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Ship Finance Study Course | Lexitus

S H I P F I N A N C E S TU D Y C O U R S E
Access the Course Materials (for those registered on the course) (http://www.suewrightonline.com/node/943) Course Information (http://www.suewrightonline.com/node/221#link1) Time Requirements (http://www.suewrightonline.com/node/221#link2) Objectives (http://www.suewrightonline.com/node/221#link3) Materials (http://www.suewrightonline.com/node/221#link4) Next Course (http://www.suewrightonline.com/node/221#link5) Syllabus (#link6) Course Information This course will be available shortly. It is designed for bankers and lawyers and anyone else who is involved in shipping finance and who needs to understand the loan documentation. It is intended to be a practical guide and is designed to deal with the more practical issues first, leaving the more legal issues to the end as far as possible, so as to be accessible to non lawyers who need to understand the commercial and practical aspects of the subject, useful for lawyers needing to eal with the legal issues as well as the commercial and practical issues

This course is designed to help those involved in international shipping finance transactions to understand the transaction and documentation structure, to know what the commercially important issues are, both in the loan agreement and the security documents, and to know where to look for them in the documentsand to understand those legal issues which have commercial implications for lenders Go to top of page (http://www.suewrightonline.com/node/221#top)

Time Requirement There are two options for taking this course.

The first is the Key Facts route. This route involves around 10 to 15 hours work over an agreed period of weeks (ideally 4 weeks). This route covers those essential topics which participants need to be aware of when dealing with a shipping finance transaction. The second route is the "in depth" route which requires background reading in addition to the texts on the site. This route requires 30 to 40 hours work over an agreed period (ideally 5 weeks)

Delegates can decide as they progress through the materials how much depth they want to go into and move from one route to another as they wish. There are different quizzes depending on which route is followed and delegates will be awarded the appropriate certificate depending on which set of quizzes they completed successfully. Go to top of page (http://www.suewrightonline.com/node/221#top) Objectives By the end of the course participants should understand the transaction and documentation structure, know what the commercially important issues are, both in the loan agreement and the security documents, and know where to look for them in the documents understand those areas of English law on security which have commercial implications for lenders and be aware of the questions which need to be asked in different countries when putting a security package together or www.suewrightonline.com/node/942 1/5

thinking about the value of a security package Go to top of page (http://www.suewrightonline.com/node/221#top) Materials The course materials available online are self contained and no other materials are required in order to complete the Key Facts route through the study course. Delegates who wish to undertake the in depth route through the course will need to have a copy of the book Shipping Finance by Stephenson Harwood, to be able to participate, as this will be a necessary part of the course materials. The other course materials can be accessed by those registered on the study course, from the link headed "Course Materials" on the side panel next to this window. Go to top of page (http://www.suewrightonline.com/node/221#top) Next Course Delegates can start a course at any time. You can register or enquire by using the registration tab Go to top of page (http://www.suewrightonline.com/node/221#top) Syllabus An overview of the syllabus is set out below, based on a five week time period for the full course. Delegates registered on the course can access the detailed curriculum and the materials from the link to "Course Materials" in the side panel.

STAGE 1 COMMERCIAL BACKGROUND Differentiating Factors part 1 This nugget looks at some of the key ways in which shipping finance is different from other forms of finance including the ship ownership structures, the concept of sister ship arrest, the currency issues, and the implications of the international nature of the business for tax structuring Differentiating factors Part 2 This is part 2 of the nugget looking at some of the key ways in which shipping finance is different from other forms of finance. It looks at the volatility of the market, the concept of maritime liens, the multitude of jurisdictions whose laws will impact on the ships operation and on the financing, and the reduced relevance of insolvency laws . Chartering and safety This nugget looks at issues relating to the operation of a ship, focussing on the different employment options and the international requirements relating to safety. It discusses the spot market, time and voyage charters, bareboat charters, pool agreements and liner services. It also looks at SOLAS, MARPOL, port state control, ship classification, the ISM Code and the ISPS code Registration This nugget looks at ship registration. It discusses national registers, flags of convenience and offshore or international registers, as well as dual registration and its risks for mortgagees. The nugget also touches on tonnage tax Environmental Issues This nugget focusses on environmental issues from the perspective of a shipping financier. It looks at the international laws and conventions relating to marine pollution as well as the US Oil Pollution Act and its requirements for vessel response plans and certificates of financial responsibility. The nugget also looks at how the loan agreement addresses these issues Insurance This nugget looks at marine insurance, including hull and machinery, P&I and war risks insurance and mortgagee interest insurance. It describes the difference between insurance brokers and P&I clubs, and discusses the concept of calls, fleet liens and the pay to be paid rule. The nugget also looks at the documentation issues including the notice of assignment, the loss payable clauses and the insurers letter of undertaking INTRODUCTION TO DOCUMENTATION Borrower This nugget looks at the consequences of the ship ownership structures for the purpose of structuring the loan. It discusses joint and several borrowing, legal issues involved in taking upstream guarantees and cross defaulting and cross securing loans. It also looks at the different legal systems which will need to be considered when deciding on the appropriate

