Document:

EX-4.3

 Exhibit 4.3 

SHARE PURCHASE AGREEMENT 

Between 
 Knutsen NYK
Offshore Tankers AS 
 (as Seller) 

And 
 KNOT Shuttle
Tankers AS 
 (as Buyer) 
  

					
			 		
			
			for the sale and purchase of the shares in		
			
			KNOT Shuttle Tankers 21 AS		
			
			 		

  
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 SHARE PURCHASE AGREEMENT 

This agreement (this “Agreement”) is entered into the 27th May 2015 between: 

 

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

 (the
“Seller”), and  
  

	(2)	KNOT Shuttle Tankers AS, company registration no. 998 942 829 

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

	1	RECITALS 

 WHEREAS: 
  

	a)	KNOT Shuttle Tankers 21 AS, company registration no. 911 782 189, is a private limited liability company that has as its purpose to engage in shipowning activities, is duly incorporated under Norwegian law and has its
registered place of business in Haugesund, Norway (the “Company”); 

  

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

  

	c)	The Company is the owner of the MT “Dan Sabia”, having IMO No. 9513438 (the “Vessel”); and 

  

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

 

	2	DEFINITIONS 

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

 

					
	a)		Accounting Principles		means the applicable Norwegian generally accepted accounting principles as defined by Norwegian law and regulations and accounting standards issued by the Norwegian Accounting Standards Board (Nw: Norsk
Regnskapsstiftelse/NRS), applied on a consistent basis;
			
	b)		Accounts		means, in respect of the Company, its audited annual accounts (årsregnskap), consisting of the profit and loss account, balance sheet, statement of cash flow and the notes thereto , for the financial year ended on the
Accounts Date attached as Schedule 2;

  
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	c)		Accounts Date		means 31 December 2014;
			
	d)		Agreement		shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	e)		Business		means the current business of the Company, being to own the Vessel, and charter the same under the Charter;
			
	f)		Business Day		means a day on which banks are open for general banking business in Norway;
			
	g)		Buyer		shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	h)		Buyer Indemnitees		shall have the meaning ascribed to such term in Clause 12.1;
			
	i)		Charter		means the Bareboat Charter Party, dated 6 March 2008 entered into between Lauritzen Tankers A/S as owner and Fronape International Company (“FIC”) or Petrobras Transporte S.A.—Transpetro as charterers, as novated
first from Lauritzen Tankers A/S to Lauritzen Shuttletankers Netherlands B.V. by way of a novation agreement dated 5 September 2011, then novated from FIC to Transpetro International B.V. by a novation agreement dated 7 February 2013, and as
subsequently novated further from Lauritzen Shuttletankers Netherlands B.V. to the Company (as owner) pursuant to a novation agreement dated 20 March 2014 ;
			
	j)		Charterer		means Petrobras Transporte S.A. – Transpetro or Transpetro International B.V. (whichever is acting as charterer under the Charter);
			
	k)		Closing		shall have the meaning ascribed to such term in Clause 5.1;
			
	l)		Closing Date		means the date when the Closing actually takes place according to Clause 5.1;
			
	m)		Companies Act		means the Norwegian Limited Liability Companies Act of 1997
			
	n)		Company		means KNOT Shuttle Tankers 21 AS;
			
	o)		Dan Sabia Facility		means the USD 172,500,000 Senior Secured Credit Facilities Agreement in respect of the Vessel and the vessel “Dan Cisne”, dated April 3, 2014, made between (i) the Company and KNOT Shuttle Tankers 20 AS as joint and
several

  
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					borrowers, (ii) the Seller as original guarantor, (iii) the banks and financial institutions listed in Schedule 1 thereto as lenders, (iv) Sumitomo Mitsui Banking Corporation Europe Limited and CommBank Europe Limited, as mandated
lead arrangers and bookrunners, (v) SMBC Nikko Capital Markets Ltd as hedging bank and (vi) Sumitomo Mitsui Banking Corporation Europe Limited, as structuring bank and agent;
			
	p)		Encumbrance		means any mortgage, charge, pledge, lien, option or other security interest or restriction of any kind;
			
	q)		Governmental Authority		means any domestic or foreign government, including federal, provincial, state, municipal, county or regional government or governmental or regulatory authority, domestic or foreign, and includes any department, commission, bureau,
board, administrative agency or regulatory body of any of the foregoing and any multinational or supranational organization;
			
	r)		Indemnified Party		shall have the meaning ascribed to such term in Clause 12.3;
			
	s)		Indemnifying Party		shall have the meaning ascribed to such term in Clause 12.3;
			
	t)		Losses		means any loss, liability, claim, damage, expense (including costs of investigation and defence and reasonable attorneys’ fees) or diminution of value, whether or not involving a third-party claim;
			
	u)		Material Adverse Effect		means a material adverse effect on the condition (financial, commercial, technical, legal or otherwise) of the Business, assets, results of operations or prospects of the Company;
			
	v)		Material Agreement		shall have the meaning ascribed to such term in Clause 8.11;
			
	w)		Party		shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	x)		Parties		shall have the meaning ascribed to such term in the preamble to this Agreement;
			
	y)		Partnership		means KNOT Offshore Partners LP, a Marshall Islands limited partnership;
			
	z)		Purchase Price		shall have the meaning ascribed to such term in Clause 4;
		
	aa)		Purchase Price Adjustments
			
					shall have the meaning ascribed to such term in Clause 5.4;
			
	bb)		Seller		shall have the meaning ascribed to such term in the preamble to this Agreement;

