and – COSTAMARE SHIPPING COMPANY S.A. MANAGEMENT AGREEMENT

Exhibit 10.3

 

COSTAMARE PARTNERS LP

 

COSTAMARE PARTNERS GP LLC

 

- and –

 

COSTAMARE SHIPPING COMPANY S.A.

 

MANAGEMENT AGREEMENT

TABLE OF CONTENTS

 

		Page
ARTICLE I	INTERPRETATION	1
ARTICLE II	APPOINTMENT	6
ARTICLE III	THE PARTNERSHIP’S GENERAL OBLIGATIONS	8
ARTICLE IV	THE MANAGER’S GENERAL OBLIGATIONS	9
ARTICLE V	ADMINISTRATIVE SERVICES	11
ARTICLE VI	COMMERCIAL SERVICES	14
ARTICLE VII	INSURANCE	15
ARTICLE VIII	OFFICERS AND EMPLOYEES	15
ARTICLE IX	MANAGEMENT FEES AND EXPENSES	16
ARTICLE X	BUDGETS, CORPORATE PLANNING AND EXPENSES	20
ARTICLE XI	LIABILITY AND INDEMNITY	22
ARTICLE XII	RIGHTS OF THE MANAGER AND RESTRICTIONS ON THE MANAGER’S AUTHORITY	24
ARTICLE XIII	TERMINATION OF THIS AGREEMENT	25
ARTICLE XIV	NOTICES	28
ARTICLE XV	APPLICABLE LAW	28
ARTICLE XVI	ARBITRATION	28
ARTICLE XVII	MISCELLANEOUS	29
APPENDIX I	Form of Ship Management Agreement
APPENDIX II	Form of Supervision Agreement

THIS MANAGEMENT AGREEMENT (this “Agreement”) is made on the [•] day of [•], 2015, BY AND BETWEEN:

 

(1) COSTAMARE PARTNERS LP, a ▇▇▇▇▇▇▇▇ Islands limited partnership (the “Partnership”);

 

(2) COSTAMARE PARTNERS GP LLC, a ▇▇▇▇▇▇▇▇ Islands limited liability company, as general partner of the Partnership (the “General Partner”); and

 

(3) COSTAMARE SHIPPING COMPANY S.A., a company organized and existing under the laws of the Republic of Panama (the “Manager”).

 

WHEREAS:

 

(A) The Partnership wholly owns (i) the entities set out in Schedule A, as such Schedule A may be amended from time to time (the “Shipowning Subsidiaries”), each of which owns one or more Container Vessels (as defined below) (the “Vessels”) and (ii) the entities set out in Schedule B, as such Schedule B may be amended from time to time (together with the Shipowning Subsidiaries, the “Subsidiaries”).

 

(B) The Manager has the benefit of experience in the technical and commercial management of Container Vessels and administration of shipowning companies generally.

 

(C) The Partnership and the Manager desire to adopt this Agreement, pursuant to which the Manager shall represent the Partnership Group (as defined below) in its dealings with third parties and either directly or through a Submanager (as defined below) provide technical, commercial, administrative and certain other services to the members of the Partnership Group as specified herein in connection with the management and administration of the business of the members of the Partnership Group.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE:

 

ARTICLE I

INTERPRETATION

 

SECTION 1.1. In this Agreement, unless the context otherwise requires:

 

“Affiliates” means, with respect to any person as to any particular date, any other persons that directly or indirectly, through one or more intermediaries, are Controlled by, Control or are under common Control with the person in question, and Affiliates means any of them.

 

“Agreement” shall have the meaning set forth in the preamble.

“Amended and Restated Group Management Agreement” means the amended and restated management agreement dated March 3, 2015, as amended from time to time, between Costamare and the Manager.

 

“Annual Period” shall have the meaning set forth in Section 9.2.

 

“Approved Budget” shall have the meaning set forth in Section 10.3.

 

“Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act. For purposes of this definition, such person or group shall be deemed to Beneficially Own any outstanding voting securities of a company held by any other company (the “parent company”) that is Controlled by such person or group. The term “Beneficially Own” and similar capitalized terms shall have analogous meanings.

 

“Board of Directors” means the board of directors or the board of managers of the General Partner as the same may be constituted from time to time, provided that, after a Board Election, the term “Board of Directors” shall mean such board of directors of the Partnership.

 

“Board Election” means the election by the General Partner to cause the Partnership to be managed by the Partnership’s own board of directors, pursuant to Section 7.14 of the Limited Partnership Agreement.

 

“Business Days” means a day (excluding Saturdays and Sundays) on which banks are open for business in Athens, Greece; and New York, New York.

 

“Change in Control of the General Partner or the Partnership” means, with respect to the General Partner or the Partnership (the “Applicable Person”), any of the following events: (a) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other person, unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the consolidation or merger of the Applicable Person with or into another person pursuant to a transaction in which the outstanding voting securities of the Applicable Person are changed into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding voting securities of the Applicable Person are changed into or exchanged for voting securities of the surviving person or its parent and (ii) the holders of the voting securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the outstanding voting securities of the surviving person or its parent immediately after such transaction; or (c) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act or any successor provision), other than Costamare, York or their Affiliates with respect to the General Partner or the Partnership or the Konstantakopoulos Entities with respect to Costamare, being or becoming the Beneficial Owner of more than 50% of all of the then outstanding voting securities of the Applicable Person, except in a merger or consolidation which would not constitute a Change in Control of the General Partner or the Partnership under clause (b) above.

“Change in Control of the Manager” means (a) a sale of all or substantially all of the assets or property of the Manager necessary for the performance of the Manager’s services under this Agreement, (b) a sale of the Manager’s shares that would result in ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ Beneficially Owning, directly or indirectly, less than 50.1% of the total voting power of the outstanding voting securities of the Manager or (c) a merger, consolidation or similar transaction, that would result in ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ Beneficially Owning, directly or indirectly, less than 50.1% of the total voting power of the outstanding voting securities of the resulting entity following such transaction.

 

“Conflicts Committee” means the conflicts committee of the Board of Directors.

 

“Consent of the Partnership” means the Special Approval (as defined in the Limited Partnership Agreement) of the Conflicts Committee.

 

“Container Vessel” means any ocean-going vessel (whether in its construction phase or operational) that is intended to be used primarily to transport containerized cargoes.

 

“Continuing Directors” means, as of any date of determination, any member of the board of directors of Costamare who (i) was a member of the board of directors immediately after the Effective Date, or (ii) was nominated for election or elected to the board of directors of Costamare with the approval of a majority of the directors then still in office or who were either directors immediately after the Effective Date or whose nomination or election was previously so approved.

 

“Control” or “Controlled” means, with respect to any person, the right to elect or appoint, directly or indirectly, a majority of the directors of such person or a majority of the persons who have the right, including any contractual right, to manage and direct the business, affairs and operations of such person or the possession of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise.

 

“Costamare” means Costamare Inc., a corporation incorporated under the laws of the Republic of the ▇▇▇▇▇▇▇▇ Islands.

 

“Crew” shall have the meaning set forth in clause 1 of each Shipmanagement Agreement.

 

“Draft Budget” shall have the meaning set forth in Section 10.1.

 

“Effective Date” means the date upon which the initial public offering of the Partnership is consummated.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Executive Officers” means the Chief Executive Officer, the Chief Operating Officer (if any) and the Chief Financial Officer of the General Partner or, after a Board Election, the Partnership, as applicable.

 

“Fixed Period” shall have the meaning set forth in Section 9.2.

 

“Force Majeure” shall have the meaning set forth in Section 11.1.

 

“General Partner” shall have the meaning set forth in the preamble.

 

“Initial Term” shall have the meaning set forth in Section 13.1.

 

“Konstantakopoulos Entities” means:

 

(a)

▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ or Vassileios Konstantakopoulos;

 

(b)

any spouse or lineal descendant of any of the individuals set out in paragraph (a) above; and

 

(c)

any person Controlled by, or under common Control with, any such individual or combination of such individuals as set out in paragraphs (a) and (b) above.

 

“Limited Partnership Agreement” means the first amended and restated agreement of limited partnership of the Partnership, dated as of [•], 2015, as from time to time amended.

 

“Management Fee” shall have the meaning set forth in Section 9.1.

 

“Management Services” shall have, in relation to a Vessel, the meaning set forth in clause 1 of the Shipmanagement Agreement applicable to such Vessel.

 

“Manager” shall have the meaning set forth in the preamble.

 

“Manager Related Parties” shall have the meaning set forth in Section 11.2.

 

“Newbuild” means a new vessel to be or which has just been constructed, or is under construction, pursuant to a shipbuilding contract or other related agreement entered into by the relevant member of the Partnership Group.

 

“Omnibus Agreement” means that certain Omnibus Agreement, dated as of October 1, 2014, among Costamare, the Partnership, the General Partner, Costamare Partners Holdings LLC and York, as such agreement may be amended, supplemented or restated from time to time.

 

“Partnership” shall have the meaning set forth in the preamble.

“Partnership Group” means, at any time, the Partnership, the General Partner and the Subsidiaries at such time taking into account the Schedule A and Schedule B in effect at such time and “member of the Partnership Group” shall be construed accordingly.

 

“Questioned Items” shall have the meaning set forth in Section 10.2.

 

“Related Manager” means each of Shanghai Costamare Ship Management Co., Ltd. or any Affiliate of a Konstantakopoulos Entity appointed as Submanager in accordance with the terms of this Agreement.

 

“Services” shall have the meaning set forth in Section 2.3.

 

“Shipmanagement Agreement” shall have the meaning set forth in Section 3.2.

 

“Shipowning Subsidiaries” shall have the meaning set forth in the recitals.

 

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

 

“Submanager” shall have the meaning set forth in Section 2.4.

 

“Subsequent Term” shall have the meaning set forth in Section 13.1.

 

“Subsidiaries” shall have the meaning set forth in the recitals.

 

“Supervision Agreement” shall have the meaning set forth in Section 3.3.

 

“Term” shall have the meaning set forth in Section 13.1.

 

“Vessels” shall have the meaning set forth in the recitals.

 

“V.Ships” means V.Ships Greece Ltd, Par-La Ville Place 14, Par-La ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ and includes its successors in title and permitted assignees.

 

“York” means York Capital Management Global Advisors LLC, Sparrow Holdings, L.P., Bluebird Holdings, L.P. and certain affiliated funds on whose behalf York Capital Management Global Advisors LLC has entered into the Omnibus Agreement.

 

SECTION 1.2. The headings of this Agreement are for ease of reference and do not limit or otherwise affect the meaning hereof.

 

SECTION 1.3. All the terms of this Agreement, whether so expressed or not, shall be binding upon the parties hereto and their respective successors and assigns.

