Filing Details

Ship Finance International Limited

(Name of Issuer)

Common Shares, par value $0.01 per share

(Title of Class of Securities)

G81075106

(CUSIP Number)

Frontline Ltd. Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road, Hamilton HM 08 Bermuda Attn: Georgina E. Sousa +1 (441) 295 6935   with a copy to: Gary J. Wolfe, Esq. Seward & Kissel LLP One Battery Park Plaza New York, New York 10004 (212) 574-1200

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

September 30, 2016

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the following box [_].

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

*The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CUSIP No.

G81075106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Hemen Holding Limited holds approximately 51.7% of the issued and outstanding shares of Frontline Ltd. As such, in addition to its current holdings of Common Shares (defined in Item 1 below), Hemen Holding Limited may also be deemed to beneficially own the 73,383 Common Shares that Frontline Ltd. beneficially owns. Hemen Holding Limited may also be deemed to beneficially own the 5,400,000 Common Shares it has lent to Farahead Investments Inc. due to the share lending arrangement described in Item 6 hereto.

 

CUSIP No.

G81075106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Greenwich Holdings Limited is the sole shareholder of Hemen Holding Limited. As such, it may be deemed to beneficially own the 20,092,070 Common Shares that Hemen Holding Limited beneficially owns.

 

 

CUSIP No.

G81075106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* C.K. Limited is the trustee of various trusts established by John Fredriksen for the benefit of his immediate family members (the "C.K. Limited Trusts"). The C.K. Limited Trusts are the sole shareholders of Greenwich Holdings Limited and the indirect owners of Hemen Holding Limited. As such, C.K. Limited may be deemed to beneficially own the 20,092,070 Common Shares that Hemen Holding Limited beneficially owns.

 

CUSIP No.

G81075106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Farahead Investments Inc. beneficially owns 5,400,000 Common Shares, which have been borrowed from Hemen Holding Limited. See Item 6.

 

CUSIP No.

G81075106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Greenfields Holding Inc. is the sole shareholder of Farahead Investments Inc. As such, it may be deemed to beneficially own the 5,400,000 Common Shares that Farahead Investments Inc. beneficially owns.

 

 

CUSIP No.

G81075106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* GSA Limited is the trustee of various trusts established by John Fredriksen for the benefit of his immediate family members (the "GSA Limited Trusts," and together with the C.K. Limited Trusts, the "Trusts"). The GSA Limited Trusts are the sole shareholders of Greenfields Holdings Inc. and the indirect owners of Farahead Investments Inc. As such, GSA Limited may be deemed to beneficially own the 5,400,000 Common Shares that Farahead Investments Inc. beneficially owns.

 

 

CUSIP No.

G81075106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Mr. Fredriksen may be deemed to beneficially own 20,092,070 Common Shares through his indirect influence over Hemen Holding Limited, Greenwich Holdings Limited, Farahead Investments Inc., and Greenfields Holding Inc., the shares of which are held in the Trusts. The beneficiaries of the Trusts are certain members of Mr. Fredriksen's family. Mr. Fredriksen disclaims beneficial ownership of the 20,092,070 Common Shares beneficially owned by Hemen Holding Limited, Greenwich Holdings Limited, Farahead Investments Inc. and Greenfields Holding Inc. except to the extent of his voting and dispositive interests in such Common Shares. Mr. Fredriksen has no pecuniary interest in the 20,092,070 Common Shares beneficially owned by Hemen Holding Limited, Greenwich Holdings Limited, Farahead Investments Inc. and Greenfields Holding Inc.

 

CUSIP NO. G81075106

 

 

 

AMENDMENT NO. 1 TO SCHEDULE 13D

 

This Amendment No. 1 to Schedule 13D (this "Amendment No. 1") amends and restates in its entirety the Schedule 13D filed on June 15, 2016 (the "Original Schedule 13D" and, together with this Amendment No. 1, the "Schedule 13D").

Item 1. Security and Issuer

This Schedule 13D relates to the common shares, par value $0.01 per share (the "Common Shares") of Ship Finance International Limited, a company incorporated in Bermuda (the "Issuer"). The address of the principal executive office of the Issuer is Par-la-Ville Place, 4th Floor, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda.

Item 2. Identity and Background

 

 

The name, citizenship, present principal occupation or employment and business address of each executive officer and director of Frontline is set forth below. If no business address is given, the director's or executive officer's address is Par-la-Ville Place, 4th Floor, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda.