  
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	cc)		Seller Indemnitees		shall have the meaning ascribed to such term in Clause 12.2;
			
	dd)		Shares		shall have the meaning ascribed to such term in Clause 1;
			
	ee)		Signing Date		means the date of this Agreement;
			
	ff)		Swap Agreements		means (i) the ISDA Master Agreement dated 14 August 2014, and entered into between the Company and SMBC Nikko Capital Markets Ltd, and (ii) the ISDA Master Agreement dated 14 August 2014, and entered into between the Company and the
Commonwealth Bank of Australia, London, and the Schedules thereto and all Transactions and/or Confirmations (as each of the said expressions is defined in the Master Agreements) supplemental thereto relating to the loan for “Dan Sabia”
under the Dan Sabia Facility;
			
	gg)		Swap Balance		means the negative balance under the Swap Agreements as determined according to a mark-to-market determination as of the Closing Date, adjusted by USD 388,851 in favour of the Seller to cover the hedging margin compared to the rate
at which the Swap Agreements were entered into;
			
	hh)		Taxes		means all taxes (including value-added tax and similar taxes), however denominated, including interest, penalties and other additions to tax that may become payable or imposed by any applicable statute, rule or regulation or any
governmental agency, including all taxes, withholdings and other charges in respect of income, profits, gains, payroll, social security or other social benefit taxes, sales, use, excise, real or personal property, stamps, transfers and workers’
compensation, which the Company is required to pay, withhold or collect; and
			
	ii)		Third-Party Claim		shall have the meaning ascribed to such term in Clause 12.3; and
			
	jj)		Vessel		shall have the meaning ascribed to such term in Clause 1.

  

	3	SALE AND PURCHASE 

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

	4	PURCHASE PRICE 

 The Seller agrees to sell and transfer to the Buyer, and the Buyer agrees to
purchase from the Seller for USD 103,000,000, less USD 64,469,555 of outstanding debt obligations of the Company under the Dan Sabia Facility, (the “Purchase Price”), plus the Purchase Price Adjustments, all in
accordance with and subject to the terms and conditions set forth in this Agreement, the Shares. 

  
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 The Purchase Price is to be settled by way of a cash settlement. 

 

	5	CLOSING 

  

	5.1	Time and place 

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

 

	5.2	The Seller’s Closing obligations 

 At the Closing, the Seller shall: 

 

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

  

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

  

	5.3	The Buyer’s Closing obligations 

 At the Closing, the Buyer shall 

 

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

  

	b)	on the Closing Date procure that the Company prepays USD 7,500,000 of the Facility A Tranche under the Dan Sabia Facility, in accordance with the terms of the Dan Sabia Facility; and 

 

	c)	procure that the cash portion of the Purchase Price is paid to the nominated bank account of the Seller. 

  

	5.4	Post-Closing Adjustment 

  

	a)	Within 15 days following the Closing Date, the Buyer and the Seller shall agree on the amount of the post-Closing adjustments to the Purchase Price based on the (i) Swap Balance and (ii) the Company’s
working capital as of the Closing Date, including compensation by the Seller to the Buyer for the net intercompany balance with accumulated interest between a) the Company and the Seller, and b) the Company and KNOT Management AS, at the Closing
Date (the “Purchase Price Adjustments”). 

  

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

  
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	6	CLOSING CONDITIONS 

  

	6.1	Conditions to the Buyer’s Closing obligations 

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

 

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

  

	b)	the Buyer shall have obtained the funds necessary to consummate the purchase of the Shares and to pay all related fees and expenses; 

 

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

  

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

 

	6.2	Conditions to the Seller’s Closing obligations 

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

 

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

  

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

  

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

  

	6.3	Conditions of the Parties. 

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

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

 

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

 

	7	REPRESENTATIONS AND WARRANTIES OF THE BUYER 

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

	7.1	Corporate existence and power 

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

 

	7.2	Corporate authorisation and non-contravention 

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

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

	8	REPRESENTATIONS AND WARRANTIES OF THE SELLER 

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

  
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	8.1	Corporate existence and power 

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

 

	8.2	Corporate authorisation and non-contravention 

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

Each of the Company and the Seller, as appropriate, is not required to obtain any authorisations, consents, approvals or exemptions by any Governmental
Authority in connection with the entering into or performance of its obligations under this Agreement. 
  

	8.3	Capitalisation and title 

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

	8.4	Records 

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

	8.5	Charter documents; validity of the Charter 

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

  
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	8.6	Accounts 

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

 

	8.7	No undisclosed liabilities 

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

	8.8	Loans and other financial facilities 

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

	a)	As of the Signing Date, the principal outstanding amount under the Dan Sabia Facility for which the Company will be responsible at the time of Closing (provided Closing takes place on or before 30 June 2015)
is USD 64,469,555; 

  

	b)	As of the Signing Date, the Company has an inter-company debt to the Seller in the amount of NOK 8,972,534.50, and the interest rate under such inter-company debt is 3.73% per annum; and 

 

	c)	As of the Signing Date, the Company has a non interest bearing inter-company receivable from KNOT Management AS in the amount of NOK 7,236,719. 

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

	8.9	Assets 

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

	8.10	Absence of certain changes or events 

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

 

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

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

 

	c)	the termination of any Material Agreement; 

  

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

 

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

  

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

  

	8.11	Agreements 

 Each Material Agreement is in full force and effect. No other Material Agreements will be
entered into by the Company prior the Closing Date without the prior consent of the Buyer (such consent not to be unreasonably withheld). The Company has fulfilled all material obligations required pursuant to the Material Agreements to have been
performed by it prior to the Signing Date and has not waived any material rights thereunder. 
 There has not occurred any material default on the part of
the Company under any of the Material Agreements, or to the knowledge of the Seller, on the part of any other party thereto, nor has any event occurred that with the giving of notice or the lapse of time, or both, would constitute any material
default on the part of the Company under any of the Material Agreements nor, to the knowledge of the Seller, has any event occurred that with the giving of notice or the lapse of time, or both, would constitute any material default on the part of
any other party to any of the Material Agreements. 
 The term “Material Agreement” means each agreement, contract or other
undertaking by or of the Company (a) that is of material importance to the Business or (b) the value of which, in respect of total turnover during one year, is not less than NOK 500,000, provided, however, that such term includes the
Charter, the Dan Sabia Facility and the Swap Agreements. 
  