SECTION 1.4. In the event of any conflict between this Agreement, any Shipmanagement Agreement or any Supervision Agreement, the provisions of this Agreement shall prevail.

 

SECTION 1.5. Unless otherwise specified, all references to money refer to the legal currency of the United States of America.

 

SECTION 1.6. Unless the context otherwise requires, words in the singular include the plural and vice versa.

 

SECTION 1.7. The words “include”, “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation” and shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately following it.

 

SECTION 1.8. Any reference to “person” includes an individual, body corporate, limited liability company, partnership, joint venture, cooperative, trust or unincorporated organization, association, trustee, domestic or foreign government or any agency or instrumentality thereof, or any other entity recognized by law.

 

SECTION 1.9. Any reference to an enactment shall be deemed to include reference to such enactment as re-enacted, amended or extended.

 

SECTION 1.10. Any reference to (or to any specified provision of) this Agreement or any other document shall be construed as reference to this Agreement, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties.

 

SECTION 1.11. Any reference to clauses, appendices and schedules shall be construed as reference to clauses of, appendices to and schedules to this Agreement and references to this Agreement includes its appendices and schedules.

 

ARTICLE II

 

APPOINTMENT

 

SECTION 2.1. The Manager is hereby appointed by the Partnership as the administrative manager of the Partnership Group and hereby accepts such appointment on the terms and conditions of this Agreement.

 

SECTION 2.2. The Manager shall be appointed by (a) each Shipowning Subsidiary pursuant to the provisions of Section 3.3 as the technical and/or commercial manager of each such Shipowning Subsidiary’s Vessel on the terms and conditions of the relevant Shipmanagement Agreement and this Agreement and (b) each member of the Partnership Group to be acquiring a Newbuild, as the supervisor of the construction thereof on the terms and conditions of the relevant Supervision Agreement and this Agreement.

SECTION 2.3. The Manager agrees to provide:

 

(a) the services specified in Articles V, VI, VII and VIII of this Agreement;

 

(b) the services specified in each Supervision Agreement; and

 

(c) the Management Services (as such term is defined in clause 1 of each Shipmanagement Agreement) in respect of each Vessel specified in each Shipmanagement Agreement (the services to be provided under Sections 2.3(a), 2.3(b) and 2.3(c) collectively the “Services”).

 

The Partnership and the Manager each hereby agree that in the performance of this Agreement, any Supervision Agreement or any Shipmanagement Agreement, the Manager or, as the case may be, any Submanager, is acting solely on behalf of, as agent of and for the account of, the Partnership or any other relevant member of the Partnership Group. The Manager or, as the case may be, the relevant Submanager may advise persons with whom it deals on behalf of the Partnership or any other member of the Partnership Group that it is conducting such business for and on behalf of the Partnership or, as the case may be, a member of the Partnership Group.

 

SECTION 2.4. The Manager may upon notice to the Partnership appoint any person (a “Submanager”) at any time throughout the duration of this Agreement to discharge any of the Manager’s duties under this Agreement or a Shipmanagement Agreement or a Supervision Agreement, provided that if such person is not a Related Manager or V.Ships, the Manager shall obtain the written Consent of the Partnership prior to such appointment (such Consent of the Partnership shall not be unreasonably withheld or delayed). The Manager shall appoint a Submanager either by entering into a management agreement or supervision agreement (such management agreement or supervision agreement to be on terms to be agreed between the parties thereto and only in respect of the services that the Manager wishes such Submanager to discharge) directly with such Submanager (for the avoidance of doubt, unless otherwise agreed in writing, no member of the Partnership Group shall have any responsibility for any fees or costs incurred under any such management agreement or supervision agreement) or by directing such Submanager to enter into a management agreement or supervision agreement directly with the relevant member of the Partnership Group (such management agreement or supervision agreement to be on terms to be agreed between the parties thereto and only in respect of the services that the Manager wishes such Submanager to discharge). Any Submanager (other than V.Ships) shall agree to the terms and conditions of this Agreement to the extent applicable to it, prior to performing any services for any member of the Partnership Group. The Partnership shall procure that each member of the Partnership Group shall provide written confirmation to the Manager or, as the case may be, a Submanager, that such member’s Vessel is commercially and/or technically managed by the Manager or, as the case may be, the relevant Submanager.

SECTION 2.5. The Manager’s power to delegate performance of any provision of this Agreement, including delegation by directing a Submanager to enter into a management agreement or supervision agreement directly with a member of the Partnership Group in accordance with Section 2.4, shall not limit the Manager’s liability to the Partnership to perform this Agreement with the intention that the Manager shall remain responsible to the Partnership for the due and timely performance of all duties and responsibilities of the Manager hereunder, PROVIDED HOWEVER, that to the extent that any Submanager has performed any such duty, the Manager shall not be under any obligation to perform again the same duty.

 

ARTICLE III

 

THE PARtnership’S GENERAL OBLIGATIONS

 

SECTION 3.1. The Partnership shall notify the Manager as soon as possible of any purchase of any vessel (whether the same is a second-hand vessel or a Newbuild), the delivery of any Newbuild from the relevant builder or intermediate seller to the relevant member of the Partnership Group to take ownership of such Newbuild, the sale of any Vessel, the purchase or creation of any direct or indirect subsidiary of the Partnership or the sale or divestiture of any Subsidiary and shall promptly amend Schedule A and Schedule B, as applicable, to be reflective of any such development. Such amended Schedule A or Schedule B shall be effective on any such day as mutually agreed by the Partnership and the Manager, which date shall be no later than five Business Days after delivery of such amended Schedule A and/or Schedule B to the Manager by the Partnership.

 

SECTION 3.2. For each Vessel the Partnership shall cause the relevant Shipowning Subsidiary to enter into with the Manager, and the Manager shall enter into with such Shipowning Subsidiary, a contract substantially in the form attached as Appendix I (each a “Shipmanagement Agreement” and, collectively, the “Shipmanagement Agreements”), with such alterations and additions as are appropriate; PROVIDED HOWEVER, that any alterations or additions which materially vary from such form shall require the approval of the Board of Directors.

 

SECTION 3.3. For each Newbuild the Partnership shall cause the relevant Shipowning Subsidiary to enter into with the Manager, and the Manager shall enter into with such Shipowning Subsidiary, a contract substantially in the form attached as Appendix II (each a “Supervision Agreement” and, collectively, the “Supervision Agreements”) with such alterations and additions as are appropriate; PROVIDED HOWEVER, that any alterations or additions which materially vary from such form shall require the approval of the Board of Directors.

 

SECTION 3.4. The Partnership shall pay punctually all sums due to the Manager under this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement to which the Manager is a party in accordance with the respective terms thereof.

SECTION 3.5. The Partnership shall procure that each other member of the Partnership Group (a) performs its obligations under any Shipmanagement Agreement or any Supervision Agreement to which it is a party and (b) does not take any action or omit to take any action the effect of which is to cause the Partnership Group or the Manager or a Submanager to be in breach of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement.

 

SECTION 3.6. The Partnership agrees that it has engaged the Manager to provide the Services on an exclusive basis and, without receiving the prior written approval of the Manager or before it has lawfully terminated this Agreement in accordance with its terms, it will not engage any other entity to provide any of the Services.

 

ARTICLE IV

 

THE MANAGER’S GENERAL OBLIGATIONS

 

SECTION 4.1. In the exercise of its duties hereunder, the Manager shall act in accordance with the reasonable policies, guidelines and instructions from time to time communicated to it in writing by any member of the Partnership Group.

 

SECTION 4.2. For each Vessel or, as the case may be, Newbuild the Manager shall act and do all and/or any of the acts or things described in this Agreement and the relevant Shipmanagement Agreement or Supervision Agreement applicable to each such Vessel or Newbuild in the name and/or on behalf of the Partnership and/or the relevant Subsidiary or Subsidiaries.

 

SECTION 4.3. The Manager acknowledges that the services it will provide pursuant to the Shipmanagement Agreements or the Supervision Agreements are not limited to the services described in such agreements and include those set forth in this Agreement.

 

SECTION 4.4. The Manager shall exercise commercially reasonable care to cause all material property of any member of the Partnership Group to be clearly identified as such, held separately from the property of the Manager and, where applicable, held in safe custody.

 

SECTION 4.5. The Manager shall exercise commercially reasonable care to cause adequate manpower to be employed by it to perform its obligations under this Agreement, PROVIDED HOWEVER, that the Manager, in the performance of its responsibilities under this Agreement, shall be entitled to have regard to its overall responsibilities in relation to the management of its clients (including Costamare) and in particular, without prejudice to the generality of the foregoing, the Manager shall be entitled to allocate available resources and services in such manner as in the prevailing circumstances the Manager considers to be fair and reasonable.

 

SECTION 4.6. Notwithstanding anything to the contrary contained in this Agreement or any Shipmanagement Agreement or any Supervision Agreement, the

Manager agrees that any and all decisions of a material nature relating to the Partnership Group, any Subsidiary, any Vessel or any Newbuild under construction shall be reserved to the General Partner, or, after a Board Election, the Partnership, such decisions including, but not being limited to:

 

(a) the purchase and/or sale of shares in any entity or other assets of a material nature;

 

(b) the purchase, formation or dissolution of subsidiaries;

 

(c) the entry into guarantees or loans or other forms of financing and any and all financial undertakings and commitments connected therewith; and

 

(d) the presentation, negotiation, settlement, prosecution or defense of any claim, demand or petition for an amount exceeding US$1,000,000 or its equivalent.

 

SECTION 4.7. During the Term, the Manager shall promote the business of the Partnership Group in accordance with the directions of the authorized representative or, as the case may be, representatives of the respective member of the Partnership Group and shall at all times use commercially reasonable efforts to conform to and comply with the lawful and reasonable directions, regulations or recommendations made by such authorized representative or, as the case may be, representatives, and in the absence of any specific directions or recommendations as aforesaid and, subject to the terms and conditions of this Agreement, shall provide general administrative and advisory services in connection with the management of the business of the Partnership Group.

 

SECTION 4.8. The Manager, in the performance of its responsibilities under this Agreement, any Supervision Agreement or any Shipmanagement Agreement, shall exercise commercially reasonable care to cause any purchases of products or services from any of its Affiliates to be on terms no less favorable to the Manager than the market prices for products or services that the Manager could obtain on an arm’s length basis from unrelated parties.

 

SECTION 4.9. During the term hereof, the Manager agrees that it will provide the Services to the Partnership Group and Costamare and their respective subsidiaries on an exclusive basis and, without receiving the prior Consent of the Partnership, it will not provide any Services or other services contemplated herein to any entity other than the Partnership Group and Costamare and their respective subsidiaries; provided, however, the Manager may also provide the Services to entities formed pursuant Framework Agreement between Costamare, Costamare Ventures Inc. and York dated 15 May 2013 as amended from time to time.

