Document:

Exhibit 10.2

Exhibit 10.2

MANAGEMENT RETENTION AGREEMENT

THIS MANAGEMENT RETENTION AGREEMENT (this “Agreement”) is entered into this       day of
December, 2008, between FedEx Corporation, a Delaware corporation (the “Corporation”), and
                                         (the “Executive”).

WHEREAS, the Executive currently serves as                                          of the Corporation; and

WHEREAS, the Corporation considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of the Corporation and
its stockholders; and

WHEREAS, the Board of Directors of the Corporation (the “Board”) has determined that it is in
the best interests of the Corporation and its stockholders to secure the Executive’s continued
services and to ensure the Executive’s continued dedication and objectivity in the event of any
threat or occurrence of, or negotiation or other action that could lead to or create the
possibility of, a Change of Control (as defined in Section 2) of the Corporation, without concern
as to whether the Executive might be hindered or distracted by personal uncertainties and risks
created by any such possible Change of Control, and to encourage the Executive’s full attention and
dedication to the Corporation, the Board has authorized the Corporation to enter into this
Agreement.

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements herein contained, the Corporation and the Executive agree as follows:

1. Operation of Agreement.

(a) The “Effective Date” shall be the date during the Change of Control Period (as defined in
Section 1(b)) on which a Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive’s employment with the Corporation terminates within six months
prior to the date on which a Change of Control occurs, and the Executive can reasonably demonstrate
that the termination:

(1) was at the request of a third party who has taken steps reasonably calculated to effect a
Change of Control, or

(2) was directly related to, arose in connection with or occurred in anticipation of, such
Change of Control,

then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior
to the date of such termination.

 

 

 

(b) The “Change of Control Period” is the period commencing on the date of this Agreement and
ending on the first anniversary of such date; provided, however, that commencing on
the date one year after the date of this Agreement, and on each annual anniversary of that date
(such date and each annual anniversary thereof is referred to as the “Renewal Date”), the Change of
Control Period will be automatically extended for an additional one-year period unless at least 30
days, but not more than 90 days, prior to the Renewal Date the Corporation gives the Executive
notice that the Change of Control Period will not be extended. The Corporation may not give the
Executive any non-extension notice, however, during any period of time when the Board has knowledge
that any person has taken steps reasonably calculated to effect a Change of Control of the
Corporation until, in the Board’s opinion, such person has abandoned or terminated its efforts to
effect a Change of Control.

2. Change of Control.

For purposes of this Agreement, a “Change of Control” means the occurrence of any of the
following during the Change of Control Period:

(a) Any “person” (as such term is used in Sections 13(d) and 14 of the Securities Exchange Act
of 1934, as amended), other than (1) the Corporation, (2) any subsidiary of the Corporation, (3)
any employee benefit plan (or a trust forming a part thereof) maintained by the Corporation or any
subsidiary of the Corporation, (4) any underwriter temporarily holding securities of the
Corporation pursuant to an offering of such securities or (5) any person in connection with a
transaction described in clauses (1), (2) and (3) of Section (2)(b) below, becomes the “beneficial
owner” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
securities of the Corporation representing 30% or more of the total voting power of the
Corporation’s then outstanding voting securities, unless such securities (or, if applicable,
securities that are being converted into voting securities) are acquired directly from the
Corporation in a transaction approved by a majority of the Incumbent Board (as defined in Section
2(d) below).

(b) The consummation of a merger, consolidation or reorganization with or into the Corporation
or in which securities of the Corporation are issued, or the sale or other disposition, in one
transaction or a series of transactions, of all or substantially all of the assets of the
Corporation (a “Corporate Transaction”), unless:

(1) the stockholders of the Corporation immediately before such Corporate Transaction will
own, directly or indirectly, immediately following such Corporate Transaction, at least 60% of the
total voting power of the outstanding voting securities of the corporation or other entity
resulting from such Corporate Transaction (including a corporation or other entity that acquires
all or substantially all of the Corporation’s assets, the “Surviving Company”) or the ultimate
parent company thereof in substantially the same proportion as their ownership of the voting
securities of the Corporation immediately before such Corporate Transaction;

(2) the individuals who were members of the Board immediately prior to the execution of the
agreement providing for such Corporate Transaction constitute a majority of the
members of the board of directors or equivalent governing body of the Surviving Company or the
ultimate parent company thereof; and

 

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(3) no person, other than (i) the Corporation, (ii) any subsidiary of the Corporation, (iii)
any employee benefit plan (or a trust forming a part thereof) maintained by the Corporation or any
subsidiary of the Corporation, (iv) the Surviving Company, (v) any subsidiary or parent company of
the Surviving Company, or (vi) any person who, immediately prior to such Corporate Transaction, was
the beneficial owner of securities of the Corporation representing 30% or more of the total voting
power of the Corporation’s then outstanding voting securities, is the beneficial owner of 30% or
more of the total voting power of the then outstanding voting securities of the Surviving Company
or the ultimate parent company thereof.

(c) The stockholders of the Corporation approve a complete liquidation or dissolution of the
Corporation.

(d) Directors who, as of the date of this Agreement, constitute the Board (the “Incumbent
Board”) cease to constitute at least a majority of the Board (or, in the event of any merger,
consolidation or reorganization the principal purpose of which is to change the Corporation’s state
of incorporation, form a holding company or effect a similar reorganization as to form, the board
of directors of such surviving company or its ultimate parent company); provided,
however, that any individual becoming a member of the Board subsequent to the date of this
Agreement whose election, or nomination for election by the Corporation’s stockholders, was
approved by a vote of a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a result of either an
actual or threatened proxy contest relating to the election of directors.

Notwithstanding the foregoing, a Change of Control will not be deemed to occur solely because
any person (a “Subject Person”) becomes the beneficial owner of more than the permitted amount of
the outstanding voting securities of the Corporation as a result of the acquisition of voting
securities by the Corporation which, by reducing the number of voting securities outstanding,
increases the proportional number of voting securities beneficially owned by the Subject Person,
provided, that if a Change of Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Corporation, and after such acquisition
by the Corporation, the Subject Person becomes the beneficial owner of any additional voting
securities that increases the percentage of the then outstanding voting securities beneficially
owned by the Subject Person to 30% or more of the total voting power, then a Change of Control will
have occurred.

3. Employment Period.

The Corporation agrees to continue the Executive in its employ, and the Executive agrees to
remain in the Corporation’s employ, for the period commencing on the Effective Date and ending on
the third anniversary of such date (the “Employment Period”).

 

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4. Position and Duties.

(a) During the Employment Period:

(1) the Executive’s position (including status, offices, titles and reporting relationships),
authority, duties and responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date; and

(2) the Executive’s services will be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or location less than 35 miles from
such location.

(b) Excluding periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business hours to the
Corporation’s business and affairs and, to the extent necessary to discharge the responsibilities
assigned to the Executive under this Agreement, to use the Executive’s reasonable best efforts to
perform faithfully and efficiently these responsibilities. The Executive may:

(1) serve on corporate, civic or charitable boards or committees;

(2) deliver lectures, fulfill speaking engagements or teach at educational institutions; and

(3) manage personal investments,

so long as such activities do not significantly interfere with the performance of the Executive’s
responsibilities. It is expressly understood and agreed that, to the extent that any such
activities have been conducted by the Executive prior to the Effective Date, the continued conduct
of these activities (or the conduct of activities similar in nature and scope) subsequent to the
Effective Date will not thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Corporation.

5. Compensation.

(a) Base Salary. During the Employment Period, the Executive will receive a base
salary (“Base Salary”) at a monthly rate at least equal to the highest monthly base salary paid to
the Executive by the Corporation and any of its affiliates during the 12-month period immediately
preceding the month in which the Effective Date occurs. During the Employment Period, the Base
Salary will be reviewed at least annually and will be increased at any time and from time to time
as will be consistent with increases in base salary awarded in the ordinary course of business to
other key executives. Any increase in the Base Salary will not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Base Salary will not be reduced after any
such increase and the term Base Salary as used in this Agreement shall
refer to the Base Salary as so increased. As used in this Agreement, the term “affiliates”
includes any company controlling, controlled by or under common control with the Corporation.

 

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(b) Annual Bonus. In addition to the Base Salary, the Executive will be awarded, for
each of the Corporation’s fiscal years (a “Fiscal Year”) ending during the Employment Period, an
annual bonus (an “Annual Bonus”) (either pursuant to a bonus, profit sharing or incentive plan or
program of the Corporation or otherwise) in cash at least equal to the average annual bonus paid or
payable to the Executive during the three Fiscal Years immediately prior to the Fiscal Year in
which the Effective Date occurs (or for such lesser number of full Fiscal Years prior to the
Effective Date for which the Executive was eligible to earn such a bonus, and annualized with
respect to any such Fiscal Year for which the Executive has been employed only during a portion
thereof). Each such Annual Bonus will be payable within the first 60 days of the Fiscal Year next
following the Fiscal Year for which the Annual Bonus is awarded.

(c) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive will be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable to other peer executives of the Corporation (including,
without limitation, the Corporation’s qualified and non-qualified pension, profit sharing,
long-term performance bonus, restricted stock and stock option plans, in each case comparable to
those in effect or as subsequently amended), but in no event will these plans, practices, policies
and programs provide the Executive with compensation, benefits and reward opportunities less
favorable, in the aggregate, than the most favorable of those provided by the Corporation for the
Executive under such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as
provided at any time thereafter with respect to other peer executives of the Corporation and its
affiliates.

(d) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, will be eligible for participation in and shall receive all
benefits under the welfare benefit plans, practices, policies and programs provided by the
Corporation (including, without limitation, medical, prescription, dental, vision, disability,
salary continuance, group life, accidental death and travel accident insurance plans and programs),
in each case comparable to those in effect at any time during the 90-day period immediately
preceding the Effective Date which would be most favorable to the Executive or, if more favorable
to the Executive, as in effect at any time thereafter with respect to other peer executives of the
Corporation and its affiliates.

(e) Expenses. During the Employment Period, the Executive will be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Corporation in effect for the Executive at
any time during the 90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to other peer executives of the
Corporation and its affiliates.

(f) Fringe Benefits. During the Employment Period, the Executive will be entitled to
fringe benefits in accordance with the most favorable plans, practices, programs and policies of
the Corporation in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other peer executives of the Corporation and its affiliates.

 

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(g) Office and Staff Support. During the Employment Period, the Executive will be
entitled to an office or offices of a size and with furnishings and other appointments, and to
secretarial and other assistance, at least equal to those provided to the Executive by the
Corporation at any time during the 90-day period immediately preceding the Effective Date which
would be most favorable to the Executive or, if more favorable to the Executive, as provided at any
time thereafter with respect to other peer executives of the Corporation and its affiliates.

(h) Vacation. During the Employment Period, the Executive will be entitled to paid
vacation in accordance with the most favorable policies of the Corporation as in effect for the
Executive at any time during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter with respect to other peer
executives of the Corporation and its affiliates.

6. Termination.

(a) Death or Disability. This Agreement will terminate automatically upon the
Executive’s death during the Employment Period. The Corporation may terminate this Agreement,
after having established the Executive’s Disability (as defined below) during the Employment
Period, by giving to the Executive written notice of its intention to terminate the Executive’s
employment. In such case, the Executive’s employment with the Corporation will terminate effective
on the 180th day after receipt of such notice (the “Disability Effective Date”),
provided, that within 180 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability”
means absence from the full-time performance of the Executive’s duties pursuant to a determination
made in accordance with the procedures established by the Corporation under the Corporation’s
long-term disability benefits plan (as in effect as of the Effective Date) that the Executive is
disabled as a result of incapacity due to physical or mental illness.

(b) Cause. During the Employment Period, the Corporation may terminate the
Executive’s employment for “Cause.” For purposes of this Agreement, “Cause” means:

(1) any act or acts of dishonesty taken by the Executive and intended to result in substantial
personal enrichment of the Executive;

(2) repeated material violations by the Executive of the Executive’s obligations under Section
4 of this Agreement:

(i) which are demonstrably willful and deliberate on the Executive’s part (which violations
occur other than as a result of incapacity due to the Executive’s physical or mental illness), and

(ii) which result in demonstrably material economic injury to the Corporation and which are
not remedied in a reasonable period of time after receipt of written notice from the Corporation
specifying such breach; or

(3) the conviction of the Executive of a felony.

 

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Notwithstanding anything to the contrary set forth in this Agreement, “Cause” will not exist,
however, unless and until the Corporation has delivered to the Executive a copy of a resolution
duly adopted by three-quarters (3/4) of the Board and, to the extent applicable, three-quarters
(3/4) of the Incumbent Board, if any, at a meeting of the Board called and held for such purpose
(after reasonable notice to the Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board), finding that in the good faith opinion of the Board, the
Executive was guilty of the conduct set forth in this Section 6(b) and specifying the particulars
in detail.

(c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason within the two-year period following the date of the initial existence of the event or
circumstances constituting Good Reason. For purposes of this Agreement, “Good Reason” means:

(1) a material diminution in the Executive’s authority, duties or responsibilities with the
Corporation, including, without limitation, a reduction in the level of the Executive’s reporting
responsibility as it existed immediately prior to the Effective Date (such as the Executive being
required to report to an officer or employee of the Corporation instead of reporting directly to
the Board);

(2) a material failure by the Corporation to comply with any of the provisions of Section 5 of
this Agreement;

(3) a material change in the office or location at which the Corporation requires the
Executive to be based during the Employment Period, except for travel reasonably required in the
performance of the Executive’s responsibilities;

(4) any purported termination by the Corporation of the Executive’s employment otherwise than
as expressly permitted by this Agreement, it being understood that any such purported termination
will not be effective for any purpose of this Agreement; or

(5) any material failure by the Corporation to comply with and satisfy Section 13 of this
Agreement;

provided, however, that the Executive will have Good Reason to terminate
employment only if (i) the Executive provides notice to the Corporation of the existence of the
event or circumstances constituting Good Reason specified in any of the preceding clauses within 90
days of the initial existence of such event or circumstances, and (ii) the Corporation does not
remedy such event or circumstances within 30 days following receipt by the Corporation of such
notice.

 

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(d) Notice of Termination. Any termination by the Corporation for Cause or by the
Executive for Good Reason will be communicated by a Notice of Termination to the other party, given
in accordance with Section 15(b). For purposes of this Agreement, a “Notice of Termination” means
a written notice which:

(1) indicates the specific termination provision in this Agreement relied upon;

(2) to the extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under the provision so
indicated; and

(3) if the Date of Termination (as defined in Section 6(e) below) is other than the date of
receipt of such notice, specifies the Date of Termination (which date shall be not more than 15
days after the giving of such notice (except as provided in Section 6(e) of this Agreement)).

(e) Date of Termination. “Date of Termination” means (1) the effective date on which
the Executive’s employment by the Corporation terminates as specified in a Notice of Termination by
the Corporation or the Executive, as the case may be, (2) if the Executive’s employment is
terminated by the Corporation other than for Cause, the date specified in the notice from the
Corporation to the Executive regarding such termination, (3) if the Executive voluntarily
terminates employment (excluding a termination for Good Reason), the date on which the Executive
notifies the Corporation of such termination (or such later date as agreed to by the Executive and
the Corporation), or (4) if the Executive’s employment by the Corporation terminates by reason of
death, the date of the Executive’s death. Notwithstanding the previous sentence, if the
Executive’s employment is terminated for Disability (as defined in Section 6(a)), or the
Executive’s employment is terminated by the Corporation other than for Cause, then such Date of
Termination will be no earlier than 30 days following the date on which a Notice of Termination or
other notice is received.

7. Obligations of the Corporation Upon Termination.

(a) Death. If the Executive’s employment terminates during the Employment Period by
reason of the Executive’s death, the Corporation will not have any further obligations to the
Executive’s legal representatives under this Agreement, other than those obligations accrued
hereunder at the date of the Executive’s death. Anything to the contrary notwithstanding, the
Executive’s family shall be entitled to receive benefits at least equal to the most favorable
benefits provided by the Corporation to surviving families of peer executives of the Corporation
under such plans, programs and policies relating to family death benefits, if any, as in effect at
any time during the 90-day period immediately preceding the Effective Date or, if more favorable to
the Executive’s estate and/or the Executive’s family, as in effect on the date of the Executive’s
death with respect to other peer executives of the Corporation and its affiliates and their
families.

 

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(b) Disability. If the Executive’s employment is terminated during the Employment
Period by reason of the Executive’s Disability, the Executive will be entitled after the Disability
Effective Date to receive disability and other benefits at least equal to the most favorable of
those provided by the Corporation to disabled executives and/or their families in accordance with
such plans, programs and policies relating to disability, if any, as in effect at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive’s family, as in effect at any time thereafter with respect to other peer
executives of the Corporation and its affiliates and their families.

(c) Cause; Other Than For Good Reason. If the Executive’s employment is terminated by
the Corporation for Cause, or if the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, the Corporation will pay the Executive
his full Base Salary through the Date of Termination at the rate in effect at the time Notice of
Termination or other notice is given and shall have no further obligations to the Executive under
this Agreement.

(d) Qualifying Termination. If during the Employment Period the Executive suffers a
“separation from service” (as defined in Treasury Regulation §1.409A-1(h)) because his employment
is terminated either by the Corporation other than for Cause or Disability or by reason of the
Executive’s death or by the Executive for Good Reason (a “Qualifying Termination”), then, on the
date that is six months after the Date of Termination (or, if earlier than the end of such
six-month period, within 30 days following the date of the Executive’s death), the Corporation will
pay to the Executive (except as provided below) as compensation for services rendered to the
Corporation:

(1) A lump-sum cash amount equal to the sum of:

(i) the Executive’s unpaid Base Salary through the Date of Termination (at the rate in effect
on the Date of Termination or, if higher, at the highest rate in effect at any time within the
90-day period preceding the Effective Date); plus

(ii) that portion of the target Annual Bonus under the Corporation’s incentive compensation
plans or any similar plans or programs then in effect determined by multiplying the target Annual
Bonus by the fraction arrived at by dividing the number of full weeks for which the Executive was
employed during the Fiscal Year in which his Date of Termination occurred by 52; plus

(iii) a pro rata portion of the target payments under the Corporation’s long-term performance
bonus (“LTI”) plans, or any similar plans or programs then in effect, adopted with respect to the
current Fiscal Year and with respect to each of the immediately two preceding
Fiscal Years. In each case, the pro rata portion of the LTI payment shall be determined by
dividing the number of full weeks for which the Executive was employed since the beginning of the
Fiscal Year with respect to which the relevant LTI plan was adopted to his Date of Termination by
156; plus

(iv) any unpaid vacation under the Corporation’s vacation policy in effect at the Date of
Termination (or, if more favorable to the Executive, under any vacation policy of the Corporation
in effect at any time within the 90-day period preceding the Effective Date).

 

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(2) A lump-sum cash amount equal to the sum of:

(i) three times the Executive’s highest annual rate of Base Salary in effect during the
12-month period prior to the Date of Termination; plus

(ii) three times the target annual bonus in effect for the Fiscal Year in which the Change of
Control occurs; plus

(iii) three times the target LTI payment for the Fiscal Year in which the Change of Control
occurs.

Any amount paid to the Executive pursuant to this Section 7(d)(2) shall be offset by any other
amount of severance relating to salary or bonus continuation to be received by the Executive upon
termination of the Executive’s employment under any other severance plan, policy, employment
agreement or arrangement of the Corporation.

(3) A lump sum cash amount equal to the excess of (i) the actuarial present value as of the
Date of Termination of the benefits that would be accrued under the FedEx Corporation Employees’
Pension Plan and the FedEx Corporation Retirement Parity Pension Plan determined by assuming that
(A) the Executive has earned an additional 36 months of the Executive’s highest annual rate of Base
Salary in effect during the 12-month period prior to the Date of Termination and target annual
bonus in effect for the Fiscal Year in which the Change of Control occurs and (B) the Executive is
credited with an additional 36 months of age and service under such plans, over (ii) the actuarial
present value of the actual benefits accrued by the Executive as of the Date of Termination under
such plans without the assumptions set forth in clauses (A) and (B) of this Section (7)(d)(3).

For purposes of determining actuarial present value under this Section 7(d)(3): (i) the most
current Mortality Table (assuming a blend of 50 percent of male mortality rates and 50 percent of
female mortality rates) shall be utilized; and (ii) the interest rate on 30-year U.S. Treasury
securities for the month of May preceding the Fiscal Year in which the Date of Termination occurs
shall be used (such rate is the “applicable interest rate” under Section 417(e)(3)(A)(ii)(II) of
the Internal Revenue Code).

