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EXHIBIT 10.28
BAREBOAT CHARTER AGREEMENT
THIS Bareboat Charter Agreement (the "Charter") is made the 10th day of
December, 1996, by and between Hyde Offshore Limited Partnership, a California
limited partnership (the "OWNER") and Falcon Drilling Company, Inc., a Delaware
Corporation (the "CHARTERER").
R E C I T A L S
WHEREAS, contemporaneously with the execution of this Charter, the OWNER
has purchased from K/S Deepsea Drillships ("Deepsea") the Bahamian flag
drilling vessel FALCON ICE (ex. DEEPSEA ICE), Official Number 710745, and its
appurtenant machinery and equipment, more fully described in Exhibit 1 hereto
and incorporated herein by reference (the "Vessel"); and
WHEREAS, the OWNER and the CHARTERER desire for the OWNER to charter to
the CHARTERER the Rig to be used from time to time for oil or gas drilling,
completion, or reworking operations, and related services, by one or more third
party petroleum companies (an "Operator"), which shall contract with the
CHARTERER directly or through a sub-charter for the use of the Vessel.
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A G R E E M E N T
NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the OWNER and the
CHARTERER agree as follows:
1. (a) Term. Subject to the terms and conditions of this Charter, the
OWNER hereby charters and demises to the CHARTERER, and the
CHARTERER hereby hires from the OWNER, the Vessel. Except as
otherwise provided in this Charter, the term of this Charter (the
"Charter Term") shall continue from the Date of Delivery (as
defined in Section 2(a) herein) of the Vessel to the OWNER up to
and through the date thirty-six (36) months following the Date of
Delivery. The CHARTERER may directly or through a sub-charter,
for so long as the CHARTERER is not in default under the Charter
and always subject, without limitation, to Section 4 herein, from
time to time enter into an agreement with an Operator for
utilization of the Vessel (a "Third Party Contract") which shall
be subordinate to this Charter.
(b) Completion of Contracts. The CHARTERER shall contract for work
for the Vessel which terminates on or before the end of the
Charter Term. If, in the reasonable judgment of the CHARTERER,
the work to be contracted for may exceed the Charter Term, then
the CHARTERER
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shall not enter into such Third Party Contract without the
OWNER's prior written consent. The OWNER will reasonably review
the CHARTERER's request for such a consent and will either: (i)
provide its consent with the stipulation that the Charter will be
extended until the end of the Third Party Contract; or (ii) not
consent to the Third Party Contract and allow the CHARTERER to
terminate the Charter up to thirty (30) days prior to the end of
the Charter Term. Should a Third Party Contract terminate during
the Charter Term, and the CHARTERER has not requested the OWNER's
consent for further Third Party Contracts, then the CHARTERER may
terminate the Charter up to thirty (30) days prior to the end of
the Charter Term.
(c) Third Party Contract Extension. In the event the Vessel is
engaged in a Third Party Contract at the end of the Charter Term,
notwithstanding Section l(b) herein, and expiration of this
Charter would cause a breach or default in the performance of the
Third Party Contract (an "Ongoing Third Party Contract"), this
Charter shall be extended for such time on terms as are then in
effect as is reasonably necessary to complete the Ongoing Third
Party Contract and re-deliver the Vessel to the OWNER.
(d) Termination of Charter During Third Party Contract. In the event
the Charter is terminated by reason of an
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Event of Default (as hereinafter defined) or by mutual agreement
during the term of a Third Party Contract or any sub-charter, if
the OWNER so elects in its sole discretion, the CHARTERER shall
use its reasonable efforts to assign to the OWNER the interests
of the CHARTERER in and to any such sub-charter and/or Third
Party Contract. The CHARTERER shall execute such documents as
are reasonably necessary to effect any such assignments, and upon
termination of the Charter shall take such actions as are
reasonably requested by the OWNER and otherwise use its best
efforts to cause a full transfer of the CHARTERER's interests in
the sub-charter and Third Party Contract to the OWNER and if
requested by the OWNER to effect a smooth transition in the
operation of the Vessel to a nominee of the OWNER.
