Document:

EX-4.12

 Exhibit 4.12 
  

					
	SHIP MANAGEMENT AGREEMENT	  	THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) STANDARD SHIP MANAGEMENT AGREEMENT CODE NAME: “SHIPMAN 98”	 	PART 1  

  

			
	1. Date of Agreement	  	Name of Vessel
	  

28.10.2010 (Agreement started from 01.12.2006)
  
	  	  

M/T Recife Knutsen
  

	 2. Owners (name,
place of registered office and law of registry) (Cl. 1)
  
	  	 3. Managers (name, place of registered office and
law of registry) (Cl. 1)
  

	Name	  	Name
	  

Knutsen Shuttle tanker XII KS
  
	  	  

Knutsen OAS Shipping AS
  

	Place of registered office	  	Place of registered office
	  

Smedasundet 40, 5529 Haugesund
  
	  	  

Smedasundet 40, 5529 Haugesund
  

	Law of registry	  	Law of registry
	  

Norway
  
	  	  

Norway
  

	4. Day and year of commencement of Agreement (Cl. 2)	  	 
	  

01.12.2006
  
	  	 
	5. Crew Management (state “yes” or “no” as agreed)
(Cl. 3.1)	  	6. Technical Management (state “yes” or “no” as agreed) (Cl. 3.2)
	  

No
  
	  	  

No
  

	7. Commercial Management (state “yes” or “no” as agreed) (Cl. 3.3)	  	8. Insurance Arrangements (state “yes” or “no” as agreed (Cl. 3.4)
	  

No
  
	  	  

No (Attachment 1)
  

	9. Accounting Services (state “yes” or “no” as agreed)
(Cl. 3.5)	  	10. (Sale or purchase of the Vessel (state “yes” or “no” as agreed) (Cl. 3.6)
	  

Yes
  
	  	  

No (Attachment 1)
  

	11. Provisions (state “yes” or “no” as agreed) (Cl. 3.7)	  	12. Bunkering (state “yes” or “no” as agreed) (Cl. 3.8)
	  

No
  
	  	  

No
  

	13. Chartering Services Period (only to be filled in if “yes” stated in Box 7) (Cl. 3.3(1))	  	14. Owners’ insurance (state alternative (i), (ii) or (iii) of Cl. 6.3))
	  

No
  
	  	  

No (attachment 1)
  

	15. Annual Management Fee (state annual amount) (Cl. 8.1)	  	16. Severance Costs (state maximum amount) (Cl. 8.4(ii))
	  

NOK 220.000 to be escalated by 4% first time 01.01.2012.

See new clause 21.
  
	  	 
	17. Day and year of termination of Agreement (Cl. 17)	  	 18. Law and Arbitration (state alternative 19.1,
19.2 or 19.3; if 19.3 place of arbitration must be stated) (Cl. 19)
  

	  

19. Notices (state postal and cable address, telex and telefax number for serving notice and communication to the Owners)
(Cl. 20)

 
	  	  
 20. Notices
(state postal and cable address, telex and telefax number for serving notice and communications to the Managers) (Cl. 20)

	  

Knutsen Shuttle Tankers XII KS

Smedasundet 40, Postbox 2017

5504 Haugesund
 Tlf 52 70
40 00 Fax 52 70 40 40
  
	  	  

Knutsen OAS Shipping AS

Smedasundet 40, Postbox 2017

5504 Haugesund
 Tlf 52 70
40 00 Fax 52 70 40 40
  

	 It is mutually agreed between the party stated in Box 2 and the party stated in Box 3 that this Agreement consisting of PART I
and PART II as well as Annexes “A” (Details of Vessel), “B” (Details of Crew) and “D” (Associated Vessels) attached hereto, shall be performed subject to the conditions contained herein. In the event of a
conflict of conditions, the provisions of PART I and Annexes “A” and “B”, “C” and “D” shall prevail over those of PART II to the extent of such conflict but no
further.
  

	  

Signature(s) (Owners)
	  	  

Signature(s) (Managers)

	 Knutsen Shuttle Tankers XII KS
	  	 Knutsen OAS Shipping AS

	  

/s/ TRYGVE SEGLEM
	  	  

/s/ TRYGVE SEGLEM

 PART II 

“Shipman 98” Standard Ship Management Agreement 

 

			
	 1.      Definitions

 
 In this Agreement, save where the context otherwise requires, the
following words and expressions shall have the meanings hereby assigned to them.
  

“Owners” means the party identified in Box 2.
  

“Managers” means the party identified in Box 3.
  

“Vessel” means the vessel or vessels, details of which are set out in Annex “A” attached hereto.

 
 “Crew” means the Master, officers and ratings of the
numbers, rank and nationality specified in Annex “B” attached hereto.
  

“Crew Support Costs” means all expenses of a general nature which are not particularly referable to any individual vessel
for the time being managed by the Managers and which are incurred by the Managers for the purpose of providing an efficient and economic management service and, without prejudice to the generality of the foregoing, shall include the cost of crew
standby pay, training schemes for officers and ratings, cadet training schemes, sick pay, study pay, recruitment and interviews.
  