(4) A lump sum cash amount equal to the Corporation’s cost (determined as of the Date of
Termination) of 36 months of coverage under each plan and policy providing medical,
dental, vision, accident, disability and life coverage with respect to the Executive and his
covered dependents, determined at the same coverage level and upon the same terms as in effect
immediately prior to the Date of Termination.

8. Consequence of a Change of Control Upon Certain Entitlements.

(a) Except as provided herein, the consequences of a Change of Control on the Executive’s
stock options, restricted stock awards, or any other award or grant of stock or rights to purchase
the stock of the Corporation (by option, warrant or otherwise) and pension, retirement, bonus,
long-term incentive or any other similar benefits, will be determined in accordance with the
provisions of the applicable plans and agreements in effect on the Effective Date.

 

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(b) (1) No later than 30 days following the occurrence of a Change of Control, the Corporation
will fund in full that portion, if any, of its obligations to the Executive under the FedEx
Corporation Retirement Parity Pension Plan that are then unfunded. Such funding will be provided
through an irrevocable domestic “rabbi” trust for the benefit of the Executive, which will be
established as promptly as possible following the Effective Date for the purpose of receiving
contributions from the Corporation to fund such obligations.

(2) No later than 30 days following the occurrence of a Change of Control, the Corporation
will fund its obligations to provide payments and benefits under this Agreement (other than the
obligations which are provided for in Section 8(b)(1)) by the establishment of an irrevocable
domestic “rabbi” trust for the benefit of the Executive to which it contributes an amount
sufficient to meet its obligations. The trust described in this Section 8(b)(2) may be part of the
trust described in Section 8(b)(1).

(3) Any trust created pursuant to this Section 8 will provide for distribution of amounts to
the Executive in order to pay taxes, if any, that become due prior to payment of amounts pursuant
to the trust. Following the occurrence of a Change of Control, the Corporation will make periodic
additional contributions (no less frequently than annually) to keep the trust fully funded. The
intent is that no later than the date 30 days following the Change of Control and annually
thereafter (the “Applicable Dates”) the amount of such fund will equal at least the then present
value (determined as of each Applicable Date) of any amounts subject to the funding requirement of
Section 8(b)(1) as determined by a nationally recognized firm qualified to provide actuarial
services and to fully fund the payments and benefits described in Section 8(b)(2). The
establishment and funding of any such trust will not affect the Corporation’s obligation to provide
the benefits being funded.

(4) The trust(s) may be terminated in accordance with the trust agreement between the
Corporation and the trustee and, if so terminated, the Corporation will not be required to
establish a successor trust under this Section 8(b). The trust described in this Section 8(b) may
be part of a trust funding similar obligations for other employees of the Corporation or its
affiliates.

 

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9. Non-exclusivity of Rights.

Nothing in this Agreement will prevent or limit the Executive’s continuing or future
participation in any benefit, bonus, incentive or other plan, program, policy or practice provided
by the Corporation or any of its affiliates and for which the Executive may qualify, nor, subject
to Section 15(f), will anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any stock option, stock warrant, restricted stock, pension, bonus,
long-term incentive award or other contracts, agreements, plans or programs with or of the
Corporation or any of its affiliates. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of, or any contract or
agreement with, the Corporation or any of its affiliates at or subsequent to the Date of
Termination will be payable in accordance with such plan, policy, practice, program, contract or
agreement except as explicitly modified by this Agreement.

10. No Set-off; No Mitigation.

The Corporation’s obligation to make the payments provided for in this Agreement and otherwise
to perform its obligations will not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other claim, right or action which
the Corporation may have against the Executive or any other person. In no event will the Executive
be obligated to seek other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, nor will the amount of any
payment under this Agreement be reduced, except as otherwise specifically provided herein, by any
compensation earned by the Executive as a result of employment by another employer.

11. Tax Payment.

(a) Withholdings and Deductions. Any payment made pursuant to Section 7(d) will be
paid, less standard withholdings and other deductions authorized by the Executive or required by
law.

(b) Gross-up for Certain Taxes.

(1) Subject to the provisions of Section 11(f) of this Agreement, all determinations required
to be made under this Section 11, including whether and when a Gross-up Payment (as defined below)
is required and the amount of such Gross-up Payment and the assumptions to be utilized in arriving
at such determination, will be made by a nationally recognized public accounting firm (other than
the firm serving as the accountant or auditor for the individual, entity or group effecting the
Change of Control) that is designated by the Corporation (the “Accounting Firm”), which will
provide detailed supporting calculations both to the Corporation and the Executive within 15
business days of the receipt of notice from the Executive that there has been a Payment (as defined
below), or such earlier time as is requested by the Corporation (collectively, a “Determination”).
All fees and expenses of the Accounting Firm will be borne solely by the Corporation.

 

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(2) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
if it is determined by the Accounting Firm that any payment, distribution or other benefit
(including any acceleration of vesting of any benefit) received or deemed received by the Executive
from the Corporation and its affiliates pursuant to this Agreement or otherwise (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any Gross-up Payment required by this Section 11) (a “Payment”) is or
will become subject to any excise tax imposed by Section 4999 of the Internal Revenue Code or any
similar tax payable under any United States federal, state, local or other law (such excise tax and
all such similar taxes, together with any interest and penalties imposed in respect thereto, are
referred to in this Agreement as the “Excise Taxes”), then the Corporation will pay the Executive
within five days of receipt of the Determination, and in no event later than the end of the
calendar year in which the Executive pays such taxes, an amount (the “Gross-up Payment”) such that
the net amount retained by the Executive, after the deduction of any Excise Taxes on the Payments,
and any federal, state and local income tax, Medicare and any Excise Tax (including any applicable
interest and penalties on all such taxes) upon such Gross-up Payment, will be equal to the amount
of the Payments in the absence of the imposition of such Excise Taxes and the Gross-up Payment.

(3) For purposes of determining the amount of the Gross-up Payment, the Executive will be
deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-up Payment is to be made and local income taxes at the highest
marginal rates of taxation in the state and locality of his residence in such calendar year.

(4) If the Accounting Firm determines that no Excise Tax is payable by the Executive, it will
furnish the Executive with a written opinion that failure to report the Excise Tax on the
Executive’s applicable federal income tax return will not result in the imposition of a negligence
or similar penalty.

(c) Determination by the Executive.

(1) If at any time within 90 days following determination of the Gross-up Payment by the
Accounting Firm, the Executive disputes the amount of the Gross-up Payment, the Executive may
accept the amount determined under Section 11(b) without prejudice and may elect to demand payment
of the additional amount which the Executive, in accordance with an opinion of counsel to the
Executive (“Executive Counsel Opinion”), determines to be the full Gross-up Payment. Any such
demand by the Executive shall be made by delivery to the Corporation of a written notice that
specifies the Gross-up Payment determined by the Executive and an Executive Counsel Opinion
regarding such Gross-up Payment (such written notice and opinion collectively, the “Executive’s
Determination”).

(2) Within 14 days after delivery of the Executive’s Determination to the Corporation, the
Corporation shall either (i) pay the Executive the additional Gross-up Payment set forth in the
Executive’s Determination or (ii) deliver to the Executive a certificate specifying
the Gross-up Payment determined by the Accounting Firm, together with an opinion of the
Corporation’s counsel (“Corporation Counsel Opinion”), and pay the Executive the Gross-up Payment
specified in such certificate (less the portion of such amount, if any, previously paid to the
Executive by the Corporation). If for any reason the Corporation fails to comply with clause (ii)
of the preceding sentence, the Gross-up Payment specified in the Executive’s Determination shall be
controlling for all purposes.

 

13

 

(d) Opinion of Counsel. “Executive Counsel Opinion” means a legal opinion of
nationally recognized executive compensation counsel that there is a reasonable basis to support a
conclusion that the Gross-up Payment determined by the Executive has been calculated in accordance
with this Section and applicable law. “Corporation Counsel Opinion” means a legal opinion of a
nationally recognized executive compensation counsel that (1) there is a reasonable basis to
support a conclusion that the Gross-up Payment set forth by the Accounting Firm has been calculated
in accordance with this Section and applicable law, and (2) there is no reasonable basis for the
calculation of the Gross-up Payment determined by the Executive.

(e) Additional Gross-up Amounts. If, despite the initial conclusion of the
Corporation and/or the Executive that certain Payments are neither subject to Excise Taxes nor to
be counted in determining whether other Payments are subject to Excise Taxes (any such item, a
“Non-Parachute Item”), it is later determined with finality (pursuant to subsequently-enacted
provisions of the Internal Revenue Code, final regulations or published rulings of the Internal
Revenue Service, a final judgment of a court of competent jurisdiction or a determination by the
Accounting Firm) that any of the Non-Parachute Items are subject to Excise Taxes, or are to be
counted in determining whether any Payments are subject to Excise Taxes, with the result that the
amount of Excise Taxes payable by the Executive is greater than the amount determined by the
Corporation or the Executive pursuant to this Section, as applicable, then, within 90 days of such
final determination, on a date determined by the Corporation, the Corporation shall pay the
Executive an additional Gross-up Payment in order to compensate the Executive for such additional
Excise Taxes, any interest, fines, penalties, expenses or other costs incurred by the Executive as
a result of having taken a position in accordance with a determination made pursuant to Section
11(b), and any federal, state and local income tax, Medicare and any Excise Tax upon such
additional Gross-up Payments, calculated in the manner described in Section 11(b).

(f) Amount Increased or Contested.

(1) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue
Service or other taxing authority that, if successful, would require the payment by the Corporation
of a Gross-up Payment. Such notice shall include the nature of such claim and the date on which
such claim is due to be paid.

(2) The Executive shall give such notice as soon as practicable, but no later than ten
business days, after the Executive first obtains actual knowledge of such claim; provided,
however, that any failure by the Executive to give or delay in giving such notice shall
affect the
Corporation’s obligations under this Section only if and to the extent that such failure results in
actual prejudice to the Corporation.

 

14

 

(3) The Executive shall not pay such claim less than 30 days after the Executive gives such
notice to the Corporation (or, if sooner, the date on which payment of such claim is due). If the
Corporation notifies the Executive in writing before the expiration of such period that it desires
to contest such claim, the Executive shall:

(i) give the Corporation any information that it reasonably requests relating to such claim;

(ii) take such action in connection with contesting such claim as the Corporation reasonably
requests in writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by the Corporation;

(iii) cooperate with the Corporation in good faith to contest such claim; and

(iv) permit the Corporation to participate in any proceedings relating to such claim;

provided, however, that the Corporation shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax, income
tax or employment tax, including related interest and penalties, imposed as a result of such
representation and payment of costs and expenses.

(4) Without limiting the foregoing, the Corporation shall control all proceedings in
connection with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner.

(5) The Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Corporation shall determine; provided, however, that if the Corporation directs
the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of
such payment to the Executive, on an interest-free basis, and shall indemnify the Executive, on an
after-tax basis, for any Excise Tax, income tax or employment tax, including related interest or
penalties, imposed with respect to such advance; and further provided, that any
extension of the statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Corporation’s control of the contest shall be limited to
issues with respect to which a Gross-up Payment would be payable hereunder and the Executive shall
be entitled to
settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or
other taxing authority.

 

15

 

(g) Refunds.

(1) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant
to Section 11(f), the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Corporation’s complying with the requirements of Section
11(f)), within 90 days of a final determination of such entitlement, pay the Corporation the amount
of such refund (together with any interest paid or credited thereon after taxes applicable
thereto).

(2) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant
to Section 11(f), a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Corporation does not notify the Executive in writing of its
intent to contest such determination before the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be refunded and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-up Payment required to be paid.

(3) Any contest of a denial of refund shall be controlled by Section 11(f).

12. Confidential Information; Non-Competition; Release.

(a) Confidentiality.

(1) The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all
Confidential Information (as defined below) relating to the Corporation or any of its affiliates
and their respective businesses, which shall have been obtained by the Executive during the
Executive’s employment by the Corporation or any of its affiliates.

(2) “Confidential Information” means any non-public, proprietary information that may provide
the Corporation with a competitive advantage, including, without limitation, any trade secrets,
formulas, flow charts, computer programs and codes (including, without limitation, any source
codes), or other systems information, business, product or marketing plans, sales and other
forecasts, financial information, customer lists and information relating to compensation and
benefits, provided that such proprietary information does not include any information which is
available to the general public or is generally available within the relevant business or industry
other than as a result of the Executive’s breach of this Section 12(a).

(3) Confidential Information may be in any medium or form, including, without limitation,
physical documents, computer files, drives or discs, videotapes, audiotapes and oral
communications.

(4) Anything herein to the contrary notwithstanding, it shall not be a violation of this
Section 12(a) for the Executive to disclose information in the ordinary course of properly carrying
out his duties and responsibilities on behalf of the Corporation or to respond to an order of a
court or other body having jurisdiction provided that he gives the Corporation prior notice of any
such order. In no event shall an asserted violation of the provisions of this Section 12(a)
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement.

 

16

 

(b) Non-Competition.

(1) The Executive agrees that he shall not for a period of one year following the Date of
Termination, directly or indirectly own, manage, operate, join, control, be employed by, or
participate in the ownership, management, operation or control of or be connected in any manner,
including but not limited to, holding the positions of officer, director, shareholder, consultant,
independent contractor, employee, partner or investor, with any Competing Enterprise (as defined
below); provided, however, that the Executive may invest, without being deemed in
violation of this Section 12(b), in stocks, bonds or other securities of any corporation or other
entity (but without participating in the business thereof) if such stocks, bonds or other
securities are listed for trading on a national securities exchange or NASDAQ and the Executive’s
investment does not exceed 1% of the issued and outstanding shares of capital stock, or in the case
of bonds or other securities, 1% of the aggregate principal amount thereof issued and outstanding.

(2) For purposes of this Agreement, the term “Competing Enterprise” shall mean an enterprise
that engages in any business that, on the Date of Termination, is engaged in by the Corporation or
by any of its affiliates if such enterprise engages in such business in any geographic areas in
which the Corporation or any of its affiliates conducts such business.

(c) Return of Property. Except as expressly provided herein, promptly following the
Executive’s termination of employment, the Executive shall return to the Corporation all property
of the Corporation then in the Executive’s possession or under his control, except that the
Executive may retain his personal notes, diaries, Rolodexes (whether in electronic form or
otherwise), calendars and correspondence so long as any Confidential Information therein is
conveyed to the Corporation in a tangible medium prior to the Executive’s termination of
employment.

(d) Irreparable Injury. The Executive agrees that any breach of the terms of this
Section 12 would result in irreparable injury and damage to the Corporation for which the
Corporation would have no adequate remedy at law. The Executive further agrees that in the event
of said breach or any reasonable threat of breach, the Corporation shall be entitled to an
immediate injunction and restraining order to prevent such breach or threatened breach. The terms
of this Section 12(d) shall not prevent the Corporation from pursuing any other available remedies
for any breach or threatened breach hereof, including but not limited to, the recovery of damages.
Should a court or arbitrator determine that any provision of this Section 12 is unreasonable, the
parties agree that such provision shall be interpreted and enforced to the maximum extent such
court or arbitrator deems reasonable.

(e) Release. In the event of a Qualifying Termination, the Executive agrees to
release the Corporation and its affiliates from any and all liabilities, claims and causes of
action arising from or in connection with his employment, or the termination of his employment, by
the Corporation, other than the obligations of the Corporation under this Agreement and except with
respect to the matters referenced in Sections 8(a) and 9 of this Agreement.

 

17

 

(f) Survival.

(1) The provisions of this Section 12 shall survive any termination of this Agreement and of
the Employment Period, and the existence of any claim or cause of action by the Executive against
the Corporation, whether predicated on this Agreement or otherwise, shall not constitute a defense
to the enforcement by the Corporation of the covenants and agreements of this Section.

(2) Anything in this Section 12(f) to the contrary notwithstanding, the provisions of Section
12(b) shall only apply in the event of:

(i) a termination of the Executive’s employment described in Section 1(a) hereof prior to the
occurrence of a Change of Control;

(ii) a termination of the Executive’s employment during the Employment Period that constitutes
a Qualifying Termination; or

(iii) a termination for Cause at any time during the Employment Period.

13. Successors; Binding Agreement.

(a) This Agreement shall not be terminated by any merger or consolidation of the Corporation
whereby the Corporation is or is not the surviving or resulting corporation or as a result of any
transfer of all or substantially all of the assets of the Corporation. In the event of any such
merger, consolidation or transfer of assets, the provisions of this Agreement shall be binding upon
the surviving or resulting corporation or the person or entity to which such assets are
transferred.

(b) The Corporation agrees that concurrently with any merger, consolidation or transfer of
assets referred to in Section 13(a) hereof, it will cause any successor or transferee
unconditionally to assume, by written instrument delivered to the Executive (or his beneficiary or
estate), all of the obligations of the Corporation hereunder.

(c) (1) No rights or obligations of the Corporation under this Agreement may be assigned or
transferred by the Corporation except that such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which the Corporation is not the
continuing entity, or in connection with the sale or liquidation of all or substantially all of the
assets of the Corporation, or in connection with the disposition of all or substantially all of the
assets of the Corporation, or in connection with the disposition of the business of the Corporation
substantially as an entirety, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Corporation and such assignee or transferee assumes all of
the liabilities, obligations and duties of the Corporation under this Agreement, either
contractually or as a matter of law.

 

18

 

(2) This Agreement is personal to the Executive and, without the prior written consent of the
Corporation, shall not be assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any amounts would be payable
to the Executive hereunder had the Executive continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by the Executive to receive such amounts or, if no person is so
appointed, to the Executive’s estate.

14. Indemnification.

(a) If, after the Effective Date, the Executive is made or is threatened to be made a party
to, or is otherwise involved in, any action, suit or proceeding by reason of the fact that he is or
was a director, officer or employee of the Corporation or any of its affiliates, or is or was
serving at the request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, the Corporation shall, to the
fullest extent permitted by applicable law as it presently exists or may hereafter be amended, (i)
indemnify and hold harmless the Executive against all liability and loss suffered and expenses
(including attorneys’ fees) reasonably incurred by the Executive in connection therewith, and (ii)
pay the expenses (including attorneys’ fees) incurred by the Executive in defending any such
action, suit or proceeding in advance of its final disposition; provided, however,
that the payment of expenses incurred by the Executive in advance of the final disposition of the
action, suit or proceeding shall be made only upon receipt of an undertaking by the Executive to
repay all amounts advanced if it should ultimately be determined that the Executive is not entitled
to be indemnified under this Section or otherwise.

(b) After the Effective Date, the Corporation shall maintain a directors’ and officers’
liability insurance policy covering the Executive on terms with respect to coverage and amounts no
less favorable than those of such policy in effect on the Effective Date.

 

19

 

15. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware without reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

If to the Executive:

	 	 	 	 	 	 	 
	 	 	If to the Corporation:	 	FedEx Corporation
	 	 	 	 	942 South Shady Grove Road
	 	 	 	 	Memphis, Tennessee 38120
	 

	 	 	 	Attn:
	 	Christine P. Richards
	 

	 	 	 	 	 	Executive Vice President,
	 

	 	 	 	 	 	General Counsel and Secretary

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

(d) If any contest or dispute shall arise under this Agreement involving termination of the
Executive’s employment with the Corporation or involving the failure or refusal of the Corporation
to perform fully in accordance with the terms hereof, the Corporation shall reimburse the
Executive, on a current basis, for all legal fees and expenses, if any, incurred by the Executive
in connection with such contest or dispute regardless of the result thereof.

(e) This Agreement contains the entire understanding between the Corporation and the Executive
with respect to the subject matter hereof and supersedes and nullifies any previous change of
control employment agreement between the parties, including, without limitation, the Management
Retention Agreement, dated as of                     , 200 , between the Corporation and the Executive.

 

20

 

(f) The Executive and the Corporation acknowledge that the employment of the Executive by the
Corporation is “at will” and, prior to the Effective Date, may be terminated by either the
Executive or the Corporation at any time. Except as specified in Section 1(a) hereof,
upon a termination of the Executive’s employment or upon the Executive’s ceasing to be an officer
of the Corporation, in each case, prior to the Effective Date, there shall be no further rights
under this Agreement.

(g) The Corporation’s or the Executive’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Corporation or the Executive may
have hereunder, including, without limitation, the right of the Executive to terminate employment
for Good Reason pursuant to Section 6(c) of this Agreement, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.

