Report of Foreign Issuer (6-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2015

Commission file number 1- 32479

TEEKAY LNG PARTNERS L.P.

(Exact name of Registrant as specified in its charter)

4^th Floor, Belvedere Building

69 Pitts Bay Road

Hamilton, HM 08 Bermuda

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Yes ¨ No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).

Yes ¨ No x

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015

INDEX


	PAGE

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Unaudited Consolidated Statements of Income for the three months ended March 31, 2015 and 2014		3

Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014		4

Unaudited Consolidated Balance Sheets as at March 31, 2015 and December 31, 2014		5

Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014		6

Unaudited Consolidated Statement of Changes in Total Equity for the three months ended March 31, 2015		7

Notes to the Unaudited Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3. Quantitative and Qualitative Disclosures about Market Risk		31

PART II: OTHER INFORMATION		33

SIGNATURES		34

ITEM 1 – FINANCIAL STATEMENTS

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands of U.S. Dollars, except unit and per unit data)


	Three Months Ended March 31,
	2015			2014
	$			$
Voyage revenues (note 9a)		97,326			101,490

Voyage expenses		(318	)		(1,333	)
Vessel operating expenses (note 9a)		(21,634	)		(24,256	)
Depreciation and amortization		(23,569	)		(24,110	)
General and administrative (note 9a)		(6,708	)		(6,408	)

Income from vessel operations		45,097			45,383

Equity income		18,058			20,373
Interest expense (note 7)		(10,104	)		(14,831	)
Interest income		734			648
Realized and unrealized loss on derivative instruments (note 10)		(14,032	)		(7,521	)
Foreign currency exchange gain (loss) (notes 7 and 10)		25,930			(779	)
Other income		443			218

Net income before income tax recovery (expense)		66,126			43,491
Income tax recovery (expense) (note 8)		225			(395	)

Net income		66,351			43,096

Non-controlling interest in net income		3,283			4,850
General Partner’s interest in net income		8,642			7,155
Limited partners’ interest in net income		54,426			31,091
Limited partners’ interest in net income per common unit:
• Basic		0.69			0.42
• Diluted		0.69			0.42
Weighted-average number of common units outstanding:
• Basic		78,514,335			74,199,534
• Diluted		78,553,194			74,226,654

Cash distributions declared per common unit		0.7000			0.6918

Related party transactions (note 9)

The accompanying notes are an integral part of the unaudited consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands of U.S. Dollars)


	Three Months			Three Months
	Ended			Ended
	March 31,			March 31,
	2015			2014
	$			$
Net income		66,351			43,096

Other comprehensive loss:
Unrealized loss on qualifying cash flow hedging instruments in equity accounted joint ventures before reclassifications, net of tax (note 5c)		(973	)		(552	)
Realized loss on qualifying cash flow hedging instruments in equity accounted joint ventures reclassified to equity income, net of tax		362			—

Other comprehensive loss		(611	)		(552	)

Comprehensive income		65,740			42,544

Non-controlling interest in comprehensive income		3,283			4,850
General and limited partners’ interest in comprehensive income		62,457			37,694

The accompanying notes are an integral part of the consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. Dollars)


	As at			As at
	March 31,			December 31,
	2015			2014
	$			$
ASSETS
Current
Cash and cash equivalents		106,410			159,639
Restricted cash – current (notes 7 and 10)		8,999			3,000
Accounts receivable, including non-trade of $9,599 (2014 – $7,998)		12,536			11,265
Prepaid expenses		5,390			3,975
Current portion of net investments in direct financing leases (note 4)		19,350			15,837
Advances to affiliates (note 9b)		17,254			11,942

Total current assets		169,939			205,658

Restricted cash – long-term (notes 7, 10 and 11b)		47,633			42,997

Vessels and equipment
At cost, less accumulated depreciation of $608,701 (2014 – $588,735)		1,641,227			1,659,807
Vessels under capital leases, at cost, less accumulated depreciation of $52,284 (2014 – $50,898)		90,500			91,776
Advances on newbuilding contracts (notes 9d and 11a)		298,362			237,647

Total vessels and equipment		2,030,089			1,989,230

Investments in and advances to equity accounted joint ventures (notes 5, 6b, 6c, 11c and 11d)		851,807			891,478
Net investments in direct financing leases (note 4)		661,764			666,658
Other assets		42,897			44,679
Derivative assets (note 10)		—			441
Intangible assets – net		85,433			87,646
Goodwill – liquefied gas segment		35,631			35,631

Total assets		3,925,193			3,964,418

LIABILITIES AND EQUITY
Current
Accounts payable		1,200			643
Accrued liabilities (notes 10 and 14)		31,161			39,037
Unearned revenue		18,271			16,565
Current portion of long-term debt (note 7)		117,677			157,235
Current obligations under capital lease (note 4)		62,456			4,422
Current portion of in-process contracts		8,084			4,736
Current portion of derivative liabilities (note 10)		36,562			57,678
Advances from affiliates (notes 9b and 10)		52,749			43,205

Total current liabilities		328,160			323,521

Long-term debt (note 7)		1,735,394			1,766,889
Long-term obligations under capital lease (note 4)		—			59,128
Long-term unearned revenue		32,561			33,938
Other long-term liabilities (notes 4 and 5c)		73,546			74,734
In-process contracts		28,246			32,660
Derivative liabilities (note 10)		170,055			126,177

Total liabilities		2,367,962			2,417,047

Commitments and contingencies (notes 4, 7, 10 and 11)

Equity
Limited Partners		1,489,685			1,482,647
General Partner		56,658			56,508
Accumulated other comprehensive loss		(2,014	)		(1,403	)

Partners’ equity		1,544,329			1,537,752
Non-controlling interest		12,902			9,619

Total equity		1,557,231			1,547,371

Total liabilities and total equity		3,925,193			3,964,418

The accompanying notes are an integral part of the unaudited consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. Dollars)


	Three Months			Three Months
	Ended			Ended
	March 31,			March 31,
	2015			2014
	$			$
Cash and cash equivalents provided by (used for)

OPERATING ACTIVITIES
Net income		66,351			43,096
Non-cash items:
Unrealized loss (gain) on derivative instruments (note 10)		6,157			(1,723	)
Depreciation and amortization		23,569			24,110
Unrealized foreign currency exchange (gain) loss (notes 7 and 10)		(29,176	)		332
Equity income, net of dividends received of $45,000 (2014 – nil)		26,942			(20,373	)
Amortization of deferred debt issuance costs and other		262			285
Change in operating assets and liabilities		(6,097	)		1,493
Expenditures for dry docking		(511	)		(5,821	)

Net operating cash flow		87,497			41,399

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		38,967			3,648
Scheduled repayments of long-term debt		(21,733	)		(21,421	)
Prepayments of long-term debt		(40,000	)		(5,000	)
Scheduled repayments of capital lease obligations		(1,094	)		(1,779	)
Proceeds from equity offerings, net of offering costs (note 12)		6,753			—
Repayments of advances from equity accounted joint ventures		13,987			—
Increase in restricted cash		(12,146	)		(564	)
Cash distributions paid		(63,609	)		(58,895	)
Novation of derivative liabilities (note 9e)		—			2,985
Dividends paid to non-controlling interest		—			(7,206	)

Net financing cash flow		(78,875	)		(88,232	)

INVESTING ACTIVITIES
Additional capital contributions in equity accounted investments (note 5a)		(1,533	)		—
Receipts from direct financing leases		1,381			3,796
Expenditures for vessels and equipment		(61,699	)		(1,620	)

Net investing cash flow		(61,851	)		2,176

Decrease in cash and cash equivalents		(53,229	)		(44,657	)
Cash and cash equivalents, beginning of the period		159,639			139,481

Cash and cash equivalents, end of the period		106,410			94,824

Supplemental cash flow information (note 15)

The accompanying notes are an integral part of the unaudited consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

(in thousands of U.S. Dollars and units)


	TOTAL EQUITY
												Non-
	Partners’ Equity											controlling
									Accumulated			Interest		Total
									Other
	Limited					General			Comprehensive
	Partners					Partner			Loss
	Number of
	Common Units		$			$			$			$		$
Balance as at December 31, 2014		78,353		1,482,647			56,508			(1,403	)		9,619		1,547,371
Net income		—		54,426			8,642			—			3,283		66,351
Other comprehensive loss		—		—			—			(611	)		—		(611	)
Cash distributions		—		(54,959	)		(8,650	)		—			—		(63,609	)
Equity based compensation, net of tax of $408 (note 13)		25		956			20			—			—		976
Proceeds from equity offering (note 12)		160		6,615			138			—			—		6,753

Balance as at March 31, 2015		78,538		1,489,685			56,658			(2,014	)		12,902		1,557,231

The accompanying notes are an integral part of the unaudited consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

1.	Basis of Presentation

The unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (or GAAP). These financial statements include the accounts of Teekay LNG Partners L.P., which is a limited partnership formed under the laws of the Republic of The Marshall Islands, and its wholly owned or controlled subsidiaries (collectively, the Partnership). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements for the year ended December 31, 2014, which are included in the Partnership’s Annual Report on Form 20-F for the year ended December 31, 2014, filed with the U.S. Securities and Exchange Commission (or SEC) on April 22, 2015. In the opinion of management of Teekay GP L.L.C., the general partner of the Partnership (or the General Partner), these interim unaudited consolidated financial statements reflect all adjustments consisting solely of a normal recurring nature, necessary to present fairly, in all material respects, the Partnership’s consolidated financial position, results of operations, changes in total equity and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of those for a full fiscal year. Significant intercompany balances and transactions have been eliminated upon consolidation.

2.	Financial Instruments

Fair Value Measurements

For a description of how the Partnership estimates fair value and for a description of the fair value hierarchy levels, see Note 2 in the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2014. The following table includes the estimated fair value and carrying value of those assets and liabilities that are measured at fair value on a recurring and non-recurring basis, as well as the estimated fair value of the Partnership’s financial instruments that are not accounted for at a fair value on a recurring basis.


				March 31, 2015						December 31, 2014
	Fair Value Hierarchy Level			Carrying Amount Asset (Liability) $			Fair Value Asset (Liability) $			Carrying Amount Asset (Liability) $			Fair Value Asset (Liability) $


Recurring:
Cash and cash equivalents and restricted cash		Level 1			163,042			163,042			205,636			205,636
Derivative instruments (note 10)
Interest rate swap agreements – liabilities		Level 2			(120,939	)		(120,939	)		(119,558	)		(119,558	)
Cross currency swap agreements		Level 2			(87,593	)		(87,593	)		(70,386	)		(70,386	)
Other derivative		Level 3			(3,870	)		(3,870	)		(2,137	)		(2,137	)
Other:
Advances to equity accounted joint ventures (notes 6b and 6c)		(i	)		167,982			(i	)		181,514			(i	)
Long-term receivable included in accounts receivable and other assets⁽ⁱⁱ⁾		Level 3			17,482			17,493			17,137			17,164
Long-term debt – public (note 7)		Level 1			(198,491	)		(204,446	)		(214,707	)		(220,762	)
Long-term debt – non-public (note 7)		Level 2			(1,654,580	)		(1,606,491	)		(1,709,417	)		(1,659,852	)

⁽ⁱ⁾

The advances to equity accounted joint ventures together with the Partnership’s equity investments in the joint ventures form the net aggregate carrying value of the Partnership’s interests in the joint ventures in these consolidated financial statements. The fair values of the individual components of such aggregate interests are not determinable.

⁽ⁱⁱ⁾

As described in Note 2 in the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year-ended December 31, 2014, the estimated fair value of the non-interest bearing receivable from BG International Limited (or BG) is based on the remaining future fixed payments as well as an estimated discount rate. The estimated fair value of this receivable as of March 31, 2015 is $17.5 million using a discount rate of 8.0%. As there is no market rate for the equivalent of an unsecured non-interest bearing receivable from BG, the discount rate is based on unsecured debt instruments of similar maturity held, adjusted for a liquidity premium. A higher or lower discount rate would result in a lower or higher fair value asset.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

Changes in fair value during the three months ended March 31, 2015 and 2014 for the Partnership’s other derivative asset, the Toledo Spirit time-charter derivative, which is described below and is measured at fair value on a recurring basis using significant unobservable inputs (Level 3), is as follows:


	Three Months Ended March 31,
	2015			2014
	$			$
Fair value at beginning of period		(2,137	)		6,344
Realized and unrealized losses included in earnings		(2,370	)		(2,300	)
Settlement payments (receipts)		637			(1,544	)

Fair value at end of period		(3,870	)		2,500

The Partnership’s Suezmax tanker, the Toledo Spirit, operates pursuant to a time-charter contract that increases or decreases the otherwise fixed-hire rate established in the charter depending on the spot charter rates that the Partnership would have earned had it traded the vessel in the spot tanker market. The time-charter contract ends in August 2025, although the charterer has the right to terminate the time-charter in July 2018. In order to reduce the variability of its revenue under the Toledo Spirit time-charter, the Partnership entered into an agreement with Teekay Corporation under which Teekay Corporation pays the Partnership any amounts payable to the charterer of the Toledo Spirit as a result of spot rates being below the fixed rate, and the Partnership pays Teekay Corporation any amounts payable to the Partnership by the charterer of the Toledo Spirit as a result of spot rates being in excess of the fixed rate. The estimated fair value of this other derivative is based in part upon the Partnership’s projection of future spot market tanker rates, which has been derived from current spot market tanker rates and long-term historical average rates as well as an estimated discount rate. The estimated fair value of this other derivative as of March 31, 2015 is based upon an average daily tanker rate of $32,272 (March 31, 2014 – $23,774) over the remaining duration of the charter contract and a discount rate of 7.4% (March 31, 2014 – 8.4%). In developing and evaluating this estimate, the Partnership considers the current tanker market fundamentals as well as the short and long-term outlook. A higher or lower average daily tanker rate would result in a higher or lower fair value liability or a lower or higher fair value asset. A higher or lower discount rate would result in a lower or higher fair value asset or liability.

Financing Receivables

The following table contains a summary of the Partnership’s loan receivables and other financing receivables by type of borrower and the method by which the Partnership monitors the credit quality of its financing receivables on a quarterly basis.

March 31,

December 31,

Credit Quality

2015

2014

Class of Financing Receivable

Indicator

Grade

Direct financing leases

Payment activity

Performing

681,114

682,495

Other receivables:

Long-term receivable and accrued revenue included in accounts receivable and other assets

Payment activity

Performing

26,108

27,266

Advances to equity accounted joint ventures (notes 6b and 6c)

Other internal metrics

Performing

167,982

181,514

875,204

891,275

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

3.	Segment Reporting

The following table includes results for the Partnership’s segments for the periods presented in these financial statements.


	Three Months Ended March 31,
	2015									2014
				Conventional									Conventional
	Liquefied Gas			Tanker						Liquefied Gas			Tanker
	Segment			Segment			Total			Segment			Segment			Total
	$			$			$			$			$			$
Voyage revenues		75,934			21,392			97,326			74,964			26,526			101,490
Voyage expenses		—			(318	)		(318	)		(823	)		(510	)		(1,333	)
Vessel operating expenses		(14,306	)		(7,328	)		(21,634	)		(14,714	)		(9,542	)		(24,256	)
Depreciation and amortization		(18,306	)		(5,263	)		(23,569	)		(18,113	)		(5,997	)		(24,110	)
General and administrative⁽ⁱ⁾		(5,325	)		(1,383	)		(6,708	)		(4,748	)		(1,660	)		(6,408	)

Income from vessel operations		37,997			7,100			45,097			36,566			8,817			45,383

⁽ⁱ⁾	Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources).

A reconciliation of total segment assets to total assets presented in the consolidated balance sheets is as follows:


	March 31,		December 31,
	2015		2014
	$		$
Total assets of the liquefied gas segment		3,407,385		3,395,759
Total assets of the conventional tanker segment		376,218		381,838
Unallocated:
Cash and cash equivalents		106,410		159,639
Accounts receivable and prepaid expenses		17,926		15,240
Advances to affiliates		17,254		11,942

Consolidated total assets		3,925,193		3,964,418

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

4.	Vessel Charters

The minimum estimated charter hire payments for the remainder of the year and the next four fiscal years, as at March 31, 2015, for the Partnership’s vessels chartered-in and vessels chartered-out are as follows:


	Remainder
	of 2015		2016		2017		2018		2019
Vessel Charters⁽ⁱ⁾	$		$		$		$		$
Charters-in – capital leases⁽ⁱⁱ⁾		5,831		7,673		30,953		27,296		—

Charters-out – operating leases⁽ⁱⁱⁱ⁾		239,424		294,070		293,050		251,368		236,641
Charters-out – direct financing leases^(iv)		56,438		75,064		204,109		173,701		39,065

		295,862		369,134		497,159		425,069		275,706

(i)

The Partnership owns 69% of Teekay BLT Corporation (or Teekay Tangguh Joint Venture) and the Teekay Tangguh Joint Venture is a party to operating leases whereby it is leasing the Tangguh Hiri and the Tangguh Sago liquefied natural gas (or LNG) carriers (or the Tangguh LNG Carriers) to a third party, which is in turn leasing the vessels back to the joint venture. The table does not include the Partnership’s minimum charter hire payments to be paid and received under these leases, which are described in more detail in Note 4 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2014. Under the terms of the leasing arrangements for the Tangguh LNG Carriers, whereby the Teekay Tangguh Joint Venture is the lessee, the lessors claim tax depreciation on its lease of these vessels. As is typical in these types of leasing arrangements, tax and change of law risks are assumed by the lessee. Lease payments under the lease arrangement are based on certain tax and financial assumptions at the commencement of the leases. If an assumption proves to be incorrect, the lessor is entitled to increase the lease payments to maintain its agreed after-tax margin.

The carrying amount of tax indemnification guarantees of the Partnership relating to the leasing arrangement through the Teekay Tangguh Joint Venture as at March 31, 2015 was $8.3 million (December 31, 2014 – $8.4 million) and is included as part of other long-term liabilities in the Partnership’s consolidated balance sheets. The tax indemnification is for the duration of the lease contracts with the third parties plus the years it would take for the lease payments to be statute barred, which will end in 2033 for the two vessels. Although there is no maximum potential amount of future payments, the Teekay Tangguh Joint Venture may terminate the lease arrangement on a voluntary basis at any time. If the lease arrangement terminates, the Teekay Tangguh Joint Venture will be required to pay termination sums to the lessor sufficient to repay the lessor’s investment in the vessels and to compensate it for the tax effect of the terminations, including recapture of any tax depreciation.

(ii)

As at March 31, 2015, the Partnership was a party to capital leases on two Suezmax tankers. Under these capital leases, the owner has the option to require the Partnership to purchase the two vessels. The charterer, who is also the owner, also has the option to cancel the charter contracts. The amounts in the table assume the owner will not exercise its options to require the Partnership to purchase either of the vessels from the owner, but rather it assumes the owner will cancel the charter contracts when the cancellation right is first exercisable, which is the thirteenth year anniversary of each respective contract in 2017 and 2018.

(iii)

Minimum scheduled future operating lease revenues do not include revenue generated from new contracts entered into after March 31, 2015, revenue from undelivered vessels, revenue from unexercised option periods of contracts that existed on March 31, 2015, or variable or contingent revenues. Therefore, the minimum scheduled future operating lease revenues should not be construed to reflect total charter hire revenues that may be recognized for any of the years.

(iv)

As described in Note 4 in the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2014, the Tangguh LNG Carriers’ time-charters and the two bareboat charter contracts to Awilco LNG ASA are accounted for as direct financing leases.

5.	Equity Method Investments

(a)

BG Joint Venture

On June 27, 2014, the Partnership acquired from BG its ownership interests in four 174,000-cubic meter LNG carrier newbuildings. The vessels upon delivery, which are scheduled between September 2017 and January 2019, will each operate under 20-year fixed-rate time-charter contracts, plus extension options with Methane Services Limited, a wholly-owned subsidiary of BG. Through this transaction, the Partnership has a 30% ownership interest in two LNG carrier newbuildings and a 20% ownership interest in the remaining two LNG carrier newbuildings (collectively the BG Joint Venture).

As at March 31, 2015, to fund its newbuilding installments, the BG Joint Venture has drawn $55.0 million (December 31, 2014 – $53.7 million) from its $787 million long-term debt facility and received $5.3 million of capital contributions from the Partnership (December 31, 2014 – $3.8 million), representing the Partnership’s proportionate share.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

(b)

Teekay LNG-Marubeni Joint Venture

The joint venture between the Partnership and Marubeni Corporation (or the Teekay LNG-Marubeni Joint Venture) is a party to a loan facility for four of its six LNG carriers, including the Magellan Spirit that had a grounding incident in January 2015. The Partnership has guaranteed its 52% share of the Teekay LNG-Marubeni Joint Venture’s obligations under this facility. The loan facility contains mandatory prepayment provisions upon early termination of a charter and requires the borrower to maintain a specific debt service coverage ratio. The Teekay LNG-Marubeni Joint Venture is currently in discussions with lenders regarding amendments to this loan facility. The Partnership expects that it may need to advance funds to the Teekay LNG-Marubeni Joint Venture to finance approximately $15 million to $25 million of loan prepayments concurrently with amending certain terms of this facility. As at March 31, 2015, the Partnership’s 52% share of the outstanding loan amount was $257.9 million. Please see “Item 2 – Management’s Discussion and Analysis of Financial Conditions and Results of Operations – Significant Developments in 2015 – Charter Contracts for MALT LNG Carriers” for further details.

(c)

Excalibur and Excelsior Joint Ventures

In February 2015, joint ventures between the Partnership and Exmar NV (or Exmar) for two LNG carriers (or the Excalibur and Excelsior Joint Ventures) completed refinancing existing debt facilities by entering into a $172.8 million long-term debt facility bearing interest at a rate of LIBOR plus 2.75%, maturing in 2019. The Partnership has guaranteed its 50% share of the secured loan facilities of the Excalibur and Excelsior Joint Ventures and, as a result, recorded a guarantee liability of $0.4 million, which is included as part of other long-term liabilities in the Partnership’s consolidated balance sheet. In addition, the Excalibur and Excelsior Joint Ventures entered into four-year interest rate swaps with an aggregate notional amount of $172.8 million, which amortizes quarterly over the term of the interest rate swaps to $133.4 million at maturity. These interest rate swaps exchange the receipt of LIBOR-based interest for the payment of a fixed rate of interest of 1.46% excluding the margin. These interest rate swaps have been designated as qualifying cash flow hedging instruments for accounting purposes. The Excalibur and Excelsior Joint Ventures use the same accounting policy for qualifying cash flow hedging instruments as the Partnership.

6.	Advances to Joint Venture Partner and Equity Accounted Joint Ventures

a) The Partnership owns a 69% interest in the Teekay Tangguh Joint Venture, a consolidated subsidiary. As of December 31, 2013, the Teekay Tangguh Joint Venture had non-interest bearing advances of $10.2 million to the Partnership’s joint venture partner, BLT LNG Tangguh Corporation, and advances of $4.2 million to its parent company, P.T. Berlian Laju Tanker. On February 1, 2014, the Teekay Tangguh Joint Venture declared dividends of $69.5 million to its owners, of which $14.4 million was used to offset the total advances to BLT LNG Tangguh Corporation and P.T. Berlian Laju Tanker.

b) The Partnership has a 50% interest in Exmar LPG BVBA (or Exmar LPG), a joint venture with Exmar, and a 50% interest in the Excalibur Joint Venture, which owns an LNG carrier, the Excalibur. As of March 31, 2015, the Partnership had advances of $67.5 million due from Exmar LPG and $2.5 million is due from the Excalibur Joint Venture. These advances bear interest at LIBOR plus margins ranging from 0.5% to 2.0% and have no fixed repayment terms. As at March 31, 2015, the interest accrued on these advances was $0.5 million (December 31, 2014 – $0.6 million). Both the advances and the accrued interest on these advances are included in investments and advances to equity accounted joint ventures in the Partnership’s consolidated balance sheets.

c) The Partnership has a 50% interest in a joint venture with China LNG Shipping (Holdings) Limited (or the Yamal LNG Joint Venture) and as of March 31, 2015, the Partnership had advanced $95.3 million to the Yamal LNG Joint Venture (December 31, 2014 – $95.3 million). The advances bear interest at LIBOR plus 3.0% compounded semi-annually. As of March 31, 2015, the interest accrued on these advances was $2.2 million (December 31, 2014 – $1.0 million).

7.	Long-Term Debt


	March 31,		December 31,
	2015		2014
	$		$
U.S. Dollar-denominated Revolving Credit Facilities due through 2018		253,095		257,661
U.S. Dollar-denominated Term Loan due through 2018		91,101		93,595
U.S. Dollar-denominated Term Loan due through 2018		114,583		116,667
U.S. Dollar-denominated Term Loan due through 2018		123,500		125,667
U.S. Dollar-denominated Term Loan due through 2021		282,047		285,274
U.S. Dollar-denominated Term Loan due through 2021		95,560		95,560
U.S. Dollar-denominated Term Loan due through 2026		445,241		450,000
Norwegian Kroner-denominated Bond due in 2017		86,840		93,934
Norwegian Kroner-denominated Bond due in 2018		111,651		120,773
Euro-denominated Term Loans due through 2023		249,453		284,993

Total		1,853,071		1,924,124
Less current portion		117,677		157,235

Total		1,735,394		1,766,889

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

As at March 31, 2015, the Partnership had three revolving credit facilities available, of which two are long-term and one is current. All three credit facilities, as at such date, provided for borrowings of up to $386.3 million, of which $133.2 million was undrawn. Interest payments are based on LIBOR plus margins. During April 2015, the Partnership refinanced its current revolving credit facility of $57.7 million with a new $55.0 million term loan maturing in April 2016. Upon refinancing in April 2015, the amount available under the remaining two revolving credit facilities of $328.6 million reduces by $19.4 million (remainder of 2015), $27.3 million (2016), $28.2 million (2017), $253.7 million and (2018). All the revolving credit facilities may be used by the Partnership to fund general partnership purposes and to fund cash distributions. The Partnership is required to repay all borrowings used to fund cash distributions within 12 months of their being drawn, from a source other than further borrowings. The revolving credit facilities are collateralized by first-priority mortgages granted on seven of the Partnership’s vessels, together with other related security, and include a guarantee from the Partnership or its subsidiaries of all outstanding amounts.

At March 31, 2015, the Partnership had a U.S. Dollar-denominated term loan outstanding in the amount of $91.1 million. Interest payments on this loan are based on LIBOR plus 2.75% and require quarterly interest and principal payments and a bullet repayment of $50.7 million due at maturity in 2018. This loan facility is collateralized by a first-priority mortgage on the five vessels to which the loan relates, together with certain other related security, and is guaranteed by the Partnership.

At March 31, 2015, the Partnership had a U.S. Dollar-denominated term loan outstanding in the amount of $114.6 million. Interest payments on this loan are based on LIBOR plus 2.80% and require quarterly interest and principal payments and a bullet repayment of $83.3 million due at maturity in 2018. This loan facility is collateralized by a first-priority mortgage on one vessel to which the loan relates, together with certain other related security, and is guaranteed by the Partnership.

At March 31, 2015, the Partnership had a U.S. Dollar-denominated term loan outstanding in the amount of $123.5 million. Interest payments on this loan are based on LIBOR plus 2.75% and require quarterly interest and principal payments and a bullet repayment of $95.3 million due at maturity in 2018. This loan facility is collateralized by a first-priority mortgage on one vessel to which the loan relates, together with certain other related security, and is guaranteed by the Partnership.

The Partnership owns a 69% interest in the Teekay Tangguh Joint Venture, a consolidated entity of the Partnership. The Teekay Tangguh Joint Venture has a U.S. Dollar-denominated term loan outstanding, which, as at March 31, 2015, totaled $282.0 million. Interest payments on the loan are based on LIBOR plus margins. Interest payments on one tranche under the loan facility are based on LIBOR plus 0.30%, while interest payments on the second tranche are based on LIBOR plus 0.63%. One tranche reduces in quarterly payments while the other tranche correspondingly is drawn up with a final $95.0 million bullet payment for each of two vessels due in 2021. This loan facility is collateralized by first-priority mortgages on the two vessels to which the loan relates, together with certain other security and is guaranteed by the Partnership.

At March 31, 2015, the Partnership had a U.S. Dollar-denominated term loan outstanding in the amount of $95.6 million. Interest payments on one tranche under the loan facility are based on LIBOR plus 0.30%, while interest payments on the second tranche are based on LIBOR plus 0.70%. One tranche reduces in semi-annual payments while the other tranche correspondingly is drawn up every six months with a final $20.0 million bullet payment for each of two vessels due at maturity in 2021. This loan facility is collateralized by first-priority mortgages on the two vessels to which the loan relates, together with certain other related security and is guaranteed by Teekay Corporation.

The Partnership owns a 70% interest in Teekay Nakilat Corporation (or the Teekay Nakilat Joint Venture), a consolidated entity of the Partnership. The Teekay Nakilat Joint Venture has a U.S. Dollar-denominated term loan outstanding, which, as at March 31, 2015, totaled $445.2 million. Interest payments on this loan are based on LIBOR plus 1.85% and the loan facility requires quarterly interest and principal payments over the remaining term of the loan and will require bullet repayments of approximately $155.4 million due at maturity in 2026. This loan facility is collateralized by first-priority mortgages on the three vessels to which the loan relates, together with certain other related security and certain guarantees from the Teekay Nakilat Joint Venture.

The Partnership has Norwegian Kroner (or NOK) 700 million of senior unsecured bonds that mature in May 2017 in the Norwegian bond market. As at March 31, 2015, the carrying amount of the bonds was $86.8 million and the bonds are listed on the Oslo Stock Exchange. The interest payments on the bonds are based on NIBOR plus a margin of 5.25%. The Partnership has a cross currency swap, to swap all interest and principal payments into U.S. Dollars, with the interest payments fixed at a rate of 6.88% (see Note 10) and the transfer of principal fixed at $125.0 million upon maturity in exchange for NOK 700 million.

The Partnership has NOK 900 million of senior unsecured bonds that mature in September 2018 in the Norwegian bond market. As at March 31, 2015, the carrying amount of the bonds was $111.7 million and the bonds are listed on the Oslo Stock Exchange. The interest payments on the bonds are based on NIBOR plus a margin of 4.35%. The Partnership has a cross currency swap, to swap all interest and principal payments into U.S. Dollars, with the interest payments fixed at a rate of 6.43% (see Note 10) and the transfer of principal fixed at $150.0 million upon maturity in exchange for NOK 900 million.

The Partnership has two Euro-denominated term loans outstanding, which as at March 31, 2015, totaled 232.4 million Euros ($249.5 million). Interest payments are based on EURIBOR plus margins, which ranged from 0.60% to 2.25% as at March 31, 2015, and the loans require monthly interest and principal payments. The term loans have varying maturities through 2023. The term loans are collateralized by first-priority mortgages on two vessels to which the loans relate, together with certain other related security and are guaranteed by the Partnership and one of its subsidiaries.

The weighted-average effective interest rate for the Partnership’s long-term debt outstanding at March 31, 2015 and December 31, 2014 were 2.16% and 2.19%, respectively. These rates do not reflect the effect of related interest rate swaps that the Partnership has used to economically hedge certain of its floating-rate debt (see Note 10). At March 31, 2015, the margins on the Partnership’s outstanding revolving credit facilities and term loans ranged from 0.30% to 2.80%.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

All Euro-denominated term loans and NOK-denominated bonds are revalued at the end of each period using the then-prevailing U.S. Dollar exchange rate. Due primarily to the revaluation of the Partnership’s NOK-denominated bonds, the Partnership’s Euro-denominated term loans, capital leases and restricted cash, and the change in the valuation of the Partnership’s cross currency swap, the Partnership incurred foreign exchange gains (losses) of $25.9 million and ($0.8) million, of which these amounts were primarily unrealized, for the three months ended March 31, 2015 and 2014, respectively.

The aggregate annual long-term debt principal repayments required subsequent to March 31, 2015 are $88.0 million (remainder of 2015), $128.6 million (2016), $206.0 million (2017), $748.2 million (2018), $70.0 million (2019) and $612.3 million (thereafter).

The Partnership and a subsidiary of Teekay Corporation are borrowers under a loan arrangement and are joint and severally liable for the obligations to the lender. Obligations resulting from long-term debt joint and several liability arrangements are measured at the sum of the amount the Partnership agreed to pay, on the basis of its arrangement among the co-obligor, and any additional amount the Partnership expects to pay on behalf of the co-obligor. This loan arrangement matures in 2021 and, as at March 31, 2015, had an outstanding balance of $186.6 million, of which $95.6 million was the Partnership’s share. Teekay Corporation has indemnified the Partnership in respect of any losses and expenses arising from any breach by the co-obligor of the terms and conditions of the loan facility.

Certain loan agreements require that (a) the Partnership maintains minimum levels of tangible net worth and aggregate liquidity, (b) the Partnership maintains certain ratios of vessel values as it relates to the relevant outstanding loan principal balance, (c) the Partnership not exceed a maximum amount of leverage, and (d) one of the Partnership’s subsidiaries maintains restricted cash deposits. The Partnership has one facility that requires us to maintain a vessel-value-to-outstanding-loan-principal-balance ratio of 115% which as at March 31, 2015, was 188%. The vessel value was determined using reference to second-hand market comparables or using a depreciated replacement cost approach. Since vessel values can be volatile, the Partnership’s estimates of market value may not be indicative of either the current or future prices that could be obtained if the Partnership sold any of the vessels. The Partnership’s ship-owning subsidiaries may not, among other things, pay dividends or distributions if the Partnership is in default under its term loans or revolving credit facilities. One of the Partnership’s term loans is guaranteed by Teekay Corporation and contains covenants that require Teekay Corporation to maintain the greater of a minimum liquidity (cash and cash equivalents) of at least $50.0 million and 5.0% of Teekay Corporation’s total consolidated debt which has recourse to Teekay Corporation. As at March 31, 2015, the Partnership, and Teekay Corporation and their affiliates were in compliance with all covenants relating to the Partnership’s credit facilities and term loans.

The Partnership maintains restricted cash deposits relating to certain term loans, which totaled $21.3 million and $23.0 million as at March 31, 2015 and December 31, 2014, respectively. In addition, the Partnership has restricted cash deposits relating to collateral for cross currency swaps (see Note 10), project tenders, leasing arrangements (see Note 11b) and amounts received from charterers to be used only for dry-docking expenditures and emergency repairs, which cash totaled $35.3 million and $23.0 million as at March 31, 2015 and December 31, 2014, respectively.

8.	Income Tax

The components of the provision for income taxes were as follows:


	Three Months Ended March 31,
	2015			2014
	$			$
Current		(1	)		(395	)
Deferred		226			—

Income tax recovery (expense)		225			(395	)

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

9.	Related Party Transactions

a) Two of the Partnership’s LNG carriers, the Arctic Spirit and Polar Spirit, are employed on long-term charter contracts with subsidiaries of Teekay Corporation. In addition, the Partnership and certain of its operating subsidiaries have entered into service agreements with certain subsidiaries of Teekay Corporation pursuant to which the Teekay Corporation subsidiaries provide the Partnership and its subsidiaries with administrative, commercial, crew training, advisory, business development, technical and strategic consulting services. In addition, as part of the Partnership’s acquisition of its ownership interest in the BG Joint Venture (see Note 5a), the Partnership has an agreement with a subsidiary of Teekay Corporation whereby Teekay Corporation’s subsidiary will, on behalf of the Partnership, provide shipbuilding supervision and crew training services for the four LNG carrier newbuildings in the BG Joint Venture up to their delivery date. All costs incurred by Teekay Corporation’s subsidiaries are charged to the Partnership and recorded as part of vessel operating expenses and general and administrative. Finally, the Partnership reimburses the General Partner for expenses incurred by the General Partner that are necessary for the conduct of the Partnership’s business. Such related party transactions were as follows for the periods indicated:


	Three Months Ended
	March 31,			March 31,
	2015			2014
	$			$
Revenues⁽ⁱ⁾		9,409			9,349
Vessel operating expenses		(4,382	)		(2,829	)
General and administrative⁽ⁱⁱ⁾		(3,416	)		(3,069	)

⁽ⁱ⁾	Commencing in 2008, the Arctic Spirit and Polar Spirit were time-chartered to Teekay Corporation at a fixed-rate for a period of ten years (plus options exercisable by Teekay Corporation to extend up to an additional 15 years).

⁽ⁱⁱ⁾	Includes commercial, strategic, advisory, business development and administrative management fees charged by Teekay Corporation and reimbursements to Teekay Corporation and our General Partner for costs incurred on the Partnership’s behalf.

b) As at March 31, 2015 and December 31, 2014, non-interest bearing advances to affiliates totaled $17.3 million and $11.9 million, respectively, and non-interest bearing advances from affiliates totaled $52.7 million and $43.2 million, respectively. These advances are unsecured and have no fixed repayment terms. Affiliates are entities that are under the same common control.

c) The Partnership’s Suezmax tanker the Toledo Spirit operates pursuant to a time-charter contract that increases or decreases the otherwise fixed-hire rate established in the charter depending on the spot charter rates that the Partnership would have earned had it traded the vessel in the spot tanker market. The time-charter contract ends in August 2025, although the charterer has the right to terminate the time-charter in July 2018. The Partnership has entered into an agreement with Teekay Corporation under which Teekay Corporation pays the Partnership any amounts payable to the charterer as a result of spot rates being below the fixed rate, and the Partnership pays Teekay Corporation any amounts payable to the Partnership as a result of spot rates being in excess of the fixed rate. The amounts receivable or payable to Teekay Corporation are settled annually (see Notes 2 and 10).

d) The Partnership entered into services agreements with certain subsidiaries of Teekay Corporation pursuant to which the Teekay Corporation subsidiaries provide the Partnership with shipbuilding and site supervision services relating to the nine LNG newbuildings the Partnership owns. These costs are capitalized and included as part of advances on newbuilding contracts in the Partnership’s consolidated balance sheets. As at March 31, 2015 and December 31, 2014, shipbuilding and site supervision costs provided by Teekay Corporation subsidiaries totaled $3.8 million and $3.0 million, respectively.

e) In March 2014, two interest rate swap agreements were novated from Teekay Corporation to the Partnership. Teekay Corporation concurrently paid the Partnership $3.0 million in cash consideration, which represents the estimated fair value of the interest rate swap liabilities on the novation date.

10.

Derivative Instruments

The Partnership uses derivative instruments in accordance with its overall risk management policy. The Partnership has not designated derivative instruments described within this note as hedges for accounting purposes.

Foreign Exchange Risk

In May 2012 and September 2013, concurrently with the issuance of NOK 700 million and NOK 900 million, respectively, of senior unsecured bonds (see Note 7), the Partnership entered into cross currency swaps and pursuant to these swaps the Partnership receives the principal amount in NOK on maturity dates of the swaps in exchange for payments of a fixed U.S. Dollar amount. In addition, the cross currency swaps exchange a receipt of floating interest in NOK based on NIBOR plus a margin for a payment of U.S. Dollar fixed interest. The purpose of the cross currency swaps is to economically hedge the foreign currency exposure on the payment of interest and principal of the Partnership’s NOK-denominated bonds due in 2017 and 2018, and to economically hedge the interest rate exposure. The following table reflects information relating to the cross currency swaps as at March 31, 2015.


											Fair Value /
											Carrying			Weighted-
Principal	Principal		Floating Rate Receivable								Amount of			Average
Amount	Amount		Reference					Fixed Rate			(Liability)			Remaining
NOK	$		Rate		Margin			Payable			$			Term (Years)
700,000		125,000		NIBOR		5.25	%		6.88	%		(42,933	)		2.1
900,000		150,000		NIBOR		4.35	%		6.43	%		(44,660	)		3.4

												(87,593	)

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

Interest Rate Risk

The Partnership enters into interest rate swaps which exchange a receipt of floating interest for a payment of fixed interest to reduce the Partnership’s exposure to interest rate variability on certain of its outstanding floating-rate debt. As at March 31, 2015, the Partnership was committed to the following interest rate swap agreements:


					Fair Value /
					Carrying			Weighted-
					Amount of			Average		Fixed
	Interest		Principal		Assets			Remaining		Interest
	Rate		Amount		(Liability)			Term		Rate
	Index		$		$			(years)		(%)⁽ⁱ⁾

LIBOR-Based Debt:
U.S. Dollar-denominated interest rate swaps		LIBOR		90,000		(11,575	)		3.5		4.9
U.S. Dollar-denominated interest rate swaps		LIBOR		100,000		(9,447	)		1.8		5.3
U.S. Dollar-denominated interest rate swaps⁽ⁱⁱ⁾		LIBOR		175,000		(38,482	)		13.8		5.2
U.S. Dollar-denominated interest rate swaps⁽ⁱⁱ⁾		LIBOR		69,623		(3,337	)		6.3		2.8
U.S. Dollar-denominated interest rate swaps⁽ⁱⁱⁱ⁾		LIBOR		320,000		(13,418	)		1.0		2.9
U.S. Dollar-denominated interest rate swaps^(iv)		LIBOR		123,500		(2,124	)		3.8		1.7

EURIBOR-Based Debt:
Euro-denominated interest rate swaps^(v)		EURIBOR		249,452		(42,556	)		5.8		3.1

						(120,939	)

⁽ⁱ⁾	Excludes the margins the Partnership pays on its floating-rate term loans, which, at March 31, 2015, ranged from 0.30% to 2.80%.

⁽ⁱⁱ⁾	Principal amount reduces semi-annually.

⁽ⁱⁱⁱ⁾

These interest rate swaps are being used to economically hedge expected interest payments on future debt that is planned to be outstanding from 2016 to 2021. These interest rate swaps are subject to mandatory early termination in 2016 whereby the swaps will be settled based on their fair value at that time.

^(iv)

Principal amount reduces quarterly.

^(v)	Principal amount reduces monthly to 70.1 million Euros ($75.2 million) by the maturity dates of the swap agreements.

As at March 31, 2015, the Partnership had multiple interest rate swaps and cross-currency swaps with the same counterparty that are subject to the same master agreements. Each of these master agreements provides for the net settlement of all swaps subject to that master agreement through a single payment in the event of default or termination of any one swap. The fair value of these interest rate swaps are presented on a gross basis in the Partnership’s consolidated balance sheets. As at March 31, 2015, these interest rate swaps and cross-currency swaps had an aggregate fair value liability amount of $179.3 million. As at March 31, 2015, the Partnership had $22.2 million on deposit as security for swap liabilities under certain master agreements. The deposit is presented in restricted cash – current and – long-term on the Partnership’s consolidated balance sheets.

Credit Risk

The Partnership is exposed to credit loss in the event of non-performance by the counterparties to the interest rate swap agreements. In order to minimize counterparty risk, the Partnership only enters into derivative transactions with counterparties that are rated A- or better by Standard & Poor’s or A3 or better by Moody’s at the time of the transactions. In addition, to the extent practical, interest rate swaps are entered into with different counterparties to reduce concentration risk.

Other Derivative

In order to reduce the variability of its revenue, the Partnership has entered into an agreement with Teekay Corporation under which Teekay Corporation pays the Partnership any amounts payable to the charterer of the Toledo Spirit as a result of spot rates being below the fixed rate, and the Partnership pays Teekay Corporation any amounts payable to the Partnership by the charterer of the Toledo Spirit as a result of spot rates being in excess of the fixed rate. The fair value of the derivative liability at March 31, 2015 was $3.9 million (December 31, 2014 – a liability of $2.1 million).

The following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on the Partnership’s consolidated balance sheets.


			Accrued			Current
			liabilities/			portion of
	Derivative		Advances from			derivative			Derivative
	assets		affiliates			liabilities			liabilities
As at March 31, 2015
Interest rate swap agreements		—		(4,510	)		(29,813	)		(86,616	)
Cross currency swap agreements		—		(705	)		(5,849	)		(81,039	)
Toledo Spirit time-charter derivative		—		(570	)		(900	)		(2,400	)

		—		(5,785	)		(36,562	)		(170,055	)

As at December 31, 2014
Interest rate swap agreements		441		(7,486	)		(52,356	)		(60,157	)
Cross currency swap agreement		—		(544	)		(4,922	)		(64,920	)
Toledo Spirit time-charter derivative		—		(637	)		(400	)		(1,100	)

		441		(8,667	)		(57,678	)		(126,177	)

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

Realized and unrealized losses relating to interest rate swap agreements and the Toledo Spirit time-charter derivative are recognized in earnings and reported in realized and unrealized loss on derivative instruments in the Partnership’s consolidated statements of income. The effect of the (loss) gain on these derivatives on the Partnership’s consolidated statements of income is as follows:


	Three Months Ended March 31,
	2015									2014
	Realized			Unrealized						Realized			Unrealized
	gains			gains						gains			gains
	(losses)			(losses)			Total			(losses)			(losses)			Total
Interest rate swap agreements		(7,305	)		(4,357	)		(11,662	)		(9,244	)		4,023			(5,221	)
Toledo Spirit time-charter derivative		(570	)		(1,800	)		(2,370	)		—			(2,300	)		(2,300	)

		(7,875	)		(6,157	)		(14,032	)		(9,244	)		1,723			(7,521	)

Unrealized and realized gains (losses) relating to cross currency swap agreements are recognized in earnings and reported in foreign currency exchange gain (loss) in the Partnership’s consolidated statements of income. For the three months ended March 31, 2015 and 2014, unrealized (losses) gains relating to the cross currency swap agreements of ($17.0) million and $3.9 million, respectively, and realized losses of ($1.4) million and ($0.4) million, respectively, were recognized in earnings.

11.

Commitments and Contingencies

a) Between December 2012 and February 2015, the Partnership signed contracts with Daewoo Shipbuilding & Marine Engineering Co. (or DSME) for the construction of nine 173,400-cubic meter LNG carriers at a total fully-built up cost of approximately $1.9 billion. These newbuilding vessels will be equipped with the M-type, Electronically Controlled, Gas Injection (or MEGI) twin engines, which are expected to be significantly more fuel-efficient and have lower emission levels than other engines currently being utilized in LNG shipping. Two of the vessels ordered are scheduled for delivery in 2016 and, upon delivery of the vessels, will be chartered to Cheniere Marketing L.L.C. at fixed rates for a period of five years. Five of the vessels ordered are scheduled for delivery between 2017 and 2018 and, upon delivery of the vessels, will be chartered to a wholly owned subsidiary of Royal Dutch Shell PLC (or Shell) at fixed rates for a period of six to eight years, plus extension options. The Partnership intends to secure charter contracts for the remaining two newbuilding vessels prior to their deliveries in 2017 and 2018. As at March 31, 2015, costs incurred under these newbuilding contracts totaled $298.4 million and the estimated remaining costs to be incurred are $110.4 million (remainder of 2015), $351.3 million (2016), $602.6 million (2017) and $542.8 million (2018). The Partnership intends to finance the newbuilding payments through its existing liquidity and expects to secure long-term debt financing for the vessels prior to their scheduled deliveries.

b) As described under Note 4 in the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2014, the Teekay Nakilat Joint Venture was the lessee under three separate 30-year capital lease arrangements with a third party for the three LNG carriers (or the RasGas II LNG Carriers). Under the terms of the leasing arrangements in respect of the RasGas II LNG Carriers, the lessor claimed tax depreciation on the capital expenditures it incurred to acquire these vessels. As is typical in these leasing arrangements, tax and change of law risks were assumed by the lessee, in this case the Teekay Nakilat Joint Venture. Lease payments under the lease arrangements were based on certain tax and financial assumptions at the commencement of the leases and subsequently adjusted to maintain its agreed after-tax margin. On December 22, 2014, the Teekay Nakilat Joint Venture terminated the leasing of the RasGas II LNG Carriers. However, the Teekay Nakilat Joint Venture remains obligated to the lessor to maintain the lessor’s agreed after-tax margin from the commencement of the lease to the lease termination date and placed $6.8 million on deposit to the lessor as security against any future claims.