 

SECTION 4.10. If a Vessel (which expression for the purposes of this Section shall include any Newbuild to be acquired by a member of the Partnership Group) and a Container Vessel directly or indirectly owned or operated by a third party

are both available and meet the criteria for a charter being fixed by the Manager, the Vessel shall be offered such charter first and the Partnership shall have 48 hours from such offer being received to accept such offer, failing which such charter shall be then offered to the relevant third party. If a Vessel and a Container Vessel directly or indirectly owned or operated by Costamare are both available and meet the criteria for a charter being fixed by the Manager, the Container Vessel owned or operated by Costamare shall be offered such charter first, provided that such Container Vessel shall be subject to the terms of the Omnibus Agreement, as applicable.

 

SECTION 4.11. The Manager shall at all times maintain appropriate and necessary accounts and records as regards the Services and shall make the same available for inspection and auditing by the Partnership at such times as may be mutually agreed by the Manager, on the one hand, and the Partnership, on the other hand.

 

ARTICLE V

 

ADMINISTRATIVE SERVICES

 

SECTION 5.1. The Manager shall provide certain general administrative services to the Partnership Group, including, but not limited to, the following:

 

(a) keeping all books and records of things done and transactions performed on behalf of any member of the Partnership Group as it may require from time to time, including, but not limited to, liaising with accountants, lawyers and other professional advisors;

 

(b) except as otherwise contemplated herein, representing any member of the Partnership Group generally in its dealings and relations with third parties;

 

(c) maintaining the general ledgers of the Partnership Group, establishing bank accounts with such financial institutions as the Partnership may request, managing, administering and reconciling of the Partnership Group’s bank accounts, preparation of periodic consolidated financial statements of the Partnership Group, including, but not limited to, those required for governmental and regulatory or self-regulatory agency filings and reports to unitholders or other holders of partnership interests, arranging of the auditing and/or review of any such financial statements and the provision of related data processing services;

 

(d) providing assistance in the preparation of periodic and other reports, proxy statements, registration statements and other documents and reports required by applicable law (including rules and regulations promulgated by the U.S. Securities and Exchange Commission) or the rules of any securities exchange or inter-dealer quotation system on which the securities of the Partnership or any member of the Partnership Group may be listed or quoted;

(e) preparing and providing (or procuring, at the Partnership’s cost, a third party service provider to prepare and provide) tax returns required by any law or regulatory authority and developing, maintaining and monitoring internal audit controls, disclosure controls and information technology for the Partnership Group;

 

(f) arranging for the provision of advisory services (either directly or, at the Partnership’s cost, through a third party service provider) to ensure the Partnership Group is in compliance with all applicable laws, including all relevant securities laws, including the preparation for review, approval and filing by the Partnership of reports and other documents with the U.S. Securities and Exchange Commission, any securities exchange on which its shares are listed and all other regulatory authorities having jurisdiction over the Partnership or with other securities exchanges on which the Partnership’s securities are listed; including the preparation for review, approval and filing by the Partnership Group of reports and other documents with all applicable regulatory authorities; provided that nothing herein shall permit or authorize the Manager to act for or on behalf of the Partnership in its relationship with regulatory authorities, except to the extent that specific authorization may from time to time be given by the General Partner, or, after a Board Election, the Partnership;

 

(g) either directly or, at the Partnership’s cost, through a third party service provider (such as by appointing lawyers), providing for the presentation, negotiation, settlement, prosecution or defense of any claim, demand or petition on behalf of any member of the Partnership Group arising in connection with the business of any member of the Partnership Group for an amount not exceeding US$1,000,000 or its equivalent, including the pursuit by any member of the Partnership Group of any rights of indemnification or reimbursement;

 

(h) providing assistance in negotiating loan and credit terms with lenders and monitoring and administration of compliance with any applicable financing terms and conditions in effect with investors, banks or other financial institutions;

 

(i) assisting with arranging board meetings, director accommodation and travel for board meetings and preparing meeting materials and detailed papers and agendas for scheduled meetings of the Board of Directors or the board of directors of any other member of the Partnership Group (and any and all committees thereof) that, where applicable, contain such information as is reasonably available to the Manager to enable the Board of Directors or such other board of directors (and any such committees) to base their opinion;

 

(j) preparing or causing to be prepared reports to be considered by the Board of Directors (or any applicable committee thereof) in accordance with the Partnership’s internal policies and procedures on any acquisition, investment or sale of any part of the business;

 

(k) administering payroll services, benefits and director’s or consultant’s fees, as applicable, for any person providing services of an employee, officer, consultant or director of the Partnership Group;

 

(l) handling general and administrative expenses of the Partnership, which are related to its operation as public company and, upon being placed by the Partnership in funds in accordance with the terms of this Agreement, arranging for the payment of the same;

 

(m) either directly or, at the Partnership’s cost, through a third party service provider (such as by appointing lawyers), handling all administrative and clerical matters in respect of (i) the calling and arrangement of all annual and/or special meetings of unitholders of the Partnership pursuant to the Limited Partnership Agreement, (ii) the preparation of all materials (including notices of meetings and information circulars) in respect thereof and (iii) the submission of all such materials to the Partnership in sufficient time prior to the dates upon which they must be mailed, filed or otherwise relied upon so that the Partnership has full opportunity to review, approve, execute and return them to the Manager for filing or mailing or other disposition as the Partnership may require or direct;

 

(n) providing, at the request and under the direction of the Partnership, such communications to the transfer agent for the Partnership as may be necessary or desirable;

 

(o) assisting the Partnership in establishing and maintaining a system of internal controls sufficient to satisfy applicable regulatory requirements;

 

(p) providing the Partnership Group with office accommodation, equipment, office staff (including all accounting, clerical, secretarial, corporate administrative and information technology services as may be reasonably necessary), facilities and stationery;

 

(q) maintaining, at the Partnership’s cost, the Partnership’s and each other member’s of the Partnership Group corporate existence, qualification and good standing in all necessary jurisdictions and assisting in all other corporate and regulatory compliance requirements;

 

(r) at the Partnership’s cost, assisting in all corporate and regulatory compliance requirements for incorporating a new entity that will be owned (inter alios) by a member of the Partnership Group and/or for dissolving any member of the Partnership Group, in all necessary jurisdictions;

(s) at the request of the Partnership, negotiating the terms and thereafter arranging for cash management services and/or hedging arrangements, in each case with a third party provider at the cost of the Partnership;

 

(t) at the request of the Partnership, monitoring the performance of investment managers; and

 

(u) providing any such other administrative services as the General Partner, or, after a Board Election, the Partnership, the Executive Officers or any other representative of the Partnership may request and the Manager may agree to provide from time to time.

 

ARTICLE VI

 

COMMERCIAL SERVICES

 

SECTION 6.1. In addition to any commercial services provided under clause 3.3 of each Shipmanagement Agreement, the Manager shall provide the following commercial services to the Partnership Group:

 

(a) performing class records review and physical inspections in respect of any vessel considered for purchase by a member of the Partnership Group;

 

(b) at the request and under the direction of the General Partner, or, after a Board Election, the Partnership, providing administrative services in connection with the purchase of a second-hand vessel or the acquisition and sale of a Newbuild, in either case by any member of the Partnership Group, including, if specifically instructed by the General Partner, or, after a Board Election, the Partnership, in writing, signing any agreed form of memorandum of agreement, shipbuilding contract or other similar contract for and on behalf of the relevant member of the Partnership Group;

 

(c) managing relationships between the Partnership Group and any existing or potential charterers, shipbuilders, insurers, lenders, investors, fund managers, unitholders and other shipping industry service providers/participants;

 

(d) providing, or arranging for the provision of, such services as may be required by the Partnership to support and assist the Partnership in considering any future acquisitions or divestments of assets of the Partnership and for the integration of any businesses or assets acquired by the Partnership, all in accordance with the direction and under the supervision of the General Partner, or, after a Board Election, the Partnership; and

(e) at the request of the General Partner, or, after a Board Election, the Partnership, providing certain services in connection with a member of the Partnership Group taking physical delivery of a vessel, registering a vessel under a ship register, tendering physical delivery of a Vessel or deleting a Vessel from the applicable port of registry, in each case on behalf of the relevant member of the Partnership Group.

 

ARTICLE VII

 

INSURANCE

 

SECTION 7.1. In addition to any insurance requirements provided in clause 3.4 of each Shipmanagement Agreement, the Manager shall:

 

(a) arrange either directly or, through insurance brokers appointed by the Manager, Directors & Officers’ liability insurance for the Board of Directors with such insurance companies, at such rates and otherwise on such other terms as the General Partner, or, after a Board Election, the Partnership, shall have instructed and/or agreed upon;

 

(b) on request, provide the Partnership with a copy of any insurance claims and any reports prepared by the relevant insurers; and

 

(c) subject to having been placed in funds on time by the Partnership, take commercially reasonable care to cause all premiums on the Partnership’s Directors & Officers’ liability insurance are paid in a timely fashion.

 

ARTICLE VIII

 

OFFICERS AND EMPLOYEES

 

SECTION 8.1. The Manager shall make available to the General Partner or, after a Board Election, the Partnership, as applicable, all such officers, managers and employees, including any of the Executive Officers, that the General Partner or the Partnership, as applicable, and the Manager agree shall be made available.

 

SECTION 8.2. The Executive Officers are entitled to direct the Manager to remove and replace any individual serving as an officer or any senior manager serving as head of a business unit, in either case, of any member of the Partnership Group, other than an Executive Officer, from such position. The Board of Directors, in its sole discretion, shall be entitled to direct the Manager to remove any individual made available to the General Partner or the Partnership, as applicable, by the Manager serving as an Executive Officer from such position and to appoint such other individual to serve as successor as the Board of Directors shall approve. Furthermore, the Manager agrees that it will not remove any individuals serving as officers or senior managers of any member of the Partnership Group from their respective positions without the prior written consent of the Executive Officers (such consent not to be unreasonably withheld or

unduly delayed) and, in the case of any Executive Officer, the Board of Directors. If any officer or senior manager who is made available to the General Partner or the Partnership, as applicable, by the Manager resigns, is terminated or otherwise vacates his or her office, the Manager shall, as soon as practicable after acceptance of any resignation or after termination, use reasonable best efforts to identify suitable candidates for replacement of such officer.

 

SECTION 8.3. The Partnership Group may employ directly any other officers, senior managers or employees as it may deem necessary that will not be subject to this Agreement.

 

SECTION 8.4. The Manager will report to the Partnership and the Board of Directors through any one of the Executive Officers.