(h) Any reference in this Agreement to any compensation, bonus, profit sharing, stock option,
restricted stock, pension, savings, retirement, welfare, vacation or other similar benefit plan or
program means and includes, for purposes of this Agreement, any substitute or successor plan or
program.

[Signature Page Follows]

 

21

 

IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization
from its Board of Directors, the Corporation has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.

	 	 	 	 	 
	 	FedEx Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Christine P. Richards 	 
	 	 	Title:  	Executive Vice President,

General Counsel and Secretary 	 
	 
	 	 	 

 

22Exhibit 4.18

Exhibit 4.18

DATED
                     2008

THE BORROWERS

(as Borrowers)

- and -

THE SEVERAL LENDERS

(as Lenders)

- and -

DNB NOR BANK ASA

(as Agent)

- and -

DNB NOR BANK ASA

(as Security Trustee)

- and -

DNB NOR BANK ASA

NORDEA BANK FINLAND PLC, New York Branch

SUMITOMO MITSUI BANKING CORPORATION, Brussels Branch

LLOYDS TSB BANK PLC

(as Mandated Lead Arrangers)

- and -

DNB NOR BANK ASA

NORDEA BANK FINLAND PLC, New York Branch

(as Bookrunners)

 

SECURED FACILITY AGREEMENT

 

STEPHENSON HARWOOD

One St. Paul’s Churchyard

London EC4M 8SH

Tel: 020 7329 4422

Fax: 020 7329 7100

Ref: 819/1314

 

 

 

CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1 Definitions and Interpretation
	 	 	2	 
	 
	 	 	 	 
	2 The Facility and its Purposes
	 	 	16	 
	 
	 	 	 	 
	3 Conditions of Utilisation
	 	 	18	 
	 
	 	 	 	 
	4 Advance
	 	 	22	 
	 
	 	 	 	 
	5 Repayment
	 	 	23	 
	 
	 	 	 	 
	6 Prepayment
	 	 	23	 
	 
	 	 	 	 
	7 Interest
	 	 	24	 
	 
	 	 	 	 
	8 Indemnities
	 	 	27	 
	 
	 	 	 	 
	9 Fees
	 	 	31	 
	 
	 	 	 	 
	10 Security and Application of Moneys
	 	 	31	 
	 
	 	 	 	 
	11 Representations and Warranties
	 	 	33	 
	 
	 	 	 	 
	12 Undertakings and Covenants
	 	 	38	 
	 
	 	 	 	 
	13 Events of Default
	 	 	43	 
	 
	 	 	 	 
	14 Assignment and Sub-Participation
	 	 	49	 
	 
	 	 	 	 
	15 The Agent, the Security Trustee and the Lenders
	 	 	51	 
	 
	 	 	 	 
	16 Set-Off
	 	 	60	 
	 
	 	 	 	 
	17 Payments
	 	 	60	 
	 
	 	 	 	 
	18 Notices
	 	 	62	 
	 
	 	 	 	 
	19 Partial Invalidity
	 	 	65	 
	 
	 	 	 	 
	20 Remedies and Waivers
	 	 	65	 

 

 

 

	 	 	 	 	 
	 	 	Page	 
	 
	21 Joint and several liability
	 	 	65	 
	 
	 	 	 	 
	22 Miscellaneous
	 	 	67	 
	 
	 	 	 	 
	23 Law and Jurisdiction
	 	 	68	 
	 
	 	 	 	 
	SCHEDULE 1: The Lenders and the Commitments
	 	 	69	 
	 
	 	 	 	 
	SCHEDULE 2: The Borrowers and the Vessels
	 	 	72	 
	 
	 	 	 	 
	SCHEDULE 3: Conditions Precedent and Subsequent
	 	 	73	 
	Part I: Conditions precedent to the First
Drawdown Date in respect of either Tranche A or
Tranche B
	 	 	73	 
	Part II: Conditions subsequent to the First Drawdown Date in respect of either Tranche A
or Tranche B
	 	 	76	 
	Part III: Conditions precedent to any subsequent drawing
	 	 	77	 
	Part IV: Conditions precedent to an Upsize Amount Drawdown Date
	 	 	78	 
	Part V: Conditions subsequent to an Upsize Amount Drawdown Date
	 	 	80	 
	 
	 	 	 	 
	SCHEDULE 4: Calculation of Mandatory Cost
	 	 	81	 
	 
	 	 	 	 
	SCHEDULE 5: Form of Drawdown Notice
	 	 	83	 
	 
	 	 	 	 
	SCHEDULE 6: Form of Transfer Certificate
	 	 	84	 
	 
	 	 	 	 
	SCHEDULE 7: Form of Upsize Notice
	 	 	87	 
	 
	 	 	 	 
	SCHEDULE 8: Reductions
	 	 	88	 

 

 

 

FACILITY AGREEMENT

Dated:
                     2008

BETWEEN:

	(1)	 	ARCTIC SPIRIT L.L.C., a limited liability company formed under the laws of the Marshall
Islands with its registered office at c/o Trust Company Complex, Ajeltake Road, Ajeltake
Islands, Majuro, Marshall Islands MH96960 and POLAR SPIRIT L.L.C., a limited liability company
formed under the laws of the Marshall Islands with its registered office at c/o Trust Company
Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands MH96960 (together the
“Borrowers” and each a “Borrower”), jointly and severally;

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

	(3)	 	DNB NOR BANK ASA, acting as agent (in that capacity the “Agent”);

	(4)	 	DNB NOR BANK ASA, NORDEA BANK FINLAND PLC, SUMITOMO MITSUI BANKING CORPORATION, Brussels
Branch and LLOYDS TSB BANK PLC acting as mandated lead arrangers (in that capacity each an
“MLA” and together the “MLAs”);

	(5)	 	DNB NOR BANK ASA and NORDEA BANK FINLAND PLC acting as bookrunners (in that capacity each a
“Bookrunner” and together the “Bookrunners”); and

	(6)	 	DNB NOR BANK ASA, acting as security trustee (in that capacity the “Security Trustee”).

WHEREAS:

Each of the Lenders has agreed to advance to the Borrowers (on a joint and several basis) its
Commitment (aggregating, with all the other Commitments, a revolving credit facility of up to one
hundred and seventy two million five hundred thousand Dollars ($172,500,000) (as increased from
time to time pursuant to the provisions of Clause 2.1.2)) (i) to refinance the aggregate purchase
price of the Vessels and (ii) for the general corporate purposes of the Guarantor Group.

 

 

 

IT IS AGREED as follows:

	1	 	Definitions and Interpretation

	 	1.1	 	In this Agreement:

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

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

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

“Assignments” means the deeds of assignment from the Borrowers in respect of each of
the Vessels referred to in Clause 10.1.2 (each an “Assignment”).

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

“Break Costs” means all sums payable by the Borrowers from time to time under Clause
8.3.

“Business Day” means a day on which banks are open for business of a nature
contemplated by this Agreement (and not authorised by law to close) in New York and
London.

“Charterer” means Polarc L.L.C. a limited liability company formed under the laws of
the Marshall Islands with its registered office at c/o Trust Company Complex,
Ajeltake Islands, Majuro, Marshall Islands MH96900.

“Charter Guarantees” means the guarantees made or to be made by the Charter
Guarantor in favour of the relevant Borrower guaranteeing the obligations of the
Charterer under each Charter.

“Charter Guarantor” means Teekay Corporation, a company incorporated under the laws
of the Marshall Islands and whose registered office is at c/o Trust Company Complex,
Ajeltake Islands, Majuro, Marshall Islands MH96960.

 

2

 

“Charters” means the time charterparties made or to be made between each Borrower
and the Charterer on the terms and subject to the conditions of which the Borrowers
respectively will charter their Vessels to the Charterer and which will be on arm’s
length terms and “Charter” means either of them.

“Commitment” means, in relation to a Lender, the aggregate amount of the Facility
which that Lender agrees to advance to the Borrowers as its several liability as
indicated against the name of that Lender in Schedule 1 (as amended from time to
time pursuant to Clause 2.1.2) and/or, where the context permits, the amount of the
Facility advanced by that Lender and remaining outstanding and “Commitments” means
more than one of them.

“Commitment Commission” means the commitment commission to be paid by the Borrowers
to the Agent on behalf of the Lenders pursuant to Clause 9.1.

“Commitment Termination Date” means the date being one (1) month before the Maturity
Date or such later date as the Lenders may in their discretion agree.

“Companies” means each ISM Company and each ISPS Company (each a “Company”).

“Conversion Agreements” means the conversion agreements in respect of each Vessel
dated 1 April 2008 between the Owner and the Charterer (as amended, supplemented,
novated or replaced from time to time).

“Conversion Project Price” means the total project price in respect of the
conversion costs, Owner supplied equipment, supervision fees, finance costs and
other expenses relating to the conversions of the Vessels (as approved by the
Lenders such approval not to be unreasonably withheld).

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

“Deeds of Covenants” means the deeds of covenants referred to in Clause 10.1.1 (each
a “Deed of Covenant”).

“Default” means an Event of Default or any event or circumstance specified in Clause
13.1 which would (with the expiry of a grace period, the giving of notice,
the making of any determination under the Finance Documents or any combination of
any of the foregoing) be an Event of Default.

 

3

 

“DOC” means, in relation to the ISM Company, a valid Document of Compliance issued
for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

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

“Drawdown Date” means the date on which a Drawing is advanced under Clause 4.

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

“Drawing” means any one amount advanced or to be advanced pursuant to a Drawdown
Notice or, where the context permits, the amount advanced and for the time being
outstanding and “Drawings” means more than one of them.

“Earnings” in relation to each Vessel means all hires, freights, pool income and
other sums payable to or for the account of its Owner in respect of that Vessel
including (without limitation) all remuneration for salvage and towage services,
demurrage and detention moneys, contributions in general average, compensation in
respect of any requisition for hire, and damages and other payments (whether awarded
by any court or arbitral tribunal or by agreement or otherwise) for breach,
termination or variation of any contract for the operation, employment or use of
that Vessel.

“Encumbrance” means a mortgage, charge, assignment, pledge, lien, or other security
interest securing any obligation of any person or any other agreement or arrangement
having a similar effect.

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

 

4

 

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

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

“Environmental Incident” means:

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

	 
	 	(b)	 	any incident in which Environmentally Sensitive Material is
released from a vessel other than a Vessel and which involves a collision
between a Vessel and such other vessel or some other incident of navigation or
operation, in either case, in connection with which the relevant Vessel is
actually or potentially liable to be arrested, attached, detained or injuncted
and/or where any guarantor, any manager (or any sub-manager of such Vessel) or
any of its officers, employees or other persons retained or instructed by it
(or such sub-manager) are at fault or allegedly at fault or otherwise liable to
any legal or administrative action; or

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

 

5

 

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

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

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

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

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

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

“Event of Default” means any of the events or circumstances set out in Clause 13.1.

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

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

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

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

“Fee Letter” means any letter or letters dated on or about the date of this
Agreement between the Agent and the Borrowers setting out any of the fees referred
to in Clause 9.

 

6

 

“Finance Documents” means this Agreement, the Security Documents, any Fee Letter and
any other document designated as such by the Agent and the Borrowers and “Finance
Document” means any one of them.

“Finance Parties” means the Agent, the Security Trustee, the MLAs, the Bookrunners
and the Lenders and “Finance Party” means any one of them.

“First Drawdown Date” means the date on which the first Drawing is advanced under
Clause 4.

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

“General Partner” means Teekay GP L.L.C., a Marshall Islands limited liability
company acting in its capacity as the general partner in the Guarantor.

“Guarantee” means the guarantee and indemnity referred to in Clause 10.1.3.

“Guarantor” means Teekay LNG Partners L.P., a limited partnership formed and
existing under the laws of the Marshall Islands and with its registered office at
c/o Trust Company Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands
MH96960.

“Guarantor Group” means the Guarantor and each of its Subsidiaries (including but
not limited to the Pledgor and the Borrowers).

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

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

“Indebtedness” means the Facility Outstandings; all other sums of any nature
including costs (together with all interest on any of those sums) which from time to
time may be payable by the Borrowers to the Finance Parties pursuant to the Security
Documents.

“Initial Maximum Amount” means the aggregate of the Tranche A Maximum Amount and the
Tranche B Maximum Amount, in a maximum aggregate amount of
one hundred and seventy two million five hundred thousand Dollars ($172,500,000).

 

7

 

“Insurances” in relation to each Vessel means all policies and contracts of
insurance (including all entries in protection and indemnity or war risks
associations) which are from time to time taken out or entered into in respect of or
in connection with that Vessel or her increased value and (where the context
permits) all benefits under such contracts and policies, including all claims of any
nature and returns of premium.

“Interest Payment Date” means each date for the payment of interest in accordance
with Clause 7.7.

“Interest Period” means each period for the payment of interest selected by the
Borrowers or agreed by the Agent pursuant to Clause 7.

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

“ISM Company” means, at any given time, the company responsible for a Vessel’s
compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

“ISPS Code” means the International Ship and Port Facility Security Code.

“ISPS Company” means, at any given time, the company responsible for a Vessel’s
compliance with the ISPS Code.

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

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

 

8

 

“LIBOR” means:

	 	(a)	 	the applicable Screen Rate; or

	 
	 	(b)	 	(if no Screen Rate is available for any Interest Period) the
arithmetic mean of the rates (rounded upwards to four decimal places) as
supplied to the Agent at its request quoted by the Reference Banks (or by one
of them if one is unable to quote) to leading banks in the London interbank
market,

at 11.00 a.m. London time two (2) Business Days before the first day of the relevant
Interest Period for the offering of deposits in Dollars in an amount comparable to
the Facility (or any relevant part of the Facility) and for a period comparable to
the relevant Interest Period.

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

“Management Agreement” means any agreement(s) for the commercial and/or technical
management of the Vessels entered into between each Owner and a company which is not
controlled either by the Guarantor or Teekay Corporation.

“Managers” means any company controlled by the Guarantor or Teekay Corporation or
such other commercial and/or technical managers of the Vessels nominated by the
relevant Owner as the Agent acting on the instructions of the Majority Lenders may
approve such approval not to be unreasonably withheld or delayed.

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in
accordance with Schedule 4.

“Margin” means nought point eight per cent (0.8%) per annum.

 

9

 

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

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

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

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

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

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

“Maturity Date” means the date falling ten (10) years after the Execution Date.

“Maximum Amount” means:

	 	(a)	 	the Initial Maximum Amount for the period from the Execution
Date until the first Upsize Trigger Date; and

	 
	 	(b)	 	the relevant Upsize Increased Maximum Amount from each Upsize
Trigger Date until the Maturity Date,

as reduced from time to time pursuant to the terms of this
Agreement.

“Mortgages” means the statutory mortgages referred to in Clause 10.1.1 together with
the Deeds of Covenants.

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

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

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

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

 

10

 

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

“Permitted Encumbrance” means (i) any Encumbrance which has the prior written
approval of the Agent acting on the instructions of all the Lenders or (ii) any
liens for current crews’ wages and salvage and liens incurred in the ordinary course
of trading a Vessel up to an aggregate amount for that Vessel at any time not
exceeding ten million Dollars ($10,000,000).

“Pledgor” means Teekay LNG Operating L.L.C..

“Pre-Approved Classification Society” means any of Det norske Veritas, Lloyds
Register, American Bureau of Shipping (ABS), Germanischer Lloyd or Bureau Veritas or
such other classification society acceptable to the Majority Lenders.

“Pre-Approved Flag” means Marshall Islands, Norwegian International Ship Registry,
Liberia, Panama, Isle of Man, Cayman Islands, Bermuda, Bahamas or Singapore.

“Proportionate Share” means, at any time, the proportion which a Lender’s Commitment
(whether or not advanced) then bears to the aggregate Commitments of all the Lenders
(whether or not advanced).

“Reduction Date” means the date falling six (6) months after the Execution Date and
each date falling at consecutive six monthly intervals thereafter.

“Reference Banks” means, in relation to LIBOR, the principal London offices (or
lending Affiliates) of each of the Bookrunners or such other banks as may be
appointed by the Agent in consultation with the Borrowers.

“Relevant Documents” means the Finance Documents, the Charters, the Charter
Guarantee, the Sub-Charters and the Management Agreements.

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

 

11

 

“Same Day Drawing”, means, in respect of the first drawing only, a Drawing
requested by the Borrowers prior to 10.00 am hours (New York time) on the day before
the First Drawdown Date and made by the Lenders on the First Drawdown Date.

“Screen Rate” means in relation to LIBOR, the British Bankers’ Association Interest
Settlement Rate for the relevant currency and period  displayed on the
appropriate page of the Reuters page LIBOR 01 (or such other page or pages which
replace(s) such page) for the purposes of displaying offered rates of leading banks,
for deposits in Dollars of amounts equal to the amount of the relevant Drawing for a
period equal in length to the relevant Interest Period.

“Security Documents” means the Mortgages, the Deeds of Covenants, the Assignments,
the Guarantee, the Share Pledges or (where the context permits) any one or more of
them and any other agreement or document which may at any time be executed by any
person as security for the payment of all or any part of the Indebtedness and
“Security Document” means any one of them.

“Security Parties” means the Borrowers, the Guarantor, the Pledgor and any other
party which may at any time during the Facility Period be liable for, or provide
security for, all or any part of the Indebtedness (but for the avoidance of doubt
not the Charterer or the Charter Guarantor) and “Security Party” means any one of
them.

“Share Pledges” means the pledges of the membership interests in each of the
Borrowers given by the Pledgor as referred to in Clause 10.1.4.

“SMC” means a valid safety management certificate issued for a Vessel by or on
behalf of the Administration under paragraph 13.7 of the ISM Code.

“SMS” means a safety management system for a Vessel developed and implemented in
accordance with the ISM Code.

“Sub-Charter” means the time charterparty in respect of each Vessel entered into
between the Charterer and the Sub-Charterers.

“Sub-Charterers” means ConocoPhillips Alaska Natural Gas Corporation and Arctic Sun
Shipping Company, Ltd. or any of their Affiliates.

 

12

 

“Subsidiary” means a subsidiary undertaking, as defined in section 1162 of the
Companies Act 2006 or any analogous definition under any other relevant system of
law.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar
nature (including any penalty or interest payable in connection with any failure to
pay or any delay in paying any of the same) and “Taxation” shall be interpreted
accordingly.

“Total Loss” in relation to a Vessel means:

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

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

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

“Tranche A” means an amount not exceeding the Tranche A Maximum Amount to be made
available by the Lenders to the Borrowers in relation to Vessel A.

“Tranche A Maximum Amount” means an amount not exceeding eighty six million two
hundred and fifty thousand Dollars ($86,250,000), as reduced from time to time in
accordance with Clause 3.4 and/or Clause 7.9.5 or increased pursuant to Clause
2.1.2.

“Tranche B” means an amount not exceeding the Tranche B Maximum Amount to be made
available by the Lenders to the Borrowers in relation to Vessel B.

“Tranche B Maximum Amount” means an amount not exceeding eighty six million two
hundred and fifty thousand Dollars ($86,250,000), as reduced from time to time in
accordance with Clause 3.4 and/or Clause 7.9.5 or increased pursuant to Clause
2.1.2.

 

13

 

“Tranches” means together Tranche A and Tranche B (each a “Tranche”).

“Tranche Maximum Amounts” means together the Tranche A Maximum Amount and the
Tranche B Maximum Amount (each a “Tranche Maximum Amount”).

“Transfer Certificate” means a certificate substantially in the form set out in
Schedule 6 or any other form agreed between the Agent and the Borrowers.

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

“Trust Property” means:

	 	(a)	 	all benefits derived by the Security Trustee from Clause 10;
and

	 	(b)	 	all benefits arising under (including, without limitation, all
proceeds of the enforcement of) each of the Security Documents,

with the exception of any benefits arising solely for the benefit of the Security
Trustee.

“Upsize Amount” means the amount set out in an Upsize Notice, which when aggregated
with all Upsize Amounts shall not exceed the lesser of (i) seventy five per cent of
the Conversion Project Price and (ii) one hundred and fifty million Dollars
($150,000,000).

“Upsize Increased Maximum Amount” means the Initial Maximum Amount as increased by
the relevant Upsize Amount with effect from each Upsize Trigger Date, being a total
maximum amount of up to three hundred and twenty two million, five hundred thousand
Dollars ($322,500,000) to be allocated between Tranche A and Tranche B as specified
by the Borrowers in the relevant Upsize Notice.