The UK taxing authority (or HMRC) has been challenging the use of similar lease structures. One of those challenges resulted in a court decision from the First Tribunal on January 2012 regarding a similar financial lease of an LNG carrier that ruled in favor of the taxpayer, as well as a 2013 decision from the Upper Tribunal that upheld the 2012 verdict. However, HMRC appealed the 2013 decision to the Court of Appeal and in August 2014, HMRC was successful in having the judgment of the First Tribunal (in favor of the taxpayer) set aside. The matter will now be reconsidered by the First Tribunal, taking into account the appellate court’s comments on the earlier judgment. If the lessor of the RasGas II LNG Carriers were to lose on a similar claim from HMRC, which the Partnership does not consider to be a probable outcome, the Partnership’s 70% share of the potential exposure in the Teekay Nakilat Joint Venture is estimated to be approximately $60 million. Such estimate is primarily based on information received from the lessor.

c) As described in Note 5a, the Partnership has an ownership interest in the BG Joint Venture and as part of the acquisition, agreed to assume BG’s obligation to provide shipbuilding supervision and crew training services for the four LNG carrier newbuildings up to their delivery dates pursuant to a ship construction support agreement. As at March 31, 2015, the Partnership incurred $1.6 million relating to shipbuilding and crew training services. The remaining estimated amounts to be incurred for the shipbuilding and crew training obligation, net of the reimbursement from BG, are $4.4 million (remainder of 2015), $4.2 million (2016), $3.8 million (2017), $4.0 million (2018) and $0.4 million (2019).

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

In addition, the BG Joint Venture has a $787.0 million debt facility to finance a portion of the estimated fully built-up cost of $1.0 billion for its four newbuilding carriers, with the remaining portion to be financed pro-rata based on ownership interests by the Partnership and the other partners. As at March 31, 2015, the Partnership’s proportionate share of the remaining newbuilding installments, net of the financing, totaled $3.4 million (remainder of 2015), $7.9 million (2016), $15.0 million (2017), $17.3 million (2018) and $6.3 million (2019).

d) The Partnership, through the Yamal LNG Joint Venture, has a 50% ownership interest in six 172,000-cubic meter ARC7 LNG carrier newbuildings that have an estimated total fully built-up cost of $2.1 billion. As at March 31, 2015, the Partnership’s proportionate costs incurred under these newbuilding contracts totaled $95.3 million and the Partnership’s proportionate share of the estimated remaining costs to be incurred is $16.9 million (remainder of 2015), $63.9 million (2016), $97.7 million (2017), $369.4 million (2018), $211.6 million (2019) and $197.7 million (thereafter). The Yamal LNG Joint Venture intends to secure debt financing for 70% to 80% of the fully built-up cost of the six newbuildings.

12.

Total Capital and Net Income Per Unit

At March 31, 2015, approximately 67.9% of the Partnership’s common units outstanding were held by the public. The remaining common units, as well as the 2% general partner interest, were held by a subsidiary of Teekay Corporation.

In 2013, the Partnership implemented a continuous offering program (or COP) under which the Partnership may issue new common units at market prices up to a maximum aggregate amount of $100.0 million. The Partnership sold 1.2 million units under the COP as at December 31, 2014 for net proceeds of $48.4 million, of which 160,000 units were settled in January 2015 for net proceeds of $6.8 million.

Net Income Per Unit

Net income per common unit is determined by dividing net income, after deducting the non-controlling interest and the General Partner’s interest, by the weighted-average number of units outstanding during the period. The computation of limited partners’ interest in net income per common unit – diluted assumes the exercise of all dilutive restricted units using the treasury stock method. The computation of limited partners’ interest in net loss per common unit – diluted does not assume such exercises as the effect would be anti-dilutive.

The General Partner’s and common unitholders’ interests in net income are calculated as if all net income was distributed according to the terms of the Partnership’s partnership agreement, regardless of whether those earnings would or could be distributed. The partnership agreement does not provide for the distribution of net income; rather, it provides for the distribution of available cash, which is a contractually defined term that generally means all cash on hand at the end of each quarter after establishment of cash reserves determined by the Partnership’s board of directors to provide for the proper conduct of the Partnership’s business, including reserves for maintenance and replacement capital expenditures and anticipated credit needs. In addition, the General Partner is entitled to incentive distributions if the amount the Partnership distributes to unitholders with respect to any quarter exceeds specified target levels. Unlike available cash, net income is affected by non-cash items, such as depreciation and amortization, unrealized gains or losses on non-designated derivative instruments and foreign currency translation gains or losses.

During the three months ended March 31, 2015 and 2014, cash distributions exceeded $0.4625 per unit and, consequently, the assumed distribution of net income resulted in the use of the increasing percentages to calculate the General Partner’s interest in net income for the purposes of the net income per unit calculation. For more information on the increasing percentages to calculate the General Partner’s interest in net income, please refer to the Partnership’s Annual Report on Form 20-F.

Pursuant to the partnership agreement, allocations to partners are made on a quarterly basis.

13.

Unit-Based Compensation

In March 2015, a total of 10,447 common units, with an aggregate value of $0.4 million, were granted to the non-management directors of the General Partner as part of their annual compensation for 2015.

The Partnership grants restricted unit awards as incentive-based compensation under the Teekay LNG Partners L.P. 2005 Long-Term Incentive Plan to certain of the Partnership’s employees and to certain employees of Teekay Corporation’s subsidiaries that provide services to the Partnership. The Partnership measures the cost of such awards using the grant date fair value of the award and recognizes that cost, net of estimated forfeitures, over the requisite service period. The requisite service period consists of the period from the grant date of the award to the earlier of the date of vesting or the date the recipient becomes eligible for retirement. For unit-based compensation awards subject to graded vesting, the Partnership calculates the value for the award as if it was one single award with one expected life and amortizes the calculated expense for the entire award on a straight-line basis over the requisite service period. The compensation cost of the Partnership’s unit-based compensation awards are reflected in general and administrative expenses in the Partnership’s consolidated statements of income.

During March 2015 and 2014, the Partnership granted 32,054 and 31,961 restricted units, respectively, with grant date fair values of $1.1 million and $1.3 million, respectively, to certain of the Partnership’s employees and to certain employees of Teekay Corporation’s subsidiaries who provide services to the Partnership, based on the Partnership’s closing unit price on the grant date. Each restricted unit is equal in value to one of the Partnership’s common units plus reinvested distributions from the grant date to the vesting date. The restricted units vest equally over three years from the grant date. Any portion of a restricted unit award that is not vested on the date of a recipient’s termination of service is cancelled, unless their termination arises as a result of the recipient’s retirement and, in this case, the restricted unit award will continue to vest in accordance with the vesting schedule. Upon vesting, the value of the restricted unit awards is paid to each recipient in the form of units, net of withholding tax. During the three months ended March 31, 2015 and 2014, a total of 13,783 and 7,076 restricted units, respectively, with fair value of $0.6 million and $0.3 million, respectively, vested. During the three months ended March 31, 2015 and 2014, the Partnership recognized an expense of $1.0 million and $1.1 million, respectively, relating to the restricted units.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(all tabular amounts stated in thousands of U.S. Dollars, except unit and per unit data or unless otherwise indicated)

14.

Restructuring Charge

Compania Espanole de Petroles, S.A., the charterer and owner of the Partnership’s former conventional vessels under capital lease, sold the Tenerife Spirit, Algeciras Spirit, and Huelva Spirit between December 2013 and August 2014. As a result of these sales, the Partnership recorded restructuring charges of $2.0 million and $1.8 million during 2014 and 2013, respectively, relating to seafarer severance payments. The balance outstanding of $0.8 million as at March 31, 2015 (December 31, 2014 – $1.6 million) is included in accrued liabilities in the Partnership’s consolidated balance sheets.

15.

Supplemental Cash Flow Information

a) As described in Note 4 in the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2014, the sale of the Algeciras Spirit on February 28, 2014 resulted in the vessel under capital lease being returned to the owner and the capital lease obligation being concurrently extinguished. Therefore, the sale of the vessel under capital lease of $30.1 million and the concurrent extinguishment of the corresponding capital lease obligation for $30.1 million were treated as non-cash transactions in the Partnership’s consolidated statements of cash flows.

b) As described in Note 6a, the portion of the dividends declared by the Teekay Tangguh Joint Venture on February 1, 2014 that was used to settle the advances made to BLT LNG Tangguh Corporation and P.T. Berlian Laju Tanker of $14.4 million, was treated as a non-cash transaction in the Partnership’s consolidated statements of cash flows.

16.	Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (or FASB) issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (or ASU 2014-08) which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is now defined as: (i) a component of an entity or group of components that has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (ii) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. ASU 2014-08 was adopted on January 1, 2015. The impact, if any, of adopting ASU 2014-08 on the Partnership’s financial statements will depend on the occurrence and nature of disposals that occur in future periods.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, (or ASU 2014-09). ASU 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue as each performance obligation is satisfied. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016 and shall be applied, at the Partnership’s option, retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Early adoption is not permitted. The Partnership is evaluating the effect of adopting this new accounting guidance.

In February 2015, the FASB issued Accounting Standards Update 2015-02, Amendments to the Consolidation Analysis (or ASU 2015-02) which eliminates the deferral of certain consolidation standards for entities considered to be investment companies, modifies the consolidation analysis performed on limited partnerships and modifies the impact of fee arrangements and related parties on the determination of the primary beneficiary of a variable interest entity. ASU 2015-02 is effective for interim and annual periods beginning after December 15, 2015. ASU 2015-02 may be applied using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply ASU 2015-02 retrospectively. The Partnership is evaluating the effect of adopting this new accounting guidance.

In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs (or ASU 2015-03) which require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for interim and annual periods beginning after December 15, 2015 and is to be applied on a retrospective basis. The Partnership is evaluating the effect of adopting this new accounting guidance.

17.

Subsequent Events

In May 2015, the Partnership issued NOK 1,000 million in senior unsecured bonds in the Norwegian bond market that mature in May 2020. The aggregate principal amount of the bonds was equivalent to approximately $130 million and all interest and principal payments have been swapped into U.S. Dollars at a fixed rate of 5.92%. The net proceeds from the bond offering are expected to be used for general partnership purposes, including the funding of newbuilding installments. The Partnership is applying to list the bonds on the Oslo Stock Exchange.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

MARCH 31, 2015

PART I – FINANCIAL INFORMATION

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and accompanying notes contained in “Item 1 – Financial Statements” of this Report on Form 6-K and with our audited consolidated financial statements contained in “Item 18 – Financial Statements” and Management’s Discussion and Analysis of Financial Condition and Results of Operations in “Item 5 – Operating and Financial Review and Prospects” of our Annual Report on Form 20-F for the year ended December 31, 2014.

OVERVIEW

Teekay LNG Partners L.P. is an international provider of marine transportation services for liquefied natural gas (or LNG), liquefied petroleum gas (or LPG) and crude oil. As of March 31, 2015, we had a fleet of 48 LNG carriers (including one regasification unit and 19 newbuilding carriers), 30 LPG/Multigas carriers (including eight newbuilding carriers) and eight conventional tankers which generally operate under medium to long-term, fixed-rate charters. Our interests in these vessels range from 20% to 100%.

SIGNIFICANT DEVELOPMENTS IN 2015

Exmar LPG Newbuilding Delivery

We hold a 50% interest in Exmar LPG BVBA (or Exmar LPG), a joint venture with Belgium-based Exmar NV (or Exmar), to own and charter-in LPG carriers with a primary focus on the mid-size gas carrier segment. One of Exmar LPG’s newbuilding carrier, the Warisoulx, delivered in January 2015, making it the fourth of the 12 newbuilding program to be delivered.

LNG Newbuildings

In February 2015, we ordered one newbuilding LNG carrier and were granted four additional newbuilding options by Daewoo Shipbuilding & Marine Engineering Co. (or DSME). In total, we have nine wholly-owned LNG newbuildings on order and scheduled for delivery between early 2016 and late 2018, with four additional newbuilding options. We have entered into time-charter contracts for all but two of the nine ordered newbuildings. In addition, we have a 20% interest in two newbuilding LNG carriers and a 30% interest in another two newbuilding LNG carriers (or the BG Joint Venture) scheduled for delivery between 2017 and 2019 and six newbuilding LNG carriers relating to our 50% owned joint venture with China LNG Shipping (Holdings) Limited (or the Yamal LNG Joint Venture) scheduled for delivery between 2018 and 2020.

Charter Contracts for MALT LNG Carriers

In January 2015, the Magellan Spirit, one of the six vessels (or the MALT LNG Carriers) in our joint venture with Marubeni Corporation (or the Teekay LNG-Marubeni Joint Venture) in which we have a 52% ownership interest, had a grounding incident. The vessel was subsequently refloated and returned to service. We expect the cost of such refloating and related costs associated with the grounding to be covered by insurance, less an applicable deductible. The charterer has claimed that the vessel was off-hire for more than 30 consecutive days during the first quarter of 2015, which in the view of the charterer, permitted the charterer to terminate the charter contract, which it claimed to do late-March 2015. The Teekay LNG-Marubeni Joint Venture has disputed both the charterer’s aggregate off-hire claims as well as the charterer’s ability to terminate the charter contract, which originally would have expired in September 2016. The Teekay LNG-Marubeni Joint Venture has obtained legal assistance in resolving this dispute. However, if the charterer’s claim to terminate the charter contract is upheld, our 52% portion of the potential lost revenue under the time charter contract from March 28, 2015 to September 30, 2016, would be approximately $27.3 million, less any amounts we may receive from re-chartering this vessel during this time. The impact in future periods from this incident will depend upon our ability to re-charter the vessel and the resolution of this dispute. The charter contract of another MALT LNG Carrier, the Methane Spirit, expired in March 2015 as scheduled. The Teekay LNG-Marubeni Joint Venture has secured short-term employment, commencing September 2015 for a period of six months plus two two-month extension options, for both of the Magellan Spirit and the Methane Spirit at significantly lower charter rates and continues to seek medium-term to long-term employment for both vessels.

The Teekay LNG-Marubeni Joint Venture is a party to a loan facility for four of its LNG carriers, including the Magellan Spirit that had the grounding incident in January 2015. We have guaranteed our 52% share of the Teekay LNG-Marubeni Joint Venture’s obligations under this facility. The loan facility contains mandatory prepayment provisions upon early termination of a charter and requires the borrower to maintain a specific debt service coverage ratio. The Teekay LNG-Marubeni Joint Venture is currently in discussions with lenders regarding amendments to this loan facility. We expect that we may need to advance funds to the Teekay LNG-Marubeni Joint Venture to finance approximately $15 million to $25 million of loan prepayments concurrently with amending certain terms of this facility. As at March 31, 2015, our 52% share of the outstanding loan amount was $257.9 million.

Bond Issuance

In May 2015, we issued NOK 1,000 million in senior unsecured bonds in the Norwegian bond market that mature in May 2020. The aggregate principal amount of the bonds was equivalent to approximately USD 130 million and all interest and principal payments have been swapped into U.S. Dollars at a fixed rate of 5.92%. The net proceeds from the bond offering are expected to be used for general partnership purposes, including the funding of newbuilding installments. We are applying to list the bonds on the Oslo Stock Exchange.

RESULTS OF OPERATIONS

There are a number of factors that should be considered when evaluating our historical financial performance and assessing our future prospects and we use a variety of financial and operational terms and concepts when analyzing our results of operations. These factors, terms and concepts are described in “Item 5 – Operating and Financial Review and Prospects” of our Annual Report on Form 20-F for the year ended December 31, 2014, filed with the U.S. Securities and Exchange Commission (or SEC) on April 22, 2015.

We manage our business and analyze and report our results of operations on the basis of two business segments: the liquefied gas segment and the conventional tanker segment, each of which are discussed below.

Liquefied Gas Segment

As at March 31, 2015, our liquefied gas segment fleet included 48 LNG carriers and 30 LPG/Multigas carriers, in which our interests ranged from 20% to 100%. However, the table below only includes 13 LNG carriers and six LPG/Multigas carriers, which are accounted for under the consolidation method of accounting. The table excludes nine newbuilding LNG carriers and the following vessels accounted for under the equity method: (i) the six MALT LNG Carriers in which we have a 52% ownership interest, (ii) four LNG carriers relating to the Angola LNG Project (or the Angola LNG Carriers) in which we have a 33% ownership interest, (iii) four LNG carriers relating to our joint venture with QGTC Nakilat (1643-6) Holdings Corporation (or the RasGas 3 LNG Carriers) in which we have a 40% ownership interest, (iv) four newbuilding LNG carriers in the BG Joint Venture in which we have a 30% ownership interest in two newbuilding LNG carriers and a 20% ownership interest in the other two newbuilding LNG carriers, (v) six newbuilding LNG carriers relating to the Yamal LNG Joint Venture in which we have a 50% ownership interest, (vi) two LNG carriers (or the Exmar LNG Carriers) and (vii) 16 LPG carriers and eight newbuilding LPG carriers (or the Exmar LPG Carriers) relating to our 50/50 joint ventures with Exmar.

The following table compares our liquefied gas segment’s operating results for the three months ended March 31, 2015 and 2014, and compares its net voyage revenues (which is a non-GAAP financial measure) for the three months ended March 31, 2015 and 2014 to voyage revenues, the most directly comparable GAAP financial measure. Non-GAAP financial measures may not be comparable to those of other companies which may calculate similar measures differently. The following table also provides a summary of the changes in calendar-ship-days and revenue days for our liquefied gas segment:


(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages)	Three Months Ended March 31,
	2015			2014			% Change
Voyage revenues		75,934			74,964			1.3
Voyage expenses		—			(823	)		(100.0	)

Net voyage revenues		75,934			74,141			2.4
Vessel operating expenses		(14,306	)		(14,714	)		(2.8	)
Depreciation and amortization		(18,306	)		(18,113	)		1.1
General and administrative⁽¹⁾		(5,325	)		(4,748	)		12.2

Income from vessel operations		37,997			36,566			3.9

Operating Data:
Revenue Days (A)		1,710			1,574			8.6
Calendar-Ship-Days (B)		1,710			1,620			5.6
Utilization (A)/(B)		100.0	%		97.2	%

⁽¹⁾	Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of resources).

Our liquefied gas segment’s total calendar-ship-days increased by 5.6% to 1,710 days in the first quarter of 2015 from 1,620 days in the same period in 2014 as a result of the acquisition of the Norgas Napa from I.M. Skaugen SE in November 2014. During the three months ended March 31, 2015, none of our consolidated vessels in this segment were off-hire compared to two vessels being off-hire for 46 days in the same period last year. As a result, our utilization increased to 100% for the three months ended March 31, 2015 compared to 97.2% for the same period in 2014.

Net Voyage Revenues. Net voyage revenues increased for the three months ended March 31, 2015 from the same period last year, primarily as a result of:

•

an increase of $1.9 million for the three months ended March 31, 2015 due to the Galicia Spirit being off-hire for 28 days in the first quarter of 2014 for a scheduled dry docking;

•

an increase of $1.8 million for the three months ended March 31, 2015 relating to 18 days of unscheduled off-hire in the first quarter of 2014 due to repairs required for one of our LNG carriers;

•

an increase of $0.9 million for the three months ended March 31, 2015 as a result of the acquisition and delivery of the Norgas Napa in November 2014; and

•

an increase of $0.8 million for the three months ended March 31, 2015 relating to amortization of in-process contracts recognized into revenue with respect to our shipbuilding and site supervision contract for the four newbuilding LNG carriers in the BG Joint Venture (however, we had a corresponding increase in operating expenses);

partially offset by:

•

a decrease of $2.1 million for the three months ended March 31, 2015 due to the effect on our Euro-denominated revenues from the weakening of the Euro against the U.S. Dollar compared to the same period in 2014; and

•

a decrease of $1.3 million for the three months ended March 31, 2015 due to higher operating expense and dry-docking recovery adjustments under our charter provisions for the Tangguh Hiri and Tangguh Sago in the first quarter of 2014.

Vessel Operating Expenses. Vessel operating expenses decreased for the three months ended March 31, 2015 from the same period last year, primarily as a result of:

•

a decrease of $1.2 million for the three months ended March 31, 2015 relating to lower crew wages primarily due to the weakening of Euro against the U.S. Dollar compared to the same period in 2014;

•

a decrease of $0.8 million for the three months ended March 31, 2015 as a result of spares and consumables purchased for main engine overhauls on the Tangguh Hiri and propulsion motor repairs on the Tangguh Sago in the first quarter of 2014;

partially offset by:

•

an increase of $0.8 million for the three months ended March 31, 2015 in relation to our agreement to provide shipbuilding and site supervision costs for the four LNG newbuilding carriers in the BG Joint Venture; and

•

an increase of $0.6 million for the three months ended March 31, 2015 relating to costs to train our crew for two newbuilding LNG carriers that are expected to deliver in the first half of 2016.

Depreciation and Amortization. Depreciation and amortization increased slightly for the three months ended March 31, 2015 compared to the same period last year primarily due to the acquisition of the Norgas Napa in November 2014.

Conventional Tanker Segment

As at March 31, 2015, our fleet included seven Suezmax-class double-hulled conventional crude oil tankers and one Handymax Product tanker, six of which we own and two of which we lease under capital leases. All of our conventional tankers operate under fixed-rate charters.

The following table compares our conventional tanker segment’s operating results for the three months ended March 31, 2015 and 2014, and compares its net voyage revenues (which is a non-GAAP financial measure) for the three months ended March 31, 2015 and 2014 to voyage revenues, the most directly comparable GAAP financial measure. The following tables also provide a summary of the changes in calendar-ship-days and revenue days for our conventional tanker segment:


(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages)	Three Months Ended March 31,
	2015			2014			% Change
Voyage revenues		21,392			26,526			(19.4	)
Voyage expenses		(318	)		(510	)		(37.6	)

Net voyage revenues		21,074			26,016			(19.0	)
Vessel operating expenses		(7,328	)		(9,542	)		(23.2	)
Depreciation and amortization		(5,263	)		(5,997	)		(12.2	)
General and administrative⁽¹⁾		(1,383	)		(1,660	)		(16.7	)

Income from vessel operations		7,100			8,817			(19.5	)

Operating Data:
Revenue Days (A)		718			842			(14.7	)
Calendar-Ship-Days (B)		720			869			(17.1	)
Utilization (A)/(B)		99.7	%		96.9	%

⁽¹⁾	Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources).

Our conventional tanker’s total calendar ship days decreased by 17.1% to 720 days for the three months ended March 31, 2015 from 869 days for the same period in 2014 as a result of the sales of the Algeciras Spirit and the Huelva Spirit in February 2014 and August 2014, respectively. During the three months ended March 31, 2015, none of our vessels in this segment were off-hire for scheduled dry dockings, compared to one of our vessels being off-hire for 27 days for a scheduled dry docking during the same period in 2014. As a result, our utilization increased to 99.7% for the three months ended March 31, 2015 compared to 96.9% for the same period in 2014.

Net Voyage Revenues. Net voyage revenues decreased for the three months ended March 31, 2015 from the same period last year, primarily as a result of:

•

a decrease of $4.2 million for the three months ended March 31, 2015 due to the sales of the Algeciras Spirit and Huelva Spirit in February 2014 and August 2014, respectively; and

•

a decrease of $1.6 million for the three months ended March 31, 2015 due to higher revenues earned in the same period last year by the Bermuda Spirit and Hamilton Spirit relating to an agreement that ended in October 2014 between us and the charterer, which resulted in us earning more revenues when Suezmax tanker spot rates exceeded a certain amount;

partially offset by:

•

an increase of $0.6 million for the three months ended March 31, 2015 due to higher revenues earned by the Toledo Spirit relating to the rate adjustment agreement between us and the charterer (however, we had a corresponding increase in our realized loss on our associated derivative contract with Teekay Corporation; therefore, this increase and future increases or decreases related to this agreement did not and will not affect our cash flow or net income); and

•

an increase of $0.5 million for the three months ended March 31, 2015 due to the Bermuda Spirit being off-hire for 27 days in the first quarter of 2014 for a scheduled dry docking.

Vessel Operating Expenses. Vessel operating expenses decreased for the three months ended March 31, 2015 compared to the same period last year, primarily as a result of:

•

a decrease of $1.7 million due to the sales of the Algeciras Spirit and Huelva Spirit in February 2014 and August 2014, respectively; and

•

a decrease of $0.5 million in crew wages due to favorable foreign exchange impacts on crew wages denominated in foreign currencies.

Depreciation and Amortization. Depreciation and amortization decreased for the three months ended March 31, 2015, from the same periods last year, primarily as a result of the sales of the Algeciras Spirit and Huelva Spirit in February 2014 and August 2014, respectively.

Other Operating Results

General and Administrative Expenses. General and administrative expenses increased slightly to $6.7 million for the three months ended March 31, 2015 from $6.4 million for the same period last year, primarily due to a greater amount of corporate services provided to us by Teekay Corporation under services contracts to support our growth.

Equity Income. Equity income decreased to $18.1 million for the three months ended March 31, 2015 from $20.4 million for the same period last year as set forth in the tables below:


(in thousands of U.S. Dollars)	Three Months Ended
	Angola			Exmar			Exmar		MALT			RasGas 3					Total
	LNG			LNG			LPG		LNG			LNG					Equity
	Carriers			Carriers			Carriers		Carriers			Carriers		Other			Income
Three months ended March 31, 2015		(51	)		1,993			6,975		3,879			5,355		(93	)		18,058
Three months ended March 31, 2014		(777	)		2,720			4,683		8,770			4,977		—			20,373

Difference		726			(727	)		2,292		(4,891	)		378		(93	)		(2,315	)

The $0.7 million increase for the three months ended March 31, 2015 in our 33% investment in the four Angola LNG Carriers was primarily due to the timing of maintenance and repairs for the Soyo and Lobito.

The $0.7 million decrease for the three months ended March 31, 2015 in our 50% ownership interest in two Exmar LNG Carriers was due to higher interest expense as a result of the joint venture’s debt refinancing in February 2015.

The $2.3 million increase for the three months ended March 31, 2015 in our 50% ownership interest in the Exmar LPG Carriers was primarily due to higher contracted charter rates from four LPG newbuildings delivered during 2014 and early 2015 net of four disposed LPG carriers during 2014, and a loss on the sale of the Temse in the first quarter of 2014.

The $4.9 million decrease for the three months ended March 31, 2015 in our 52% investment in the MALT LNG Carriers was primarily due to a grounding incident and related disputed off-hire claims of the Magellan Spirit during the first quarter of 2015, the scheduled expiration of the Methane Spirit’s time-charter contract on March 16, 2015, and unscheduled off-hire days relating to the Woodside Donaldson.

The $0.4 million increase for the three months ended March 31, 2015 in our 40% investment in the RasGas 3 LNG Carriers was primarily due to lower interest expense as a result of principal repayments made during 2014.

Interest Expense. Interest expense decreased to $10.1 million for the three months ended March 31, 2015 from $14.8 million for the same period last year. Interest expense primarily reflects interest incurred on our capital lease obligations and long-term debt. The decrease was primarily the result of:

•

a decrease of $1.3 million for the three months ended March 31, 2015 due to lower interest on capital lease obligations associated with the sales of the Algeciras Spirit and Huelva Spirit in February 2014 and August 2014, respectively;

•

a decrease of $1.0 million for the three months ended March 31, 2015 relating to lower interest expense on our Norwegian Kroner (or NOK) bonds as a result of the depreciation of the NOK against the U.S. Dollar and a decrease in NIBOR;

•

a decrease of $1.0 million for the three months ended March 31, 2015 due to a lower interest rate on the debt facilities and elimination of interest on capital lease obligations relating to our LNG carriers in Teekay Nakilat Corporation (or the Teekay Nakilat Joint Venture) upon debt refinancing and termination of capital lease obligations in December 2014;

•

a decrease of $0.8 million for the three months ended March 31, 2015 due to an increase in capitalized interest expense as a result of our exercising three newbuildings options with DSME in December 2014 and entering into an additional newbuilding agreement with DSME in February 2015;

•

a decrease of $0.6 million for the three months ended March 31, 2015 relating to capitalized interest expense on the advances we made to the Yamal LNG Joint Venture in July 2014 to fund our proportionate share of the joint venture’s newbuild installments;

•

a decrease of $0.5 million for the three months ended March 31, 2015 due to the impact of a decrease in EURIBOR and weakening of Euro against the U.S. Dollar on our Euro-denominated debt facilities;

•

a decrease of $0.4 million for the three months ended March 31, 2015 due to debt repayments during 2014, net of an increase in LIBOR on our floating-rate debt;

partially offset by:

•

an increase of $0.9 million for the three months ended March 31, 2015 relating to a new debt facility used to fund the delivery of the Wilpride in April 2014.

Interest Income. Interest income increased to $0.7 million for the three months ended March 31, 2015 from $0.6 million for the same period last year. These changes were primarily the result of accrued interest earned on our receivable from BG as described in “Item 1 – Financial Statements: Note 5 – Equity Method Investments.”

Realized and Unrealized Losses on Derivative Instruments. Net realized and unrealized losses on derivative instruments were $14.0 million for the three months ended March 31, 2015 as compared to $7.5 million in the same period last year, as set forth in the tables below:


(in thousands of U.S. Dollars)	Three Months Ended March 31,
	2015									2014
	Realized			Unrealized						Realized			Unrealized
	gains			gains						gains			gains
	(losses)			(losses)			Total			(losses)			(losses)			Total
Interest rate swap agreements		(7,305	)		(4,357	)		(11,662	)		(9,244	)		4,023			(5,221	)
Toledo Spirit time-charter derivative		(570	)		(1,800	)		(2,370	)		—			(2,300	)		(2,300	)

		(7,875	)		(6,157	)		(14,032	)		(9,244	)		1,723			(7,521	)

As at March 31, 2015 and 2014, we had interest rate swap agreements with aggregate average net outstanding notional amounts of approximately $1.2 billion and $1.0 billion, respectively, with average fixed rates of 3.5% and 4.3%, respectively. The decrease in realized losses from 2014 to 2015 relating to our interest rate swaps was primarily due to the termination of interest rate swaps in December 2014, that had been held by the Teekay Nakilat Joint Venture.

During the three months ended March 31, 2015, we did not have any interest rate swaps associated with our U.S. Dollar-denominated restricted cash deposits as we terminated all interest rate swaps economically hedging restricted cash deposits in December 2014. During the three months ended March 31, 2014, long-term forward LIBOR benchmark interest rates decreased relative to the beginning of 2014 which resulted in us recognizing $22.6 million of unrealized gains.

During the three months ended March 31, 2015, we recognized unrealized losses on our interest rate swaps associated with our U.S. Dollar-denominated long-term debt. This resulted from $12.9 million of unrealized losses relating to decreases in long-term forward LIBOR benchmark interest rates, relative to the beginning of 2015, partially offset by transfers of $5.3 million of previously recognized unrealized losses to realized losses related to actual cash settlements of our interest rate swaps.

During the three months ended March 31, 2014, we recognized unrealized losses on our interest rate swaps associated with our U.S. Dollar-denominated long-term debt and capital leases. This resulted from $24.1 million of unrealized losses relating to decreases in long-term forward LIBOR benchmark interest rates, relative to the beginning of 2014, partially offset by transfers of $12.2 million of previously recognized unrealized losses to realized losses related to actual cash settlements of our interest rate swaps.

Long-term forward EURIBOR benchmark interest rates decreased during the three months ended March 31, 2015. However, the impact of the decrease is more than offset by the impact of the weakening of the Euro against the U.S. Dollar, resulting in us recognizing $3.3 million of unrealized gains on our interest rate swaps associated with our Euro-denominated long-term debt.

Long-term forward EURIBOR benchmark interest rates decreased during the three months ended March 31, 2014, resulting in us recognizing $6.7 million of unrealized losses on our interest rate swaps associated with our Euro-denominated long-term debt.

The projected average tanker rates in the tanker market increased for the three months ended March 31, 2015 compared to beginning of the year, which resulted in $1.8 million of unrealized losses on our Toledo Spirit time-charter derivative. The projected average tanker rates in the tanker market increased for the three months ended March 31, 2014 compared to the beginning of 2014 which resulted in $2.3 million of unrealized losses on our Toledo Spirit time-charter derivative. The Toledo Spirit time-charter derivative is the agreement with Teekay Corporation under which Teekay Corporation pays us any amounts payable to the charterer of the Toledo Spirit as a result of spot rates being below the fixed rate, and we pay Teekay Corporation any amounts payable to us by the charterer of the Toledo Spirit as a result of spot rates being in excess of the fixed rate.

Please see “Item 5 – Operating and Financial Review and Prospects: Valuation of Derivative Instruments” in our Annual Report on Form 20-F for the year ended December 31, 2014, which explains how our derivative instruments are valued, including the significant factors and uncertainties in determining the estimated fair value and why changes in these factors result in material variances in realized and unrealized gain (loss) on derivative instruments.

Foreign Currency Exchange Gains and (Losses). Foreign currency exchange gains and (losses) were $25.9 million for the three months ended March 31, 2015 compared to ($0.8) million for the same period last year. Our foreign currency exchange gains and losses, substantially all of which are unrealized, are due primarily to the relevant period-end revaluation of our NOK-denominated debt and our Euro-denominated term loans and restricted cash for financial reporting purposes and the realized and unrealized losses on our cross currency swaps. Gains on NOK-denominated and Euro-denominated monetary liabilities reflect a stronger U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to the rate in effect at the beginning of the period. Losses on NOK-denominated and Euro-denominated monetary liabilities reflect a weaker U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to the rate in effect at the beginning of the period.

For the three months ended March 31, 2015, foreign currency exchange gains (losses) included unrealized gains on the revaluation of our Euro-denominated cash, restricted cash and debt of $28.3 million and the revaluation of our NOK-denominated debt of $16.2 million. These were partially offset by realized losses of ($1.4) million and unrealized losses of ($17.0) million on our cross currency swaps.

For the three months ended March 31, 2014, foreign currency exchange gains (losses) include a realized loss of ($0.4) million and an unrealized gain of $3.9 million on our cross currency swaps, and an unrealized loss of ($3.7) million on the revaluation of our NOK-denominated debt. For the three months ended March 31, 2014, foreign currency exchange gains (losses) also include the revaluation of our Euro-denominated restricted cash, debt and capital leases of ($0.6) million.

Other Income. Other income increased slightly by $0.2 million for the three months ended March 31, 2015 compared to the same period last year, primarily due to one of our guarantee liabilities being fully amortized in the first quarter of 2015.

Income Tax Recovery (Expense). Income tax recovery increased by $0.6 million, resulting in an income tax recovery of $0.2 million for the three months ended March 31, 2015 compared to the same period last year due to a reversal of an uncertain tax position and recognition of a deferred income tax asset in the first quarter of 2015.

Liquidity and Cash Needs

Our business model is to employ our vessels on fixed-rate contracts primarily with large energy companies and their transportation subsidiaries. The operating cash flow our vessels generate each quarter, excluding a reserve for maintenance capital expenditures and debt repayments, is generally paid out to our unitholders within approximately 45 days after the end of each quarter. Our primary short-term liquidity needs are to pay these quarterly distributions on our outstanding units, payment of operating expenses, dry-docking expenditures, debt service costs and to fund general working capital requirements. We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows from operations.

Our long-term liquidity needs primarily relate to expansion and maintenance capital expenditures and debt repayment. Expansion capital expenditures primarily represent the purchase or construction of vessels to the extent the expenditures increase the operating capacity or revenue generated by our fleet, while maintenance capital expenditures primarily consist of dry-docking expenditures and expenditures to replace vessels in order to maintain the operating capacity or revenue generated by our fleet. Our primary sources of funds for our long-term liquidity needs are from cash from operations, long-term bank borrowings and other debt or equity financings, or a combination thereof. Consequently, our ability to continue to expand the size of our fleet is dependent upon our ability to obtain long-term bank borrowings and other debt, as well as raising equity.

Our revolving credit facilities and term loans are described in “Item 1 – Financial Statements: Note 7 – Long-Term Debt”. They contain covenants and other restrictions typical of debt financing secured by vessels, that restrict the ship-owning subsidiaries from: incurring or guaranteeing indebtedness; changing ownership or structure, including mergers, consolidations, liquidations and dissolutions; paying dividends or distributions if we are in default; making capital expenditures in excess of specified levels; making certain negative pledges and granting certain liens; selling, transferring, assigning or conveying assets; making certain loans and investments; and entering into a new line of business. Certain of our revolving credit facilities and term loans require us to maintain financial covenants. If we do not meet these financial covenants, the lender may accelerate the repayment of the revolving credit facilities and term loans, thus having a significant impact on our short-term liquidity requirements. As at March 31, 2015, we and our affiliates were in compliance with all covenants relating to our credit facilities and term loans.

We have one credit facility that requires us to maintain vessel value to outstanding loan principal balance ratios of 115%, which as at March 31, 2015, was 188%. The vessel value was determined using second-hand market comparables or using a depreciated replacement cost approach. Since vessel values can be volatile, our estimates of market value may not be indicative of either the current or future prices that could be obtained if we sold any of the vessels.

As at March 31, 2015, our consolidated cash and cash equivalents were $106.4 million, compared to $159.6 million at December 31, 2014. Our total liquidity, which consists of cash, cash equivalents and undrawn medium-term credit facilities, was $239.6 million as at March 31, 2015, compared to $295.2 million as at December 31, 2014. The decrease in total consolidated liquidity is primarily due to installment payments relating to our newbuildings.

As of March 31, 2015, we had a working capital deficit of $158.2 million. The working capital deficit includes a $62.5 million current capital lease obligation for two Suezmax tankers, under which the owner has the option to require us to purchase the vessels. However, we do not expect the owner to exercise this option.

We expect to manage the remaining portion of our working capital deficit primarily with net operating cash flow, debt refinancing and, to a lesser extent, existing undrawn revolving credit facilities. As at March 31, 2015, we had undrawn medium-term credit facilities of $133.2 million.

Cash Flows. The following table summarizes our cash flow for the periods presented:


(in thousands of U.S. Dollars)	Three Months Ended March 31,
	2015			2014
Net cash flow from operating activities		87,497			41,399
Net cash flow used for financing activities		(78,875	)		(88,232	)
Net cash flow (used for) from investing activities		(61,851	)		2,176

Operating Cash Flows. Net cash flow from operating activities increased to $87.5 million for the three months ended March 31, 2015, from $41.4 million for the same period last year, primarily due to the acquisition of the Norgas Napa in November 2014, a greater aggregate amount of dividends received from our equity accounted joint ventures, and 18 days of unscheduled off-hire during the first quarter of 2014 due to repairs required for one of our LNG carriers; partially offset by the sales of the Algeciras Spirit and Huelva Spirit in February 2014 and August 2014, respectively. Net cash flow from operating activities depends upon the timing and amount of dry-docking expenditures, repair and maintenance activity, the impact of vessel additions and dispositions on operating cash flows, foreign currency rates, changes in interest rates, timing of dividends from equity accounted investments, fluctuations in working capital balances and spot market hire rates (to the extent we have vessels operating in the spot tanker market or our hire rates are partially affected by spot market rates). The number of vessel dry dockings tends to vary each period depending on the vessels’ maintenance schedule.

Our equity accounted joint ventures are generally required to distribute all available cash to its shareholders. However, the timing and amount of dividends from each of our equity accounted joint ventures may not necessarily coincide with the operating cash flow generated from each respective equity accounted joint venture. The timing and amount of dividends distributed by our equity accounted joint ventures are affected by the timing and amounts of debt repayments in the joint ventures, capital requirements, as well as any cash reserves maintained in the joint ventures for operations, capital expenditures and/or as required under financing agreements.

Financing Cash Flows. Net cash flow used for financing activities decreased to $78.9 million for the three months ended March 31, 2015, from $88.2 million for the same period last year, primarily as a result of a $14.0 million repayment of a shareholder loan received from Exmar LPG, $6.8 million of proceeds received under our continuous offering program (or COP) in January 2015, and a $7.2 million decrease in cash paid to non-controlling interests. These changes were partially offset by a $11.7 million increase in restricted cash relating to collateral for cross currency swaps and project tenders, $3.0 million recorded in the same period last year on novation of derivative liabilities from Teekay Corporation to us, and a $4.7 million increase in cash distributions paid to our unitholders and general partner.

Cash distributions paid during the three months ended March 31, 2015 increased to $63.6 million from $58.9 million for the same period last year. This increase was the result of an increase in the number of units eligible to receive cash distributions from us as a result of (a) our common unit public offering in July 2014 and common units sold under our COP during December 2014 and January 2015, and (b) a 1.2% increase in the quarterly cash distribution per unit relating to the fourth quarter of 2014, which was paid in February 2015.

Investing Cash Flows. Net cash flow used for investing activities was $61.9 million for the three months ended March 31, 2015, compared to net cash flow from investing activities of $2.2 million for the same period last year. During the three months ended March 31, 2015, we used cash of $60.7 million relating to newbuilding installments for three of our nine LNG newbuilding vessels equipped with the MEGI twin engines.

Contractual Obligations and Contingencies

The following table summarizes our contractual obligations as at March 31, 2015:


			Remainder		2016		2018
			of		and		and		Beyond
	Total		2015		2017		2019		2019
	(in millions of U.S. Dollars)
U.S. Dollar-Denominated Obligations:
Long-term debt⁽¹⁾		1,405.1		77.5		217.0		570.2		540.4
Commitments under capital leases⁽²⁾		71.8		5.8		38.7		27.3		—
Commitments under operating leases⁽³⁾		337.7		18.1		48.2		48.2		223.2
Newbuilding installments/shipbuilding supervision⁽⁴⁾		2,651.3		137.1		1,161.0		1,155.5		197.7

Total U.S. Dollar-Denominated obligations		4,465.9		238.5		1,464.9		1,801.2		961.3

Euro-Denominated Obligations:⁽⁵⁾
Long-term debt⁽⁶⁾		249.5		10.5		30.8		136.3		71.9

Total Euro-Denominated obligations		249.5		10.5		30.8		136.3		71.9

Norwegian Kroner-Denominated Obligations:⁽⁵⁾
Long-term debt⁽⁷⁾		198.5		—		86.8		111.7		—

Total Norwegian Kroner-Denominated obligations		198.5		—		86.8		111.7		—

Totals		4,913.9		249.0		1,582.5		2,049.2		1,033.2

⁽¹⁾

Excludes expected interest payments of $23.3 million (remainder of 2015), $42.2 million (2016 and 2017), $24.6 million (2018 and 2019) and $38.6 million (beyond 2019). Expected interest payments are based on the existing interest rates (fixed-rate loans) and LIBOR at March 31, 2015, plus margins on debt that has been drawn that ranges up to 2.80% (variable-rate loans). The expected interest payments do not reflect the effect of related interest rate swaps that we have used as an economic hedge of certain of our variable-rate debt.

⁽²⁾

Includes, in addition to lease payments, amounts we may be required to pay to purchase leased vessels at the end of lease terms. The lessor has the option to sell these vessels to us at any time during the remaining lease term; however, in this table we have assumed the lessor will not excerise its right to sell the vessels to us until after the lease term expire, which is during the years 2017 to 2018. The purchase price for any vessel we are required to purchase would be based on the unamortized portion of the vessel construction financing costs for the vessels, which are included in the table above. We expect to satisty any such purchase price by assuming the existing vessel financing, although we may be required to obtain separate debt or equity financing to complete any purchases if the lenders do not consent to our assuming the financing obligations. Please read “Item 1 – Financial Statements: Note 4 – Vessel Charters”.

⁽³⁾	We have corresponding leases whereby we are the lessor and expect to receive approximately $297.5 million for these leases from 2015 to 2029.

⁽⁴⁾	Between December 2012 and February 2015, we entered into agreements for the construction of nine LNG newbuildings. The remaining cost for these newbuildings totaled $1,607.1 million as of March 31, 2015, including estimated interest and construction supervision fees.

As part of the acquisition of an ownership interest in the BG Joint Venture, we agreed to assume BG’s obligation to provide shipbuilding supervision and crew training services for the four newbuilding LNG carriers and to fund our proportionate share of the remaining newbuilding installments. The estimated remaining costs for the shipbuilding supervision and crew training services and our proportionate share of newbuilding installments, net of the secured financing within the joint venture for the LNG carrier newbuildings, totaled $87.0 million as of March 31, 2015. However, as part of this agreement with BG, we expect to recover $20.3 million of the shipbuilding supervision and crew training costs from BG between 2015 and 2019.

In July 2014, the Yamal LNG Joint Venture, in which we have a 50% ownership interest entered into agreements for the construction of six LNG newbuildings. As at March 31, 2015, our 50% share of the remaining cost for these six newbuildings totaled $957.2 million. The Yamal LNG Joint Venture intends to secure debt financing for 70% to 80% of the fully built-up cost of the six newbuildings, which fully built up cost is estimated to be $2.1 billion.

The table above excludes eight newbuilding LPG carriers scheduled for delivery between 2015 and 2018 in Exmar LPG, the joint venture between Exmar and us. As at March 31, 2015, our 50% share of the remaining cost for these eight newbuildings totaled $172.6 million, including estimated interest and construction supervision fees.

⁽⁵⁾	Euro-denominated and NOK-denominated obligations are presented in U.S. Dollars and have been converted using the prevailing exchange rate as of March 31, 2015.

⁽⁶⁾

Excludes expected interest payments of $2.8 million (remainder of 2015), $6.9 million (2016 and 2017), $2.4 million (2018 and 2019) and $1.3 million (beyond 2019). Expected interest payments are based on EURIBOR at March 31, 2015, plus margins that range up to 2.25%, as well as the prevailing U.S. Dollar/Euro exchange rate as of March 31, 2015. The expected interest payments do not reflect the effect of related interest rate swaps that we have used as an economic hedge of certain of our variable-rate debt.

⁽⁷⁾

Excludes expected interest payments of $9.0 million (remainder of 2015), $20.3 million (2016 and 2017) and $4.2 million (2018 and 2019). Expected interest payments are based on NIBOR at March 31, 2015, plus margins that range up to 5.25%, as well as the prevailing U.S. Dollar/NOK exchange rate as of March 31, 2015. The expected interest payments do not reflect the effect of the related cross currency swaps that we have used as an economic hedge of our foreign exchange and interest rate exposure associated with our NOK-denominated long-term debt.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements. The details of our equity accounted investments are shown in “Item 18 – Notes to Consolidated Financial Statements: Note 5 – Equity Method Investments” of our Annual Report on Form 20-F for the year ended December 31, 2014. In addition, please read “Item 1 – Financial Statements: Note 5 – Equity Method Investments”.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP, which require us to make estimates in the application of our accounting policies based on our best assumptions, judgments and opinions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could materially differ from our assumptions and estimates. Accounting estimates and assumptions discussed in “Item 5 – Operating and Financial Review and Prospects – Critical Accounting Estimates” of our Annual Report on Form 20-F for the year ended December 31, 2014, are those that we consider to be the most critical to an understanding of our financial statements, because they inherently involve significant judgments and uncertainties. For a further description of our critical accounting policies, please read “Item 5 – Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2014. There have been no significant changes in accounting estimates and assumptions from those discussed in the Form 20-F.