 

 

 

The name, citizenship, present principal occupation or employment and the business address of Hemen's directors is set forth below. Hemen does not have any executive officers.

 

 

The name, citizenship, present principal occupation or employment and the business address of Greenwich's directors is set forth below. Greenwich does not have any executive officers.

 

 

The name, citizenship, present principal occupation or employment and principal business address of C.K. Limited's directors is set forth below. C.K. Limited does not have any executive officers.

 

 

 

The name, citizenship, present principal occupation or employment and principal business address of Farahead's directors is set forth below. Farahead does not have any executive officers.

 

 

The name, citizenship, present principal occupation or employment and the principal business address of Greenfields' directors is set forth below. Greenfields does not have any executive officers.

 

 

The name, citizenship, present principal occupation or employment and the principal business address of GSA Limited's directors is set forth below.  GSA Limited does not have any executive officers.

 

 

 

 

Item 3. Source and Amount of Funds or Other Consideration

 

On January 25, 2013, pursuant to the SFLC Share Lending Agreement I (defined in Item 6 below), Hemen lent 6,060,606 Common Shares to SFL Capital II LTD ("SFLC"), an exempted company incorporated in Bermuda and a wholly-owned subsidiary of the Issuer, for approximately $1.0 million.  See Item 6.

On June 2, 2016, pursuant to the Farahead Share Lending Arrangement (defined in Item 6 below), Farahead transferred 2,500,000 Common Shares to Hemen that were previously loaned by Hemen to Farahead for no consideration. See Item 6.

On September 30, 2016, pursuant to the SFLC Share Lending Agreement II (defined in Item 6 below), Hemen lent 8,000,000 Common Shares to SFLC for $0.015 per share.  See Item 6.

Item 4. Purpose of Transaction

 

The Reporting Persons at any time and from time to time may acquire additional Common Shares or dispose of any or all of Common Shares they own depending upon an ongoing evaluation of the investment in the Common Shares, prevailing market conditions, other investment opportunities, other investment considerations and/or other factors.

The Reporting Persons have no plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) through (j) inclusive of the instructions to Item 4 of Schedule 13D. The Reporting Persons may, at any time and from time to time, review or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto.

Item 5. Interest in Securities of the Issuer

 

 

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

 

In 2006, Hemen and Farahead entered into a share lending arrangement (the "Farahead Share Lending Arrangement") pursuant to which Hemen, from time to time, may loan Common Shares to Farahead (the "Farahead Loan Shares") for no consideration. Under the Farahead Share Lending Arrangement, Farahead is entitled to vote the Farahead Loan Shares and receive any dividends therefrom provided however that Hemen may request, and Farahead must return, the Farahead Loan Shares to Hemen within five days of such request.

 

Share loans under the SFLC Share Lending Agreement I will terminate, and the SFLC Loan I Shares must be returned to Hemen, on the first business day following the last day of the Loan Period (as defined in the SFLC Share Lending Agreement I) or in the following circumstances: (i) at SFLC's written request, (ii) by a written agreement between Hemen and SFLC or (iii) by Hemen or SFLC upon the occurrence of a Default (as defined in the SFLC Share Lending Agreement I).

 

Share loans under the SFLC Share Lending Agreement II will terminate, and the SFLC Loan II Shares must be returned to Hemen, on the first business day following the last day of the Loan Period (as defined in the SFLC Share Lending Agreement II) or in the following circumstances: (i) at SFLC's written request, (ii) by a written agreement between Hemen and SFLC, or (iii) by Hemen or SFLC upon the occurrence of a Default (as defined in the SFLC Share Lending Agreement II). At any time the SFLC Loan II Shares are returned to Hemen pursuant to the terms of the SFLC Share Lending Agreement II, Hemen has agreed to pay the Issuer $0.01 per SFLC Loan II Share returned.

 

Except as described herein, the Reporting Persons do not have any other contract, arrangement, understanding or relationship with any person with respect to the securities of the Issuer.

 

Item 7. Materials to be Filed as Exhibits

 

Exhibit A: Joint Filing Agreement

Exhibit B: SFLC Share Lending Agreement I

Exhibit C: SFLC Share Lending Agreement II

 

 

SIGNATURES

 

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

 

 

* Each of the Reporting Persons disclaims beneficial ownership of the reported securities except to the extent of their pecuniary interest therein.

 

Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations (see 18 U.S.C. 1001).