 

ARTICLE IX

 

MANAGEMENT FEES AND EXPENSES

 

SECTION 9.1. In consideration of the Manager providing the Services to the Partnership Group, the Partnership shall pay the Manager the following fees (together, the “Management Fees” and, on a per Vessel basis, the “Management Fee”):

 

(a) subject to Sections 9.2 and 9.3, a fee of US$956 per day per Vessel, payable monthly in arrears (pro rated to reflect the actual number of days that the Partnership (or any Subsidiary) owns or charters-in each Vessel during the applicable month), unless a Vessel is chartered-out to a third party on a bareboat charter basis, in which case the fee payable to the Manager for such Vessel shall be, subject to Sections 9.2 and 9.3, US$478 per day, PROVIDED HOWEVER, that when in respect of certain services to a Vessel the Manager appoints a Submanager in accordance with Section 2.4 and such Submanager enters into a management agreement directly with the relevant member of the Partnership Group (the “direct agreement”), the fees payable by the Partnership and/or such member of the Partnership Group under this Agreement and/or any relevant Shipmanagement Agreement in respect of such Vessel pursuant to Section 9.1(a) shall be US$956 per day, or as the case may be, US$478 per day minus, in each case, the fees per day payable by such member of the Partnership Group to such Submanager under the relevant direct agreement in respect of such Vessel;

 

(b) a fee equal to 0.75% calculated on the aggregate of the gross freight, demurrage, charter hire, ballast bonus or other income obtained for the employment of each Vessel during the term of this Agreement, payable to the Manager monthly in arrears, only to the extent such freight, demurrage, charter hire, ballast bonus or other income, as the case may be, is received as revenue;

(c) subject to Sections 9.2 and 9.3, a fee of US$787,405 per Newbuild under construction for the services rendered by the Manager under the Supervision Agreement in respect of such Newbuild, payable in accordance with the terms of such Supervision Agreement; and

 

(d) an annual fee payable to the Manager (or its designee) quarterly in arrears of the number of validly issued, fully paid and nonassessable common units representing limited partnership interests in the Partnership equal to 0.75% of the aggregate number of issued and outstanding common units, subordinated units and general partnership units representing partnership interests in the Partnership as of January 1 of the applicable calendar year (the “Units”) payable in kind, PROVIDED HOWEVER, that the Partnership and the Manager shall renegotiate in good faith, on no more than one occasion in any calendar year, a reduction in the amount of such unit based compensation in the event of a substantial increase in the public trading price of the Partnership’s common units above the trading price of such common units over the prior year. PROVIDED ALWAYS, that the Manager is aware and acknowledges that there are limitations and restrictions on the circumstances under which it may offer to sell, transfer or otherwise dispose of the Units to be acquired by it including certain restrictions on transfer under the applicable securities laws.

 

The fee payable to the Manager pursuant to clause (d) above for the year ending on December 31, 2015, will be reduced pro rata based on the actual number of days this Agreement is in effect in such year and will be based on the issued and outstanding common units, subordinated units and general partnership units of the Partnership as of the date immediately following the Partnership’s initial public offering but after giving effect to any green shoe option in connection therewith (the “IPO Date”) as if such units had been issued and outstanding on January 1 of such year (i.e., such fee shall be 0.75% of the aggregate number of the common units, subordinated units and general partnership units issued and outstanding on the IPO Date times a fraction where the numerator is equal to the number of actual days this Agreement is in effect in 2015 and the denominator is equal to 365).

 

SECTION 9.2. The Management Fees will be fixed for the period commencing on the date of this Agreement and ending on December 31, 2015 (the “Fixed Period”) and shall not be subject to adjustment for Euro/U.S. Dollar exchange rate fluctuations or inflation. For the 12-month period starting on January 1, 2016 and for each subsequent 12-month period falling thereafter (each such 12-month period referred to hereinafter as an “Annual Period”), the Management Fee for each Vessel payable pursuant to Section 9.1(a) or Section 9.1(c) will be adjusted pursuant to Section 9.3.

 

SECTION 9.3. The Management Fees for each Vessel payable pursuant to Section 9.1(a) or Section 9.1(c), for the Annual Period commencing

on the day falling immediately after the end of the Fixed Period and each subsequent Annual Period thereafter, will, in each case, be further adjusted upwards with effect from the beginning of such Annual Period if:

 

(a) the average of the Euro/U.S. Dollar exchange rates during the 12-month period ending on the last day of the month of September falling before the commencement date of such Annual Period (such average being the average over the applicable period, as calculated by the Manager from the Euro Foreign Exchange Reference Rate published daily at 15:00 CET by the European Central Bank on ▇▇▇.▇▇▇.▇▇▇) evidence that the Euro has strengthened against the U.S. Dollar by more than five per cent (5%) from:

 

(i) in the case of the first Annual Period starting on the day falling immediately after the end of the Fixed Period, the rate existing on the business day immediately prior to the date of this Agreement, and

 

(ii) in the case of each subsequent Annual Period, the previous Euro/U.S. Dollar average calculated for the purposes of this Section 9.3 in respect of the immediately previous Annual Period,

 

by the average percentage amount by which the Euro has in each such case so strengthened against the U.S. Dollar; and/or

 

(b) the Manager has incurred a material unforeseen increase in the cost of providing the Services, by an amount to be agreed between the Manager and the Partnership, each acting in a commercially reasonable manner.

 

SECTION 9.4. The Manager shall, subject to Section 9.5, pay for all usual office expenses incurred by it as the Manager.

 

SECTION 9.5. The Partnership hereby acknowledges that any capital expenditure, financial costs, operating expenses for each Vessel and any general and administrative expenses of the Partnership Group whatsoever are not covered by the Management Fees and any such expenditure, costs and expenses shall be paid fully by the Partnership or the applicable member of the Partnership Group, whether directly to third parties (which for the avoidance of doubt shall include any Submanager) or by payment to such third parties through the Manager and, without prejudice to Section 10.8, to the extent incurred by the Manager, shall be reimbursed to it by the Partnership and/or any member of the Partnership Group the Manager seeks, in its discretion, reimbursement from. The said capital expenditure, financial costs, operating expenses for each Vessel and general and administrative expenses of the Partnership Group include, without limiting the generality of the foregoing, items such as:

 

(a) fees, interest, principal and any other costs due to the Partnership Group’s financiers and their respective advisors;

(b) all voyage expenses and vessel operating and maintenance expenses relating to the operation and management of the Vessels (including Crew costs, surveyor’s attendance fees, bunkers, lubricant oils, spares, survey fees, classification society fees, maintenance and repair costs, vetting expenses, etc.);

 

(c) any commissions, fees, remuneration or disbursements due to lawyers, brokers, agents, surveyors, consultants, financial advisors, investment bankers, insurance advisors or any other third parties whatsoever appointed by the Manager whether in its name or on behalf and/or in the name of any member of the Partnership Group;

 

(d) any commissions, fees, remuneration or disbursements due to lawyers, brokers, agents, surveyors, consultants, financial advisors, investment bankers, insurance advisors or any other third parties (other than, if applicable, a Related Manager) whatsoever sub-contracted to the Manager in the normal and reasonable course of meeting the Manager’s duties and obligations under this Agreement or any Shipmanagement Agreement or any Supervision Agreement including the duties provided in Articles V, VI and VII of this Agreement;

 

(e) applicable deductibles, insurance premiums (including Directors & Officers’ liability insurance) ▇▇▇/▇▇ ▇&▇ calls;

 

(f) compensation expenses for employees who are not provided by the Manager pursuant to Section 8.1;

 

(g) postage, communication, traveling, lodging, victualling, overtime, out of office compensation and out of pocket expenses of the Manager and/or its personnel, incurred in pursuance of the Services; and

 

(h) any other out of pocket expenses that are incurred by the Manager in the performance of the Services pursuant to this Agreement, any Supervision Agreement or any Shipmanagement Agreement.

 

SECTION 9.6. The Manager shall have the right to demand the Management Fee payable in relation to each Vessel from either the Partnership or the Shipowning Subsidiary owning such Vessel under the terms of the relevant Shipmanagement Agreement. By written notice to the Partnership, the Manager may direct the Partnership to pay any amounts owing by the Manager to any Submanager pursuant to a subcontract of any provisions of this Agreement or any Shipmanagement Agreement or any Supervision Agreement, directly to the relevant Submanager.

 

SECTION 9.7. In the event that a Shipmanagement Agreement is terminated, other than by reason of default by the Managers, the Management Fee payable to the Manager under Section 9.1(a) for the Vessel subject to such Shipmanagement Agreement shall be payable in respect of such Vessel for a further period of three months from the termination date. The fees payable for the said three

months shall be paid in one lump sum in advance on the termination of the relevant Shipmanagement Agreement. In addition the relevant member of the Partnership Group shall pay any Severance Costs (as such term is defined in the relevant Shipmanagement Agreement) for the relevant Vessel which may materialize.

 

ARTICLE X

 

BUDGETS, CORPORATE PLANNING AND EXPENSES

 

SECTION 10.1. On or before October 1 of each calendar year, the Manager shall prepare and submit to the Executive Officers a detailed draft budget for the next calendar year in a format acceptable to the Executive Officers and the Board of Directors and generally used by the Manager which shall include a statement of estimated revenue and out-of-pocket expenses in providing the Services (the “Draft Budget”).

 

SECTION 10.2. For a period of 20 days after receipt of the Draft Budget, the Executive Officers, from time to time, may request further details and submit written comments on the Draft Budget. If the Executive Officers do not agree with any item of the Draft Budget, they will, within the same 20-day period, give the Manager notice of any inquiries to the Draft Budget, which notice will include the list of items under consideration (the “Questioned Items”) and a proposal for the resolution of each such Questioned Item. The Executive Officers and the Manager will endeavor to resolve any such differences between them with respect to the Questioned Items, failing which the relevant Questioned Items shall be left as presented by the Manager. If the Executive Officers do not present any Questioned Items within such 20-day period, they will be deemed to have accepted the Draft Budget and, such Draft Budget, shall be deemed to be the Approved Budget (as defined in Section 10.3 below).

 

SECTION 10.3. By November 15 of the relevant calendar year (or such later date as the Manager and the Board of Directors deem appropriate), and to the extent that changes are required to the Draft Budget pursuant to Section 10.2, the Manager will prepare and deliver to the Partnership a revised budget that has been approved by the Executive Officers (the “Approved Budget”). However, the Partnership acknowledges that the Approved Budget is only an estimate of the performance of the Vessels and/or the Partnership Group and the Manager makes no assurance, representation or warranty that the actual performance of the Vessels and/or the Partnership Group in any relevant calendar year will correspond to the estimates contained in the Approved Budget for that calendar year. Notwithstanding the provisions of Section 10.2 and this Section 10.3, the Approved Budget for the 2015 calendar year shall be the 2015 revised budget that has been previously approved pursuant to the Amended and Restated Group Management Agreement.