“Severance Costs” means the costs which the employers are legally obliged to pay to or in respect of the Crew as a result
of the early termination of any employment contract for service on the Vessel.
  

“Crew Insurances” means insurances against crew risks which shall include but not be limited to death, sickness,
repatriation, injury, shipwreck unemployment indemnity and loss of personal effects.
  

“Management Services” means the services specified in sub-clauses 3.1 to 3.8 as indicated affirmatively in Boxes 5 to
12.
  
 “ISM Code” means the International Management
Code for the Safe Operation of Ships and for Pollution Prevention as adopted by the International Maritime Organization (IMO) by resolution A.741(18) or any subsequent amendment thereto.

 
 “STCW 95” means the International Convention on
Standards of Training, Certification and Watchkeeping for Seafarers, 1978, as amended in 1995 or any subsequent amendment thereto.
  

2.      Appointment of Managers

 
 With effect from the day and year stated in Box 4 and continuing
unless and until terminated as provided herein, the Owners hereby appoint the Managers, and the Managers hereby agree to act, as the Managers of the Vessel.
  

3.      Basis of Agreement

 
 Subject to the terms and conditions herein provided, during the period
of this Agreement, the Managers shall carry out Management Services in respect of the Vessel as agents for and on behalf of the Owners. The Managers shall have authority to take such actions as they may from time to time in their absolute discretion
consider to be necessary to enable them to perform this Agreement in accordance with sound ship management practice.
  

3.1 Crew Management
  

(only applicable if agreed according to Box 5)
  

The Managers shall provide suitably qualified Crew for the Vessel as required by the Owners in accordance with the STCW 95 requirements,
provision of which includes but is not limited to the following functions:
  

(i)      selecting and engaging the Vessel’s Crew, including payroll
arrangements, pension administration, and insurances for the Crew other than those mentioned in Clause 6;
  

(ii)     ensuring that the applicable requirements of the law of the flag of the
Vessel are satisfied in respect of
	  	

 

			
	 manning levels, rank, qualification and certification of the Crew and employment regulations including Crew’s tax, social insurance, discipline and other
requirements;
  

(iii)    ensuring that all members of the Crew have passed a medical examination with a
qualified doctor certifying that they are fit for the duties for which they are engaged and are in possession of valid medical certificates issued in accordance with appropriate flag State requirements. In the absence of applicable flag State
requirements the medical certificate shall be dated not more than three months prior to the respective Crew members leaving their country of domicile and maintained for the duration of their service on board the Vessel;

 
 (iv)    ensuring that the
Crew shall have a command of the English language of a sufficient standard to enable them to perform their duties safely;
  

(v)     arranging transportation of the Crew, including repatriation;

 
 (vi)    training of the
Crew and supervising their efficiency;
  

(vii)   conducting union negotiations;

 
 (viii)  operating the
Managers’ drug and alcohol policy unless otherwise agreed.
  

3.2 Technical Management
  

(only applicable if agreed according to Box 6)
  

The Managers shall provide technical management, which includes, but is not limited to, the following functions:

 

(i)      provision of competent personnel to supervise the maintenance and
general efficiency of the Vessel;
  

(ii)     arrangement and supervision of dry dockings, repairs, alterations and the
upkeep of the Vessel to the standards required by the Owners, provided that the Managers shall be entitled to incur the necessary expenditure to ensure that the Vessel will comply with the law of the flag of the Vessel and of the places where she
trades, and all requirements and recommendations of the classification society.
  

(iii)    arrangement of the supply of necessary stores, spares and lubricating oil;

 
 (iv)    appointment of
surveyors and technical consultants as the Managers may consider from time to time to be necessary;
  

(v)     development, implementation and maintenance of a Safety Management System (SMS) in
accordance with the ISM Code (see sub-clauses 4.2 and 5.3).
  
 3.3
Commercial Management
  
 (only applicable if agreed according
to Box 7)
  
 The Managers shall provide the commercial operation
of the Vessel, as required by the Owners, which includes, but is not limited to, the following functions:
  

(i)      providing chartering services in accordance with the Owners’
instructions which include, but are not limited to, seeking and negotiating employment for the Vessel and the conclusion (including the execution thereof) of charter parties or other contracts relating to the employment of the Vessel. If such a
contract exceeds the period stated in Box 13, consent thereto in writing shall first be obtained from the Owners.
  

(ii)     arranging of the proper payment to Owners or their nominees of all hire
and/or freight revenues or other moneys of whatsoever nature to which Owners may be entitled arising out of the employment of or otherwise in connection with the Vessel.
  

(iii)    providing voyage estimates and accounts and calculating of hire, freights,
demurrage and/or despatch moneys due from or due to the charterers passengers of the Vessel;
	  	

 
 

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“Shipman 98” Standard Ship Management Agreement 

 

			
	 (iv)    issuing of voyage instructions;

 
 (v)     appointing
agents;
  
 (vi)   
appointing stevedores;
  

(vii)   arranging surveys associated with the commercial operation of the Vessel.