 

 

 

Exhibit A

 

 

JOINT FILING AGREEMENT

 

The undersigned agree that this Schedule 13D, dated October 11, 2016, relating to the Common Shares, par value $0.01 per share of Ship Finance International Limited shall be filed on behalf of the undersigned.

 

 

 

 

 

 

 

Exhibit B

 

may include Borrower or its affiliates), but not exceeding three, as shall furnish bid prices available to Lender.

 

"Common Stock" means shares of common stock, par value $1.00, of Ship Finance; provided that, if the Common Stock shall be exchanged or converted into any other security, assets or other consideration (including cash) as the result of any merger, consolidation, other business combination, reorganization, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy or liquidation or a scheme of arrangements), then, effective upon such exchange or conversion, the amount of such other security, assets or other consideration received in exchange for one share of Common Stock (without regard to any substitutions of cash in lieu of fractional securities) shall be deemed to become one share of Common Stock. For purposes of the foregoing, where a share of Common Stock may be converted or exchanged into more than a single type of consideration based upon any form of stockholder election, such consideration will be deemed to be the weighted average of the type and amounts of consideration received by holders of Ship Finance's common stock or based upon the consideration actually received by the Borrower or its affiliates in connection with such exchange or conversion. For the avoidance of doubt, the foregoing provisions shall apply in connection with the occurrence of each such event, in addition to any prior adjustments or modifications effected hereunder.

 

"Convertible Notes" means the $350,000,000 aggregate principal amount of 3.25% Convertible Senior Notes due February 1, 2018 issued by Ship Finance.

 

"Cutoff Time" shall mean 10:00 a.m. (New York City time), or such other time on a Business Day by which a transfer of Loaned Shares must be made by Borrower or Lender to the other, as shall be determined in accordance with market practice.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

"Facility Termination Date" has the meaning assigned to such term in Section 4(b).

 

"Foreign Private Issuer" has the meaning assigned to such terms in Section 2(c)

 

"Lender's Designated Account" means the securities account of the Lender maintained with Nordea Securities Services, as custodian, on the books of Brown Brothers Harriman, as securities intermediary, and designated "Hemen Holding Ltd. (account number             )".

 

"Loan Period" means the period beginning on the date hereof and ending on the earliest to occur of (i) the 3^rd Business Day immediately following the 50^th VWAP Trading Day (as such term is defined in the final prospectus for the Convertible Notes) immediately following the date on which all Convertible Notes have been redeemed, repurchased, converted or otherwise acquired for value, (ii) the date, if any, on which all Loans hereunder are terminated and (iii) the date, if any, on which this Agreement is terminated.

 

"Loaned Shares" means shares of Common Stock transferred in a Loan hereunder until such Common Stock (or identical Common Stock) is transferred back to Lender hereunder. If,

 

 

as the result of a stock dividend, stock split or reverse stock split, the number of outstanding shares of Common Stock is increased or decreased, then the number of outstanding Loaned Shares shall be proportionately increased or decreased, as the case may be. If any new or different security or securities, assets or other consideration shall be exchanged for or converted into the outstanding shares of Common Stock as described in the definition thereof, such new or different security or securities, assets or other consideration shall, effective upon such exchange, be deemed to become a Loaned Share in substitution for the former Loaned Share for which such exchange is made and in the same proportions as described in the definition of "Common Stock." For purposes of return of Loaned Shares by Borrower or purchase or sale of securities pursuant to Section 3 or 10, Borrower may return securities of the same issuer, class and quantity as the Loaned Shares as adjusted pursuant to the two preceding sentences. For the avoidance of doubt, such adjustments shall be made in connection with the occurrence of each such event, and shall be made in addition to any prior adjustments effected hereunder.

 

"Maximum Number of Shares" means 6,060,606 shares of Common Stock, subject to the following adjustments:

 

 

 

 

"NYSE" means the New York Stock Exchange

 

"Securities Act" means the Securities Act of 1933, as amended.

 

 

"Securities Intermediary" means a "securities intermediary" as defined by Section 8-102(a)(14) of the UCC.

 

"UCC" means the Uniform Commercial Code as in effect in the State of New York on the date hereof and as it may be amended from time to time.

 

Section 2.  Loans Of Shares; Transfers of Loaned Shares

 

 

 

 

 

 

 

Section 3.  Consideration. Borrower agrees to pay Lender a single loan fee for the Loaned Shares (a "Loan Fee") equal to 1.0% (one per-cent) of the product of (i) the Closing Price of the Common Stock, multiplied by (ii) the number of Loaned Shares. The Loan Fee shall be paid by Borrower on or before the time of transfer of the Loaned Shares pursuant to Section 2(b).