 

SECTION 10.4. The Manager may, from time to time, in any calendar year propose amendments to the Approved Budget upon 15 days notice to the Partnership, in which event the Executive Officers will have the right to approve the amendments in accordance with the process set out in Section 10.2 with the relevant time periods being amended accordingly.

SECTION 10.5. Once the Approved Budget has been delivered, the Manager shall prepare and present to the Partnership its estimate of the working capital requirements of the Vessels and the Partnership Group and the Manager shall each month update this estimate. Based thereon, the Manager shall each month make a request to the Partnership and/or, as the case may be, the relevant members of the Partnership Group, in writing for the funds required to provide the Services to the Partnership Group and to operate each Vessel for the ensuing month, including the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. The Manager may also make a request in writing to the Partnership and/or, as the case may be, the relevant members of the Partnership Group, at any time for funds required for the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. Such funds shall be received by the Manager within ten calendar days after the receipt by the Partnership or, as the case may be, the relevant member of the Partnership Group of the Manager’s written request and shall be held in a separate bank account in the name of the Manager or, if requested by the Manager, in the name of the Partnership or of the relevant member of the Partnership Group.

 

At the end of each quarter or, if the Manager from time to time so requires, month, the Manager shall preliminarily reconcile the amounts advanced to it by the Partnership or, as the case may be, the relevant member of the Partnership Group, with the amounts actually expended by it for the operation of each of the Vessels and/or the Partnership Group, and (a) the Manager shall remit to the Partnership, or credit to the Partnership amounts to be advanced to it hereunder for future months, any unused portion of the amounts previously advanced by the Partnership or, as the case may be, the relevant member of the Partnership Group, or (b) the Partnership shall pay to the Manager any amounts properly expended by the Manager in excess of the amounts previously advanced by the Partnership or, as the case may be, the relevant member of the Partnership Group. The Partnership and the Manager shall reconcile any amounts due to the Partnership by the Manager or due to the Manager by the Partnership for each fiscal year of the Partnership as promptly as practicable following the close of each such fiscal year. Without prejudice to Section 10.8, any expenses incurred by the Manager under the terms of this Agreement on behalf of any member of the Partnership Group may be debited against the account of the respective member of the Partnership Group, but shall in any event remain payable by the Partnership and the relevant member of the Partnership Group to the Manager on demand.

 

SECTION 10.6. The Manager shall also maintain the records of all costs and expenses incurred, including any invoices, receipts and supplementary materials as are necessary or proper for the settlement of accounts.

 

SECTION 10.7. Insofar as any moneys are collected from third parties by the Manager under the terms of this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement (other than moneys payable by a member of the Partnership Group to the Manager), such moneys and any interest thereon shall be held to the credit of the relevant member of the Partnership Group in a separate bank account in the name

thereof. Interest on any such bank account shall be for the benefit of the relevant member of the Partnership Group.

 

SECTION 10.8. Notwithstanding anything contained herein to the contrary, the Manager shall in no circumstances be required to use or commit its own funds to finance the provision of the Services.

 

SECTION 10.9. To the extent that a Related Manager has been appointed in accordance with the terms of Section 2.4, it is agreed by the Partnership and the Manager for the benefit of such Related Manager that the provisions of Article X shall apply to such Related Manager as if such provisions were repeated herein, but with references to:

 

(a) the “Manager” being deemed as references to the relevant Related Manager;

 

(b) the “Services” being deemed as references to the services to be performed by such Related Manager under the relevant management agreement;

 

(c) the “Vessels” being deemed as references to the Vessels being managed by such Related Manager under a management agreement entered into directly with the relevant Partnership Group members;

 

(d) the “Partnership” being deemed as references to the relevant Partnership Group members; and

 

(e) references to “this Agreement, any Shipmanagement Agreement and/or any Supervision Agreement” being deemed as references to any management agreement signed by such Related Manager directly with the relevant Partnership Group members.

 

ARTICLE XI

 

LIABILITY AND INDEMNITY

 

SECTION 11.1. Save for the obligation of the Partnership to pay any moneys due to the Manager hereunder, neither any member of the Partnership Group nor the Manager shall be under any liability to the other for any failure to perform any of their obligations hereunder by reason of Force Majeure. “Force Majeure” shall mean any cause whatsoever of any nature or kind beyond the reasonable control of the relevant member of the Partnership Group or the Manager, including, without limitation, acts of God, acts of civil or military authorities, acts of war or public enemy, acts of any court, regulatory agency or administrative body having jurisdiction, insurrections, riots, strikes or other labor disturbances, embargoes or other causes of a similar nature.

 

SECTION 11.2. The Manager, including its officers, directors, employees, shareholders, agents, sub-contractors and any Submanager (the “Manager

Related Parties”) shall be under no liability whatsoever to any member of the Partnership Group or to any third party (including the Crew) for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect (including but not limited to loss of profit arising out of or in connection with detention of or delay to a Vessel), and howsoever arising in the course of the performance of this Agreement, any Shipmanagement Agreement or any Supervision Agreement, unless and to the extent that the same is proved to have resulted solely from the gross negligence or willful misconduct of the Manager, its officers, employees, agents, sub-contractors or any Submanager.

 

SECTION 11.3. Notwithstanding anything that may appear to the contrary in this Agreement or any Shipmanagement Agreement, the Manager shall not be liable for any of the actions of the Crew, even if such actions are negligent, grossly negligent or willful, except only to the extent that they are shown to have resulted from a failure by the Manager to discharge its obligations under clause 3.1 of each Shipmanagement Agreement, in which case the Manager’s liability shall be limited in accordance with the terms of this Article XI.

 

SECTION 11.4. The Partnership shall indemnify and hold harmless the Manager Related Parties against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of this Agreement, any Shipmanagement Agreement or any Supervision Agreement and against and in respect of any loss, damage, delay or expense of whatsoever nature (including legal costs and expenses on a full indemnity basis), whether direct or indirect, incurred or suffered by any Manager Related Party arising out of or in connection with the performance of this Agreement, any Shipmanagement Agreement and any Supervision Agreement, unless incurred or suffered due to the gross negligence or willful misconduct of any Manager Related Party.

 

SECTION 11.5. It is hereby expressly agreed that no employee or agent of the Manager (including any sub-contractor from time to time employed by the Manager) shall in any circumstances whatsoever be under any liability whatsoever to any member of the Partnership Group or any third party for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment or agency and, without prejudice to the generality of the foregoing provisions in this Article XI, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to the Manager or to which the Manager is entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Manager acting as aforesaid, and for the purpose of all the foregoing provisions of this Article XI, the Manager is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be the Manager’s servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement. Nothing in this Section 11.5 shall be construed so as to further limit any liability the Manager may have to the Partnership Group under Section 11.2.

SECTION 11.6. The provisions of this Article XI shall survive any termination of this Agreement.

 

ARTICLE XII

 

RIGHTS OF THE MANAGER AND RESTRICTIONS ON THE MANAGER’S AUTHORITY

 

SECTION 12.1. Except as may be provided in this Agreement or in any separate written agreement between the Partnership or any other member of the Partnership Group and the Manager or a Submanager, the Manager and any Submanager shall be an independent contractor and not the agent of the Partnership or any other member of the Partnership Group and shall have no right or authority to incur any obligation on behalf of any member of the Partnership Group or to bind any member of the Partnership Group in any way whatsoever. Nothing in this Agreement shall be deemed to make the Manager or any Submanager or any of their subsidiaries or employees an employee, joint venturer or partner of any member of the Partnership Group.

 

SECTION 12.2. The Partnership acknowledges that the Manager or, as the case may be, any Submanager shall have no responsibility hereunder, direct or indirect, with regard to the formulation of the business plans, policies, management or strategies (financial, tax, legal or otherwise) of any member of the Partnership Group, which is solely the responsibility of each respective member of the Partnership Group. Each member of the Partnership Group shall set its corporate policies independently through its respective board of directors and executive officers and nothing contained herein shall be construed to relieve such directors or officers of each respective member of the Partnership Group from the performance of their duties or to limit the exercise of their powers.

 

SECTION 12.3. Notwithstanding the other provisions of this Agreement:

 

(a) the Manager or, as the case may be, any Submanager may act with respect to a member of the Partnership Group upon any advice, resolutions, requests, instructions, recommendations, direction or information obtained from such member of the Partnership Group or any banker, accountant, broker, lawyer or other person acting as agent of or adviser to such member of the Partnership Group and the Manager or, as the case may be, the relevant Submanager shall incur no liability to such member of the Partnership Group for anything done or omitted or suffered in good faith in reliance upon such advice, instruction, resolution, recommendation, direction or information made or given by such member of the Partnership Group or its agents, in the absence of gross negligence or willful misconduct by the Manager or, as the case may be, the relevant Submanager or their respective servants, and shall not be responsible for any misconduct, mistake, oversight, error of judgment, neglect, default, omission, forgetfulness or want of prudence on the part of any such

banker, accountant, broker, lawyer, agent or adviser or other person as aforesaid;

 

(b) the Manager or, as the case may be, a Submanager shall not be under any obligation to carry out any request, resolution, instruction, direction or recommendation of any member of the Partnership Group or its agents if the performance thereof is or would be illegal or unlawful; and

 

(c) the Manager or, as the case may be, the relevant Submanager shall incur no liability to any member of the Partnership Group for doing or failing to do any act or thing which it shall be required to do or perform or forebear from doing or performing by reason of any provision of any law or any regulation or resolution made pursuant thereto or any decision, order or judgment of any court or any lawful request, announcement or similar action of any person or body exercising or purporting to exercise the legitimate authority of any government or of any central or local governmental institution in each case where the above entity has jurisdiction.

 

ARTICLE XIII

 

TERMINATION OF THIS AGREEMENT

 

SECTION 13.1. This Agreement shall be effective as of the Effective Date and, subject to Sections 13.2, 13.3, 13.4 and 13.5, shall continue until December 31, 2015 (the “Initial Term”). Thereafter the term of this Agreement shall be extended on a year-to-year basis for up to ten times (each a “Subsequent Term”) unless the General Partner, or, after a Board Election, the Partnership, at least 12 months prior to the end of the then current term, gives written notice to the Manager that it wishes to terminate this Agreement at the end of the then current term. In no event will the term of this Agreement (the “Term”) extend beyond the date falling ten years after the last day of the Initial Term.