	8.12	Insurance 

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

	8.13	Environmental matters 

 The Company is not and has not been in breach of any applicable laws (whether
civil, criminal or administrative), statutes, regulations, directives, codes, judgments, orders or any other measures imposed by any governmental, statutory or regulatory body with regard to the pollution or the protection of the environment or to
the protection of human health or human safety, or any other living organisms supported by the environment. 

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

	8.14	Compliance with laws 

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

	8.15	Litigation 

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

	8.16	Taxes 

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

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

  
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 There are no Tax audits, Tax disputes or Tax litigation pending or threatened against or involving the Company.
There is no basis for assessment of any deficiency in any Taxes against the Company that has not been provided for in the Accounts or that has not been paid. 

The Company is not and has not been involved in any transaction that could be considered as Tax-evasive. All losses for Tax purposes incurred by of the
Company are trading losses and are available to be carried forward and set off against income in succeeding periods without limitation and have been accepted by the relevant Tax authorities. 

The Company is not and has not been subject to any Tax outside its respective country of fiscal residence. 

 

	8.17	Relationship with the Seller 

 Except as disclosed to the Buyer, there are no written or oral agreements
or arrangements between the Company and the Seller, and no liabilities or obligations (contingent or otherwise) owed by the Company to the Seller. 
 No
services provided by the Seller to the Company are necessary in the ordinary course of business. 
 No payments of any kind, including, but not limited to
management charges, have been made by the Company to the Seller, save for payments under agreements or arrangements made on an arm’s-length basis in accordance with applicable law and regulations. 

 

	8.18	Information 

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

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

	9	REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THE VESSEL 

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

	9.1	Flag and title 

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

  
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	9.2	Classification 

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

	9.3	Maintenance 

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

	9.4	Liens 

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

	9.5	Safety 

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

	9.6	No blacklisting or boycotts 

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

	9.7	No options 

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

 

	9.8	Insurance 

 The insurance policies relating to the Vessel are as set forth on Schedule 1 hereto,
each of which is in full force and effect and, to the Seller’s knowledge, not subject to being voided or terminated for any reason. 

  
 14 

	10	COVENANTS PRIOR TO THE CLOSING 

  

	10.1	Covenants of the Seller Prior to the Closing 

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

 

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

  

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

  

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

  

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

  

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

 

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

 

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

 

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

  
 15 

	10.2	Covenants of the Buyer Prior to the Closing 

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

 

	11	TERMINATION 

  

	11.1	Termination 

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

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

  

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

  

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

  

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

 

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

  

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

  

	11.2	Rights on termination 

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

  
 16 

	12	INDEMNIFICATION 

  

	12.1	Indemnity by the Seller 

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

 

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

  

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

  

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

  

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

 

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

 

	12.2	Indemnity by the Buyer 

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

	12.3	Indemnification procedures with respect to third-party claims 

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

  
 17 

 
payment of money by the Indemnifying Party. No Third-Party Claim that is being defended in good faith by the Indemnifying Party shall be settled by the Indemnified Party without the written
consent of the Indemnifying Party. The Indemnifying Party shall have no obligation to indemnify the Indemnified Party for any losses resulting from the settlement of Third-Party Claims in violation of the provisions of this Clause 12.3. 

 

	13	COSTS 

  

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

 

	b)	The fees and expenses related to the fairness opinion of AMA Securities Inc. dated 20th May 2015 will be divided equally between the Buyer and the Seller. 

 

	14	NOTICES 

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

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

 

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

  

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

All such notices and communications shall be addressed as set forth below or to such other addresses as may be given by written notice in accordance with this
Clause 14. 
 If to the Seller: 
 Knutsen NYK Offshore Tankers
AS 
 Attention: Chairman of the Board 
 Smedasundet 40,
Postboks 2017, 5504 Haugesund, Norway 
 Fax no.: +47 52 70 40 40 

If to the Buyer: 
 KNOT Shuttle Tankers AS 

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

  
 18 

	15	ASSIGNMENT 

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

	16	MISCELLANEOUS 

  

	16.1	Further Assurances 

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

	16.2	Integration 

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

	16.3	No Broker’s Fees 

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

	17	GOVERNING LAW AND ARBITRATION 

 This Agreement shall be governed by and construed in accordance with
Norwegian law. 
 The Parties shall seek to solve through negotiations any dispute, controversy or claim arising out of or relating to this Agreement, or
the breach, termination or invalidity hereof. If the Parties fail to solve such dispute, controversy or claim by a written agreement within 60 days after one of the Parties has requested such negotiations by notice to the other Party, such dispute,
controversy or claim shall be finally settled by arbitration in Haugesund in the English language in accordance with the Norwegian Arbitration Act. The arbitration tribunal shall consist of three arbitrators, of which the

  
 19 

 
Buyer shall appoint one arbitrator and the Seller shall appoint one arbitrator. The arbitrators so appointed shall appoint the third arbitrator, who shall be the chairman of the arbitration
tribunal. In the event of failure by a Party to appoint its arbitrator within 30 days after the request for arbitration first is given, or the failure by the first two arbitrators to appoint the third arbitrator within 30 days after appointment of
the last of the first two arbitrators to be appointed, such arbitrator or arbitrators shall be appointed by the district judge (No: “Sorenskriver”) of Haugesund District Court. Any Party may seek judgement upon any award in any
court having jurisdiction, or an application may be made to such court for the judicial acceptance of the award and for an order of enforcement. 