 

Section 4.  Loan Terminations.

 

 

 

 

 

 

Section 5.  Distributions.

 

Subject to Section 7(j) and (k) below:

 

 

 

shares of Common Stock, Borrower shall pay to Lender (regardless of whether Borrower is a holder of any or all of the outstanding Loaned Shares), within three Business Days after the payment of such dividend or distribution, as the case may be, an amount in cash equal to the product of (i) the amount per share of such dividend or distribution and (ii) the number of Loaned Shares outstanding at such time; provided, that if Borrower returns any Loaned Shares to Lender following a record date for such a dividend or distribution on such Loaned Shares, but prior to the payment of such dividend or distribution on such Loaned Shares, Borrower shall nonetheless pay to Lender the amount of such dividend or distribution, as the case may be, within three Business Days after the payment of such dividend or distribution and, provided further, that Borrower's obligations under this Section 5(a) shall be subject to Borrower's receipt from Deutsche Bank AG of an amount in cash equal to such distribution.

 

 

Section 6.  Rights in Respect of Loaned Shares.

 

Subject to the terms of this Agreement, including Borrower's obligation to return the Loaned Shares in accordance with the terms of this Agreement, and except as otherwise agreed by Borrower and Lender or Borrower and any subsequent transferee of Loaned Shares, insofar as such person is the record owner of any such Loaned Shares, such person shall have all of the incidents of ownership in respect of any such Loaned Shares, including the right to transfer the Loaned Shares to others. Borrower agrees that neither it nor any affiliate of it that is the record owner of any Loaned Shares that are (i) initially transferred hereunder and (ii) held for delivery to Lender or held by Borrower or its affiliates (other than any such securities that are held in the accounts of, and beneficially owned by, any unaffiliated third party, where such third party has the power to, and has, directed the vote of such securities) shall vote such Loaned Shares on any matter submitted to a vote of Ship Finance's stockholders; provided that, if by failing to vote such Loaned Shares there shall not be a quorum at any meeting of stockholders relating to such a matter, Borrower shall vote its shares proportionately to the votes of all other stockholders voting on such matter at such meeting.

 

 

Section 7.  Representations and Warranties.

 

 

that:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

period in which this Agreement is in effect, such dividends cash distributions or Non-Cash Distributions would not qualify, or there is a substantial likelihood that such cash distributions or Non-Cash Distributions dividends will not qualify, as foreign source dividends, or would otherwise be subject to withholding tax (whether as a result of a change of law, a change of facts or otherwise), Lender shall notify Borrower of such change or potential change in tax treatment as soon as practicable.

 

 

 

Section 8.  Covenants.

 

 

 

 

 

 

 

 

 

Section 9.  Events of Default.

 

 

 

 

obligations hereunder, or otherwise disaffirms, rejects or repudiates any of its obligations hereunder; or

 

(vii) Any representation made by Borrower, Lender or Ship Finance under this Agreement in connection with any Loan or Loans hereunder shall be incorrect or untrue in any material respect during the term of any Loan hereunder or Borrower, Lender or Ship Finance fails to comply in any material respect with any of its covenants under this Agreement.

 

Section 10.  Right to Extend; Remedies.

 

 

 

 

