have removed your personal possessions to document the condition of the residence so that we can
confirm if any repairs are required for which you are responsible. We will then arrange for
cleaning of the house before relocation of the next resident.

	8.	 	Federal Income Tax and Social Security (FICA)

     As a consequence of your relocation to the United States effective June 16, 2010, your
earnings will once again be subject to Federal Income Tax, State Tax and the Federal Income
Contributions Act (FICA) at applicable rates.

	9.	 	Tax Preparation Assistance

     As you will be departing the foreign area on a permanent basis in 2010, your tax return will
be prepared by the Company’s tax preparer and the respective tax reimbursement due (if any) will be
computed and paid to you during the 2010 tax return filing season.

10. Paid Time Off (PTO)

     You will be eligible for twenty-five (25) days of Paid Time Off (PTO) per year. PTO covers
all excused absences from work such as vacation and or absences due to illness and in conjunction
with short-term disability leave and disability salary continuation plan. PTO does not apply to
holidays, jury duty, military leave or funeral leave. Please advise if you have any unused
vacation days that will be rolled over and be used in the United States.

11. Miscellaneous Relocation Allowance

     The Company recognizes that there are many incidental expenses that will occur when you are
relocating and your family’s normal living pattern is temporarily disrupted. To help you cover
most of these contingency costs, you will be paid a Miscellaneous Relocation Allowance

Initials                     

 

 

			
	 	 	 
	Mr. Ashit Jain

May 20, 2010

Page 3
	 	

equal to one (1) month of your base salary effective on the date your family relocates to the
Houston area.

     To receive payment of the Miscellaneous Relocation Allowance, the enclosed sample memorandum
should be completed, signed, approved and forwarded to the local Human Resources Manager. Requests
for payment of these amounts in advance will not be considered.

	12.	 	Excess Baggage/Air Freight

     The Company will provide reimbursement to you for the cost of one (1) checked excess bag over
the two (2) checked bags permitted by the airline for you and you eligible dependents on your
transfer to Houston. Also, you will be allowed to airfreight up to 500 pounds (includes packing,
but excludes crating materials) of personal belongings (such as additional clothing, some kitchen
supplies, etc. until your household effects shipment arrives) at company expense from your present
residence in Sharjah to Houston. The value of this benefit may not be substituted for cash or
other benefits in-kind.

	13.	 	Air Travel Accommodations

     The Company will furnish one-way Business Class air transportation for you and eligible
dependents residing with you on a permanent basis from your assigned foreign work location to
Houston, Texas.

	14.	 	Temporary Accommodations

     Upon arrival in Houston and while seeking permanent housing, your actual and reasonable
temporary living expenses for you and your family will be reimbursed via expense report for a
period of up to thirty (30) days. The temporary living expenses incurred for hotel, meals, laundry
and a rental car will be reimbursed by submission of expense reports with appropriate receipts.

	15.	 	Purchase of Primary Residence in the Houston Area

     The Company will pay reasonable closing costs (see attached list; does not include discount
points) as shown on the Summary of Entitlements if you purchase your primary home in Houston or the
surrounding area. Per IRS rules, all applicable taxes will be deducted from this allowance. This
benefit will remain valid for up to a maximum of twelve (12) months from the date you relocate to
Houston or the surrounding area. The value of this benefit may not be substituted for other
benefits in-kind.

     For reimbursement of moving costs, realtor fees/commissions and approved closing costs,
expenses should be submitted via the attached memorandum along with a Settlement Statement (i.e.,
HUD) (see attached). These amounts may be claimed after (not before) your transfer to Houston.
Requests for payment of these amounts in advance will not be considered.

Initials                     

 

 

			
	Mr. Ashit Jain

May 20, 2010

Page 4
	 	

	16.	 	Household Goods Storage

     The storage of your household goods in the Houston area has been Company paid in conjunction
with your recently completed expatriate assignment. The Company will continue to direct pay that
storage requirement through September 30, 2010, or sooner, if these services are no longer
required.