“Upsize Notice” means a notice substantially in the form of Schedule 7.

“Upsize Trigger Date” means the date specified in an Upsize Notice (being not less
than thirty (30) days following the date of such Upsize Notice) on which the
Borrowers request an increase in the Maximum Amount pursuant to Clause 2.1.2.

 

14

 

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

“Vessel A” means m.v. “ARCTIC SPIRIT” and everything now or in the future belonging
to it on board and ashore, currently registered under the flag of the Bahamas in the
ownership of Arctic Spirit L.L.C..

“Vessel B” means m.v. “POLAR SPIRIT” and everything now or in the future belonging
to it on board and ashore, currently registered under the flag of the Bahamas in the
ownership of Polar Spirit L.L.C..

“Vessels” or “Vessel” means either or both of Vessel A and Vessel B as the case
requires.

“WSJ Prime Rate” means the “Prime Rate” as published in the printed copy of the Wall
Street Journal on any particular day as the same may be adjusted from time to time.

	 	1.2	 	In this Agreement:

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

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

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

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

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

 

15

 

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

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

	 	1.2.8	 	references to any Finance Party include its successors,
transferees and assignees; and

	 	1.2.9	 	a time of day (unless otherwise specified) is a reference to
New York time.

	 	1.3	 	Offer letter

This Agreement supersedes the terms and conditions contained in any correspondence
relating to the subject matter of this Agreement exchanged between any Finance Party
and the Borrowers or their representatives prior to the date of this Agreement.

	2	 	The Facility and its Purposes

	 	2.1	 	Amount

	 	2.1.1	 	Subject to the terms of this Agreement, each of the Lenders
agrees to make available to the Borrowers its Commitment of a revolving credit
in an aggregate amount not exceeding, until the first Upsize Trigger Date, the
Initial Maximum Amount at any one time to be used by the Borrowers for the
purposes referred to in the Recitals.

	 	2.1.2	 	The Borrowers shall have the right (provided that no Event of
Default has occurred and is continuing unremedied or unwaived) to issue one or
more Upsize Notices requesting an Upsize Amount and specifying the Upsize
Trigger Date and the proportions in which it is to be allocated to Tranche A
and/or Tranche B, following receipt of which Upsize Notice the Lenders shall
have the right (but not the obligation) to subscribe in the Upsize Amount pro
rata to their Commitments in the Initial Maximum Amount. The availability of
the Upsize Amount 

 

16

 

shall
be subject (inter alia) to the participating Lenders agreeing to the proposed fee payable, as specified in
the relevant Upsize Notice. If any Lender does not take up this option
within twenty (20) days of receipt of an Upsize Notice, its portion of the
Upsize Amount shall be made available to be taken up by the participating
Lenders for a further ten (10) days. If at the end of such ten (10) day
period not all of the Upsize Amount has been subscribed, then the Upsize
Amount shall be reduced to the amount subscribed, and the reduced Upsize
Amount shall take effect from the Upsize Trigger Date. Following each
Upsize Trigger Date, the participating Lenders agree to make their
Commitments in the Maximum Amount as increased by the relevant Upsize Amount
available to the Borrowers. The aggregate amount of the Facility following
each Upsize Trigger Date shall not exceed the Maximum Amount. The Upsize
Amount shall be used for the purposes of financing up to seventy five
percent (75%) of the Conversion Project Price. At or around each Upsize
Trigger Date, the Agent shall circulate to each of the parties an amended
Schedule 8 to reflect the increased Maximum Amount, which shall be
calculated on a similar basis to the initial Schedule 8 but with the
availability of the increased Upsize Amount reducing by equal consecutive
semi annual reductions commencing six (6) months after redelivery of the
second Vessel or, if only one Vessel is so converted, of that Vessel down to
a balloon payment of zero on the Maturity Date, and an amended Schedule 1 to
reflect the amended Commitments. Save in the case of manifest error, such
amended Schedules shall be binding on all the parties with effect from the
relevant Upsize Trigger Date, and each Lender, whether participating in the
Upsize Amount or not, agrees to sign all documents reasonably necessary in
connection therewith (but if not so participating shall not be entitled to
any additional fee).

	 	2.2	 	Finance Parties’ obligations The obligations of each Finance Party under the
Finance Documents are several. Failure by a Finance Party to perform its obligations
under the Finance Documents does not affect the obligations of any other party to the
Finance Documents. No Finance Party is responsible for the obligations of any other
Finance Party under the Finance Documents.

 

17

 

	 	2.3	 	Purposes The Borrowers shall apply the Facility insofar as it relates to the
Initial Maximum Amount for the purposes referred to in the Recital and insofar as it
relates to the Upsize Amount for the purposes referred to in Clause 2.1.2.

	 	2.4	 	Monitoring No Finance Party is bound to monitor or verify the application of
any amount borrowed under this Agreement.

	3	 	Conditions of Utilisation

	 	3.1	 	Conditions precedent

	 	3.1.1	 	Before any Lender shall have any obligation to advance any
Drawing the Borrowers shall deliver or cause to be delivered to or to the order
of the Agent all of the documents and other evidence listed in Part I of
Schedule 3.

	 	3.1.2	 	Before any Lender shall have any obligation to advance any
subsequent Drawing the Borrowers shall deliver or cause to be delivered to or
to the order of the Agent all of the documents and other evidence listed in
Part III of Schedule 3.

	 	3.1.3	 	Before any Lender that has agreed to participate in any Upsize
Amount shall have any obligation to advance any drawing in respect of the
Upsize Amount the Borrowers shall deliver or cause to be delivered to or to the
order of the Agent all of the documents and other evidence listed in Part IV of
Schedule 3.

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

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

	 	3.2.2	 	the representations made by the Borrowers under Clause 11 and
by the Guarantor under the Guarantee are true in all material respects.

 

18

 

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

	 	3.3.1	 	no other Drawing under the same Tranche has been made on the
same Business Day;

	 	3.3.2	 	that Drawing will not result in there being more than seven
Drawings outstanding in respect of that Tranche at any one time;

	 	3.3.3	 	that Drawing is not less than five million Dollars
($5,000,000) and in an integral multiples of one million Dollars ($1,000,000)
or otherwise for the balance available under the relevant Tranche; and

	 	3.3.4	 	that Drawing will not increase the outstanding amount of the
relevant Tranche to a sum in excess of the relevant Tranche Maximum Amount or
the Facility to a sum in excess of the Maximum Amount.

The First Drawdown Date must occur on or before 30 June 2008 or 30 days following
the Execution Date, whichever is the later.

	 	3.4	 	Facility Reduction

	 	3.4.1	 	The amount of the Facility available to the Borrowers, for
drawing under this Agreement shall be the Maximum Amount. On the Reduction
Dates the amount of the Facility available for drawing shall be reduced by the
amounts set out in Schedule 8 (the “Initial Reduction Amounts”). On the
Maturity Date the Facility available shall be reduced to zero. Subject to the
proviso hereto, the mandatory reductions in the amount of the Facility
available for drawing required pursuant to this Clause will be made in the
amounts and at the times specified whether or not the Maximum Amount is reduced
pursuant to Clause 3.4.2, Clause 3.4.3, Clause 3.4.4, Clause 3.4.5, Clause 6.1
or Clause 7.9, PROVIDED ALWAYS THAT any reductions pursuant to Clause 3.4.2
(voluntary reductions) shall be applied to the remaining mandatory reductions
hereunder on a pro rata basis.

	 	3.4.2	 	The Borrowers may voluntarily cancel the Maximum Amount in
whole or in part (such cancellation to be against the Tranches in the
proportions specified by the Borrowers) in an amount of not less than five
million Dollars ($5,000,000) such amount to be in integral multiples of one
million Dollars ($1,000,000) (or as otherwise may be agreed by the Agent),
provided that they have first given to the Agent not fewer than five (5) Business Days’

 

19

 

prior written notice expiring on a Business Day (the
“Cancellation Date”) of their desire to reduce the Maximum Amount and
notification of which Tranche the cancellation is to be applied against;
such notice once received by the Agent shall be irrevocable and shall oblige
the Borrowers to make payment of all interest and Commitment Commission
accrued on the amount so cancelled up to and including the Cancellation Date
together with any Break Costs in respect of such cancelled amount if the
Cancellation Date is not the final day of an Interest Period. Any such
reduction in the Maximum Amount shall not be reversed. If, as a result of
any such cancellation, the Facility Outstandings would exceed the Tranche
Maximum Amounts, the Borrowers shall, on the Cancellation Date, prepay such
amount of Tranche A and/or Tranche B as will ensure that the Facility
Outstandings is not greater than the Tranche Maximum Amounts.

	 	3.4.3	 	In the event of a sale or disposal of a Vessel, the relevant
Tranche Maximum Amount shall be reduced to zero on the date falling thirty (30)
days after such sale or disposal. The Borrowers shall, on or before such
reduction date, prepay such Tranche in full. Any such prepayment shall oblige
the Borrowers to make payment of all interest and Commitment Commission accrued
on the amount so reduced up to and including the date of reduction together
with any Break Costs in respect of such reduced amount if the date of such
reduction is not the final day of an Interest Period. Any such reduction in
the Maximum Amount and Tranche Maximum Amounts shall not be reversed.

	 	3.4.4	 	In the event that any Vessel becomes a Total Loss, on the
earlier to occur of (a) the date of receipt of the proceeds of the Total Loss
and (b) the date falling one hundred and eighty (180) days after the occurrence
of the Total Loss (the “Total Loss Reduction Date”), the relevant Tranche
Maximum Amount shall be reduced to zero. The Borrowers shall, on the earlier
to occur of (i) the date on which the relevant Owner receives the proceeds of
such Total Loss and (ii) the one hundred and eightieth day after the date of
such Total Loss occurring, prepay such Tranche in full PROVIDED that if the
date of such repayment is not the last day of the then current Interest Period,
the Borrowers shall prepay such Tranche in full on the last day of the then
current Interest Period. If the amount of the prepayment is not
immediately applied, the Borrowers shall promptly, if so requested by the
Majority Lenders, place the amount of the prepayment in an account held with
the Agent and pledge such account to the Agent as security for the
Indebtedness for the period up until such funds are applied in or towards
payment hereunder. Any prepayment under this Clause 3.4.4 shall not be
reborrowed and Clause 8.3 shall apply to any such prepayment.

 

20

 

	 	3.4.5	 	In the event that (a) one of Charters is terminated early or
(b) one of the Charters expires prior to the Maturity Date, the relevant
Tranche Maximum Amount shall be reduced to zero. The Borrowers shall, on the
earlier to occur of (i) the date on which the relevant Owner receives the
notice of such Charter termination or (ii) on the expiry of the Charter prior
to the Maturity Date, prepay such Tranche in full. Any prepayment under this
Clause 3.4.5 shall not be reborrowed and Clause 8.3 shall apply to any such
prepayment.

	 	3.4.6	 	To the extent that repayments or prepayments made by the
Borrowers to the Agent in accordance with this Agreement reduce the Facility
and Tranches outstanding to less than the Maximum Amount and the Tranche
Maximum Amounts respectively, the Borrowers shall again be entitled to make
Drawings up to the Commitment Termination Date in accordance with and subject
to the terms of this Agreement. Any part of the Facility which is undrawn on
the Commitment Termination Date shall be automatically cancelled.

	 	3.4.7	 	Simultaneously with each reduction of the Maximum Amount in
accordance with Clause 3.4.1, Clause 3.4.2, Clause 3.4.3, Clause 3.4.4 or
Clause 3.4.5 (as the case may be), the Commitment of each Lender will reduce so
that the Commitments of the Lenders in respect of the amended Maximum Amount
and Tranche Maximum Amounts remain in accordance with their respective
Proportionate Shares. In the case of any increase in the Maximum Amount in
accordance with Clause 2.1.2, the Commitment of each Lender will be in
accordance with the revised Schedule 1 circulated by the Agent pursuant to
Clause 2.1.2 at or about the relevant Upsize Trigger Date.

 

21

 

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

	 	3.6	 	Conditions subsequent The Borrowers undertake to deliver or to cause to be
delivered to the Agent on, or as soon as practicable after, the First Drawdown Date the
additional documents and other evidence listed in Part II of Schedule 3.

	 	3.7	 	No Waiver If the Lenders in their sole discretion agree to advance a Drawing
to the Borrowers before all of the documents and evidence required by Clause 3.1 have
been delivered to or to the order of the Agent, the Borrowers undertake to deliver all
outstanding documents and evidence to or to the order of the Agent no later than the
date specified by the Agent, except to the extent expressly waived by the Agent in
writing.

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

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

	 	3.8.1	 	be in form and substance reasonably acceptable to the Agent; and

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

	4	 	Advance

	 	4.1	 	Drawdown Request The Borrowers may request a Drawing in respect of Tranche A
and/or Tranche B, in each case to be advanced on any Business Day prior to the
Commitment Termination Date, by delivering to the Agent a duly completed Drawdown
Notice not more than ten (10) and not fewer than three (3) Business Days before the
proposed Drawdown Date save in respect of a Same Day Drawing.

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

 

22

 

	5	 	Repayment

	 	5.1	 	Repayment of each Drawing The Borrowers agree to repay each Drawing to the
Agent for the account of the Lenders on the last day of the Interest Period in respect
of that Drawing unless the Borrowers select a further Interest Period for that Drawing
in accordance with Clause 7, provided that the Borrowers shall not be permitted to
select such a further Interest Period if a Default has occurred and shall then be
obliged to repay such Drawing on the last day of its then current Interest Period. The
Borrowers shall on the Maturity Date repay to the Agent as agent for the Lenders all
Facility Outstandings.

	 	5.2	 	Reborrowing Amounts of the Facility which are repaid or prepaid shall be
available for reborrowing in accordance with Clause 3 prior to the Commitment
Termination Date.

	6	 	Prepayment

	 	6.1	 	Illegality If it becomes unlawful in any jurisdiction for a Lender to fund or
maintain its Commitment as contemplated by this Agreement or to fund or maintain the
Facility:

	 	6.1.1	 	that Lender shall promptly notify the Agent of that event;

	 	6.1.2	 	upon the Agent notifying the Borrowers, the Commitment of that
Lender (to the extent not already advanced) will be immediately cancelled; and

	 	6.1.3	 	the Borrowers shall repay that Lender’s Proportionate Share of
any Drawing on the last day of its current Interest Period or, if earlier, the
date specified by that Lender in the notice delivered to the Agent and notified
by the Agent to the Borrowers (being no earlier than the last day of any
applicable grace period permitted by law) and the Maximum Amount shall be
reduced by the amount of that Lender’s Commitment in the Facility. Prior to
the date on which repayment is required to be made under this Clause 6.1.3 the
affected Lender shall negotiate in good faith with the Borrowers to find an
alternative method or lending base in order to reinstate and maintain its
Commitment in the Facility.

 

23

 

	 	6.2	 	Voluntary prepayment of Facility The Borrowers may prepay the whole or any
part of a Drawing (but, if in part, being an amount that reduces that Drawing by a
minimum amount of five million Dollars ($5,000,000)) provided that they give the Agent
not less than three (3) Business Days’ prior notice.

	 	6.3	 	Restrictions Any notice of prepayment given under this Clause 6 shall be
irrevocable and, unless a contrary indication appears in this Agreement, shall specify
the date or dates upon which the relevant prepayment is to be made and the amount of
that prepayment.

Any prepayment under this Agreement shall be made together with accrued interest on
the amount prepaid and, subject to any Break Costs, without premium or penalty.

If the Agent receives a notice under this Clause 6 it shall promptly forward a copy
of that notice to the Borrowers or the Lenders, as appropriate.

	 	6.4	 	Mandatory Prepayment If at any time the Facility Outstandings shall exceed the
Maximum Amount or the amount outstanding under a Tranche shall exceed the relevant
Tranche Maximum Amount, the Borrowers shall immediately prepay to the Agent on behalf
of the Lenders such amounts as will ensure that the Facility Outstandings do not exceed
the Maximum Amount or the amount outstanding under a Tranche shall not exceed the
relevant Tranche Maximum Amount, and shall pay to the Lenders all interest accrued on
the amount prepaid up to and including the date on which such prepayment occurred.

	7	 	Interest

	 	7.1	 	Interest Periods The period during which each Drawing shall be outstanding
under this Agreement shall be an Interest Period of one, three or six months’ duration,
as selected by the Borrowers in the Drawdown Notice in respect of the Drawing in
question, or such other duration as may be agreed by the Agent (acting on the
instructions of all the Lenders). Not more than seven (7) one (1) month Interest
Periods in respect of a Tranche may be selected by the Borrowers in each twelve (12)
month period.

	 	7.2	 	Beginning and end of Interest Periods The first Interest Period in respect of
each Drawing shall begin on the Drawdown Date of that Drawing and shall end on
the last day of the Interest Period selected in accordance with Clause 7.1. Any
subsequent Interest Period selected in respect of each Drawing shall commence on the
day following the last day of its previous Interest Period and shall end on the last
day of its current Interest Period selected in accordance with Clause 7.1.

 

24

 

	 	7.3	 	Interest Periods to meet Maturity Date If an Interest Period for a Drawing
would otherwise expire after the Maturity Date, the Interest Period for that Drawing
shall expire on the Maturity Date.

	 	7.4	 	Non-Business Days If an Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period will instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if there is not).

	 	7.5	 	Interest rate During each Interest Period interest shall accrue on the
relevant Drawing at the rate determined by the Agent to be

	 	(i)	 	the WSJ Prime Rate in the case of the first Interest Period for
a Same Day Drawing; or

	 	(ii)	 	in all other cases the aggregate of (a) the applicable Margin
for that Tranche, (b) LIBOR and (c) the Mandatory Cost, if applicable.

	 	7.6	 	Failure to select Interest Period If the Borrowers at any time fail to select
or agree an Interest Period in accordance with Clause 7.1, the Interest Period
applicable shall be of three (3) months duration.

	 	7.7	 	Accrual and payment of interest Interest shall accrue from day to day, shall
be calculated on the basis of a 360 day year and the actual number of days elapsed (or,
in any circumstance where market practice differs, in accordance with the prevailing
market practice) and shall be paid by the Borrowers to the Agent for the account of the
Lenders on the last day of each Interest Period and, if the Interest Period is longer
than three months, on the dates falling at three monthly intervals after the first day
of that Interest Period.

 

25

 

	 	7.8	 	Default interest If the Borrowers fail to pay any amount payable by them
under a Finance Document on its due date, interest shall accrue on the overdue amount
from the due date, subject to any applicable grace period, up to the date of actual
payment (both before and after judgment) at a rate which is one point five per cent
(1.5%) higher than the rate which would have been payable if the overdue amount
had, during the period of non-payment, constituted a Drawing for successive
Interest Periods, each selected by the Agent (acting reasonably). Any interest
accruing under this Clause 7.8 shall be immediately payable by the Borrowers on
demand by the Agent. If unpaid, any such interest will be compounded with the
overdue amount at the end of each Interest Period applicable to that overdue amount
but will remain immediately due and payable.

	 	7.9	 	Changes in market circumstances If at any time the Agent determines (which
determination shall be final and conclusive and binding on the Borrowers) that, by
reason of changes affecting the London interbank market, adequate and fair means do not
exist for determining the rate of interest on a Drawing for any Interest Period:

	 	7.9.1	 	the Agent shall give notice to the Lenders and the Borrowers
of the occurrence of such event; and

	 	7.9.2	 	the rate of interest on each Lender’s Commitment in the
relevant Drawing for that Interest Period shall be the rate per annum which is
the sum of:

	 	(a)	 	the relevant Margin; and

	 	(b)	 	the rate notified to the Agent by that Lender
as soon as practicable, and in any event before interest is due to be
paid in respect of that Interest Period, to be that which expresses as
a percentage rate per annum the cost to that Lender of funding its
Commitment in the relevant Drawing from whatever source it may
reasonably select; and

	 	(c)	 	the Mandatory Cost, if any, applicable to that
Lender’s Commitment,

 

26

 

PROVIDED THAT if the resulting rate of interest on any Commitment is not acceptable
to the Borrowers:

	 	7.9.3	 	the Agent on behalf of the Lenders will negotiate with the
Borrowers in good faith with a view to modifying this Agreement to provide a
substitute basis for determining the rate of interest which is financially a
substantial equivalent to the basis provided for in this Agreement;

	 	7.9.4	 	any substitute basis agreed pursuant to Clause 7.9.3 shall be
binding on all the parties to this Agreement and shall apply to all Commitments
in the relevant Drawing; and

	 	7.9.5	 	if, within thirty (30) days of the giving of the notice
referred to in Clause 7.9.1, the Borrowers and the Agent fail to agree in
writing on a substitute basis for determining the rate of interest in respect
of the relevant Drawing, the relevant Lender shall cease to be obliged to
advance its Proportionate Share of that Drawing, but, if it has already been
advanced, the Borrowers will immediately prepay that Proportionate Share of
that Drawing, together with any Break Costs, and the Maximum Amount shall be
reduced by the amount of that Lender’s Proportionate Share of that Drawing.