 
 3.4 Insurance Arrangements

 
 (only applicable if agreed according to Box 8)

 
 The Managers shall arrange insurances in accordance with Clause 6, on
such terms and conditions as the Owners shall have instructed or agreed, in particular regarding conditions, insured values, deductibles and franchises.
  

3.5 Accounting Services
  

(only applicable if agreed according to Box 9)
  

The Managers shall:
  

(i)      establish an accounting system which meets the requirements of the
Owners and provide regular accounting services, supply regular reports and records,
  

(ii)     maintain the records of all costs and expenditure incurred as well as data
necessary or proper for the settlement of accounts between the parties.
  

3.6 Sale or Purchase of the Vessel
  

(only applicable if agreed according to Box 10)
  

The Managers shall, in accordance with the Owners’ instructions, supervise the sale or purchase of the Vessel, including the
performance of any sale or purchase agreement, but not negotiation of the same.
  

3.7 Provisions (only applicable if agreed according to Box 11) The Managers shall arrange for the supply of
provisions.
  
 3.8 Bunkering (only applicable if
agreed according to Box 12) The Managers shall arrange for the provision of bunker, of the quality specified by the Owners as required for the Vessel’s trade.
  

4.      Managers’ Obligations

 
 4.1 The Managers undertake to use their best endeavours to
provide the agreed Management Services as agents for and on behalf of the Owners in accordance with sound ship management practice and to protect and promote the interests of the Owners in all matters relating to the provision of services
hereunder.
  
 Provided, however, that the Managers in the performance
of their management responsibilities under this Agreement shall be entitled to have regard to their overall responsibility in relation to all vessels as may from time to time be entrusted to their management and in particular, but without prejudice
to the generality of the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Managers in their absolute discretion consider to be fair and
reasonable.
  
 4.2 Where the Managers are providing Technical
Management in accordance with sub-clause 3.2, they shall procure that the requirements of the law of the flag of the Vessel are satisfied and they shall in particular be deemed to be the “Company” as defined by the ISM Code, assuming the
responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code when applicable.
  

5.      Owners’ Obligations

 
 5.1 The Owners shall pay all sums due to the Managers
punctually in accordance with the terms of this Agreement.
  

5.2 Where the Managers are providing Technical Management in accordance with sub-clause 3.2, the Owners shall:

 

(i)      procure that all officers and ratings supplied by them or on their
behalf comply with the requirements of STCW 95;
	  	

 

			
	 (ii)     instruct such officers and ratings to obey all reasonable
orders of the Managers in connection with the operation of the Managers’ safety management system.
  

5.3 Where the Managers are not providing Technical Management in accordance with sub-clause 3.2, the Owners shall procure that the
requirements of the law of the flag of the Vessel are satisfied and that they, or such other entity as may be appointed by them and identified to the Managers, shall be deemed to be the “Company” as defined by the ISM Code assuming the
responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code when applicable.
  

6.      Insurance Policies

 
 The Owners shall procure, whether by instructing the Managers under
sub-clause 3.4 or otherwise, that throughout the period of this Agreement:
  

6.1 at the Owners’ expense, the Vessel is insured for not less than her sound market value or entered for her full gross
tonnage, as the case may be for:
  

(i)      usual hull and machinery marine risks (including crew negligence) and
excess liabilities;
  

(ii)     protection and indemnity risks (including pollution risks and Crew
Insurances); and
  

(iii)    war risks (including protection and indemnity and crew risks) in accordance with
the best practice of prudent owners of vessels of a similar type to the Vessel, with first class insurance companies, underwriters or associations (“the Owners’ Insurances”);

 
 6.2 all premiums and calls on the Owners’ Insurances are
paid promptly by their due date,
  
 6.3 the Owners’
Insurances name the Managers and, subject to underwriters’ agreement, any third party designated by the Managers as a joint assured, with full cover, with the Owners obtaining cover in respect of each of the insurances specified in
sub-clause 6.1:
  

(i)      on terms whereby the Managers and any such third party are liable in
respect of premiums or calls arising in connection with the Owners’ Insurances; or
  

(ii)     if reasonably obtainable, on terms such that neither the Managers nor any such
third party shall be under any liability in respect of premiums or calls arising in connection with the Owners’ Insurances; or
  

(iii)    on such other terms as may be agreed in writing.

 
 Indicate alternative (i), (ii) or (iii) in Box 14. If
Box 14 is left blank then (i) applies
  
 6.4 written
evidence is provided, to the reasonable satisfaction of the Managers, of their compliance with their obligations under Clause 6 within a reasonable time of the commencement of the Agreement, and of each renewal date and, if specifically
requested, of each payment date of the Owners’ Insurances.
  

7.     Income Collected and Expenses Paid on Behalf of Owners

 
 7.1 All moneys collected by the Managers under the terms of
this Agreement (other than moneys payable by the Owners to the Managers) and any interest thereon shall be held to the credit of the Owners in a separate bank account.
  