Notwithstanding the above, either Party may bring an action in any court of competent jurisdiction (a) for provisional relief pending the outcome of
arbitration, including, without limitation, provisional injunctive relief or pre-judgement attachment of assets, or (b) to compel arbitration or enforce any arbitral award. For purposes of any proceeding authorised by this Clause 16, each Party
hereby consents to the non-exclusive jurisdiction of Haugesund, Norway. 
 * * * 

  
 20 

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

 

									
	 Knutsen NYK Offshore Tankers AS
				 KNOT Shuttle Tankers AS

					
	By:		/s/Bjørn Sande Urtegaard				By:		/s/ Øystein Emberland
	Name: Bjørn Sande Urtegaard				Name: Øystein Emberland
	Title: Attorney-in-fact				Title: Attorney-in-fact
					
	By:		 						
	Name:		 						
	Title:		 						

  
 21 

 Schedule 1 

INSURANCES 
 Insurance Policies (all
quoted values are USD) 
  

							
	Hull & Machinery						
	Hull		Insured Value: $75,335,000		 	Policy Renewal: 28.12.2015	  
	Hull Interest		Insured Value: $19,825,000		 	Policy Renewal: 28.12.2015	  
	Freight Interest		Insured Value: $3,965,000		 	Policy Renewal: 28.12.2015	  
			
	P&I Insurance						
	Gross Tonnage: 36,303				 	Policy Renewal: 20.02.2016	  
			
	War Risk						
			Insured Value: $99.125.000		 	Policy Renewal: 28.12.2015	  
			
	Hull & Machinery						
	     MAPFRE SEGUROS GERAIS S/A
		 	          100 %	  
			 	Total           100 %	  
		
	 Hull Interest/Freight Interest
				
	 100%
		MAPFRE SEGUROS GERAIS S/A				
		
	 War Risk
				
	 100%
		MAPFRE SEGUROS GERAIS S/A				
		
	 P&I
				
	 100%
		UK P&I CLUB				

  
 22 

 Schedule 2 

ACCOUNTS 
 [Separate
attachment] 

  
 23 

 KNOT Shuttle Tankers 21 AS 

Annual Report 2014 
  

 
 

 

 KNOT SHUTTLE TANKERS 21 AS 

REPORT OF THE BOARD OF DIRECTORS 2014 

KNOT Shuttle Tankers 21 AS owns one 57,607 DWT MR size DP2 shuttle tanker, M/T Dan Sabia, delivered from COSCO Nantong Shipyard in China in 2012. 

The company operates out of Haugesund, Norway and has no employees and working environment. The daily operations of the company are managed by KNOT Management
AS in Haugesund in accordance with separate agreement and the daily operations of the vessel are managed by KNOT Management Denmark A/S in Copenhagen, Denmark in accordance with separate agreement. 

The company’s activity 
 M/T Dan Sabia with bare-boat
charter was purchased from the J. Lauritzen group in Copenhagen, Denmark in August 2014. The vessel has been chartered out to Fronape/TransPetro in Brazil on a 12-year bareboat CP agreement from delivery at yard. 

Result for the year 
 The operating result for KNOT
Shuttle Tankers 21 AS was NOK 6 234 501 in 2014 compared to minus NOK 12 099 in 2013. After net financial loss of NOK 33 034 698 in 2014, against a profit of NOK 1 029 in 2013, the results of the year were minus NOK 26 800 197 in 2014 compared to
minus NOK 6 384 in 2013. The company have entered into the tonnage tax regime from 2014 as the company starts up the business with M/T Dan Sabia. There were not calculated any gain from entering into the tax regime. 

The Board of Directors suggests the result for the year covered by the additional paid-in capital and the owner, Knutsen NYK Offshore Tankers AS, contribute a
group contribution of NOK 158 368 952 at 31.12.14 to increase the capital of the company. 
 Total cash flow from operating activities in the company was
NOK 9 165 518, minus NOK 
 11 070 in 2013. The liquidity position was NOK 19 686 674 as per 31.12.2014 compared to NOK 118 764 as per 31.12.2013. The
company’s ability to finance its investments is good. The company have financed the vessel with a senior and junior long-term mortgage loan and have in December repaid the junior loan and reduced the senior loan after lending the amount from
Knutsen NYK Offshore Tankers AS. The outstanding mortgage loan is at the end of 2014 USD 66 469 555. 
 The company’s short-term debt per 31.12.2014
was 2.0 % of total debt (0 % in 2013). 
 The company is exposed to fluctuations in foreign exchange rates, especially USD, as the company’s
income is denominated in USD. Since the majority of the company’s operating expenses and financial costs also are denominated in USD, this limits the company’s foreign exchange risk. The company has not entered into any forward contracts
or other agreements in order to reduce the company’s foreign exchange risk, and thereby operating related market risk. 

  
 25 

 The company is also exposed to changes in the interest rate level, as its Tong-term debt carrying floating
interest rate. 48% of the long-term debt is secured with long-term interest rate swaps at the end of the year. 
 Total capital was by the end of the year
NOK 712 385 873, NOK 135 500 at the end of 2013. The equity Share as of 31.12.2014 was 20% down from 89% the year before after starting up the business in August. 

The financial accounts are settled on the assumption of a going concern. The board confirms the assumption of a going concern. The Board of Directors confirms
that the Financial Statements give a true picture of the company’s assets and liabilities, financial position and results. 
 The environment safety
and quality control 
 The requirements for a safety operation of ships are increasing, and both the company and the manager KNOT Management AS are
concerned with an operational excellence. KNOT Offshore Partners Group’ s fleet consists of modem ships, which are designed and engineered for safe, environmentally sound and efficient operations. The ships are maintained and upgraded
continuously to meet the demands and expectations from a government and employers. The company and the manager put significant resources to the quality assurance and there are stritt requirements for safety systems and an operation of the ships.