At March 31, 2015, we had one reporting unit with goodwill attributable to it. Based on conditions that existed at March 31, 2015, we do not believe that there is a reasonable possibility that the goodwill attributable to this reporting unit might be impaired for the remainder of the year. However, certain factors that impact this assessment are inherently difficult to forecast and, as such, we cannot provide any assurance that an impairment will or will not occur in the future. An assessment for impairment involves a number of assumptions and estimates that are based on factors that are beyond our control. These are discussed in more detail in the following section entitled “Forward-Looking Statements”.

FORWARD-LOOKING STATEMENTS

This Report on Form 6-K for the three months ended March 31, 2015 contains certain forward-looking statements (as such term is defined in Section 27A of the Securities Exchange Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and our operations, performance and financial condition, including, in particular, statements regarding:

•

our financial condition and results of operations and our revenues and expenses;

•

growth prospects of the LNG and LPG shipping and oil tanker markets;

•

LNG, LPG and tanker market fundamentals, including the balance of supply and demand in the LNG, LPG and tanker markets and spot LNG, LPG and tanker charter rates;

•

our ability to conduct and operate our business and the business of our subsidiaries in a manner than minimizes taxes imposed upon us and our subsidiaries;

•

estimated minimum charter hire payments for the remainder of 2015 and the next four fiscal years, and our expectation regarding our vessels’ ability to perform to specifications and maintain their hire rates;

•

our ability to maximize the use of our vessels, including the redeployment or disposition of vessels no longer under long-term charter, specifically, our 52% owned vessels, the Magellan Spirit and the Methane Spirit;

•

the expectation that insurance will cover the costs related to the grounding of the Magellan Spirit, less an applicable deductible;

•

the expected outcome of our dispute on the charterer’s claims of the aggregate off-hire time and charter contract termination for the Magellan Spirit;

•

the amount of prepayments we may need to advance to the Teekay LNG-Maurbeni Joint Venture in connection with the loan facility related to the Magellan Spirit, and the impact of potential negotiations regarding amendments to that loan facility;

•

expected purchases and deliveries of newbuilding vessels, our ability to obtain charter contracts for newbuildings, and the newbuildings’ commencement of service under charter contracts, including with respect to the nine LNG newbuildings ordered from DSME, four LNG newbuildings ordered within the BG Joint Venture, six LNG newbuildings relating to the Yamal LNG Joint Venture and eight remaining LPG newbuildings ordered within Exmar LPG BVBA;

•

the exercise of options to order additional MEGI LNG carrier newbuildings, and the chartering of any such vessels;

•

delivery dates, financing and estimated costs for acquisitions and newbuildings, including the possible purchase of our leased Suezmax tankers, the nine newbuilding LNG carriers we own, and the 10 newbuilding LNG carriers and eight newbuilding LPG carriers in our equity accounted joint ventures;

•

expected financing for the Yamal LNG Joint Venture;

•

expected financing of future shipyard installment payments for the BG Joint Venture;

•

the cost of supervision and crew training in relation to the BG Joint Venture;

•

the expected technical and operational capabilities of newbuildings, including the benefits of the MEGI engines in certain newbuilding LNG carriers;

•

the expected sale or redelivery of certain vessels;

•

the expected source of funds for short-term and long-term liquidity needs;

•

estimated capital expenditures and our ability to fund them;

•

the expected source of funds to manage our working capital deficit;

•

the expected use of net proceeds from our offering of NOK 1,000 million in senior unsecured bonds;

•

our continued ability to enter into long-term, fixed-rate time-charters with our LNG and LPG customers;

•

obtaining LNG and LPG projects that we bid on;

•

our expected financial flexibility to pursue acquisitions and other expansion opportunities;

•

the possibility that goodwill attributable to a reporting unit will not be impaired for the remainder of the year;

•

our expectations regarding whether the UK taxing authority can successfully challenge the tax benefits available under certain of our leasing arrangements, and the potential financial exposure to us if such a challenge is successful;

•

our hedging activities relating to foreign exchange, interest rate and spot market risks;

•

the potential impact of new accounting guidance;

•

anticipated taxation of our partnership and its subsidiaries; and

•

our business strategy and other plans and objectives for future operations.

Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe”, “anticipate”, “expect”, “estimate”, “project”, “will be”, “will continue”, “will likely result”, “plan”,

“intend” or words or phrases of similar meanings. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to: changes in production or price of LNG, LPG or oil; changes in anticipated levels of vessel newbuilding orders or rates of vessel scrapping; changes in the financial stability of our charterers; changes in trading patterns; changes in our expenses; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; LNG or LPG infrastructure constraints and community and environmental group resistance to new LNG or LPG infrastructure; potential development of active short-term or spot LNG or LPG shipping markets; spot tanker market rate fluctuations; potential inability to implement our growth strategy; competitive factors in the markets in which we operate; potential for early termination of long-term contracts and our ability to renew or replace long-term contracts; our ability to secure charter contracts for our newbuilding carriers or other vessels; loss of any customer, time-charter or vessel; shipyard production or vessel delivery delays; changes in tax regulations or the outcome of tax positions; our and our joint ventures’ potential inability to raise financing to purchase additional vessels; our exposure to currency exchange rate fluctuations; conditions in the public equity markets; LNG or LPG project delays or abandonment; potential failure of the Yamal LNG Project to be completed for any reason, including due to lack of funding as a result of existing or future sanctions against Russian entities and individuals, which may affect partners in the project; potential delays or cancellation of the Yamal LNG Project; failure to materialize of assumptions underlying our estimates of U.S. federal taxable income to a holder of our common units in a given year; and other factors detailed from time to time in our periodic reports filed with the SEC, including our Annual Report on Form 20-F for the year ended December 31, 2014. We do not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

MARCH 31, 2015

PART I – FINANCIAL INFORMATION

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to the impact of interest rate changes primarily through our borrowings that require us to make interest payments based on LIBOR, EURIBOR or NIBOR. Significant increases in interest rates could adversely affect our operating margins, results of operations and our ability to service our debt. We use interest rate swaps to reduce our exposure to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costs associated with our floating-rate debt.

We are exposed to credit loss in the event of non-performance by the counterparties to the interest rate swap agreements. In order to minimize counterparty risk, we only enter into derivative transactions with counterparties that are rated A- or better by Standard & Poor’s or A3 or better by Moody’s at the time of the transactions. In addition, to the extent practical, interest rate swaps are entered into with different counterparties to reduce concentration risk.

The table below provides information about our financial instruments at March 31, 2015, that are sensitive to changes in interest rates. For long-term debt and capital lease obligations, the table presents principal payments and related weighted-average interest rates by expected contractual maturity dates. For interest rate swaps, the table presents notional amounts and weighted-average interest rates by expected contractual maturity dates. The expected contractual maturity dates do not reflect potential prepayments of long-term debt and capital lease obligations as well as the potential exercise of early termination options for certain of our interest rate swaps.


	Expected Maturity Date
	Remainder																					Fair
	of															There-						Value
	2015			2016			2017			2018			2019			after			Total			Liability		Rate⁽¹⁾
	(in millions of U.S. Dollars, except percentages)
Long-Term Debt:
Variable Rate ($U.S.)⁽²⁾		77.5			113.7			103.3			509.3			60.9			540.4			1,405.1			1,366.9		1.7	%
Variable Rate (Euro)^{(3) (4)}		10.5			14.9			15.9			127.2			9.1			71.9			249.5			239.6		1.5	%
Variable Rate (NOK)^{(4) (5)}		—			—			86.8			111.7			—			—			198.5			204.4		6.1	%

Capital Lease Obligations:
Variable-Rate ($U.S.)⁽⁶⁾		3.3			4.6			28.3			26.3			—			—			62.5			62.5		5.5	%
Average Interest Rate⁽⁷⁾		5.4	%		5.4	%		4.6	%		6.4	%		—			—			5.5	%

Interest Rate Swaps:
Contract Amount ($U.S.)⁽⁸⁾		18.0			351.9			161.9			61.9			144.2			140.2			878.1			78.4		3.7	%
Average Fixed Pay Rate⁽²⁾		3.2	%		3.0	%		4.9	%		4.1	%		2.7	%		4.8	%		3.7	%
Contract Amount (Euro)^{(4) (9)}		10.5			14.9			15.9			127.2			9.1			71.9			249.5			42.6		3.1	%
Average Fixed Pay Rate⁽³⁾		3.1	%		3.1	%		3.1	%		2.6	%		3.7	%		3.8	%		3.1	%

(1)

Rate refers to the weighted-average effective interest rate for our long-term debt and capital lease obligations, including the margin we pay on our floating-rate debt and the average fixed pay rate for our interest rate swap agreements. The average interest rate for our capital lease obligations is the weighted-average interest rate implicit in our lease obligations at the inception of the leases. The average fixed pay rate for our interest rate swaps excludes the margin we pay on our floating-rate term loans, which as of March 31, 2015 ranged from 0.30% to 2.80%. Please read “Item 1 – Financial Statements: Note 7 – Long-Term Debt”.

(2)	Interest payments on U.S. Dollar-denominated debt and interest rate swaps are based on LIBOR.

(3)	Interest payments on Euro-denominated debt and interest rate swaps are based on EURIBOR.

(4)	Euro-denominated and NOK-denominated amounts have been converted to U.S. Dollars using the prevailing exchange rate as of March 31, 2015.

(5)

Interest payments on our NOK-denominated debt and on our cross currency swaps are based on NIBOR. Our NOK 700 million and NOK 900 million debt have been economically hedged with cross currency swaps, to swap all interest and principal payments into U.S. Dollars, with the respective interest payments fixed at rates of 6.88% and 6.43%, respectively, and the transfer of principal locked in at $125.0 million and $150.0 million, respectively, upon maturity. Please see below in the foreign currency fluctuation section and read “Item 1 – Financial Statements: Note 10 – Derivative Instruments”.

(6)	The amount of capital lease obligations represents the present value of minimum lease payments together with our purchase obligation, as applicable.

(7)

The average interest rate is the weighted-average interest rate implicit in the capital lease obligations at the inception of the leases. Interest rate adjustments on these leases have corresponding adjustments in charter receipts under the terms of the charter contracts to which these leases relate to.

(8)	The average variable receive rate for our U.S. Dollar-denominated interest rate swaps is set at 3-month or 6-month LIBOR.

(9)	The average variable receive rate for our Euro-denominated interest rate swaps is set at 1-month EURIBOR.

Spot Market Rate Risk

One of our Suezmax tankers, the Toledo Spirit, operates pursuant to a time-charter contract that increases or decreases the otherwise fixed-rate established in the charter depending on the spot charter rates that we would have earned had we traded the vessel in the spot tanker market. The time-charter contract is scheduled to expire in August 2025, although the charterer has the right to terminate the time-charter in July 2018. We have entered into an agreement with Teekay Corporation under which Teekay Corporation pays us any amounts payable to the charterer as a result of spot rates being below the fixed rate, and we pay Teekay Corporation any amounts payable to us from the charterer as a result of spot rates being in excess of the fixed rate. The amounts payable to or receivable from Teekay Corporation are settled at the end of each year. At March 31, 2015, the fair value of this derivative liability was $3.9 million and the change from December 31, 2014 to the reporting period has been reported in realized and unrealized loss on derivative instruments.

Foreign Currency Fluctuation Risk

Our functional currency is U.S. Dollars because primarily all of our revenues and most of our operating costs are in U.S. Dollars. Our results of operations are affected by fluctuations in currency exchange rates. The volatility in our financial results due to currency exchange rate fluctuations is attributed primarily to foreign currency revenues and expenses, our Euro-denominated loans and restricted cash deposits and our NOK-denominated bonds. A portion of our voyage revenues are denominated in Euros. A portion of our vessel operating expenses and general and administrative expenses are denominated in Euros, which is primarily a function of the nationality of our crew and administrative staff. We have Euro-denominated interest expense and Euro-denominated interest income related to our Euro-denominated loans of 232.4 million Euros ($249.5 million) and Euro-denominated restricted cash deposits of 15.5 million Euros ($16.6 million), respectively, as at March 31, 2015. We also incur NOK-denominated interest expense on our NOK-denominated bonds; however, we entered into cross currency swaps and pursuant to these swaps we receive the principal amount in NOK on the maturity date of the swap, in exchange for payment of a fixed U.S. Dollar amount. In addition, the cross currency swaps exchange a receipt of floating interest in NOK based on NIBOR plus a margin for a payment of U.S. Dollar fixed interest. The purpose of the cross currency swaps is to economically hedge the foreign currency exposure on the payment of interest and principal of our NOK bonds due in 2017 through 2018, and to economically hedge the interest rate exposure. We have not designated, for accounting purposes, these cross currency swaps as cash flow hedges of our NOK-denominated bonds due in 2017 through 2018. Please read “Item 1 – Financial Statements: Note 10 – Derivative Instruments”. At March 31, 2015, the fair value of this derivative liability was $87.6 million and the change from December 31, 2014 to the reporting period has been reported in foreign currency exchange gain (loss). As a result, fluctuations in the Euro and NOK relative to the U.S. Dollar have caused, and are likely to continue to cause, fluctuations in our reported voyage revenues, vessel operating expenses, general and administrative expenses, interest expense, realized and unrealized gain (loss) on derivative instruments and foreign currency exchange gain (loss).

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

MARCH 31, 2015

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

None

Item 1A – Risk Factors

In addition to the other information set forth in this Report on Form 6-K, you should carefully consider the risk factors discussed in Part I, “Item 3. Key Information-Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2014, which could materially affect our business, financial condition or results of operations.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3 – Defaults Upon Senior Securities

None

Item 4 – Mine Safety Disclosures

None

Item 5 – Other Information

None

Item 6 – Exihibits

4.31	Agreement dated November 7, 2014, for a US$175,000,000 secured loan facility between Solaia Shipping L.L.C. and Excelsior BVBA, and Nordea Bank Norge ASA.

4.32	Agreement dated April 27, 2015, for a US$55,000,000 secured loan facility between African Spirit L.L.C., European Spirit L.L.C. and Asian Spirit L.L.C., and ING Bank N.V.

THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE FOLLOWING REGISTRATION STATEMENTS OF THE PARTNERSHIP:

•

REGISTRATION STATEMENT ON FORM S-8 (NO.333-124647) FILED WITH THE SEC ON MAY 5, 2005

•

REGISTRATION STATEMENT ON FORM F-3 (NO.333-170838) FILED WITH THE SEC ON NOVEMBER 24, 2010

•

REGISTRATION STATEMENT ON FORM F-3 (NO.333-188387) FILED WITH THE SEC ON MAY 6, 2013

•

REGISTRATION STATEMENT ON FORM F-3 (NO.333-190783) FILED WITH THE SEC ON AUGUST 22, 2013

•

REGISTRATION STATEMENT ON FORM F-3ASR (NO.333-197479) FILED WITH THE SEC ON JULY 17, 2014

•

REGISTRATION STATEMENT ON FORM F-3 (NO.333-197651) FILED WITH THE SEC ON JULY 25, 2014

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	TEEKAY LNG PARTNERS L.P.

	By:	Teekay GP L.L.C., its General Partner

Date: May 26, 2015	By:	/s/ Peter Evensen
		Peter Evensen
		Chief Executive Officer and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 4.31


Confidential		Execution version

Dated 7 November 2014

SOLAIA SHIPPING L.L.C. and EXCELSIOR BVBA

as Borrowers

arranged by

NORDEA BANK NORGE ASA

as Bookrunner

and

THE PARTIES REFERRED TO HEREIN

as Arrangers

with

NORDEA BANK NORGE ASA

as Agent

and

NORDEA BANK NORGE ASA

as Security Agent

FACILITY AGREEMENT

for $175,000,000 relating to vessels known as

“EXCALIBUR” and “EXCELSIOR”

LOGO

Contents


Clause		Page

1	Definitions and interpretation		1

2	The Facility		23

3	Purpose		25

4	Conditions of Utilisation		26

5	Utilisation		27

6	Repayment		28

7	Illegality, prepayment and cancellation		28

8	Interest		32

9	Interest Periods		32

10	Changes to the calculation of interest		33

11	Fees		34

12	Tax gross-up and indemnities		35

13	Increased Costs		38

14	Other indemnities		39

15	Mitigation by the Lenders		41

16	Costs and expenses		42

17	Representations and Warranties		43

18	Undertakings and Covenants		47

19	Events of Default		54

20	Position of Hedging Provider		59

21	Changes to the Lenders		61

22	Changes to the Obligors		64

23	Roles of Agent, Security Agent, Bookrunner and Arrangers		65

24	Conduct of business by the Finance Parties		79

25	Sharing among the Finance Parties		81

26	Payment mechanics		83

27	Set-off		85

28	Notices		85



29	Calculations and certificates	87

30	Partial invalidity	87

31	Remedies and waivers	88

32	Amendments and waivers	88

33	Confidentiality	90

34	Counterparts	92

35	Governing law	93

36	Enforcement	93



Schedule 1	The original parties	94

Schedule 2	Ship information	98

Schedule 3	Conditions precedent	100

Schedule 4	Utilisation Request	107

Schedule 5	Selection Notice	108

Schedule 6	Form of Transfer Certificate	109

Schedule 7	Form of Compliance Certificate	111

Schedule 8	Form of Accession Agreement	112

THIS AGREEMENT is dated 2014 and made between:

(1)	THE ENTITIES listed in Schedule 1 as borrowers (the Borrowers);

(2)	NORDEA BANK NORGE ASA, as bookrunner (the Bookrunner);

(3)	THE ENTITIES listed in Schedule 1 as arrangers (whether acting individually or together the Arrangers);

(4)	THE FINANCIAL INSTITUTIONS listed in Schedule 1 as lenders (the Original Lenders);

(5)	NORDEA BANK NORGE ASA as agent of the other Finance Parties (the Agent); and

(6)	NORDEA BANK NORGE ASA as security agent of the Finance Parties (the Security Agent).

IT IS AGREED as follows:

Section 1 - Interpretation

1	Definitions and interpretation

Definitions

1.1	In this Agreement and (unless otherwise defined in the relevant Finance Document) the other Finance Documents:

Accession Agreement means an accession agreement substantially in the form as set out in Schedule 8 (Form of Accession Agreement), or otherwise approved

Account Bank means, in relation to any Earnings Account, Nordea Bank Norge ASA or another bank or financial institution approved by the Majority Lenders at the request of the Borrowers

Account Holder(s) means, in relation to any Earnings Account, each Obligor in whose name that Earnings Account is held

Account Security means, in relation to an Earnings Account, a deed or other instrument by the relevant Account Holder(s) in favour of the Security Agent in an agreed form conferring a Security Interest over that Earnings Account

Accounting Reference Date means 31 December or such other date as may be notified to the Lenders

Advance means each borrowing of a proportion of the Total Commitments by the Borrowers or (as the context may require) the outstanding principal amount of such borrowing

Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company

Agent includes any person who may be appointed as such under the Finance Documents

Approved Brokers means RS Platou, Lorentzen & Stemoco, Joachim Grieg & Co, Clarkson, Fearnleys, E.A. Gibson Shipbrokers Ltd and Braemar Seascope Ltd or such other firm or firms of reputable and independent brokers as may from time to time be approved in writing by the Agent (acting on the instructions of the Majority Lenders, such approval not to be unreasonably withheld or delayed)

Approved Manager means Exmar Shipmanagement N.V. as technical managers and Exmar Marine N.V. as commercial managers

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

Available Facility means, at any relevant time, such part of the Total Commitments (drawn and undrawn) which is available for borrowing under this Agreement at such time in accordance with clause 4 (Conditions of Utilisation) to the extent that such part of the Total Commitments is not cancelled or reduced under this Agreement

Basel III means, together:

(a)

the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

(b)

the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”

Borrower Assignment means in relation to a Ship, an assignment by the Borrower of its interest in (among other things) the Insurances and Requisition Compensation of the Ship and the Earnings from the Ship in the agreed form

Break Costs means the amount (if any) by which:

(a)

the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b)

the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period

Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in Antwerp, London, Oslo, Paris, Vancouver and New York

Change in Law means the occurrence, after the date of this Agreement, of any of the following:

(a)

the adoption or taking effect of any law, rule, regulation or treaty;

(b)

any change in law, rule, regulation or treaty or in the administration, interpretation implementation or application thereof by any government entity; or

(c)

the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any government entity,

provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act of the United States of America, passed in 2010 and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements,

the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted or issued

Change of Control occurs when:

(a)

in respect of a Borrower:

(i)

Any Guarantor (but in the case of Exmar, when taken together with Exmar Energy) ceases to own beneficially (directly or indirectly) at least fifty per cent (50%) of the aggregate issued share capital or units of a Borrower; or

(ii)

Any Guarantor (but in the case of Exmar, when taken together with Exmar Energy) ceases to have or own at least fifty per cent (50%) of the aggregate voting power or economic interest represented by the issued and outstanding equity interests or units in a Borrower; or

(iii)

Any Guarantor (but in the case of Exmar, when taken together with Exmar Energy) ceases to have the power to nominate the number of directors or the officers in a Borrower which that party has at the date of this Agreement,

and for the avoidance of doubt, the Share Transfer Date and/or the anticipated transfers of shares and/or membership interests and/or units in the Borrowers on the first Utilisation Date shall not be a Change of Control; and/or

(b)

In respect of Exmar Energy:

(i)

Exmar ceases to own beneficially an ownership interest of (x) at least twenty five per cent (25%) of Exmar Energy; and (y) one hundred per cent (100%) of Exmar General Partner Ltd; or

(ii)

Exmar ceases to control directly or indirectly Exmar General Partner Ltd.

Charged Property means all of the assets of the Obligors which from time to time are, or are expressed or intended to be, the subject of the Security Documents

Charter Documents means, where relevant, in relation to a Ship, the External Charter of that Ship, any bareboat charter of that Ship, any letter of credit issued to secure obligations under or in respect of any External Charter, any mortgage of that Ship to the extent the beneficiary is not the Security Agent, the Second Priority Security Documents, any documents supplementing them, following the expiry or termination of any External Charter, any charter commitment with a term in excess of 36 months, and in each case any guarantee or security given by any person in favour of an Obligor for the obligations thereunder

Civil Law Security Documents means each Mortgage, Share Security governed by Belgian law and such other Security Documents designated by the Agent

Classification means, in relation to a Ship, the classification specified in respect of such Ship in Schedule 2 (Ship information) with the relevant Classification Society or another classification approved by the Majority Lenders as its classification, at the request of the relevant Borrower

Classification Society means, in relation to a Ship, the classification society specified in respect of such Ship in Schedule 2 (Ship information) or another classification society (being a member of the International Association of Classification Societies (IACS) or, if such association no longer exists, any similar association nominated by the Agent) approved by the Majority Lenders as its Classification Society, at the request of the relevant Borrower

Code means the US Internal Revenue Code of 1986

Commitment means:

(a)

in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Schedule 1 (The original parties) and the amount of any other Commitment assigned to it under this Agreement; and

(b)

in relation to any other Lender, the amount of any Commitment assigned to it under this Agreement,

to the extent not cancelled, reduced or assigned by it under this Agreement

Compliance Certificate means, in relation to a Borrower, a certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate), and in relation to a Guarantor, a certificate substantially in the form set out in its Guarantee, or in each case, otherwise approved

Confidential Information means all information relating to an Obligor, any Group, the Transaction Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:

(a)

any member of any Group or any of its advisers; or

(b)

another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of any Group or any of its advisers,

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

(i)

is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of clause 33 (Confidentiality); or

(ii)

is identified in writing at the time of delivery as non-confidential by any member of any Group or any of its advisers; or

(iii)

is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality

Confirmation shall have, in relation to any Hedging Transaction, the meaning given to it in the Hedging Master Agreement

Constitutional Documents means, in respect of an Obligor, such Obligor’s memorandum and articles of association, by-laws or other constitutional documents including as referred to in any certificate relating to an Obligor delivered pursuant to Schedule 3 (Conditions precedent)

Default means an Event of Default or any event or circumstance specified in clause 19 (Events of Default) 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 the foregoing) be an Event of Default.

Defaulting Lender means any Lender:

(a)

which has failed to make its participation in an Advance available (or has notified the Agent or a Borrower (which has notified the Agent) that it will not make its participation in an Advance available) by the Utilisation Date of that Loan in accordance with clauses 5.5 to 5.8 (Lenders’ participation);

(b)

which has otherwise rescinded or repudiated a Finance Document; or

(c)

with respect to which an Insolvency Event has occurred and is continuing,

unless, in the case of paragraph (a) above:

(i)

its failure to pay is caused by:

(A)

administrative or technical error; or

(B)

a Payment Disruption Event; and,

payment is made within 3 Business Days of its due date; or

(ii)

the Lender is disputing in good faith whether it is contractually obliged to make the payment in question

Disposal Repayment Date means in relation to:

(a)

a Total Loss of a Ship, the applicable Total Loss Repayment Date; and

(b)

a sale of a Ship by the relevant Borrower, the date upon which such sale is completed by the transfer of title to the purchaser in exchange for payment of all or part of the relevant purchase price

DOC means, in relation to the operator of each Ship, a valid Document of Compliance issued for the operator of that Ship by the Administration under paragraph 13.2 of the ISM Code.

Earnings means, in relation to a Ship and a person, all money at any time payable to that person for or in relation to the use or operation of such Ship including freight, hire and passage moneys, money payable to that person for the provision of services by or from such Ship or under any charter commitment, requisition for hire compensation, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach and payments for termination or variation of any charter commitment

Earnings Account means any account held offshore designated as an “Earnings Account” under clause 18.52 (Bank accounts)

Environmental Affiliate means an agent or employee of a Borrower (but excluding any Approved Manager which is an Affiliate of a Borrower) or a person in a contractual relationship with a Borrower (but excluding any Approved Manager which is an Affiliate of a Borrower) in respect of a Ship (including without limitation, the operation of or the carriage of cargo of a Ship)

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

Environmental Incident means:

(a)

any release of Environmentally Sensitive Material from a Ship; or

(b)

any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or where any guarantor, any manager (or any sub-manager of a Ship) 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 a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where any guarantor, any manager (or any sub-manager of a Ship) 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

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

Equator Principles means the set of environmental guidelines developed by commercial banks and the International Finance Corporation for the purpose of assessing and managing environmental and social issues related to private sector project financings, as adopted on 4 June 2003 and revised in June 2006 and as revised from time to time

Event of Default means any event or circumstance specified as such in clause 19 (Events of Default)

Existing Indebtedness means, in relation to a Ship, the existing indebtedness specified against the name of such Ship in Schedule 2 (Ship Information)

Exmar means Exmar N.V., a limited liability company incorporated under the laws of the Kingdom of Belgium, whose registered office is at De Gerlachekaai 20, Antwerp, Belgium

Exmar Energy means Exmar Energy Partners L.P., a limited partnership formed in the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH96960

Exmar Energy Guarantee means the guarantee and indemnity relating to the Facility executed or to be executed by Exmar Energy in favour of the Security Agent in the agreed form on the Guarantee Transfer Date

Exmar Group means at any time prior to the Guarantee Transfer Date, Exmar and each of its Subsidiaries, and at any time on or after the Guarantee Transfer Date, Exmar Energy and each of its Subsidiaries

Exmar Guarantee means the guarantee and indemnity relating to the Facility executed or to be executed by Exmar in favour of the Security Agent in the agreed form until the Guarantee Transfer Date

External Charter means, in relation to a Ship, the external charter commitment for that Ship details of which are provided in Schedule 2 (Ship information) or, after the expiry, termination or cancellation of such External Charter, a replacement charter commitment for that Ship

External Charterer means, in relation to a Ship, the charterer named in Schedule 2 (Ship information) as external charterer of that Ship or, after the expiry, termination or cancellation of the External Charter relating to such External Charterer for that Ship, a replacement external charterer party to a charter commitment for that Ship

External Charterer Undertaking means, in relation to a Ship, the external charterer undertaking of the relevant External Charterer to the Security Agent in respect of that Ship, in the agreed form and, in the case of the Ship known as the Excelsior, the intercreditor agreement between Excelsior BVBA, the External Charterer, the Lenders, the Agent and the Security Agent, in the agreed form

Facility means the term loan facility made available under this Agreement as described in clause 2 (The Facility)

Facility Office means:

(a)

in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office through which it will perform its obligations under this Agreement; and

(b)

in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes

Facility Period means the period from and including the date of this Agreement to and including the date on which the Total Commitments have reduced to zero and all Secured Obligations of the Obligors under the Finance Documents has been fully paid and discharged

FATCA means:

(a)

sections 1471 to 1474 of the Code or any associated regulations;

(b)

any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or

(c)

any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction

FATCA Application Date means:

(a)

in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;

(b)

in relation to a “withholdable payment” described in section 1473(1)(A)(ii) of the Code (which relates to “gross proceeds” from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or

(c)

in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2017,

or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement

FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA

FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction

FATCA FFI means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Finance Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction

Fee Letter means any letter dated on or about the date of this Agreement setting out any of the fees referred to in clause 11 (Fees)

Final Repayment Date means, subject to clauses 26.13 and 26.14 (Business Days), the date falling five (5) years after the date of this Agreement

Finance Documents means this Agreement, any Fee Letter, the Security Documents, any Hedging Contracts, any Hedging Master Agreement and any deed of accession supplemental to it and any other document designated as such by the Agent and the Borrowers

Finance Party means the Agent, the Bookrunner, the Security Agent, the Account Bank, any Arranger, any Hedging Provider or a Lender

Financial Indebtedness means any indebtedness for or in respect of:

(a)

moneys borrowed;

(b)

any acceptance credit;

(c)

any bond, note, debenture, loan stock or other similar instrument;

(d)

any redeemable preference share to the extent such shares can be redeemed before the Final Repayment;

(e)

any finance or capital lease;

(f)

receivables sold or discounted (otherwise than on a non-recourse basis);

(g)

any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, except for non-payment of an amount, the then mark to market value of the derivative transaction will be used to calculate its amount);

(h)

any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing;

(i)

any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or

(j)

any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (i) above.

First Repayment Date means, subject to clauses 26.13 and 26.14 (Business Days), the date falling three months after the date of this Agreement

Flag State means, in relation to a Ship, the country specified in respect of such Ship in Schedule 2 (Ship information), or such other state or territory as may be approved by the Majority Lenders (acting reasonably), at the request of the relevant Borrower, as being the “Flag State” of such Ship for the purposes of the Finance Documents, with Marshall Islands, Norwegian International Ship Registry, Panama, Bahamas and Singapore being pre-approved

Free Liquidity means cash, cash equivalents and marketable securities of maturities less than one (1) year to which the Borrower shall have free, immediate and direct access each as reflected in the Borrower’s most recent management accounts forming part of the Borrower’s most recently delivered financial statements

GAAP means generally accepted accounting principles (i) in respect of any member of the Teekay LNG, Group United States of America, (ii) in respect of any member of the Exmar Group, Belgium and (iii) in respect of the Borrowers, Belgium

Group means:

(a)

in relation to Exmar or Exmar Energy, the Exmar Group; and

(b)

in relation to Teekay LNG, the Teekay LNG Group

Group Member means any Obligor and any other entity which is part of the Group

Guarantee Transfer Date means the date upon which the Agent confirms to the Borrowers that it has received each of the documents and evidence listed in Schedule 3, Part 3

Guarantees means (i) the Teekay LNG Guarantee, (ii) at any time prior to the Guarantee Transfer Date, the Exmar Guarantee, and at any time on or after the Guarantee Transfer Date, the Exmar Energy Guarantee

Guarantors means:

(a)

Exmar or, at any time on or after the Guarantee Transfer Date, Exmar Energy; and

(b)

Teekay LNG

Hedging Contract means any Hedging Transaction between one or more of the Borrowers and any Hedging Provider pursuant to any Hedging Master Agreement and includes any Hedging Master Agreement and any Confirmations from time to time exchanged under it and governed by its terms relating to that Hedging Transaction and any contract in relation to such a Hedging Transaction constituted and/or evidenced by them and Hedging Contracts means all of them and on approved terms

Hedging Master Agreement means any agreement made or (as the context may require) to be made between the Borrowers and a Hedging Provider comprising an ISDA Master Agreement and the Schedule thereto in the agreed form

Hedging Provider means each Arranger or Affiliate of an Arranger that becomes a party to this Agreement in its capacity as a Hedging Provider pursuant to an Accession Agreement which in each case is party to a Hedging Contract and has not ceased to be an Arranger or Affiliate of an Arranger (as applicable)

Hedging Transaction has, in relation to any Hedging Master Agreement, the meaning given to the term “Transaction” in that Hedging Master Agreement

Holding Company means, in relation to a person, any other person in respect of which it is a Subsidiary

IFRS means international accounting standards within the meaning of the IAS Regulations 1606/2002

Indemnified Person means:

(a)

each Finance Party and any attorney, agent or other person appointed by them under the Finance Documents;

(b)

each Affiliate of those persons; and

(c)

any officers, directors, employees, representatives or agents of any of the above persons

Insolvency Event in relation to a Finance Party means that the Finance Party:

(a)

is dissolved (other than pursuant to a consolidation, amalgamation or merger);

(b)

becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

(c)

makes a general assignment, arrangement or composition with or for the benefit of its creditors;

(d)

institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;

(e)

has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (d) above and:

(i)

results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding up or liquidation; or

(ii)

is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;

(f)

has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

(g)

seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets(other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in paragraph (d) above);

(h)

has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other enforcement action or legal process levied, enforced, taken or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

(i)

causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (h) above; or

(j)

takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

Insurance Notice means, in relation to a Ship, a notice of assignment in the form scheduled to the Ship’s Borrower Assignment

Insurances means, in relation to a Ship:

(a)

all policies and contracts of insurance; and

(b)

all entries in a protection and indemnity or war risks or other mutual insurance association

in the name of such Borrower or the joint names of its owner and any other person in respect of or in connection with such Ship and includes all benefits thereof (including the right to receive claims and to return of premiums)

Interest Period means, in relation to the Loan, each period determined in accordance with clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with clauses 8.3 to 8.5 (Default interest)

Interpolated Screen Rate means, in relation to LIBOR for an Interest Period with respect to the Loan or any part of it or any Unpaid Sum, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:

(a)

the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the relevant Interest Period; and

(b)

the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the relevant Interest Period,

each as of 11:00 a.m. on the Quotation Day

ISM Code means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A.741(18) of the International Maritime Organisation and incorporated into the Safety of Life at Sea Convention, and includes any amendment of the foregoing and any regulation issued pursuant to the foregoing.

ISPS Code means the International Ship and Port Facility Security Code of the International Maritime Organisation and includes any amendments or extensions thereto and any regulation issued pursuant thereto

ISSC means, if and whenever the same is required by applicable law and/or pursuant to or for the purposes of the Insurances, the International Ship Security Certificate for the Ship issued in accordance with the ISPS Code

Last Availability Date means 30 November 2014 (or such later date as may be approved by the Lenders)

Legal Opinion means any legal opinion delivered to the Agent under clause 4 (Conditions of Utilisation)

Lender means:

(a)

any Original Lender; and

(b)

any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with clause 21 (Changes to the Lenders),

which in each case has not ceased to be a Lender in accordance with the terms of this Agreement

LIBOR means, in relation to the Loan or any part of it or any Unpaid Sum:

(a)

the applicable Screen Rate; or

(b)

(if no Screen Rate is available for dollars for the relevant Interest Period) the Interpolated Screen Rate for the relevant Interest Period; or

(c)

if no Screen Rate is available for the relevant Interest Period and it is not possible to calculate an Interpolated Screen Rate for that Interest Period, the Reference Bank Rate as of 11:00 a.m. on the Quotation Day for a period equal in length to the Interest Period of the Loan or relevant part of it or Unpaid Sum and,

if that rate is less than zero, LIBOR shall be deemed to be zero

Loan means the loan made or to be made under the Facility or the principal amount outstanding for the time being of that loan

Loss Payable Clauses means, in relation to a Ship, the provisions concerning payment of claims under the Ship’s Insurances in the form scheduled to the Ship’s Borrower Assignment or in another approved form

Major Casualty means any casualty to a Ship for which the total insurance claim, inclusive of any deductible, exceeds or is likely to exceed the Major Casualty Amount

Major Casualty Amount means, in relation to a Ship, the amount specified as such in Schedule 2 (Ship information) against the name of such Ship or the equivalent in any other currency

Majority Lenders means:

(a)

if no part of the Loan is then outstanding, a Lender or Lenders whose Commitments aggregate more than 66 2/3 per cent of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2/3 per cent of the Total Commitments immediately prior to the reduction); or

(b)

at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 66 2/3 per cent of the Loan

Manager’s Undertaking means, in relation to a Ship, an undertaking by any manager of the Ship to the Security Agent in the agreed form at any time that the Approved Manager is not a member of a Group

Margin means two point seven five per cent (2.75%) per annum

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 Obligor or on the consolidated financial condition, assets, prospects or business of a Group; or

(b)

the ability of an Obligor to perform and comply with its obligations under any Transaction Documents or to avoid any Event of Default; or

(c)

the validity, legality or enforceability of any Transaction Document; or

(d)

the validity, legality or enforceability of any security expressed to be created pursuant to any Transaction 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) each Group taken as a whole and (y) the ability of the Borrowers and the Obligors to perform each of their obligations under the Finance Documents

Mortgage means, in relation to a Ship, a first mortgage of that Ship in the agreed form by the relevant Borrower in favour of the Security Agent, and Mortgages means all of them

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 Finance Documents to which it is party;

(b)

ensure the legality, validity, enforceability or admissibility in evidence in England, the governing law of such document and, if different, its jurisdiction of incorporation, of such Finance Documents to which it is party; and

(c)

carry on its business from time to time

New Lender has the meaning given to that term in clause 21 (Changes to the Lenders)

Obligors means the parties to the Finance Documents (other than Finance Parties), and any other person who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Secured Obligations and for the avoidance of doubt, (i) excluding the External Charterer, (ii) excluding an Approved Manager that is not a member of the Exmar Group and/or Teekay LNG Group, (iii) at any time prior to the Guarantee Transfer Date including Exmar but excluding Exmar Energy and at any time on or following the Guarantee Transfer Date, excluding Exmar but including Exmar Energy, and (iv) at any time prior to the Share Transfer Date including Teekay LNG Holdco L.L.C., and at any time on or following the Share Transfer Date, excluding Teekay LNG Holdco L.L.C. and Obligor means any one of them

Original Security Documents means:

(a)

the Guarantees;

(b)

the Mortgages;

(c)

the Borrower Assignments in relation to each of the Ships;

(d)

the Share Security in relation to each Borrower;

(e)

the Account Security;

(f)

any Manager’s Undertaking in relation to a Ship, if required; and

(g)

an External Charterer Undertaking in relation to each Ship

Participating Member State means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union

Party means a party to this Agreement

Payment Disruption Event means either or both of:

(a)

a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

(b)

the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

(i)

from performing its payment obligations under the Finance Documents; or

(ii)

from communicating with other Parties in accordance with the terms of the Finance Documents,

(and which (in either such case)) is not caused by, and is beyond the control of, the Party whose operations are disrupted

Permitted Financial Indebtedness means any Financial Indebtedness:

(a)

incurred under this Agreement; or

(b)

owed to other members of a Group on a subordinated and unsecured basis; or

(c)

such other Financial Indebtedness which has the prior written approval of the Agent acting on the instructions of the Majority Lenders

Permitted Maritime Liens means, in relation to any Ship:

(a)

any ship repairer’s or outfitter’s possessory lien in respect of the Ship for an amount not exceeding the Major Casualty Amount (unless with the prior written consent of the Agent, acting on behalf of all the Lenders);

(b)

any lien on the Ship for master’s, officer’s or crew’s wages not more than 30 days outstanding in the ordinary course of its trading and operating that Ship; and

(c)

any lien on the Ship for salvage

Permitted Security Interests means, in relation to any Ship, any Security Interest over it which is:

(a)

granted by the Finance Documents; or

(b)

a Permitted Maritime Lien;

(c)

any lien arising in the ordinary course of business or operation of the Ships by statute or by operation of law in respect of obligations which are not more than thirty (30) days overdue or which are being contested in good faith by appropriate proceedings (and for the payment of which adequate reserves have been provided) so long as any such proceedings or the continued existence of such lien do not in the opinion of the Facility Agent involve any likelihood of the sale, forfeiture or loss of, or of any interest in, the Ships or any proceeds of a Total Loss;

(d)

any Security Interest arising out of any claims, judgments, or awards against a Borrower which are being contested in good faith by that Borrower or which are the subject of a pending appeal (and for the payment of which adequate reserves have been provided) so long as any such claims, judgments or awards or the continued existence of such Security Interest do not in the reasonable opinion of the Agent involve any likelihood of the sale, forfeiture or loss of, or of any interest in, the Ships or any proceeds of a Total Loss;

(e)

the Second Priority Security Documents; or

(f)

is approved by the Majority Lenders

Quarter Date means 31 March, 30 June, 30 September and 31 December

Quotation Day means, in relation to any period for which an interest rate is to be determined, two Business Days before the first day of that period unless market practice differs in the Interbank Market for a currency, in which case the Quotation Day for that currency shall be determined by the Agent in accordance with market practice in the Interbank Market (and if quotations would normally be given by leading banks in the Interbank Market on more than one day, the Quotation Day will be the last of those days)

Receiver means a receiver or a receiver and manager or an administrative receiver appointed in relation to the whole or any part of any Charged Property under any relevant Security Document

Reference Banks means, in relation to LIBOR and Mandatory Cost, the principal London offices of Nordea Bank Finland Plc and Nordea Bank AB Publ and such other banks as may be appointed by the Agent in consultation with the Borrowers

Reference Bank Rate means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks as the rate at which the relevant Reference Bank could borrow funds in the Interbank Market, in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period

Registry means, in relation to each Ship, such registrar, commissioner or representative of the relevant Flag State who is duly authorised and empowered to register the relevant Ship, the relevant Borrower’s title to such Ship and the relevant Mortgage under the laws of its Flag State

Repayment Date means:

(a)

the First Repayment Date;

(b)

each of the dates falling at quarterly intervals thereafter up to but not including the Final Repayment Date; and

(c)

the Final Repayment Date.

Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian

Requisition Compensation means, in relation to a Ship, any compensation paid or payable by a government entity for the requisition for title, confiscation or compulsory acquisition of such Ship

Restricted Party means a person:

(a)

that is listed on any Sanctions List (whether designated by name or by reason of being included in a class of person);

(b)

that is domiciled, registered as located or having its main place of business in, or is incorporated under the laws of, a country which is subject to Sanctions Laws; or

(c)

that is directly or indirectly owned or controlled by a person referred to in (a) and/or (b) above; or

(d)

with which any Finance Party is prohibited from dealing or otherwise engaging in a transaction with by any Sanctions Laws

Sanctioned Country means a country or territory that is, or territory that is, or whose government is, the subject of Sanctions Laws broadly prohibiting deals with such government, country or territory (including, without limitation, Cuba, Iran, Myanmar, North Korea, Sudan and Syria)

Sanctions Authority means the Norwegian State, the United Nations, the European Union, the member states of the European Union, the United States of America, the Monetary Authority of Singapore and any authority acting on behalf of any of them in connection with Sanctions Laws

Sanctions Laws means the economic or financial sanctions laws and/or regulations, trade embargoes, prohibitions, restrictive measures, decisions, executive orders or notices from regulators implemented, adapted, imposed, administered, enacted and/or enforced by any Sanctions Authority

Sanctions List means any list of persons or entities published in connection with Sanctions Laws by or on behalf of any Sanctions Authority

Screen Rate means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars and the relevant period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or, in each case on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers and the Lenders

Second Priority Security Documents means, in respect of the Ship known as Excelsior, the mortgage deed, the assignment of insurance proceeds and the share pledge in respect of Excelsior BVBA, in each case in favour of the External Charterer to secure the rights of the External Charterer under the External Charter relating to the Ship known as Excelsior, in the agreed form for so long as the External Charterer’s rights under and pursuant to such agreements, documents and/or arrangements are fully subordinated in rights and priority to the rights and priority of the Finance Parties under and pursuant to the relevant External Charterer Undertaking

Secured Obligations means the indebtedness and obligations undertaken to be paid and discharged by the Obligors under the Finance Documents

Security Agent includes any person as may be appointed as such under the Finance Documents and includes its capacity as Security Holder

Security Documents means:

(a)

the Original Security Documents;

(b)

any other document as may be executed to guarantee and/or secure any amounts owing to the Finance Parties under this Agreement or any other Finance Document

Security Holder means the Security Agent in its capacity as security holder for the purposes of the Civil Law Security Documents

Security Interest means a mortgage, charge, pledge, lien, assignment, trust, hypothecation or other security interest of any kind securing any obligation of any person or any other agreement or arrangement having a similar effect

Security Value means, at any time, the amount in dollars which, at that time, is the aggregate of (a) the Valuations (or, if less in relation to an individual Ship, the maximum amount capable of being secured by the Mortgage of the relevant Ship) of all of the Ships which have not then become a Total Loss and (b) the value of any additional security then held by the Security Agent provided under clause 18.8), in each case as most recently determined in accordance with this Agreement

Selection Notice means a notice substantially in the form set out in Schedule 5(Selection Notice) given in accordance with clause 9 (Interest Periods)

Share Security means, in relation to each Borrower, the document constituting a Security Interest by the relevant Shareholders in favour of the Security Agent in the agreed form in respect of all of the shares or units in such Borrower

Shareholders means:

(a)

at any time on or after the first Utilisation Date and prior to the Share Transfer Date, Teekay LNG Holdco L.L.C., Teekay Luxembourg S.à.r.l. and Exmar Energy Hong Kong Ltd.; and

(b)

at any time on or after the first Utilisation Date and on or after the Share Transfer Date, Exmar Energy Hong Kong Ltd. and Teekay Luxembourg S.à.r.l.