Section 16 of the Exchange Act), or (E) be commercially impracticable, in the reasonable judgment of Borrower, as a result of a demonstrable legal or regulatory impediment (including regulations of self-regulatory organizations) to such purchases in the time period required by Section 4 (each of (A), (B), (C), (D) and (E), a "Legal Obstacle"), then, in each case, Borrower shall immediately notify Lender of the Legal Obstacle and the basis therefor, whereupon Borrower's obligations under Section 4 shall be suspended until such time as no Legal Obstacle with respect to such obligations shall exist (a "Repayment Suspension"); provided that, in the case of an inability of the Borrower to return such purchase of Common Stock or the delivery of such Common Stock to the Lender shall be impracticable under clause (E) above, Borrower shall take all commercially reasonable steps to purchase such Common Stock as soon as possible after the cause of such inability shall be rectified. Following the occurrence of and during the continuation of any Repayment Suspension, Borrower shall use commercially reasonable best efforts to remove or cure the Legal Obstacle as soon as practicable; provided that (except in circumstances where the Legal Obstacle resulted from the failure by Borrower to comply with applicable securities laws or regulations or the rules of a securities self-regulatory organization) Lender shall promptly reimburse all reasonable costs and expenses (including of legal counsel to Borrower) incurred, or, at Borrower's election, provide adequate surety or guarantee for any such costs and expenses that may be incurred, by Borrower, in each case in removing or curing any Legal Obstacle described in Clause (A), (B), (C), (D) or (E) immediately above. If Borrower cannot remove or cure the Legal Obstacle within five Business Days, then Lender shall have the right at any time thereafter, upon prior written notice, to require Borrower to elect to either (a) pay to Lender, in lieu of the delivery of Loaned Shares in accordance with Section 4(c), the Replacement Cash (as defined below) within five Business Days of such notification (with the Average Closing Price in such case measured over the ten consecutive Business Day period ending on the Business Day immediately preceding such notification date) or (b) provide collateral to Lender in lieu, and with a value equal to, the Replacement Cash. If Borrower is unable to remove or cure the Legal Obstacle within 30 Business Days of the termination of the Loan under Section 4, then Borrower shall, upon the written request of Lender, pay to Lender, in lieu of the delivery of Loaned Shares in accordance with Section 4, an amount in immediately available funds (the "Replacement Cash") equal to the product of the Average Closing Price and the number of Loaned Shares otherwise required to be delivered. Such payment will be made by Borrower, and Borrower shall notify Lender of the Average Closing Price and expected date of such payment, as soon as practicable after the determination of the Average Closing Price by Borrower pursuant to the terms of this Agreement. As used herein, "Average Closing Price" is the average Closing Price during the ten consecutive Business Day period ending on the Business Day immediately preceding such 30^th Business Day multiplied by (B) the number of Loaned Shares then outstanding.

 

 

Price or Closing Price, as applicable, and expected date of such payment, as soon as practicable after the determination of the Average Closing Price or Closing Price by Borrower pursuant to the terms of this Agreement.

 

 

Section 11.  Transfers.

 

 

 

 

 

facilities of such Clearing Organization or wire transfer system are required to effect such transfer.

 

 

 

 

Section 12.  Indemnities.

 

 

 

 

 

promptly notify the Indemnifying Party in writing of the existence and amount thereof; provided that the failure of the Indemnified Party to give such notice shall not adversely affect the right of the Indemnified Party to indemnification under this Agreement, except to the extent the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party shall promptly notify the Indemnified Party in writing if it accepts such claim or litigation as being within its indemnification obligations under this Section 12. Such response shall be delivered no later than 30 days after the initial notification from the Indemnified Party; provided that, if the Indemnifying Party reasonably cannot respond to such notice within 30 days, the Indemnifying Party shall respond to the Indemnified Party as soon thereafter as reasonably possible.

 

 

Section 13.  Termination Of Agreement.

 

 

 

Section 14.  [Reserved]

 

Section 15.  Notices.

 

 

 

and if delivered by email shall be deemed to have been duly given when sent, provided such email was sent to the correct email address.

 

 

0112 Oslo

Norway

Phone: +47 23114000

Fax: +47 23114035

Email: andre.reppen@shipfinance.no

 

Courier address:

 

André Reppen

c/o Ship Finance Management AS

Bryggegata 3

0250 Oslo

Norway

Phone: +47 23114000

Fax: +47 23114035

Email: andre.reppen@shipfinance.no

 

 

Section 16.  Governing Law; Submission To Jurisdiction; Severability.

 

 

 

 

 

 

Section 17. Counterparts. This Agreement may be executed in any number of counterparts, and all such counterparts taken together shall be deemed to constitute one and the same agreement.

 

 

 

 

		SFL CAPITAL II LTD.,
		as Borrower
		By:	/s/ Kate Blankenship
		Name:	Kate Blankenship
		Title:	Director
		By:	/s/ Georgina E. Sousa
		Name:	Georgina E. Sousa
		Title:	Director

		HEMEN HOLDING LTD.
		as Lender
		By:	/s/ Dimitris Hannas
		Name:	Dimitris Hannas
		Title:	Director

		SHIP FINANCE INTERNATIONAL LIMITED
		By:	/s/ Ole B. Hjertaker
		Name:	Ole B. Hjertaker
		Title:	Attorney-in-Fact

 

 

 

 

January 25, 2013

 

 

Hemen Holding Ltd.

c/o Seatankers Management Co Ltd

PO Box 53562

CY-3399 Limassol

Cyprus

Attn: Dimitris Hannas

 

 

Ladies and Gentlemen:

 

Reference is made to the share lending agreement dated January 25, 2013 ("Share Lending  Agreement"), by and among Hemen Holding Ltd. ("Lender"), Ship Finance International Limited and SFL Capital II Ltd. ("Borrower") that, pursuant to its terms and subject to the limitations therein, Borrower hereby notifies Lender that Borrower is borrowing 6,060,606 shares of Common Stock. Capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Share Lending Agreement.