 The company is not aware of any significant pollution to the external environment, and the Board of Directors considers the working conditions on-board
the ship as satisfactory. M/T Dan Sabia is certified in accordance with both ISM code and the ISPS code. 
 The company have no employees and thus no
working environment. The company aims to be workplace where there is no discrimination related to gender, ethnicity, religion or disability. The company aims to avoid gender discrimination regarding salary, promotion and recruiting. The members of
the Board of Directors are all men. 
 Future prospects 

M/T Dan Sabia is operated on a long-term charter with Fronape/TransPetro in Brazil. The charterer and trading area is well known for the manager and the Board
of Directors. The Board of Directors expect that 2015 will be a stable profitable year for the company. 
 Haugesund, February 27, 2015

  
  

					
	 /s/ Trygve Seglem
 Trygve Seglem

Chairman of the Board
				 /s/ Karl Gerhard Bråstein Dahl
 Karl
Gerhard Bråstein Dahl
 Member of the Board

			/s/ Fumitake Shishido		
			Fumitake Shishido		
			Member of the Board		

  
 26 

 KNOT Shuttle Tankers 21 AS 

Profit & Loss Account 
  

													
	 	  	Note	 	  	2014	 	  	2013	 
	 Operating Income
	  				  				  			
	 Freight income
	  	 	2	  	  	 	23 663 197	  	  	 	0	  
	 Commissions
	  				  	 	-7 638 653	  	  	 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total Operating Income
						 	16 024 545	  		 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 Operating Expenses
												
	 Administration expenses
		 	6	  		 	856 044	  		 	12 099	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total Operating Expenses
						 	856 044	  		 	12 099	  
		  				  	  
	  
	 	  	  
	  
	 
	 Ordinary depreciation
		 	3	  		 	8 934 000	  		 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 Operating Result
						 	6 234 501	  		 	-12 099	  
		  				  	  
	  
	 	  	  
	  
	 
	 Financial Income and Expenses
												
	 Financial income
		 	4	  		 	1 024	  		 	1 029	  
	 Foreign exchange profit/loss
						 	-17 482 771	  		 	0	  
	 Financial expenses
		 	4	  		 	-15 552 951	  		 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 Net Financial Items
						 	-33 034 698	  		 	1 029	  
		  				  	  
	  
	 	  	  
	  
	 
	 Operating result before tax
						 	-26 800 197	  		 	-11 070	  
		  				  	  
	  
	 	  	  
	  
	 
	 Taxes
		 	11	  		 	0	  		 	4 686	  
		  				  	  
	  
	 	  	  
	  
	 
	 Result for the year
						 	-26 800 197	  		 	-6 384	  
		  				  	  
	  
	 	  	  
	  
	 

  
 27 

 KNOT Shuttle Tankers 21 AS 

Balance Sheet as of 31. December 
  

													
	 	  	Note	 	  	2014	 	  	2013	 
	 Fixed Assets
	  				  				  			
	 Vessel
	  	 	3, 10	  	  	 	527 052 408	  	  	 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total Fixed Assets
						 	527 052 408	  		 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 Current Assets
												
	 Current receivables group
						 	165 646 790	  		 	16 736	  
	 Bank deposits
						 	19 686 674	  		 	118 764	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total Current Assets
						 	185 333 465	  		 	135 500	  
		  				  	  
	  
	 	  	  
	  
	 
	 ASSETS
						 	712 385 873	  		 	135 500	  
		  				  	  
	  
	 	  	  
	  
	 

  
 28 

 KNOT Shuttle Tankers 21 AS 

Balance Sheet as of 31. December 
  

													
	 	  	Note	 	  	2014	 	  	2013	 
	 Shareholders Equity and Liabilities
	  				  				  			
	 Equity
	  				  				  			
	 Share capital
	  	 	5	  	  	 	100 000	  	  	 	100 000	  
	 Share premium
	  				  	 	7 950	  	  	 	7 950	  
	 Additional paid-in capital
	  				  	 	140 070 304	  	  	 	12 050	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total paid in capital
						 	140 178 255	  		 	120 000	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total Equity
		 	5, 9	  		 	140 178 255	  		 	120 000	  
		  				  	  
	  
	 	  	  
	  
	 
	 Other long-term liabilities
												
	 Liabilities to financial institutions
		 	10	  		 	402 497 382	  		 	0	  
	 Long-term debt group
						 	158 368 952	  		 	15 500	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total Long Term Debt
						 	560 866 334	  		 	15 500	  
		  				  	  
	  
	 	  	  
	  
	 
	 Current Liabilities
												
	 Accounts payable
		 	7	  		 	315 251	  		 	0	  
	 Other current liabilities
						 	11 026 033	  		 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 Total Current Liabilities
						 	11 341 284	  		 	0	  
		  				  	  
	  
	 	  	  
	  
	 
	 SHAREHOLDERS’ EQUITY AND LIABILITIES
						 	712 385 873	  		 	135 500	  
		  				  	  
	  
	 	  	  
	  
	 

 Haugesund, February 27, 2015 
  

					
	/s/ Trygve Seglem				/s/ Karl Gerhard Bråstein Dahl
	Trygve Seglem				Karl Gerhard Bråstein Dahl
	Chairman of the Board				Member of the Board

 /s/ Fumitake Shishido 

Fumitake Shishido 
 Member of the
Board 

  
 29 

 KNOT SHUTTLE TANKERS 21 AS 

CASH FLOW STATEMENT 
  

									
	 	  	2014	 	  	2013	 
	 Cashflow from operations
	  				  			
	 Total generated from operations 1)
	  	 	5 102 072	  	  	 	-11 070	  
	 Change in working capital
	  	 	4 080 182	  	  	 	0	  
		  	  
	  
	 	  	  
	  
	 
	 Net cashflow from operations
		 	9 182 254	  		 	-11 070	  
		  	  
	  
	 	  	  
	  
	 
	 Cashflow from investments
								
	 Purchase vessel including contract
		 	-535 986 408	  		 	0	  
		  	  
	  
	 	  	  
	  
	 
	 Net cashflow from investments
		 	-535 986 408	  		 	0	  
		  	  
	  
	 	  	  
	  
	 