Share Transfer Date means the date upon which fifty percent (50%) of the membership interests in Solaia Shipping L.L.C. are acquired by Teekay Luxembourg S.à.r.l. from Teekay LNG Holdco L.L.C. upon and subject to the satisfaction of each of the conditions precedent set out in Schedule 3, Part 4 of this Agreement

Ship Commitment means, in relation to a Ship, the amount specified against the name of such Ship in Schedule 2 (Ship information), as cancelled or reduced pursuant to any provision of this Agreement

Ships means each of the ships described in Schedule 2 (Ship information) and Ship means any of them

Structure Chart means the structure chart delivered pursuant to clause 4 and referred to in clause 17.35

Subsidiary of a person means any other person:

(a)

directly or indirectly controlled by such person; or

(b)

of whose dividends or distributions on ordinary voting share capital or units such person is beneficially entitled to receive more than 50 per cent

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)

Teekay LNG means Teekay LNG Partners L.P., a limited partnership formed in the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The Marshall Islands MH9 6960

Teekay LNG Group means Teekay LNG and each of its Subsidiaries

Total Commitments means the aggregate of the Commitments, being one hundred and seventy five million dollars ($175,000,000) at the date of this Agreement

Total Loss means, in relation to a Ship, its:

(a)

actual, constructive, compromised or arranged total loss; or

(b)

requisition for title, confiscation or other compulsory acquisition by a government entity; or

(c)

hijacking, theft, condemnation, capture, seizure, arrest or detention for more than 90 days

Total Loss Date means, in relation to the Total Loss of a Ship:

(a)

in the case of an actual total loss, the date it happened or, if such date is not known, the date on which the Ship was last reported;

(b)

in the case of a constructive, compromised, agreed or arranged total loss, the earliest of:

(i)

the date notice of abandonment of the Ship is given to its insurers; or

(ii)

if the insurers do not admit such a claim, the date later determined by a competent court of law to have been the date on which the total loss happened; or

(iii)

the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the Ship’s insurers;

(c)

in the case of a requisition for title, confiscation or compulsory acquisition, the date it happened; and

(d)

in the case of hijacking, theft, condemnation, capture, seizure, arrest or detention, the date 90 days after the date upon which it happened

Total Loss Repayment Date means, where a Ship has become a Total Loss, the earlier of:

(a)

the date 180 days after its Total Loss Date (but in the case of paragraph (d) of the definition of Total Loss Date, disregarding the 90 day period referred to); and

(b)

the date upon which insurance proceeds or Requisition Compensation for such Total Loss are paid by insurers or the relevant government entity

Transaction Document means:

(a)

each of the Finance Documents; and

(b)

each Charter Document

Transfer Certificate means a certificate substantially in the form set out in Schedule 6 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrowers

Transfer Date means, in relation to an assignment, the later of:

(a)

the proposed Transfer Date specified in the Transfer Certificate; and

(b)

the date on which the Agent executes the Transfer Certificate

Treasury Transaction means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price

Trust Property means, collectively:

(a)

all moneys duly received by the Security Agent under or in respect of the Finance Documents;

(b)

any portion of the balance on any Earnings Account held by or charged to the Security Agent at any time;

(c)

the Security Interests, guarantees, security, powers and rights given to the Security Agent under and pursuant to the Finance Documents including, without limitation, the covenants given to the Security Agent in respect of all obligations of any Obligor;

(d)

all assets paid or transferred to or vested in the Security Agent or its agent or received or recovered by the Security Agent or its agent in connection with any of the Finance Documents whether from any Obligor or any other person; and

(e)

all or any part of any rights, benefits, interests and other assets at any time representing or deriving from any of the above, including all income and other sums at any time received or receivable by the Security Agent or its agent in respect of the same (or any part thereof)

Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents

US means the United States of America

Utilisation means the making of an Advance

Utilisation Date means the date on which a Utilisation is made

Utilisation Request means a notice substantially in the form set out in Schedule 4 (Utilisation Request)

VAT means:

(a)

any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

(b)

any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere

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

Construction

1.2	Unless a contrary indication appears, any reference in any of the Finance Documents to:

(a)

Sections, clauses and Schedules are to be construed as references to the Sections and clauses of, and the Schedules to, the relevant Finance Document and references to a Finance Document include its Schedules;

(b)

a Finance Document, Charter Document or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as it may from time to time be amended, restated, novated or replaced, however fundamentally;

(c)

words importing the plural shall include the singular and vice versa;

(d)

a time of day are to London time;

(e)

any person includes its successors in title, permitted assignees or transferees;

(f)

the knowledge, awareness and/or beliefs (and similar expressions) of any Obligor shall be construed so as to mean the knowledge, awareness and beliefs of the director and officers of such Obligor, having made due and careful enquiry;

(g)

agreed form means:

(i)

where a Finance Document has already been executed by all of the relevant parties, such Finance Document in its executed form;

(ii)

prior to the execution of a Finance Document, the form of such Finance Document separately agreed in writing between the Agent and the Borrowers as the form in which that Finance Document is to be executed or another form approved at the request of the Borrowers or, if not so agreed or approved, is in the form specified by the Agent;

(h)

approved by the Majority Lenders or approved by the Lenders means approved in writing by the Agent acting on the instructions of the Majority Lenders or, as the case may be, all of the Lenders (on such conditions as they may respectively impose) and otherwise approved means approved in writing by the Agent (on such conditions as the Agent may impose) and approval and approve shall be construed accordingly;

(i)

assets includes present and future properties, revenues and rights of every description;

(j)

an authorisation means any authorisation, consent, concession, approval, resolution, licence, exemption, filing, notarisation or registration;

(k)

charter commitment means, in relation to a vessel, any charter or contract for the use, employment or operation of that vessel or the carriage of people and/or cargo or the provision of services by or from it and includes any agreement for pooling or sharing income derived from any such charter or contract;

(l)

control of an entity means:

(i)

the power (whether by way of ownership of shares or units, proxy, contract, agency or otherwise) to:

(A)

cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of that entity; or

(B)

appoint or remove all, or the majority, of the directors or other equivalent officers of that entity; or

(C)

give directions with respect to the operating and financial policies of that entity with which the directors or other equivalent officers of that entity are obliged to comply; and/or

(ii)

the holding beneficially of more than 50 per cent of the issued share capital of that entity (excluding any part of that issued share capital or units that carries no right to participate beyond a specified amount in a distribution of either profits or capital) (and, for this purpose, any Security Interest over share capital or units shall be disregarded in determining the beneficial ownership of such share capital or units);

and controlled shall be construed accordingly;

(m)

the term disposal or dispose means a sale, transfer or other disposal (including by way of lease or loan but not including by way of loan of money) by a person of all or part of its assets, whether by one transaction or a series of transactions and whether at the same time or over a period of time, but not the creation of a Security Interest;

(n)

$, USD and dollars denote the lawful currency of the United States of America;

(o)

the equivalent of an amount specified in a particular currency (the specified currency amount) shall be construed as a reference to the amount of the other relevant currency which can be purchased with the specified currency amount in the London foreign exchange market at or about 11 a.m. on the date the calculation falls to be made for spot delivery, as conclusively determined by the Agent (with the relevant exchange rate of any such purchase being the Agent’s spot rate of exchange);

(p)

a government entity means any government, state or agency of a state;

(q)

a group of Lenders includes all the Lenders;

(r)

a guarantee means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;

(s)

indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(t)

month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that:

(i)

if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that month (if there is one) or on the immediately preceding Business Day (if there is not); and

(ii)

if there is no numerically corresponding day in that month, that period shall end on the last Business Day in that month

and the above rules in paragraphs (i) to (ii) will only apply to the last month of any period;

(u)

an obligation means any duty, obligation or liability of any kind;

(v)

something being in the ordinary course of business of a person means something that is in the ordinary course of that person’s current day-to-day operational business (and not merely anything which that person is entitled to do under its Constitutional Documents);

(w)

a person includes any individual, firm, company, corporation, government entity or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality);

(x)

a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation and includes (without limitation) any capital adequacy law or regulation;

(y)

right means any right, privilege, power or remedy, any proprietary interest in any asset and any other interest or remedy of any kind, whether actual or contingent, present or future, arising under contract or law, or in equity;

(z)

trustee, fiduciary and fiduciary duty has in each case the meaning given to such term under applicable law;

(aa)

(i) the liquidation, winding up, dissolution, or administration of person or (ii) a receiver or administrative receiver or administrator in the context of insolvency proceedings or security enforcement actions in respect of a person shall be construed so as to include any equivalent or analogous proceedings or any equivalent and analogous person or appointee (respectively) under the law of the jurisdiction in which such person is established or incorporated or any jurisdiction in which such person carries on business including (in respect of proceedings) the seeking or occurrences of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors;

(bb)

an entity is a “wholly-owned Subsidiary” of another entity if it has no members except that other and that other’s wholly-owned Subsidiaries or persons acting on behalf of that other or its wholly-owned Subsidiaries; and

(cc)

a provision of law is a reference to that provision as amended or re-enacted.

1.3

Where in this Agreement a provision includes a monetary reference level in one currency, unless a contrary indication appears, such reference level is intended to apply equally to its equivalent in other currencies as of the relevant time for the purposes of applying such reference level to any other currencies.

1.4	Section, clause and Schedule headings are for ease of reference only.

1.5	Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

1.6	A Default (other than an Event of Default) is continuing if it has not been remedied or waived and an Event of Default is continuing if it has not been waived or remedied.

1.7

Unless a contrary indication appears, in the event of any inconsistency between the terms of this Agreement and the terms of any other Finance Document when dealing with the same or similar subject matter, the terms of this Agreement shall prevail.

Third party rights

1.8

Unless expressly provided to the contrary in a Finance Document for the benefit of a Finance Party or another Indemnified Person, a person who is not a party to a Finance Document has no right under the Contracts (Rights of Third Parties) Act 1999 (the Third Parties Act) to enforce or enjoy the benefit of any term of the relevant Finance Document.

1.9

Any Finance Document may be rescinded or varied by the parties to it without the consent of any person who is not a party to it (unless otherwise provided by this Agreement).

1.10

An Indemnified Person who is not a party to a Finance Document may only enforce its rights under that Finance Document through a Finance Party and if and to the extent and in such manner as the Finance Party may determine.

Finance Documents

1.11

Where any other Finance Document provides that this clause 1.11 shall apply to that Finance Document, any other provision of this Agreement which, by its terms, purports to apply to all or any of the Finance Documents and/or any Obligor shall apply to that Finance Document as if set out in it but with all necessary changes.

Conflict of documents

1.12

The terms of the Finance Documents are subject to the terms of this Agreement and, in the event of any conflict between any provision of this Agreement and any provision of any Finance Document the provisions of this Agreement shall prevail.

Section 2 - The Facility

2	The Facility

The Facility

2.1	Subject to the terms of this Agreement, the Lenders make available to the Borrowers a loan facility in an aggregate amount equal to the Total Commitments.

Finance Parties’ rights and obligations

2.2

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 under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

2.3	The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.

2.4	A Finance Party may, except as otherwise stated in the Finance Documents (including clauses 23.77 and 23.78 (All enforcement action through the Security Agent)) and clauses 24.2 and 24.3 (Finance Parties acting together), separately enforce its rights under the Finance Documents.

Borrowers’ rights and obligations

2.5	The obligations of each Borrower under this Agreement are joint and several. Failure by a Borrower to perform its obligations under this Agreement shall constitute a failure by all of the Borrowers.

2.6	Each Borrower irrevocably and unconditionally jointly and severally with each other Borrower:

(a)

agrees that it is responsible for the performance of the obligations of each other Borrower under this Agreement;

(b)

acknowledges and agrees that it is a principal and original debtor in respect of all amounts due from the Borrowers under this Agreement; and

(c)

agrees with each Finance Party that, if any obligation of another Borrower under this Agreement is or becomes unenforceable, invalid or illegal for any reason it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any and all losses it incurs as a result of another Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by that other Borrower under this Agreement. The amount payable under this indemnity shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

2.7

The obligations of each Borrower under the Finance Documents shall continue until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably and unconditionally paid or discharged in full, regardless of any intermediate payment or discharge in whole or in part.

2.8

If any discharge, release or arrangement (whether in respect of the obligations of a Borrower or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Borrowers under this Agreement will continue or be reinstated as if the discharge, release or arrangement had not occurred.

2.9	The obligations of each Borrower under the Finance Documents shall not be affected by an act, omission, matter or thing which, but for this clause (whether or not known to it or any Finance Party), would reduce, release or prejudice any of its obligations under the Finance Documents including:

(a)

any time, waiver or consent granted to, or composition with, any Obligor or other person;

(b)

the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any other Obligor;

(c)

the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(d)

any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

(e)

any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of a Finance Document or any other document or security;

(f)

any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

(g)

any insolvency or similar proceedings.

2.10

Each Borrower waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Borrower under any Finance Document. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

2.11	Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably and unconditionally paid or discharged in full, each Finance Party (or any trustee or agent on its behalf) may:

(a)

refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Borrower will be entitled to the benefit of the same; and

(b)

hold in an interest-bearing suspense account any money received from any Borrower or on account of any Borrower’s liability under any Finance Document.

2.12

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs (on such terms as it may require), no Borrower shall exercise any rights (including rights of set-off) which it may have by reason of performance by it of its obligations under the Finance Documents:

(a)

to be indemnified by another Obligor;

(b)

to claim any contribution from any other Obligor or any guarantor of any Obligor’s obligations under the Finance Documents; and/or

(c)

to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party.

2.13

If, at the date of the Utilisation Request of a Ship, the Ship Commitment for that Ship is more than sixty per cent (60%) of the Ship’s Valuation delivered under Part 2 of Schedule 3 (Conditions precedent), then the Ship Commitment for the relevant Ship, shall be reduced (and the Available Facility and the Total Commitments shall each be correspondingly reduced) by such amount as may be necessary to ensure that the Ship Commitment for the relevant Ship as so reduced is equal to or less than sixty per cent (60%) of such Valuation as so determined.

2.14	The parallel debt duties of each Borrower under this Agreement are as follows:

(a)

each Borrower will pay to the Security Holder, when they are due for payment, the full amount of the Loan and all other amounts (including interest, commission and expenses) payable by the Borrowers under the Finance Documents and will owe all obligations, liabilities and undertakings to the Security Holder;

(b)

the duties of each Borrower to (i) the Security Holder and (ii) each other Finance Party are several;

(c)

payment either to the Security Holder or to another Finance Party of an amount which is due to both of them will reduce both of those liabilities by that amount;

(d)

if an amount would otherwise be payable under this clause 2.14 to the same person in two different capacities, each Borrower will only have an obligation to pay that amount once (the Parallel Debt); and

(e)

the Borrowers and each Finance Party agrees that the Security Holder shall be the joint creditor (“hoofdelijke schuldeiser”) together with each other Finance Party of each liability and obligation of the Borrowers towards any Finance Party under any Finance Document, and that accordingly the Security Holder will have its own independent right to demand performance by the Borrower of those liabilities and obligations. However, any discharge of any liability or obligation of the Borrowers to the Security Holder or other Finance Party shall, to the same extent, discharge the corresponding liability or obligation owing to the others. The Security Holder holds any security created by a Finance Document in its name and the Security Holder shall have full and unrestricted title to and authority in respect of that security, subject always to the terms of the Finance Documents.

3	Purpose

Purpose

3.1	The Borrowers shall apply all amounts borrowed under the Facility in accordance with this clause 3.

3.2	Each Ship Commitment shall initially be made available solely for the purpose of:

(a)

firstly assisting the relevant Borrower to refinance all amounts owing under the Existing Indebtedness; and

(b)

secondly general corporate and working capital purposes of the Borrowers.

Monitoring

3.3	No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

4	Conditions of Utilisation

Initial conditions precedent

4.1

The Lenders will only be obliged to comply with clauses 5.5 to 5.8 (Lenders’ participation) in relation to any Utilisation if on or before the Utilisation Date for that Utilisation, the Agent, or its duly authorised representative, has received or is satisfied that it will receive on or before the Utilisation Date all of the documents and other evidence listed in Part 1 of Schedule 3 (Conditions precedent to any Utilisation) in form and substance reasonably satisfactory to the Agent.

Ship and security conditions precedent

4.2

The Total Commitments shall only become available for borrowing under this Agreement if the Agent, or its duly authorised representative, has received or is satisfied that it will receive on or before the Utilisation Date all of the documents and evidence listed in Part 2 of Schedule 3 (Ship and security conditions precedent) in respect of the relevant Ship in form and substance reasonably satisfactory to the Agent.

Notice to Lenders

4.3

The Agent shall notify the Lenders and the Borrowers promptly after receipt by it of the documents and evidence referred to in this clause 4 in form and substance reasonably satisfactory to it. Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives any such notification, the Lenders authorise (but do not require) the Agent to give that notification. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

Further conditions precedent

4.4	The Lenders will only be obliged to comply with clauses 5.5 to 5.8 (Lenders’ participation) if:

(a)

on the date of the Utilisation Request and on the proposed Utilisation Date, no Default is continuing or would result from the proposed Utilisation; and

(b)

on the date of the Utilisation Request and on the proposed Utilisation Date, the representations and warranties are true and correct.

Waiver of conditions precedent

4.5	The conditions in this clause 4 are inserted solely for the benefit of the Finance Parties and may be waived on their behalf in whole or in part and with or without conditions by the Agent acting on the instructions of the Majority Lenders.

Section 3 - Utilisation

5	Utilisation

Delivery of a Utilisation Request

5.1	A Borrower may utilise the Facility by delivery to the Agent of a duly completed Utilisation Request not later than 11:00 a.m. three Business Days before the proposed Utilisation Date.

Completion of a Utilisation Request

5.2	A Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

(a)

the proposed Utilisation Date is a Business Day falling on or before the Last Availability Date;

(b)

the currency and amount of the Utilisation comply with clause 5.4 (Currency and amount); and

(c)

the proposed Interest Period complies with clause 9 (Interest Periods).

5.3	Only one Advance may be requested in each Utilisation Request.

Currency and amount

5.4

The currency specified in a Utilisation Request must be dollars and the amount of the proposed Advance must be in accordance with clause 2.13 or, if less, the amount of the Available Facility less the amount of the outstanding Loan. Only two utilisations may be made, one in respect of each Borrower.

Lenders’ participation

5.5	If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Advance available by the Utilisation Date through its Facility Office.

5.6	The amount of each Lender’s participation in the Advance will be equal to the proportion borne by its undrawn Commitment to the undrawn Total Commitments immediately prior to making the Advance.

5.7	The Agent shall promptly notify each Lender of the amount of the Advance and the amount of its participation in the Advance, in each case by 11:00 a.m. on the Quotation Day.

5.8	The Agent shall pay all amounts received by it in respect of each Advance (and its own participation in it, if any) to the Borrowers or the account of any of them in accordance with the instructions contained in the Utilisation Request.

Section 4 - Repayment, Prepayment and Cancellation

6	Repayment

Repayment

6.1	The Borrowers shall on each Repayment Date repay such part of the Loan as is required to be repaid by clause 6.2 (Scheduled repayment of Facility).

Scheduled repayment of Facility

6.2

To the extent not previously reduced, the Loan shall be repaid by instalments on each Repayment Date by two million one hundred and eighty seven thousand five hundred dollars ($2,187,500) (as revised by clause 6.3). The Borrowers shall pay the amount of the Loan outstanding on the Final Repayment Date.

Adjustment of scheduled repayments

6.3

If the Total Commitments have been partially reduced under this Agreement and/or any part of the Loan is prepaid (other than under clause 6.2) the amount of the instalment by which the Loan shall be repaid under clause 6.2 on each Repayment Date (as reduced by any earlier operation of this clause 6.3) shall be reduced pro rata to such reduction in the Total Commitments (except in the case of a reduction under clause 7.4 (Voluntary cancellation) or prepayment under clause 7.5 (Voluntary prepayment) where the reduction shall be treated as reducing the instalments on each Repayment Date on a pro rata basis).

7	Illegality, prepayment and cancellation

Illegality

7.1	If, in any applicable jurisdiction, it becomes unlawful for any Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Loan:

(a)

that Lender shall promptly notify the Agent upon becoming aware of that event;

(b)

upon the Agent notifying the Borrowers, the Commitment of that Lender will be immediately cancelled and the remaining Ship Commitments shall each be reduced rateably; and

(c)

to the extent that the Lender’s participation has not been assigned pursuant to clauses 32.10 to 32.12 (Replacement of a Defaulting Lender), the Borrowers shall repay that Lender’s participation in the Loan on the last day of the Interest Period occurring after the Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law). Prior to the date on which repayment is required to be made under this clause 7.1, unless as a result of or relating to Sanctions, the affected Lender shall negotiate in good faith with the Borrowers to find an alternative method or lending base in order to maintain their Commitment in the Facility.

Change of control

7.2	The Borrowers shall promptly notify the Agent upon a Change of Control.

7.3

If a Change of Control occurs, the Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrowers, cancel the Total Commitments with effect from a date specified in that notice which is at least sixty (60) days after the giving of the notice and declare that all or part of the Loan be prepaid in full on such date.

Voluntary cancellation

7.4

The Borrowers may, if they give the Agent not less than three (3) Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of $1,000,000 and a multiple of $1,000,000 of any part of any Ship Commitment which is undrawn at the proposed date of cancellation. Upon any such cancellation the Total Commitments shall be reduced by the same amount.

Voluntary prepayment

7.5

The Borrowers may, if they give the Agent not less than three (3) Business Days’ (or such shorter period as the Majority Lenders may agree) prior written notice, prepay the whole or any part of the Loan (but if in part, being an amount that reduces the amount of the Loan by a minimum amount of $5,000,000 on the last day of an Interest Period in respect of the amount to be prepaid.

Right of replacement or cancellation and prepayment in relation to a single Lender

7.6

If:

(a)

any sum payable to any Lender by an Obligor is required to be materially increased under clause 12.5 (Tax gross-up); or

(b)

any Lender claims indemnification (of a material nature) from the Borrowers under clause 12.8 (Tax indemnity) or clause 13.1 to 13.2 (Increased Costs); or

(c)

any Lender does not provide its consent to a consent or waiver request made by an Obligor pursuant to the Finance Documents where all Lender consent is required,

the Borrowers may, whilst the circumstance giving rise to the requirement for that increase, indemnification or consent continues, give the Agent notice of cancellation of the Commitment of that Lender and their intention to procure the repayment of that Lender’s participation in the Loan or give the Agent notice of their intention to replace that Lender in accordance with clause 7.10.

7.7	On receipt of a notice referred to in clause 7.6 above, the Commitment of that Lender shall immediately be reduced to zero and (unless the Commitment of the relevant Lender is replaced in accordance with clause 7.9) the remaining Ship Commitments shall each be reduced rateably.

7.8	On the last day of each Interest Period which ends after the Borrowers have given notice under clause 7.6 above in relation to a Lender (or, if earlier, the date specified by the Borrowers in that notice), the Borrowers shall repay that Lender’s participation in the Loan.

7.9

The Borrowers may, in the circumstances set out in clause 7.6, on 10 Business Days’ prior notice to the Agent and that Lender, replace that Lender by requiring that Lender to assign (and, to the extent permitted by law, that Lender shall assign) pursuant to clause 21 (Changes to the Lenders) all (and not part only) of its rights under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (other than any of the Obligors or any of their respective Affiliates) selected by the Borrowers which confirms its willingness to undertake and does undertake all the obligations of the assigning Lender in accordance with clause 21 (Changes to the Lenders) for a purchase price in cash or other cash payment payable at the time of the assignment equal to the aggregate of:

(a)

the outstanding principal amount of such Lender’s participation in the Loan;

(b)

all accrued interest owing to such Lender;

(c)

the Break Costs which would have been payable to such Lender pursuant to clause 10.7 (Break Costs) had the Borrowers prepaid in full that Lender’s participation in the Loan on the date of the assignment; and

(d)

all other amounts payable to that Lender under the Finance Documents on the date of the assignment.

7.10	The replacement of a Lender pursuant to clause 7.9 shall be subject to the following conditions:

(a)

the Borrowers shall have no right to replace the Agent;

(b)

neither the Agent nor any Lender shall have any obligation to find a replacement Lender;

(c)

in no event shall the Lender replaced under clause 7.9 be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and

(d)

the Lender shall only be obliged to assign its rights pursuant to clause 7.9 above once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that assignment.

7.11	A Lender shall perform the checks described in clause 7.10(d) above as soon as reasonably practicable following delivery of a notice referred to in clause 7.10 above and shall notify the Agent and the Borrowers when it is satisfied that it has complied with those checks.

7.12	If any Lender becomes a Defaulting Lender, the Borrowers may, at any time whilst the Lender continues to be a Defaulting Lender give the Agent three (3) Business Days’ notice of cancellation of the undrawn Commitment of that Lender.

7.13

On such notice becoming effective, the undrawn Commitment of the Defaulting Lender shall immediately be reduced to zero and (unless the Commitment of the relevant Lender is replaced in accordance with clause 7.9) the remaining undrawn Ship Commitments shall each be reduced rateably and the Agent shall as soon as practicable after receipt of such notice, notify all the Lenders.

Sale or Total Loss

7.14	If a Ship becomes a Total Loss before its Ship Commitment has become available for borrowing under this Agreement, the Total Commitments shall immediately be reduced by the Ship Commitment for such Ship and such Ship Commitment shall be reduced to zero.

7.15	On a Ship’s Disposal Repayment Date:

(a)

the Total Commitments will be reduced by the Applicable Fraction of the Total Commitments; and

(b)

if the Facility has been advanced, the Borrowers shall prepay such amount of the Loan as may be necessary to ensure that the outstanding Loan after such date will not exceed the Available Facility (as so reduced).

For the purposes of this clause, Applicable Fraction means a fraction having a numerator equal to the Ship Commitment relating to that Ship and a denominator equal to the Total Commitments.

7.16	Any cancellation of part of the Available Facility pursuant to clauses 7.14 or 7.15 shall reduce the Total Commitments by the same amount.

External Charter

7.17	In the event that any of the External Charters are terminated or cancelled then within 30 days of such termination or cancellation, the Applicable Fraction of the Loan shall be prepaid by the Borrowers and the Total Commitments reduced by such Applicable Fraction, unless the relevant

Borrower provides written notice to the Agent within such 30 day period that it intends to replace the terminated or cancelled External Charter with a replacement charter commitment within 90 days of such notice, and a replacement charter commitment is entered into within such 90 day period, by (as the case may be) the Borrower originally a party to that External Charter in form and substance, and on terms and conditions satisfactory to, the Agent (acting on the instructions of the Majority Lenders) in its reasonable discretion.

Automatic cancellation

7.18	Any part of the Total Commitments which has not become available by the Last Availability Date shall be automatically cancelled at close of business in London on the Last Availability Date.

Restrictions

7.19

Any notice of cancellation or prepayment given by any Party under this clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

7.20	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.

7.21	The Borrowers may not reborrow any part of the Facility which is prepaid or repaid.

7.22	The Borrowers shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

7.23	No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

7.24	If the Agent receives a notice under this clause 7 it shall promptly forward a copy of that notice to either the Borrowers or the affected Lender, as appropriate.

7.25

If the Total Commitments are partially reduced and/or the Loan partially prepaid under this Agreement (other than under clause 7.1 (Illegality) and clauses 7.6 to 7.13 (Right of cancellation and prepayment in relation to a single Lender)), the Commitments of the Lenders and (other than in relation to a cancellation of all of the Ship Commitment for a Ship) the remaining Ship Commitments shall be reduced rateably. Any prepayment shall be applied pro rata to each Lender’s participation in the Loan.

Section 5 - Costs of Utilisation

8	Interest

Calculation of interest

8.1	The rate of interest on the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(a)

Margin; and

(b)

LIBOR.

Payment of interest

8.2	The Borrowers shall pay accrued interest on the Loan 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 the Interest Period).

Default interest

8.3

If an Obligor fails to pay any amount payable by it under a Finance Document (other than a Hedging Contract) on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to clause 8.4 below, is 2 per cent per annum higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this clause 8.3 shall be immediately payable by the Obligor on demand by the Agent.

8.4	If any overdue amount consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or the relevant part of it:

(a)

the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan; and

(b)

the rate of interest applying to the overdue amount during that first Interest Period shall be 2 per cent per annum higher than the rate which would have applied if the overdue amount had not become due.

8.5	Default interest (if unpaid) arising on an overdue amount 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.

Notification of rates of interest

8.6	The Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.

9	Interest Periods

Selection of Interest Periods

9.1	A Borrower may select an Interest Period for the first Advance and thereafter the balance of the Loan in the Utilisation Request for the first Advance or (if the Loan has already been borrowed) in a Selection Notice.

9.2	Each Selection Notice is irrevocable and must be delivered to the Agent by the Borrowers not later than 11:00 a.m. three Business Days before the last day of the then current Interest Period.

9.3	If the Borrowers fail to deliver a Selection Notice to the Agent in accordance with clause 9.2, the relevant Interest Period will, subject to clause 9.5 (Interest Periods overrunning Repayment Dates), be 3 months.

9.4	Subject to this clause 9, the Borrowers may select an Interest Period of one, three or six months or any other period agreed between the Borrowers and the Agent on the instructions of all the Lenders.

9.5	No Interest Period shall extend beyond the Final Repayment Date.

9.6

The first Interest Period for the Loan shall start on the first Utilisation Date, the first Interest Period for any later Advance shall start on the relevant Utilisation Date and end on the last day of the then current Interest Period for the balance of the Loan and each subsequent Interest Period for the Loan shall start on the last day of its preceding Interest Period

Non-Business Days

9.7	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).

10	Changes to the calculation of interest

Absence of quotations

10.1

Subject to clause 10.2 (Market Disruption Event), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11:00 a.m. on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

Market Disruption Event

10.2

If:

(a)

a Market Disruption Event referred to in clause 10.4(a) occurs in relation to the Loan for any Interest Period, then the rate of interest on each Lender’s share of the Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

(i)

the Margin;

(ii)

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 participation in the Loan from whatever source it may reasonably select; or

(b)

a Market Disruption Event referred to in clause 10.4(b) occurs in relation to the Loan for any Interest Period, then the rate of interest on each Affected Lender’s share of the Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

(i)

the Margin;

(ii)

the rate notified to the Agent by that Affected 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 Affected Lender of funding its participation in the Loan from whatever source it may reasonably select.

10.3	If a Market Disruption Event occurs the Agent shall, as soon as is practicable, notify the Borrowers.

10.4	In this Agreement Market Disruption Event means:

(a)

at or about 11am on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for the relevant Interest Period; or

(b)

before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed 50 per cent of the Loan (the Affected Lenders)) that the cost to it of funding its participation in the Loan from whatever source it may reasonably select would be in excess of LIBOR.

Alternative basis of interest or funding

10.5	If a Market Disruption Event occurs and the Agent or Borrowers so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.

10.6	Any alternative basis agreed pursuant to clause 10.5 above shall, with the prior consent of all the Lenders be binding on all Parties.

Break Costs

10.7

The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrowers on a day other than the last day of an Interest Period for the Loan Unpaid Sum or relevant part of it.

10.8	Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

Fees

Commitment commission

11.1	The Borrowers shall pay to the Agent (for the account of each Lender) a fee in dollars computed at the rate of one point one per cent (1.1%) per annum on the undrawn portion of that Lender’s Commitment calculated from the date of this Agreement (the start date).

11.2

The Borrowers shall pay the accrued commitment commission in arrears on each Quarter Date after the start date but prior to the Last Availability Date, and, on the Last Availability Date and, if cancelled in full, on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.

11.3	No commitment fee is payable to the Agent (for the account of a Lender) on any undrawn Commitment of that Lender for any day on which that Lender is a Defaulting Lender.

Fees

11.4	The Borrowers shall pay any fees set out in a Fee Letter in the amount and at times agreed in the applicable Fee Letter.

Section 6 - Additional Payment Obligations

12	Tax gross-up and indemnities

Definitions

12.1	In this Agreement:

Protected Party means a Finance Party or, in relation to clauses 14.5 to 14.6 (Indemnity concerning security) and clause 14.9 (Interest) insofar as it relates to interest on any amount demanded by that Indemnified Person under clauses 14.5 to 14.6 (Indemnity concerning security), any Indemnified Person, which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

Tax Credit means a credit against, relief or remission for, or repayment of, any Tax.

Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document (other than a Hedging Contract) other than a FATCA Deduction.

Tax Payment means either the increase in a payment made by an Obligor to a Finance Party under clause 12.5 (Tax gross-up) or a payment under clause 12.9 or clause 12.13 (Indemnities on after Tax basis).

12.2	Unless a contrary indication appears, in this clause 12 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination.

Tax gross-up

12.3	Each Obligor shall make all payments to be made by it under any Finance Document without any Tax Deduction, unless a Tax Deduction is required by law.

12.4

The Borrowers shall, promptly upon any of them becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction), notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrowers and that Obligor.

12.5

If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor under the relevant Finance Document shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

12.6	If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

12.7

Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

12.8	Clauses 12.3 to 12.7 shall not apply in respect of any payments under any Hedging Contract, where the gross-up provisions of the relevant Hedging Master Agreement itself shall apply.

12.9

The Borrowers shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

12.10

Clause 12.9 above shall not apply:

(a)

with respect to any Tax assessed on a Finance Party:

(i)

under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

(ii)

under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

(b)

to the extent a loss, liability or cost is compensated for by an increased payment under clause 12.5 (Tax gross-up) 12.13 or 12.14 (Indemnities on after Tax basis); or

(c)

to the extent such Tax is attributable to a FATCA Deduction.

12.11

A Protected Party making, or intending to make a claim under clause 12.9 above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrowers.

12.12

A Protected Party shall, on receiving a payment from an Obligor under clause 12.9, notify the Agent.

Indemnities on after Tax basis

12.13

If and to the extent that any sum payable to any Protected Party by the Borrowers under any Finance Document by way of indemnity or reimbursement proves to be insufficient, by reason of any Tax suffered thereon, other than to the extent such Tax relates to a FATCA Deduction, for that Protected Party to discharge the corresponding liability to a third party, or to reimburse that Protected Party for the cost incurred by it in discharging the corresponding liability to a third party taking into account, in either case, any deduction or credit or other tax benefit obtained by the Protected Party in relation to such corresponding liability, the Borrowers shall pay that Protected Party such additional sum as (after taking into account any Tax suffered by that Protected Party on such additional sum) shall be required to make up the relevant deficit.

12.14

If and to the extent that any sum (the Indemnity Sum) constituting (directly or indirectly) an indemnity to any Protected Party but paid by the Borrowers to any person other than that Protected Party, shall be treated as taxable in the hands of the Protected Party, the Borrowers shall pay to that Protected Party such sum (the Compensating Sum) as (after taking into account any Tax suffered by that Protected Party on the Compensating Sum) shall reimburse that Protected Party for any Tax suffered by it in respect of the Indemnity Sum.

12.15

For the purposes of clauses 12.13 to 12.14 a sum shall be deemed to be taxable in the hands of a Protected Party if it falls to be taken into account in computing the profits or gains of that Protected Party for the purposes of Tax and, if so, that Protected Party shall be deemed to have suffered Tax on the relevant sum at the rate of Tax applicable to that Protected Party’s profits or gains for the period in which the payment of the relevant sum falls to be taken into account for the purposes of such Tax.

Stamp taxes

12.16

The Borrowers shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document other than in respect of any stamp duty, registration or other similar Taxes which are payable in respect of any assignment, transfer or other alienation of any kind by a Finance Party of any of its rights and/or obligations under a Finance Document.

12.17

FATCA Deduction

(a)

Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(b)

Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify the Borrowers and the Agent and the Agent shall notify the other Finance Parties.

Value added tax

12.18

All amounts expressed in a Finance Document to be payable by any party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to clause 12.20 below, if VAT is or becomes chargeable on any supply made by any Finance Party to any party under a Finance Document, and such Finance Party is required to account to the relevant tax authority for the VAT, that party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to that party).

12.19

If VAT is or becomes chargeable on any supply made by any Finance Party (the Supplier) to any other Finance Party (the Recipient) under a Finance Document, and any party to a Finance Document other than the Recipient (the Subject Party) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):

(a)

(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Subject Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this paragraph (a) applies) promptly pay to the Subject Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and

(b)

(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Subject Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.

12.20

Where a Finance Document requires any party to it to reimburse or indemnify a Finance Party for any cost or expense, that party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment of in respect of such VAT from the relevant tax authority.

12.21

Any reference in clauses 12.18 to 12.22 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994 or an equivalent meaning in the case of any other jurisdiction).

12.22

In relation to any supply made by a Finance Party to any party under a Finance Document, if reasonably requested by such Finance Party, that party must promptly provide such Finance Party with details of that party’s VAT registration and such other information as is reasonably requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply.

Tax Credit

12.23

If an Obligor makes a Tax Payment and the relevant Finance Party determines that:

(a)

a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and

(b)

that Finance Party has obtained and utilised that Tax Credit,

the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.

13	Increased Costs

13.1	If, by reason of any Change in Law there is:

(a)

a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliates’) overall capital; or

(b)

an additional or increased cost; or

(c)

a reduction of any amount due and payable under a Finance Document,

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 (or to the holding company of 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 13.2, 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.

Exceptions to increased costs

13.2	Clause 13.1 does not apply to the extent any additional cost or reduced return referred to in that clause is:

(a)

compensated for by a payment made under clause 12 or would have been compensated under clause 12 (Tax gross-up and indemnities) but for any exclusions from that clause;

(b)

a FATCA Deduction; or

(c)

attributable to the wilful breach by the relevant Finance Party (or the holding company of that Finance Party) of any law or regulation.

FATCA information

13.3	Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:

(a)

confirm to that other Party whether it is:

(i)

a FATCA Exempt Party; or

(ii)

not a FATCA Exempt Party;

(b)

supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA;

(c)

supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.

13.4	If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

13.5	Paragraph (a) above shall not oblige any Finance Party to do anything, and paragraph (a)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

(a)

any law or regulation;

(b)

any fiduciary duty; or

(c)

any duty of confidentiality.

13.6

If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

14	Other indemnities

Currency indemnity

14.1	If any sum due from an Obligor under the Finance Documents (a Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency) in which that Sum is payable into another currency (the Second Currency) for the purpose of:

(a)

making or filing a claim or proof against that Obligor; and/or

(b)

obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

that Obligor shall, as an independent obligation, within three Business Days of demand by a Finance Party, indemnify each Finance Party to whom that Sum is due against any losses arising out of or as a result of the conversion including any discrepancy between (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

14.2	Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

Other indemnities

14.3	The Borrowers shall (or shall procure that another Obligor will), promptly after demand by a Finance Party, indemnify each Finance Party against any and all losses and costs incurred or sustained (reasonably in the case of paragraphs (b) and (f) below) by that Finance Party as a result of:

(a)

the occurrence of any Event of Default;

(b)

a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any and all losses arising as a result of clause 25 (Sharing among the Finance Parties);

(c)

funding, or making arrangements to fund, its participation in the Loan requested by the Borrowers in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone);

(d)

any claim, action, civil penalty or fine against, any settlement, and any other kind of loss or liability, and all reasonable costs and expenses (including reasonable counsel fees and disbursements) incurred by the Agent or any other Finance Party as a result of conduct of any Obligor or any of their partners, directors, officers, employees, agents or advisors, that violates any Sanctions Laws;

(e)

arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions Law; or

(f)

the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.

Indemnity to the Agent and the Security Agent

14.4	The Borrowers shall promptly indemnify the Agent and the Security Agent against:

(a)

any and all losses, costs or expenses incurred by the Agent or the Security Agent, (acting reasonably) (otherwise than by reason of the Agent’s or the Security Agent’s gross negligence or wilful misconduct) as a result of:

(i)

investigating any event which it reasonably believes is a Default;

(ii)

acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

(iii)

instructing one set of lawyers for the Finance Parties, (other than the Hedging Providers), accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; or

(iv)

any action taken by the Agent or the Security Agent, or any of its or their representatives, agents or contractors in connection with any powers conferred by any Security Document to remedy any breach of any Obligor’s obligations under the Finance Documents, and

(b)

any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent or the Security Agent, (otherwise than by reason of the Agent’s or the Security Agent’s gross negligence or wilful misconduct).

Indemnity concerning security

14.5	The Borrowers shall (or shall procure that another Obligor will) promptly indemnify each Indemnified Person against any and all losses, costs or expenses incurred by it in connection with:

(a)

any failure by the Borrowers to comply with clause 16 (Costs and expenses);

(b)

acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

(c)

the taking, holding, protection or enforcement of the Security Documents;

(d)

the exercise or purported exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver by the Finance Documents or by law unless and to the extent that it was caused by its gross negligence or wilful misconduct;

(e)

any claim (whether relating to the environment or otherwise) made or asserted against the Indemnified Person which would not have arisen but for the execution or enforcement of one or more Finance Documents (unless and to the extent it is caused by the gross negligence or wilful misconduct of that Indemnified Person); or

(f)

any breach by any Obligor of the Finance Documents.

14.6

The Security Agent may, in priority to any payment to the other Finance Parties, indemnify itself out of the Trust Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in clause 14.5 and shall have a lien on the Security Documents and the proceeds of the enforcement of those Security Documents for all moneys payable to it.

Continuation of indemnities

14.7

The indemnities by the Borrowers in favour of the Indemnified Persons contained in this Agreement shall continue in full force and effect notwithstanding any breach by any Finance Party or the Borrowers of the terms of this Agreement, the repayment or prepayment of the Loan, the cancellation of the Total Commitments or the repudiation by the Agent or the Borrowers of this Agreement.

Third Parties Act

14.8

Each Indemnified Person may rely on the terms of clauses 14.5 and 14.6 (Indemnity concerning security) and clauses 12 (Tax gross-up and indemnities) and 14.9 (Interest) insofar as it relates to interest on any amount demanded by that Indemnified Person under clauses 14.5 and 14.6 (Indemnity concerning security), subject to clauses 1.8 to 1.10 (Third party rights) and the provisions of the Third Parties Act.

Interest

14.9

Moneys becoming due by the Borrowers to any Indemnified Person under the indemnities contained in this clause 14 (Other indemnities) or elsewhere in this Agreement shall be paid on demand made by such Indemnified Person and shall be paid together with interest on the sum demanded from the date of demand therefor to the date of reimbursement by the Borrowers to such Indemnified Person (both before and after judgment) at the rate referred to in clauses 8.3 to 8.5 (Default interest).

Exclusion of liability

14.10

No Indemnified Person will be in any way liable or responsible to any Obligor (whether as mortgagee in possession or otherwise) who is a Party or is a party to a Finance Document to which this clause applies for any loss or liability arising from any act, default, omission or misconduct of that Indemnified Person, except to the extent caused by its own gross negligence or wilful misconduct. Any Indemnified Person may rely on this clause 14.10 subject to clauses 1.8 to 1.10 (Third party rights) and the provisions of the Third Parties Act.

15	Mitigation by the Lenders

Mitigation

15.1

Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 7.1 (Illegality), clause 12 (Tax gross-up and indemnities) or clause 13.1 to13.2 (Increased Costs) including (but not limited to) assigning its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

15.2	Clause 15.1 does not in any way limit the obligations of any Obligor under the Finance Documents.

Limitation of liability

15.3	The Borrowers shall promptly indemnify each Finance Party for all costs and expenses incurred by that Finance Party as a result of steps taken by it under clause 15.1 (Mitigation).

15.4	A Finance Party is not obliged to take any steps under clause 15.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

16	Costs and expenses

Transaction expenses

16.1

The Borrowers shall promptly within fourteen days of demand pay the Agent, the Bookrunner, the Arrangers and the Security Agent the amount of all reasonable costs and expenses (including fees, costs and expenses of legal advisers and insurance and other consultants and advisers) reasonably incurred by any of them (and by any Receiver) in connection with the negotiation, preparation, printing, execution, syndication, registration and perfection and any release, discharge or reassignment of:

(a)

this Agreement, the Hedging Master Agreements and any other documents referred to in this Agreement and the Original Security Documents;

(b)

any other Finance Documents executed or proposed to be executed after the date of this Agreement including any executed to provide additional security under clause 18.7; or

(c)

any Security Interest expressed or intended to be granted by a Finance Document.

Amendment costs

16.2

If an Obligor requests an amendment, waiver or consent, the Borrowers shall, within fourteen days of demand by the Agent, reimburse the Agent for the amount of all reasonable costs and expenses (including fees, costs and expenses of legal advisers and insurance and other consultants and advisers) reasonably incurred by the Agent and the Security Agent (and by any Receiver) in responding to, evaluating, negotiating or complying with that request or requirement.

Enforcement, preservation and other costs

16.3	The Borrowers shall, on demand by a Finance Party, pay to each Finance Party the amount of all costs and expenses (including fees, costs and expenses of legal advisers and insurance and other consultants, brokers, surveyors and advisers) incurred by that Finance Party in connection with;

(a)

the enforcement of, or the preservation of any rights under, any Finance Document and any proceedings initiated by or against any Indemnified Person and as a consequence of holding the Charged Property or enforcing those rights and any proceedings instituted by or against any Indemnified Person as a consequence of taking or holding the Security Documents or enforcing those rights;

(b)

any Valuation carried out under clause 18.7; or

(c)

any inspection carried out in respect of a Ship.

Section 7- Representations, Undertakings and Events of Default

17	Representations and Warranties

Each Borrower represents and warrants to each of the Finance Parties at the date of this Agreement and (by reference to the facts and circumstances then pertaining) at the date of each Utilisation Request, at each Utilisation Date and at each Repayment Date as follows (except that the representation and warranty contained at clauses 17.2 and 17.7 shall only be made on the date of this Agreement and the representations and warranties contained at clauses 17.6, 17.25 and 17.35 shall only be repeated on each Utilisation Date):

Status and Due Authorisation

17.1

Each of the Obligors is a corporation, limited liability company or limited partnership duly incorporated or formed under the laws of its jurisdiction of incorporation, organisation or formation (as the case may be) 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.

No Deductions or Withholding

17.2	Under the laws of the Obligors’ respective jurisdictions of incorporation or formation in force at the date hereof, none of the Obligors will be required to make any deduction or withholding from any payment it may make under any of the Finance Documents.

Claims Pari Passu

17.3

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

No Immunity

17.4	In any proceedings taken in any of the Obligors’ respective jurisdictions of incorporation or formation in relation to any of the Finance Documents, none of the Obligors will be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal process.

Governing Law and Judgments

17.5

In any proceedings taken in any of the Obligors’ 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.

Validity and Admissibility in Evidence

17.6

As at each Utilisation Date, all acts, conditions and things required to be done, fulfilled and performed in order (a) to enable each of the Obligors 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 Obligors 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 Obligors, have been done, fulfilled and performed.

No Filing or Stamp Taxes

17.7

Under the laws of the Obligors’ 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 relevant maritime registry and Companies House in England and Wales, to the extent applicable) or that any stamp, registration or similar tax be paid on or in relation to any of the Finance Documents.

Binding Obligations

17.8

The obligations expressed to be assumed by each of the Obligors 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 breach of Constitutional Documents and/or law or regulation and/or 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.

No Winding-up

17.9

None of the Obligors have taken any corporate or limited partnership 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 any Obligor for its winding-up, dissolution, administration or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of it or of any or all of its assets or revenues which might have a material adverse effect on the business or financial condition of any Group taken as a whole.

Solvency

17.10

None of the Obligors nor any 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.

17.11

None of the Obligors nor any Group taken as a whole has by reason of actual or anticipated financial difficulties, commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

17.12

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

17.13

No moratorium has been, or may, in the reasonably foreseeable future be, declared in respect of any indebtedness of any Obligor or of any Group taken as a whole.

No Material Defaults

17.14

Without prejudice to clause 17.15, none of the Obligors 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 or any applicable law to an extent or in a manner which might have a material adverse effect on the business or financial condition of any Group taken as a whole.

17.15

No Event of Default is continuing or might reasonably be expected to result from the making of any Advance.

17.16

With effect from the relevant Utilisation Date, each Ship is insured in the manner required by the Finance Documents.

No Material Proceedings

17.17

No action or administrative proceeding involving any of the Borrowers of or before any court, arbitral body or agency:

(a)

relating to the Transaction Documents and which is not covered by adequate insurance; or

(b)

which might have a Material Adverse Effect on the business or financial condition of any Group taken as a whole,

has to any of the Borrower’s knowledge and belief after having made due enquiry been started or is reasonably likely to be started.

No Obligation to Create Security

17.18

The execution of the Finance Documents by the Obligors and their exercise of their rights and performance of their obligations thereunder will not result in the existence of nor oblige any Obligor to create any Security Interest (other than a Permitted Security Interest) over all or any of their present or future revenues or assets, other than pursuant to the Security Documents.

No Breach

17.19

The execution of the Finance Documents by each of the Obligors 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.

17.20

None of the Obligors has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

17.21

No labour disputes are current or (to the best of the Borrowers’ knowledge and belief) threatened against any member of any Group which have or are reasonably likely to have a Material Adverse Effect.

Security

17.22

Each of the Obligors (and in respect of the Shareholders only, as of the first Utilisation Date) is the legal and beneficial owner of all assets and other property which it purports to charge, mortgage, pledge, assign or otherwise secure pursuant to each Security Document and those Security Documents to which it is a party create and give rise to valid and effective security having the ranking expressed in those Security Documents.