2. (a) Delivery. The delivery of the Vessel by Deepsea to the OWNER, in
such condition as the Vessel is accepted by and delivered to the
OWNER, shall be deemed to be delivery of the Vessel by the OWNER
to the CHARTERER and acceptance of the Vessel by the CHARTERER
under this Charter (the date of such occurrence being the "Date
of Delivery") and shall constitute full performance of the
OWNER's obligations to deliver the Vessel to the CHARTERER. The
OWNER shall deliver to the CHARTERER with the Vessel all
documentation
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relating to the operation of the Vessel and its equipment that
the OWNER receives from Deepsea, including technical and
operating manuals, construction drawings, specifications, repair
records and regulatory inspection records (collectively, the
"Technical Documents"). During the Charter Term, the CHARTERER
shall be entitled to possession of the Technical Documents;
provided, however, that the OWNER and its designees shall be
allowed reasonable access to and may make copies of the Technical
Documents. THE OWNER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT
LIMITED TO, THE DESIGN, CONDITION, MERCHANTABILITY, SEAWORTHINESS
OF OR THE QUALITY OF THE MATERIAL, EQUIPMENT, OR WORKMANSHIP IN
THE VESSEL, OR AS TO ITS FITNESS FOR A PARTICULAR PURPOSE OR ANY
PARTICULAR TRADE, AND THE OWNER FURTHER DISCLAIMS ALL OTHER
LIABILITIES (AT COMMON LAW OR IN CONTRACT OR TORT OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, STRICT LIABILITY). THE VESSEL IS
DELIVERED BY THE OWNER TO THE CHARTERER "AS IS, WHERE IS" AND
WITH ALL FAULTS.
(b) Re-Delivery. The CHARTERER shall, at its expense, on the
expiration date of the Charter Term or other termination of the
Charter, re-deliver the Vessel to the OWNER at a safe location in
the port of Singapore or offshore Singapore, or at such other
safe port
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as may be mutually agreed upon by the OWNER and the CHARTERER.
The CHARTERER shall re-deliver all Technical Documents to the
OWNER with the Vessel. The CHARTERER shall provide the OWNER
with 30/14/7 days approximate notice of the place and anticipated
date of re-delivery of the Vessel and three (3) days definite
notice of the actual date and place of re-delivery.
(c) Survey, Inventory and Inspection. To establish a benchmark for
the condition of the Vessel and the amount of inventory on the
Vessel at the commencement of the Charter, a joint survey will be
performed at the time of delivery of the Vessel (the "On-hire
Survey") and a joint survey is to be held immediately prior to
the redelivery of the Vessel (the "Off-hire Survey") as provided
for in this Section 2(c). The expenses for independent surveyors
for such surveys shall be shared equally between the CHARTERER
and the OWNER. Such surveys will include, but not be limited to,
an inventory of all consumables, stores, spare parts and
equipment on board the Vessel and ashore; a monetary valuation of
such inventory; a general condition survey of the Vessel
including photographic or videotape records; an inspection of
class records; and an inspection of maintenance records. The
CHARTERER and the OWNER each will mutually agree on the factual
nature of such surveys and such agreement will not be
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unreasonably withheld. At the OWNER's option and expense, an
underwater survey may be performed as a part of the On-hire
Survey and Off-hire Survey. The On-hire Survey report and the
Off-hire Survey report produced pursuant to this Section 2(c),
when agreed, shall be deemed to be incorporated into this Charter
by reference.