1/13/13 structure to use Security Fundamentals for Shipping Finance

Ship Finance Study Course | Lexitus

This nugget looks at some fundamental issues relating to security including the different purposes of security on shares as opposed to security on other assets, the difference between rights in rem and rights in personam and the sorts of issues which can make the security less effective than anticipated. The nugget also highlights the four key parts of any security document; being the charging clause, the application of funds clause, the undertakings and the powers of the security holder QUIZ STAGE 2 LOAN AGREEMENT Document overview part 1 This nugget discusses some of the most important issues in a shipping finance loan agreement. It describes the relationship between the different parts of the agreement and highlights the importance of the Repeated Representations. It also discusses the cross default clause, the material adverse change clause and the financial ratios Document overview part 2 This is part 2 of the nugget focussing on the important loan agreement issues. It highlights the market disruption clause, the increased costs clause and the grossing up clause. It discusses questions the robustness and restrictiveness of the loan terms as well as issues relating to lender default Conditions Precedent and Closings This nugget focusses on the practicalities of a shipping finance closing. It explains the various meetings which will need to take place and how those meetings will need to be coordinated to minimise the risks involved for all parties

Ship covenants This nugget highlights the undertakings relating to the ship which will be included in the loan documentation. It explains their rationale and also looks at the security cover ratio and the issues which often arise in negotiating and operating that clause. Insurance and spc covenants This nugget discusses the undertakings in relation to the insurances. It also looks at the concept of ring fencing and the restrictions which will be required if the borrower is a special purpose vehicle, as well as the US concept of substantive consolidation and the separateness covenants which may be required to address that issue STANDARD SHIPPING SECURITY Basic Shipping security This nugget discusses the elements of the basic ship security package, consisting of the Ship and also her Earnings Insurances and Requisition Compensation. It looks at the structure of the basic mortgage documentation including preferred mortgages, statutory mortgages, general assignments and deeds of covenant Key Security Document Clauses This nugget explores the charging clause and the application of funds clauses in the documentation. It highlights the relationship between these clauses and the loss payable clauses and discusses how Earnings Insurances and sale proceeds of the ship ought to be applied both before and after the occurrence of a Default

QUIZ STAGE 3 OTHER SECURITY Impact of charterer part 1 This nugget looks at the reasons for the restrictions on chartering in the documentation. It highlights the issues which need to be addressed depending on whether the charter is a time charter or a bareboat charter Impact of charterer part 2 This nugget looks at how the various issues discussed in the first part of the nugget will be incorporated into the www.suewrightonline.com/node/942 3/5

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Ship Finance Study Course | Lexitus documentation. It also looks at the impact of pool arrangements on the financing and the ship managers undertaking Charter assignments This nugget discusses the specific assignment of a charter which will be required for any significant charter of the ship and its advantages over the general assignment of Earnings which forms part of the standard security package. It also looks at the acknowledgement of the notice of assignment which the charterer will be asked to sign Other security This nugget discusses the pros and cons of taking security on shares in the shipowner. It also addresses the additional issues which arise with second mortgages and security on collateral ships Bank accounts This nugget looks at taking security on cash. It considers charge back and the advantages and disadvantages of set off as against security as well as discussing the law which applies to perfection requirements Guarantees part 1 This nugget discusses the difference between guarantees, indemnities, performance bonds and comfort letters and the characteristics of each of these instruments Guarantees part 2 This nugget looks at guarantees. It explains important legal issues relating to guarantees focussing on upstream guarantees and transactions at an undervalue Guarantees part 3 This nugget looks at the wording of the guarantee, explaining the purpose of the clauses. It uses the form of guarantee contained in the Loan Market Association investment grade loan agreement by way of an example QUIZ COMPULSORY REPORT STAGE 4 NEWBUILDINGS Newbuilding Finance This nugget looks at newbuilding finance focussing on the security arrangements during construction. It considers the issues which the lender will require the shipbuilding contract to contain and the issues to consider when reviewing a refund guarantee LEGAL ISSUES Clawback This nugget looks at the circumstances in which security may be ineffective, or less effective than anticipated. It discusses the common company law and insolvency law issues (such as directors duties and preferences) English Security Types This nugget explains pledges, legal mortgages, statutory mortgages, equitable charges, statutory and equitable assignments and legal, equitable and statutory liens, focussing in each case on the practical consequences of the differences Floating charges This nugget explains floating charges under English law including their characteristics, advantages and disadvantages. It highlights the issue as to whether security on income is a fixed or a floating charge and explains the most common circumstances in which floating charges given shortly before an insolvency may be problematic Legal opinions This nugget looks at legal opinions. It considers the countries in which opinions should be sought, and what they commonly say. It also highlights the numerous legal issues which are NOT addressed by the opinion and on which advice might need to be sought. Transferring secured loans This nugget looks at the options for structuring secured syndicated loans. It explains the need for security to be given to a single entity, either as agent or as trustee. It explores the difficulties in giving security to an agent as security for the debts due to the lenders, including the difficulties with novation, and some common solutions, including the parallel debt structure and the option of transferring the loan by assignment and assumption

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1/13/13 ENFORCEMENT Enforcement Part 1

Ship Finance Study Course | Lexitus

This nugget discusses enforcement issues. It focusses on the preparation necessary prior to formal enforcement including estoppel and preservation of rights , and the notices which need to be given prior to enforcement as well as the need to consider what other debts exist and perhaps even to pay off some debts even if they rank behind the mortgage Enforcement Part 2 This nugget looks at the options when it comes to formal enforcement. It explains the pros and cons of enforcing the pledge of shares, taking possession, selling the ship privately and proceeding via a court sale

QUIZ Stage 5 Wrap up Stage For completion of any outstanding quizzes, compulsory written report and the online evaluation

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