 

 

.

 

Exhibit C

 

bid prices for the Common Stock obtained from as many dealers in the Common Stock (which may include Borrower or its affiliates), but not exceeding three, as shall furnish bid prices available to Lender.

 

"Common Stock" means common shares, par value $1.00 (par value $0.01, effective on or about September 30, 2016), of Ship Finance; provided that, if the Common Stock shall be exchanged or converted into any other security, assets or other consideration (including cash) as the result of any merger, amalgamation, consolidation, other business combination, reorganization, reclassification, recapitalization or other corporate action (including, without limitation, a reorganization in bankruptcy or liquidation or a scheme of arrangements), then, effective upon such exchange or conversion, the amount of such other security, assets or other consideration received in exchange for one share of Common Stock (without regard to any substitutions of cash in lieu of fractional securities) shall be deemed to become one share of Common Stock. For purposes of the foregoing, where a share of Common Stock may be converted or exchanged into more than a single type of consideration based upon any form of shareholder election, such consideration will be deemed to be the weighted average of the type and amounts of consideration received by holders of Ship Finance's common stock or, at the election of Borrower, based upon the consideration actually received by the Borrower or its affiliates in connection with such exchange or conversion. For the avoidance of doubt, the foregoing provisions shall apply in connection with the occurrence of each such event, in addition to any prior adjustments or modifications effected hereunder.

 

"Convertible Notes" means $225,000,000 aggregate principal amount of 5.75% Convertible Senior Notes due October 15, 2021 issued by Ship Finance.

 

"Cutoff Time" shall mean 10:00 a.m. (New York City time), or such other time on a Business Day by which a transfer of Loaned Shares must be made by Borrower or Lender to the other, as shall be determined in accordance with market practice.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

"Facility Termination Date" has the meaning assigned to such term in Section 4(b).

 

"Foreign Private Issuer" has the meaning assigned to such terms in Section 2(c)

 

"Lender's Designated Account" means the securities account of the Lender maintained with Nordea Securities Services, as custodian, on the books of Brown Brothers Harriman, as securities intermediary, and designated "Hemen Holding Ltd. (account number              )".

 

"Loan Period" means the period beginning on the date hereof and ending on the earliest to occur of (i) October 15, 2021, (ii) the 3rd Business Day immediately following the 50^th VWAP Trading Day (as such term is defined in the final prospectus for the Convertible Notes) immediately following the date on which all Convertible Notes have been redeemed, repurchased, converted or otherwise acquired for value, (iii) the date, if any, on which all Loans hereunder are terminated and (iv) the date, if any, on which this Agreement is terminated.

 

 

 

"Loaned Shares" means shares of Common Stock transferred in a Loan hereunder until such Common Stock (or identical Common Stock) is transferred back to Lender hereunder. If, as the result of a stock dividend, stock split or reverse stock split, the number of issued and outstanding shares of Common Stock is increased or decreased, then the number of issued and outstanding Loaned Shares shall be proportionately increased or decreased, as the case may be. If any new or different security or securities, assets or other consideration shall be exchanged for or converted into the outstanding shares of Common Stock as described in the definition thereof, such new or different security or securities, assets or other consideration shall, effective upon such exchange, be deemed to become a Loaned Share in substitution for the former Loaned Share for which such exchange is made and in the same proportions as described in the definition of "Common Stock." For purposes of return of Loaned Shares by Borrower, or purchase or sale of securities pursuant to Section 10, Borrower may return securities of the same issuer, class and quantity as the Loaned Shares, as adjusted pursuant to the two preceding sentences. For the avoidance of doubt, such adjustments shall be made in connection with the occurrence of each such event, and shall be made in addition to any prior adjustments effected hereunder.

 

"Maximum Number of Shares" means 8,000,000 shares of Common Stock, subject to the following adjustments:

 

 

 

 

"NYSE" means the New York Stock Exchange

 

 

"Securities Act" means the Securities Act of 1933, as amended.