	 	7.10	 	Determinations conclusive The Agent shall promptly notify the Borrowers of
the determination of a rate of interest under this Clause 7 and each such determination
shall (save in the case of manifest error) be final and conclusive.

	8	 	Indemnities

	 	8.1	 	Transaction expenses The Borrowers will, within fourteen (14) days of the
Agent’s written demand, pay the Agent (for the account of the Finance Parties) the
amount of all reasonable out of pocket costs and expenses (including legal fees and
Value Added Tax or any similar or replacement tax if applicable) reasonably incurred by
the Finance Parties or any of them in connection with:

	 	8.1.1	 	the negotiation, preparation, printing, execution and
registration of the Finance Documents (whether or not any Finance Document is
actually executed or registered and whether or not a Drawing is advanced);

	 	8.1.2	 	any amendment, addendum or supplement to any Finance Document
(whether or not completed); and

	 	8.1.3	 	any other document which may at any time be required by a
Finance Party to give effect to any Finance Document or which a Finance Party
is entitled to call for or obtain under any Finance Document.

 

27

 

	 	8.2	 	Funding costs The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agent’s written demand,
against all losses and costs incurred or sustained by that Finance Party if, for any
reason due to a default or other action by the Borrowers, a Drawing is not advanced to
the Borrowers after the relevant Drawdown Notice has been given to the Agent, or is
advanced on a date other than that requested in the Drawdown Notice.

	 
	 	8.3	 	Break Costs The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agent’s written demand,
against all documented costs, losses, premiums or penalties incurred by that Finance
Party as a result of its receiving any prepayment of all or any part of a Drawing
(whether pursuant to Clause 6 or otherwise) on a day other than the last day of an
Interest Period for that Drawing, or any other payment under or in relation to the
Finance Documents on a day other than the due date for payment of the sum in question,
including (without limitation) any losses or costs incurred in liquidating or
re-employing deposits from third parties acquired to effect or maintain all or any part
of a Drawing.

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

	 
	 	8.5	 	Increased costs (subject to Clause 8.6) If, by reason of the introduction of
any law, or any change in any law, or any change in the interpretation or
administration of any law, or compliance with any request or requirement from any
central bank or any fiscal, monetary or other authority occurring after the date of
this Agreement:

	 	8.5.1	 	a Finance Party (or the Holding Company of a Finance Party)
shall be subject to any Tax with respect to payment of all or any part of the
Indebtedness (other than Tax on overall net income); or

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

 

28

 

	 	8.5.3	 	any reserve requirements shall be imposed, modified or deemed
applicable against assets held by or deposits in or for the account of or loans
by any branch of a Finance Party; or

	 	8.5.4	 	the manner in which a Finance Party allocates capital
resources to its obligations under this Agreement or any ratio (whether cash,
capital adequacy, liquidity or otherwise) which a Finance Party is required or
requested to maintain shall be affected; or

	 	8.5.5	 	there is imposed on a Finance Party (or on the Holding Company
of a Finance Party) any other condition in relation to the Indebtedness or the
Finance Documents;

and the result of any of the above shall be to increase the cost to a Finance Party
(or to the Holding Company of a Finance Party) of that Finance Party making or
maintaining its Commitment, or to cause a Finance Party to suffer (in its opinion) a
material reduction in the rate of return on its overall capital below the level
which it reasonably anticipated at the date of this Agreement and which it would
have been able to achieve but for its entering into this Agreement and/or performing
its obligations under this Agreement, then, subject to Clause 8.6, the Finance Party
affected shall notify the Agent and the Borrowers shall from time to time pay to the
Agent on demand for the account of that Finance Party the amount which shall
compensate that Finance Party (or the relevant Holding Company) for such additional
cost or reduced return. A certificate signed by an authorised signatory of that
Finance Party setting out the amount of that payment and the basis of its
calculation shall be submitted to the Borrowers and shall be conclusive evidence of
such amount save for manifest error or on any question of law.

	 	8.6	 	Exceptions to increased costs Clause 8.5 does not apply to the extent any
additional cost or reduced return referred to in that Clause is:

	 	8.6.1	 	compensated for by a payment made under Clause 8.10; or

	 
	 	8.6.2	 	compensated for by a payment made under Clause 17.3; or

	 
	 	8.6.3	 	compensated for by the payment of the Mandatory Cost; or

	 
	 	8.6.4	 	attributable to the wilful breach by the relevant Finance
Party (or the Holding Company of that Finance Party) of any law or regulation.

 

29

 

	 	8.7	 	Events of Default The Borrowers shall indemnify each Finance Party from time
to time, by payment to the Agent (for the account of that Finance Party) on the Agent’s
written demand, against all losses and costs incurred or sustained by that Finance
Party as a consequence of any Event of Default.

	 	8.8	 	Enforcement costs The Borrowers shall pay to the Agent (for the account of
each Finance Party) on the Agent’s written demand the amount of all costs and expenses
(including legal fees) incurred by a Finance Party in connection with the enforcement
of, or the preservation of any rights under, any Finance Document including (without
limitation) any losses, costs and expenses which that Finance Party may from time to
time sustain, incur or become liable for by reason of that Finance Party being
mortgagee of a Vessel and/or a lender to the Borrowers, or by reason of that Finance
Party being deemed by any court or authority to be an operator or controller, or in any
way concerned in the operation or control, of each Vessel. No such indemnity will be
given where any such loss or cost has occurred due to gross negligence or wilful
misconduct on the part of that Finance Party; however, this shall not affect the right
of any other Finance Party to receive such indemnity.

	 	8.9	 	Other costs The Borrowers shall pay to the Agent (for the account of each
Finance Party) on the Agent’s written demand the amount of all sums which a Finance
Party may pay or become actually or contingently liable for on account of the Borrowers
in connection with a Vessel (whether alone or jointly or jointly and severally with any
other person) including (without limitation) all sums which that Finance Party may pay
or guarantees which it may give in respect of the Insurances, any expenses incurred by
that Finance Party in connection with the maintenance or repair of a Vessel or in
discharging any lien, bond or other claim relating in any way to a Vessel, and any sums
which that Finance Party may pay or guarantees which it may give to procure the release
of a Vessel from arrest or detention.

 

30

 

	 	8.10	 	Taxes The Borrowers shall pay all Taxes to which all or any part of the
Indebtedness or any Finance Document may be at any time subject (other than Tax on a
Finance Party’s overall net income) and shall indemnify the Finance Parties, by payment
to the Agent (for the account of the Finance Parties) on the Agent’s written demand,
against all liabilities, costs, claims and expenses resulting from any omission to pay
or delay in paying any such Taxes.

	9	 	Fees

	 	9.1	 	Commitment fee The Borrowers shall pay to the Agent (for the account of the
Lenders in proportion to their Commitments) a fee computed at the rate of forty per
cent (40%) of the applicable Margin on the undrawn and uncancelled amount of the
Tranche Maximum Amounts from time to time from the Execution Date until the Commitment
Termination Date. The accrued commitment fee is payable on the last Business Day of
each fiscal quarter following the Execution Date and on the Commitment Termination
Date.

	 	9.2	 	Other fees The Borrowers shall pay to the Agent on behalf of the Lenders the
fees in the amount and at the times agreed in the Fee Letter.

	 	9.3	 	Upsize Fees The Borrowers shall pay to the Agent on behalf of the Lenders the
fees in the amount and at the times agreed in each Upsize Notice.

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

	10	 	Security and Application of Moneys

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

	 	10.1.1	 	a first priority statutory mortgage over each of the Vessels together with a
collateral Deed of Covenants;

	 	10.1.2	 	a first priority deed of assignment of the Insurances, Earnings, Charter,
Conversion Agreement, Charter Guarantee and Requisition Compensation of each of
the Vessels;

 

31

 

	 	10.1.3	 	an on demand guarantee and indemnity from the Guarantor; and

	 	10.1.4	 	a pledge of the membership interests of each of the Borrowers given by the
Pledgor.

	 	10.2	 	Remittance of Earnings Immediately upon the occurrence of an Event of Default
the Borrowers shall procure that all Earnings are paid to such account(s) as the Agent
shall from time to time specify by notice in writing to the Borrowers.

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

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

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

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

in accordance with Clause 3.4.3 or Clause 3.4.4 (if relevant) or otherwise in or
towards satisfaction, or by way of retention on account, of the Indebtedness as
follows:-

	 	(i)	 	first in payment of all outstanding fees and
expenses of the Agent and the Security Trustee;

	 	(ii)	 	secondly in or towards payment of all
outstanding interest hereunder;

	 	(iii)	 	thirdly in or towards payment of all
outstanding principal hereunder;

	 	(iv)	 	fourthly in or towards payment of all other Indebtedness hereunder;

	 	(v)	 	fifthly the balance, if any, shall be remitted
to the Borrowers or whoever may be entitled thereto.

 

32

 

	11	 	Representations and Warranties

Each of the Borrowers represents and warrants to each of the Finance Parties at the
Execution Date and (by reference to the facts and circumstances then pertaining) at the date
of each Drawdown Notice, at each Drawdown Date and at each Interest Payment Date as follows
(except that the representation and warranty contained at Clause 11.6 shall only be made on
the First Drawdown Date and that the representations and warranties contained at Clause 11.2
and 11.21 shall only be made on the Execution Date).

	 	11.1	 	Status and Due Authorisation Each of the Security Parties is a corporation or
limited partnership duly incorporated or formed under the laws of its jurisdiction of
incorporation or formation with power to enter into the Finance Documents and to
exercise its rights and perform its obligations under the Finance Documents and all
corporate and other action required to authorise its execution of the Finance Documents
and its performance of its obligations thereunder has been duly taken.

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

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

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

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

 

33

 

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

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

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

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

 

34

 

	 	11.10	 	Solvency

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

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

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

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

	 	11.11	 	No Material Defaults

	 	11.11.1	 	Without prejudice to Clause 11.11.2, neither the Borrowers, the Pledgor nor
the Guarantor is in breach of or in default under any agreement to which it is
a party or which is binding on it or any of its assets to an extent or in a
manner which might have a material adverse effect on the business or financial
condition of the Guarantor Group taken as a whole.

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

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

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

 

35

 

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

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

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

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

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

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

 

36

 

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

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

	 	11.22	 	Charters etc The copies of the Charters, the Sub-Charters and the Management
Agreements delivered or to be delivered to the Agent are true and complete copies, and
to the best of the Borrowers’ knowledge and belief, each such document is valid,
binding and in full force and effect in accordance with its terms.

	 	11.23	 	Use of Facility The Facility will be used for the purposes specified in the
Recital.

	 	11.24	 	Representations Limited The representation and warranties of the Borrowers in
this Clause 11 are subject to:

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

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

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

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

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

 

37

 

	12	 	Undertakings and Covenants

The undertakings and covenants in this Clause 12 remain in force for the duration of the
Facility Period.

	 	12.1	 	General Undertakings

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

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

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

	 	12.1.4	 	Management of Vessels The Borrowers shall ensure that each of the Vessels is
at all times technically and commercially managed by the Managers.

	 	12.1.5	 	Classification The Borrowers shall ensure that each Vessel maintains the
highest classification required for the purpose of the relevant trade of such
Vessel which shall be with a Pre-Approved Classification Society, in each
case, free from any overdue recommendations and conditions affecting that
Vessel’s class.

 

38

 

	 	12.1.6	 	Certificate of Financial Responsibility The Borrowers shall obtain and
maintain a certificate of financial responsibility in relation to any Vessel
which is to call at the United States of America.

	 	12.1.7	 	Negative Pledge The Borrowers shall not create, or permit to subsist, any
Encumbrance (other than pursuant to the Security Documents) over all or any
part of the Vessels or the Insurances other than a Permitted Encumbrance.

	 	12.1.8	 	Registration The Borrowers shall not change or permit a change to the flag
of the Vessels during the Facility Period other than to a Pre-Approved Flag or
under such other flag as may be approved by the Agent acting on the
instructions of the Majority Lenders, such approval not to be unreasonably
withheld or delayed.

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

	 	12.1.10	 	Necessary Authorisations Without prejudice to Clause 12.1.9 or any other
specific provision of the Security Documents relating to an Authorisation, the
Borrowers shall (i) obtain, comply with and do all that is necessary to
maintain in full force and effect all Necessary Authorisations if a failure to
do the same may cause a Material Adverse Effect; and (ii) promptly upon
request, supply certified copies to the Agent of all Necessary Authorisations.

 

39

 

	 	12.1.11	 	Compliance with Applicable Laws The Borrowers shall comply with all
applicable laws to which they may be subject if a failure to do the same may
have a Material Adverse Effect.

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

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

	 	12.1.14	 	Other information The Borrowers will promptly supply to the Agent such
information and explanations as the Majority Lenders may from time to time
reasonably require in connection with the operation of the Vessels and any
reasonable financial information in connection with the Borrowers, and will
procure that the Agent be given the like information and explanations relating
to all other Security Parties.

	 	12.1.15	 	Inspection of records Following the occurrence of an Event of Default which
is continuing unremedied and unwaived the Borrowers will permit the inspection
of their financial records and accounts on reasonable notice from time to time
during business hours by the Agent or its nominee.

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

 

40

 

	 	12.1.17	 	Insurance The Borrowers shall ensure at their own expense throughout the
Facility Period that the Vessels are insured and operated in accordance with
the provisions set out in the relevant Security Documents.

	 	12.1.18	 	Change of Control The Borrowers shall procure that throughout the Facility
Period:

	 	(a)	 	Ownership of the Guarantor the Charter
Guarantor shall at all times own (directly or indirectly) a majority of
the limited liability company interests in the General Partner;

	 	(b)	 	Ownership of the Pledgor the Guarantor shall
remain the one hundred percent (100%) legal and beneficial owner of the
Pledgor (either directly or indirectly).

	 	(c)	 	Ownership of the Borrowers the Pledgor shall
remain the one hundred percent (100%) legal and beneficial owner of
each of the Borrowers (either directly or indirectly).

	 	12.1.19	 	“Know your
customer” checks If:

	 	(a)	 	the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation
made after the date of this Agreement;

	 	(b)	 	any change in the status of the Borrowers after
the Execution Date; or

	 	(c)	 	a proposed assignment or transfer by a Lender
of any of its rights and obligations under this Agreement to a party
that is not a Lender prior to such assignment or transfer,

 

41

 

obliges the Agent or any Lender (or, in the case of (c) above, any
prospective new Lender) to comply with “know your customer” or similar
identification procedures in circumstances where the necessary information
is not already available to it, the Borrowers shall promptly upon the
request of the Agent or any Lender supply, or procure the supply of, such
documentation and other evidence as is reasonably requested by the Agent
(for itself or on behalf of any Lender) or any Lender for itself (or, in the
case of (c) above, on behalf of any prospective new Lender) in order for the
Agent or that Lender (or, in the case of (c) above, any prospective new
Lender) to carry out and be satisfied it has complied with all necessary
“know your customer” or other similar checks under all applicable laws and
regulations pursuant to the transactions contemplated in the Finance
Documents.

	 	12.1.20	 	Borrowings The Borrowers will not (save hereunder) borrow from entities
other than members of the Guarantor Group and Teekay Corporation on a
subordinated and unsecured basis.

	 	12.1.21	 	No Dividends The Borrowers shall not pay dividends or make other
distributions to shareholders whilst an Event of Default has occurred and is
continuing unremedied and unwaived.

	 	12.1.22	 	No disposal of Assets The Borrowers shall not dispose of any material
assets other than as permitted in the Finance Documents.

	 	12.1.23	 	Chartering The Borrowers shall not:

	 	(a)	 	bareboat charter any of the Vessels during the Facility Period; or

	 	(b)	 	without the prior written consent of the
Lenders, permit any termination of, alteration to, or waiver of any
material term of either of the Charters.

	 	12.1.24	 	Conversion The Borrowers may proceed with any conversion in respect of the
Vessels without the prior written consent of the Lenders PROVIDED that the
Vessels maintain the ability to operate within the LNG sector following any
conversion works.

 

42

 

	13	 	Events of Default

	 	13.1	 	Events of Default Each of the events or circumstances set out in this Clause
13.1 is an Event of Default.

	 	13.1.1	 	Borrowers’ Failure to Pay under this Agreement The Borrowers fail to pay any
amount of principal due from them under this Agreement at the time, in the
currency and otherwise in the manner specified herein provided
that, if the Borrowers can demonstrate to the reasonable satisfaction of the
Agent that all necessary instructions were given to effect such payment and
the non-receipt thereof is attributable solely to an error in the banking
system, such payment shall instead be deemed to be due, solely for the
purposes of this paragraph, within three (3) Business Days of the date on
which it actually fell due under this Agreement (if a payment of principal),
five (5) Business Days (if a payment of interest or fees) or ten (10)
Business Days (if a sum payable on demand); or

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

	 	13.1.3	 	Specific Covenants A Security Party fails duly to perform or comply with any
of the obligations expressed to be assumed by or procured by the Borrowers under
Clauses 12.1.7, 12.1.17 or 12.1.18; or

	 	13.1.4	 	Financial Covenants The Guarantor is in breach of the Guarantor’s financial
covenants set out in Clauses 8.1.1 or 8.1.2 of the Guarantee at any time; or

	 	13.1.5	 	Other Obligations A Security Party fails duly to perform or comply with any of
the obligations expressed to be assumed by it in any Security Document (other
than those referred to in Clause 13.1.3 or Clause 13.1.4) and such failure is not
remedied within 30 days after the Agent has given notice thereof to the
Borrowers; or

 

43

 

	 	13.1.6	 	Cross Default Any indebtedness of any member of the Guarantor Group or the
Charter Guarantor is not paid when due (or within any applicable grace period) or
any indebtedness of any member of the Guarantor Group or the Charter Guarantor is
declared to be or otherwise becomes due and payable prior to its specified
maturity where (in either case) the aggregate of all such unpaid or accelerated
indebtedness of:

	 	(a)	 	each of the Borrowers is equal to or greater
than ten million Dollars ($10,000,000) or its equivalent in any other
currency; or

	 	(b)	 	any other member of the Guarantor Group (save
for the Guarantor and the Pledgor) is equal to or greater than twenty
five million Dollars ($25,000,000) or its equivalent in any other
currency; or

	 	(c)	 	the Charter Guarantor is equal to or greater
than one hundred million Dollars ($100,000,000) or its equivalent in
any other currency; or

	 	(d)	 	the Guarantor is equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency;
or

	 	(e)	 	the Pledgor is equal to or greater than fifty
million Dollars ($50,000,000), or its equivalent in any other currency;
or

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

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

 

44

 

	 	13.1.9	 	Execution or Distress

	 	(a)	 	Any Security Party fails to comply with or pay
any sum due from it (within 30 days of such amount falling due) under
any final judgment or any final order made or given by any court or
other official body of a competent jurisdiction in an aggregate (i) in
respect of the Guarantor equal to or greater than fifty million Dollars
($50,000,000) or its equivalent in any other currency; or (ii)
in respect of the Pledgor equal to or greater than fifty million
Dollars ($50,000,000) or its equivalent in any other currency, or
(iii) in respect of each Borrower equal to or greater than ten
million Dollars ($10,000,000) or its equivalent in any other
currency being a judgment or order against which there is no right
of appeal or if a right of appeal exists, where the time limit for
making such appeal has expired.

	 	(b)	 	Any execution or distress is levied against, or
an encumbrancer takes possession of, the whole or any part of, the
property, undertaking or assets of a Security Party in an aggregate
amount (i) in respect of the Guarantor equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency;
or (ii) in respect of the Pledgor equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency,
or (iii) in respect of each Borrower equal to or greater than ten
million Dollars ($10,000,000) or its equivalent in any other currency
other than any execution or distress which is being contested in good
faith and which is either discharged within 30 days or in respect of
which adequate security has been provided within 30 days to the
relevant court or other authority to enable the relevant execution or
distress to be lifted or released.