7.2 All expenses incurred by the Managers under the terms of this Agreement on behalf of the Owners (including expenses as provided
in Clause 8) may be debited against the Owners in the account referred to under sub-clause 7.1 but shall in any event remain payable by the Owners to the Managers on demand.
	  	

 
 

 PART II 

“Shipman 98” Standard Ship Management Agreement 

 

			
	 8.      Management Fee

 
 8.1 The Owners shall pay to the Managers for their services as
Managers under this Agreement an annual management fee as stated in Box 15 which shall be payable, by equal monthly instalments in advance, the first instalment being payable on the commencement of this Agreement (see Clause 2 and
Box 4) and subsequent instalments being payable every month.
  

8.2 The management fee shall be subject to an annual review on the anniversary date of the Agreement and the proposed fee shall be
presented in the annual budget referred to in sub-clause 9.1.
  

8.3 The Managers shall, at no extra cost to the Owners, provide their own office accommodation, office staff, facilities and
stationery. Without limiting the generality of Clause 7 the Owners shall reimburse the Managers for postage and communication expenses, travelling expenses, and other out of pocket expenses properly incurred by the Managers in pursuance of the
Management Services.
  
 8.4 In the event of the appointment of
the Managers being terminated by the Owners or the Managers in accordance with the provisions of Clauses 17 and 18 other than by reason of default by the Managers, or if the Vessel is lost, sold or otherwise disposed of, the “management
fee” payable to the Managers according to the provisions of sub-clause 8.1, shall continue to be payable for a further period of three calendar months as from the termination date. In addition, provided that the Managers provide Crew for the
Vessel in accordance with sub-clause 3.1:
  

(i)      the Owners shall continue to pay Crew Support Costs during the said
further period of three calendar months and
  

(ii)     the Owners shall pay an equitable proportion of any Severance Costs which may
materialize, not exceeding the amount stated in Box 16.
  
 8.5
If the Owners decide to lay-up the Vessel whilst this Agreement remains in force and such lay-up lasts for more than three months, an appropriate reduction of the management fee for the period exceeding three months until one month before the Vessel
is again put into service shall be mutually agreed between the parties.
  

8.6 Unless otherwise agreed in writing all discounts and commissions obtained by the Managers in the course of the management of the
Vessel shall be credited to the Owners.
  

9.      Budgets and Management of Funds

 
 9.1 The Managers shall present to the Owners annually a budget
for the following twelve months in such form as the Owners require. The budget for the first year hereof is set out in Annex “C” hereto. Subsequent annual budgets shall be prepared by the Managers and submitted to the Owners by
15 November each year not less than three months before the anniversary date of the commencement of this Agreement (see Clause 2 and Box 4).
  

9.2 The Owners shall indicate to the Managers their acceptance and approval of the annual budget within one month of presentation
and in the absence of any such indication the Managers shall be entitled to assume that the Owners have accepted the proposed budget.
  

9.3 Following the agreement of the budget, the Managers shall prepare and present to the Owners their estimate of the working
capital requirement of the Vessel and the Managers shall each month update this estimate. Based thereon, the Managers shall each month request the Owners in writing for the funds required to run the Vessel for the ensuing month, including the
payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. Such funds shall be received by the Managers within ten running days after the receipt by
the
	  	

 

			
	 Owners of the Managers’ written request and shall be held to the credit of the Owners in a separate bank
account.
  
 9.4 The Managers shall produce a comparison
between budgeted and actual income and expenditure of the Vessel, in such form as required by the Owners, monthly or at such other intervals as mutually agreed.
  

9.5 Notwithstanding anything contained herein to the contrary, the Managers shall in no circumstances be required to use or commit
their own funds to finance the provision of the Management Services.
  

10.    Managers’ Right to Sub-Contract

 
 The Managers shall not have the right to sub-contract any of their
obligations hereunder, including those mentioned in sub-clause 3.1, without the prior written consent of the Owners, which shall not be unreasonably withheld. In the event of such a sub-contract, the Managers shall remain fully liable for the
due performance of their obligations under this Agreement.
  

11.    Responsibilities

 
 11.1 Force Majeure - Neither the Owners nor the
Managers shall be under any liability for any failure to perform any of their obligations hereunder by reason of any cause whatsoever of any nature or kind beyond their reasonable control.

 
 11.2 Liability to Owners - (i) Without
prejudice to sub-clause 11.1, the Managers shall be under no liability whatsoever to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or
in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services UNLESS same is proved to have resulted solely from the negligence, gross negligence or wilful default of the
Managers or their employees, or agents or sub-contractors employed by them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers’ personal act or omission committed with the
intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers’ liability for each incident or series of incidents giving rise to a claim or claims shall never exceed; a total
of ten times the annual management fee payable hereunder.
  

