Common use of Reflagging Clause in Contracts

Reflagging. 12.5.1 The Lessor may require the Lessee (at its cost and expense) to re-register the Ship under the laws and flag of any other state or jurisdiction (including, but not limited to, the Approved Flag States referred to in clause 12.3 above) in the event that (a) it becomes unlawful, impossible, impracticable or (in the opinion of the Lessor, acting in good faith) undesirable (including, without limitation, by reason of change of legal or political circumstances) for the Lessor to continue to be registered as the owner of the Ship under the laws and flag of its then current register or (b) if classification inspections for vessels registered under the laws and flag of the state in which the Ship is registered at the relevant time are no longer undertaken by a classification society which is a member of IACS. 12.5.2 The Lessee, upon not less than 15 days written notice to the Lessor (or such shorter period as the Lessor may agree, such agreement not to be unreasonably withheld) and provided that no Relevant Event has occurred and is continuing, may elect to re-register the Ship in a state listed in clause 12.3.1 or any other state or country approved by the Lessor, such approval not to be unreasonably withheld or delayed, subject to: (a) the Ship being registered in the name of the Lessor, free from Security Interests other than Permitted Security Interests in the applicable register in such flag state; (b) inspections of the Ship required by the proposed new flag state continuing to be undertaken by a classification society which is a member of IACS; (c) it being possible to obtain a legal opinion satisfactory to the Lessor in its discretion in relation to the laws of such proposed flag state as to the validity and enforceability of the Lessor’s ownership interest in the Ship contemplated by the Transaction Documents; (d) the Lessor’s liability as owner of the Ship not increasing as a result of such change of flag; and (e) the right of the Lessor to treat the applicable state or country as being unacceptable in the future in accordance with clause 12.5.1 above. 12.5.3 The Lessor agrees, at the request and cost of the Lessee, promptly to take such actions as are available to the Lessor and which must be performed exclusively by the registered owner of the Ship and not the operator of the Ship in order to assist the Lessee to re-register the Ship in any Approved Flag State. 12.5.4 All costs and expenses (including legal costs and expenses and Taxes thereon and any appropriate fee in respect of the Lessor’s Management Time notified by the Lessor to the Lessee as having been properly incurred and which fee will be charged at the Lessor’s Management Time Cost Rate) properly incurred in connection with any re-registration pursuant to clause 12.5 shall be borne by the Lessee and any such costs and expenses reasonably incurred by the Lessor shall be reimbursed by the Lessee on demand. The provisions of clause 12.4 shall, with any necessary modifications, apply following any re-registration.