	 	(c)	 	Notwithstanding the foregoing paragraphs of
this Clause 13.1.9, any levy of any distress on or any arrest,
condemnation, confiscation, requisition for title or use, compulsory
acquisition, seizure, detention or forfeiture of a Vessel (or any part
thereof) or any exercise or purported exercise of any lien or claim on
or against a Vessel where the release of or discharge the lien or claim
on or against such Vessel has not been procured within 30 days; or

 

45

 

	 	13.1.10	 	Similar Event Any event occurs which, under the laws of any jurisdiction,
has a similar or analogous effect to any of those events mentioned in Clauses
13.1.7, 13.1.8 and 13.1.9; or

	 	13.1.11	 	Insurances Insurance is not maintained in respect of each Vessel in
accordance with the terms of the relevant Security Document in respect of that
Vessel; or

	 	13.1.12	 	Class A Vessel has its classification withdrawn by the relevant
classification society PROVIDED THAT if such withdrawal is (in the opinion of
the Agent in its absolute discretion) capable of remedy such Event of Default
shall only occur if the Vessel’s classification is not reinstated to the
satisfaction of the Agent within twenty one (21) days; or

	 	13.1.13	 	Environmental Matters

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

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

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

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

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

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

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

 

46

 

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

	 	13.1.17	 	Material Adverse Change At any time there shall occur a change in the
business or operations of a Security Party or a change in the financial
condition of any Security Party which, in the reasonable opinion of the
Majority Lenders, materially impairs such Security Party’s ability to discharge
its obligations under the Security Documents in the manner provided therein,
and such change, if capable of remedy, is not so remedied within thirty (30)
days of the delivery of a notice confirming such change by the Agent to the
relevant Security Party; or

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

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

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

 

47

 

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

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

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

	 	13.1.24	 	Notice of Termination if the Guarantor gives notice to the Agent to
determine its obligations under the Guarantee; or

	 	13.1.25	 	Status of Guarantor if the Guarantor ceases to be a publicly listed
limited partnership, or merges or demerges without the prior written approval
of the Lenders; or

	 	13.1.26	 	Termination of Charters If either of the Charters is terminated.

	 	13.2	 	Acceleration If an Event of Default is continuing unremedied or unwaived the
Agent may (with the consent of the Majority Lenders) and shall (at the request of the
Majority Lenders) by notice to the Borrowers cancel any part of the Maximum Amount not
then advanced and:

	 	13.2.1	 	declare that the Facility, together with accrued interest, and all other
amounts accrued or outstanding under the Finance Documents are immediately due
and payable, whereupon they shall become immediately due and payable; and/or

	 	13.2.2	 	declare that the Facility is payable on demand, whereupon it shall
immediately become payable on demand by the Agent; and/or

	 
	 	13.2.3	 	declare the Commitments terminated and the Maximum Amount reduced to zero.

 

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	14	 	Assignment and Sub-Participation

	 	14.1	 	Lenders’ rights Subject to the Borrowers’ consent (not to be unreasonably
withheld or delayed) a Lender may assign any of its rights under this Agreement or sell
participations in its rights and obligations under this Agreement, or transfer by
novation any of its rights and obligations under this Agreement to any other branch or
Affiliate of that Lender or (subject to a minimum assignment amount of five million
Dollars ($5,000,000)) to any other bank or financial institution or special purpose
vehicles wholly owned by a bank or financial institution, and may grant
sub-participations in all or any part of its Commitment PROVIDED any assignment, sale
or transfer under this Clause 14.1 shall not result in increased costs to the Borrowers
at the time of any such assignment, sale or transfer. Any such assignment, sale or
transfer must include a pro rata share of that Lender’s Commitment in respect of
Tranche A and Tranche B.

	 	14.2	 	Borrowers’ co-operation The Borrowers will co-operate fully with a Lender in
connection with any assignment, transfer or sub-participation by that Lender; will
execute and procure the execution of such documents as that Lender may require in that
connection; and irrevocably authorises any Finance Party to disclose to any proposed
assignee, transferee or sub-participant (whether before or after any assignment,
transfer or sub-participation and whether or not any assignment, transfer or
sub-participation shall take place) all information relating to the Security Parties,
the Facility, the Relevant Documents and the Vessels which any Finance Party may in its
discretion consider necessary or desirable (subject to any duties of confidentiality
applicable to the Lenders generally). Additionally, (but subject to the same duties of
confidentiality), any Lender may disclose the size and term of the Facility and the
names of each Security Party to any investor or potential investor in a securitisation
whether of a true sale, synthetic or other nature (or similar transaction of broadly
equivalent economic effect) of that Lender’s rights and obligations under the Finance
Documents or to any ratings agency, professional adviser, financial institution or
other person for the same purpose.

 

49

 

	 	14.3	 	Rights of assignee Any assignee of a Lender shall (unless limited by the
express terms of the assignment) take the full benefit of every provision of the
Finance
Documents benefiting that Lender PROVIDED THAT an assignment will only be
effective on notification by the Agent to that Lender and the assignee that the
Agent is satisfied it has complied with all necessary “Know your customer” or other
similar checks under all applicable laws and regulations in relation to the
assignment to the assignee.

	 	14.4	 	Transfer Certificates If a Lender wishes to transfer any of its rights and
obligations under or pursuant to this Agreement, it may do so by delivering to the
Agent a duly completed Transfer Certificate, in which event on the Transfer Date:

	 	14.4.1	 	to the extent that that Lender seeks to transfer its rights and obligations,
the Borrowers (on the one hand) and that Lender (on the other) shall be
released from all further obligations towards the other;

	 	14.4.2	 	the Borrowers (on the one hand) and the transferee (on the other) shall
assume obligations towards the other identical to those released pursuant to
Clause 14.4.1; and

	 	14.4.3	 	the Agent, each of the Lenders and the transferee shall have the same rights
and obligations between themselves as they would have had if the transferee had
been an original party to this Agreement as a Lender

PROVIDED THAT the Agent shall only be obliged to execute a Transfer Certificate
once:

	 	(a)	 	it is satisfied it has complied with all necessary “know your
customer” or other similar checks under all applicable laws and regulations in
relation to the transfer to the transferee; and

	 	(b)	 	the transferee has paid to the Agent for its own account a
transfer fee of three thousand five hundred Dollars ($3,500).

The Agent shall, as soon as reasonably practicable after it has executed a Transfer
Certificate, send to the Borrowers a copy of that Transfer Certificate.

	 	14.5	 	Finance Documents Unless otherwise expressly provided in any Finance Document
or otherwise expressly agreed between a Lender and any proposed transferee and notified
by that Lender to the Agent on or before the relevant Transfer Date, there shall
automatically be assigned to the transferee with any
transfer of a Lender’s rights and obligations under or pursuant to this Agreement
the rights of that Lender under or pursuant to the Finance Documents (other than
this Agreement) which relate to the portion of that Lender’s rights and obligations
transferred by the relevant Transfer Certificate.

 

50

 

	 	14.6	 	No assignment or transfer by the Borrowers, the Pledgor or the Guarantor The
Borrowers, the Pledgor and the Guarantor may not assign any of their rights or transfer
any of their rights or obligations under the Finance Documents without the prior
written consent of the Lenders.

	15	 	The Agent, the Security Trustee and the Lenders

	 	15.1	 	Appointment

	 	15.1.1	 	Each Lender appoints the Agent to act as its agent under and in connection
with the Finance Documents and each Lender and the Agent appoints the Security
Trustee to act as its security agent for the purpose of the Security Documents.

	 	15.1.2	 	Each Lender authorises the Agent, and each Lender and the Agent authorises
the Security Trustee, to exercise the rights, powers, authorities and
discretions specifically given to the Agent or the Security Trustee (as the
case may be) under or in connection with the Finance Documents together with
any other incidental rights, powers, authorities and discretions.

	 	15.1.3	 	Except where the context otherwise requires, references in this Clause 15 to
the “Agent” shall mean the Agent and the Security Trustee individually and
collectively.

	 	15.2	 	Authority Each Lender irrevocably authorises the Security Trustee (in the
case of Clause 15.2.1) and the Agent (in the case of Clauses 15.2.2, 15.2.3 and 15.2.4)
(in each case subject to Clauses 15.4 and 15.18):

	 	15.2.1	 	to execute any Finance Document (other than this Agreement) on its behalf;

	 	15.2.2	 	to collect, receive, release or pay any money on its behalf;

 

51

 

	 	15.2.3	 	acting on the instructions from time to time of the Majority Lenders (save
where the terms of any Security Document expressly provide otherwise) to give
or withhold any waivers, consents or approvals under or pursuant to any Finance
Document; and

	 	15.2.4	 	acting on the instructions from time to time of the Majority Lenders (save
where the terms of any Security Document expressly provide otherwise) to
exercise, or refrain from exercising, any rights, powers, authorities or
discretions under or pursuant to any Finance Document.

The Agent shall have no duties or responsibilities as agent or as security agent
other than those expressly conferred on it by the Finance Documents and shall not be
obliged to act on any instructions from the Lenders or the Majority Lenders if to do
so would, in the opinion of the Agent, be contrary to any provision of the Finance
Documents or to any law, or would expose the Agent to any actual or potential
liability to any third party.

	 	15.3	 	Trust The Security Trustee agrees and declares, and each of the other Finance
Parties acknowledges, that, subject to the terms and conditions of this Clause 15.3,
the Security Trustee holds the Trust Property on trust for the Finance Parties
absolutely. Each of the other Finance Parties agrees that the obligations, rights and
benefits vested in the Security Trustee shall be performed and exercised in accordance
with this Clause 15.3. The Security Trustee shall have the benefit of all of the
provisions of this Agreement benefiting it in its capacity as security agent for the
Finance Parties, and all the powers and discretions conferred on trustees by the
Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:

	 	15.3.1	 	the Security Trustee and any attorney, agent or delegate of the Security
Trustee may indemnify itself or himself out of the Trust Property against all
liabilities, costs, fees, damages, charges, losses and expenses sustained or
incurred by it or him in relation to the taking or holding of any of the Trust
Property or in connection with the exercise or purported exercise of the
rights, trusts, powers and discretions vested in the Security Trustee or any
other such person by or pursuant to the Security Documents or in respect of
anything else done or omitted to be done in any way relating to the Security
Documents other than as a result of its gross negligence or wilful misconduct;

 

52

 

	 	15.3.2	 	the other Finance Parties acknowledge that the Security Trustee shall be
under no obligation to insure any property nor to require any other person to
insure any property and shall not be responsible for any loss which may be
suffered by any person as a result of the lack or insufficiency of any
insurance; and

	 	15.3.3	 	the Finance Parties agree that the perpetuity period applicable to the trusts
declared by this Agreement shall be the period of eighty years from the date of
this Agreement.

	 	15.4	 	Limitations on authority Except with the prior written consent of all the
Lenders, the Agent shall not be entitled to:

	 	15.4.1	 	release or vary any security given for the Borrowers’ obligations under this
Agreement; nor

	 	15.4.2	 	waive, or agree to the reduction of, a payment of any sum of money payable by
any Security Party under the Finance Documents; nor

	 	15.4.3	 	change the meaning of the expressions “Majority Lenders”, “Margin”,
“Commitment Commission” or “Default Rate”; nor

	 	15.4.4	 	exercise, or refrain from exercising, any right, power, authority or
discretion, or give or withhold any consent, the exercise or giving of which
is, by the terms of this Agreement, expressly reserved to the Lenders; nor

	 	15.4.5	 	extend the due date for the payment of any sum of money payable by any
Security Party under any Finance Document; nor

	 	15.4.6	 	take or refrain from taking any step if the effect of such action or inaction
may lead to the increase of the obligations of a Lender under any Finance
Document; nor

	 	15.4.7	 	agree to change the currency in which any sum is payable under any Finance
Document (other than in accordance with the terms of the relevant Finance
Document); nor

	 	15.4.8	 	agree to amend this Clause 15.4.

 

53

 

	 	15.5	 	Liability Neither the Agent nor any of its directors, officers, employees or
agents shall be liable to the Lenders for anything done or omitted to be done by the
Agent under or in connection with any of the Relevant Documents unless as a result of
the Agent’s gross negligence or wilful misconduct.

	 	15.6	 	Acknowledgement Each Lender acknowledges that:

	 	15.6.1	 	it has not relied on any representation made by the Agent or any of the
Agent’s directors, officers, employees or agents or by any other person acting
or purporting to act on behalf of the Agent to induce it to enter into any
Finance Document;

	 	15.6.2	 	it has made and will continue to make without reliance on the Agent, and
based on such documents and other evidence as it considers appropriate, its own
independent investigation of the financial condition and affairs of the
Security Parties in connection with the making and continuation of the
Facility;

	 	15.6.3	 	it has made its own appraisal of the creditworthiness of the Security
Parties; and

	 	15.6.4	 	the Agent shall not have any duty or responsibility at any time to provide it
with any credit or other information relating to any Security Party unless that
information is received by the Agent pursuant to the express terms of a Finance
Document.

Each Lender agrees that it will not assert nor seek to assert against any director,
officer, employee or agent of the Agent or against any other person acting or
purporting to act on behalf of the Agent any claim which it might have against them
in respect of any of the matters referred to in this Clause 15.6.

	 	15.7	 	Limitations on responsibility The Agent shall have no responsibility to any
Security Party or to any Lender on account of:

	 	15.7.1	 	the failure of a Lender or of any Security Party to perform any of its
obligations under a Finance Document; nor

	 	15.7.2	 	the financial condition of any Security Party; nor

 

54

 

	 	15.7.3	 	the completeness or accuracy of any statements, representations or warranties
made in or pursuant to any Finance Document, or in or pursuant to any document
delivered pursuant to or in connection with any Finance Document; nor

	 	15.7.4	 	the negotiation, execution, effectiveness, genuineness, validity,
enforceability, admissibility in evidence or sufficiency of any Finance
Document or of any document executed or delivered pursuant to or in connection
with any Finance Document.

	 	15.8	 	The Agent’s rights The Agent may:

	 	15.8.1	 	assume that all representations or warranties made or deemed repeated by any
Security Party in or pursuant to any Finance Document are true and complete,
unless, in its capacity as the Agent, it has acquired actual knowledge to the
contrary;

	 	15.8.2	 	assume that no Default has occurred unless, in its capacity as the Agent, it
has acquired actual knowledge to the contrary;

	 	15.8.3	 	rely on any document or notice believed by it to be genuine;

	 	15.8.4	 	rely as to legal or other professional matters on opinions and statements of
any legal or other professional advisers selected or approved by it;

	 	15.8.5	 	rely as to any factual matters which might reasonably be expected to be
within the knowledge of any Security Party on a certificate signed by or on
behalf of that Security Party; and

	 	15.8.6	 	refrain from exercising any right, power, discretion or remedy unless and
until instructed to exercise that right, power, discretion or remedy and as to
the manner of its exercise by the Lenders (or, where applicable, by the
Majority Lenders) and unless and until the Agent has received from the Lenders
any payment which the Agent may require on account of, or any security which
the Agent may require for, any costs, claims, expenses (including legal and
other professional fees) and liabilities which it considers it may incur or
sustain in complying with those instructions.

 

55

 

	 	15.9	 	The Agent’s duties The Agent shall:

	 	15.9.1	 	if requested in writing to do so by a Lender, make enquiry and advise the
Lenders as to the performance or observance of any of the provisions of any
Finance Document by any Security Party or as to the existence of an Event of
Default; and

	 	15.9.2	 	inform the Lenders promptly of any Event of Default of which the Agent has
actual knowledge.

	 	15.10	 	No deemed knowledge The Agent shall not be deemed to have actual knowledge
of the falsehood or incompleteness of any representation or warranty made or deemed
repeated by any Security Party or actual knowledge of the occurrence of any Default
unless a Lender or a Security Party shall have given written notice thereof to the
Agent in its capacity as the Agent. Any information acquired by the Agent other than
specifically in its capacity as the Agent shall not be deemed to be information
acquired by the Agent in its capacity as the Agent.

	 	15.11	 	Other business The Agent may, without any liability to account to the
Lenders, generally engage in any kind of banking or trust business with a Security
Party or with a Security Party’s subsidiaries or associated companies or with a Lender
as if it were not the Agent.

	 	15.12	 	Indemnity The Lenders shall, promptly on the Agent’s request, reimburse the
Agent in their respective Proportionate Shares, for, and keep the Agent fully
indemnified in respect of all liabilities, damages, costs and claims sustained or
incurred by the Agent in connection with the Finance Documents, or the performance of
its duties and obligations, or the exercise of its rights, powers, discretions or
remedies under or pursuant to any Finance Document, to the extent not paid by the
Security Parties and not arising solely from the Agent’s gross negligence or wilful
misconduct.

	 	15.13	 	Employment of agents In performing its duties and exercising its rights,
powers, discretions and remedies under or pursuant to the Finance Documents, the Agent
shall be entitled to employ and pay agents to do anything which the Agent is empowered
to do under or pursuant to the Finance Documents (including the receipt of money and
documents and the payment of money) and to act or refrain
from taking action in reliance on the opinion of, or advice or information obtained
from, any lawyer, banker, broker, accountant, valuer or any other person believed by
the Agent in good faith to be competent to give such opinion, advice or information.

 

56

 

	 	15.14	 	Distribution of payments The Agent shall pay promptly to the order of each
Lender that Lender’s Proportionate Share of every sum of money received by the Agent
pursuant to the Finance Documents (with the exception of any amounts payable pursuant
to Clause 9 and/or any Fee Letter and any amounts which, by the terms of the Finance
Documents, are paid to the Agent for the account of the Agent alone or of one or more
Lenders) and until so paid such amount shall be held by the Agent on trust absolutely
for that Lender.

	 	15.15	 	Reimbursement The Agent shall have no liability to pay any sum to a Lender
until it has itself received payment of that sum. If, however, the Agent does pay any
sum to a Lender on account of any amount prospectively due to that Lender pursuant to
Clause 15.14 before it has itself received payment of that amount, and the Agent does
not in fact receive payment within five (5) Business Days after the date on which that
payment was required to be made by the terms of the Finance Documents, that Lender
will, on demand by the Agent, refund to the Agent an amount equal to the amount
received by it, together with an amount sufficient to reimburse the Agent for any
amount which the Agent may certify that it has been required to pay by way of interest
on money borrowed to fund the amount in question during the period beginning on the
date on which that amount was required to be paid by the terms of the Finance Documents
and ending on the date on which the Agent receives reimbursement.

	 	15.16	 	Redistribution of payments Unless otherwise agreed between the Finance
Parties, if at any time a Finance Party receives or recovers by way of set-off, the
exercise of any lien or otherwise from any Security Party, an amount greater than that
Finance Party’s entitlement to any sum due from that Security Party under the Finance
Documents (the amount of the excess being referred to in this Clause 15.16 and in
Clause 15.17 as the “Excess Amount”) then:

	 	15.16.1	 	that Finance Party shall promptly notify the Agent (which shall promptly
notify each other Finance Party);

 

57

 

	 	15.16.2	 	that Finance Party shall pay to the Agent an amount equal to the Excess
Amount within ten (10) days of its receipt or recovery of the Excess Amount;
and

	 	15.16.3	 	the Agent shall treat that payment as if it were a payment by the Security
Party in question on account of the sum due from that Security Party to the
Finance Party and shall account to the Finance Parties in respect of the Excess
Amount in accordance with the provisions of this Clause 15.16.

However, if a Finance Party has commenced any legal proceedings to recover sums
owing to it under the Finance Documents and, as a result of, or in connection with,
those proceedings has received an Excess Amount, the Agent shall not distribute any
of that Excess Amount to any other Finance Party which had been notified of the
proceedings and had the legal right to, but did not, join those proceedings or
commence and diligently prosecute separate proceedings to enforce its rights in the
same or another court.

	 	15.17	 	Rescission of Excess Amount If all or any part of any Excess Amount is
rescinded or must otherwise be restored to any Security Party or to any other third
party, the Finance Parties which have received any part of that Excess Amount by way of
distribution from the Agent pursuant to Clause 15.16 shall repay to the Agent for the
account of the Finance Party which originally received or recovered the Excess Amount,
the amount which shall be necessary to ensure that the Finance Parties share in the
amount of the receipt or payment retained in accordance with the provisions of the
Finance Documents, together with interest on that amount at a rate equivalent to that
(if any) paid by the Lender receiving or recovering the Excess Amount to the person to
whom that Lender is liable to make payment in respect of such amount, and Clause
15.16.3 shall apply only to the retained amount.