(d) (i) Re-delivery - Condition. The CHARTERER shall re-deliver
the Vessel in the same good order, structure, state and
condition as it was when it was delivered, except for
ordinary wear and tear. The Vessel when so re-delivered
(i) shall have installed thereon all spares required by
the American Bureau of Shipping ("ABS") and any other
regulatory authority having jurisdiction over the Vessel;
(ii) shall have a currently effective Certificate of the
highest classification and rating issued by the ABS for
drillships of its age and type, with continuous survey
cycles up to date; (iii) shall be in good order, condition
and repair required by all of the
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terms of Section 5 hereof, with no requirements,
recommendations or citations of the ABS, the United States
Coast Guard or any other governmental agency or department
having jurisdiction over the Vessel uncorrected as
evidenced by a special survey of the Vessel completed
within six (6) months of re-delivery; (iv) shall have all
national and international trading or other certificates
required for operation as a mobile offshore drilling unit
in the location of its most recent employment prior to
redelivery; (v) the main diesel engines of the Vessel
shall at redelivery be returned to the OWNER with the same
time remaining, in aggregate, until their next major
overhauls (assuming 30,000 operating hours per engine
between major overhauls) as recorded in the On-hire
Survey; the CHARTERER will compensate the OWNER for any
deficiency in remaining time, at
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the CHARTERER'S then current cost for overhaul, pro-rated
for 30,000 hours and the OWNER will compensate the
CHARTERER for any surplus at the same rate; (vi) the
CHARTERER shall have fulfilled its obligations under any
Third Party Contract then currently in force as may be
required by the respective Operator; (vii) if the Vessel
is not in Singapore or Singapore waters, the CHARTERER
shall on behalf of the OWNER obtain valid and current
documentation for immediate export of the Vessel from its
location to Singapore to the extent such documentation is
required, such documentation to be provided at the
CHARTERER's expense; and (viii) the Vessel shall be in all
respects seaworthy. The CHARTERER shall also deliver to
the OWNER with the Vessel, the Vessel's log books, all
plans and drawings in the possession of the CHARTERER, and
all classification
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society, inspection, modification and overhaul records
relating applicable to the Vessel.
(ii) Re-delivery - Standards. The Vessel is to be re-delivered
(i) in the same (or better) condition as received by the
CHARTERER, ordinary wear and tear excepted, and (ii) with
equipment in compliance with published operating
specifications and the CHARTERER's maintenance practice
for similar equipment on similar drillships owned or
operated by the CHARTERER or its owners or affiliates. If
the OWNER elects to perform an underwater survey, as
provided in Section 2(c) above, any damage affecting class
revealed by such survey shall be repaired by the
CHARTERER, at the CHARTERER's time and expense. If the
OWNER requires the CHARTERER (pursuant to the preceding
sentence) to repair damage revealed pursuant to an
underwater survey, and the estimated cost of such repairs
exceeds USD 1,000,000, the Option granted to the CHARTERER
pursuant to Section 18 below shall be extended for a
period of fifteen (15) days from the date of such
underwater survey.
(e) Re-delivery Inventory. The CHARTERER shall re-deliver the Vessel
with the same amount of fuel oil, lubricating oil, unbroached
provisions, paints, oils,
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ropes, spare parts and equipment, including, but not limited, to
the inventory determined as a part of the On-hire Survey, and
other unused consumable stores as are on board and ashore at the
commencement of the Charter Term. In the event the quantity of
fuel oil or lubricating oil is less than it was determined in the
On-hire Survey, the CHARTERER shall compensate the OWNER for such
discrepancy at the then current unit cost for the difference in
value as appropriate. In the event consumable stores are greater
at re-delivery than at delivery, the CHARTERER may remove the
excess. In the event the amount of fuel oil or lubricating oil
is greater at re-delivery than delivery, the OWNER will purchase
the excess at the then current unit cost for the difference in
value as appropriate.
3. (a) (i) Basic Charter Hire. The CHARTERER shall pay to the OWNER
charter hire ("Basic Charter Hire") for the Vessel during
the Charter Term as follows: (x) for months 1 through 12 -
USD 10,000 per day; (y) for months 13 through 24 - USD
11,000 per day and (z) for months 25 through 36 and for
any extended period pursuant to Sections 1(c) and 2(c)
above - USD 13,000 per day. Basic Charter Hire for the
first and last calendar months for the Charter Term shall
be prorated if the Date of Delivery is other than the
first day of a calendar month. The
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Charter Hire for the month in which the Date of Delivery
occurs shall be payable within ten (10) days after the
Date of Delivery. Charter Hire payments for each
subsequent calendar month shall be made prior to the first
day of each such month.