	 Cashflow from financing
								
	 Paid-in capital, inlc share premium, net of expenses
		 	0	  		 	114 334	  
	 Group contribution
		 	8 489 499	  		 	0	  
	 Instalments/drawings—mortgage debt
		 	379 529 113	  		 	0	  
	 Loan from group companies
		 	158 353 452	  		 	15 500	  
		  	  
	  
	 	  	  
	  
	 
	 Net cashflow from financing
		 	546 372 065	  		 	129 834	  
		  	  
	  
	 	  	  
	  
	 
	 Net change in cashflow for the period
		 	19 567 910	  		 	118 764	  
	 + Cash balance per 01.01.
		 	118 764	  		 	0	  
		  	  
	  
	 	  	  
	  
	 
	 = Cash Balance per 31.12.
		 	19 686 674	  		 	118 764	  
		  	  
	  
	 	  	  
	  
	 
	 1) Generated from operations:
								
	 The result for the period before taxes
		 	-26 800 197	  		 	-11 070	  
	 + Ordinary depreciation
		 	8 934 000	  		 	0	  
	 +Amortization deferred debt issuance cost
		 	2 822 910	  		 	0	  
	 +Realized currency gain mortgage debt
		 	20 145 359	  		 	0	  
		  	  
	  
	 	  	  
	  
	 
	 = Total generated from operations
		 	5 102 072	  		 	-11 070	  
		  	  
	  
	 	  	  
	  
	 

  
 30 

 KNOT SHUTTLE TANKERS 21 AS 

Notes to the Financial Statement 31.12.2014 
  

	1	Accounting Principles 

 The financial statements have been prepared in accordance with
the Norwegian Accounting Act and generally accepted accounting principles in Norway. 
 Current Assets/Current Liabilities 

Fixed assets are intended for long-term ownership and use. Other assets are classified as current assets. Short-term liabilities are due within
one year or tied to the operation. Other liabilities are classified as long-term liabilities. Current assets are valued at the lower of cost and fair valne. Short-term liabilities are recorded at nominal value at the time of the entering. 

This principle is not used for current items in foreign currency, which are valued at the rate of exchange at the year-end. 

Income 
 The income from
the bareboat is in USD, and income is recorded to the Profit & Loss account when actually earned. 
 Fixed Assets and
Dry-Docking 
 The total cost of the vessel is capitalised at delivery and dcpreciated linearly to zero at the date 25 years after
delivery of the vessel from newbuilding yard. 
 The total cost of the contract value is linearly capitalised over the contract period. 

Dry-docking expenses are capitalised and expensed over the period till the next dry-docking. This is in line with the depreciation plan of the
vessel, and takes into account that the vessel is classified to operate for an additional period. Dry-docking is carried out every 5th year for vessels less than 15 years, and every 2.5 year for vessels more than 15 years. Actual expenses related to
repair and maintenance of the vessel are expensed when the work is executed. 
 The fixed assets are valued according to the lowest of the
depreciated value and the market valne unless the fall in value is assumed to be temporary. 
 Interest-bearing loan and borrowings

 All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs
associated with the borrowing. 
 After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the effective interest method; any difference between proceeds (net of transaction costs) and the redemption value is recorded in the profit and loss over the period of the interest-bearing liabilities. Amortized cost is calculated by
taking into account any issue costs, and any discount or premium on settlement. 
 Gains and losses are recognized in the net profit and loss
statement when the liabilities are devalued or depreciated, as well as through the amortization process. 
 Tax 

The calculated tax costs in the accounting includes both the payable tax for the period in addition to the change in deferred tax. Deferred tax
is calculated using 27 % as the basis for taxation on the temporary differences between the accounting and the taxable values in addition to the loss carried forward at the end of the financial year. Tax increasing and decreasing changes in
temporary differences which are reversed or can be reversed in the same period are offset and the net valne is booked. The company is taxed based on the shipping tax regime. This means that companies are not taxed on the basis of its operating
income. However it is calculated an annual tax of 27% on the company’s net financial income. At the same time companies are within the tonnage tax scheme. Tonnage tax is classified as an operating expense. To be within the scheme the company
should meet certain requirements, such as only ownership of ship/ shares in the shipping companies, and only own certain types of financial assets. 

  
 31 

 Transactions in Foreign Currency 

The income received in USD is recorded at the rate of exchange on the day the transaction is carried out. Income and expenditure in foreign
currency are converted with the exchange rate at the time of the transaction. 
 All current assets and current liabilities in foreign
currency are registered at the rate of exchange as per 31.12. Realised foreign exchange gain and loss are registered as financial items. 

The debt is valued at the historical rate, to the extent that the future net nominal income flow exceed the borrowed amount. To the extent that
long-term debt exceeds the net nominal income flow, the unrealised foreign exchange loss on the exceeding amount is recorded. 

Realized and unrealized profit and loss on foreign exchange are recorded as financial income / expenses. 

Cash flow statement 

The cash flow statement is presented using the indirect method of NRS. The liquidity balance is defined as the sum of cash, bank deposits and
other short term liquid assets. 
  

	2	Contracts 

 The company has secured employment of the vessel with a long-term fix
bareboat contract which expires in September 2023. KNOT Management Denmark A/S operates as a manager on behalf of the company in accordance with management agreement. 
  

	3	Fixed Assets 

 M/T Dan Sabia, including bare-boat charter was purchased from J.
Lauritzen Group in August 2014. 
  