	 	15.18	 	Instructions Where the Agent is authorised or directed to act or refrain
from acting in accordance with the instructions of the Lenders or of the Majority
Lenders each of the Lenders shall provide the Agent with instructions within three (3)
Business Days of the Agent’s request (which request may be made orally or in writing).
If a Lender does not provide the Agent with instructions within that period, that
Lender shall be bound by the decision of the Agent. Nothing in this Clause 15.18 shall
limit the right of the Agent to take, or refrain from taking, any action without
obtaining the instructions of the Lenders or the Majority Lenders if
the Agent in its discretion considers it necessary or appropriate to take, or
refrain from taking, such action in order to preserve the rights of the Lenders
under or in connection with the Finance Documents. In that event, the Agent will
notify the Lenders of the action taken by it as soon as reasonably practicable, and
the Lenders agree to ratify any action taken by the Agent pursuant to this Clause
15.18.

 

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	 	15.19	 	Payments All amounts payable to a Lender under this Clause 15 shall be paid
to such account at such bank as that Lender may from time to time direct in writing to
the Agent.

	 	15.20	 	“Know your customer” checks Each Lender shall promptly upon the request of
the Agent supply, or procure the supply of, such documentation and other evidence as is
reasonably requested by the Agent (for itself) in order for the Agent to carry out and
be satisfied it has complied with all necessary “know your customer” or other similar
checks under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.

	 	15.21	 	Resignation Subject to a successor being appointed in accordance with this
Clause 15.21, the Agent may resign as agent and/or the Security Trustee may resign as
security agent at any time without assigning any reason by giving to the Borrowers and
the Finance Parties notice of its intention to do so, in which event the following
shall apply:

	 	15.21.1	 	with the consent of the Borrowers not to be unreasonably withheld (but such
consent not to be required at any time after an Event of Default which is
continuing unremedied and unwaived) the Finance Parties may within thirty (30)
days after the date of the notice from the Agent or the Security Trustee (as
the case may be) appoint a successor to act as agent and/or security agent or,
if they fail to do so with the consent of the Borrowers, not to be unreasonably
withheld (but such consent not to be required at any time after an Event of
Default which is continuing unremedied and unwaived), the Agent or the Security
Trustee (as the case may be) may appoint any other bank or financial
institution as its successor;

	 	15.21.2	 	the resignation of the Agent or the Security Trustee (as the case may be)
shall take effect simultaneously with the appointment of its successor on
written notice of that appointment being given to the Borrowers and the
Finance Parties;

 

59

 

	 	15.21.3	 	the Agent or the Security Trustee (as the case may be) shall thereupon be
discharged from all further obligations as agent and/or security agent but
shall remain entitled to the benefit of the provisions of this Clause 15; and

	 	15.21.4	 	the successor of the Agent or the Security Trustee (as the case may be) and
each of the other parties to this Agreement shall have the same rights and
obligations amongst themselves as they would have had if that successor had
been a party to this Agreement.

	 	15.22	 	No fiduciary relationship Except as provided in Clauses 15.3 and 15.14, the
Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or
for any other person and nothing contained in any Finance Document shall constitute a
partnership between any two or more Finance Parties or between the Agent and any other
person.

	16	 	Set-Off

Set-off A Finance Party may set off any matured obligation due from the Borrowers under
any Finance Document (to the extent beneficially owned by that Finance Party) against any
matured obligation owed by that Finance Party to the Borrowers, regardless of the place of
payment, booking branch or currency of either obligation. If the obligations are in
different currencies, that Finance Party may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of the set-off.

	17	 	Payments

	 	17.1	 	Payments Each amount payable by the Borrowers under a Finance Document shall
be paid to such account at such bank as the Agent may from time to time direct to the
Borrowers in the Currency of Account and in such funds as are customary at the time for
settlement of transactions in the relevant currency in the place of payment. Payment
shall be deemed to have been received by the Agent on the date on which the Agent
receives authenticated advice of receipt, unless that advice is received by the Agent
on a day other than a Business Day or at a time of day (whether on a Business Day or
not) when the Agent in its reasonable discretion considers that it is impossible or
impracticable for the Agent to utilise the amount
received for value that same day, in which event the payment in question shall be
deemed to have been received by the Agent on the Business Day next following the
date of receipt of advice by the Agent.

 

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	 	17.2	 	No deductions or withholdings Each payment (whether of principal or interest
or otherwise) to be made by the Borrowers under a Finance Document shall, subject only
to Clause 17.3, be made free and clear of and without deduction for or on account of
any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims
of any nature.

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

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

	 	17.5	 	Rebate If a Borrower pays any additional amount under Clause 17.3, and a
Finance Party subsequently receives a refund or allowance from any tax authority which
that Finance Party identifies as being referable to that increased amount so paid by
that Borrower, that Finance Party shall, as soon as reasonably practicable, pay to that
Borrower an amount equal to the amount of the refund or allowance received, if and to
the extent that it may do so without prejudicing its right to retain that refund or
allowance and without putting itself in any worse financial position
than that in which it would have been had the relevant deduction or withholding not
been required to have been made. Nothing in this Clause 17.5 shall be interpreted
as imposing any obligation on any Finance Party to apply for any refund or allowance
nor as restricting in any way the manner in which any Finance Party organises its
tax affairs, nor as imposing on any Finance Party any obligation to disclose to the
Borrowers any information regarding its tax affairs or tax computations.

 

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	 	17.6	 	Adjustment of due dates If any payment or transfer of funds to be made under
a Finance Document, other than a payment of interest on a Drawing, shall be due on a
day which is not a Business Day, that payment shall be made on the next succeeding
Business Day (unless the next succeeding Business Day falls in the next calendar month
in which event the payment shall be made on the next preceding Business Day). Any such
variation of time shall be taken into account in computing any interest in respect of
that payment.

	 	17.7	 	Control Account The Agent shall without further input required from the
Borrowers open and maintain on its books a control account in the name of the Borrowers
showing the advance of the Facility and the computation and payment of interest and all
other sums due under this Agreement. The Borrowers’ obligations to repay the Facility
and to pay interest and all other sums due under this Agreement shall be evidenced by
the entries from time to time made in the control account opened and maintained under
this Clause 17.7 by the Agent and those entries will, in the absence of manifest error,
be conclusive and binding.

	18	 	Notices

	 	18.1	 	Communications in writing Any communication to be made under or in connection
with this Agreement shall be made in writing and, unless otherwise stated, may be made
by fax or letter or (subject to Clause 18.6) electronic mail.

	 	18.2	 	Addresses The address and fax number (and the department or officer, if any,
for whose attention the communication is to be made) of each party to this Agreement
for any communication or document to be made or delivered under or in connection with
this Agreement are:

	 	18.2.1	 	in the case of the Borrowers, c/o Teekay Shipping (Canada) Ltd Suite 2000,
Bentall 5, 550 Burrard Street, Vancouver, B.C., Canada V6C 2K2 (fax no: +1 604
681 3011) marked for the attention of Vice President, Finance;

 

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	 	18.2.2	 	in the case of each Lender, those appearing opposite its name in Schedule 1;

	 	18.2.3	 	in the case of the Agent, 200 Park Avenue, 31st Floor, New York,
NY 10166, USA (fax no: +1 212 681 4123) marked for the attention of Teresa
Rosu; and

	 	18.2.4	 	in the case of the Security Trustee, 200 Park Avenue, 31st Floor,
New York, NY 10166, USA (fax no: +1 212 681 4123)marked for the attention of
Teresa Rosu;

or any substitute address, fax number, department or officer as any party may notify
to the Agent (or the Agent may notify to the other parties, if a change is made by
the Agent) by not less than five (5) Business Days’ notice.

	 	18.3	 	Delivery Any communication or document made or delivered by one party to this
Agreement to another under or in connection this Agreement will only be effective:

	 	18.3.1	 	if by way of fax, when received in legible form; or

	 	18.3.2	 	if by way of letter, when it has been left at the relevant address or five
(5) Business Days after being deposited in the post postage prepaid in an
envelope addressed to it at that address; or

	 	18.3.3	 	if by way of electronic mail, in accordance with Clause 18.6;

and, if a particular department or officer is specified as part of its address
details provided under Clause 18.2, if addressed to that department or officer.

Any communication or document to be made or delivered to the Agent will be effective
only when actually received by the Agent.

All notices from or to the Borrowers shall be sent through the Agent.

	 	18.4	 	Notification of address and fax number Promptly upon receipt of notification
of an address, fax number or change of address, pursuant to Clause 18.2 or changing
its own address or fax number, the Agent shall notify the other parties to this
Agreement.

 

63

 

	 	18.5	 	English language Any notice given under or in connection with this Agreement
must be in English. All other documents provided under or in connection with this
Agreement must be:

	 	18.5.1	 	in English; or

	 	18.5.2	 	if not in English, and if so required by the Agent, accompanied by a
certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.

	 	18.6	 	Electronic communication

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

	 	(i)	 	agree that, unless and until notified to the
contrary, this is to be an accepted form of communication;

	 	(ii)	 	notify each other in writing of their
electronic mail address and/or any other information required to enable
the sending and receipt of information by that means; and

	 	(iii)	 	notify each other of any change to their
address or any other such information supplied by them.

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

 

64

 

	19	 	Partial Invalidity

If, at any time, any provision of a Finance Document is or becomes illegal, invalid or
unenforceable in any respect under any law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will in any way be
affected or impaired.

	20	 	Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any
right or remedy under a Finance Document shall operate as a waiver, nor shall any single or
partial exercise of any right or remedy prevent any further or other exercise or the
exercise of any other right or remedy. The rights and remedies provided in this Agreement
are cumulative and not exclusive of any rights or remedies provided by law.

	21	 	Joint and several liability

	 	21.1	 	Nature of liability of the Borrowers The representations, warranties,
covenants, obligations and undertakings of the Borrowers contained in this Agreement
shall be joint and several so that each Borrower shall be jointly and severally liable
with the other Borrower for all of the same and such liability shall not in any way be
discharged, impaired or otherwise affected by:

	 	21.1.1	 	any forbearance (whether as to payment or otherwise) or any time or other
indulgence granted to the other Borrower or any other Security Party under or
in connection with any Finance Document;

	 	21.1.2	 	any amendment, variation, novation or replacement of any other Finance
Document;

	 	21.1.3	 	any failure of any Finance Document to be legal valid binding and enforceable
in relation to the other Borrower or any other Security Party for any reason;

	 	21.1.4	 	the winding-up or dissolution of the other Borrower or any other Security
Party;

 

65

 

	 	21.1.5	 	the release (whether in whole or in part) of, or the entering into of any
compromise or composition with, the other Borrower or any other Security Party;
or

	 	21.1.6	 	any other act, omission, thing or circumstance which would or might, but for
this provision, operate to discharge, impair or otherwise affect such
liability.

	 	21.2	 	No rights as surety Until the Indebtedness has been unconditionally and
irrevocably paid and discharged in full, each Borrower agrees that it shall not, by
virtue of any payment made under this Agreement on account of the Indebtedness or by
virtue of any enforcement by a Finance Party of its rights under this Agreement or by
virtue of any relationship between, or transaction involving, the relevant Borrower and
the other Borrower or any other Security Party:

	 	21.2.1	 	exercise any rights of subrogation in relation to any rights, security or
moneys held or received or receivable by a Finance Party or any other person;
or

	 	21.2.2	 	exercise any right of contribution from the other Borrower or any other
Security Party under any Finance Document; or

	 	21.2.3	 	exercise any right of set-off or counterclaim against the other Borrower or
any other Security Party; or

	 	21.2.4	 	receive, claim or have the benefit of any payment, distribution, security or
indemnity from the other Borrower or any other Security Party; or

	 	21.2.5	 	unless so directed by the Agent (when the relevant Borrower will prove in
accordance with such directions), claim as a creditor of the other Borrower or
any other Security Party in competition with any Finance Party

and each Borrower shall hold in trust for the Finance Parties and forthwith pay or
transfer (as appropriate) to the Agent any such payment (including an amount equal
to any such set-off), distribution or benefit of such security, indemnity or claim
in fact received by it.

 

66

 

	22	 	Miscellaneous

	 	22.1	 	No oral variations No variation or amendment of a Finance Document shall be
valid unless in writing and signed on behalf of all the Finance Parties.

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

	 	22.3	 	Rescission of payments etc. Any discharge, release or reassignment by a
Finance Party of any of the security constituted by, or any of the obligations of a
Security Party contained in, a Finance Document shall be (and be deemed always to have
been) void if any act (including, without limitation, any payment) as a result of which
such discharge, release or reassignment was given or made is subsequently wholly or
partially rescinded or avoided by operation of any law.

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

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

	 	22.6	 	Contracts (Rights of Third Parties) Act 1999 A person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce or to enjoy the benefit of any term of this Agreement.

 

67

 

	 	22.7	 	Disclosure of Information In addition to the disclosure of information
permitted under Clause 14.2, each of the Borrowers authorises each Lender to disclose
any information and/or document(s) concerning its relationship with such Lender (i) to
authorities in any other countries where such Lender or any Affiliate is represented
and/or where any Lender or any Affiliate may be requested information by any
regulatory authority, when this shall be deemed necessary in order for such Lender
or any Affiliate to meet its requirements for the contribution to reduction or
prevention of money laundering, terrorism and corruption, and (ii) to any Affiliate
of that Lender making it possible to consolidate the client’s total commitments and
offer the client any other products offered by that Lender or any Affiliate, subject
always to the duties of confidentiality on the Lenders set out herein.

	23	 	Law and Jurisdiction

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

	 	23.2	 	Jurisdiction For the exclusive benefit of the Finance Parties, the parties to
this Agreement irrevocably agree that the courts of England are to have jurisdiction to
settle any disputes which may arise out of or in connection with this Agreement and
that any proceedings may be brought in those courts.

	 	23.3	 	Alternative jurisdictions Nothing contained in this Clause 23 shall limit the
right of the Finance Parties to commence any proceedings against the Borrowers in any
other court of competent jurisdiction nor shall the commencement of any proceedings
against the Borrowers in one or more jurisdictions preclude the commencement of any
proceedings in any other jurisdiction, whether concurrently or not.

	 	23.4	 	Waiver of objections Each of the Borrowers irrevocably waives any objection
which it may now or in the future have to the laying of the venue of any proceedings in
any court referred to in this Clause 23, and any claim that those proceedings have been
brought in an inconvenient or inappropriate forum, and irrevocably agrees that a
judgment in any proceedings commenced in any such court shall be conclusive and binding
on it and may be enforced in the courts of any other jurisdiction.

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

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

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

 

68

 

SCHEDULE 1: The Lenders and the Commitments

	 	 	 	 	 
	The Lenders	 	The Commitments	 
	 	 	(US$)	 
	 
	DNB NOR Bank ASA
	 	 	34,500,000	 
	 
	 	 	 	 
	200 Park Avenue
	 	 	 	 
	31st Floor
	 	 	 	 
	New York
	 	 	 	 
	NY 10166
	 	 	 	 
	USA
	 	 	 	 
	 
	 	 	 	 
	For Credit Matters:
	 	 	 	 
	 
	Attention: Asa Jemseby-Rodgers / Sanjiv Nayar
	 	 	 	 
	Fax no: +1 212 681 3900
	 	 	 	 
	Tel: +1 212 681 3856 / +1 212 681 3862
	 	 	 	 
	Email: asa.jemseby@dnbnor.no
	 	 	 	 
	           sanjiv.nayar@dnbnor.no
	 	 	 	 
	 
	 	 	 	 
	For Administrative Matters:
	 	 	 	 
	 
	Attention: Teresa Rosu / Ahelia Singh
	 	 	 	 
	Fax no. + 1 212 681 3845
	 	 	 	 
	Tel: +1 212 681 3900
	 	 	 	 
	Email: teresa.rosu@dnbnor.no
	 	 	 	 
	           ahelia.singh@dnbnor.no
	 	 	 	 
	 
	 	 	 	 
	Nordea Bank Norge ASA, Cayman Islands Branch
	 	 	34,500,000	 
	 
	 	 	 	 
	437 Madison Avenue
	 	 	 	 
	New York
	 	 	 	 
	NY 10022
	 	 	 	 
	USA
	 	 	 	 
	 
	For Credit Matters:
	 	 	 	 
	 
	Attention: Hans Kjelsrud/Colleen Durkin
	 	 	 	 
	Fax no: +1 212 421 4420
	 	 	 	 
	Email: hans.kjelsrud@nordea.com
	 	 	 	 
	           colleen.durkin@nordea.com
	 	 	 	 
	 
	 	 	 	 
	For administration matters:
	 	 	 	 
	 
	Attention: Jacqueline Ng/Sonia Earle
	 	 	 	 
	Fax no: +1 212 750 9188
	 	 	 	 
	Email: jackie.ng@nordea.com
	 	 	 	 
	           sonia.earle@nordea.com
	 	 	 	 

 

69

 

	 	 	 	 	 
	The Lenders	 	The Commitments	 
	 	 	(US$)	 
	 
	Sumitomo Mitsui Banking Corporation, Brussels Branch
	 	 	34,500,000	 
	 
	 	 	 	 
	For Credit Matters:
	 	 	 	 
	 
	99 Queen Victoria Street
	 	 	 	 
	London EC4V 4EH
	 	 	 	 
	United Kingdom
	 	 	 	 
	Attention: Robert Taylor / Cyrille Martin
	 	 	 	 
	Fax no: + 44 207 786 101
	 	 	 	 
	Email: robert_taylor@gb.smbcgroup.com
	 	 	 	 
	           cyrille_martin@gb.smbcgroup.com
	 	 	 	 
	 
	 	 	 	 
	With copy to
	 	 	 	 
	 
	 	 	 	 
	20 rue de la ville l’evêque
	 	 	 	 
	75008 Paris
	 	 	 	 
	Attention: Guillaume Dufour / Touf-itri Akdime
	 	 	 	 
	Fax No: +33 1 44 71 40 50
	 	 	 	 
	Email: guillaume_dufour@fr.smbcgroup.com
	 	 	 	 
	           Touf-itri_akdime@fr.smbcgroup.com
	 	 	 	 
	 
	 	 	 	 
	And
	 	 	 	 
	 
	 	 	 	 
	Avenue des Arts 58, Box 18
	 	 	 	 
	1000 Brussels
	 	 	 	 
	Belgium
	 	 	 	 
	Attention: Francoise Bouchat / Nadine Boudart
	 	 	 	 
	Fax No: + 32 2 502 07 80
	 	 	 	 
	Email: francoise_bouchat@be.smbcgroup.com
	 	 	 	 
	           nadine_boudart@be.smbcgroup.com
	 	 	 	 
	 
	 	 	 	 
	For Administrative Matters:
	 	 	 	 
	 
	 	 	 	 
	European Loan Operations
	 	 	 	 
	Attention: David Griffiths / Jo Dunnage
	 	 	 	 
	99 Queen Victoria Street
	 	 	 	 
	London EC4V 4EH
	 	 	 	 
	Fax No: +44 207 786 1569
	 	 	 	 
	(fax correspondence only)
	 	 	 	 
	 
	 	 	 	 
	Lloyds TSB Bank Plc
	 	 	34,500,000	 
	 
	 	 	 	 
	10 Gresham Street
	 	 	 	 
	London EC2V 7EA
	 	 	 	 
	 
	For Credit Matters:
	 	 	 	 
	 
	Attention: Tony Stevens / David Sumner
	 	 	 	 
	Tel: +44 207 158 2647 / +44 207 158 2749
	 	 	 	 
	Fax: +44 207 158 3271 / +44 207 158 3273
	 	 	 	 
	Email: tony.stevens@lloydstsb.co.uk
	 	 	 	 
	           david.sumner@lloydstsb.co.uk
	 	 	 	 

 

70

 

	 	 	 	 	 
	The Lenders	 	The Commitments	 
	 	 	(US$)	 
	 
	For Administrative Matters:
	 	 	 	 
	 
	 	 	 	 
	Bank House
	 	 	 	 
	Wine Street,
	 	 	 	 
	Bristol BS1 2AN
	 	 	 	 
	 
	 	 	 	 
	Attention: Martina Rogers / S-Z Team
	 	 	 	 
	Tel: +44 117 923 3006 / +44 117 923 3086
	 	 	 	 
	Fax: +44 207 158 3204
	 	 	 	 
	Email: martina.rogers@lloydstsb.co.uk
	 	 	 	 
	           LoansAdmin_S-Z@lloydstsb.co.uk
	 	 	 	 
	 
	 	 	 	 
	Skandinaviska Enskilda Banken AB
	 	 	34,500,000	 
	 
	 	 	 	 
	For Credit Matters:
	 	 	 	 
	 
	 	 	 	 
	SEB Merchant Banking
	 	 	 	 
	Shipping Finance, KBBV
	 	 	 	 
	SE-10640 Stockholm
	 	 	 	 
	Sweden
	 	 	 	 
	Attention: Arne Juell-Skielse
	 	 	 	 
	Fax no: + 46 8 678 0206
	 	 	 	 
	Email: arne.juell-skielse@seb.se
	 	 	 	 
	 
	 	 	 	 
	With copy to
	 	 	 	 
	 
	 	 	 	 
	SEB Merchant Banking
	 	 	 	 
	2 Cannon Street
	 	 	 	 
	London EC4M 6XX
	 	 	 	 
	Attention: Egil Aarrestad
	 	 	 	 
	Fax No: +44 20 7236 5144
	 	 	 	 
	Email: egil.aarrestad@seb.co.uk
	 	 	 	 
	 
	 	 	 	 
	For Administrative Matters:
	 	 	 	 
	 
	 	 	 	 
	Skandinaviska Enskilda Banken AB
	 	 	 	 
	Structured Finance Operations
	 	 	 	 
	Rissneleden 110
	 	 	 	 
	SE-10640 Stockholm
	 	 	 	 
	Sweden
	 	 	 	 
	Attention: Lars Hansson
	 	 	 	 
	Fax No: +46 8 611 0384
	 	 	 	 

 

71

 

SCHEDULE 2: The Borrowers and the Vessels

	 	 	 	 	 	 	 	 	 
	Borrower	 	Vessel Name	 	 	Year Built	 
	Arctic Spirit L.L.C.
	 	“ARCTIC SPIRIT”	 	 	1993	 
	 
	 	 	 	 	 	 	 	 
	Polar Spirit L.L.C.
	 	“POLAR SPIRIT”	 	 	1993	 

 

72

 

SCHEDULE 3: Conditions Precedent and Subsequent

Part I: Conditions precedent to the First Drawdown Date in respect of either Tranche A or Tranche B

	1	 	Security Parties

	 	(a)	 	Constitutional Documents Copies of the constitutional documents of each
Security Party, the Charterer and the Charter Guarantor together with such other
evidence as the Agent may reasonably require that each Security Party, the Charterer
and the Charter Guarantor is duly formed or incorporated in its country of
incorporation or formation and remains in existence with power to enter into, and
perform its obligations under, the Relevant Documents to which it is or is to become a
party.