(ii) Notwithstanding anything that may appear to the contrary in this Agreement, the Managers shall not be liable for any of the
actions of the Crew, even if such actions are negligent, grossly negligent or wilful, except only to the extent that they are shown to have resulted from a failure by the Managers to discharge their obligations under sub-clause 3.1, in which
case their liability shall be limited in accordance with the terms of this Clause 11.
  

11.3 Indemnity - Except to the extent and solely for the amount therein set out that the Managers would be liable
under sub-clause 11.2, the Owners hereby undertake to keep the Managers and their employees, agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever
arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of the Agreement, and against and in respect of all costs, losses, damages and expenses (including legal costs and
expenses on a full indemnity basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
  

11.4 “Himalaya” - It is hereby expressly agreed that no employee or agent of the Managers (including every
sub-contractor from time to time employed by the Managers)
  
	  	

 
 

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“Shipman 98” Standard Ship Management Agreement 

 

			
	 shall in any circumstances whatsoever be under any liability whatsoever to the Owners for any loss, damage or delay of
whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this
Clause 11, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also
be available and shall extend to protect every such employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this Clause 11 the Managers are or shall be deemed to be acting as agent or trustee on
behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.

 

12.    Documentation

 
 Where the Managers are providing Technical Management in accordance
with sub-clause 3.2 and/or Crew Management in accordance with sub-clause 3.1, they shall make available, upon Owners’ request, all documentation and records related to the Safety Management System (SMS) and/or the Crew which the Owners need in
order to demonstrate compliance with the ISM Code and STCW 95 or to defend a claim against a third party.
  

13.    General Administration

 
 13.1 The Managers shall handle and settle all claims arising
out of the Management Services hereunder and keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving third parties.

 
 13.2 The Managers shall, as instructed by the Owners, bring or
defend actions, suits or proceedings in connection with matters entrusted to the Managers according to this Agreement.
  

13.3 The Managers shall also have power to obtain legal or technical or other outside expert advice in relation to the handing and
settlement of claims and disputes or all other matters affecting the interests of the Owners in respect of the Vessel.
  

13.4 The Owners shall arrange for the provision of any necessary guarantee bond or other security.

 
 13.5 Any costs reasonably incurred by the Managers in carrying
out their obligations according to Clause 13 shall be reimbursed by the Owners.
  

14.    Auditing
  

The Managers shall at all times maintain and keep true and correct accounts and shall make the same available for inspection and auditing
by the Owners at such times as may be mutually agreed. On the termination, for whatever reasons, of this Agreement, the Managers shall release to the Owners, if so requested, the originals where possible, or otherwise certified copies, of all such
accounts and all documents specifically relating to the Vessel and her operation.
  

15.    Inspection of Vessel

 
 The Owners shall have the right at any time after giving reasonable
notice to the Managers to inspect the Vessel for any reason they consider necessary.
  

16.    Compliance with Laws and Regulations

 
 The Managers will not do or permit to be done anything which might
cause any breach or infringement of the laws
	  	

 

			
	 and regulations of the Vessel’s flag, or of the places where she trades.

 
 17.    Duration of the
Agreement
  
 This Agreement shall come into effect on the day and
year stated in Box 4 and shall continue until the date stated in Box 17. Thereafter it shall continue until terminated by either party giving to the other notice in writing, in which event the Agreement shall terminate upon the expiration of a
period of three months from the date upon which such notice was given.
  

18.    Termination
  

18.1 Owners’ Default
  

(i)      The Managers shall be entitled to terminate the Agreement with immediate
effect by notice in writing if any moneys payable by the Owners under this Agreement and/or the owners of any associated vessel, details of which are listed in Annex “D”, shall not have been received in the Managers’ nominated account
within ten running days of receipt by the Owners of the Manager’s written request or if the Vessel is repossessed by the Mortgagees.
  

(ii)     If the Owners:

 
 (a)    fail to meet their
obligations under sub-clauses 5.2 and 5.3 of this Agreement for any reason within their control, or
  

(b)    proceed with the employment of or continue to employ the Vessel in the carriage of
contraband, blockade running, or an unlawful trade, or on a voyage which in the reasonable opinion of the Managers is unduly hazardous or improper, the Managers may give notice of the default to the Owners, requiring them to remedy it as soon as
practically possible. In the event that the Owners fail to remedy it within a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate the Agreement with immediate effect by notice in writing.

 
 18.2 Managers’ Default

 
 If the Managers fail to meet their obligations under Clauses 3 and 4
of this Agreement for any reason within the control of the Managers, the Owners may give notice to the Managers of the default, requiring them to remedy it as soon as practically possible. In the event that the Managers fail to remedy it within a
reasonable time to the satisfaction of the Owners, the Owners shall be entitled to terminate the Agreement with immediate effect by notice in writing.
  

18.3 Extraordinary Termination
  

This Agreement shall be deemed to be terminated in the case of the sale of the Vessel or if the Vessel becomes a total loss or is declared
as a constructive or compromised or arranged total loss or is requisitioned.
  