Necessary Authorisations

17.23

The Necessary Authorisations required by each Obligor are in full force and effect, and each Obligor 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.

Money Laundering

17.24

Any amount borrowed hereunder, and the performance of the obligations of the Obligors under the Finance Documents, will be for the account of members of each 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 (2005/60/EEC) of the Council of the European Communities.

Disclosure of material facts

17.25

No Borrower is aware of any material facts or circumstances which:

(a)

have not been disclosed to the Agent; and

(b)

if disclosed, might 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.

17.26

All information provided by any Obligor or member of any Group to any of the Finance Parties in connection with the Transaction Documents or the transactions referred to therein is accurate and correct in all material respects at the time it was given or made and is not misleading in any respect.

Use of Facility

17.27

The Facility will be used for the purposes specified in clause 3 (Purpose).

17.28

[Intentionally omitted]

Taxation

17.29

Each of the Borrowers is not materially overdue in the filing of any Tax returns and each Borrower is not overdue in the payment of any amount in respect of Tax of one million Dollars ($1,000,000) (or its equivalent in any other currency) or more, save in the case of Taxes which are being contested on bona fide grounds.

17.30

No claims or investigations are being made or conducted against any Obligor with respect to Taxes such that a liability of, or claim against, any Obligor is reasonably likely to arise.

17.31

As far as Excelsior BVBA is aware it is resident in Belgium for the purposes of Belgian tax law, and in the case of Solaia Shipping L.L.C., as far as it is aware, it is not resident in any jurisdiction outside of Liberia for Tax purposes.

Laws

17.32

Each member of each Group is in compliance with clause 18.21(a) and (to the best of its knowledge and belief) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

17.33

No Environmental Claim has been commenced or (to the best of the Borrowers’ knowledge and belief) is threatened against any member of any Group where that claim has or is reasonably likely, if determined against that member of any Group, to have a Material Adverse Effect.

Shares or units

17.34

Other than in respect of the Share Transfer Date and as of the first Utilisation Date, the shares or units of each Borrower are fully paid and not subject to any option to purchase or similar rights. The Constitutional Documents of each Borrower do not and could not restrict or inhibit any transfer of those shares or units on creation or enforcement of the Security Documents. Other than in respect of the Share Transfer Date and as of the first Utilisation Date, there are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or unit or loan capital of each Borrower (including any option or right of pre-emption or conversion).

Structure Chart

17.35

The Structure Chart delivered or to be delivered to the Agent pursuant to Part 2 of Schedule 3 is as of the first Utilisation Date, so far as each Borrower is aware, true, complete and accurate in all material respects and shows the following information:

17.36

Each relevant member of the relevant Group, including current name and company registration number, its jurisdiction of incorporation and/or establishment and (other than in the case of the Guarantors) a list of shareholders; and

17.37

All minority interests in any member of the Borrowers and any person in which any Borrower holds shares or units in its issued share capital, units or equivalent ownership interest of such person.

Sanctions

17.38

Each Obligor, and their respective directors, officers, employees, or (when acting in its capacity as agent for any Obligor) agents, has been and is in compliance with Sanctions Laws;

17.39

No Obligor, nor any of their respective directors, officers, employees, or (when acting in its capacity as agent for any Obligor) agents:

(a)

is a Restricted Party, or is involved in any transaction through which it is likely to become a Restricted Party; or

(b)

is subject to or involved in any inquiry, claim, action, suit, proceeding or investigation against it with respect to Sanctions Laws.

Anti-corruption law

17.40

Each Obligor has conducted its businesses in compliance with applicable anti-corruption and anti-bribery laws.

Representations Limited

17.41

The representation and warranties of the Borrowers in this clause 17 are subject to:

(a)

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

(b)

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;

(c)

the time barring of claims under any applicable limitation acts;

(d)

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

(e)

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

18	Undertakings and Covenants

18.1	The undertakings and covenants in this clause 18 remain in force for the duration of the Facility Period.

Financial statements

18.2

Each Borrower shall supply to the Agent as soon as the same become available, but in any event within one hundred and eighty (180) days after the end of each of its financial years, its audited consolidated financial statements for that financial year, prepared in accordance with IFRS, and cashflows.

Interim financial statements

18.3

Each Borrower shall supply to the Agent as soon as the same become available, but in any event within one hundred and twenty (120) days after the end of each fiscal first half year during each of its financial years, its unaudited consolidated financial statements for that fiscal half, signed by a duly authorised representative of the Borrower, which shall include an income statement and a cashflow statement.

18.4	Each Borrower shall supply to the Agent a financial projection relating to it in respect of the following financial year on or by the start of each financial year until it has provided those financial projections for three (3) years of the Facility Period.

Year-end

18.5	Each Borrower shall procure that each financial year-end of each Obligor is not changed.

Valuation

18.6

Each Borrower shall supply to the Agent on a 6 monthly basis at the same time as the financial statements referred to in clause 18.3, or if an Event of Default has occurred or is continuing, at any time upon request from the Agent, a Valuation in respect of each of the Ships, attached to a Compliance Certificate.

Collateral Maintenance

18.7	If at any time the Security Value is less than 125% of the Loan outstanding at that time (the Collateral Maintenance Test), the Borrowers shall within 30 days of such non-compliance:

(a)

provide additional security over other assets reasonably acceptable to the Majority Lenders in accordance with this clause 18 and carry out such actions diligently during such 30 day period; and/or

(b)

cancel part of the Available Facility under clause 7.4 (Voluntary cancellation) and prepay under clause 7.5 (Voluntary prepayment) (disregarding the notice period required by such clause) a corresponding amount of the Loan such that the Collateral Maintenance Test is met.

Creation of additional security

18.8	The value of any additional security which the Borrowers offer to provide to remedy all or part of a shortfall in the amount of the Security Value will only be taken into account for the purposes of determining the Security Value if and when:

(a)

that additional security, its value and the method of its valuation have been approved by the Majority Lenders, acting reasonably (it being acknowledged and agreed that cash or cash equivalents comprising of dollars is satisfactory and that it is valued at par);

(b)

a Security Interest over that security has been constituted in favour of the Security Agent or (if appropriate) the Finance Parties in form and substance reasonably satisfactory to the Security Agent;

(c)

this Agreement has been unconditionally amended in such manner as agreed between the Agent and the Borrowers, as required in consequence of that additional security being provided; and

(d)

the Agent, or its duly authorised representative, has received such documents and evidence it may reasonably require in relation to that amendment and additional security including documents and evidence of the type referred to in Schedule 3 in relation to that amendment and additional security and its execution and (if applicable) registration.

18.9	The Borrower shall provide details of the Collateral Maintenance Test in each Compliance Certificate.

Minimum Liquidity

18.10

Each Borrower shall at all times maintain a Free Liquidity available to it of at least $7,000,000 and confirm that Free Liquidity in the Compliance Certificate.

Compliance Certificate

18.11

The Borrowers shall deliver a Compliance Certificate to the Agent (in sufficient copies for each of the Lenders) attaching the evidence and documents referred to in this clause 18 on each date that the financial statements referred to in clause 18.3 are required to be delivered to the Agent.

Maintenance of Legal Validity

18.12

Each Borrower shall procure that each Obligor obtains and complies with the terms of and does all that is necessary to maintain in full force and effect:

(a)

all authorisations, approvals, licences and consents required in or by the laws and regulations of its jurisdiction of formation and all other applicable jurisdictions and its Constitutional Documents, to enable it lawfully to enter into and perform its obligations under the Finance Documents and to ensure the legality, validity, enforceability or admissibility in evidence of the Finance Documents in its jurisdiction of incorporation or organisation and all other applicable jurisdictions; and

(b)

each Earnings Account.

Notification of Default

18.13

A Borrower 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.

Other notifications

18.14

Each Borrower shall promptly, upon becoming aware of the same, inform the Agent in writing of any Environmental Claim pending or made against it or any member of the respective Group or in connection with any Ship, where the Environmental Claim, if determined against that member of that Group, has or is reasonably likely to have a Material Adverse Effect.

Claims Pari Passu

18.15

Each Borrower shall and shall procure that each Obligor shall, ensure that at all times the claims of the Finance Parties against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation, winding-up or other similar laws of general application.

Classification

18.16

Each Borrower shall ensure that the Ship maintains the highest classification required for the purpose of the relevant trade of the Ship which shall be with a Classification Society free from any overdue recommendations and conditions affecting the Ship’s class.

Management of Ship

18.17

Each Borrower shall ensure that (a) each Ship is at all times technically and commercially managed by an Approved Manager in accordance with good industry standards and (b) at any time such Approved Manager is not a member of the Exmar Group or Teekay LNG Group, such Approved Manager provides a written confirmation confirming that, among other things, following the occurrence of an Event of Default which is continuing unremedied and unwaived, all claims of the Approved Manager against each Borrower shall be subordinated to the claims of the Finance Parties under the Finance Documents.

Certificate of Financial Responsibility

18.18

Each Borrower shall, if required, obtain and maintain a certificate of financial responsibility in relation to the Ship which is to call at the United States of America.

Sanctions

18.19

No proceeds of the Loan shall be made available, directly or indirectly, to or for the benefit of a Restricted Party nor to fund any activities or business in the country or territory that at the time of such funding is a Sanctioned Country, nor shall they otherwise be applied in a manner or for a purpose prohibited by Sanctions Laws.

18.20

Each Borrower shall supply to the Agent:

(a)

promptly upon becoming aware of them, the details of any inquiry, claim, action, suit, proceeding or investigation pursuant to Sanctions Laws against any Obligor, any of their direct or indirect owners, any of their respective directors, officers, employees, or (when acting in its capacity as agent for any Obligor) agents, as well as information on what steps are being taken with regards to answer or oppose such; and

(b)

promptly upon becoming aware that an Obligor or any of their respective directors, officers, employees, or (when acting in its capacity as agent for any Obligor) agents has become or is likely to become a Restricted Party.

18.21

Each Borrower shall (and shall ensure that each Obligor shall):

(a)

comply with all laws or regulations:

(i)

applicable to its business; and

(ii)

applicable to a Ship, its ownership, employment, operation, management and registration,

including the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions Laws, the laws of the Flag State and the Equator Principles;

(b)

obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals, where failure to do so has or is reasonably likely to have a Material Adverse Effect;

(c)

procure that the Approved Manager holds (i) a valid and current DOC issued pursuant to the ISM Code, (ii) a valid and current SMC issued in respect of the Ship pursuant to the ISM Code, and (iii) an ISSC in respect of each Ship and the Borrowers shall promptly, upon request, supply the Agent with copies of the same; and

without limiting paragraph (a) above, not employ any Ship nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions Laws.

18.22

Each Obligor shall ensure that none of them, nor any of their Affiliates, respective directors, officers, employees, agents or representatives or any other persons acting on any of their behalf, is or will become a Restricted Party.

Anti-corruption laws

18.23

Each Borrower shall, and shall procure that each of the Obligor shall, conduct its business in compliance with applicable anti-corruption laws and anti-bribery laws and maintain policies and procedures designed to prove and achieve compliance with such laws.

18.24

[Intentionally omitted]

Environmental claims

18.25

Each Borrower shall, promptly upon becoming aware of the same, inform the Agent in writing of:

(a)

any Environmental Claim against any member of the Group which is current, pending or threatened; and

(b)

any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Group,

where the claim, if determined against that member of that Group, has or is reasonably likely to have a Material Adverse Effect.

Taxation

18.26

Each Borrower shall pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

(a)

such payment is being contested in good faith;

(b)

adequate reserves are being maintained for those Taxes and the costs required to contest them; and

(c)

such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

18.27

No member of the Groups may change its residence for Tax purposes.

Loans and Guarantees

18.28

No Borrower shall make any loan nor enter into any guarantee and indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other party except for (i) until the relevant Utilisation Date, the Existing Indebtedness, (ii) investments relating to any maintenance or repair under or pursuant to the Charter Documents, (iii) unsecured trade credits, (iv) loans or guarantees made in the ordinary course of business, and/or (v) Permitted Financial Indebtedness.

Negative Pledge

18.29

With effect from the relevant Utilisation Date, no Borrower shall create, or permit to subsist, any Security Interest over all or any part of its assets (including but not limited to the Ship and the insurances) other than a Permitted Security Interest.

Registration

18.30

No Borrower shall for the duration of the Facility Period change or permit a change to the flag of the Ship other than to a Flag State and/or bring its centre of main interests into any country with which a Lender is prohibited from doing business and which has been notified to the Agent.

Necessary Authorisations

18.31

Without prejudice to any specific provision of the Finance Documents relating to an Authorisation, each Borrower 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.

Performance of Obligations

18.32

Each Borrower shall comply with the material provisions of all Charter Documents in relation to the Ships.

Further Assurance

18.33

Each Borrower shall, at its 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.

Information

18.34

Each Borrower shall, and procure that each Obligor shall, supply to the Agent:

(a)

promptly upon becoming aware of the same, details of any litigation, arbitration or administrative proceedings which are current, pending or, provided they are material, threatened against any Obligor, and which, if adversely determined, are reasonably likely to have a Material Adverse Effect; and

(b)

promptly, details of any capture, seizure, arrest, confiscation or detention of, or act of piracy relating to, the Ships which remain in existence, or has not been resolved within five (5) Business Days after the initial capture, seizure, arrest, confiscation or detention or act of piracy.

Other information

18.35

Each Borrower will promptly supply to the Agent at any time such other information and explanations as the Majority Lenders may from time to time reasonably require in connection with the operation of the Ships, any Major Casualty Event and any reasonable financial information in connection with a Borrower, and will procure that the Agent be given the like information and explanations relating to all other Obligors.

Inspection of records

18.36

Each Borrower will permit the inspection of its financial records and accounts from time to time during business hours by the Agent or its nominee, upon reasonable notice.

Insurance

18.37

With effect from the relevant Utilisation Date, each Borrower shall ensure at its own expense throughout the Facility Period that the relevant Ship is insured and operated in accordance with the provisions set out in the relevant Security Documents.

Change of Business

18.38

Except as expressly permitted in the Finance Documents no Borrower shall carry on any business, other than that of owning, chartering and operating the Ships.

No disposal of assets

18.39

No Borrower shall dispose of any of its material assets other than a sale of the Ship which complies with clause 7.15.

“Know your customer” checks

18.40

If:

(c)

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;

(c)

any change in the status of any Borrower after the date of this Agreement; or

(d)

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

obliges the Agent or any Lender (or, in the case of (c) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, that Borrower 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.

Enforcement of Obligations

18.41

Each Borrower shall take all reasonable steps to enforce its rights under the Charter Documents and any other agreements relating to the Ship.

No dividends or distributions

18.42

No Borrower shall pay dividends or distributions or make other distributions to shareholders or members:

(a)

whilst an Event of Default has occurred and is continuing unremedied or unwaived; or

(b)

following breach of any of the covenants contained in this clause 18 and/or clause 8 of a Guarantee.

No Material Amendment to Project Documents

18.43

No Borrower shall agree to any material amendment, material variation or termination of any of the Charter Documents or Hedging Contracts to which it is a party without the prior written consent of the Majority Lenders (such consent not to be unreasonably withheld).

Hedging

18.44

Each Borrower may, at its discretion, enter into an interest rate hedging programme under one or more of the Hedging Contracts to hedge part of the floating rate interest exposure under the Facility. At such time as a Borrower enters into a Hedging Contract that Borrower shall promptly notify the Agent of the key terms of such Hedging Contract and require each Hedging Provider not then a Party to execute and deliver to the Agent an Accession Agreement.

Ownership

18.45

Each Borrower shall procure that its legal and beneficial ownership remains the same as advised to the Agent to be effected on the first Utilisation Date, other than permitted in accordance with the Finance Documents, including but not limited to pursuant to the Share Transfer Date and if the ownership of any Borrower and/or Approved Manager changes (other than pursuant to a Guarantee Transfer Date) that Borrower shall supply an updated Structure Chart detailing those changes to the Agent.

18.46

[Intentionally omitted]

Merger and Demerger

18.47

Other than pursuant to the Share Transfer Date, and/or as anticipated on the first Utilisation Date, no Borrower shall enter into any amalgamations, merger, demerger or corporate restructuring without the prior written consent of all Lenders (such consent not to be unreasonably withheld).

Change of Control

18.48

Each Borrower shall procure that throughout the Facility Period there is no Change of Control with respect to it or Exmar Energy.

Transfer of Assets

18.49

No Borrower shall sell or transfer any of its material assets other than:

(a)

on arm’s length terms to third parties where the net proceeds of sale are used as a prepayment hereunder; or

(b)

on arm’s length terms to its Affiliates, which are and remain members of a Group,

in each case only if otherwise expressly permitted pursuant to the terms of the Finance Documents.

Acquisitions

18.50

Subject to 18.28, no Borrower shall make any acquisitions or investments without the prior written consent of the Majority Lenders.

Centre of main interests and establishments

18.51

For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the Regulation), each Obligor’s centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in its jurisdiction of incorporation or formation and it has no “establishment” (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.

Earnings Account

18.52

Each Borrower shall be the holder of an account with an Account Bank which is designated as an Earnings Account for the purposes of the Finance Documents.

18.53

The Earnings of the Ships relating to that Borrower and all moneys payable to the relevant Borrower under the Ship’s Insurances shall be paid by the persons from whom they are due to that Earnings Account unless required to be paid to the Security Agent under the relevant Finance Documents.

18.54

The relevant Account Holder(s) shall not withdraw amounts standing to the credit of an Earnings Account except as permitted by clause 18.55.

18.55

Unless an Event of Default has occurred and is continuing, the Borrowers may withdraw amounts from the Earnings Accounts, and the relevant Account Holder(s) may withdraw the amounts from an Earnings Account.

18.56

The relevant Account Holder shall not close any Earnings Account or alter the terms of any Earnings Account from those in force at the time it is designated for the purposes of this clause 18 or waive any of its rights in relation to an Earnings Account except with approval.

19	Events of Default

19.1	Each of the events or circumstances set out in clauses 19.2 to 19.36 is an Event of Default.

Non-payment

19.2	An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

(a)

its failure to pay is caused by:

(i)

administrative or technical error; or

(ii)

a Disruption Event; and

(b)

payment is made within 3 Business Days of its due dates.

Financial covenants

19.3	The Borrowers do not comply with clause 18.10 and/or clause 18.9.

19.4	Any Guarantor does not comply with the financial covenants set out in clause 8 of the Guarantee to which it is a party.

Insurance

19.5	The Insurances of a Ship are not placed and kept in force in the manner required by the terms of the Security Documents.

Misrepresentation

19.6

Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made in any material respect, where the circumstances causing the same give rise to a Material Adverse Effect.

Specific Obligations

19.7	An Obligor fails duly to perform or comply with any of the obligations expressed to be assumed by or procured by a Borrower under clauses 18.12, 18.15, 18.19 to 18.23.

Other obligations

19.8	An Obligor does not comply with any provision of the Finance Documents (other than those referred to in clause 19.2 (Non-payment), clause 19.3 to 19.4 (Financial covenants), clause 19.5 (Insurance) and clause 19.7 (Specific obligations)).

19.9	No Event of Default under clause 19.8 above will occur if the failure to comply is capable of remedy and the failure is remedied within 30 days of the earlier of (A) the Agent giving notice to the Borrowers and (B) any of the Borrowers becoming aware of the failure to comply.

Cross default

19.10

Any Financial Indebtedness of any Obligor is not paid when due nor within any originally applicable grace period.

19.11

Any Financial Indebtedness of any Obligor is declared or capable of being declared to be or otherwise becomes due and payable prior to its specified maturity.

19.12

No Event of Default will occur under clauses 19.10 and 19.11 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within clauses 19.9 to 19.10 above is less than (a) in the case of a Borrower, $10,000,000, (b) in the case of Exmar or Exmar Energy, $25,000,000, and (c) in the case of Teekay LNG, $100,000,000, (or in each case its equivalent in any other currency or currencies).

Insolvency and Rescheduling

19.13

An Obligor 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.

Winding-up

19.14

An Obligor takes any corporate action or other steps are taken or legal proceedings are started for its winding-up, dissolution, administration or re-organisation (other than the Share Transfer Date) 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.

Execution or Distress

19.15

Any Obligor fails to comply with or pay any sum due from it (within 30 days of such amount falling due) under any uninsured final judgment or any final order made or given by any court or other official body of a competent jurisdiction, subject to the amount due being in an aggregate amount (i) for a Borrower, equal to or greater than ten million Dollars ($10,000,000) or its equivalent in any other currency; or (ii) for Exmar or Exmar Energy, equal to or greater than twenty five million Dollars ($25,000,000) or its equivalent in any other currency; or (iii) for Teekay LNG, equal to or greater than one hundred million Dollars ($100,000,000) 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.

19.16

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 an Obligor, subject to the amount in question being in an aggregate amount (i) for a Borrower, equal to or greater than ten million Dollars ($10,000,000) or its equivalent in any other currency; or (ii) for Exmar or Exmar Energy, equal to or greater than twenty five million Dollars ($25,000,000) or its equivalent in any other currency; or (iii) for Teekay LNG, equal to or greater than one hundred million Dollars ($100,000,000) 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.

19.17

Notwithstanding the foregoing paragraphs of this clause 19 any levy of any distress on or any arrest, condemnation, confiscation, requisition for title or use, compulsory acquisition, seizure, detention, forfeiture or similar proceeding of a Ship (or any part thereof) or any exercise or purported exercise of any lien or claim on or against a Ship where the release of or discharge of the lien or claim on or against the Ship has not been procured within 30 days.

Similar Event

19.18

Any event occurs which, under the laws of any jurisdiction, has a similar or analogous effect to any of those events mentioned in clauses 19.13 to 19.17.

Class

19.19

A Ship 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 that Ship’s classification is not reinstated to the satisfaction of the Agent within twenty one (21) days.

Environmental Matters

19.20

Any Environmental Claim is pending or made against the Borrower or the Approved Manager or any of their Environmental Affiliates or in connection with a Ship, where such Environmental Claim has a Material Adverse Effect.

19.21

Any actual Environmental Incident occurs in connection with a Ship, where such Environmental Incident has a Material Adverse Effect.

Repudiation

19.22

Any Obligor or Borrower repudiates any Finance Document or Charter 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 Finance Document or Charter Document other than any repudiation to which clause 7.17 applies.

Illegality

19.23

At any time it is or becomes unlawful for any Obligor to perform or comply with any or all of its obligations under the Finance Documents to which it is a party or any of the obligations of the Obligors hereunder or thereunder 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 30 days after it has given notice thereof to the relevant Obligor.

Validity and Admissibility

19.24

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

(a)

to enable any Obligor lawfully to enter into, exercise its rights under and perform the respective 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 Obligors in the Finance Documents are legal, valid and binding; or

(c)

to make the Finance 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 Obligor requiring the same to be done, fulfilled or performed.

Material Adverse Change

19.25

At any time there shall occur a change in the business or operations of an Obligor or a change in the financial condition of any Obligor which, in the reasonable opinion of the Majority Lenders, materially impairs such Obligor’s ability to discharge its obligations under the Finance Documents in the manner provided therein and such change, if capable of remedy, is not remedied within 30 days of written notification from the Agent.

Qualifications of Financial Statements

19.26

The auditors of any Group qualify their report on any audited consolidated financial statements of that Group in any regard which, in the reasonable opinion of the Agent, has a Material Adverse Effect.

Conditions Subsequent

19.27

If any of the conditions set out in clause 4 is agreed on a Utilisation Date to be delivered at a later date and is not satisfied by that date or such other time period specified by the Agent acting on the instructions of the Majority Lenders.

Revocation or Modification of consents etc.

19.28

If any Necessary Authorisation which is now or which at any time during the Facility Period becomes necessary to enable any of the Obligors 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.

Curtailment of Business

19.29

If the business of any of the Obligors 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 Obligors is seized, nationalised, expropriated or compulsorily acquired by or under authority of any government or any Obligor disposes or threatens to dispose of a substantial part of its business or assets.

Reduction of Capital

19.30

If either Borrower reduces its committed or subscribed capital.

Challenge to Registration

19.31

If the registration of a Ship or a Mortgage becomes void or voidable or liable to cancellation or termination.

War

19.32

If the country of registration of the Ship 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.

Notice of Termination

19.33

If a Guarantor gives notice to the Agent to determine or terminate its obligations under the relevant Guarantee.

Termination or material breach

19.34

If:

(a)

any of the Charter Documents (other than an External Charter) is terminated; or

(b)

any of the Charter Documents (other than an External Charter) is breached by an Obligor in a manner that gives rise to a right to terminate such Charter Document or treat it as repudiated.

Cessation of Business

19.35

Any of the Obligors ceases, or threatens to cease, to carry on all or a substantial part of its business.

Loss of Property

19.36

All or a substantial part of the business or assets of any Obligor is destroyed, abandoned, seized, appropriated or forfeited for any reason, and such occurrence in the reasonable opinion of the Agent (acting on the instructions of the Majority Lenders) has or could reasonably be expected to have a Material Adverse Effect.

Acceleration

19.37

At any time an Event of Default is continuing, the Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrowers:

(a)

cancel the Total Commitments at which time they shall immediately be cancelled; and/or

(b)

declare that all or part of the Loan together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, at which time they shall become immediately due and payable; and/or

(c)

declare that all or part of the Loan be payable on demand, at which time it shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders; and/or

(d)

declare that no withdrawals be made from any Earnings Account; and/or

(e)

exercise or direct the Security Agent and/or any other beneficiary of the Security Documents to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.

For the avoidance of doubt, any notice given under or pursuant to this clause 19.37 is, and shall remain, valid if at the time it was given, an Event of Default was continuing.

20	Position of Hedging Provider

Rights of Hedging Provider

20.1

Each Hedging Provider is a Finance Party and as such, will be entitled to share in the security constituted by the Security Documents in respect of any liabilities of the Borrowers under the Hedging Contracts with such Hedging Provider in the manner and to the extent contemplated by the Finance Documents.

No voting rights

20.2

No Hedging Provider shall be entitled to vote on any matter where a decision of the Lenders alone is required under this Agreement, whether before or after the termination or close out of the Hedging Contracts with such Hedging Provider, provided that each Hedging Provider shall be entitled to vote on any matter where a decision of all the Finance Parties is expressly required.

Close out of Hedging Contracts

20.3

The Parties agree that at any time on and after any Event of Default which is continuing the Agent (acting on the instructions of the Majority Lenders) shall be entitled, by notice in writing to a Hedging Provider, to instruct such Hedging Provider to terminate and close out any Hedging Transactions (or part thereof) with the relevant Hedging Provider. The relevant Hedging Provider will terminate and close out the relevant Hedging Transactions (or parts thereof) and/or the relevant Hedging Contracts in accordance with such notice immediately upon receipt of such notice.

20.4	No Hedging Provider shall be entitled to terminate or close out any Hedging Contract or any Hedging Transaction under it prior to its stated maturity except:

(a)

in accordance with a notice served by the Agent under clause 20.3 (Close out of Hedging Contracts); or

(b)

if the Borrowers have not paid amounts due under the Hedging Contract and such amounts remain unpaid for a period of 30 days after the due date for payment and the Agent (acting on the instructions of the all the Lenders) consents to such termination or close out; or

(c)

if the Agent takes any action under clause 19.37 (Acceleration); or

(d)

if the Loan and other amounts outstanding under the Finance Documents (other than amounts outstanding under the Hedging Contracts) have been repaid by the Borrowers in full.

20.5

If there is a net amount payable to any Borrower under a Hedging Transaction or a Hedging Contract upon its termination and close out, the relevant Hedging Provider shall forthwith pay that net amount (together with interest earned on such amount) to the Security Agent for application in accordance with clause 23.73 (Order of application).

20.6	No Hedging Provider (in any capacity) shall set-off any such net amount against or exercise any right of combination in respect of any other claim it has against a Borrower.

Subordination

20.7	Each Hedging Provider agrees with and covenants to each of the other Finance Parties that until the end of the Facility Period and without prejudice to any rights which that Hedging Provider may otherwise have against a Borrower:

(a)

it will not, without the prior written consent of the Agent:

(i)

at any time when an Event of Default has occurred and is continuing unremedied and unwaived, accept or demand from a Borrower the payment or repayment in whole or in part of any indebtedness whatsoever now or hereafter due to it from the Borrower;

(ii)

at any time when an Event of Default has occurred and is continuing unremedied and unwaived, otherwise accept, have the benefit of, or share in any payment from, or composition with, a Borrower (other than pursuant to any contractual set-off and/or netting provisions contained in the Hedging Contract to which it is a party and without prejudice to its rights as a Finance Party in respect of the Secured Property);

(iii)

take any step to enforce any right against a Borrower (by proceedings or otherwise) (but without prejudice to its rights as a Finance Party in respect of the Secured Property);

(iv)

initiate or take any action which would result in any insolvency event in relation to a Borrower; or

(v)

claim or prove in any insolvency event in relation to a Borrower;

(b)

it will, if so directed by the Agent, prove in any insolvency event in relation to the Borrower for the whole or any part of any claim which it may have against that Borrower and on terms that the benefit of such proof and of all moneys received by it in respect thereof shall be held on trust for the Finance Parties and shall be applied in accordance with clause 23.73.

20.8

Each Hedging Provider acknowledges and agrees that each of the Borrowers has charged its rights under the Hedging Contracts to and in favour of the Security Agent pursuant to each Borrower Assignment and confirms that at any time when an Event of Default has occurred and is continuing unremedied and unwaived, it will pay all amounts due and payable under the Hedging Contracts to the Earnings Accounts or such other accounts as directed by the Security Agent.

Section 8 - Changes to Parties

21	Changes to the Lenders

Assignments by the Lenders

21.1

Subject to this clause 21, a Lender (the Existing Lender) may assign any of its rights or novate any of its rights and obligations under this Agreement to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (other than any of the Obligors or any of their respective Affiliates) (the New Lender).

Conditions of assignment

21.2	The consent of the Borrowers is required for an assignment or novation by a Lender, unless the assignment is to another Lender or an Affiliate of a Lender or an Event of Default or Default is continuing. The Agent will immediately advise the Borrowers of the assignment or novation.

21.3	The Borrowers’ consent to an assignment or novation may not be unreasonably withheld or delayed and will be deemed to have been given five Business Days after the Lender has requested consent unless consent is expressly refused within that time.

21.4	An assignment or novation will only be effective:

(a)

on receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the Borrowers and the other Finance Parties as it would have been under if it was an Original Lender;

(b)

on the New Lender entering into any documentation required for it to accede as a party to any Security Document to which the Original Lender is a party in its capacity as a Lender and, in relation to such Security Documents, completing any filing, registration or notice requirements;

(c)

if the Commitment of an Existing Lender and its participation in the Loan being transferred is at least ten million dollars ($10,000,000) (or if less, a transfer of all of that Existing Lender’s Commitment and/or participation in the Loan);

(d)

on the performance by the Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations relating to any person that it is required to carry out in relation to such assignment or novation to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender; and

(e)

that Existing Lender assigns or novates equal fractions of its Ship Commitments and participation in the Loan under the Facility to the New Lender.

21.5

Each New Lender, by executing the relevant Transfer Certificate, confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with the Finance Documents on or prior to the date on which the assignment or novation becomes effective in accordance with the Finance Documents and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.

Fee

21.6	The New Lender shall, on the date upon which an assignment or novation takes effect, pay to the Agent (for its own account) a fee of $3,500.

Limitation of responsibility of Existing Lenders

21.7	Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(a)

the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;

(b)

the financial condition of any Obligor;

(c)

the performance and observance by any Obligor or any other person of its obligations under the Finance Documents or any other documents;

(d)

the application of any capital adequacy law or regulation to the transactions contemplated by the Finance Documents; or

(e)

the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

and any representations or warranties implied by law are excluded.

21.8	Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(a)

has made (and shall continue to make) its own independent investigation and assessment of:

(i)

the financial condition and affairs of the Obligors and their related entities in connection with its participation in this Agreement; and

(ii)

the application of any capital adequacy law or regulation to the transactions contemplated by the Finance Documents;

and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Finance Document;

(b)

will continue to make its own independent appraisal of the application of any capital adequacy law or regulation to the transactions contemplated by the Finance Documents; and

(c)

will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

21.9	Nothing in any Finance Document obliges an Existing Lender to:

(a)

accept a re-assignment from a New Lender of any of the rights assigned or novated under this clause 21 (Changes to the Lenders); or

(b)

support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or by reason of the application of any capital adequacy law or regulation to the transactions contemplated by the Finance Documents or otherwise.

Procedure for assignment

21.10

Subject to the conditions set out in clauses 21.2 to 21.5 (Conditions of assignment) an assignment or novation may be effected in accordance with clause 21.14 below when (a) the Agent executes an otherwise duly completed Transfer Certificate and (b) the Agent executes any document required under clause 21.4 which it may be necessary for it to execute in each

case delivered to it by the Existing Lender and the New Lender duly executed by them and, in the case of any such other document, any other relevant person. The Agent shall, subject to clause 21.12, as soon as reasonably practicable after receipt by it of a Transfer Certificate and any such other document each duly completed, appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate and such other document.

21.11

The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once 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 assignment or novation to such New Lender.

21.12

The Obligors and the other Finance Parties irrevocably authorise the Agent to execute any Transfer Certificate and/or Accession Agreement on their behalf without any consultations with them.

21.13

On the Transfer Date:

(a)

the Existing Lender will assign absolutely to the New Lender the rights under the Finance Documents expressed to be the subject of the assignment in the Transfer Certificate;

(b)

the Existing Lender will be released by each Obligor and the other Finance Parties from the obligations owed by it (the Relevant Obligations) and expressed to be the subject of the release in the Transfer Certificate (but the obligations owed by the Obligors under the Finance Documents shall not be released); and

(c)

the New Lender shall become a Party to the Finance Documents as a “Lender” for the purposes of all the Finance Documents and will be bound by obligations equivalent to the Relevant Obligations.

21.14

Lenders may utilise procedures other than those set out in clauses 21.11 to 21.14 (Procedure for assignment) to assign their rights under the Finance Documents (but not, without the consent of the relevant Obligor or unless in accordance with clauses 21.11 to 21.14 (Procedure for assignment) to obtain a release by that Obligor from the obligations owed to that Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in clauses 21.2 to 21.5 (Conditions of assignment).

Copy of Transfer Certificate to Borrowers

21.15

The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate and any other document required under clause 21.4, send a copy of that Transfer Certificate and such other documents to the Borrowers.

Security over Lenders’ rights

21.16

In addition to the other rights provided to Lenders under this clause 21, each Lender may without consulting with or obtaining consent from an Obligor, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

(a)

any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

(b)

in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities, except that no such charge, assignment or Security Interest shall:

(i)

release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or

(ii)

require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.

22	Changes to the Obligors

No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

Section 9 - The Finance Parties

23	Roles of Agent, Security Agent, Bookrunner and Arrangers

Appointment of the Agent

23.1	Each other Finance Party (other than the Security Agent) appoints the Agent to act as its agent under and in connection with the Finance Documents.

23.2	Each such other Finance Party authorises the Agent:

(a)

to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions; and

(b)

to execute each of the Security Documents and all other documents that may be approved by the Majority Lenders or all Lenders (as appropriate) for execution by it.

Instructions to Agent

23.3	The Agent shall:

(a)

unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by:

(i)

all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and

(ii)

in all other cases, the Majority Lenders; and

(b)

not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with paragraph (a) above.

23.4

The Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Lender or group of Lenders, from that Lender or group of Lenders) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Agent may refrain from acting unless and until it receives those instructions or that clarification.

23.5

Save in the case of decisions stipulated to be a matter for any other Lender or group of Lenders under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties save for the Security Agent.

23.6

The Agent may refrain from acting in accordance with any instructions of any Lender or group of Lenders until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions.

23.7	In the absence of instructions, the Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders.

23.8	The Agent is not authorised to act on behalf of a Lender or any Hedging Provider (without first obtaining that Lender’s or any Hedging Provider’s consent) in any legal or arbitration

proceedings relating to any Finance Document. This clause 23.8 shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Security Documents.

Duties of the Agent

23.9	The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

23.10

The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.

23.11

Without prejudice to clause 21.15 (Copy of Transfer Certificate to Borrower), clause 23.10 shall not apply to any Transfer Certificate.

23.12

Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

23.13

If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.

23.14

If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or an Arranger or the Bookrunner or the Security Agent, for their own account) under this Agreement it shall promptly notify the other Finance Parties.

23.15

The Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).

Role of the Bookrunner and the Arrangers

23.16

Except as specifically provided in the Finance Documents, neither the Bookrunner nor the Arrangers have obligations of any kind to any other Party under or in connection with any Finance Document or the transactions contemplated by the Finance Documents.

No fiduciary duties

23.17

Nothing in this Agreement constitutes the Agent, the Bookrunner or an Arranger as a trustee or fiduciary of any other person.

23.18

None of the Agent, the Security Agent, the Bookrunner or any Arranger shall be bound to account to any Lender or any Hedging Provider for any sum or the profit element of any sum received by it for its own account or have any obligations to the other Finance Parties beyond those expressly stated in the Finance Documents.

Business with the Group

23.19

The Agent, the Security Agent and any Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any Obligor or other Group Member or their Affiliates.

Rights and discretions of the Agent

23.20

The Agent may

(a)

rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;

(b)

assume that:

(i)

any instructions received by it from the Majority Lenders, any Lenders or any group of Lenders are duly given in accordance with the terms of the Finance Documents; and

(ii)

unless it has received notice of revocation, that those instructions have not been revoked; and

(c)

rely on a certificate from any person:

(i)

as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or

(ii)

to the effect that such person approves of any particular dealing, transaction, step, action or thing,

as sufficient evidence that that is the case and, in the case of paragraph (i) above, may assume the truth and accuracy of that certificate.

23.21

The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the other Finance Parties) that:

(a)

no Default has occurred (unless it has actual knowledge of a Default arising under clauses 19.2 (Non-payment));

(b)

any right, power, authority or discretion vested in any Party or any group of Lenders has not been exercised; and

(c)

any notice or request made by a Borrower (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.

23.22

The Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts in the conduct of its obligations and responsibilities under the Finance Documents.

23.23

Without prejudice to the generality of clause 23.22 or clause 23.24, the Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Agent (and so separate from any lawyers instructed by the Lenders) if the Agent in its reasonable opinion deems this to be desirable.

23.24

The Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.

23.25

The Agent may act in relation to the Finance Documents through its officers, employees and agents and the Agent shall not:

(a)

be liable for any error of judgment made by any such person; or

(b)

be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part, of any such person,

unless such error or such loss was directly caused by the Agent’s gross negligence or wilful misconduct.

23.26

Unless a Finance Document expressly provides otherwise, the Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

23.27

Without prejudice to the generality of clause 23.26 above, the Agent:

(a)

may disclose; and

(b)

upon the written request of a Borrower or the Majority Lenders shall, as soon as reasonably practicable, disclose

the identity of a Defaulting Lender to the other Finance Parties and the Borrowers.

23.28

Notwithstanding any other provision of any Finance Document to the contrary, none of the Agent, the Bookrunner or any Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. The Agent, the Bookrunner and any Arranger may do anything which in its opinion, is necessary or desirable to comply with any law or regulation of any jurisdiction.

23.29

Notwithstanding any provision of any Finance Document to the contrary, the Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.

23.30

None of the Agent, the Bookrunner or any Arranger shall be obliged to request any certificate, opinion or other information under clause 18 unless so required in writing by a Lender or any Hedging Provider, in which case the Agent shall promptly make the appropriate request of the Borrowers if such request would be in accordance with the terms of this Agreement.

Responsibility for documentation and other matters

23.31

None of the Agent, the Bookrunner or any Arranger is responsible or liable for:

(a)

the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Bookrunner, any Arranger, an Obligor or any other person given in or in connection with any Finance Document or the transactions contemplated in the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or of any representations in any Finance Document or of any copy of any document delivered under any Finance Document;

(b)

the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document;

(c)

the application of any capital adequacy law or regulation to the transactions contemplated by the Finance Documents;

(d)

any loss to the Trust Property arising in consequence of the failure, depreciation or loss of any Charged Property or any investments made or retained in good faith or by reason of any other matter or thing;

(e)

accounting to any person for any sum or the profit element of any sum received by it for its own account;

(f)

the failure of any Obligor or any other party to perform its obligations under any Transaction Document or the financial condition of any such person;

(g)

ascertaining whether all deeds and documents which should have been deposited with it (or the Security Agent) under or pursuant to any of the Security Documents have been so deposited;

(h)

investigating or making any enquiry into the title of any Obligor to any of the Charged Property or any of its other property or assets;

(i)

failing to register any of the Security Documents with the Registrar of Companies or any other public office;

(j)

failing to register any of the Security Documents in accordance with the provisions of the documents of title of any Obligor to any of the Charged Property;

(k)

failing to take or require any Obligor to take any steps to render any of the Security Documents effective as regards property or assets outside England or Wales or to secure the creation of any ancillary charge under the laws of the jurisdiction concerned;

(l)

(unless it is the same entity as the Security Agent) the Security Agent and/or any other beneficiary of a Security Document failing to perform or discharge any of its duties or obligations under the Security Documents; or

(m)

any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by any applicable law or regulation relating to insider dealing or otherwise.

No duty to monitor

23.32

The Agent shall not be bound to enquire:

(a)

whether or not any Default has occurred;

(b)

as to the performance, default or any breach by any Party of its obligations under any Finance Document; or

(c)

whether any other event specified in any Finance Document has occurred.

Exclusion of liability

23.33

Without limiting clause 23.34 (and without prejudice to any other provision of the Finance Documents excluding or limiting the liability of the Agent) the Agent will not be liable (including, without limitation, for negligence or any other category of liability whatsoever) for:

(a)

any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document or the Charged Property, unless directly caused by its gross negligence or wilful misconduct;

(b)

exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document, the Charged Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document or the Charged Property; or

(c)

without prejudice to the generality of paragraphs (a) and (b) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:

(i)

any act, event or circumstance not reasonably within its control; or

(ii)

the general risks of investment in, or the holding of assets in, any jurisdiction,

including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any

Payment Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.

23.34

No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this clause subject to clauses 1.8 to 1.10 (Third party rights) and the provisions of the Third Parties Act.

23.35

The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.

23.36

Nothing in this Agreement shall oblige the Agent, the Bookrunner or any Arranger to carry out

(a)

any “know your customer” or other checks in relation to any person; or

(b)

any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Lender,

on behalf of any Lender, any Hedging Provider and each Lender or any Hedging Provider confirms to the Agent, the Bookrunner and the Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent, the Bookrunner or any Arranger.

23.37

Without prejudice to any provision of any Finance Document excluding or limiting the Agent’s liability, any liability of the Agent arising under or in connection with any Finance Document or the Charged Property shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Agent at any time which increase the amount of that loss. In no event shall the Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Agent has been advised of the possibility of such loss or damages.

Lenders’ indemnity to the Agent

23.38

Each Lender shall (in proportion (if no part of the Loan is then outstanding) to its share of the Total Commitments or (at any other time) to its participation in the Loan) indemnify the Agent, within three Business Days of demand, against any losses (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) including the costs of any person engaged in accordance with clause 23.23 (Rights and discretions of the Agent) and any Receiver in acting as its agent under the Finance Documents

in each case incurred by the Agent in acting as such under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document or out of the Trust Property).

23.39

Subject to clause 23.40, the Borrowers shall immediately on demand reimburse any Lender for any payment that Lender makes to the Agent pursuant to clause 23.38.

23.40

Clause 23.39 shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Agent to an Obligor.

Resignation of the Agent

23.41

The Agent may resign and appoint one of its Affiliates as successor by giving notice to the Lenders, each Hedging Provider, the Security Agent and the Borrowers.

23.42

Alternatively the Agent may resign by giving 30 days’ notice to the other Finance Parties and the Borrowers, in which case the Majority Lenders (after consultation with the Borrowers) may appoint a successor Agent.

23.43

If the Majority Lenders have not appointed a successor Agent in accordance with clause 23.42 above within 20 days after notice of resignation was given, the retiring Agent (after consultation with the Borrowers) may appoint a successor Agent.

23.44

The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. The Borrowers shall, within three Business Days of demand, reimburse the retiring Agent for the amount of all costs and expenses (including legal fees) properly incurred by it in making available such documents and records and providing such assistance.

23.45

The Agent’s resignation notice shall only take effect upon the appointment of a successor.

23.46

The appointment of the successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Agent. As from this date, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under clause 23.44) but shall remain entitled to the benefit of clause 14.4 (Indemnity to the Agent and the Security Agent) and this clause 23 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

Replacement of the Agent

23.47

After consultation with the Borrowers, the Majority Lenders may, by giving 30 days’ notice to the Agent replace the Agent by appointing a successor Agent.

23.48

The retiring Agent shall make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.

23.49

The appointment of the successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Agent. As from this date, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under clause 23.48) but shall remain entitled to the benefit of clause 14.4 (Indemnity to the Agent and the Security Agent) and this clause 23 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date).

23.50

Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

Confidentiality

23.51

In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its department, division or team directly responsible for the management of the Finance Documents which shall be treated as a separate entity from any other of its divisions, departments or teams.

23.52

If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.

23.53

Notwithstanding any other provision of any Finance Document to the contrary, none of the Agent, the Bookrunner or any Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty.

Relationship with the Lenders and Hedging Providers

23.54

The Agent may treat the person shown in its records as Lender or as each Hedging Provider at the opening of business (in the place of the Agent’s principal office as notified to the Finance Parties from time to time) as the Lender or (as the case may be) as a Hedging Provider acting through its Facility Office:

(a)

entitled to or liable for any payment due under any Finance Document on that day; and

(b)

entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,

unless it has received not less than five Business Days prior notice from that Lender or (as the case may be) a Hedging Provider to the contrary in accordance with the terms of this Agreement.

23.55

Each Lender and each Hedging Provider shall supply the Agent with any information that the Agent may reasonably specify as being necessary or desirable to enable the Agent or the Security Agent, to perform its functions as Agent or Security Agent.

23.56

Each Lender and each Hedging Provider shall deal with the Security Agent exclusively through the Agent and shall not deal directly with the Security Agent.

Credit appraisal by the Lenders and Hedging Providers

23.57

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document each Lender and each Hedging Provider confirms to each other Finance Party that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

(a)

the financial condition, status and nature of each Obligor and other Group Member;

(b)

the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document;

(c)

the application of any capital adequacy law or regulation to the transactions contemplated by the Finance Documents;

(d)

whether any Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Charged Property;

(e)

the adequacy, accuracy and/or completeness of any information provided by the Agent, any Party or by any other person under or in connection with any Transaction Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and

(f)

the right or title of any person in or to, or the value or sufficiency of, any part of the Charged Property, the priority of the Security Documents or the existence of any Security Interest affecting the Charged Property.

Reference Banks

23.58

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in consultation with the Borrowers) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

23.59

Any amount payable to the Agent under clause 14.4 (Indemnity to the Agent and the Security Agent), clause 16 (Costs and expenses) and clause 23.37 (Lenders’ indemnity to the Agent) shall include the cost of utilising the Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Agent may notify to the Borrowers and the Lenders, and is in addition to any fee paid or payable to the Agent under clause 11 (Fees).

Deduction from amounts payable by the Agent

23.60

If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.

Common parties

23.61

Although the Agent and the Security Agent may from time to time be the same entity, that entity will have entered into the Finance Documents (to which it is party) in its separate capacities as agent for the Finance Parties and (as appropriate) security agent and trustee for the Finance Parties. Where any Finance Document provides for the Agent or Security Agent to communicate with or provide instructions to the other, while they are the same entity, such communication or instructions will not be necessary.