	 	(b)	 	Certificates of good standing A certificate of good standing in respect of
each Security Party, the Charterer and the Charter Guarantor (if such a certificate can
be obtained).

	 	(c)	 	Board resolutions A copy of a resolution of the board of directors of each
Security Party, the Charterer and the Charter Guarantor (or its sole member):

	 	(i)	 	approving the terms of, and the transactions contemplated by,
the Relevant Documents to which it is a party and ratifying or resolving that
it execute those Relevant Documents; and

	 	(ii)	 	if required authorising a specified person or persons to
execute those Relevant Documents (and all documents and notices to be signed
and/or despatched under those documents) on its behalf.

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

 

73

 

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

	2	 	Security and related documents

	 	(a)	 	Vessel documents In respect of the relevant Vessel photocopies, certified as
true, accurate and complete by a duly authorised representative of the relevant Owner,
of any relevant Management Agreement, the Charter, the Sub-Charter and the Conversion
Agreement, together in each case with all addenda, amendments or supplements.

	 	(b)	 	Evidence of Owner’s title Evidence that on the Drawdown Date (i) the relevant
Vessel is registered under the flag stated in Schedule 2 in the ownership of the
relevant Owner and (ii) the relevant Mortgage will be capable of being registered
against the relevant Vessel with first priority.

	 	(c)	 	Evidence of insurance Evidence that the relevant Vessel is insured in the
manner required by the Security Documents and that letters of undertaking will be
issued in the manner required by the Security Documents, together with the written
approval of the Insurances by an insurance adviser appointed by the Agent.

	 	(d)	 	Confirmation of class Certificate of Confirmation of Class for hull and
machinery confirming that such Vessel is classed with the highest class applicable to
vessels of her type with a Pre-Approved Classification Society.

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

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

 

74

 

	3	 	Legal opinions

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

	4	 	Other documents and evidence

	 	(a)	 	Drawdown Notice A duly completed Drawdown Notice.

	 	(b)	 	Process agent Evidence that any process agent referred to in Clause 23.5 and
any process agent appointed under any other Finance Document has accepted its
appointment.

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

	 	(d)	 	Fees Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 8 and Clause 9 (other than Clause 9.3) have been paid or will be paid by
the Drawdown Date.

	 	(e)	 	“Know your customer” documents Such documentation and other evidence as is
reasonably requested by the Agent in order for the Lenders to comply with all necessary
“know your customer” or similar identification procedures in relation to the
transactions contemplated in the Finance Documents.

 

75

 

Part II: Conditions subsequent to the First Drawdown Date in respect of either Tranche A or
Tranche B

	1	 	Evidence of Owner’s title Certificate of ownership and encumbrance (or equivalent) issued
by the Registrar of Ships (or equivalent official) of the relevant Vessel’s flag state
confirming that (a) the relevant Vessel is permanently registered under that flag in the
ownership of the relevant Owner, (b) the relevant Mortgage has been registered with first
priority against the relevant Vessel and (c) there are no further Encumbrances registered
against the relevant Vessel.

	2	 	Letters of undertaking Letters of undertaking in respect of the Insurances in respect of
the Vessels as required by the Security Documents together with copies of the relevant
policies or cover notes or entry certificates duly endorsed with the interest of the Finance
Parties.

	3	 	Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge
given pursuant to the Security Documents.

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

	5	 	Companies Act registrations Evidence that the prescribed particulars of the Security
Documents have been delivered to the Registrar of Companies of England and Wales and (where
relevant) the appropriate registry in Singapore within the statutory time limit.

 

76

 

Part III: Conditions precedent to any subsequent drawing

	1.	 	A certificate from a duly authorised officer or representative of each Security
Party, the Charterer and the Charter Guarantor confirming that none of the documents
delivered to the Agent pursuant to Schedule 3 Part I (a), (b), (c), (d) and (e) have
been amended or modified in any way since the date of their delivery to the Agent or
otherwise confirming such amendments or modifications. Such confirmations may be
provided in the form of a single certificate issued by a duly authorised officer or
representative of one of the Security Parties.

	2.	 	Drawdown Notice A duly completed Drawdown Notice.

 

77

 

Part IV: Conditions precedent to an Upsize Amount Drawdown Date

	1	 	Security Parties

	 	(a)	 	A certificate from a duly authorised officer or representative of each Security
Party, the Charterer and the Charter Guarantor confirming that none of the documents
delivered to the Agent pursuant to Schedule 3 Part I (a), (b), (c), (d) and (e) have
been amended or modified in any way since the date of their delivery to the Agent or
otherwise confirming such amendments or modifications.

	 	(b)	 	Officer’s certificates A certificate of a duly authorised officer or
representative of each Borrower (a) certifying that each copy document relating to it
specified in this Part IV of Schedule 3 is correct, complete and in full force and
effect as at a date no earlier than the date of the Upsize Trigger Date (b) confirming
that the representations and warranties referred to in Clause 11 are true and accurate
as at the date of the Upsize Trigger Date and (c) setting out the names of the
directors and officers of each Borrower (or its sole member) and the proportion of
 shares held by each shareholder.

Such confirmation and/or certification may be provided in the form of a single
certificate issued by a duly authorised officer or representative of one of the Security
Parties.

	2	 	 Legal opinions

If a Security Party is incorporated or formed in a jurisdiction other than England and Wales
or if any Finance Document is governed by the laws of a jurisdiction other than England and
Wales, a legal opinion of the legal advisers to the Lenders in each relevant jurisdiction,
substantially in the form provided to the Agent prior to the Upsize Amount Drawdown Date or
confirmation satisfactory to the Agent that such an opinion will be given.

	3	 	 Other documents and evidence

	 	(a)	 	Upsize Notice A duly completed Upsize Notice, accepted in writing by the
Agent.

	 	(b)	 	 Drawdown Notice A duly completed Drawdown Notice.

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

 

78

 

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

	 	(e)	 	Conversion Project Price A certificate from the Borrowers which provides
information satisfactory to the Agent (in its reasonable opinion) in respect of the
conversion costs relating to the Vessels which shows that (i) the requested increase in
the Maximum Amount is no more than seventy five per cent (75%) of the conversion costs
incurred and (ii) an amount equivalent to the balance of the conversion costs incurred
has been paid to the party carrying out the conversion works.

	 	(f)	 	Fees Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 9.3 have been paid or will be paid by the Drawdown Date.

 

79

 

Part V: Conditions subsequent to an Upsize Amount Drawdown Date

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

 

80

 

SCHEDULE 4: Calculation of Mandatory Cost

	1	 	The Mandatory Cost is an addition to the interest rate to compensate the Lenders for the cost
of compliance with (a) the requirements of the Bank of England and/or the Financial Services
Authority (or, in either case, any other authority which replaces all or any of its functions)
or (b) the requirements of the European Central Bank.

	(a)	 	On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall
calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender in
accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the
Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to
the percentage participation of each Lender in the Facility) and will be expressed as a
percentage rate per annum.

	(b)	 	The Additional Cost Rate for any Lender lending from an office in the euro-zone will be the
percentage notified by that Lender to the Agent to be its reasonable determination of the cost
(expressed as a percentage of that Lender’s participation in the Facility) of complying with
the minimum reserve requirements of the European Central Bank as a result of participating in
the Facility from that office.

	(c)	 	The Additional Cost Rate for any Lender lending from an office in the United Kingdom will be
calculated by the Agent as follows:

	 	 	 	 	 	 	 
	 

	 	F x 0.01
	 	per cent per annum	 	 
	 

	 	 

300
	 	 	 	 

where F is the charge payable by that Lender to the Financial Services Authority under
paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent provisions
in any replacement regulations (with, for this purpose, the figure for the minimum amount in
paragraph 2.02b or such equivalent provision deemed to be zero), expressed in pounds per £1
million of the fee base of that Lender.

	2	 	For the purpose of this Schedule:

	 	(a)	 	“eligible liabilities” and “special deposits” have the meanings given to them
at the time of application of the formula by the Bank of England;

	 	(b)	 	“fee base” has the meaning given to it in the Fees Regulations;

 

81

 

	 	(c)	 	“Fees Regulations” means the regulations governing periodic fees contained in
the FSA Supervision Manual or such other law or regulation as may be in force from time
to time in respect of the payment of fees for the acceptance of deposits.

	3	 	If a Lender does not supply the information required by the Agent to determine its Additional
Cost Rate when requested to do so, the applicable Mandatory Cost shall be determined on the
basis of the information supplied by the remaining Lenders.

	4	 	If a change in circumstances has rendered, or will render, the formula inappropriate, the
Agent shall notify the Borrowers of the manner in which the Mandatory Cost will subsequently
be calculated. The manner of calculation so notified by the Agent shall, in the absence of
manifest error, be binding on the Borrowers.

 

82

 

SCHEDULE 5: Form of Drawdown Notice

To: DNB NOR Bank ASA

From: [                    ]

			
	[Date]

Dear Sirs,

Drawdown Notice

We refer to the Facility Agreement dated                      2008 made between, amongst
others, ourselves and yourselves (the “Agreement”).

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

Pursuant to Clause 4.1 of the Agreement, we irrevocably request that you advance a Drawing in
respect of [Tranche A] [Tranche B] in the sum of [                    ]
to us on                      200         , which is a Business Day, by paying the
amount of the advance to [                    ].

We warrant that the representations and warranties contained in Clause 11.1 of the Agreement
are true and correct at the date of this Drawdown Notice and will be true and correct on
200 , that no Default has occurred and is continuing, and that no Default will result from the
advance of the sum requested in this Drawdown Notice.

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

Yours faithfully

                                        

For and on behalf of

[                                        ]

 

83

 

SCHEDULE 6: Form of Transfer Certificate

To: DNB NOR Bank ASA

TRANSFER CERTIFICATE

This transfer certificate relates to a secured loan facility agreement (as from time to time
amended, varied, supplemented or novated the “Facility Agreement”) dated [                    ]
2008, on the terms and subject to the conditions of which a secured revolving credit facility was
made available to Arctic Spirit L.L.C. and Polar Spirit L.L.C., by a syndicate of banks on whose
behalf you act as agent and security agent.

	1	 	Terms defined in the Facility Agreement shall, unless otherwise expressly indicated, have the
same meaning when used in this certificate. The terms “Transferor” and “Transferee” are
defined in the schedule to this certificate.

	2	 	The Transferor:

	 	2.1	 	confirms that the details in the Schedule under the heading “Transferor’s
Commitment” accurately summarise its Commitment; and

	 	2.2	 	requests the Transferee to accept by way of novation the transfer to the
Transferee of the amount of the Transferor’s Commitment specified in the Schedule by
counter-signing and delivering this certificate to the Agent at its address for
communications specified in the Facility Agreement.

	3	 	The Transferee requests the Agent to accept this certificate as being delivered to the Agent
pursuant to and for the purposes of clause 14.4 of the Facility Agreement so as to take effect
in accordance with the terms of that clause on the Transfer Date specified in the Schedule.

	4	 	The Agent confirms its acceptance of this certificate for the purposes of clause 14.4 of the
Facility Agreement.

	5	 	The Transferee confirms that:

	 	5.1	 	it has received a copy of the Facility Agreement together with all other
information which it has required in connection with this transaction;

 

84

 

	 	5.2	 	it has not relied and will not in the future rely on the Transferor or any
other party to the Facility Agreement to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or completeness of any such
information; and

	 	5.3	 	it has not relied and will not in the future rely on the Transferor or any
other party to the Facility Agreement to keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of any Security
Party.

	6	 	Execution of this certificate by the Transferee constitutes its representation and warranty
to the Transferor and to all other parties to the Facility Agreement that it has the power to
become a party to the Facility Agreement as a Lender on the terms of the Facility Agreement
and has taken all steps to authorise execution and delivery of this certificate.

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

	8	 	The Transferor makes no representation or warranty and assumes no responsibility with respect
to the legality, validity, effectiveness, adequacy or enforceability of any Finance Document
or any document relating to any Finance Document, and assumes no responsibility for the
financial condition of any Finance Party or for the performance and observance by any Security
Party of any of its obligations under any Finance Document or any document relating to any
Finance Document and any conditions and warranties implied by law are expressly excluded.

	9	 	The Transferee acknowledges that nothing in this certificate or in the Facility Agreement
shall oblige the Transferor to:

	 	9.1	 	accept a re-transfer from the Transferee of the whole or any part of the
rights, benefits and/or obligations transferred pursuant to this certificate; or

	 	9.2	 	support any losses directly or indirectly sustained or incurred by the
Transferee for any reason including, without limitation, the non-performance by any
party to any Finance Document of any obligations under any Finance Document.

 

85

 

	10	 	The address and fax number of the Transferee for the purposes of clause 18 of the Facility
Agreement are set out in the Schedule.

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

	12	 	This certificate shall be governed by and interpreted in accordance with English law.

THE SCHEDULE

	1	 	Transferor:

	 
	2	 	Transferee:

	 
	3	 	Transfer Date (not earlier that the fifth Business Day after the date of delivery of the
Transfer Certificate to the Agent):

	 
	4	 	Transferor’s Commitment:

	 
	5	 	Amount transferred:

	 
	6	 	Transferee’s address and fax number for the purposes of clause 18 of the Facility Agreement:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[name of Transferor]	 	 	 	[name of Transferee]	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Date:
	 	 	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	DNB NOR Bank ASA as Agent	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 

 

86

 

SCHEDULE 7: Form of Upsize Notice

To: DNB NOR Bank ASA

From: [                    ]

Facility Agreement dated                      2008 (the “Agreement”)
We refer to the Agreement. This is an Upsize Notice. Terms defined in the Agreement have the same
meaning when used in this Upsize Notice unless given a different meaning in this Upsize Notice.

We hereby request an increase in the Maximum Amount by
[                    ] Dollars ($[                    ]) to up to
[                    ] Dollars ($[                    ]) which increase to
be effective from [insert date at least 30 days after date of this Notice] (the “Upsize Trigger
Date”), such increase to be allocated as to [                    ] Dollars
 ($[                    ]) to Tranche A and as to [                    ]
Dollars ($[                    ]) to Tranche B.]

We agree to pay you as Agent a fee of [                    ] Dollars ($[                    ]) for distribution to the Participating Lenders on the Upsize Trigger Date.

Signed                                         

Duly authorised representative of

[                                        ]

 

87

 

SCHEDULE 8: Reductions

Reductions

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reduction Dates	 	 	 	 	 	 	 	 	 	 	 
	(from the date of	 	 	 	 	 	 	 	 	 	Initial Reduction	 
	this Agreement)	 	Reductions	 	 	Committed amount	 	 	Amounts	 
	 
	0
	 	 	 	 	 	$	172,500,000	 	 	 	0	 
	6 months
	 	1st reduction	 	$	172,500,000	 	 	$	6,100,000	 
	1 year
	 	2nd reduction	 	$	166,400,000	 	 	$	6,100,000	 
	1 year 6 months
	 	3rd reduction	 	$	160,300,000	 	 	$	6,100,000	 
	2 years
	 	4th reduction	 	$	154,200,000	 	 	$	6,100,000	 
	2 years 6 months
	 	5th reduction	 	$	148,100,000	 	 	$	6,100,000	 
	3 years
	 	6th reduction	 	$	142,000,000	 	 	$	6,100,000	 
	3 years 6 months
	 	7th reduction	 	$	135,900,000	 	 	$	6,100,000	 
	4 years
	 	8th reduction	 	$	129,800,000	 	 	$	6,100,000	 
	4 years 6 months
	 	9th reduction	 	$	123,700,000	 	 	$	6,100,000	 
	5 years
	 	10th reduction	 	$	117,600,000	 	 	$	6,100,000	 
	5 years 6 months
	 	11th reduction	 	$	111,500,000	 	 	$	6,100,000	 
	6 years
	 	12th reduction	 	$	105,400,00	 	 	$	6,100,000	 
	6 years 6 months
	 	13th reduction	 	$	99,300,000	 	 	$	6,100,000	 
	7 years
	 	14th reduction	 	$	93,200,000	 	 	$	6,100,000	 
	7 years 6 months
	 	15th reduction	 	$	87,100,000	 	 	$	6,100,000	 
	8 years
	 	16th reduction	 	$	81,000,000	 	 	$	6,100,000	 
	8 years 6 months
	 	17th reduction	 	$	74,900,000	 	 	$	6,100,000	 
	9 years
	 	18th reduction	 	$	68,800,000	 	 	$	6,100,000	 
	9 years 6 months
	 	19th reduction	 	$	62,700,000	 	 	$	6,100,000	 
	10 years
	 	20th reduction	 	$	56,600,000	 	 	$	56,600,000	 
	 
	 	 	 	 	 	 	0	 	 	 	 	 

 

88

 

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

	 	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of ARCTIC SPIRIT L.L.C.

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of POLAR SPIRIT L.L.C.

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of NORDEA NORGE ASA, Cayman

	 	 	)	 
	Islands Branch

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of SUMITOMO MITSUI BANKING

	 	 	)	 
	CORPORATION, Brussels Branch

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of LLOYDS TSB BANK PLC

	 	 	)	 
	(as a Lender)

	 	 	)	 

 

89

 

	 	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of SKANDINAVISKA ENSKILDA

	 	 	)	 
	BANKEN AB

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as the Agent)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as the Security Trustee)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as an MLA)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of NORDEA BANK FINLAND PLC,

	 	 	)	 
	New York Branch

	 	 	)	 
	(as an MLA)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of SUMITOMO MITSUI BANKING

	 	 	)	 
	CORPORATION, Brussels Branch

	 	 	)	 
	(as an MLA)

	 	 	)	 

 

90

 

	 	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of LLOYDS TSB BANK PLC

	 	 	)	 
	(as an MLA)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as a bookrunner)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of NORDEA BANK FINLAND PLC

	 	 	)	 
	New York Branch

	 	 	)	 
	(as a bookrunner)

	 	 	)	 

 

91

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]