 

"Securities Intermediary" means a "securities intermediary" as defined by Section 8-102(a)(14) of the UCC.

 

"UCC" means the Uniform Commercial Code as in effect in the State of New York on the date hereof and as it may be amended from time to time.

 

Section 2. Loans Of Shares; Transfers of Loaned Shares.

 

 

 

 

 

 

 

 

Section 3.  Consideration. Borrower agrees to pay Lender a single loan fee for the Loaned Shares (a "Loan Fee") equal to $0.015 per Loaned Share. The Loan Fee shall be paid by Borrower on or before the time of transfer of the Loaned Shares pursuant to Section 2(b). At any time Loaned Shares are returned to the Lender by the Borrower pursuant to Section 4 of this Agreement, Lender agrees to pay Ship Finance $0.01 per Loaned Share returned, on or before the time of such delivery of Loaned Shares by the Borrower.

 

Section 4.  Loan Terminations.

 

 

 

 

 

 

Section 5. Distributions.

 

Subject to Section 7(j) and (k) and (l) below:

 

 

 

 

 

Section 6.  Rights in Respect of Loaned Shares.

 

Subject to the terms of this Agreement, including Borrower's obligation to return the Loaned Shares in accordance with the terms of this Agreement, and except as otherwise agreed by Borrower and Lender or Borrower and any subsequent transferee of Loaned Shares, insofar as such person is the record owner of any such Loaned Shares, such person shall have all of the incidents of ownership in respect of any such Loaned Shares, including the right to transfer the Loaned Shares to others. Borrower agrees that neither it nor any affiliate of it that is the record owner of any Loaned Shares that are (i) initially transferred hereunder and (ii) held for delivery to Lender or held by Borrower or its affiliates (other than any such securities that are held in the accounts of, and beneficially owned by, any unaffiliated third party, where such third party has the power to, and has, directed the vote of such securities) shall vote such Loaned Shares on any matter submitted to a vote of Ship Finance's shareholders; provided that, if by failing to vote such Loaned Shares there shall not be a quorum at any meeting of shareholders

 

 

relating to such a matter, as advised by Lender to Borrower in writing, Borrower shall vote its shares proportionately to the votes of all other shareholders voting on such matter at such meeting.

 

Section 7.  Representations and Warranties.

 

 

that:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comparable and not materially more onerous to comply with) and, any current or future regulations or official interpretations thereof or other official guidance; any intergovernmental agreement between the US and any other jurisdiction; and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

 

Section 8.  Covenants.

 

 

 

 

 

 

 

Non-Cash Distribution made (or that is planned to be made) on or in respect of the Loaned Shares, did or will not qualify, or that there is a substantial likelihood that such cash distributions or Non-Cash Distribution did or will not qualify, as foreign source dividends for U.S. federal income tax purposes within the meaning of Section 862 of the Code, or were or would otherwise be subject to withholding tax.

 

 

 

 

 

Section 9.  Events of Default.

 

 

 

 

(iii)            the filing by or on behalf of any party hereto of a voluntary petition or an answer seeking reorganization, arrangement, readjustment of its debts or for any other relief under any liquidation, bankruptcy, reorganization, receivership, compromise, arrangement, insolvency, readjustment of debt, dissolution, moratorium, delinquency, winding-up or liquidation or similar act or law, of any state, federal or other applicable

 

 

 

foreign jurisdictions, now or hereafter existing ("Bankruptcy Law"), or any action by such party for, or consent or acquiescence to, the appointment of a receiver, trustee, conservatory, custodian or similar official of such party, or of all or a substantial part of its property; or the making by such party of a general assignment for the benefit of creditors; or the admission by such party in writing of its inability to pay its debts as they become due;

 

 

 

 

 

 

Section 10.  Right to Extend; Remedies.

 

 

 