 

SECTION 13.2. The Partnership shall be entitled to terminate this Agreement by notice in writing to the Manager if:

 

(a) the Manager defaults in the performance of any material obligation under this Agreement, subject to a cure right of 20 Business Days following written notice by the Partnership, PROVIDED ALWAYS, that any default of the Manager to perform any of its obligations under a particular Shipmanagement Agreement or any Supervision Agreement, shall not, in itself, entitle the Partnership to terminate this Agreement pursuant to this Section 13.2(a) and shall only allow the relevant member of the Partnership Group to terminate the relevant Shipmanagement Agreement or Supervision Agreement;

(b) any moneys due and payable to the Partnership or third parties by the Manager under this Agreement is not paid or accounted for within 10 Business Days following written notice by the Partnership;

 

(c) there is a Change in Control of the Manager; or

 

(d) the Manager is convicted of, enters a plea of guilty or nolo contendere with respect to, or enters into a plea bargain or settlement admitting guilt for a crime (including, for the avoidance of doubt, fraud), which conviction, plea bargain or settlement is demonstrably and materially injurious to the Partnership, PROVIDED ALWAYS, such crime is not a misdemeanor and PROVIDED ALWAYS further that such crime has been committed solely and directly by an officer or director of the Manager acting within the terms of its employment or office.

 

SECTION 13.3. The Manager shall be entitled to terminate this Agreement by notice in writing to the Partnership if:

 

(a) any moneys payable by the Partnership under this Agreement is not paid when due or if due on demand within 20 Business Days following demand by the Manager;

 

(b) the Partnership defaults in the performance of any other material obligations under this Agreement, subject to a cure right of 20 Business Days following written notice by the Manager; or

 

(c) there is a Change in Control of the General Partner or the Partnership;

 

SECTION 13.4. Either party shall be entitled to terminate this Agreement by notice in writing to the other party if:

 

(a) the other party ceases to conduct business, or all or substantially all of the equity-interests, properties or assets of such other party are sold, seized or appropriated which, in the case of seizure or appropriation, is not discharged within 20 Business Days;

 

(b) (i) the other party files a petition under any bankruptcy law, makes an assignment for the benefit of its creditors, seeks relief under any law for the protection of debtors or adopts a plan of liquidation; (ii) a petition is filed against the other party seeking to have it declared insolvent or bankrupt and such petition is not dismissed or stayed within 90 Business Days of its filing; (iii) the other party shall admit in writing its insolvency or its inability to pay its debts as they mature; (iv) an order is made for the appointment of a liquidator, manager, receiver or trustee of the other party of all or a substantial part of its assets; (v) if an encumbrancer takes possession of or a receiver or trustee is appointed over the whole or a substantial part of the other party’s undertaking, property or

assets; or (vi) if an order is made or a resolution is passed for the other party’s winding up;

 

(c) the other party is prevented from performing its obligations hereunder, in any material respect, by reasons of Force Majeure for a period of two or more consecutive months; or

 

(d) all Supervision Agreements and all Shipmanagement Agreements are terminated in accordance with the respective terms thereof.

 

SECTION 13.5. Upon the effective date of termination pursuant to this Article XIII, the Manager shall promptly terminate its service hereunder, after taking reasonable commercial steps to minimize any interruption to the business of the members of the Partnership Group.

 

SECTION 13.6. Upon termination, the Manager shall, as promptly as possible, submit a final accounting of funds received and disbursed under this Agreement, any Supervision Agreement and/or any Shipmanagement Agreement and of any remaining Management Fees and/or any other funds due from the Partnership or any other member of the Partnership Group, calculated pro rata to the date of termination, and any non-disbursed funds of any member of the Partnership Group in the Manager’s possession or control will be paid by the Manager as directed by such member of the Partnership Group promptly upon the Manager’s receipt of all sums then due to it under this Agreement, any Supervision Agreement and/or any Management Agreement, if any.

 

SECTION 13.7. Upon termination of this Agreement, the Manager shall release to the Partnership the originals where possible, or otherwise certified copies, of all such accounts and all documents specifically relating to each Vessel or the provision of the Services.

 

SECTION 13.8. Upon termination of this Agreement either by the Manager for any reason (other than pursuant to Section 13.4(c)) or by the Partnership pursuant to Section 13.1, the Partnership shall be liable to pay to the Manager as liquidated damages an amount in U.S. Dollars and common units representing limited partnership interests in the Partnership equal to the lesser of (a) ten times and (b) the number of full years remaining prior to the date falling ten years after the last day of the Initial Term times, in each case, the aggregate fees due and payable to the Manager under the terms of this Agreement during the 12-month period ending on the date of termination of this Agreement (without taking into account any reduction to the fees payable to the Manager under Section 9.1(a) in the event that a Submanager has been appointed as provided therein), PROVIDED ALWAYS, that the amount of liquidated damages payable thereunder shall never be less than two times the aggregate fees due and payable to the Manager under the terms of this Agreement during the 12-month period ending on the date of termination of this Agreement.

SECTION 13.9. The provisions of this Article XIII shall survive any termination of this Agreement.

 

ARTICLE XIV

 

NOTICES

 

SECTION 14.1. All notices, consents and other communications hereunder, or necessary to exercise any rights granted hereunder, shall be in writing, sent either by prepaid registered mail or telefax, and will be validly given if delivered on a Business Day to an individual at the following address:

 

Costamare Partners LP
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇

 

Telefax: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Attention: CEO

 

Costamare Shipping Company S.A.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇

 

Telefax: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Attention: General Manager

 

ARTICLE XV

 

APPLICABLE LAW

 

SECTION 15.1. This Agreement and any non-contractual obligations connected with it shall be governed by, and construed in accordance with, the laws of England.

 

SECTION 15.2. Except for Sections 2.3, 3.5, 9.5 and 9.6 and Articles XI and XII which can be relied by a Submanager (other than V.Ships) and Sections 2.3, 3.5, 9.5, 9.6 and 10.9 and Articles XI and XII which can be relied by a Related Manager, no other term of this Agreement is enforceable under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to this Agreement.

 

ARTICLE XVI

 

ARBITRATION

 

SECTION 16.1. All disputes arising out of this Agreement and/or any non-contractual obligations connected with it shall be arbitrated in London in the following manner. One arbitrator is to be appointed by each of the parties hereto and a third by the two so chosen. Their decision or that of any two of them shall be final. The

arbitrators shall be commercial persons, conversant with shipping matters. Such arbitration is to be conducted in accordance with the London Maritime Arbitration Association (LMAA) Terms current at the time when the arbitration proceedings are commenced and in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof.

 

SECTION 16.2. In the event that a party hereto shall state a dispute and designate an arbitrator in writing, the other party shall have 10 Business Days to designate its own arbitrator. If such other party fails to designate its own arbitrator within such period, the arbitrator appointed by the first party can render an award hereunder.

 

SECTION 16.3. Until such time as the arbitrators finally close the hearings, either party shall have the right by written notice served on the arbitrators and on the other party to specify further disputes or differences under this Agreement for hearing and determination.

 

SECTION 16.4. The arbitrators may grant any relief, and render an award, which they or a majority of them deem just and equitable and within the scope of this Agreement, including but not limited to the posting of security. Awards pursuant to this Article XVI may include costs and judgments may be entered upon any award made herein in any court having jurisdiction.

 

ARTICLE XVII

 

MISCELLANEOUS

 

SECTION 17.1. This Agreement constitutes the sole understanding and agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings, written or oral, with respect thereto. This Agreement may not be amended, waived or discharged except by an instrument in writing executed by the party against whom enforcement of such amendment, waiver or discharge is sought.

 

SECTION 17.2. During the term hereof, the Manager will not provide services hereunder through, or otherwise cause any member of the Partnership Group to have, an office or fixed place of business in the United States.

 

SECTION 17.3. This Agreement may be executed in one or more written counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

IN WITNESS WHEREOF the undersigned have executed this Agreement as of the date first above written.

 

	COSTAMARE PARTNERS LP
	By:	COSTAMARE PARTNERS GP LLC,
	its general partner

	By:
		Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
		Title:   CFO

	COSTAMARE PARTNERS GP LLC
	By:
		Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
		Title:   CFO

 

	COSTAMARE SHIPPING COMPANY S.A.
	By:
		Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
		Title:  Director

SCHEDULE A

 

SHIPOWNING SUBSIDIARIES

 

1) Capetanissa Maritime Corporation

 

2) ▇▇▇▇▇ Shipping Co.

 

3) Kayley Shipping Co.

 

4) ▇▇▇▇▇▇▇ Shipping Co.

SCHEDULE B

 

NON-SHIPOWNING SUBSIDIARIES

 

1. Costamare Partners Holdings LLC

APPENDIX I

 

FORM OF SHIP MANAGEMENT AGREEMENT

 

This document is a computer generated ▇▇▇▇▇▇▇ 98 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and this computer generated document.

PART II
“▇▇▇▇▇▇▇ 98” Standard Ship Management Agreement

 

This document is a computer generated ▇▇▇▇▇▇▇ 98 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and the computer generated document.

PART II
“▇▇▇▇▇▇▇ 98” Standard Ship Management Agreement

 

This document is a computer generated ▇▇▇▇▇▇▇ 98 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and the computer generated document.

PART II
“▇▇▇▇▇▇▇ 98” Standard Ship Management Agreement

 

This document is a computer generated ▇▇▇▇▇▇▇ 98 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and the computer generated document.

PART II
“▇▇▇▇▇▇▇ 98” Standard Ship Management Agreement

 

This document is a computer generated ▇▇▇▇▇▇▇ 98 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and the computer generated document.

PART II
“▇▇▇▇▇▇▇ 98” Standard Ship Management Agreement

 

This document is a computer generated ▇▇▇▇▇▇▇ 98 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and the computer generated document.

PART II
“▇▇▇▇▇▇▇ 98” Standard Ship Management Agreement

 

This document is a computer generated ▇▇▇▇▇▇▇ 98 form printed by authority of BIMCO. Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original BIMCO approved document shall apply. BIMCO assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original BIMCO approved document and the computer generated document.

APPENDIX II

 

FORM OF SUPERVISION AGREEMENT

 

THIS AGREEMENT is made the ____ day of                           , 20[ • ] BETWEEN:

 

(1)

[name of relevant member of the Partnership Group], a company incorporated under the laws of [•], whose registered office is [ADDRESS] (the “Owner”); and

 

(2)

COSTAMARE SHIPPING COMPANY S.A., a company incorporated under the laws of [•], whose registered office is at [ADDRESS] (the “Construction Supervisor”).

 

WHEREAS:

 

By a shipbuilding contract dated                                   (the “Shipbuilding Contract”) and made between [•1 (the “Builder”) and the Owner, the Builder agreed to construct, to the order of the Owner, and sell to the Owner, a [•] container vessel, known during construction as Hull No.[•] (the “Vessel”);

 

IT IS NOW AGREED as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1. Except as otherwise defined herein, all terms defined in the Shipbuilding Contract shall have the same respective meanings when used herein.