18.4 For the purpose of sub-clause 18.3 hereof

 
 (i)      the
date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the Owners cease to be registered as Owners of the Vessel;
  

(ii)     the Vessel shall not be deemed to be lost unless either she has become an
actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a
constructive loss of the Vessel has occurred.
  
 18.5 This
Agreement shall terminate forthwith in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of either party (otherwise than for the purpose of reconstruction or amalgamation) or if a
receiver is appointed, or if it suspends
	  	

 
 

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“Shipman 98” Standard Ship Management Agreement 

 

			
	 payment, ceases to carry on business or makes any special arrangement or composition with its creditors.

 
 18.6 The termination of this Agreement shall be without
prejudice to all rights accrued due between the parties prior to the date of termination.
  

19.    Law and Arbitration

 
 19.1 This Agreement shall be governed by and construed in
accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the
extent necessary to give effect to the provisions of this Clause.
  

The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the
arbitration proceedings are commenced.
  
 The reference shall be to
three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of
that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own
arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and
shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement.
  

Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole
arbitrator.
  
 In cases where neither the claim nor any counterclaim
exceeds the sum of €50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.

 
 19.2 This Agreement shall be governed by and construed in
accordance with Title 9 of the United States Code and the Maritime Law of the United States and any dispute arising out of or in connection with this Agreement shall be referred to three persons at New York, one to be appointed by each of the
parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for the purposes of enforcing any award, judgement may be entered on an award by any court of competent jurisdiction. The proceedings
shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc.
  

In cases where neither the claim nor any counterclaim exceeds the sum of USD 50,000 (or such other sum as the parties may agree) the
arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current at the time when the arbitration proceedings are commenced.

 
 19.3 This Agreement shall be governed by and construed in
accordance with the laws of the place mutually agreed by the parties and any dispute arising out of or in connection with this Agreement shall be referred to arbitration at a mutually agreed place, subject to the procedures applicable there.

 
 19.4 If Box 18 in Part I is not appropriately filled in,
sub-clause 19.1 of this Clause shall apply.
  

Note: 19.1, 19.2 and 19.3 are alternatives; indicate alternative agreed in Box 18.
	  	

 

			
	 20.    Notices

 
 20.1 Any notice to be given by either party to the other party
shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service.
  

20.2 The address of the Parties for service of such communication shall be as stated in Boxes 19 and 20, respectively.
	  	

 
 

 ANNEX “A” (DETAILS OF VESSEL OR VESSELS) TO 

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) 
 STANDARD
SHIP MANAGEMENT AGREEMENT – CODE NAME: “SHIPMAN 98” 
  
  

			
	Date of Agreement:	  	01.12.2006
		
	Name of Vessel(s):	  	NB 256 Shuttle Cosco Nantong
		
	Particulars of Vessel(s):	  	Shuttle Tanker

 KNUTSEN SHUTTLE TANKERS XII KS 

New clause 21. 
 The Manager shall provide
administration service and technical supervision during the construction of the NB 256 from this day until delivery from Cosco Nantong, Kina. 
 The Owner
shall pay the Manager for the services rendered as follows: 
  

									
	 01.01.2010
	  	 	NOK	  	  	 	2.000.000	  
	 01.04.2010
	  	 	NOK	  	  	 	2.000.000	  
	 01.07.2010
	  	 	NOK	  	  	 	2.000.000	  
	 01.10.2010
	  	 	NOK	  	  	 	3.000.000	  
	 01.01.2011
	  	 	NOK	  	  	 	3.000.000	  
	 01.04.2011
	  	 	NOK	  	  	 	2.000 000	  
			
	 Total
	  	 	NOK	  	  	 	14.000.000	  

 All capital and direct expenditures shall be at Owners cost. 

 Date of Agreement 01.12.2006 – Re.: NB 256 Shuttle Cosco Nantong 

Clauses 
 Clause 17 

This Agreement shall come into effect on the day stated in Box 4 and shall continue until terminated by either party giving to the other notice in writing, in
which event the Agreement shall terminate upon the expiration of a period of six moth from the date upon which such notice was given. 
 The Owner may only
terminate this Agreement if so decided in the Company meeting in accordance with the Company Agreement. Documentation for such decision shall be presented to Manager along with the termination letter. 

Clause 19 
 The Ship Management Agreement shall be
governed by Norwegian Law and the parties accept Haugesund City Court as proper legal venue for the settlement of any controversy or dispute that may arise in connection with, or as a result of this contract that cannot be resolved by mutual
agreement between the parties hereto. 