 

commercially reasonable steps to purchase such Common Stock as soon as possible after the cause of such inability shall be rectified. Following the occurrence of and during the continuation of any Repayment Suspension, Borrower shall use commercially reasonable best efforts to remove or cure the Legal Obstacle as soon as practicable. If Borrower cannot remove or cure the Legal Obstacle within five Business Days, then Lender shall have the right at any time thereafter, upon prior written notice, to require Borrower to elect to either (a) pay to Lender, in lieu of the delivery of Loaned Shares in accordance with Section 4(c), the Replacement Cash (as defined below) within five Business Days of such notification (with the Average Closing Price in such case measured over the ten consecutive Business Day period ending on the Business Day immediately preceding such notification date) or (b) provide collateral to Lender in lieu, and with a value equal to, the Replacement Cash. If Borrower is unable to remove or cure the Legal Obstacle within 30 Business Days of the termination of the Loan under Section 4, then Borrower shall, upon the written request of Lender, pay to Lender, in lieu of the delivery of Loaned Shares in accordance with Section 4, an amount in immediately available funds (the "Replacement Cash") equal to the product of the Average Closing Price and the number of Loaned Shares otherwise required to be delivered. Such payment will be made by Borrower, and Borrower shall notify Lender of the Average Closing Price and expected date of such payment, as soon as practicable after the determination of the Average Closing Price by Borrower pursuant to the terms of this Agreement. As used herein, "Average Closing Price" is the average Closing Price during the ten consecutive Business Day period ending on the Business Day immediately preceding such 30^th Business Day multiplied by (B) the number of Loaned Shares then outstanding.

 

 

 

 

be due and payable within three Business Days of notice to Borrower by Lender of the aggregate purchase price of the Replacement Shares. The purchase price of Replacement Shares purchased under this Section 10 shall include broker's fees and commissions or other reasonable costs, fees and expenses related to such purchase.

 

Section 11.  Transfers.

 

 

 

 

 

 

 

 

Section 12.  Indemnities.

 

 

 

 

 

to assume the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such Indemnified Party, in connection with the defense thereof other than reasonable costs of investigation. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (regardless of whether the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the Indemnified Party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Party. An Indemnified Party shall not make any settlement of any claim or litigation under this Section 12 without the written consent of the Indemnifying Party.

 

Section 13.  Termination Of Agreement.

 

 

Section 14.  [Reserved]

 

Section 15.  Notices.

 

 

 

(i)

If to Borrower:

 

SFL Capital II LTD.

André Reppen

c/o Ship Finance Management AS

P.O. Box 1327 Vika

0112 Oslo

Norway

Phone: +47 23114000

Email: andre.reppen@shipfinance.no

 

 

Courier address:

 

André Reppen

c/o Ship Finance Management AS

Bryggegata 3

0250 Oslo

Norway

Phone: +47 23114000

Email: andre.reppen@shipfinance.no

 

Mailing address:

Hemen Holding Ltd.

c/o Seatankers Management Co Ltd

P.O. Box 53562

CY-3399 Limassol

Cyprus

Attention: Dimitris Hannas

Phone: +35 725 858303

Email: dimitris.hannas@cytanet.com

 

Mailing address:

André Reppen

c/o Ship Finance Management AS

P.O. Box 1327 Vika

0112 Oslo

Norway

Phone: +47 23114000

Courier address:

 

André Reppen

c/o Ship Finance Management AS

Bryggegata 3

0250 Oslo

Norway

Phone: +47 23114000

Email: andre.reppen@shipfinance.no

 

 

 

 

Section 16.  Governing Law; Submission To Jurisdiction; Severability.

 

 

 

 

 

 

Section 17. Counterparts. This Agreement may be executed in any number of counterparts, and all such counterparts taken together shall be deemed to constitute one and the same agreement.

 

 

		SFL CAPITAL II LTD.,
		as Borrower
		By:	/s/ Harald Gurvin
		Name:	Harald Gurvin
		Title:	Attorney-in-Fact

		HEMEN HOLDING LTD.
		as Lender
		By:	/s/ Dimitris Hannas
		Name:	Dimitris Hannas
		Title:	Director

		SHIP FINANCE INTERNATIONAL LIMITED
		By:	/s/ Ole B. Hjertaker
		Name:	Ole B. Hjertaker
		Title:	Attorney-in-Fact

 

 

 

 

 

 

Hemen Holding Ltd

c/o Seatankers Management Co Ltd

P.O. Box 53562

CY-3399 Limassol

Cyprus

Attn: Dimitris Hannas

 

 

Ladies and Gentlemen:

 

Reference is made to the share lending agreement dated September 30, 2016 ("Share  Lending Agreement"), by and among Hemen Holding Ltd. ("Lender"), Ship Finance International Limited and SFL Capital II Ltd. ("Borrower") that, pursuant to its terms and subject to the limitations therein, Borrower hereby notifies Lender that Borrower is borrowing 8,000,000 shares of Common Stock, such shares of Common Stock to be delivered by the Cutoff Time on [October [•]], 2016. Capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Share Lending Agreement.