 

SECTION 1.2. In this Agreement, unless the context otherwise requires, the following expressions shall have the following meanings:

 

“Business Day” means a day, other than a Saturday or Sunday or a public holiday, on which major retail banks in New York City and Athens Greece, and (in respect of any payments which are to be made to the Builder) [•], are open for non-automated customer services;

 

“Partnership Management Agreement” means the agreement dated [         ] 2015 made between the Partnership and the Construction Supervisor.

 

“Owner’s Supplies” means all of the items to be furnished to the Vessel by the Owner in accordance the relevant provisions of the Shipbuilding Contract.

 

“Partnership” means Costamare Partners LP of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ Islands MH96960 and includes its successors in title.

 

“Spares” means the items to be designated as spares by the parties hereto at the time of the delivery of the Vessel.

“Supervision Period” means the period from the execution of this Agreement to and including the earlier of (i) the date of delivery of the Vessel pursuant to the Shipbuilding Contract and (ii) the date this Agreement is terminated.

 

ARTICLE II

 

APPOINTMENT

 

SECTION 2.1. The Owner hereby appoints the Construction Supervisor, and the Construction Supervisor hereby agrees to act as the Owner’s supervisor towards the Builder and as the “Owner’s Representative” under the Shipbuilding Contract for the duration of the Supervision Period and to perform the duties and rights which rest with the Owner regarding the construction and delivery of the Vessel in accordance with all of the provisions of the Shipbuilding Contract. The Owner shall be responsible for, inter alia, determining the general policy of supervision of construction of the Vessel and the scope of activities of the Construction Supervisor and, in the performance of its duties under this Agreement, the Construction Supervisor shall at all times act strictly in accordance with any instructions or directions given to it by the Owner regarding such general policy or, in the absence of such instructions or directions, in accordance with the standards of a prudent supervisor providing services of the type to be provided under this Agreement, having due regard to the Owner’s interest. Any instructions so given shall be consistent with the nature and scope of the supervision services required to be performed by the Construction Supervisor under this Agreement and shall not require the Construction Supervisor to do or omit to do anything which may be contrary to any applicable law of any jurisdiction or which is inconsistent or contrary to any of the rights and duties of the Owner under the Shipbuilding Contract. Upon appointment the Owner shall furnish the Construction Supervisor with a full and complete copy of the Shipbuilding Contract (which for the avoidance of doubt shall include the Specifications and the Plans).

 

SECTION 2.2. Specific Powers and Duties of the Construction Supervisor. Without prejudice to the generality of the appointment made under Section 2.1, and (where applicable) by way of addition to the rights, powers and duties so conferred, the Construction Supervisor shall, subject to this Section 2.2 and to Articles III and IV, have and be entrusted with the following rights, powers and duties in relation to the Shipbuilding Contract and the Vessel:

 

(a) to review, comment on, agree and approve the lists of plans and the drawings referred to; to attend the testing of the Vessel’s machinery, outfitting and equipment and to request any tests or inspections which the Construction Supervisor may consider appropriate or desirable and to review and comment on the results of all tests and inspections to the extent this is possible under the terms of the Shipbuilding Contract; to carry out such inspections and give such advice or suggestions to the Builder as the Construction Supervisor may consider appropriate and as the terms of the Shipbuilding Contract allow him to do; and to give notice to the Builder in the event that the Construction Supervisor discovers any construction, material or workmanship which the Construction Supervisor

believes does not or will not conform to the requirements of the Shipbuilding Contract and the specifications again provided the terms of the Shipbuilding Contract allows for such notice to be given;

 

(b) to appoint a representative of the Construction Supervisor for the purposes specified under Article [•];

 

(c) if any alteration or addition to the Shipbuilding Contract becomes obligatory or desirable, to consult with the Builder and make recommendations to the Owner as to whether or not acceptance should be given to any proposal notified to the Owner by the Builder;

 

(d) to request and agree to any minor alterations, additions or modifications to the Vessel or the specifications and any substitute materials to the extent this is possible under the terms of the Shipbuilding Contract, which the Construction Supervisor may consider appropriate or desirable, provided that if the cost of such variations or substitute materials would have the effect of altering the Contract Price (as defined in the Shipbuilding Contract) by more than three per cent (3%) from the Contract Price on the date hereof or the amount of any of the installments of the Contract Price due under the Shipbuilding Contract prior to the delivery of the Vessel, the Construction Supervisor shall notify the same to the Owner in writing and obtain the Owner’s instructions before taking any action in relation thereto; to receive from and transmit to the Builder information relating to the requirements of the classification society and to give instructions and agree with the Builder regarding alterations, additions or changes in connection with such requirements; and to approve the substitution of materials as requested by the Builder;

 

(e) to attend and witness the trials of the Vessel to the extent this is possible under the terms of the Shipbuilding Contract;

 

(f) to determine whether the Vessel has been designed, constructed, equipped and completed in accordance with, and complies with, the Shipbuilding Contract and the Specifications and Plans (each as defined in the Shipbuilding Contract); to give the Builder a notice of acceptance or (as the case may be) rejection of the Vessel, to require or request any further test and inspection of the Vessel to the extent this is possible under the terms of the Shipbuilding Contract, and to give and receive any further or other notice relative to such matters and generally to advise the Owner in respect of all such matters;

 

(g) to sign on behalf of the Owner any protocols as to sea trials, consumable stores, delivery and acceptance or otherwise, having first ascertained with the Owner the appropriateness of so doing;

 

(h) to accept on behalf of the Owner the documents specified in Article [•], Paragraph [•] of the Shipbuilding Contract to be delivered by the Builder at

delivery of the Vessel under the Shipbuilding Contract and to confirm receipt thereof to the Owner;

 

(i) to give and receive on behalf of the Owner any notice contemplated by the Shipbuilding Contract, provided that the Construction Supervisor shall not have authority to give on behalf of the Owner any notice which the Owner may be entitled to give to cancel, repudiate or rescind the Shipbuilding Contract without the prior written consent of the Owner; and

 

(j) to purchase, after being placed in funds by the Owner, all Owner’s Supplies as agent of the Owner and supply and deliver the same together with all necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates to the Builder as provided in the Shipbuilding Contract, and provide to the Owner a list of all such Owner’s Supplies as soon as possible.

 

SECTION 2.3. The Construction Supervisor shall discharge its responsibilities under this Clause 2 as the Owner’s agent.

 

SECTION 2.4. In the event that the Construction Supervisor uses own funds to purchase Owner’s Supplies, the cost of supplying and delivering Owner’s Supplies pursuant to relevant terms of the Shipbuilding Contract shall be reimbursed by the Owner to the Construction Supervisor on the date the Construction Supervisor submits to the Owner supporting invoices in respect of such cost.

 

ARTICLE III

 

CONSTRUCTION SUPERVISOR’S DUTIES
REGARDING CONSTRUCTION

 

SECTION 3.1. The Construction Supervisor undertakes with the Owner with respect to the Shipbuilding Contract:

 

(a) to notify the Owner in writing promptly on becoming aware of any likely change to any of the dates on which any installment under the Shipbuilding Contract is expected to be due;

 

(b) to (i) notify the Owner in writing of the expected date on which the launching or, as the case may be, sea trials of the Vessel is or are to take place and (ii) promptly on the same day as the launching or, as the case may be, sea trials of the Vessel takes or take place to confirm that the launching or, as the case may be, sea trials of the Vessel has or have taken place and, where relevant, that the amount specified in such confirmation is due and payable;

 

(c) to (i) advise the Owner in writing, four (4) Business Days prior to the date on which the delivery installment under the Shipbuilding Contract is anticipated to become due, of the times and amounts of payments to be made to the Builder under the Shipbuilding Contract and any amount due to the Construction Supervisor for Owner’s Supplies not already settled and (ii)

promptly confirm the same on the day on which such installment becomes due (and being the date the same is required to be paid to the account referred to in the relevant term of the Shipbuilding Contract);

 

(d) not to accept the Vessel or delivery of the Vessel on the Owner’s behalf without the Owner’s prior written approval and unless the Construction Supervisor shall have previously certified to the Owner in writing, in the form of the certificate set out in Schedule 1 to this Agreement, that:

 

(i) the Vessel has been duly completed and is ready for delivery to and acceptance by the Owner in or substantially in accordance with the Shipbuilding Contract and the Specifications and Plans;

 

(ii) there is, to the best of the Construction Supervisor’s knowledge and belief having made due enquiry with the Builder, no lien or encumbrance on the Vessel other than the lien in favor of the Builder in respect of the delivery installment of the Contract Price due in accordance with the terms of the Shipbuilding Contract; and

 

(iii) the Vessel is recommended for classification by the relevant classification society provided for in the Shipbuilding Contract (and the Construction Supervisor shall attach to its certificate the provisional certificate of such classification society recommending such classification of the Vessel or a duplicate or photocopy of such provisional certificate or otherwise provide evidence of such classification to the Owner);

 

(e) on receipt thereof from the Builder promptly to deliver the documents specified in Article [•], Paragraph [•] of the Shipbuilding Contract to the Owner or as the Owner may direct; and

 

(f) solely with the prior written approval of the Owner, to request from or agree with the Builder any material alterations, additions or modifications to the Vessel.

 

ARTICLE IV

 

CONSTRUCTION SUPERVISOR’S GENERAL OBLIGATIONS

 

SECTION 4.1. The Construction Supervisor undertakes to the Owner, with respect to the exercise and performance of its rights, powers and duties as the Owner’s representative under this Agreement, as follows:

 

(a) it will exercise commercially reasonable efforts to cause the due and punctual observance and performance of all conditions, duties and obligations imposed on the Owner by the Shipbuilding Contract (other than to pay the Contract Price) and will not without the prior written consent of the Owner:

(i) exercise any rights of the Owner to cancel, repudiate or rescind the Shipbuilding Contract;

 

(ii) waive, modify or suspend any provision of the Shipbuilding Contract if as a result of such waiver, modification or suspension the Owner will or may suffer any adverse consequences; and

 

(b) it will, at its own expense, keep all necessary and proper books, accounts, records and correspondence files relating to its duties and activities under this Agreement and shall send quarterly reports to the Owner concerning the progress of the design and construction of the Vessel and keep the Owner promptly informed of any deviations from the building program.

 

ARTICLE V

 

LIABILITY AND INDEMNITY

 

SECTION 5.1. Save for the obligation of the Owner to pay any moneys due to the Construction Supervisor hereunder, neither the Owner nor the Construction Supervisor shall be under any liability to the other for any failure to perform any of their obligations hereunder by reason of Force Majeure. “Force Majeure” shall mean any cause whatsoever of any nature or kind beyond the reasonable control of the Owner or the Construction Supervisor, including, without limitation, acts of God, acts of civil or military authorities, acts of war or public enemy, acts of any court, regulatory agency or administrative body having jurisdiction, insurrections, riots, strikes or other labor disturbances, embargoes or other causes of a similar nature.