					
	 Vessel
	  	2014	 
	 Purchase value 21.08
	  	 	535 986 408	  
	 Additions
	  	 	0	  
	 Ordinary annual depreciation
	  	 	8 934 000	  
		  	  
	  
	 
	 Book value 31.12.
		 	527 052 408	  
		  	  
	  
	 

  

	4	Financial Income and-Expenses 

  

									
	 	  	2014	 	  	2013	 
	 Financial Income:
	  				  			
	 Other interest income
	  	 	1 024	  	  	 	1 029	  
		  	  
	  
	 	  	  
	  
	 
	 Total financial income
		 	1 024	  		 	1 029	  
		  	  
	  
	 	  	  
	  
	 
	 Financial expenses:
								
	 Interest expenses
		 	10 417 602	  		 	0	  
	 Interest expenses to group companies/related parties
		 	837 869	  		 	0	  
	 Guarantee expenses group
		 	1 525 706	  		 	0	  
	 Other financial expenses
		 	2 771 774	  		 	0	  
		  	  
	  
	 	  	  
	  
	 
	 Total financial expenses
		 	15 552 951	  		 	0	  
		  	  
	  
	 	  	  
	  
	 

  

	5	Equity 

 Specification of the equity per 31.12. 

 

																					
	 	  	Share	 	  	Share	 	  	Additional	 	  	Other	 	  	Total	 
	 	  	capital	 	  	premium	 	  	paid-in capital	 	  	equity	 	  	equity	 
	 Equity 01.01
	  	 	100 000	  	  	 	7 950	  	  	 	12 050	  	  	 	0	  	  	 	120 000	  
	 Group contribution, net
	  	 	0	  	  	 	0	  	  	 	166 858 451	  	  	 	0	  	  	 	166 858 451	  
	 Result for the year
	  	 	0	  	  	 	0	  	  	 	-26 800 197	  	  	 	0	  	  	 	-26 800 197	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Equity 31.12.
		 	100 000	  		 	7 950	  		 	140 070 304	  		 	0	  		 	140 178 255	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Share capital consists of 100 shares NOK 1 000 each, all held by Knutsen NYK Offshore Tankers AS. 

The company is a wholly owned subsidiary of Knutsen NYK Offshore Tankers AS. Financial statements for the group can be obtained at
company’s registered office, Smedasundet 40, 5529 Haugesund. 

  
 32 

	6	Remuneration 

 No remuneration is paid to the Board of Directors during the year.

 The company have not given any loan or guarantees to any leading person or board member during the year. 

 

									
	 Auditor’s fee (excl. VAT):
	  	2014	 	  	2013	 
	 Auditing
	  	 	0	  	  	 	0	  
	 Other consultancy
	  	 	0	  	  	 	0	  
		  	  
	  
	 	  	  
	  
	 
			 	0	  		 	0	  
		  	  
	  
	 	  	  
	  
	 

  

	7	Balances with related parties 

  

									
	 	  	2014	 	  	2013	 
	 Accounts payable
	  				  			
	 TS Shipping Invest AS
	  	 	312 167	  	  	 	0	  
	 KNOT Management Denmark AS
	  	 	3 084	  	  	 	0	  
		  	  
	  
	 	  	  
	  
	 
			 	315 251	  		 	0	  

  

	8	Salary and social costs 

 The company has no employees and thereby no pension
liabilities (under the new OTP regulation). 
  

	9	Shares Owned by Board Members and Affiliates 

 Trygve Seglem controls TS Shipping
Invest AS, which owns 50 % of the parent company Knutsen NYK Offshore Tankers AS . 
  

	10	Mortgage Debt and Financial Instruments 

  

																	
	 31.12.2014
	  	USD	 	  	Historical rate	 	  	Rate per 31.12	 	  	NOK	 
	 USD-loan
	  	 	66 469 555	  	  	 	6,1759	  	  	 	6,1759	  	  	 	410 509 325	  
	 Deferred debt issuance
	  				  				  				  	 	-8 011 942	  
		  				  				  				  	  
	  
	 
															 	402 497 382	  
		  				  				  				  	  
	  
	 
	 Current portion:
																
	 USD-loan
		 	4 000 000	  										 	24 703 600	  
	 Deferred debt issuance
														 	-892 246	  
		  				  				  				  	  
	  
	 
															 	23 811 354	  
		  				  				  				  	  
	  
	 

 The USDNOK exchange rate at the year-end was 7,4299 

Estimated outstanding debt per year end 2019 is USD 44.8 million. 

Future income flows from fixed contracts in USD exceed debt in USD. Therefore it is not recognized foreign exchange gains on USD debt on the
basis of the year-end exchange rate. The foreign exchange loss not recorded is NOK 83 million. 
 Security for the loan is made through a
first priority mortgage in the vessel, transportation of income, pledged bank deposit, factoring agreement, pledged shares in the company and guarantees from the owner. 

Book value of mortgaged assets is NOK 574 million. 

The company has aimed to reduce the market risk by entering financial contracts. The company has entered long term freight contracts in USD,
with the intention of having income, vessel investment and loans in the same currency in order to minimize the effects of exchange rate fluctuations. The company has also entered into interest rate swap contracts to minimize the effects of
fluctuations in the interest rate. The Company has entered agreements on fixed interest rates on USD 32 million. Mark to market gain on the interest rate swaps have not been taken into account with USD 1.0 million. 

  
 33 

	11	Tax 

 The company is taxed based on the shipping tax regime after entrance to the
regime in 2014. This means that companies are not taxed on the basis of its operating income. However it is calculated an annual tax of 27% on the company’s net financial income. At the same time companies within the tonnage tax scheme will
have to pay a tonnage tax based on the size of the company’s operated vessels, which in 2014 amounted to NOK 30 888. Tonnage tax is classified as an operating expense. Entry into the tonnage tax regime resulted in no entrance tax. 

The company should meet certain requirements to be within the scheme, such as only ownership of ship/ shares in the shipping companies, and
only own certain types of financial assets. 
 Below is a specification of the temporary differences at the end of the financial year. 