 Addendum number 1 to the Standard Ship Management Agreement dated 28.10.2010 

 

	Re.:	M/T Recife Knutsen 

 With effect this addendum date a New Box 15 have been agreed to be: 

USD 46 080 annual to be escalated by 6% annual, first time 01.01.2016 

With effect from July 1st 2012 KNOT Management AS has become new manager and a New Box 3 have
been agreed to be: 
 Managers: 

Name: KNOT Management AS 

Place of registered office: Smedasundet 40, 5529 Haugesund, Norway 

Law of registry: Haugesund, Norway 

Haugesund, March 14th, 2016 

 

					
	/s/ TRYGVE SEGLEM	 		 	/s/ TRYGVE SEGLEM
	Knutsen OAS Shipping AS	 		 	KNOT Management AS
			
	Old Managers	 		 	New Managers
			
	By CEO Trygve Seglem	 		 	By CEO Trygve Seglem
			
	/s/ TRYGVE SEGLEM	 		 	
	Knutsen NYK Shuttle Tankers 16 AS	 		 	
			
	Owners	 		 	
			
	By Chairman of the Board Trygve Seglemcdtx-ex1016_1863.htm

 

EXHIBIT 10.16

 

CIDARA THERAPEUTICS, INC.

BONUS PLAN

 

Effective January 1, 2016

 

 

The Cidara Therapeutics, Inc. (“Cidara” or the “Company”) Bonus Plan (the “Plan”) is designed to reward eligible employees for the achievement of corporate objectives, as well as measured individual objectives that are consistent with and support the overall corporate objectives.

 

The Plan is designed to:

	
·
	
Encourage high performance by providing an incentive program to achieve overall corporate objectives.

	
·
	
Reward those individuals who significantly impact corporate results.

	
·
	
Encourage increased teamwork among all disciplines within Cidara.

	
·
	
Incorporate an incentive program in the overall compensation program to help attract and retain employees.

 

ELIGIBILITY

All regular employees are eligible to participate in the Plan.  In order to be eligible, a participant must have been in an eligible position for at least three (3) full months prior to the end of the Plan year, and the participant must remain employed through the end of the Plan year and until awards are paid.  If the participant is not employed on the date awards are paid, the participant will not have earned any bonus.  If the participant has been subject to any performance improvement plan or other disciplinary procedure during the Plan year, any award to such individual will be at the discretion of the President/CEO or the Compensation Committee of the Board of Directors (the “Compensation Committee”), and may be reduced or withheld regardless of corporate performance as outlined below. 

 

Change in Status During the Plan Period:

	
a.
	
Participants hired during the Plan year:

	
·
	
Participants hired during the Plan year are eligible for a prorated award based on the number of calendar days employed in an eligible position.

	
·
	
Participants hired during the months of October through December are not eligible to participate for the Plan year. 

	
·
	
If an employee has worked in a temporary or consulting capacity for Cidara, this time will not impact the eligibility start date which is the date of hire.  Only as an exception and with approval by the Compensation Committee or the Board of Directors will time worked as a consultant be considered when determining the bonus award proration for an employee.

	
b.
	
Promotion/change in level: 

	
·
	
   If a promotion occurred during the first three quarters of the applicable Plan year, the position

at the end of the Plan year shall be used for the purposes of bonus calculation.    

	
·
	
   If a promotion occurred on or after October 1 of the applicable Plan year, the entire

      calculation will be based on the position prior to the promotion.

	
c.
	
Termination of employment: 

	
·
	
If a participant’s employment is terminated voluntarily prior to the date awards are paid, the participant will not be eligible to receive an award. 

	
·
	
If a participant’s employment is terminated involuntarily prior to the date awards are paid, it will be at the absolute discretion of the Company whether or not an award payment is made.

	
d.
	
Leave of absence:  

	
·
	
Bonus award will be prorated to reflect the calendar days on a leave of absence that exceed 60 calendar days in the Plan year.

 

1

 

 

 

 

 

 

AWARD CALCULATION

Awards will be determined by applying a “bonus percentage” to the participant’s base salary that is in effect at the end of the Plan year.  While the Compensation Committee may change the bonus percentage for any Plan year, the following bonus percentages will initially be used for this purpose:

 

		
	
Position Title
	
Bonus Percentage

	
President/CEO
	
50%

	
Chief Officer
	
35%

	
Vice President, Senior Vice President
	
30%

	
Senior Director, Executive Director
	
25%

	
Director
	
20%

	
Associate Director, Senior Principal Scientist
	
15%

	
Manager, Senior Manager, Scientist, Senior Scientist
	
10%

	
Analyst, Accountant, Executive Assistant, Research Associate
	
8%

	
Administrative Assistant, Accounting Associate
	
6%

 

Corporate and Individual Performance Factors

The President/CEO will present to the Compensation Committee/Board of Directors a list of the overall corporate objectives for the applicable Plan year, which are subject to approval by the Compensation Committee/Board of Directors.  All participants in the Plan whose performance is measured in part based on individual performance factors will then develop a list of key individual objectives, which must be approved by the responsible Vice President, Senior Vice President, Chief Officer, or President/CEO.