Security Agent

23.62

Each other Finance Party appoints the Security Agent to act as its agent and (to the extent permitted under any applicable law) trustee under and in connection with the Security Documents and confirms that the Security Agent shall have a lien on the Security Documents and the proceeds of the enforcement of those Security Documents for all moneys payable to the beneficiaries of those Security Documents.

23.63

Each other Finance Party authorises the Security Agent:

(a)

to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions; and

(b)

to execute each of the Security Documents and all other documents that may be approved by the Agent and/or the Majority Lenders or all Lenders (as appropriate) for execution by it.

23.64

The Security Agent accepts its appointment under clause 23.62 (Security Agent) as trustee of the Trust Property with effect from the date of this Agreement and declares that it holds the Trust Property on trust for itself, the other Finance Parties (for so long as they are Finance Parties) on and subject to the terms set out in clauses 23.62 - 23.81 (inclusive) and the Security Documents to which it is a party.

Application of certain clauses to Security Agent

23.65

Clauses 23.20 to 23.30 (Rights and discretions of the Agent), clause 23.31 (Responsibility for documentation and other matters), clause 23.32 (No duty to monitor), clauses 23.33 to 23.37 (Exclusion of liability), clauses 23.38 to 23.40 (Lenders’ indemnity to the Agent), clauses 23.41 to 23.46 (Resignation of the Agent), clauses 23.47 to 23.50 (Replacement of Agent) clauses 23.51 to 23.53 (Confidentiality), clauses 23.54 to 23.56 (Relationship with the Lenders and Hedging Providers, clause 23.57 (Credit appraisal by the Lenders and Hedging Providers), clause 23.60 (Deduction from amounts payable by the Agent) and clause 23.87 (Resignation of the Agent for FATCA) shall each extend so as to apply to the Security Agent in its capacity as such and for that purpose each reference to the “Agent” in these clauses shall extend to include in addition a reference to the “Security Agent” in its capacity as such and, in clauses 23.20 to 23.30 (Rights and discretions of the Agent), references to the Lenders and a group of Lenders shall refer to the Agent.

23.66

In addition, clauses 23.41 to 23.46 (Resignation of the Agent), clauses 23.47 to 23.50 and clause 23.87 (Resignation of the Agent for FATCA) shall, for the purposes of their application to the Security Agent pursuant to clause 23.65, have the following additional clause inserted after them:

At any time after the appointment of a successor, the retiring Security Agent shall do and execute all acts, deeds and documents reasonably required by its successor to transfer to it (or its nominee, as it may direct) any property, assets and rights previously vested in the retiring Security Agent pursuant to the Security Documents and which shall not have vested in its successor by operation of law (including but not limited to the transfer of the Civil Law Security Documents to the successor Security Holder). All such acts, deeds and documents shall be done or, as the case may be, executed at the cost of the retiring Security Agent (except where the Security Agent is retiring under clause 23.47 as extended to it by clause 23.65, in which case such costs shall be borne by the Lenders (in proportion (if no part of the Loan is then outstanding) to their shares of the Total Commitments or (at any other time) to their participations in the Loan).

Instructions to Security Agent

23.67

The Security Agent shall:

(a)

unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Security Agent in accordance with any instructions given to it by the Agent; and

(b)

not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with paragraph (a) above.

23.68

The Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Agent as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Security Agent may refrain from acting unless and until it receives those instructions or that clarification.

23.69

Unless a contrary indication appears in a Finance Document, any instructions given to the Security Agent by the Agent shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.

23.70

The Security Agent may refrain from acting in accordance with any instructions of the Agent until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions.

23.71

In the absence of instructions, the Security Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders.

23.72

The Security Agent is not authorised to act on behalf of a Lender or any Hedging Provider (without first obtaining that Lender’s or the relevant Hedging Provider’s consent) in any legal or arbitration proceedings relating to any Finance Document. This clause 23.72 shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Security Documents or enforcement of the Security Documents.

Order of application

23.73

The Security Agent agrees to apply the Trust Property and each other beneficiary of the Security Documents agrees to apply all moneys received by it in the exercise of its rights under the Security Documents in accordance with the following respective claims:

(a)

first, as to a sum equivalent to the amounts payable to the Security Agent under the Finance Documents (excluding any amounts received by the Security Agent pursuant to clauses 23.38 to 23.40 (Lenders’ indemnity to the Agent) as extended to the Security Agent pursuant to clause 23.65 (Application of certain clauses to Security Agent)), for the Security Agent absolutely;

(b)

secondly, as to a sum equivalent to the aggregate amount then due and owing to the other Finance Parties (other than the Hedging Providers) under the Finance Documents, for those Finance Parties (other than the Hedging Providers) absolutely for application between them in accordance with clauses 26.9 to 26.11 (Partial payments);

(c)

thirdly, as to a sum equivalent to the aggregate amount then due and owing to the other Hedging Providers under the Finance Documents, for those Hedging Providers absolutely for application between them in accordance with clauses 26.9 to 26.11 (Partial payments);

(d)

fourthly, until such time as the Security Agent is satisfied that all obligations owed to the Finance Parties have been irrevocably and unconditionally discharged in full, held by the Security Agent on a suspense account for payment of any further amounts owing to the Finance Parties under the Finance Documents and further application in accordance with this clause 23.73 as and when any such amounts later fall due; and

(e)

fifthly, as to the balance (if any), for the Obligors by or from whom or from whose assets the relevant amounts were paid, received or recovered or other person entitled to them.

23.74

The Security Agent and each other beneficiary of the Security Documents shall make each application as soon as is practicable after the relevant moneys are received by, or otherwise become available to, it save that (without prejudice to any other provision contained in any of the Security Documents) the Security Agent (acting on the instructions of the Agent) any other beneficiary of the Security Documents or any receiver or administrator may credit any moneys received by it to a suspense account for so long and in such manner as the Security Agent), any other beneficiary of the Security Documents or such receiver or administrator may from time to time determine with a view to preserving the rights of the Finance Parties or any of them to prove for the whole of their respective claims against the Borrowers or any other person liable.

23.75

The Security Agent and/or any other beneficiary of the Security Documents shall obtain a good discharge in respect of the amounts expressed to be due to the other Finance Parties as referred to in clauses 23.73 and 23.74 by paying such amounts to the Agent for distribution in accordance with clause 26 (Payment mechanics).

Powers and duties of the Security Agent as trustee of the security

23.76

In its capacity as trustee in relation to the Trust Property, the Security Agent:

(a)

shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of this Agreement or any of the Security Documents), have all the same powers and discretions as a natural person acting as the beneficial Borrower of such property and/or as are conferred upon

the Security Agent by this Agreement and/or any Security Document but so that the Security Agent may only exercise such powers and discretions to the extent that it is authorised to do so by the provisions of this Agreement;

(b)

shall (subject to clause 23.73 (Order of application)) be entitled (in its own name or in the names of nominees) to invest moneys from time to time forming part of the Trust Property or otherwise held by it as a consequence of any enforcement of the security constituted by any Finance Document which, in the reasonable opinion of the Security Agent, it would not be practicable to distribute immediately, by placing the same on deposit in the name or under the control of the Security Agent as the Security Agent may think fit without being under any duty to diversify the same and the Security Agent shall not be responsible for any loss due to interest rate or exchange rate fluctuations except for any loss arising from the Security Agent’s gross negligence or wilful misconduct;

(c)

may, in the conduct of its obligations under and in respect of the Security Documents (otherwise than in relation to its right to make any declaration, determination or decision), instead of acting personally, employ and pay any agent (whether being a lawyer or any other person) to transact or concur in transacting any business and to do or concur in doing any acts required to be done by the Security Agent (including the receipt and payment of money) and on the basis that (i) any such agent engaged in any profession or business shall be entitled to be paid all usual professional and other charges for business transacted and acts done by him or any partner or employee of his or her in connection with such employment and (ii) the Security Agent shall not be bound to supervise, or be responsible for any loss incurred by reason of any act or omission of, any such agent if the Security Agent shall have exercised reasonable care in the selection of such agent; and

(d)

may place all deeds and other documents relating to the Trust Property which are from time to time deposited with it pursuant to the Security Documents in any safe deposit, safe or receptacle selected by the Security Agent exercising reasonable care or with any firm of solicitors or company whose business includes undertaking the safe custody of documents selected by the Security Agent exercising reasonable care and may make any such arrangements as it thinks fit for allowing Obligors access to, or its solicitors or auditors possession of, such documents when necessary or convenient and the Security Agent shall not be responsible for any loss incurred in connection with any such deposit, access or possession if it has exercised reasonable care in the selection of a safe deposit, safe, receptacle or firm of solicitors or company (save that it shall take reasonable steps to pursue any person who may be liable to it in connection with such loss).

All enforcement action through the Security Agent

23.77

None of the other Finance Parties shall have any independent power to enforce any of those Security Documents which are executed in favour of the Security Agent only or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to such Security Documents or otherwise have direct recourse to the security and/or guarantees constituted by such Security Documents except through the Security Agent.

23.78

None of the other Finance Parties shall have any independent power to enforce any of those Security Documents which are executed in their favour or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to such Security Documents or otherwise have direct recourse to the security and/or guarantees constituted by such Security Documents except through the Security Agent. If any Finance Party (other than the Security Agent) is a party to any Security Document it shall promptly upon being requested by the Agent to do so grant a power of attorney or other sufficient authority to the Security Agent to enable the Security Agent to exercise any rights, discretions or powers or to grant any consents or releases under such Security Document.

Co-operation to achieve agreed priorities of application

23.79

The other Finance Parties shall co-operate with each other and with the Security Agent and any receiver or administrator under the Security Documents in realising the property and assets subject to the Security Documents and in ensuring that the net proceeds realised under the Security Documents after deduction of the expenses of realisation are applied in accordance with clause 23.73 (Order of application).

Indemnity from Trust Property

23.80

In respect of all liabilities, costs or expenses for which the Obligors are liable under this Agreement, the Security Agent and each Affiliate of the Security Agent and each officer or employee of the Security Agent or its Affiliate (each a Relevant Person) shall be entitled to be indemnified out of the Trust Property in respect of all liabilities, damages, costs, claims, charges or expenses whatsoever properly incurred or suffered by such Relevant Person:

(a)

in the execution or exercise or bona fide purported execution or exercise of the trusts, rights, powers, authorities, discretions and duties created or conferred by or pursuant to the Finance Documents;

(b)

as a result of any breach by an Obligor of any of its obligations under any Finance Document;

(c)

in respect of any Environmental Claim made or asserted against a Relevant Person which would not have arisen if the Finance Documents had not been executed; and

(d)

in respect of any matter or thing done or omitted in any way in accordance with the terms of the Finance Documents relating to the Trust Property or the provisions of any of the Finance Documents.

23.81

The rights conferred by clause 23.80 are without prejudice to any right to indemnity by law given to trustees generally and to any provision of the Finance Documents entitling the Security Agent or any other person to an indemnity in respect of, and/or reimbursement of, any liabilities, costs or expenses incurred or suffered by it in connection with any of the Finance Documents or the performance of any duties under any of the Finance Documents. Nothing contained in clause 23.80 shall entitle the Security Agent or any other person to be indemnified in respect of any liabilities, damages, costs, claims, charges or expenses to the extent that the same arise from such person’s own gross negligence or wilful misconduct.

Finance Parties to provide information

23.82

The other Finance Parties shall provide the Security Agent with such written information as it may reasonably require for the purposes of carrying out its duties and obligations under the Security Documents and, in particular, with such necessary directions in writing so as to enable the Security Agent to make the calculations and applications contemplated by clause 23.73 (Order of application) above and to apply amounts received under, and the proceeds of realisation of, the Security Documents as contemplated by the Security Documents, clauses 26.9 to 26.11 (Partial payments) and clause 23.73 (Order of application).

Release to facilitate enforcement and realisation

23.83

Each Finance Party acknowledges that pursuant to any enforcement action by the Security Agent (or a Receiver) carried out on the instructions of the Agent it may be desirable for the purpose of such enforcement and/or maximising the realisation of the Charged Property being enforced against, that any rights or claims of or by the Security Agent (for the benefit of the Finance Parties) and/or any Finance Parties against any Obligor and/or any Security Interest over any assets of any Obligor (in each case) as contained in or created by any Finance Document, other than such rights or claims or security being enforced, be released in order to facilitate such enforcement action and/or realisation and, notwithstanding any other provision of the Finance Documents, each Finance Party hereby irrevocably authorises the Security Agent

(acting on the instructions of the Agent) to grant any such releases to the extent necessary to fully effect such enforcement action and realisation including, without limitation, to the extent necessary for such purposes to execute release documents in the name of and on behalf of the Finance Parties. Where the relevant enforcement is by way of disposal of shares or units in a Borrower, the requisite release shall include releases of all claims (including under guarantees) of the Finance Parties and/or the Security Agent against such Borrower and of all Security Interests over the assets of such Borrower.

Undertaking to pay

23.84

Each Obligor which is a Party undertakes with the Security Agent on behalf of the Finance Parties that it will, on demand by the Security Agent, pay to the Security Agent all money from time to time owing, and discharge all other obligations from time to time incurred, by it under or in connection with the Finance Documents.

Additional trustees

23.85

The Security Agent shall have power by notice in writing to the other Finance Parties and the Borrowers to appoint any person approved by the Borrowers (such approval not to be unreasonably withheld or delayed) either to act as separate trustee or as co-trustee jointly with the Security Agent:

(a)

if the Security Agent reasonably considers such appointment to be in the best interests of the Finance Parties;

(b)

for the purpose of conforming with any legal requirement, restriction or condition in any jurisdiction in which any particular act is to be performed; or

(c)

for the purpose of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction against any person of a judgment already obtained,

and any person so appointed shall (subject to the provisions of this Agreement) have such rights (including as to reasonable remuneration), powers, duties and obligations as shall be conferred or imposed by the instrument of appointment. The Security Agent shall have power to remove any person so appointed. At the request of the Security Agent, the other parties to this Agreement shall forthwith execute all such documents and do all such things as may be required to perfect such appointment or removal and each such party irrevocably authorises the Security Agent in its name and on its behalf to do the same. Such a person shall accede to this Agreement as a Security Agent to the extent necessary to carry out their role on terms satisfactory to the Security Agent and (subject always to the provisions of this Agreement) have such trusts, powers, authorities, liabilities and discretions (not exceeding those conferred on the Security Agent by this Agreement and the other Finance Documents) and such duties and obligations as shall be conferred or imposed by the instrument of appointment (being no less onerous than would have applied to the Security Agent but for the appointment). The Security Agent shall not be bound to supervise, or be responsible for any loss incurred by reason of any act or omission of, any such person if the Security Agent shall have exercised reasonable care in the selection of such person.

Non-recognition of trust

23.86

It is agreed by all the parties to this Agreement that:

(a)

in relation to any jurisdiction the courts of which would not recognise or give effect to the trusts expressed to be constituted by this clause 23, the relationship of the Security Agent and the other Finance Parties shall be construed as one of principal and agent, but to the extent permissible under the laws of such jurisdiction, all the other provisions of this Agreement shall have full force and effect between the parties to this Agreement;

(b)

the provisions of this clause 23 insofar as they relate to the Security Agent in its capacity as trustee for the Finance Parties and the relationship between themselves and the

Security Agent as their trustee may be amended by agreement between the other Finance Parties and the Security Agent. The Security Agent may amend all documents necessary to effect the alteration of the relationship between the Security Agent and the other Finance Parties and each such other party irrevocably authorises the Security Agent in its name and on its behalf to execute all documents necessary to effect such amendments;

(c)

the security under the Civil Law Security Documents secures the rights of the Security Holder as direct creditor under the Finance Documents and as several creditor under clause 2.14 and not as trustee or agent of the Finance Parties; and

(d)

any amount recovered by the Security Holder under the Civil Law Security Documents will be held on trust for the benefit of the relevant Finance Party to be applied in accordance with the terms of this Agreement.

Resignation of the Agent for FATCA

23.87

The Agent shall resign in accordance with clauses 23.41 to 23.46 (Resignation of the Agent), above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to clause 23.43 above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either:

(a)

the Agent fails to respond to a request under clause 13.3 (FATCA Information) and a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

(b)

the information supplied by the Agent pursuant to clause 13.3 (FATCA Information) indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or

(c)

the Agent notifies the Borrowers and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

and (in each case) a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCA Exempt Party, and that Lender, by notice to the Agent, requires it to resign.

24	Conduct of business by the Finance Parties

Finance Parties tax affairs

24.1	No provision of this Agreement will:

(a)

interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

(b)

oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

(c)

oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

Finance Parties acting together

24.2

Notwithstanding clauses 2.10 to 2.12 (Finance Parties’ rights and obligations), if the Agent makes a declaration under clause 19.37 (Acceleration) the Agent shall, in the names of all the Finance Parties, take such action on behalf of the Finance Parties and conduct such negotiations with the Borrowers and any Group Members and generally administer the Facility

in accordance with the wishes of the Majority Lenders. All the Finance Parties shall be bound by the provisions of this clause and no Finance Party shall be entitled to take action independently against any Obligor or any of its assets without the prior consent of the Majority Lenders.

24.3	Clause 24.2 shall not override clause 23 (Roles of Agent, Security Agent, Bookrunner and Arrangers) as it applies to the Security Agent.

Majority Lenders

24.4

Where any Finance Document provides for any matter to be determined by reference to the opinion of, or to be subject to the consent, approval or request of, the Majority Lenders or for any action to be taken on the instructions of the Majority Lenders (a majority decision), such majority decision shall (as between the Lenders) only be regarded as having been validly given or issued by the Majority Lenders if all the Lenders shall have received prior notice of the matter on which such majority decision is required and the relevant majority of Lenders shall have given or issued such majority decision. However (as between any Obligor and the Finance Parties) the relevant Obligor shall be entitled (and bound) to assume that such notice shall have been duly received by each Lender and that the relevant majority shall have been obtained to constitute Majority Lenders when notified to this effect by the Agent whether or not this is the case.

24.5

If, by the date falling five Business Days after the deadline for response (and if no deadline for response was set, ten Business Days after the request was sent) of the Agent despatching to each Lender a notice requesting instructions (or confirmation of instructions) from the Lenders or the agreement of the Lenders to any amendment, modification, waiver, variation or excuse of performance for the purposes of, or in relation to, any of the Finance Documents, the Agent has not received a reply specifically giving or confirming or refusing to give or confirm the relevant instructions or, as the case may be, approving or refusing to approve the proposed amendment, modification, waiver, variation or excuse of performance, then (irrespective of whether such Lender responds at a later date) the Agent shall treat any Lender which has not so responded as having indicated a desire to be bound by the wishes of 662/3 per cent of those Lenders (measured in terms of the total Commitments of those Lenders) which have so responded.

24.6	For the purposes of clause 24.5, any Lender which notifies the Agent of a wish or intention to abstain on any particular issue shall be treated as if it had not responded within the timeframes referred to in clause 24.5.

24.7	Clauses 24.5 and 24.6 shall not apply in relation to those matters referred to in, or the subject of, clauses 25.5 and 25.6 (Exceptions).

Conflicts

24.8

Each Borrower acknowledges that any Bookrunner and/or Arranger and its parent undertaking, subsidiary undertakings and fellow subsidiary undertakings (together an Arranger Group) may be providing debt finance, equity capital or other services (including financial advisory services) to other persons with which the Borrowers may have conflicting interests in respect of the Facility or otherwise.

24.9

No member of an Arranger Group shall use confidential information gained from any Obligor by virtue of the Facility or its relationships with any Obligor in connection with their performance of services for other persons. This shall not, however, affect any obligations that any member of an Arranger Group has as Agent in respect of the Finance Documents. The Borrowers also acknowledge that no member of an Arranger Group has any obligation to use or furnish to any Obligor information obtained from other persons for their benefit.

24.10

The terms parent undertaking, subsidiary undertaking and fellow subsidiary undertaking when used in this clause have the meaning given to them in sections 1161 and 1162 of the Companies Act 2006.

25	Sharing among the Finance Parties

Payments to Finance Parties

25.1	If a Finance Party (a Recovering Finance Party) receives or recovers any amount from an Obligor other than in accordance with clause 26 (Payment mechanics) (a Recovered Amount) and applies that amount to a payment due under the Finance Documents then:

(a)

the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent;

(b)

the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with clause 26 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

(c)

the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the Sharing Payment) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with clauses 26.9 to 26.11 (Partial payments).

Redistribution of payments

25.2

The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties) in accordance with clauses 26.9 to 26.11 (Partial payments) towards the obligations of that Obligor to the Sharing Finance Parties.

Recovering Finance Party’s rights

25.3

On a distribution by the Agent under clause 26.2 (Redistribution of payments) of a payment received by a Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor.

Reversal of redistribution

25.4	If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

(a)

each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the Redistributed Amount); and

(b)

as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Obligor.

Exceptions

25.5	This clause 25 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this clause, have a valid and enforceable claim against the relevant Obligor.

25.6	A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(a)

it notified that other Finance Party of the legal or arbitration proceedings;

(b)

the taking legal or arbitration proceedings was in accordance with the terms of this Agreement; and

(c)

that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

Section 10- Administration

26	Payment mechanics

Payments to the Agent

26.1

On each date on which an Obligor or a Lender is required to make a payment under a Finance Document (other than a Hedging Contract), that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

26.2	Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in such Participating Member State or London, as specified by the Agent) and with such bank as the Agent, in each case, specifies.

Distributions by the Agent

26.3

Each payment received by the Agent under the Finance Documents for another Party shall, subject to clause 26.4 (Distributions to an Obligor) and clauses 26.5 to 26.7 (Clawback and pre-funding) be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank specified by that Party in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London, as specified by that Party).

Distributions to an Obligor

26.4

The Agent may (with the consent of the Obligor or in accordance with clause 27 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

Clawback and pre-funding

26.5

Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

26.6

Unless clause 26.7 applies, if the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.

26.7	If the Agent is willing to make available amounts for the account of a Borrower before receiving funds from the Lenders then if and to the extent that the Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to a Borrower:

(a)

the Borrowers shall on demand refund it to the Agent; and

(b)

the Lender by whom those funds should have been made available or, if that Lender fails to do so, the Borrowers, shall on demand pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.

26.8	A Paying Party shall, promptly upon request by a Recipient Party and to the extent:

(a)

that it has not given an instruction pursuant to clause 26.7 above; and

(b)

that it has been provided with the necessary information by that Recipient Party,

give all requisite instructions to the bank with whom the trust account is held to transfer the relevant amount (together with any accrued interest) to that Recipient Party.

Partial payments

26.9

If the Agent receives a payment for application against amounts in respect of any Finance Documents that is insufficient to discharge all the amounts then due and payable by an Obligor under those Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under those Finance Documents in the following order:

(a)

first, in or towards payment pro rata of any unpaid amount owing to the Agent, the Security Agent, the Bookrunner or the Arrangers under those Finance Documents;

(b)

secondly, in or towards payment to the Lenders pro rata of any amount owing to the Lenders under clause 23.38 (Lenders’ indemnity to the Agent) including any amount owing to the Lenders under clause 23.39 as a result of clauses 23.38 to 23.40 being extended to the Security Agent by clause 23.65 (Application of certain clauses to Security Agent);

(c)

thirdly, in or towards payment to the Lenders pro rata of any accrued interest, fee or commission due to them but unpaid under those Finance Documents;

(d)

fourthly, in or towards payment to the Lenders pro rata of any principal which is due but unpaid under those Finance Documents; and

(e)

fifthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

26.10

The Agent shall, if so directed by all the Lenders, vary the order set out in paragraphs (b) to (e) of clause 26.9.

26.11

Clauses 26.9 and 26.10 above will override any appropriation made by an Obligor.

No set-off by Obligors

26.12

All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

Business Days

26.13

Any payment under the Finance Documents which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

26.14

During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

Currency of account

26.15

Subject to clauses 26.16 to 26.17, dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document.

26.16

A repayment of all or part of the Loan or an Unpaid Sum and each payment of interest shall be made in dollars on its due date.

26.17

Each payment in respect of the amount of any costs, expenses or Taxes or other losses shall be made in dollars and, if they were incurred in a currency other than dollars, the amount payable under the Finance Documents shall be the equivalent in dollars of the relevant amount in such other currency on the date on which it was incurred.

26.18

All moneys received or held by the Security Agent or by a Receiver under a Security Document in a currency other than dollars may be sold for dollars and the Obligor which executed that Security Document shall indemnify the Security Agent against the full cost in relation to the sale. Neither the Security Agent nor such Receiver will have any liability to that Obligor in respect of any loss resulting from any fluctuation in exchange rates after the sale.

Change of currency

26.19

Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(a)

any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Borrowers); and

(b)

any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).

26.20

If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Borrowers) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Interbank Market and otherwise to reflect the change in currency.

27	Set-off

27.1

A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the 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.

28	Notices

Communications in writing

28.1	Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

Addresses

28.2	The address, and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Obligor or Finance Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

(a)

in the case of any Obligor which is a Party, that identified with its name in Schedule 1 (The original parties);

(b)

in the case of any Obligor which is not a Party, that identified in any Finance Document to which it is a party;

(c)

in the case of the Security Agent, the Agent and any other original Finance Party that identified with its name in Schedule 1 (The original parties); and

(d)

in the case of each Lender or other Finance Party, that notified in writing to the Agent on or prior to the date on which it becomes a Party in the relevant capacity,

or, in each case, any substitute address, fax number, or department or officer as an Obligor or Finance 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 Business Days’ notice.

Delivery

28.3	Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

(a)

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

(b)

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

and, if a particular department or officer is specified as part of its address details provided under clause 28.2 (Addresses), if addressed to that department or officer.

28.4

Any communication or document to be made or delivered to the Agent or the Security Agent, will be effective only when actually received by the Agent or the Security Agent, and then only if it is expressly marked for the attention of the department or officer identified in Schedule 1 (The original parties) (or any substitute department or officer as the Agent or the Security Agent, shall specify for this purpose).

28.5	All notices from or to an Obligor shall be sent through the Agent.

28.6	Any communication or document made or delivered to the Borrowers in accordance with this clause will be deemed to have been made or delivered to each of the Obligors.

28.7	Any communication or document which becomes effective, in accordance with clauses 28.3 to 28.6 above, after 5:00pm in the place of receipt shall be deemed only to become effective on the following day.

Notification of address and fax number

28.8	Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to clause 28.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.

Electronic communication

28.9

Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means (including by way of the Agent’s Intralinks or Debtdomain system or such other similar electronic system) to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:

(a)

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

(b)

notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice.

28.10

Any electronic communication made between those two Parties will be effective only when actually received in readable form and, in the case of any electronic communication made by a Party to the Agent or the Security Agent, only if it is addressed in such a manner as the Agent or the Security Agent, shall specify for this purpose.

28.11

Any electronic communication which becomes effective, in accordance with clause 28.10 above, after 5:00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

28.12

All Finance Parties confirm that they have consented to the use of the Agent’s Intralinks or Debtdomain systems (or such other similar electronic system) as an accepted method of communication under or in connection with the Finance Documents and agree that the Intralinks or Debtdomain system (or such other similar electronic system) will be the primary method of communication between the Agent and the other Finance Parties. The Finance Parties acknowledge that a communication via Intralinks or Debtdomain (or such other similar electronic system) will be effective once the communication is posted to Intralinks or Debtdomain (or such other similar electronic system) by the Agent.

English language

28.13

Any notice given under or in connection with any Finance Document shall be in English.

28.14

All other documents provided under or in connection with any Finance Document shall be:

(a)

in English; or

(b)

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.

29	Calculations and certificates

Accounts

29.1	In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

Certificates and determinations

29.2	Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

Day count convention

29.3	Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Interbank Market differs, in accordance with that market practice.

30	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.

31	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 of any such right or remedy or constitute an election to affirm any of the Finance Documents. No election to affirm any of the Finance Documents on the part of any Finance Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in the Finance Documents are cumulative and not exclusive of any rights or remedies provided by law.

32	Amendments and waivers

Required consents

32.1

Subject to clause 32.5 (All Lender matters) and clauses 32.6 to 32.8 (Other exceptions) any term of the Finance Documents may be amended or waived with the consent of the Agent (acting on the instructions of the Majority Lenders and, if it affects the rights and obligations of the Agent or the Security Agent, the consent of the Agent or the Security Agent) and any such amendment or waiver agreed or given by the Agent will be binding on all the Finance Parties.

32.2	The Agent may (or, in the case of the Security Documents, instruct the Security Agent to) effect, on behalf of any Finance Party, any amendment or waiver permitted by this clause 32.

32.3	Without prejudice to the generality of clauses 23.22, 23.23 and 23.24 (Rights and discretions of the Agent), the Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.

32.4	Each Obligor agrees to any such amendment or waiver permitted by this clause 32 which is agreed to by the Borrowers.

All Lender matters

32.5	An amendment, waiver or discharge or release or a consent of, or in relation to, the terms of any Finance Document that has the effect of changing or which relates to:

(a)

the definition of “Majority Lenders” in clause 1.1 (Definitions);

(b)

the definition of “Last Availability Date” in clause 1.1 (Definitions);

(c)

an extension to the date of payment of any amount under the Finance Documents;

(d)

a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable or the rate at which they are calculated;

(e)

an increase in, or an extension of, any Commitment or any requirement that a cancellation of Commitments reduces the Commitments of the Lenders rateably under the Facility;

(f)

a change to the Borrowers or any other Obligor;

(g)

any provision which expressly requires the consent or approval of all the Lenders;

(h)

clauses 2.10 to 2.12 (Finance Parties’ rights and obligations), clause 22 (Changes to the Lenders), clause 25.1 (Payments to Finance Parties), this clause 32, clause 35 (Governing law) or clauses 36.1 to 36.3 (Jurisdiction of English courts);

(i)

the order of distribution under clauses 26.9 to 26.11 (Partial payments);

(j)

the order of distribution under clause 23.73 (Order of application);

(k)

the currency in which any amount is payable under any Finance Document;

(l)

an increase in any Commitment or the Total Commitments, an extension of any period within which the Facility is available for Utilisation or any requirement that a cancellation of Commitments reduces the Commitments rateably;

(m)

the nature or scope of the Charged Property or the manner in which the proceeds of enforcement of the Security Documents are distributed;

(n)

the circumstances in which the security constituted by the Security Documents and/or the Guarantees are permitted or required to be released under any of the Finance Documents,

shall not be made, or given, without the prior consent of all the Lenders.

Other exceptions

32.6	Amendments to or waivers in respect of the Hedging Contracts may only be agreed by the relevant Hedging Provider.

32.7

An amendment or waiver which relates to the rights or obligations of the Agent, the Security Agent, the Bookrunner or the Arrangers in their respective capacities as such (and not just as a Lender) may not be effected without the consent of the Agent, Security Agent, Bookrunner or the Arrangers (as the case may be).

32.8

Notwithstanding clauses 32.1 to 32.7 (inclusive), the Agent may make technical amendments to the Finance Documents arising out of manifest errors on the face of the Finance Documents, where such amendments would not prejudice or otherwise be adverse to the interests of any Finance Party without any reference or consent of the Finance Parties.

Releases

32.9	Except with the approval of the Lenders or for a release which is expressly permitted or required by the Finance Documents, the Agent shall not have authority to authorise the Security Agent to release:

(a)

any Charged Property from the security constituted by any Security Document; or

(b)

any Obligor from any of its Guarantees or other obligations under any Finance Document.

Replacement of a Defaulting Lender

32.10

The Borrowers may, at any time a Lender has become and continues to be a Defaulting Lender, by giving 10 Business Days’ prior written notice to the Agent and such Lender replace such Lender by requiring such Lender to (and to the extent permitted by law such Lender shall) assign pursuant to clause 21 (Changes to the Lenders) all (and not part only) of its rights under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (other than any of the Obligors or any of their respective Affiliates) (a Replacement Lender) selected by the Borrowers, and which confirms its willingness to undertake and does undertake all the obligations or all the relevant obligations of the transferring Lender in accordance with clause 21 (Changes to the Lenders) for a purchase price in cash payable at the time of transfer which is either:

(a)

in an amount equal to the outstanding principal amount of such Lender’s participation in the outstanding Loan and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents; or

(b)

in an amount agreed between that Defaulting Lender, the Replacement Lender and the Borrowers and which does not exceed the amount described in paragraph (a) above.

32.11

Any assignment by a Defaulting Lender pursuant to this clause shall be subject to the following conditions:

(a)

the Borrowers shall have no right to replace the Agent;

(b)

neither the Agent nor the Defaulting Lender shall have any obligation to the Borrowers to find a Replacement Lender;

(c)

the assignment must take place no later than 10 days after the notice referred to in clause 32.10 above;

(d)

in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents; and

(e)

the Defaulting Lender shall only be obliged to assign its rights pursuant to clause 32.10 above once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that assignment to the Replacement Lender.

32.12

The Defaulting Lender shall perform the checks described in clause 32.11(e) above as soon as reasonably practicable following delivery of a notice referred to in clause 32.10 and shall notify the Agent and the Borrowers when it is satisfied that it has complied with those checks.

33	Confidentiality

Confidential Information

33.1

Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by clause 33.2 (Disclosure of Confidential Information) and clauses 33.3 to 33.5 (Disclosure to numbering service providers), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

Disclosure of Confidential Information

33.2	Any Finance Party may disclose to any of its Affiliates and any other person:

(a)

in the case of a Lender, to (or through) whom that Lender assigns (or may potentially assign) all or any of its rights and obligations under the Finance Documents;

(b)

in the case of a Lender, to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to clause 21.16 (Security over Lenders’ rights);

(c)

in the case of a Lender, with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, the Finance Documents or any Obligor; or

(d)

to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,

and any Finance Party may disclose to a rating agency or its professional advisers or (with the consent of the Borrower) any other person, any information about any Obligor, the Group and the Finance Documents as that Finance Party shall consider appropriate.

Disclosure to numbering service providers

33.3	Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:

(a)

names of Obligors;

(b)

country of domicile of Obligors;

(c)

place of incorporation of Obligors;

(d)

date of this Agreement;

(e)

clause 35 (Governing law);

(f)

the names of the Agent, the Bookrunner and the Arrangers;

(g)

date of each amendment and restatement of this Agreement;

(h)

amount of Total Commitments;

(i)

currency of the Facility;

(j)

type of Facility;

(k)

ranking of Facility;

(l)

the term of the Facility;

(m)

changes to any of the information previously supplied pursuant to paragraphs (a) to (l) above; and

(n)

such other information agreed between such Finance Party and the Borrowers,

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

33.4

The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facilities and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

33.5	Each of the Borrowers represents that none of the information set out in clauses 33.3(a) to (m) above is, nor will at any time be, unpublished price-sensitive information.

Entire agreement

This clause 33 (Confidentiality) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

Inside information

33.6

Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.

Notification of disclosure

33.7	Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers:

(a)

of the circumstances of any disclosure of Confidential Information made pursuant to clause 33.2 (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that clause during the ordinary course of its supervisory or regulatory function; and

(b)

upon becoming aware that Confidential Information has been disclosed in breach of this clause 33 (Confidentiality).

Continuing obligations

33.8	The obligations in this clause 33 (Confidentiality) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of twelve months from the earlier of:

(a)

the date on which all amounts payable by the Obligors under or in connection with the Finance Documents have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and

(b)

the date on which such Finance Party otherwise ceases to be a Finance Party.

34	Counterparts

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

Section 11- Governing Law and Enforcement

35	Governing law

This Agreement and any non-contractual obligations connected with it are governed by English law.

36	Enforcement

Jurisdiction of English courts

36.1	The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement) (a Dispute).

36.2	The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

36.3

Clauses 36.1 and 36.2 are for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

Service of process

36.4	Without prejudice to any other mode of service allowed under any relevant law, each Obligor which is a Party (other than an Obligor incorporated in England and Wales):

(a)

irrevocably appoints the person named in Schedule 1 (The original parties) as that Obligor’s English process agent as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document;

(b)

agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned; and

(c)

if any person appointed as process agent for an Obligor is unable for any reason to act as agent for service of process, that Obligor must immediately (and in any event within ten days of such event taking place) appoint another agent on terms acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

Schedule 1

The original parties

Borrowers



Name:		SOLAIA SHIPPING L.L.C.

Original Jurisdiction		Republic of Liberia

Registration number (or equivalent, if any)		960054

English process agent (if not incorporated in England)		Exmar (UK) Shipping Company Limited currently of Moreau House, 116 Brompton Road, London SW3 1JJ

Registered office		80 Broad Street, Monrovia, Liberia

Address for service of notices		Room 3206, 32^nd Floor, Lippo Centre, Tower Two, No. 89 Queensway, Hong Kong



Name:		EXCELSIOR BVBA

Original Jurisdiction		Kingdom of Belgium

Registration number (or equivalent, if any)		0866.482.687

English process agent (if not incorporated in England)		Exmar (UK) Shipping Company Limited currently of Moreau House, 116 Brompton Road, London SW3 1JJ

Registered office		De Gerlachekaai 20, Antwerp, Belgium

Address for service of notices		20 De Gerlachekaai, B2000 Antwerp, Belgium

The Arrangers


Name		Nordea Bank Norge ASA
Facility Office, address, fax number and attention details for notices		Middelthunsgate 17 P.O. Box 1166, Sentrum 0107 Oslo Norway Credit Matters: Tel: +47 22 48 50 00 Fax: +47 22 48 66 68 Attn: Shipping, Offshore and Oil Services Administration Matters: Tel: +47 22 48 50 00 Fax: +47 22 48 42 78 Attn: International Loan Administration
Name		BNP Paribas Fortis SA/NV
Facility Office, address, fax number and attention details for notices		3 Montagne du Parc 1KB1A, 1000 Brussels Belgium Credit Matters: Address: 16, rue de Hanovre, 75002, Paris - France Tel: +33 1 57 43 83 11 / +33 1 42 98 29 94 Fax: +33 1 42 98 61 66 Attn: Alice Renaudin / Alia Sondarjee Email: alice.renaudindurand-ruel@bnpparibas.com / alia.sondarjee@bnpparibas.com Administration Matters: Address: 3 Montagne du Parc, 1KB1A, 1000 Brussels, Belgium Tel: +32 (0) 2 565 2355 / +32 (0) 2 565 3930 Fax: +32 (0) 2 565 3403 Attn: Geert Sterck / Jean-Marie Berger Email: geert.sterck@bnpparibasfortis.com / jean-marie.berger@bnpparibasfortis.com / bruxelles_bo_export_project_finance.cib@bnpparibasfortis.com Address: 16 rue de Hanovre, ACI CAT04B1 Tel: +33 1 57 43 83 28 / +33 1 58 16 71 20 Fax: +33 1 42 98 43 55 Attn: Transportation group Middle Office Email: tgmo.shipping@bnpparibas.com


Name		Skandinaviska Enskilda Banken AB (publ)
Facility Office, address, fax number and attention details for notices		SE-106 40 Stockholm Sweden Credit Matters: Address: P.O. Box 1843, Vika, Filipstad Brygge 1, NO-0123 Oslo Attn: Egil Aarrestad Email: egil.aarrestad@seb.no Administration Matters: Address: Rissneleden 110, RA 8 Tel: +46 9 763 8593 Fax: +46 8 611 0384 Attn: Structured Credits Operations Email: sco@seb.se
Name		KBC Bank NV
Facility Office, address, fax number and attention details for notices		Antwerp Corporate branch Eiermarket 20 2000 Antwerp Credit Matters: Address: Eiermarket 20, 2000 Antwerp Tel: +32 3 202 90 81 / +32 3 202 92 33 Fax: +32 3 202 92 72 Attn: Koen Struyf / Dennis Ideler Email: koen.struyf@kbc.be / dennis.ideler@kbe.be Administration Matters: Address: IBR/8244, Havenlaan 12, 1080-Brussels, Belgium Tel: +32 2 429 08 20 / +32 2 429 42 76 Fax: +32 2 429 36 95 Attn: Tamara Demarrez / Guido Lenaerts Email: creditadmin.br2@kbc.be

The Original Lenders


Name		Nordea Bank Norge ASA

Commitment		$50,000,000

Name		BNP Paribas Fortis SA/NV

Commitment		$47,500,000

Name		Skandinaviska Enskilda Banken AB (publ)


Commitment		$47,500,000

Name		KBC Bank NV

Commitment		$30,000,000

TOTAL:		$175,000,000

The Agent

Name

Nordea Bank Norge ASA

Facility Office, address, fax number and attention details for notices

Middelthunsgate 17

P.O. Box 1166, Sentrum

0107 Oslo

Norway

Credit Matters:

Tel: +47 22 48 50 00

Fax: +47 22 48 66 68

Attn: Shipping, Offshore and Oil Services

Administration Matters:

Tel: +47 22 48 50 00

Fax: +47 22 48 42 78

slo.shipping.norway@nordea.com

Attn: International Loan Administration

The Security Agent

Name

Nordea Bank Norge ASA

Facility Office, address, fax number and attention details for notices

Middelthunsgate 17

P.O. Box 1166, Sentrum

0107 Oslo

Norway

Credit Matters:

Tel: +47 22 48 50 00

Fax: +47 22 48 66 68

Attn: Shipping, Offshore and Oil Services

Administration Matters:

Tel: +47 22 48 50 00

Fax: +47 22 48 42 78

slo.shipping.norway@nordea.com

Attn: International Loan Administration

Schedule 2

Ship information

Part A


Name of Ship:		Excalibur

Borrower:		Solaia Shipping L.L.C.

Ship Commitment:		$75,000,000

Flag State:		Belgium

Port of Registry:		Antwerp

Official Number:		9230050

External Charter:		time charter dated 10 October 2006, as amended and novated by a novation agreement dated 31 October 2014, between External Charterer and Solaia Shipping L.L.C. and as amended and restated from time to time

External Charterer:		Excelerate Energy Limited Partnership

Classification:		I HULL MACH Liquefied gas carrier/LNG Unrestricted navigation

Classification Society:		Bureau Veritas

Major Casualty Amount:		$10,000,000

Part B


Name of Ship:		Excelsior

Borrower:		Excelsior BVBA

Ship Commitment:		$100,000,000

Flag State:		Belgium

Port of Registry:		Antwerp

Official Number:		9239616

External Charter:		time charter dated 15 December 2003, as amended by addendum no 1 dated 9 December 2005 and addendum no 2 dated 10 January 2006, between the External Charterer and the Borrower and as amended and restated from time to time

External Charterer:		Excelerate Energy Limited Partnership

Classification:		I HULL MACH Liquefied gas carrier STL-SPM/LNG-RV unrestricted navigation

Classification Society:		Bureau Veritas


Major Casualty Amount:		$10,000,000

Existing Indebtedness		$160,000,000 loan agreement dated 9 November 2004 (as amended) between Excelsior NV ad borrower, the Export-Impot bank of Korea, Citibank International plc as agent and Citicorp Trustee Co Ltd. as security trustee

Schedule 3

Conditions precedent

Part 1

Conditions Precedent to any Utilisation Date

1	Obligors

(a)

Constitutional Documents

Copies of the Constitutional Documents of each Obligor together with such other evidence as the Agent may reasonably require that each such Obligor is duly formed or incorporated in its country of formation or incorporation and remains in existence with power to enter into, and perform its obligations under, the Finance 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 Obligor (if such a certificate can be obtained).

(c)

Board resolutions

A copy of a resolution of the board of directors of each Obligor (or its sole member or general partner) (other than Exmar):

(i)

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

(ii)

if required authorising a specified person or persons to execute those Finance 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 Obligor certifying that each copy document relating to it specified in this Part 1 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 Obligor (or its sole member or general partner) and (other than in respect of Teekay LNG) the proportion of shares or units held by each shareholder or member.

(e)

Powers of attorney

The original power of attorney of each Obligor under which any documents are to be executed or transactions undertaken by that Obligor.

(f)

Authorisations

Each Obligor has obtained all Necessary Authorisations in respect of the Transaction Documents, including but not limited to the consents and/or approvals required under or pursuant to the Charter Documents for the entry into of the Finance Documents.

2	Relevant Documents

(a)

An original counterpart of this Agreement, the Guarantees and each Fee Letter.

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(b)

A copy, certified as true, accurate and complete and in full force and effect by a duly authorised representative of each Borrower, of the Charter Documents, together with all addenda, amendments or supplements and a confirmation that all Authorisations with respect to the Charter Documents have been obtained.

(c)

Evidence satisfactory to the Agent that all Security Interests securing the Existing Indebtedness will, immediately upon the relevant Utilisation Date, be released in full.

3	Legal opinions

Legal opinions from:

(a)

Norton Rose Fulbright LLP, English counsel to the Lenders, in relation to, inter alia, the Finance Documents;

(b)

Fulbright & Jaworski LLP, Liberian counsel to the Lenders, in relation to, inter alia, a Borrower;

(c)

Watson, Farley & Williams LLP, Marshall Islands counsel to the Lenders, in relation to, inter alia, Teekay LNG; and

(d)

Fransen Luyten, Belgian counsel to the Lenders, in relation to, inter alia, the Borrowers and Exmar.

4	Process agents

Due execution of a letter of appointment and acceptance by each process agent appointed or required to be appointed under this Agreement and Guarantees.

5	Know your customer

All know your customer requirements of each of the Finance Parties shall have been satisfied in full.

6	Structure chart

A structure chart relating to the Groups.

7	Material adverse effect

Since 31 December 2013, nothing shall have occurred (and neither the Agent nor any of the Lenders shall have become aware of any condition or circumstance not previously known to it or them) which the Majority Lenders determine has had or could reasonably be expected to have, a material adverse effect:

(a)

on the rights or remedies of the Finance Parties;

(b)

on the performance of the Obligors and their Subsidiaries (taken as a whole) of their obligations to the Lenders;

(c)

with respect to the Finance Documents; or

(d)

on the property, assets, nature of assets, operations, liabilities or condition (financial or otherwise) of the Obligors and their Subsidiaries (taken as a whole) (MAE).

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8	No Litigation

No litigation by any entity (private or governmental) shall be pending or threatened with respect to the Finance Documents, which the Agent or Majority Lenders determine has, or could reasonably be expected to have, a MAE.

Fees

All fees, costs, expenses then due from the Obligors under this Agreement and/or a Fee Letter have been paid.

10	Solvency Certificate

The Agent shall have received a solvency certificate from an authorised signatory of each Borrower setting forth the conclusion that, after giving effect to the Transaction Documents, (a) each of the Obligors on an individual basis, and (b) the Borrowers and their Subsidiaries taken as a whole, are not insolvent and will not be rendered insolvent by the borrowing under this Facility.

102

Part 2

Conditions Precedent to a Utilisation Date for a Ship

1	Mortgage

(a)

A certified copy of the transcript of register from the Ship’s flag state evidencing the registration of the Ship in the name of the relevant Borrower free from Security Interests other than those Security Interests securing the Existing Indebtedness which will, immediately upon the relevant Utilisation Date, be released in full.

(b)

Evidence that the Mortgage will be filed in the Ship’s Flag State upon the relevant Utilisation Date.

2	Insurances

Evidence that the insurances have been placed in accordance with clause 9 of the relevant Borrower Assignment and that the Loss Payable Clause has been (or will promptly following the relevant Utilisation Date) endorsed thereon and an opinion in satisfactory form and content from an insurance consultant as to the adequacy of the insurances.

3	Classification

Classification certificate for hull and machinery confirming that the Ship is classed with the highest class applicable to vessels of her type with a Classification Society.

4	Valuation

A Valuation evidencing that the Ship Commitment for that Ship is less than sixty per cent (60%) of the Ship’s Valuation.