 

													
	 	  	2014	 	  	Change	 	  	2013	 
	 Loss carried forward
	  	 	-14 661 865	  	  	 	-14 661 865	  	  	 	0	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Basis for deferred tax (benefit)
		 	-14 661 865	  		 	-14 661 865	  		 	0	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Deferred tax (benefit)
		 	-3 958 704	  		 	-3 958 704	  		 	0	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Deferred tax (benefit) booked
		 	0	  		 	0	  		 	0	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Taxable result tonnage tax scheme:
												
				
	 	  	2014	 	  	 	 	  	 	 
	 Net financial items
	  	 	-33 034 698	  	  				  			
	 Non-deductable currency loss
	  	 	12 932 014	  	  				  			
		  	 	0	  	  				  			
	 Interest deduction
	  	 	5 440 819	  	  				  			
		  	  
	  
	 	  				  			
	 Taxable income before loss carried forward
		 	-14 661 865	  								
	 Change in loss carried forward
		 	-14 661 865	  								
		  	  
	  
	 	  				  			
	 Taxable income
		 	0	  								
		  	  
	  
	 	  				  			
	 Tax payable
		 	0	  								
	 Change in deferred tax
		 	0	  								
		  	  
	  
	 	  				  			
	 Tax expense
		 	0	  								
		  	  
	  
	 	  				  			

 Tax information from 2013 is within the normal norwegian tax regime. The tax information is not relevant any longer and
therefor the information is not part of the notes. 

  
 34 

					
	

		Statsautoriserte revisorer Ernst & Young AS		 Foretaksregisteret: NO 976 389 387 MVA
 Tlf: +47
55 21 30 00
 Fax: +47 55 21 30 01
  

		Thormøhlens gate 53 D, NO-5006 Bergen Postboks 6163, NO-5892 Bergen		 www.ey.no
 Medlemmer av Den norske
revisorforening

 To the Annual Shareholders’ Meeting of 

KNOT Shuttle Tankers 21 AS 
 AUDITOR’S REPORT 

Report on the financial statements 
 We have audited the
accompanying financial statements of KNOT Shuttle Tankers 21 AS, which comprise the balance sheet as at 31 December 2014, the statements of income and cash flows for the year then ended and a summary of significant accounting policies and other
explanatory information. 
 The Board of Directors’ responsibility for the financial statements 

The Board of Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the Norwegian Accounting Act
and accounting standards and practices generally accepted in Norway, and for such internal control as the Board of Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error. 
 Auditor’s responsibility 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and
auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement. 
 An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements. 
 We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion. 

			
	

		

  

 Opinion 

In our opinion, the financial statements of KNOT Shuttle Tankers 21 AS have been prepared in accordance with laws and regulations and present fairly, in all
material respects, the financial position of the Company as at 31 December 2014 and its financial performance and its cash fiows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices
generally accepted in Norway. 
 Report on other legal and regulatory requirements 

Opinion on the Board of Directors’ report 
 Based on
our audit of the financial statements as described above, it is our opinion that the information presented in the Directors’ report concerning the financial statements and the going concern assumption is consistent with the financial statements
and complies with the law and regulations. 
 Opinion on registration and documentation 

Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International
Standard on Assurance Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is our opinion that the Board of Directors have fulfilled their duty to ensure that the
Company’s accounting information is properly recorded and documented as required by law and generally accepted bookkeeping practice in Norway. 

Bergen, 3 March 2015 
 ERNST & YOUNG AS 

/s/ Fredrik Gabrielsen 
 Fredrik Gabrielsen 

State Autorised Public Accountant (Norway) 

  
 36mondialexh101.htm

Exhibit 10.01

 

MODIFICATION AND EXTENSION TO AMENDED PARTICIPATION AGREEMENT

AMENDED MAY 31, 2015

(Turnkey Drilling, Re Entry, and Multiple Wells)

This Modification and Extension to Amended Participation Agreement dated May 31, 2015 amending the March 26, 2014 Modification and Extension to Amended Participation Agreement is in accordance with Exhibit “B” of an *Asset Purchase Agreement made and entered into as of January 21, 2014, the Effective Date (“Effective Date”), by and among Shale Corp., a corporation organized under the laws of the Province of Ontario in Canada with its principal place of business located at 365 Bay St, Suite 400, Toronto On, M5H 2V1(the “Company”), and the Investor acting as Mondial Ventures, Inc., along with approvals from Success Oil Co., Inc., its Operator and Partner, EGPI Firecreek, Inc. via its wholly owned subsidiary Energy Producers, Inc., Partner, and TWL Investments, aLLC, investing participants, herewith amend, modify and extend the following provision to the January 21, 2014 Amended Participation Agreement (please see *Asset Purchase Agreement included as Exhibit A in the Exhibit 10.1 to a Current Report on Form 8-K filed by Mondial Ventures, Inc. with the Securities and Exchange Commission on April 3, 2014):

Section II. paragraph one shall be modified and extended to read:

  

II.

Consideration

  

Participants shall deliver to Operator Participant’s share of the Turnkey Cost to Casing Point for drilling of the first Prospect Well, and the first Program initiated from successful financing will be for the Ellenburger Prospect Well formation at approximately 8,300 foot depth, as provided for in this Agreement and listed as follows in this section II. 1) below within a reasonable time after the execution and effective date of this Agreement not to exceed the period ending June 30, 2015, unless mutually extended by all parties to this Agreement in writing to be attached hereto. In addition, if the Turnkey Costs are delivered for the first Prospect Well listed in II. 1) below, the parties agree to extend timing for agreed participation up to two years but no less than one year. A draft for formal terms will be then delivered by participant 1 in coordination with Success for acceptance by the parties.

  

Agreed this 31st day of May, 2015 by the undersigned:

 

 

  

  

	
Mondial Ventures, Inc.

	
Success Oil Co., Inc.

	
TWL Investments, a LLC

	 	 	 
	
  

/s/Dennis R Alexander

	
  

/s/Jeru M. Morgan

	
  

/s/Larry W. Trapp

	
President and CEO

	
President and CEO

	
Managing Director

	 	 	 
	
Energy Producers, Inc., a wholly owned Subsidiary of EGPI Firecreek, Inc.

	 
	 	 	 
	
/s/Dennis R Alexander

	 	 
	
Dennis R. Alexander

	 	 
	
President and CEO

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