 

SECTION 5.2. The Construction Supervisor, including its officers, directors, employees, shareholders, agents and any sub-contractors (the “Construction Supervisor Related Parties”), shall be under no liability whatsoever to the Owner or to any third party (including the Builder) for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect (including but not limited to loss of profit arising out of or in connection with the delayed or non-conforming delivery of the Vessel), and howsoever arising in the course of the performance of this Agreement, unless and to the extent that the same is proved to have resulted solely from the gross negligence or willful misconduct of the Construction Supervisor, its officers, employees, agents or any of its sub-contractors in which case (save where loss, damage, delay or expense, has resulted from the Construction Supervisor’s personal act or omission committed with the intent to cause same) the Construction Supervisor’s liability for each incident or series of incidents giving rise to claim or claims shall never exceed a total of ten times the fees payable hereunder.

 

SECTION 5.3. The Owner shall indemnify and hold harmless the Construction Supervisor Related Parties against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out of or in connection with the performance of this Agreement and against and in respect of any loss, damage, delay or expense of

whatsoever nature (including legal costs and expenses on a full indemnity basis), whether direct or indirect, incurred or suffered by any Construction Supervisor Related Party in the performance of this Agreement, unless incurred or suffered due to the gross negligence or willful misconduct of any Construction Supervisor Related Party.

 

SECTION 5.4. It is hereby expressly agreed that no employee or agent of the Construction Supervisor (including any sub-contractor from time to time employed by the Construction Supervisor) shall in any circumstances whatsoever be under any liability whatsoever to the Owner or any third party for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Article V, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to the Construction Supervisor or to which the Construction Supervisor is entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Construction Supervisor acting as aforesaid, and for the purpose of all the foregoing provisions of this Article V, the Construction Supervisor is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.

 

SECTION 5.5. The provisions of this Article V shall survive any termination of this Agreement.

 

ARTICLE VI

 

FEES

 

SECTION 6.1. In consideration of the performance of the duties assigned to the Construction Supervisor in this Agreement, the Owner shall pay to the Construction Supervisor the sum of US$787,405 for its total supervision costs in connection with the supervision of the construction of the Vessel, plus any expenses incurred under the Shipbuilding Contract against presentation of supporting invoices from the Construction Supervisor which the Construction Supervisor shall supply to the Owner at the same time as payment is requested. The fee payable hereunder to the Construction Supervisor shall include all costs which are incurred by the Construction Supervisor in connection with the ordinary exercise and performance by the Construction Supervisor of the rights, powers and duties entrusted to it pursuant to this Agreement. The supervision fee will be paid in two equal installments as follows:

 

(a)

US$393,702.50 on the execution of this Agreement; and

 

(b)

US$393,702.50 upon the Construction Supervisor advising the Owner of the completion of the sea trial run of the Vessel.

For the avoidance of doubt, the Construction Supervisor can demand payment of the fee and other amounts payable hereunder from the Partnership pursuant to the relevant provisions of the Partnership Management Agreement.

 

ARTICLE VII

 

COMMENCEMENT - TERMINATION

 

SECTION 7.1. This Agreement shall come into effect on the date hereof and shall continue until the delivery of the Vessel in accordance with the Shipbuilding Contract unless terminated earlier pursuant to the terms of Section 7.2, Section 7.3, Section 7.4 or Section 7.5.

 

SECTION 7.2. The Owner shall be entitled to terminate this Agreement by notice in writing to the Construction Supervisor if the Construction Supervisor defaults in the performance of any material obligation under this Agreement, subject to a cure right of 20 Business Days following written notice by the Owner.

 

SECTION 7.3. This Agreement shall terminate automatically if:

 

(a) the Shipbuilding Contract is cancelled, rescinded or terminated; or

 

(b) the Partnership Management Agreement is terminated.

 

SECTION 7.4. The Construction Supervisor shall be entitled to terminate this Agreement by notice in writing to the Owner if:

 

(a) any moneys payable by the Owner under this Agreement is not paid when due or if due on demand within 10 Business Days following demand by the Construction Supervisor; or

 

(b) the Owner defaults in the performance of any other material obligations under this Agreement, subject to a cure right of 20 Business Days following written notice by the Construction Supervisor.

 

SECTION 7.5. Either party shall be entitled to terminate this Agreement immediately if:

 

(a) the other party ceases to conduct business, or all or substantially all of the equity-interests, properties or assets of either such party is sold, seized or appropriated; or

 

(b) (i) the other party files a petition under any bankruptcy law, makes an assignment for the benefit of its creditors, seeks relief under any law for the protection of debtors or adopts a plan of liquidation; (ii) a petition is filed against the other party seeking to have it declared insolvent or bankrupt and such petition is not dismissed or stayed within 40 Business Days of its filing; (iii) the other

party shall admit in writing its insolvency or its inability to pay its debts as they mature; (iv) an order is made for the appointment of a liquidator, manager, receiver or trustee of the other party of all or a substantial part of its assets; (v) an encumbrancer takes possession of or a receiver or trustee is appointed over the whole or any part of the other party’s undertaking, property or assets; or (vi) an order is made or a resolution is passed for the other party’s winding up;

 

(c) a distress, execution, sequestration or other process is levied or enforced upon or sued out against the other party’s property which is not discharged within 20 Business Days;

 

(d) the other party ceases or threatens to cease wholly or substantially to carry on its business otherwise than for the purpose of a reconstruction or amalgamation without insolvency previously approved by the terminating party;

 

or

 

(e) the other party is prevented from performing its obligations hereunder by reasons of Force Majeure for a period of two or more consecutive months.

 

SECTION 7.6. In the event of termination due to the Construction Supervisor’s default, then it shall not be entitled to receive any payment in respect of the fees and other amounts described in Article VI becoming due and payable after the date of such termination.

 

ARTICLE VIII

 

EMPLOYEES

 

SECTION 8.1. None of the employees and/or sub-contractors of the Construction Supervisor shall constitute, for the purposes of this Agreement, sub-agents of the Owner. The Construction Supervisor, in its capacity as employer and contractor (and not in its capacity as agent for the Owner), shall (a) be responsible for the salaries, expenses and costs in respect of each of its employees and sub-contractors (not in its capacity as agent for the Owner) and (b) save for the provisions of Article V, indemnify its employees and sub-contractors for any liabilities and losses incurred by such employees and sub-contractors.

 

ARTICLE IX

 

GOVERNING LAW - ARBITRATION

 

SECTION 9.1. This Agreement shall be governed by and be construed in accordance with the laws of England.

 

SECTION 9.2. All disputes arising out of this Agreement shall be arbitrated in London in the following manner. One arbitrator is to be appointed by each of the parties hereto and a third by the two so chosen. Their decision or that of any two of them shall be final and, for the purpose of enforcing any award, this Agreement may

be made a rule of the court. The arbitrators shall be commercial persons, conversant with shipping matters. Such arbitration is to be conducted in accordance with the rules of the London Maritime Arbitration Association terms current at the time when the arbitration proceedings are commenced and in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof.

 

SECTION 9.3. In the event that a party hereto shall state a dispute and designate an arbitrator in writing, the other party shall have 20 Business Days to designate its own arbitrator. If such other party fails to designate its own arbitrator within such period, the arbitrator appointed by the first party can render an award hereunder.

 

SECTION 9.4. Until such time as the arbitrators finally close the hearings, either party shall have the right by written notice served on the arbitrators and on the other party to specify further disputes or differences under this Agreement for hearing and determination.

 

SECTION 9.5. The arbitrators may grant any relief, and render an award, which they or a majority of them deem just and equitable and within the scope of this Agreement, including but not limited to the posting of security. Awards pursuant to this Article IX may include costs, including a reasonable allowance for attorneys’ fees, and judgments may be entered upon any award made herein in any court having jurisdiction.

 

ARTICLE X

 

COUNTERPARTS

 

SECTION 10.1. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

 

ARTICLE XI

 

NOTICES

 

SECTION 11.1. Every notice or other communication under this Agreement shall:

 

(a) be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication (other than telex) in permanent written form;

 

(b) be deemed to have been received, in the case of a letter, when delivered personally or three (3) days after it has been put into the post and, in the case of a facsimile transmission or other means of telecommunication (other than telex) in permanent written form, at the time of dispatch (provided that if the date of dispatch is a Saturday or Sunday or a public holiday in the country of the addressee or if the time of dispatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next day which is not a Saturday or Sunday or public holiday); and

(c) be sent:

 

(i)

to the Construction Supervisor at:

 

Costamare Shipping Company S.A.
[•l
Facsimile No.: [•]
Attention: [•]

 

(ii)

to the Owner at:

 

C/o Costamare Partners LP
[•]Athens, Greece
Facsimile No.: +30 210 [•]
Attention: [•]

 

or to such other address and/or numbers for a party as is notified by such party to the other party under this Agreement.

 

SECTION 11.2. Each communication and document made or delivered by one party to another pursuant to this Agreement shall be in the English language.

 

SECTION 11.3. This Agreement shall not create benefits on behalf of any other person not a party to this Agreement, and this Agreement shall be effective only as between the parties hereto, their successors and permitted assigns.

IN WITNESS of which this Agreement has been duly executed the day and year first before written.

 

For the Owner

 

For the Construction Supervisor

SCHEDULE 1

 

FORM OF CONSTRUCTION CERTIFICATE

[On the letterhead of the Construction Supervisor]

 

[Vessel Owner] (the “Owner”)
[Address]
Facsimile: [ ]
Attention: [ ]

 

Date:

 

Dear Sirs,

 

[Name of Builder] (the “Builder”), [Name of Vessel] (the “Vessel”)

 

We refer to the construction supervision agreement dated [       ] between the Owner and us (the “Supervision Agreement”).

 

Words and expressions defined in the Supervision Agreement (whether expressly or by incorporation by reference to another document) shall have the same meaning where used in this certificate.

 

We hereby certify, pursuant to Section 3.1(d) of the Supervision Agreement, as follows:

 

(1)

the Vessel has been duly completed and is ready for delivery to and acceptance by the Owner in or substantially in accordance with the Shipbuilding Contract and the Specifications and Plans; and

 

(ii)

the Vessel is recommended for classification by [Name of the classification society] (the “Classification Society”).

 

With respect to paragraph (ii) above, please find attached to this certificate the provisional certificate of the Classification Society recommending such classification of the Vessel / a duplicate or photocopy of the provisional certificate of the Classification Society recommending such classification of the Vessel / the following evidence of the Classification Society’s recommendation of such classification of the Vessel [ ].

 

 

	Yours faithfully,
	for and on behalf of

COSTAMARE SHIPPING COMPANY S.A.