 

The relative weight between corporate and individual performance factors varies based on the individual’s assigned level within the organization.  The weighting may be reviewed periodically and may be adjusted for any Plan year.  The weighting for the performance factors will initially be as follows:

 CorporateIndividual

President/CEO     100%

Chief Officer                 80%     20%     

Vice President, Sr Vice President      60%     40%

Director, Sr Director, Exec Director            50%     50%

Manager, Sr Mgr, Assoc Dir, Scientist      40%     60%

Analyst/Associate/Administrative      30%     70%

 

Performance Award Multiplier

Separate award multipliers will be established for both the corporate and the individual components of each award.  The award multiplier for the corporate component will be determined by the Compensation Committee/Board of Directors each Plan year, in its sole discretion.  The same award multiplier for the corporate component of the award shall be used for all such Plan participants.  The award multiplier for the individual component shall be determined by the responsible Chief Officer or President/CEO.  

 

For Executives (Vice President level and above):  The actual performance bonus awarded in any year, if any, may be more or less than the applicable target, depending primarily on the Compensation Committee’s determination of the award multiplier for the corporate component and the executive’s individual performance with respect to the corporate objectives. Whether or not performance bonus is paid for any year is within the discretion of the Compensation Committee/Board of Directors based on such achievement.  

 

 

 

2

 

 

 

Example

The example below shows a sample cash bonus award calculation under the Plan, which is determined after the end of the performance period.  

Step #1:  A potential base bonus award is calculated by multiplying the employee’s base salary by their assigned level bonus percentage.  

Step #2:  The calculated potential base bonus amount is then split between the corporate and individual performance factors by the employee’s assigned level (per the weighting above).  This calculation establishes specific potential dollar awards for the performance period based on both the individual and corporate performance factor components.

Step #3:  After the end of the performance period, corporate and individual award multipliers will be established using the criteria described above.  Awards are determined by multiplying the potential bonus awards in Step #2 by the actual corporate and individual award multipliers.  

 

Example:Step # 1:    Potential Bonus Award Calculation

Position: Manager

Base salary:            $100,000

Target bonus percentage:       10%

Potential base bonus:             $ 10,000

 

Step # 2:    Split award target amount based on weighting of Performance Factors

Potential corporate performance bonus (40%):$ 4,000

Potential individual performance bonus (60%):$ 6,000

 

Step # 3:   Actual Cash Incentive Award Calculation

Assumed payment multipliers based on assessment of corporate and individual

performance:

Corporate multiplier  75% -  performance generally met objectives

Individual multiplier           125% - performance generally exceeded objectives

Cash Award:

Corporate component                         $   3,000   ($4,000 x 75%)

Individual component                         $   7,500   ($6,000 x 125%)

Total Award                                     $ 10,500

 

 

AWARD PAYMENTS

Bonus award payments may be made in cash, through the issuance of stock, stock options or another form of equity award, or by a combination of cash, stock, stock options and/or another form of equity award, at the discretion of the Compensation Committee.  All bonus award payments are subject to applicable tax withholdings.  In the event that the Compensation Committee and/or the Board of Directors elect to pay bonus awards in stock or stock options, the Compensation Committee, in its sole discretion, will make a determination as to the number of shares of stock or stock options to be issued to each Plan participant based, in part, upon the overall corporate performance and each participant’s individual performance, as described.  The issuance of stock and stock options may also be subject to the approval of the Company’s stockholders, and any stock options issued will be subject to the terms and conditions of the Company’s equity incentive award plan, as amended from time to time by the Company.

 

Payment of bonus awards will be made as soon as practicable after the issuance of the Company’s year-end audited Financial Statements for the Plan year, but not later than December 31 of the year following the Plan year.   Payments will not be impacted by any benefits, with the exception of elected 401(k) contributions which will be applied. 

 

 

 

3

 

PLAN PROVISIONS

Governance

The Plan will be governed by the Compensation Committee.  The President and/or CEO of Cidara will be responsible for the administration of the Plan.  The Compensation Committee will be responsible for recommending to the Board of Directors a bonus amount for the President and/or CEO (unless such compensation is intended to be qualified, performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended).  Additionally, the Compensation Committee will be responsible for approving any compensation or incentive awards to other executive officers of the Company and all other officers who are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.  All determinations of the Compensation Committee, under the Plan, shall be final and binding on all Plan participants.

 

Compensation Committee’s Absolute Right to Alter or Abolish the Plan

The Compensation Committee reserves the right in its absolute discretion to terminate the Plan, or any portion of the Plan, at any time or to alter the terms and conditions under which a bonus will be paid. In the event of the Plan’s termination prior to the payment of a bonus, such bonus will not be payable under this Plan. Such discretion may be exercised any time before, during, and after the Plan year is completed. No participant shall have any vested right to receive any compensation hereunder until actual delivery of such compensation.  Participation in the Plan at any given time does not guarantee ongoing participation.

 

Employment Duration/Employment Relationship

This Plan does not, and Cidara’s policies and practices in administering this Plan do not, constitute an express or implied contract or other agreement concerning the duration of any participant’s employment with the Company.  The employment relationship of each participant is “at will” and may be terminated at any time by Cidara or by the participant, with or without cause.

 

 

 

 

 

Any questions pertaining to this Plan should be directed to the Human Resources Department.

4

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