Fees

Evidence that the fees, costs, expenses then due from the Obligors under this Agreement and/or a Fee Letter have been paid or will be paid by the Utilisation Date.

6	Repayment of Existing Indebtedness

Evidence satisfactory to the Agent (by way of confirmation in the Utilisation Request) that the proceeds from the relevant Utilisation will be immediately applied towards the repayment of the Existing Indebtedness (to the extent there are any loans outstanding) and that the relevant Borrower will, on the relevant Utilisation Date, be released and discharged from all obligations, liabilities and security (actual or contingent) granted in respect of the Existing Indebtedness.

7	Certificate of Ownership

(a)

A certificate from Teekay LNG that it owns directly or indirectly fifty per cent (50%) of each Borrower; and

(b)

A certificate from Exmar that, together with Exmar Energy, it owns directly or indirectly fifty per cent (50%) of each Borrower; and

(c)

A certificate of each Shareholder evidencing its shareholding or membership interests in each Borrower.

8	Legal Opinions

To the extent required for such Ship, in form and substance reasonably acceptable to the Agent and the Majority Lenders, legal opinions from:

(a)

Norton Rose Fulbright LLP, English counsel to the Lenders, in relation to the Finance Documents;

103

(b)

Fulbright & Jaworski LLP, Liberian counsel to the Lenders, in relation to a Borrower;

(c)

Elvinger, Hoss and Prussen, Luxembourg counsel to the Lenders, in relation to, inter alia, a Shareholder;

(d)

Stephenson Harwood, Hong Kong, Hong Kong counsel to the Lenders, in relation to, a Shareholder;

(e)

Fransen Luyten, Belgian counsel to the Lenders, in relation to, inter alia, a Borrower;

(f)

Watson, Farley & Williams LLP, Marshall Islands counsel to the Lenders, in relation to, inter alia, the Shareholder; and

(g)

Wikborg, Rein & Co., Advokatfirma DA Norwegian counsel to the Lenders, in relation to, inter alia, the Account Security.

9	Relevant Documents

(a)

An original counterparty of each Finance Document relating to that Ship and/or the Borrower of that Ship, duly executed and delivered by each party thereto as well as all notices, acknowledgements, authorisations, invoices and certificates required thereunder duly executed and delivered or evidence that each of them will have been duly executed and delivered by each party thereto.

(b)

Evidence satisfactory to the Agent that Exmar Energy Hong Kong Ltd. will have fully perfected and registered legal and beneficial title in respect of fifty per cent (50%) of the shares, units or membership interests in each of the Borrowers, as the case may be on the Utilisation Date.

10	Process agents

Due execution of a letter of appointment and acceptance by each process agent appointed or required to be appointed under each Finance Document referred to in paragraph 9 above.

11	External Charters

Evidence satisfactory to the Agent that (a) the relevant Ship is and remains employed pursuant to the External Charter relating to it, and (b) there is no default under such External Charter.

12	ISM and ISPS Code

Certified copies of:

(a)

the document of compliance issued in accordance with the ISM Code to the person who is the operator of the relevant Ship for the purposes of that code;

(b)

the international ship security certificate in respect of the relevant Ship issued under the ISPS Code; and

(c)

if so requested by the Agent, any other certificates issued under any applicable code required to be observed by the relevant Ship or in relation to its operation under any applicable laws; and

(d)

all technical and commercial management agreements relating to the Ship.

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Part 3

Conditions Precedent to a Guarantee Transfer Date

1	Exmar Energy

The conditions precedent set out in Schedule 3, Part 1, paragraphs 1, 4, 5 and 7 in respect of Exmar Energy have been satisfied.

2	Legal opinions

A legal opinion of the English and Marshall Islands counsel.

3	No Event of Default

No Event of Default has occurred or would occur as a result of the occurrence of the Guarantee Transfer Date.

4	Guarantee

(a)

A confirmation from Teekay LNG in form and substance satisfactory to the Lenders that its Guarantee remains in full force and effect.

(b)

A duly executed Exmar Energy Guarantee.

(c)

A Compliance Certificate from Exmar Energy.

5	Conditions

Evidence satisfactory to the Agent (acting on the instructions of all Lenders) that:

(a)

Exmar Energy is listed on the New York Stock Exchange;

(b)

Exmar Energy has received gross proceeds of at least $100,000,000 as a result of that listing;

(c)

Exmar Energy has book shareholders equity of at least $250,000,000;

(d)

Exmar Energy owns directly or indirectly fifty per cent (50%) of each Borrower.

105

Part 4

Conditions Precedent to the Share Transfer Date

1	Shareholder

A certificate signed by a duly authorised officer, authorised signatory (including an attorney-in-fact) or representative of each of the Shareholder(s) of Solaia Shipping L.L.C. and Teekay Luxembourg S.á.r.l. (the Transferee Shareholder) dated no later than five (5) Business Days before the Share Transfer Date confirming that none of the documents and evidence delivered to the Agent pursuant to clauses 4.1 and 4.2 has been amended, modified or revoked in any way since its delivery to the Facility Agent or, if so amended, new certified copies and, to the extent that the additional Share Security is not already included therein, the conditions precedent set out in Schedule 3, Part 1, paragraph 1 and Schedule 3, Part 2, paragraph 10 in respect of the Transferee Shareholder and Exmar Energy Hong Kong Ltd.

2	Shares Charge

Replacement Share Security to be given by the Transferee Shareholder and Exmar Energy Hong Kong Ltd. of Solaia Shipping L.L.C., in substantially identical form to the agreed form of the Share Security and all ancillary documents to be delivered pursuant thereto and pursuant to the Share Security already executed, together with a release of the existing Share Security in respect of Solaia Shipping L.L.C.

3	Evidence of Transfer

Evidence acceptable to the Agent that at least fifty per cent (50%) of the membership interests of Solaia Shipping L.L.C. will, on the Share Transfer Date, be held and retained directly or indirectly by the Transferee Shareholder and that the Transferee Shareholder is a member of the Teekay LNG Group.

4	Legal opinions

A legal opinion of the English, Luxembourg, and Hong Kong legal advisers to the Lenders, (and of legal advisers in any other relevant legal jurisdiction).

5	No Event of Default

No Event of Default has occurred or would occur as a result of the occurrence of the Share Transfer Date.

6	Structure Chart

A replacement Structure Chart, showing the Transferee Shareholder.

7	Financial Guarantee

A confirmation from Teekay LNG in form and substance satisfactory to the Lenders that the Teekay LNG Guarantee remains in full force and effect.

106

Schedule 4

Utilisation Request


From:		Solaia Shipping L.L.C. and Excelsior BVBA
To:		Nordea Bank Norge ASA
Dated:		[●]

Dear Sirs

$175,000,000

Facility Agreement dated [●] (the Agreement)

1	We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

2	We wish to borrow an Advance on the following terms:


Proposed Utilisation Date:		[●] (or, if that is not a Business Day, the next Business Day)

Amount:		$[●]

3	We confirm that each condition specified in clause 4.8 (Further conditions precedent) is satisfied on the date of this Utilisation Request.

4	The purpose of this Advance is [specify purpose complying with clause 3 of the Agreement] and its proceeds should be credited to [●] [specify account].

5	[first Utilisation only: We request that the first Interest Period for the Loan be [●] months.]

6	This Utilisation Request is irrevocable.

Yours faithfully

authorised signatory for

Solaia Shipping L.L.C.

authorised signatory for

Excelsior BVBA

107

Schedule 5

Selection Notice


From:		Solaia Shipping L.L.C. and Excelsior BVBA

To:		Nordea Bank Norge ASA

Dated:		[●]

Dear Sirs

$175,000,000

Facility Agreement dated [●] (the Agreement)

1	We refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.

2	We request that the next Interest Period for the Loan be [●] months.

3	This Selection Notice is irrevocable.

Yours faithfully

authorised signatory for

Solaia Shipping L.L.C.

authorised signatory for

Excelsior BVBA

108

Schedule 6

Form of Transfer Certificate


To:		[●] as Agent

From:		[The Existing Lender] (the Existing Lender) and [The New Lender] (the New Lender)

Dated:

$175,000,000

Facility Agreement dated [●] (the Agreement)

1	We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.

2	We refer to clauses 21.10 to 21.14 (Procedure for assignment):

(a)

The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender’s Commitment(s) and participations in the Loan under the Agreement as specified in the Schedule.

(b)

The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender’s Commitment(s) and participations in the Loan under the Agreement specified in the Schedule.

(c)

The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.

(d)

The proposed Transfer Date is [●].

(e)

The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 28.2 (Addresses) are set out in the Schedule.

3	The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in clauses 21.7 to 21.9 (Limitation of responsibility of Existing Lenders).

4	This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

5	The Security Holder’s rights under clause 2.14 of the Agreement (and any corresponding provisions in any other Finance Document) remain in full force and effect and are not affected by this transfer.

6	This Transfer Certificate and any non-contractual obligations connected with it are governed by English law.

7	This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.

[Note: The execution of this Transfer Certificate may not assign a proportionate share of the Existing Lender’s interest in the Security Documents in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect an assignment of such a share in the Security Documents in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.]

109

The Schedule

Rights to be assigned and obligations to be released and undertaken

[insert relevant details]

[Facility Office address, fax number and attention details for notices and account details for payments.]

[Existing Lender] [New Lender] [Affiliate if transferring hedge]


By:		By:

This is accepted by the Agent as a Transfer Certificate and the Transfer Date is confirmed as [ ].

Signature of this Transfer Certificate by the Agent constitutes confirmation by the Agent of receipt of notice of the assignment referred to herein, which notice the Agent receives on behalf of each Finance Party.


[Agent]

By:

110

Schedule 7

Form of Compliance Certificate


To:		[●] as Agent

From:		[●] as Parent

Dated:		[●]

Dear Sirs

$175,000,000

Facility Agreement dated [●] (the “Agreement”)

1	I/We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

2	I/We confirm that: [*Insert details of covenants to be certified including details of the Collateral Maintenance Test*]

3	[I/We confirm that no Default is continuing.] [If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.]

Signed by:

[Finance Director] [Chief Financial Officer]

111

Schedule 8

Form of Accession Agreement


To:		[●], as Agent

From:		[●] (the Acceding Hedging Provider)

Dated:		[●]

Facility Agreement dated [●] (the Agreement)

We refer to the Agreement. Terms defined in the Agreement have the same meaning in this Accession Agreement.

For the benefit of all of the other Parties, the Acceding Hedging Provider undertakes to perform all the obligations expressed in the Agreement to be assumed by a Hedging Provider and agrees that it shall be bound by all the provisions of the Agreement, as if it had been an original party to the Agreement.

For the purposes of clause 23 (Role of Agent, Security Agent, Bookrunner and Arrangers) of the Agreement, the Acceding Hedging Provider appoints the Agent to act as its agent and security trustee under and in connection with the Finance Documents in accordance with clause 23 (Role of Agent, Security Agent, Bookrunner and Arrangers) of the Agreement (and all other relevant provisions of the Finance Documents).

The address, telefax number, email address and attention details for notices to the Acceding Hedging Provider are [●].

This Accession Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Accession Agreement.

This Accession Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

This Accession Agreement has been entered into on the date stated above.


Acceding Hedging Provider

SIGNED by		)

		)

for and on behalf of		)

[		])

Agent

SIGNED by		)

		)

for and on behalf of		)

[●]		)

112


SIGNATURES

THE BORROWERS

SOLAIA SHIPPING L.L.C.

By:		/s/ Georgios Macheras, Attorney-in-fact

EXCELSIOR BVBA

By:		/s/ Georgios Macheras, Attorney-in-fact

THE ARRANGERS

NORDEA BANK NORGE ASA

By:		/s/ Harvard Tondel, Vice President; /s/ Erik Venold, First Vice President

BNP PARIBAS FORTIS SA/NV

By:		/s/ Pierre Demaerel, Head of Business Management Specialiesed Financing Europe; /s/ Helmut Van Ginderen, Deputy – Business Management Specialiesed Financing Europe

SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)

By:		/s/ Per Olav Bucher Johannessen; /s/ Erling Amundsen

KBC BANK NV

By:		/s/ Koen Struyf, Senior Banker; /s/ Erik Gillis, General Manager Corporate Banking Office North

THE AGENT

NORDEA BANK NORGE ASA

By:		/s/ Harvard Tondel, Vice President; /s/ Erik Venold, First Vice President

THE SECURITY AGENT

NORDEA BANK NORGE ASA

By:		/s/ Harvard Tondel, Vice President; /s/ Erik Venold, First Vice President

THE BOOKRUNNER

NORDEA BANK NORGE ASA

By:		/s/ Harvard Tondel, Vice President; /s/ Erik Venold, First Vice President

THE LENDERS

NORDEA BANK NORGE ASA

By:		/s/ Harvard Tondel, Vice President; /s/ Erik Venold, First Vice President

BNP PARIBAS FORTIS SA/NV

By:		/s/ Pierre Demaerel, Head of Business Management Specialiesed Financing Europe; /s/ Helmut Van Ginderen, Deputy – Business Management Specialiesed Financing Europe

113


SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)

By:		/s/ Per Olav Bucher Johannessen; /s/ Erling Amundsen

KBC BANK NV

By:		/s/ Koen Struyf, Senior Banker; /s/ Erik Gillis, General Manager Corporate Banking Office North

114

Exhibit 4.32

US$55,000,000 Secured Term Loan Facility Agreement

Dated 27 April 2015

(1)

African Spirit L.L.C.

European Spirit L.L.C.

and

Asian Spirit L.L.C.

(as Borrowers)

(2)

ING Bank N.V., London Branch

and others

(as Lenders)

(3)

ING Bank N.V., London Branch

(as Agent)

LOGO

Contents


Page

1	Definitions and Interpretation	1

2	The Loan and its Purposes	18

3	Conditions of Utilisation	19

4	Advance	20

5	Repayment	20

6	Prepayment	21

7	Interest	22

8	Indemnities	24

9	Fees	31

10	Security and Application of Moneys	31

11	Representations and Warranties	32

12	Undertakings and Covenants	37

13	Events of Default	42

14	Assignment and Sub-Participation	46

15	The Agent and the Lenders	49

16	Set-Off	61

17	Payments	61

18	Notices	63

19	Partial Invalidity	65

20	Remedies and Waivers	65

21	Miscellaneous	65

22	Confidentiality	66

23	Law and Jurisdiction	69

Schedule 1	The Lenders and the Commitments	70

Schedule 2	Conditions Precedent and Subsequent	71
	Part I: Conditions precedent to service of Drawdown Notice	71
	Part II: Conditions precedent to Drawdown Date	73
	Part III: Conditions subsequent to Drawdown Date	76


Schedule 3	Form of Drawdown Notice	77

Schedule 4	Form of Transfer Certificate	78

Loan Agreement

Dated 27 April 2015

Between:

(1)

African Spirit L.L.C., European Spirit L.L.C. and Asian Spirit L.L.C., each being a limited liability company formed and existing under the laws of the Republic of the Marshall Islands whose registered office is at The Trust Company Complex, Ajeltake Island, Majuro, The Marshall Islands, MH96960 (together the “Borrowers” and each a “Borrower”); and

(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”); and

(3)	ING Bank N.V., London Branch, acting as agent and security trustee through its office at 60 London Wall, London EC2M 5TQ, England (in that capacity the “Agent”).

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, an amount not exceeding the Maximum Amount) to assist the Borrowers to refinance the existing debt in respect of the Vessels and for working capital and the general corporate purposes of the Guarantor Group.

It is agreed as follows:

1	Definitions and Interpretation

1.1	In this Agreement:

“Acceptable Bank” means a bank or financial institution which has a rating for its long-term unsecured and non-credit-enhanced debt originations of A+ or higher by Standard & Poor’s Ranking Services or Fitch Ratings Ltd or A1 or higher by Moody’s Investors Services Limited or a comparable rating from an internationally recognised credit rating agency.

“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.

“Annex VI” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).

“Approved Broker” means Fearnleys, RS Platou, H. Clarkson & Co. Ltd, Simpson Spence & Young Shipbrokers Ltd. and P. F. Bassoe AS or such other reputable and independent consultancy or ship broker firm approved by the Agent.

“Approved Managers” means (i) the Commercial Manager and (ii) the Technical Manager.

“Assignments” means all the forms of assignment referred to in Clause 10.1.2 and “Assignment” means any one of them.

Page 1

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

“Balloon Amount” means the amount of fifty million four hundred and fifteen thousand Dollars (US$50,415,000) to be paid on the Maturity Date or on any other date when the Balloon Amount is payable pursuant to this Agreement.

“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.

“Change of Control” means if:

(a)

in relation to the Guarantor:

(i)

(where all management powers over the business and affairs of the Guarantor are vested exclusively in its general partner),

(A)

Teekay GP LLC ceases to be the general partner of the Guarantor; or

(B)

Teekay ceases to own, directly or indirectly, a minimum of fifty per cent (50%) of the voting rights in Teekay GP LLC; or

(ii)

(where all management powers over the business and affairs of the Guarantor become vested exclusively in the board of directors of the Guarantor), Teekay ceases to own, directly or indirectly, a minimum of fifty per cent (50%) of the voting rights to elect the members of that board of directors; and

(b)

in relation to any Borrower, there is a change in the ultimate legal or beneficial ownership of that Borrower from that advised to the Agent at the date of this Agreement;

in each case unless the Borrowers have requested the prior consent of the Majority Lenders to a change of control and the Majority Lenders have consented to such request within thirty (30) days of such request being made.

“Charged Property” means all of the assets of the Security Parties which from time to time are, or are expressed to be, the subject of the Security Documents.

“Code” means the US Internal Revenue Code of 1986.

“Commercial Manager” means (i) Teekay, (ii) the Guarantor, (iii) any other member of either the Teekay Group or the Guarantor Group or (iv) any other commercial manager approved by the Majority Lenders.

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

Page 2

“Confidential Information” means all information relating to any Security Party, any other member of the Guarantor Group, the Finance Documents or the Loan of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Loan from either:

(a)

any Security Party, any other member of the Guarantor Group or any of its advisers; or

(b)

another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Security Party, any other member of the Guarantor Group or any of its advisers,

(i)

is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 22; or

(ii)

is identified in writing at the time of delivery as non-confidential by any Security Party, any other member of the Guarantor Group or any of its advisers; or

(iii)

is known by that Finance Party before the date the information is disclosed to it in accordance with (a) or (b) or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with any Security Party or any other member of the Guarantor Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the Loan Market Association at the relevant time.

“CRD IV” means Directive 2013/36/EU of 26 June 2013 on access to the activity of credit instructions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directive 2006/48/EC and 2006/49/EC.

“CRR” means Regulation (EU) no. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012.

“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.

Page 3

“Deeds of Covenants” means the deeds of covenants referred to in Clause 10.1.1 and “Deed of Covenant” means any one of them.

“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.

“Defaulting Lender” means any Lender:

(a)

which has failed to make its participation in the Loan available (or has notified the Agent or the Borrowers (which have notified the Agent) that it will not make its participation in the Loan available) by the Drawdown Date in accordance with Clause 4.2; or

(b)

which has otherwise rescinded or repudiated a Finance Document; or

(c)

with respect to which an Insolvency Event has occurred and is continuing,

unless, in the case of (a):

(i)

its failure to pay is caused by:

(A)

administrative or technical error; or

(B)

a Disruption Event; and

payment is made within three Business Days of its due date; or

(ii)

the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.

“Disruption Event” means either or both of:

(a)

a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

(b)

the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

(i)

from performing its payment obligations under the Finance Documents; or

(ii)

from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

Page 4

“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 the Loan is advanced under Clause 4.1.

“Drawdown Notice” means a notice substantially in the form set out in Schedule 3.

“Earnings” means all hires, freights, pool income and other sums payable to or for the account of a Borrower in respect of a 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 a 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 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.

“Environmental Incident” means:

(a)

any release, emission, spill or discharge from a Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from a Vessel; or

(b)

any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water 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 a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Security Party and/or any operator or manager of a Vessel is 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, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Security Party and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.

Page 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 Office” means:

(a)

in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five (5) Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement; or

(b)

in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes.

“Facility Period” means the period beginning on the Execution Date and ending on the date when the whole of the Indebtedness has been repaid in full, all Commitments have been terminated 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.

“FATCA” means:

(a)

sections 1471 to 1474 of the Code or any associated regulations;

(b)

any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

(c)

any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

Page 6

“FATCA Application Date” means:

(a)

in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;

(b)

(c)

in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2017,

or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.

“FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA.

“FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction.

“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Finance Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction.

“Fee Letter” means any letter 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.

“Final Availability Date” means the date falling ten (10) days after the Execution Date or such later date as the Agent (acting on the instructions of the Lenders) may approve.

“Finance Documents” means this Agreement, the Security Documents, the Fee Letters 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 and the Lenders and “Finance Party” means any one of them.

“Financial Indebtedness” means any indebtedness for or in respect of:

(a)

moneys borrowed;

(b)

any acceptance credit;

(c)

any bond, note, debenture, loan stock or other similar instrument;

Page 7

(d)

any redeemable preference share to the extent such shares can be redeemed before the Maturity Date;

(e)

any finance or capital lease;

(f)

receivables sold or discounted (otherwise than on a non-recourse basis);

(g)

(h)

any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing;

(i)

any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or

(j)

any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (i) above.

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

“Guarantor” means Teekay LNG Partners L.P., a limited partnership formed according to the laws of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands, MH96960.

“Guarantor Group” means the Guarantor and each of its Subsidiaries from time to time.

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

“IAPPC” means a valid international air pollution prevention certificate for a Vessel issued under Annex VI.

“Impaired Agent” means the Agent at any time when:

(a)

it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;

(b)

the Agent otherwise rescinds or repudiates a Finance Document;

(c)

(if the Agent is also a Lender) it is a Defaulting Lender under (a) or (b) of the definition of “Defaulting Lender”; or

(d)

an Insolvency Event has occurred and is continuing with respect to the Agent;

Page 8

unless, in the case of (a):

(i)

its failure to pay is caused by:

(A)

administrative or technical error; or

(B)

a Disruption Event; and

payment is made within three (3) Business Days of its due date; or

(ii)

the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.

“Indebtedness” means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) which from time to time may be payable by the Borrowers to any of the Finance Parties under all or any of the Finance Documents.

“Insolvency Event” in relation to an entity means that the entity:

(a)

is dissolved (other than pursuant to a consolidation, amalgamation or merger);

(b)

becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

(c)

makes a general assignment, arrangement or composition with or for the benefit of its creditors;

(d)

(e)

(i)

results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or

(ii)

is not dismissed, discharged, stayed or restrained in each case within thirty (30) days of the institution or presentation thereof;

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(f)

has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;

(g)

has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

(h)

seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in (d));

(i)

has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

(j)

causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in (a) to (i); or

(k)

takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

“Insurances” 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 a Vessel or her increased value or her Earnings 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.

“Interpolated Screen Rate” means, in relation to LIBOR, the rate which results from interpolating on a linear basis between:

(a)

the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the relevant Interest Period; and

(b)

the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the relevant Interest Period,

each as of 11.00 a.m. London time on the Quotation Day.

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“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).

“LIBOR” means:

(a)

the applicable Screen Rate; or

(b)

if no Screen Rate is available for the relevant Interest Period) the Interpolated Screen Rate; or

(c)

if (i) no Screen Rate is available for the currency of the Loan or (ii) no Screen Rate is available for the relevant Interest Period and it is not possible to calculate an Interpolated Screen Rate, the Reference Bank Rate

as of, in case of paragraphs (a) and (b) above, 11.00 a.m. London time on the Quotation Day for the offering of deposits in Dollars and for a period equal in length to the relevant Interest Period, provided that if any such rate is below zero, LIBOR shall be deemed to be zero.

“Loan” means the aggregate amount advanced or to be advanced by the Lenders to the Borrowers under Clause 4 or, where the context permits, the amount advanced and for the time being outstanding.

“Majority Lenders” means a Lender or Lenders whose Commitments in aggregate are equal to or greater than sixty six and two thirds per cent (66 2/3%) of the Total Commitments (or, if the Total Commitments have been reduced to zero, in aggregate or equal to or greater than sixty six and two thirds per cent (66.2/3%) of the Total Commitments immediately prior to the reduction).

“Management Agreements” means the agreement(s) for the commercial and/or technical management of the Vessels entered into between (i) the Borrowers and (ii) the Approved Managers (which are not Teekay, the Guarantor or any other member of either the Teekay Group or the Guarantor Group).

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“Managers’ Confirmations” means the written confirmations of the Approved Managers (which are not Teekay the Guarantor or any other member of either the Teekay Group or the Guarantor Group) that throughout the Facility Period unless otherwise agreed by the Agent:

(a)

they will not, without the prior written consent of the Agent, subcontract or delegate the commercial or technical management of the Vessels (as the case may be) to any third party; and

(b)

following the occurrence of an Event of Default which is continuing unremedied and unwaived, all claims of the Approved Managers against the Borrowers (less any agreed reasonable deductible) shall be subordinated to the claims of the Finance Parties under the Finance Documents.

“Margin” means one per cent (1%) per annum.

“Market Value” means the value of a Vessel conclusively determined by an Approved Broker appointed by the Agent on the basis of a charter-free sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing seller and a willing buyer and evidenced by a valuation of that Vessel addressed to the Agent certifying a value for that Vessel and dated not more than thirty (30) days prior to the Drawdown Date.

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

(a)

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

(b)

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

(c)

the validity, legality or enforceability of any Finance Document; or

(d)

the validity, legality or enforceability of any security expressed to be created pursuant to any Finance 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 Security Parties to perform each of their obligations under the Finance Documents.

“Maturity Date” means the date falling three hundred and sixty four (364) days after the Execution Date.

“Maximum Amount” means the lesser of (i) fifty five million Dollars ($55,000,000) and (ii) sixty percent (60%) of the aggregate Market Value of the Vessels, as reduced from time to time in accordance with the provisions of this Agreement.

“Mortgages” means the first priority statutory or first preferred mortgages (as the case may be) referred to in Clause 10.1.1 together with the Deeds of Covenants (if applicable) and “Mortgage” means any one of them.

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“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 Finance 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 or formation, of such Finance Documents to which it is party; and

(c)

carry on its business from time to time.

“Original Financial Statements” means the audited consolidated financial statements of the Guarantor for the financial year ended 31 December 2014.

“Party” means a party to this Agreement.

“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 securing obligations incurred in the ordinary course of trading and/or operating a Vessel up to an aggregate amount at any time not exceeding seven million five hundred thousand Dollars (US$7,500,000) and not more than thirty (30) days overdue.

“Pledgor” means Teekay LNG Operating L.L.C., a limited liability company formed and existing under the laws of the Marshall Islands and whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, The Marshall Islands MH96960.

“Pre-Approved Classification Society” means any of DNV GL, Lloyds Register, America Bureau of Shipping (ABS) or Bureau Veritas or such other classification society approved by the Majority Lenders, acting reasonably.

“Pre-Approved Flag” means Marshall Islands, Norwegian International Ship Registry, Liberia, Panama, Isle of Man, 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) being on the Execution Date the percentage indicated against the name of that Lender in Schedule 1.

“Protected Party” means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum required or receivable (or any sum deemed for the purpose of Tax to be received or receivable) under a Finance Document.

“Quotation Day” means, in relation to any period for which an interest rate is to be determined two (2) Business Days (in New York) before the first day of that period, unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

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“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks as the rate at which each of the relevant Reference Banks would borrow funds in the London interbank market in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.

“Reference Banks” means, in relation to LIBOR, ING Bank N.V., London Branch or such other banks as may be appointed by the Agent in consultation with the Borrowers.

“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

“Relevant Documents” means the Finance Documents, the Management Agreements (if any), the Managers’ Confirmations (if any) specified in Part I of Schedule 2 and any time charterparty or other contract of employment in relation to the Vessels which will be in force on the Drawdown Date and which (inclusive of any extension options) is capable of exceeding twelve (12) months.

“Relevant Interbank Market” means the London interbank market.

“Relevant Loan Amount” in relation to each Vessel, means the amount which is obtained by multiplying the Maximum Amount at the time of making the calculation by the Relevant Percentage for such Vessel.

“Relevant Percentage” in relation to each Vessel, means the percentage indicated against the name of that Vessel in the table contained in the definition of “Vessels” divided by the aggregate percentage shown against all Vessels subject to a Mortgage at the relevant date.

“Repayment Date” means the date for payment of any Repayment Instalment and the Balloon Amount in accordance with Clause 5.1

“Repayment Instalment” means any instalment of the Loan to be repaid by the Borrowers under Clause 5.1 including, for the avoidance of doubt, the Balloon Amount.

“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

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

“Restricted Party” means a person that (i) is listed on any Sanctions List, (ii) is located in or incorporated under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions, (iii) is directly or indirectly owned or controlled by, or acting on behalf of, a person referred to in (i) and/or (ii) above or (iv) with whom a subject of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities.

Page 14

“Sanctioned Country” means a country or territory that is, or whose government is, the subject of Sanctions including, without limitation, Cuba, Iran, Myanmar, North Korea, Sudan or Syria.

“Sanctions” means the economic sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by (i) the Norwegian Government, (ii) the United States Government, (iii) the United Nations, (iv) the European Union and the (v) the United Kingdom, and with regard to (i) - (v) above, the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the Office of Foreign Assets Control of the US Department of Treasury (“OFAC”), the United States Department of State and Her Majesty’s Treasury (“HMT”); (together the “Sanctions Authorities”).

“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list maintained by OFAC, the “Consolidated List of Financial Sanctions Targets” maintained by HMT or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities, including, but not limited to, the Norwegian Government, the European Union or the United Nations.

“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or the service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.

“Security Documents” means the Guarantee, the Mortgages, the Deeds of Covenants, the Assignments, the Share Pledges, the Managers’ Confirmations 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 person who 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 any Approved Manager), and “Security Party” means any one of them.

“Share Pledges” means the pledge or pledges of the issued share capital or membership interests (as the case may be) of the Borrowers referred to in Clause 10.1.4 and “Share Pledge” means any one of them.

“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.

“Subsidiary” means a subsidiary undertaking, as defined in section 1159 Companies Act 2006 or any analogous definition under any other relevant system of law.

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“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.

“Technical Manager” means (i) Teekay, (ii) the Guarantor, (iii) any other member of either the Teekay Group or the Guarantor Group or (iii) any other technical manager approved by the Majority Lenders.

“Teekay” means Teekay Corporation, a corporation incorporated under the laws of the Republic of the Marshall Islands whose registered office is at The Trust Company Complex, Ajeltake Road, Ajeltake Island, P.O. Box 1405, Majuro, The Marshall Islands MH96960.

“Teekay Group” means Teekay and each of its Subsidiaries from time to time.

“Total Commitments” means the aggregate of the Commitments.

“Total Loss” means:

(a)

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

(b)

the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire); or

(c)

the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture of a Vessel (not falling within (b)), unless that Vessel is released and returned to the possession of the relevant Borrower within 90 days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question.

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 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 Agent 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 Agent.

“VAT” means:

(a)

any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

(b)

any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (a), or imposed elsewhere.

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“Vessels” means the following vessels, and everything now or in the future belonging to them on board and ashore, registered under the respective flags set out below in the ownership of the relevant Borrower and “Vessel” means any one of them:

Vessel

Borrower

Vessel

Name

Vessel

Type

Flag

Relevant
Percentage

Vessel 1

African Spirit L.L.C.

“AFRICAN SPIRIT”

Suezmax

Bahamas

Vessel 2

European Spirit L.L.C.

“EUROPEAN SPIRIT”

Suezmax

Bahamas

Vessel 3

Asian Spirit L.L.C.

“ASIAN SPIRIT”

Suezmax

Bahamas

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;

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;

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1.2.9

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

1.2.10

a “person” includes any individual firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality); and

1.2.11

a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation.

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 respective representatives prior to the date of this Agreement.

1.4	Joint and several liability

1.4.1

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

1.4.2

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

1.4.3

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

2	The Loan and its Purposes

2.1	Amount Subject to the terms of this Agreement, each of the Lenders agrees to make available to the Borrowers its Commitment in the Loan in an aggregate amount not exceeding the Maximum Amount.

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2.2	Finance Parties’ rights and obligations

2.2.1

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.

2.2.2

The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from a Security Party shall be a separate and independent debt.

2.2.3

A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

2.3	Purposes The Borrowers shall apply the Loan for the purposes referred to in the Recital.

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 to service of Drawdown Notice Before any Lender shall have any obligation to accept any Drawdown Notice under the Loan Agreement 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 2.

3.2	Further conditions precedent to service of Drawdown Notice The Lenders will only be obliged to accept any Drawdown Notice if on the date of the Drawdown Notice:

3.2.1

no Default is continuing or would result from the advance of the Loan; and

3.2.2

the representations made by the Borrowers under Clause 11 (other than those at Clauses 11.2, 11.6 and 11.19) are true in all material respects.

3.3	Conditions precedent to Drawdown Date The Borrowers are not entitled to have the Loan advanced unless the Agent has received all of the documents and other evidence listed in Part II of Schedule 2.

3.4	Further conditions precedent to Drawdown Date The Lenders will only be obliged to advance the Loan if on the proposed Drawdown Date:

3.4.1

no Default is continuing or would result from the advance of the Loan; and

3.4.2

the representations made by the Borrowers under Clause 11 (other than those at Clauses 11.2 11.6 and 11.19) are true in all material respects.

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

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3.6

Conditions subsequent to Drawdown Date The Borrowers undertake to deliver or to cause to be delivered to the Agent on, or as soon as practicable after, (or within any time period specified in Part III of Schedule 2) the Drawdown Date the additional documents and other evidence listed in Part III of Schedule 2.

3.7

No Waiver If the Lenders in their sole discretion agree to advance the Loan to the Borrowers before all of the documents and evidence required by Clause 3.3 have been delivered to or to the order of the Agent, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Agent no later than thirty (30) days after the Drawdown Date or such other date specified by the Agent (acting on the instructions of the Lenders).

The advance of all or any part of the Loan 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 3.3.

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 the Loan to be advanced in one amount on any Business Day prior to the Final Availability Date, by delivering to the Agent a duly completed Drawdown Notice not more than ten (10) Business Days and not later than 12:00 noon (London time) three (3) Business Days before the proposed Drawdown Date.

4.2

Lenders’ participation Subject to Clause 2 and Clause 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 Loan to the Borrowers through the Agent not later than 11:00am (New York time) on the Drawdown Date.

5	Repayment

5.1

Repayment of Loan The Borrowers agree to repay the Loan to the Agent for the account of the Lenders by (i) an instalment in the sum of four million five hundred and eighty five thousand Dollars ($4,585,000), such instalment falling due on the date which is six calendar months after the Drawdown Date and (ii) the Balloon Amount, together with any other amounts then outstanding, payable on the Maturity Date.

5.2	Reduction of Repayment Instalments If the aggregate amount advanced to the Borrowers is less than the Maximum Amount, the amount of each Repayment Instalment, including the Balloon Amount, shall be reduced pro rata to the amount actually advanced.

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

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6	Prepayment

6.1	Illegality If it becomes unlawful for a Lender to perform its obligations as contemplated by this Agreement or fund or maintain its Commitment or fund or maintain its participation in the Loan:

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 the Loan 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. 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 maintain the Loan.

6.2	Voluntary Cancellation

6.2.1

The Borrowers may voluntarily cancel (i) the whole or any part of the Loan in an amount of not less than one million Dollars ($1,000,000) (or as otherwise may be agreed by the Agent), provided that it has first given to the Agent not fewer than three (3) Business Days’ prior written notice expiring on a Business Day (the “Cancellation Date”) of its desire to cancel the whole or any part of the Loan; such notice once received by the Agent shall be irrevocable and shall oblige the Borrowers to make payment of all interest 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, without premium or penalty. Any such cancellation in the Loan shall not be reversed. If, as a result of any such cancellation, the Loan outstanding would exceed the Maximum Amount, the Borrowers shall, on the Cancellation Date, prepay such amount of the Loan as will ensure that the Loan outstanding is not greater than the Maximum Amount.

6.2.2

Simultaneously with each reduction of the Loan in accordance with Clause 6.2.1, the Commitment of each Lender will reduce so that the Commitments of the Lenders in respect of the reduced Loan remain in accordance with their respective Proportionate Shares.

6.3

Voluntary Prepayment of Loan The Borrowers may prepay the whole or any part of the Loan (but, if in part, such prepayment shall be in an amount that reduces the Loan by a minimum amount of one million Dollars ($1,000,000) provided that it gives the Agent not less than three (3) Business Days’ prior notice.

6.4

Sale of Vessel In the event of a sale or disposal of a Vessel, the Borrowers shall, on the date of the sale or disposal, make a prepayment of the Loan in an amount equivalent to the Relevant Loan Amount applicable to that Vessel. Any such prepayment shall be applied in prepayment of, first, the Balloon Amount and, second, the earlier Repayment Instalment (if relevant) in inverse order of maturity.

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6.5

Total Loss In the event that a Vessel becomes a Total Loss, the Borrowers shall, on the earlier to occur of (x) the date on which the proceeds of such Total Loss are realised and (y) the one hundred and eightieth day after the date of such Total Loss occurring, make a prepayment of the Loan in an amount equivalent to the Relevant Loan Amount applicable to that Vessel provided always that if such date is not the final day of an Interest Period, the Borrowers may instead place the relevant sum in an account with the Agent, charged to the Agent in a manner reasonably acceptable to the Lenders, with an irrevocable instruction to the Agent to apply such sum in prepayment of the Loan on the final day of such Interest Period. Any such prepayment shall be applied in prepayment of, first, the Balloon Amount and, second, the earlier Repayment Instalment (if relevant) in inverse order of maturity.

6.6

Change of Control In the event that a Change of Control occurs with respect to any Security Party, the Borrowers shall within thirty (30) days of such Change of Control (i) in the case of a Change of Control with respect to the Guarantor prepay the Loan in full or (ii) in the case of a Change of Control with respect to a Borrower, make a prepayment of the Loan in an amount equivalent to the Relevant Loan Amount applicable to the Vessel owned by that Borrower with any such prepayment to be applied in prepayment of, first, the Balloon Amount and, second, the earlier Repayment Instalment (if relevant) in inverse order of maturity.

6.7

Restrictions Any notice of prepayment or cancellation 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 or cancellation is to be made and the amount of that prepayment or cancellation.

Any prepayment under this Agreement shall be made together with all interest accrued on the amount so prepaid up to and including the date of prepayment together with any Break Costs in respect of such prepaid amount if the date of such prepayment is not the final day of an Interest Period.

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.

7	Interest

7.1

Interest Periods The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of one, three or six months’ duration, as selected by the Borrowers by written notice to the Agent not later than 11:00 am on the third Business Day before the beginning of the Interest Period in question, or any other period which will coincide with the end of any other Interest Period then current, or such other duration as may be agreed by the Agent (acting on the instructions of all the Lenders).

7.2

Beginning and end of Interest Periods The first Interest Period in respect of the Loan shall begin on the Drawdown Date 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 the Loan 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.

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7.3

Interest Periods to meet Repayment Dates If an Interest Period would otherwise expire after the next Repayment Date, there shall be a separate Interest Period for a part of the Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on the next Repayment 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 Loan at the rate determined by the Agent to be the aggregate of (a) the Margin and (b) LIBOR.

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 rate applicable shall be based on an Interest Period of three (3) months.

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 (3) months, on the dates falling at three monthly intervals after the first day of that Interest Period.

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 (1.5) percentage points higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan 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

Absence of quotations Subject to Clause 7.10, if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11.00 am on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

7.10	Market disruption If a Market Disruption Event occurs for any Interest Period, then the rate of interest on each Lender’s share of the Loan for that Interest Period shall be the percentage rate per annum which is the sum of:

7.10.1

the Margin; and

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7.10.2

the rate notified to the Agent by that Lender as soon as practicable, and in any event by close of business on the date falling ten (10) Business Days after the Quotation Day (or, if earlier, on the date falling ten (10) Business Days prior to the date on which 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 participation in the Loan from whatever source it may reasonably select.

In this Agreement “Market Disruption Event” means:

(a)

at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for dollars and the relevant Interest Period; or

(b)

before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan are equal to or greater than 50 per cent of the Loan) that the cost to it of funding its participation in the Loan from the London Interbank Market or, if cheaper, from whatever other source it may reasonably select, would be in excess of LIBOR.

7.11	Alternative basis of interest or funding

7.11.1

If a Market Disruption Event occurs and the Agent or the Borrowers so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest.

7.11.2

Any alternative basis agreed pursuant to Clause 7.11.1 shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties.

7.11.3

If an alternative basis is not agreed pursuant to Clause 7.11.1, the relevant Lender shall cease to be obliged to advance its Proportionate Share of the Loan, but, if it has already been advanced, the Borrowers will immediately prepay that Proportionate Share of the Loan, together with Break Costs, and the Maximum Amount of the Loan shall be reduced by the amount of that Lender’s Proportionate Share of the Loan.

7.12	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 VAT 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 the Loan is advanced);

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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 (including, for the avoidance of doubt, a report on the Insurances by an insurance advisor appointed by the Agent).

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, the Loan 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 the Loan (whether pursuant to Clause 6 or otherwise) on a day other than the last day of an Interest Period for the Loan, 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 the Loan, and any liabilities, expenses or losses incurred by that Finance Party in terminating or reversing, or otherwise in connection with, any interest rate and/or currency swap, transaction or arrangement entered into by that Finance Party with any member of the Guarantor Group to hedge any exposure arising under this Agreement, or in terminating or reversing, or otherwise in connection with, any open position arising under this Agreement.

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	Other Indemnities

8.5.1

The Borrowers shall (or shall procure that a Security Party will), within three (3) Business Days of demand, indemnify each Finance Party against any cost, loss or liability reasonably incurred by it as a result of:

(a)

a failure by a Security Party to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 15.22;

(b)

the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.

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8.6	General indemnity

8.6.1

The Borrowers hereby agree at all times to pay promptly or, as the case may be, indemnify and hold the Finance Parties and their respective officers, directors, representatives, agents and employees (together the “Indemnified Parties”) harmless on a full indemnity basis from and against each and every loss suffered or incurred by or imposed on any Indemnified Party related to or arising out of:

(a)

the use of proceeds of the Loan;

(b)

the execution and delivery of any commitment letter, engagement letter, fee letter, the Finance Documents or any other document connected therewith or the performance of the respective obligations thereunder, including without limitation environmental liabilities; or

(c)

any claim, action, suit, investigation or proceeding relating to the foregoing or the Security Parties, whether or not any Indemnified Party is a party thereto or target thereof, or the Indemnified Parties’ roles in connection therewith, and will reimburse the Indemnified Parties, on demand, for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred by the Indemnified Parties in connection with investigating, preparing for or defending any such claim, action, suit or proceeding (including any security holder actions or proceeding, inquiry or investigation), whether or not in connection with pending or threatened litigation in which the Security Parties are a party.

8.6.2

The Borrowers will not, however, be responsible for any claims, liabilities, losses, damages or expenses of an Indemnified Party that are finally judicially determined by a court of competent jurisdiction to have resulted principally from the wilful misconduct or gross negligence of such Indemnified Party.

8.6.3

The foregoing shall be in addition to any rights that the Indemnified Parties may have at common law or otherwise and shall extend upon the same terms to and inure to the benefit of any affiliate, director, officer, employee, agent or controlling person of an Indemnified Party.

8.7	Increased costs

8.7.1

Subject to Clause 8.9, the Borrowers shall, within three (3) Business Days of a demand by the Agent, pay to the Agent for the account of a Finance Party

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the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement or (iii) the implementation or application of or compliance with Basel III (as defined in Clause 8.9), CRD IV or CRR or any law or regulation that implements or applies Basel III, CRD IV or CRR or (iv) any change in the risk weight allocation by that Finance Party to the Borrowers after the date of this Agreement.

8.7.2

In this Agreement “Increased Costs” means:

(i)

a reduction in the rate of return from the Loan or on a Finance Party’s (or its Affiliate’s) overall capital;

(ii)

an additional or increased cost; or

(iii)

a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document.

8.8	Increased cost claims

8.8.1

A Finance Party intending to make a claim pursuant to Clause 8.7 shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrowers.

8.8.2

Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

8.9	Exceptions to increased costs Clause 8.7 does not apply to the extent any Increased Costs is:

8.9.1

compensated for by a payment made under Clause 8.12; or

8.9.2

compensated for by a payment made under Clause 17.3; or

8.9.3

attributable to a FATCA Deduction required to be made by a Party; or

8.9.4

attributable to the wilful breach by the relevant Finance Party (or an Affiliate of that Finance Party) of any law or regulation; or

8.9.5

attributable to the implementation or application of, or compliance with, the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (but excluding any amendment arising out of Basel III) (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or of its Affiliates).

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In this Clause 8.9,

“Basel III” means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated, (b) the rules for global systemically important banks contained in “Global systemically important banks : assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Suspension in November 2011 and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”; and

8.10	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.

8.11

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 a lender to the Borrowers. 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.

8.12

Taxes

8.12.1

The Borrowers shall (within three (3) Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

8.12.2

Clause 8.12.1 above shall not apply:

(a)

with respect to any Tax assessed on a Finance Party:

(i)

(ii)

under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

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if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party;

(b)

to the extent a loss, liability or cost is compensated for by an increased payment under Clause 17.3; or

(c)

to the extent a loss, liability or cost relates to a FATCA Deduction required to be made by a Party.

8.12.3

A Protected Party making, or intending to make a claim under paragraph 8.12.1 above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrowers.

8.12.4

A Protected Party shall, on receiving a payment from a Security Party under this Clause 8.12, notify the Agent.

8.13

VAT

8.13.1

All amounts expressed to be payable under a Finance Document by any Party or any Security Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 8.13.2, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party or any Security Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party or Security Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to the Borrowers).

8.13.2

If VAT is or becomes chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party other than the Recipient (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):

(a)

(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this Clause 8.13.2(a) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and

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(b)

(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.

8.13.3

Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

8.13.4

Any reference in this Clause 8.13 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994).

8.13.5

In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party’s VAT registration and such other information as is reasonably requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply.

8.14	FATCA Information

8.14.1

Subject to clause 8.14.3 below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:

(a)

confirm to that other Party whether it is:

(i)

a FATCA Exempt Party; or

(ii)

not a FATCA Exempt Party; and

(b)

supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable “passthru payment percentage” or other information required under the US Treasury Regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA.

8.14.2

If a Party confirms to another Party pursuant to clause 8.14.1(a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

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8.14.3

Clause 8.14.1 above shall not oblige any Party to do anything which would or might in its reasonable opinion constitute a breach of:

(a)

any law or regulation;

(b)

any fiduciary duty; or

(c)

any duty of confidentiality.

8.14.4

If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with clause 8.14.1 above (including, for the avoidance of doubt, where clause 8.14.3 above applies), then:

(a)

if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and

(b)

if that Party failed to confirm its applicable “passthru payment percentage” then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable “passthru payment percentage” is 100%,

until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.

8.15	FATCA Deduction

8.15.1

Each Party may make any FATCA Deduction it is required by FATCA to make, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

8.15.2

Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrowers, the Agent and the other Finance Parties.