	17.	 	Voluntary Separation

     In the event you voluntarily separate from the Company, you agree to reimburse the Company for
any and all relocation expenses paid to you such as: Relocation (Moving) Expenses, Miscellaneous
Relocation Allowance, etc. per the following:

     Voluntarily separate within one (1) year from date of transfer: 100%

     Voluntarily separate after one (1) year from date of transfer: 0%

	18.	 	Administrative and Miscellaneous Issues 

     American Express Platinum Card

     You are eligible to receive reimbursement for the annual fee of $300 for an American Express
Platinum Card. Benefits of the Platinum Card include the following:

	 	•	 	Complimentary hotel upgrades
	 
	 	•	 	Complimentary access to airport clubs
	 
	 	•	 	Free memberships in premium rental car programs
	 
	 	•	 	Free enrollment in American Express Reward Program
	 
	 	•	 	Free companion tickets on international flights in first or business class
	 
	 	•	 	Travel emergency assistance
	 
	 	•	 	Baggage insurance plan
	 
	 	•	 	$1,000,000 travel insurance

     If you currently are an American Express cardholder, you may apply by calling American Express
Platinum Card Services at (800) 525-3355. If you do not have an American Express card, you will be
required to call AMEX’s new accounts department at (800) 354-4760. They will fax to you a one-page
application form for you to complete and fax back to their office (fax no. 801-945-7900).The annual
fee of $300 for the Platinum Card may be claimed via expense report. All charges incurred on the
Platinum Card will be for your account with business expenses claimed via expense report as usual,
per policy.

     Change-In-Control

     As a senior executive, you will be provided a Change-In-Control Agreement in a standard format
as approved by the Board of Directors.

Initials                     

 

 

			
	 	 	 
	Mr. Ashit Jain

May 20, 2010

Page 5
	 	

     Stock Ownership Guideline

     The Compensation Committee of the Board of Directors has implemented share ownership
guidelines for all Executives. These new ownership guidelines require that all Executives hold at
least one (1) times their annual base salary in market value (i.e., number of shares times stock
price) of Global Industries stock within five (5) years. The Board believes this share ownership
guideline will visibly link executive fortunes with those of shareholders of the long term. In
order to assist you in reaching the targeted level of ownership, the Board has included the
following in their definition of shares owned: shares held outright and unvested Restricted stock.
Please contact me for further information regarding your specific guideline.

	19.	 	Decision/Acceptance

     The Company would appreciate your carefully examining the terms and conditions and advising
your decision to transfer and relocate to the Houston area, and acceptance of the various
relocation entitlements and restrictions as indicated in this document. The various relocation
entitlements are part of your overall compensation, which is personal and private; therefore, it
should not be discussed with your co-workers. We trust you will keep this information
confidential.

     Should you have any questions, please do not hesitate to contact me at (281) 529-7930.

Sincerely,

Global Industries Offshore, L.L.C.

David R. Sheil

Senior Vice President, Human Resources

	 	 	 	 	 	 	 

	Accepted:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 

 

 

Executive Benefits Summary

     The following benefits will be provided to you as part of your overall compensation package.

     Medical

     If you and your family are enrolled in Global’s medical insurance plan, you will be reimbursed
100% for your deductible, office visit co-payments, and co-insurance payments under our current
medical plan through a supplemental medical plan. Prescription co-pays are also reimbursed.
Charges that are considered “above usual and customary” will not be reimbursed. Benefits paid
under this plan will not be considered taxable income.

     You are free to use any provider in or out of the Company approved network. However, we
encourage you to use network providers whenever possible to avoid incurring charges considered
“above usual and customary” for which you would not be reimbursed as well as creating a significant
cost to the Company. If you do choose to utilize the services of a non-PPO provider, please be
aware that you may be asked to pay in full at the time of service. While these amounts will be
refunded to you, if you utilize a PPO provider you should only be asked to pay the $15 co-pay at
the time services are rendered.

     Dental

     You will be reimbursed 100% of the $50 calendar year deductible, and 20% and/or 50% of
co-payments for dental service charges up to the plan annual maximum of $1,000. Charges that are
“above usual and customary” will not be considered for payment under either plan. Benefits paid
under this plan will not be considered taxable income. You are free to use any dental provider.
If your dental provider does not file claims for you, initial claims should be filed with the
Company’s Benefits Administrator.

     While the Company is paying the cost of the executive dental coverage, you will be required to
pay monthly dental insurance premiums for both yourself and dependents who are participating in
this benefit.

     Supplemental Life/AD&D

     In addition to the one (1) times base in life insurance you will receive from the Company, you
will be provided with an additional $100,000 of life insurance at no cost.

     Long Term Disability

     You will be provided with Long-Term Disability coverage at no cost. If it should become
necessary for you to utilize this coverage, any benefits paid to you would be considered taxable
income.

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