Fees

The Borrowers shall pay to the Agent and the Lenders the fees in the amounts and at the times agreed in any 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 Agent or cause to be executed and delivered to the Agent at the relevant time, the following documents in such forms and containing such terms and conditions as the Agent shall require:

10.1.1

a first priority statutory or preferred mortgage (as the case may be) over each Vessel together with a collateral deed of covenants (if applicable), and if such mortgage shows the amount secured, such amount shall be no less than 110% of the Indebtedness (if allowed by applicable law);

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10.1.2

a first priority deed of assignment of the Insurances, Earnings and Requisition Compensation of each Vessel;

10.1.3

a guarantee and indemnity from the Guarantor;

10.1.4

a first priority pledge of all the membership interests or shares (as the case may be) in each Borrower granted by the Pledgor; and

10.1.5

at any time when the Approved Managers are not Teekay, the Guarantor or any other member of either the Teekay Group or the Guarantor Group, a Managers’ Confirmation.

10.2

General application of moneys Whilst an Event of Default is continuing unremedied or unwaived the Borrowers irrevocably authorise the Agent to apply (and the Agent agrees to apply) all sums which it may receive under or in connection with any Security Document, in or towards satisfaction, or by way of retention on account, of the Indebtedness, as follows:

10.2.1

first in payment of all outstanding amounts payable to the Agent;

10.2.2

secondly in or towards payment of all outstanding interest hereunder;

10.2.3

thirdly in or towards payment of all outstanding principal hereunder;

10.2.4

fourthly in or towards payment of all other Indebtedness hereunder;

10.2.5

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

11	Representations and Warranties

The Borrowers represent and warrant to each of the Finance Parties at the Execution Date and (by reference to the facts and circumstances then pertaining) at the date of the Drawdown Notice, at the Drawdown Date and at each Interest Payment Date as follows (except that the representation and warranty contained at Clause 11.7 shall only be made on the Execution Date and the Drawdown Date and the representations and warranties at Clause 11.2, Clause 11.6 and Clause 11.19 shall only be made on the Execution Date):

11.1

Status and Due Authorisation Each of the Security Parties is a limited liability company or limited partnership duly incorporated or formed under the laws of its jurisdiction of incorporation or formation (as the case may be) 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.

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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.

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 misleading information To the best of its knowledge, any factual information provided by any Security Party to any Finance Party in connection with the Loan was true and accurate in all material respects as at the date it was provided and is not misleading in any respect.

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11.10

No Winding-up None of the Security Parties has taken any corporate or limited liability company 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 any Security Party for its winding-up, dissolution, administration or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of it or of any or all of its assets or revenues which might have a Material Adverse Effect.

11.11

Solvency

11.11.1

None of the Security Parties 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.

11.11.2

None of the Security Parties 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.

11.11.3

The value of the assets of each Security Party 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).

11.11.4

No moratorium has been, or may, in the reasonably foreseeable future be, declared in respect of any indebtedness of any Security Party or of the Guarantor Group taken as a whole.

11.12

No Material Defaults

11.12.1

Without prejudice to Clause 11.12.2, none of the Security Parties are 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.

11.12.2

No Event of Default is continuing or might reasonably be expected to result from the advance of the Loan or any part thereof.

11.13

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 has been started or is reasonably likely to be started.

11.14

No Obligation to Create Security The execution of the Finance 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 any Security Party to create any Encumbrance over all or any of their present or future revenues or assets, other than pursuant to the Security Documents.

11.15

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.

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11.16

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 Security Document and those Security Documents to which it is a party create and give rise to valid and effective security having the ranking expressed in those Security Documents.

11.17

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.

11.18

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 (2005/60/EEC) of the Council of the European Communities.

11.19

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.

11.20

No breach of laws

11.20.1

None of the Security Parties has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

11.20.2

No labour disputes are current or (to the best of the Borrowers’ knowledge and belief) threatened against any member of the Guarantor Group which have or are reasonably likely to have a Material Adverse Effect.

11.21

Environmental laws

11.21.1

Each member of the Guarantor Group is in compliance with Clause 12.1.6 and (to the best of its knowledge and belief) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

11.21.2

No Environmental Claim has been commenced or (to the best of the Borrowers’ knowledge and belief) is threatened against any member of the Guarantor Group where that claim has or is reasonably likely, if determined against that member of the Guarantor Group, to have a Material Adverse Effect.

11.22

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

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11.23

Taxation

11.23.1

No Borrower is materially overdue in the filing of any Tax returns nor is it overdue in the payment of any amount in respect of Tax of $5,000,000 (or its equivalent in any other currency) or more, save in the case of Taxes which are being contested on bona fide grounds.

11.23.2

No claims or investigations are being made or conducted against any Borrower with respect to Taxes such that a liability of, or claim against, any such Borrower of $5,000,000 (or its equivalent in any other currency) or more is reasonably likely to arise.

11.24

Shares

The shares (or membership interests, as the case may be) of the Borrowers are fully paid and not subject to any option to purchase or similar rights. The constitutional documents of companies whose shares or membership interests (as the case may be) are subject to the Security Documents do not and could not restrict or inhibit any transfer of those shares on creation or enforcement of the Security Documents. There are no agreements in force which provide for the issue or allotment of, or grant any person the right to call for the issue or allotment of, any share or loan capital of any member of the Guarantor Group and the Borrowers (including any option or right of pre-emption or conversion).

11.25

Sanctions

No Security Party, nor any Affiliate of any Security Party, nor any of their respective directors, officers or employees:

11.25.1

is a Restricted Party; or

11.25.2

has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority; or

11.25.3

is located, organised or resident in a country or territory that is, or whose government is, the subject of Sanctions and/or a Sanctioned Country.

11.26

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

11.26.1

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

11.26.2

11.26.3

the time barring of claims under any applicable limitation acts;

11.26.4

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

11.26.5

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

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12	Undertakings and Covenants

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

12.1.1

Information: miscellaneous The Borrowers shall supply to the Agent:

(a)

promptly upon becoming aware of them, details of any material litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which, if adversely determined, are reasonably likely to have a Material Adverse Effect;

(b)

promptly, details of any capture, seizure, arrest, confiscation or detention of any Vessel which remains in existence ten (10) Business Days after the initial capture, seizure, arrest, confiscation or detention (as the case may be); and

(c)

promptly, such further information regarding the financial condition, business and operations of any Security Party as the Agent may reasonably request.

12.1.2

Maintenance of Legal Validity Each Borrower shall comply with the terms of and do all that is necessary to maintain in full force and effect all Authorisations required in or by the laws and regulations of its jurisdiction of formation and all other applicable jurisdictions, to enable it lawfully to enter into and perform its obligations under the Finance Documents and to ensure the legality, validity, enforceability or admissibility in evidence of the Finance Documents in its jurisdiction of formation and all other applicable jurisdictions.

12.1.3

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.

12.1.4

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.

12.1.5

Necessary Authorisations Without prejudice to any specific provision of the Finance 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.

12.1.6

Compliance with Applicable Laws The Borrowers shall comply with all applicable laws, including Environmental Laws, to which they may be

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subject (except as regards Sanctions to which Clause 12.1.7 applies and anti-corruption laws to which Clause 12.1.8 applies) if a failure to do the same may have a Material Adverse Effect.

12.1.7

Sanctions

(a)

The Borrowers shall ensure that no part of the proceeds of the Loan or other transaction(s) contemplated by any Finance Document shall, directly or indirectly, be used or otherwise made available:

(i)

to fund any trade, business or other activity involving any Restricted Party or any country or territory that at the time of such funding, is a Sanctioned Country;

(ii)

for the direct or indirect benefit of any Restricted Party; or

(iii)

in any other manner that would reasonably be expected to result in (i) the occurrence of an Event of Default under Clause 13.1.23 or (ii) any Party (other than the Security Parties) or any Affiliate of such party or any other person being party to or which benefits from any Finance Document being in breach of any Sanction (if and to the extent applicable to any of them) or becoming a Restricted Party.

(b)

Each Security Party shall ensure that its assets, the assets subject to Security Documents or the Vessels shall not be used directly or indirectly:

(i)

by or for the direct or indirect benefit of any Restricted Party; or

(ii)

in any trade which is prohibited under applicable Sanctions or which could expose any Security Party, its assets, any asset subject to the Security Documents, the Vessels, any Finance Party or any other person being party to or which benefits from any Finance Document, any Approved Managers (except from any Approved Managers that are not Teekay, the Guarantor or another member of either the Teekay Group or the Guarantor Group) to enforcement proceedings or any other consequences whatsoever arising from Sanctions.

(c)

Each Security Party shall ensure that the Vessels shall not be trading to Iranian ports or carrying or storing/warehousing crude oil, petroleum products or petrochemical products or other products subject to Sanctions if they originate in Iran, or are being exported from Iran to any other country.

12.1.8

Anti-corruption laws The Borrowers shall conduct their business in compliance with applicable anti-corruption laws and maintain policies and procedures designed to prove and achieve compliance with such laws.

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12.1.9

Environmental compliance

The Borrowers shall:

(a)

comply with all Environmental Laws;

(b)

obtain, maintain and ensure compliance with all requisite Environmental Approvals;

(c)

implement procedures to monitor compliance with and to prevent liability under any Environmental Law;

(d)

ensure that any Vessel controlled by any of them with the intention of being scrapped is recycled at a recycling yard which conducts its recycling business in a socially and environmentally responsible manner,

where failure to do so has or is reasonably likely to have a Material Adverse Effect.

12.1.10

Environmental claims

The Borrowers shall promptly upon becoming aware of the same, inform the Agent in writing of:

(a)

any Environmental Claim against any member of the Guarantor Group which is current, pending or threatened; and

(b)

any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Guarantor Group,

where the claim, if determined against that member of the Guarantor Group, has or is reasonably likely to have a Material Adverse Effect.

12.1.11

Taxation

Each Borrower shall pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

(a)

such payment is being contested in good faith;

(b)

adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements; and

(c)

such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

12.1.12

Loans or other financial commitments No Borrower shall without the prior written consent of the Agent make any loan or enter into any guarantee and indemnity or otherwise voluntarily assume any actual or

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contingent liability in respect of any obligation of any other person except for the Loan and loans made in the ordinary course of business in connection with the chartering, operation or repair of its Vessel.

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 financial information and explanations as the Majority Lenders may from time to time reasonably require in connection with the Security Parties, including the unaudited consolidated annual financial statements of such Security Parties as soon as such financial statements have been drawn up.

12.1.15

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

12.1.16

Insurance The Borrowers shall procure that all of the assets, operation and liability of the members of the Guarantor Group are insured against such risks, liabilities and for amounts as normally adopted by the industry for similar assets and liabilities and, in the case of the Vessels, in accordance with the terms of the Security Documents.

12.1.17

Merger and Demerger No Borrower shall enter into any amalgamation, merger, demerger or corporate restructuring without the prior written consent of all Lenders (such consent not to be unreasonably withheld or delayed).

12.1.18

Transfer of Assets No Borrower shall sell or transfer any of its material assets other than:

(a)

on arm’s length terms to third parties where the net proceeds of sale are used as a prepayment hereunder; or

(b)

on arm’s length terms to its Affiliates, which are and remain members of the Guarantor Group.

12.1.19

Change of Business No Borrower shall, without the prior written consent of all Lenders, make any substantial change to the general nature of its shipping business from that carried on at the date of this Agreement.

12.1.20

Acquisitions No Borrower shall make any acquisitions or investments without the prior written consent of all Lenders (such consent not to be unreasonably withheld or delayed).

12.1.21

“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;

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(b)

any change in the status of any Borrower after the date of this Agreement; or

(c)

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

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

12.1.22

No borrowings No Borrower shall without the prior written consent of the Agent incur any liability or obligation (except for (i) liabilities and obligations under the Finance Documents, (ii) liabilities and obligations reasonably incurred in the ordinary course of business in connection with the chartering, operating or repairing of its Vessel and (iii) Financial Indebtedness owing to Affiliates provided that such Financial Indebtedness is unsecured and subordinated and provided that so long as no Event of Default shall have occurred and be continuing or would result from making any such payment nothing under this Clause 12.1.22 shall prevent the relevant Borrower from repaying any such Financial Indebtedness or paying interest on such Financial Indebtedness) nor incur any obligations under leases.

12.1.23

No dividends No Borrower shall without the prior written consent of the Agent pay any dividends or make other distributions to its shareholders or members or issue any new shares whilst an Event of Default has occurred and is continuing unremedied or unwaived.

12.1.24

Negative Pledge No Borrower shall without the prior written consent of the Agent (such consent not to be unreasonably withheld or delayed) create, or permit to subsist, any Encumbrance or other third party rights (other than pursuant to the Security Documents) over all or any part of its assets or undertakings (other than Permitted Encumbrances) nor dispose of any of those assets or of all or part of that undertaking other than, in the case of a sale of a Vessel, where such sale complies with the requirements of Clause 6.4.

12.1.25

Management of Vessels The Borrowers shall ensure that (a) each Vessel is at all times technically and commercially managed by Approved Managers and (b) at any time that the Approved Managers of the Vessels are not

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Teekay or any other member of the Teekay Group, such Approved Managers provide a written confirmation confirming that, among other things, following the occurrence of an Event of Default which is continuing unremedied and unwaived, all claims of the Approved Managers against the relevant Borrower shall be subordinated to the claims of the Finance Parties under the Finance Documents. The Borrowers shall promptly inform the Agent in writing of any proposed change of an Approved Manager.

12.1.26

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 material overdue recommendations and adverse notations affecting that Vessel’s class.

12.1.27

Certificate of Financial Responsibility Each Borrower will, if and for so long as its Vessel trades in the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990), obtain and retain a valid Certificate of Financial Responsibility for its Vessel under that Act, will provide the Agent with evidence of that Certificate, and will comply strictly with the requirements of that Act.

12.1.28

Registration No Borrower shall change or permit a change to the flag of its Vessel 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 Lenders, such approval not to be unreasonably withheld or delayed.

12.1.29

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

12.1.30

Maintenance Each Borrower shall ensure that its Vessel shall be maintained in good and safe condition and with all registered surveys carried out when due.

12.1.31

Chartering No Borrower shall, during the Facility Period, without the prior consent of the Agent (acting on the instructions of all Lenders), take any vessel on charter or other contract of employment (or agree to do so) from any party outside the Teekay Group or the Guarantor Group (save for the existing charterparties in respect of the Vessels with ConocoPhillips as previously advised by the Borrowers to the Agent).

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.

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13.1.1

Borrowers’ Failure to Pay under this Agreement The Borrowers fail to pay any amount 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 administrative or technical error by the Agent or an error in the banking system or a Disruption Event, 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) and 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 Finance 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 6.4, 6.5, 6.6, 12.1.16, 12.1.22, 12.1.24 and 12.1.28; or

13.1.4

Financial Covenants The Guarantor is in breach of the Guarantor’s financial covenants set out in clause 3.2 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 Finance Document (other than those referred to in Clause 13.1.3) and such failure is not remedied within 30 days after the earlier of (i) the Agent having given notice thereof to the Borrowers, and (ii) the Borrowers becoming aware of such Default; or

13.1.6

Cross Default Any Financial Indebtedness of any Security Party is not paid when due (or within any applicable grace period) or any Financial Indebtedness of any Security Party is declared, or is capable of being declared, to be or otherwise becomes due and payable prior to its specified maturity where (in either case) the aggregate of all such unpaid or accelerated indebtedness (i) of the Guarantor is equal to or greater than one hundred million Dollars ($100,000,000) or its equivalent in any other currency; or (ii) of the Pledgor is equal to or greater than one hundred million Dollars ($100,000,000) or its equivalent in any other currency; or (iii) of any Borrower is equal to or greater than five million Dollars ($5,000,000) 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

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13.1.8

Winding-up A Security Party files for initiation of formal restructuring proceedings, is wound up or declared bankrupt or 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

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 one hundred million Dollars ($100,000,000) or its equivalent in any other currency; or (ii) in respect of the Pledgor equal to or greater than one hundred million Dollars ($100,000,000) or its equivalent in any other currency; or (iii) in respect of any Borrower equal to or greater than five million Dollars ($5,000,000) 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 one hundred million Dollars ($100,000,000) or its equivalent in any other currency; or (ii) in respect of the Pledgor equal to or greater than one hundred million Dollars ($100,000,000) or its equivalent in any other currency; or (iii) in respect of any Borrower equal to or greater than five million Dollars ($5,000,000) 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; or

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 or 13.1.9; or

13.1.11

Repudiation Any Security Party repudiates any Finance 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 Finance Document; or

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13.1.12

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 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; or

(c)

to make the Finance 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

13.1.13

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 Finance 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

13.1.14

Material Adverse Change At any time there shall occur any event or change which has a Material Adverse Effect in respect of any Security Party and such event or change, if capable of remedy, is not so remedied within 30 days of the delivery of a notice confirming such event or change by the Agent to the relevant Security Party; or

13.1.15

Conditions Precedent and Subsequent If (a) any of the conditions set out in Clauses 3.1 and 3.3 is not satisfied by the relevant time or such other time period specified by the Agent in its discretion, or (b) 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

13.1.16

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 Finance 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

13.1.17

Cessation of Business Any of the Security Parties ceases, or threatens to cease, to carry on all or a substantial part of its business; or

13.1.18

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

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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

13.1.19

Reduction of Capital If any Security Party reduces its committed or subscribed capital; or

13.1.20

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

13.1.21

Environmental Matters

(a)

any Environmental Claim is pending or made against a Borrower 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

13.1.22

Loss of Property All or a substantial part of the business or assets of any Security Party is destroyed, abandoned, seized, appropriated or forfeited for any reason, and such occurrence in the reasonable opinion of the Agent (acting on the instructions of the Majority Lenders) has or could reasonably be expected to have a Material Adverse Effect; or

13.1.23

Sanctions Any Security Party, any Affiliate of any Security Party or any of their respective directors, officers or employees becomes a Restricted Party.

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 Loan, 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 Loan 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.

14	Assignment and Sub-Participation

14.1

Lenders’ rights A Lender may assign any of its rights 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 to any other Lender (or an Affiliate of another Lender) or (subject to the prior written consent of the Borrowers, such consent not to be unreasonably withheld but not to be required at any time after an

Page 46

Event of Default which is continuing unremedied or unwaived) to any other bank, financial institution or institutional lender, or any trust, fund or other entity which is regularly engaged in, or established for the purpose of, making, purchasing or investing in loans, securities or other financial assets, and may grant sub-participations in all or any part of its Commitment in the Loan provided that where any such assignment, transfer or sub-participation relates to only part of a Lender’s Commitment, (i) it shall be in an amount of no less than five million Dollars ($5,000,000) and (ii) such assignment, transfer or sub-participation of only part of a Lender’s Commitment shall not result in such Lender holding a Commitment of less than five million Dollars ($5,000,000). Where the consent of the Borrowers is required, the Borrowers shall be deemed to have given its consent if no express refusal is given within five (5) Business Days.

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 including, but not limited to, re-executing any Security Documents (if required); 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 Loan and the Relevant Documents which any Finance Party may in its discretion consider necessary or desirable (subject to any duties of confidentiality applicable to the Lenders generally).

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

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(b)

the transferee has paid to the Agent for its own account a transfer fee of seven thousand five hundred Dollars ($7,500) (or, in the case of a transfer to another branch of the transferee, a transfer fee of three thousand seven hundred and fifty Dollars ($3,750)).

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

14.6	No assignment or transfer by the Borrowers No Borrower may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

14.7

Security over Lenders’ rights In addition to the other rights provided to Lenders under this Clause 14, each Lender may without consulting with or obtaining consent from any Security Party, at any time charge, assign or otherwise create an Encumbrance in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

14.7.1

any charge, assignment or other Encumbrance to secure obligations to a federal reserve or central bank; and

14.7.2

in the case of any Lender which is a fund, any charge, assignment or other Encumbrance granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,

except that no such charge, assignment or Encumbrance shall:

(a)

release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or other Encumbrance for the Lender as a party to any of the Finance Documents; or

(b)

require any payments to be made by any Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

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15	The Agent and the Lenders

15.1	Appointment

15.1.1

Each Lender appoints the Agent to act as its agent and/or security trustee under and in connection with the Finance Documents.

15.1.2

Each Lender authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

15.2	Authority Each Lender irrevocably authorises the Agent and the Agent hereby agrees (subject to Clauses 15.5.1, 15.24 and this Clause 15.2):

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;

15.2.3

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

15.2.4

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

The Agent shall have no duties or responsibilities as agent or as security trustee 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 (in its sole discretion), 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 Agent agrees and declares, and each of the other Finance Parties acknowledges, that, subject to the terms and conditions of this Clause 15.3, the Agent 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 Agent shall be performed and exercised in accordance with this Clause 15.3. The Agent shall have the benefit of all of the provisions of this Agreement benefiting it in its capacity as 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 Agent and any attorney, agent or delegate of the Agent 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 Agent 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;

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15.3.2

the other Finance Parties acknowledge that the Agent 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 125 years from the date of this Agreement.

15.4	Required consents

15.4.1

Subject to Clause 15.5 any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Borrowers and any such amendment or waiver will be binding on all Parties.

15.4.2

The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 15.

15.4.3

Without prejudice to the generality of Clause 15.14.4, the Agent may engage, pay for and rely on the services of lawyers in determining the consent level required for and effecting any amendment, waiver or consent under this Agreement.

15.5	Exceptions

15.5.1

An amendment, waiver or (in the case of a Security Document) a consent of, or in relation to, any term of any Finance Document that has the effect of changing or which relates to:

(a)

the definitions of “Majority Lenders”, “Maximum Amount” and “Proportionate Share” in Clause 1.1;

(b)

an extension to the date of payment of any amount under the Finance Documents;

(c)

a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable;

(d)

a change in currency of payment of any amount under the Finance Documents;

(e)

an increase in any Commitment under the Loan or the amount available under the Loan, an extension of the Final Availability Date or any requirement that a cancellation of Commitments under the Loan reduces the Commitments of the Lenders under the Loan rateably;

(f)

any provision which expressly requires the consent of all the Lenders;

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(g)

Clause 2.2, Clause 14, this Clause 15 or Clause 23;

(h)

(other than as expressly permitted by the provisions of any Finance Document) the nature or scope of:

(i)

any Guarantee;

(ii)

the Charged Property; or

(iii)

the manner in which the proceeds of enforcement of the Security Documents are distributed;

(i)

the release of any Guarantee or of any Encumbrance created or expressed to be created or evidenced by the Security Documents unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of any Encumbrance created or expressed to be created or evidenced by the Security Documents where such sale or disposal is expressly permitted under this Agreement or any other Finance Document; or

(j)

the pro rata application of payments made by the Borrowers under the Finance Documents or sharing of payments or Commitment reductions;

shall not be made, or given, without the prior consent of all the Lenders.

15.5.2

An amendment or waiver which relates to the rights or obligations of the Agent may not be effected without the consent of the Agent.

15.6	Excluded Commitments

If:

15.6.1

any Defaulting Lender fails to respond to a request for a consent, waiver, amendment of or in relation to any term of any Finance Document or any other vote of Lenders under the terms of this Agreement within twenty (20) Business Days of that request being made; or

15.6.2

any Lender which is not a Defaulting Lender fails to respond to such a request (other than an amendment, waiver or consent referred to in Clauses 15.5.1(b), 15.5.1(c) and 15.5.1(e)) or other or such a vote within twenty (20) Business Days of that request being made,

(unless, in either case, the Borrowers and the Agent agree to a longer time period in relation to any request):

(a)

its Commitment(s) under the Loan shall not be included for the purpose of calculating the aggregate of the Commitments when ascertaining whether any relevant percentage (including, for the avoidance of doubt, unanimity) of the aggregate of the Commitments has been obtained to approve that request; and

(b)

its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.

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15.7	Replacement of Lender

15.7.1

If:

(a)

any Lender becomes a Non-Consenting Lender (as defined in Clause 15.7.4); or

(b)

a Borrower or any other Security Party becomes obliged to repay any amount in accordance with Clause 6.1 or to pay additional amounts pursuant to Clause 17.3, Clause 8.12.1 or Clause 8.7 to any Lender,

then the Borrowers may, on ten (10) Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to Clause 14 all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrowers, which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 14 for a purchase price in cash payable at the time of transfer in an amount equal to the outstanding principal amount of such Lender’s participation in the outstanding Loan and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.

15.7.2

The replacement of a Lender pursuant to this Clause 15.7 shall be subject to the following conditions:

(a)

the Borrowers shall have no right to replace the Agent;

(b)

neither the Agent nor the Lender shall have any obligation to the Borrowers to find a Replacement Lender;

(c)

in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than thirty (30) Business Days after the date on which that Lender is deemed a Non-Consenting Lender;

(d)

in no event shall the Lender replaced under this Clause 15.7 be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents; and

(e)

the Lender shall only be obliged to transfer its rights and obligations pursuant to Clause 15.7.1 once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer.

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15.7.3

A Lender shall perform the checks described in Clause 15.7.2(e) as soon as reasonably practicable following delivery of a notice referred to in Clause 15.7.1 and shall notify the Agent and the Borrowers when it is satisfied that it has complied with those checks.

15.7.4

In the event that:

(a)

the Borrowers or the Agent (at the request of the Borrowers) have requested the Lenders to give a consent in relation to, or to agree to a waiver or amendment of, any provisions of the Finance Documents;

(b)

the consent, waiver or amendment in question requires the approval of all the Lenders; and

(c)

Lenders whose Commitments aggregate more than ninety per cent (90%) of the aggregate of the Commitments (or, if the aggregate of the Commitments have been reduced to zero, aggregated more than ninety per cent (90%) of the aggregate of the Commitments prior to that reduction) have consented or agreed to such waiver or amendment,

then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting Lender”.

15.8	FATCA Mitigation

Notwithstanding any other provision to this Agreement, if a FATCA Deduction is or will be required to be made by any Party under Clause 8.15 in respect of a payment to any Lender which is a FATCA FFI (a “FATCA Non-Exempt Lender”), the FATCA Non-Exempt Lender may either:

(a)

transfer its entire interest in the Loan to a U.S. branch or affiliate; or

(b)

(subject to the prior written consent of the Borrowers in the case of a transferee which is not already a Lender, such consent not to be unreasonably withheld or delayed and always provided that it should be deemed to be reasonable for the Borrowers to withhold such consent in circumstances where any transfer under this Clause 15.8(b) would result in any Increased Cost being incurred by the transferee lender) nominate one or more transferee lenders who upon becoming a Lender would be a FATCA Exempt Party, by notice in writing to the Agent and the Borrowers specifying the terms of the proposed transfer, and cause such transferee lender(s) to purchase all of the FATCA Non-Exempt Lender’s interest in the Loan.

15.9	Disenfranchisement of Defaulting Lenders

15.9.1

For so long as a Defaulting Lender has any Commitment in ascertaining:

(a)

the Majority Lenders; or

(b)

whether:

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(i)

any given percentage (including, for the avoidance of doubt, unanimity) of the aggregate of the Commitments; or

(ii)

the agreement of any specified group of Lenders,

has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents, that Defaulting Lender’s Commitment will be reduced by the amount of its participation in the Loan it has failed to make available and, to the extent that that reduction results in that Defaulting Lender’s Commitment being zero, that Defaulting Lender shall be deemed not to be a Lender for the purposes of (i) and (ii).

15.9.2

For the purposes of this Clause 15.9, the Agent may assume that the following Lenders are Defaulting Lenders:

(a)

any Lender which has notified the Agent that it has become a Defaulting Lender;

(b)

any Lender in relation to which it is aware that any of the events or circumstances referred to in (a), (b) or (c) of the definition of “Defaulting Lender” has occurred,

unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender.

15.10

Replacement of a Defaulting Lender

15.10.1

The Borrowers may, at any time a Lender has become and continues to be a Defaulting Lender, by giving ten (10) Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to Clause 14 all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrowers which confirms its willingness to assume and does assume all the obligations, or all the relevant obligations, of the transferring Lender in accordance with Clause 14 for a purchase price in cash payable at the time of transfer which is either:

(a)

(b)

in an amount agreed between that Defaulting Lender, the Replacement Lender and the Borrowers and which does not exceed the amount described in (a).

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15.10.2

Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause 15.10 shall be subject to the following conditions:

(a)

the Borrowers shall have no right to replace the Agent;

(b)

neither the Agent nor the Defaulting Lender shall have any obligation to the Borrowers to find a Replacement Lender;

(c)

the transfer must take place no later than thirty (30) Business Days after the notice referred to in Clause 15.10.1;

(d)

in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents; and

(e)

the Defaulting Lender shall only be obliged to transfer its rights and obligations pursuant to 15.10.1 once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer to the Replacement Lender.

15.10.3

The Defaulting Lender shall perform the checks described in Clause 15.10.2 as soon as reasonably practicable following delivery of a notice referred to in Clause 15.10.1 and shall notify the Agent and the Borrowers when it is satisfied that it has complied with those checks.

15.11

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.

15.12

Acknowledgement Each Lender acknowledges that:

15.12.1

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;

15.12.2

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 Loan;

15.12.3

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

15.12.4

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 15.12.

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15.13

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

15.13.1

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

15.13.2

the financial condition of any Security Party; nor

15.13.3

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

15.13.4

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.

15.14

The Agent’s rights The Agent may:

15.14.1

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;

15.14.2

assume (unless it has received notice to the contrary in its capacity as Agent) that no Default has occurred unless, in the case of Clause 13.1.1 only, it, in its capacity as the Agent, has acquired actual knowledge to the contrary;

15.14.3

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

15.14.4

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

15.14.5

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

15.14.6

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.

15.15

The Agent’s duties The Agent shall inform the Lenders promptly of any Event of Default under Clause 13.1.1 of which the Agent has actual knowledge.

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15.16

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 (other than a Default under Clause 13.1.1) 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.

15.17

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.

15.18

Indemnity The Lenders shall, promptly on the Agent’s request, reimburse the Agent in their respective Proportionate Share, 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 from the Agent’s gross negligence or wilful misconduct.

15.19

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.

15.20

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 any amounts which, by the terms of the Finance Documents, are paid to the Agent for the account of the Agent alone or specifically for the account of one or more Lenders) and until so paid such amount shall be held by the Agent on trust absolutely for that Lender.

15.21

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 15.20 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.

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15.22

Redistribution of payments Unless otherwise agreed between the Lenders and the Agent, if at any time a Lender receives or recovers by way of set-off, the exercise of any lien or otherwise from any Security Party, an amount greater than that Lender’s Proportionate Share of any sum due from that Security Party to the Lenders under the Finance Documents (the amount of the excess being referred to in this Clause 15.22 and in Clause 15.23 as the “Excess Amount”) then:

15.22.1

that Lender shall promptly notify the Agent (which shall promptly notify each other Lender);

15.22.2

that Lender 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

15.22.3

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 Lenders and shall account to the Lenders in respect of the Excess Amount in accordance with the provisions of this Clause 15.22.

However, if a Lender 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 Lender 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.

15.23

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 Lenders which have received any part of that Excess Amount by way of distribution from the Agent pursuant to Clause 15.22 shall repay to the Agent for the account of the Lender which originally received or recovered the Excess Amount, the amount which shall be necessary to ensure that the Lenders share rateably in accordance with their Proportionate Shares in the amount of the receipt or payment retained, 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 15.22.3 shall apply only to the retained amount.

15.24

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 five (5) Business Days of the Agent’s request (which request must be 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 15.24 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 15.24.

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15.25

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.

15.26

“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.

15.27

Resignation

15.27.1

Subject to a successor being appointed in accordance with this Clause 15.27, the Agent may resign as agent and/or security trustee at any time without assigning any reason by giving to the Borrowers and the Lenders notice of its intention to do so, in which event the following shall apply:

(a)

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 or unwaived) the Lenders may within thirty (30) days after the date of the notice from the Agent appoint a successor to act as agent and/or security trustee 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 or unwaived), the Agent may appoint any other bank or financial institution as its successor provided that if no successor is appointed pursuant to this Clause 15.27.1(a) the Lenders shall act as successor to the Agent and take on the roles as agent and security trustee;

(b)

the resignation of the Agent shall take effect simultaneously with the appointment of its successor on written notice of that appointment being given to the Borrowers and the Lenders;

(c)

the Agent shall thereupon be discharged from all further obligations as agent but shall remain entitled to the benefit of the provisions of this Clause 15; and

(d)

the successor of the Agent 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.

15.27.2

The Agent shall resign and the Majority Lenders (after consultation with the Borrowers) shall appoint a successor Agent in accordance with clause 15.27 if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either:

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(a)

the Agent fails to respond to a request under clause 8.14 and a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

(b)

the information supplied by the Agent pursuant to clause 8.14 indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or

(c)

the Agent notifies the Borrowers and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date,

15.28

Replacement of the Agent

15.28.1

After consultation with the Borrowers, the Majority Lenders may, by giving thirty (30) days’ notice to the Agent (or, at any time the Agent is an Impaired Agent, by giving any shorter notice determined by the Majority Lenders) replace the Agent by appointing a successor Agent.

15.28.2

The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its function as Agent under the Finance Documents.

15.28.3

15.28.4

Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

15.29

No fiduciary relationship Except as provided in Clauses 15.3 and 15.20, 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 Lenders or between the Agent and any other person.

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16	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 any Borrower, 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 a Borrower 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.

17.2

No deductions or withholdings Each payment (whether of principal or interest or otherwise) to be made by a Borrower 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, other than FATCA Deductions.

17.3

Grossing-up If at any time any law requires (or is interpreted to require) a Borrower to make any deduction or withholding from any payment, other than a FATCA Deduction, or to change the rate or manner in which any required deduction or withholding is made under a Finance Documents, 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 a Borrower is required by law to make any deduction or withholding from any payment to be made by it under a Finance Document, that Borrower 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.

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17.5

Rebate If a Borrower pays any additional amount under Clause 8.12 or 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 a Borrower any information regarding its tax affairs or tax computations.

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 the Loan, 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 open and maintain on its books a control account in the name of the Borrowers showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrowers’ obligations to repay the Loan 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 and those entries will, in the absence of manifest error, be conclusive and binding.

17.8	Impaired Agent

17.8.1

If, at any time, the Agent becomes an Impaired Agent, a Security Party or a Lender which is required to make a payment under the Finance Documents to the Agent in accordance with Clause 17.1 may instead either:

(a)

pay that amount direct to the required recipient(s); or

(b)

if in its absolute discretion it considers that it is not reasonably practicable to pay that amount direct to the required recipient(s), pay that amount or the relevant part of that amount to an interest-bearing account held with an Acceptable Bank in relation to which no Insolvency Event has occurred and is continuing, in the name of the Security Party or the Lender making the payment (the “Paying Party”) and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance Documents (the “Recipient Party” or “Recipient Parties”).

In each case such payments must be made on the due date for payment under the Finance Documents.

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17.8.2

All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the Recipient Party or the Recipient Parties pro rata to their respective entitlements.

17.8.3

A Party which has made a payment in accordance with this Clause 17.8 shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the trust account.

17.8.4

Promptly upon the appointment of a successor Agent in accordance with Clause 15.28, each Paying Party shall (other than to the extent that that Party has given an instruction pursuant to Clause 17.8.5) give all requisite instructions to the bank with whom the trust account is held to transfer the amount (together with any accrued interest) to the successor Agent for distribution to the relevant Recipient Party or Recipient Parties in accordance with Clause 15.20.

17.8.5

A Paying Party shall, promptly upon request by a Recipient Party and to the extent:

(a)

it has not given an instruction pursuant to Clause 17.8.4; and

(b)

that it has been provided with the necessary information by that Recipient Party,

give all requisite instructions to the bank with whom the trust account is held to transfer the relevant amount (together with any accrued interest) to that Recipient Party.

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 Renee Eng, Treasury Manager;

18.2.2

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

18.2.3

in the case of the Agent, 60 London Wall, London EC2M 5TQ, England (fax no: +44 20 7767 7324) marked for the attention of Adam Byrne;

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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.

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

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.

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(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.

19	Partial Invalidity

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	Miscellaneous

21.1	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.

21.2

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.

21.3

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.

21.4

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.

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21.5	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.

21.6	Contracts (Rights of Third Parties) Act 1999 A person who is not a party to this Agreement (other than the Indemnified Parties) 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.

22	Confidentiality

22.1

Confidential Information Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 22.2 and Clause 22.3, and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

22.2	Disclosure of Confidential Information Any Finance Party may disclose:

22.2.1

to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this Clause 22.2.1 is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

22.2.2

to any person:

(a)

to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as agent or security trustee and, in each case, to any of that person’s Affiliates, Related Funds, Representatives, auditors and professional advisers;

(b)

with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Security Parties and to any of that person’s Affiliates, Related Funds, Representatives, auditors and professional advisers;

(c)

appointed by any Finance Party or by a person to whom Clause 22.2.2(a) or 22.2.2(b) applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

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(d)

who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in Clause 22.2.2(a) or 22.2.2(b);

(e)

to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

(f)

to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

(g)

to whom or for whose benefit that Finance Party charges, assigns or otherwise creates security (or may do so) pursuant to Clause 14.7;

(h)

who is a Party; or

(i)

with the consent of the Borrowers;

in each case, such Confidential Information as that Finance Party shall consider appropriate if:

(i)

in relation to Clauses 22.2.2(a), 22.2.2(b) and 22.2.2(c), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

(ii)

in relation to Clause 22.2.2(d), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

(iii)

in relation to Clauses 22.2.2(e), 22.2.2(f) and 22.2.2(g), the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances; and

22.2.3

to any person appointed by that Finance Party or by a person to whom Clause 22.2.2(a) or 22.2.2(b) applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be

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required to be disclosed to enable such service provider to provide any of the services referred to in this Clause 22.2.3 if the service provider to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking.

22.3	Disclosure to numbering service providers

22.3.1

Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Loan and/or one or more Security Parties the following information:

(a)

names of Security Parties;

(b)

country of domicile of Security Parties;

(c)

place of incorporation of Security Parties;

(d)

date of this Agreement;

(e)

Clause 23;

(f)

the name of the Agent;

(g)

date of each amendment and restatement of this Agreement;

(h)

amount of the Loan;

(i)

currencies of the Loan;

(j)

type of Loan;

(k)

ranking of the Loan;

(l)

Final Availability Date for the Loan;

(m)

changes to any of the information previously supplied pursuant to (a) to (l); and

(n)

such other information agreed between such Finance Party and that Security Party,

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

22.3.2

The Parties acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or one or more Security Parties by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

22.3.3

The Borrowers represent that none of the information set out in Clauses 22.3.1(a) to 22.3.1(n) is, nor will at any time be, unpublished price-sensitive information.

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22.3.4

The Agent shall notify the Borrowers and the other Finance Parties of:

(a)

the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Loan and/or one or more Security Parties; and

(b)

the number or, as the case may be, numbers assigned to this Agreement, the Loan and/or one or more Security Parties by such numbering service provider.

23	Law and Jurisdiction

23.1	Governing law This Agreement and any non-contractual obligations arising from or in connection with it 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 dispute (a) arising from or in connection with this Agreement or (b) relating to any non-contractual obligations arising from 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 Borrower 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 Borrower:

23.5.1

irrevocably appoints Teekay Shipping (UK) Ltd of 2^nd 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 any Borrower of the process will not invalidate the proceedings concerned.

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Schedule 1

The Lenders and the Commitments


The Lenders	Commitments	The Proportionate Share
The Lenders	(US$)	(%)
ING Bank N.V., London Branch	55,000,000	100
60 London Wall
London EC2M 5TQ
England
Fax no: +44 20 7767 7324
Attn: Adam Byrne

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Schedule 2

Conditions Precedent and Subsequent

Part I:

Conditions precedent to service of Drawdown Notice

1	Security Parties

(a)

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

(b)

Certificates of good standing A certificate of good standing in respect of each Security Party (if available).

(c)

Board resolutions A copy of a resolution of the board of directors of each Security Party (or its sole member or general partner):

(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)

Shareholder resolutions If required by any legal advisor to the Agent, a copy of a resolution signed by all the holders of the issued shares in each Security Party, approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party.

(e)

Officer’s certificates An original certificate of a duly authorised officer or representative of each Security Party certifying that each copy document relating to it specified in this Part I of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement, setting out the names of its directors and officers (or its sole member), setting out the proportion of shares held by each shareholder, and confirming that any applicable borrowing and guaranteeing limits will not be exceeded.

(f)

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

2	Finance Documents

This Agreement, the Guarantee and the Share Pledges, together with all other documents required by any of them.

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3	Legal opinions

(a)

The following legal opinions, each addressed to the Agent, or confirmation satisfactory to the Agent that such opinion will be given:

(i)

an opinion on matters of English law from Stephenson Harwood LLP; and

(ii)

an opinion on matters of Marshall Island law from Watson, Farley & Williams LLP, New York.

4	Other documents and evidence

(a)

Process agent Evidence that any process agent referred to in Clause 23.5 and any process agent appointed under any Finance Document executed pursuant to paragraph 2 above has accepted its appointment.

(b)

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

(c)

Fees Evidence that the fees, costs and expenses then due from the Borrowers under Clause 8 and Clause 9 have been paid.

(d)

“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 (including “know your customer” documentation on each shareholder of the Borrowers with a shareholding of 20% or more).

(e)

Other Such other documents, authorisations, opinions and assurances as the Agent may reasonably specify.

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Part II:

Conditions precedent to Drawdown Date

1	Security Parties

Bringdown Certificate An original certificate from a duly authorised officer or representative of the relevant Borrower confirming that none of the documents delivered to the Agent pursuant to Schedule 2, Part I, paragraphs (a) to (f) have been amended or modified in any way since their delivery to the Agent.

2	Security and related documents

(a)

Vessel documents In respect of each Vessel, photocopies, certified as true, accurate and complete by a duly authorised representative of the relevant Borrower, of:

(i)

any charterparty or other contract of employment of the Vessel which will be in force on the Drawdown Date and which (inclusive of any extension option) is capable of exceeding twelve (12) months (unless already provided to the Agent);

(ii)

the Management Agreements (if any);

(iii)

evidence of the Vessel’s current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990 (if applicable);

(iv)

the Vessel’s current SMC;

(v)

the ISM Company’s current Document of Compliance;

(vi)

the Vessel’s current ISSC;

(vii)

the Vessel’s current IAPPC;

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

(b)

Evidence of Borrowers’ title Evidence that on the Drawdown Date (i) each Vessel is at least provisionally registered under a Pre-Approved Flag in the ownership of the relevant Borrower and (ii) each Mortgage will be capable of being registered against the relevant Vessel with first priority.

(c)

Evidence of insurance Evidence that each 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 Certificates of Confirmation of Class for hull and machinery confirming that each Vessel is classed with the highest class applicable to vessels of her type with a Pre-Approved Classification Society free of material overdue recommendations affecting class.

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(e)

Security Documents The Mortgages, the Deeds of Covenants (if applicable) and the Assignments, together with all other documents required by any of them, including, without limitation, (i) all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients and (ii) all share certificates, certified copy share registers or registers of members, transfer forms, proxy forms, letters of resignation and letters of undertakings.

(f)

Managers’ Confirmations The Managers’ Confirmations (if any) together with notices of any assignments contained in the same and evidence that those notices will be duly acknowledged by the recipients.

(g)

Other Relevant Documents Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part II of Schedule 2.

(h)

No disputes The written confirmation of each Borrower that, to the best of that Borrower’s knowledge, there is no dispute under any of the Relevant Documents as between the parties to any such Document.

(i)

Valuations A valuation of each Vessel addressed to the Agent from an Approved Broker certifying the Market Value of that Vessel, acceptable to the Agent.

(j)

Financial Statements A copy of the Original Financial Statements of the Guarantor (if not available on the website of the Guarantor).

3	Legal opinions

Confirmation satisfactory to the Agent that legal opinions substantially in the form provided to the Agent prior to the Drawdown Date will be given promptly following disbursement of the Loan, namely:

(a)

an opinion on matters of English law from Stephenson Harwood LLP;

(b)

an opinion on matters of Marshall Islands law from Watson, Farley & Williams LLP; and

(c)

an opinion on matters of Bahamas law from Lennon Patton (or such other legal advisors in respect of the jurisdiction of the underlying flag of the Vessels).

4	Other documents and evidence

(a)

Process agent Evidence that any process agent appointed under any of the Security Documents executed pursuant to paragraph 2(e) above has accepted its appointment.

(b)

Other Authorisations A copy of any other 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 Relevant Document or for the validity and enforceability of any Relevant Document.

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(c)

“Know your customer” 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.

(d)

Fees Evidence that the fees, costs and expenses then due from the Borrowers under Clause 8 and Clause 9 have been paid by, or will have been paid on, the Drawdown Date.

(e)

Drawdown Notice A duly completed Drawdown Notice.

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Part III: Conditions subsequent to Drawdown Date

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

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

3	Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Agent pursuant to Part II of this Schedule 2.

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

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Schedule 3

Form of Drawdown Notice


To:		ING Bank N.V., London Branch

From:		African Spirit L.L.C.
		European Spirit L.L.C.
		and
		Asian Spirit L.L.C.

[Date]

Dear Sirs,

Drawdown Notice

We refer to the Loan Agreement dated 2015 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 the Loan in the sum of [ ] to us on 2015, which is a Business Day, by paying the amount of the advance to [specify account details].

We warrant that the representations and warranties contained in Clause 11 of the Agreement save those contained in Clauses 11.2, 11.6 and 11.19 are true and correct at the date of this Drawdown Notice and will be true and correct on 2015 that no Default has occurred and is continuing unremedied or unwaived, 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 first Interest Period in respect of the said Drawing.

Yours faithfully

For and on behalf of

African Spirit L.L.C.

European Spirit L.L.C.

and

Asian Spirit L.L.C.

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Schedule 4

Form of Transfer Certificate


To:		ING Bank N.V., London Branch

Transfer Certificate

This transfer certificate relates to a secured loan facility agreement (as from time to time amended, varied, supplemented or novated the “Loan Agreement”) dated [ ] 2015, on the terms and subject to the conditions of which a secured revolving credit facility was made available to African Spirit L.L.C., European Spirit L.L.C. and Asian Spirit L.L.C., by a syndicate of banks on whose behalf you act as agent and security trustee.

1	Terms defined in the Loan 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 Loan 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 of the Loan 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 of the Loan Agreement.

5	The Transferee confirms that:

5.1

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

5.2

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

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

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The Transferee undertakes with the Transferor and each of the other parties to the Loan Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Loan 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.

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 Loan 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.

10	The address and fax number of the Transferee for the purposes of clause 18 of the Loan 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.

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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 Loan Agreement*:


[*name of Transferor*]				[*name of Transferee*]

By:				By:

Date:				Date:

ING Bank N.V., London Branch as Agent

By:

Date:

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


Signed by		)
as duly authorized		)
for and on behalf of		)
African Spirit L.L.C.: /s/ Patrick Smith, Attorney-in-Fact)
in the presence of: /s/ Michelle Gomes, Stephenson Harwood LLP)


Signed by		)
as duly authorized		)
for and on behalf of		)
European Spirit L.L.C: /s/ Patrick Smith, Attorney-in-Fact)
in the presence of: /s/ Michelle Gomes, Stephenson Harwood LLP)

Signed by		)
as duly authorized		)
for and on behalf of		)
Asian Spirit L.L.C.: /s/ Patrick Smith, Attorney-in-Fact)
in the presence of: /s/ Michelle Gomes, Stephenson Harwood LLP)

Signed by		)
as duly authorized		)
for and on behalf of		)
ING Bank N.V., London Branch: /s/ David Metzger, Attoney-in-Fact)
(as Agent)		)
in the presence of: /s/ Michelle Gomes, Stephenson Harwood LLP)

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Signed by		)
as duly authorized		)
for and on behalf of		)
ING Bank N.V., London Branch: /s/ David Metzger, Attoney-in-Fact)
(as Lender)		)
in the presence of: /s/ Michelle Gomes, Stephenson Harwood LLP)