(ii) Additional Hire. All other amounts to be paid by the
CHARTERER to the OWNER under this Charter shall be deemed
"Additional Hire."
(iii) Charter Hire Payments. Payments of Basic Charter Hire and
Additional Hire (collectively, "Charter Hire") shall be
paid in U.S. currency to such account and in such manner
as may be designated in writing by the OWNER from time to
time.
(b) Hell or High Water Charter Obligation. Except as hereinafter
provided, the CHARTERER's obligation to pay Charter Hire
hereunder shall be absolute during the term of this Charter
irrespective of any contingency whatsoever, including, but not
limited to (i) any set-off, counterclaim, recoupment, defense or
other right which either party hereto may have against the other;
(ii) any temporary unavailability of the Vessel by reason of any
damage to the Vessel; (iii) any failure or delay on the part of
any party hereto, whether with or without fault on its part, in
performing or complying with any of the terms or covenants
hereunder; (iv) any insolvency, bankruptcy, reorganization,
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arrangement, readjustment or debt, dissolution, liquidation or
similar proceeding by or against the CHARTERER or any other
person; and (v) any invalidity or unenforceability, or lack of
due authorization of or defect in the execution, of this Charter.
The CHARTERER shall not be obligated to pay Basic Charter Hire
for any period during which the Vessel is not available for the
CHARTERER's use due to defect in the OWNER's title or as a result
of an act or omission of the OWNER.
(c) Withholding Deductions. Notwithstanding anything herein to the
contrary, the CHARTERER hereby covenants and agrees that it shall
make all payments of Charter Hire under this Charter to the OWNER
free and clear from, and without deduction by reason of, income,
gross receipts, sales or use taxes or withholdings of any nature
whatsoever imposed, assessed, levied or collected by or within
any taxing jurisdiction; provided, however, that to the extent
required by the laws of the United States or any jurisdiction
where the OWNER is domiciled, the CHARTERER may make any
deductions or withholdings in respect of payments hereunder.
(d) Audit and Inspection. The CHARTERER will, upon request, permit
the OWNER or its representatives at any reasonable time or times
during normal business hours,
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to inspect the Vessel; provided, however that any inspection of
the Vessel shall be subject to the consent of the Operators under
applicable drilling contracts and the consent of applicable
governmental agencies; which consents the CHARTERER shall use its
best efforts to obtain.
4. (a) Use; Operating Areas. The CHARTERER may use the Vessel in
connection with contract oil and gas drilling operations for
Operators in any area, provided: (i) the CHARTERER shall only use
the Vessel in the territorial waters of nations which recognize
the rights of vessels documented under the flag of the Vessel;
(ii) the Vessel shall be moved only to a location where the
Vessel's operating specifications allow it to operate safely, and
(iii) the Vessel shall be employed only in lawful activities
under the laws of the United States and any other authority
having jurisdiction over the Vessel, in connection with contract
oil or gas drilling, completion, or re-working operations, and
related services. The CHARTERER further agrees that it shall
always operate the Vessel in compliance with the effective
contract between the CHARTERER or any sub-charterer and the
Operator, but always within the Vessel's technical capacities and
certification and within the limits of the Vessel's insurance
coverage.
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(b) Limits on Third Party Contracts.
(i) Subject to the terms of this Charter, and in particular
Sections 4 and 7 herein, the CHARTERER shall have the
right to enter into Third Party Contracts with financially
responsible Operators, (which for operations in U.S.
territorial waters or the U.S. economic zone shall be as
defined by the U.S. Minerals Management Service, and for
any operations in all other areas shall be as defined by
applicable governmental authorities for the area in which
the Vessel is operating) for oil or gas drilling,
completion, or re-working operations, and related
services. As a condition precedent to entering into any
Third Party Contracts. The CHARTERER shall use its best
efforts to have the Operator under such Third Party
Contracts indemnify and hold harmless the Vessel, the
CHARTERER, the Owner and any sub-charterer for any loss or
damage to any geological formation, strata, or oil or gas
reservoir beneath the surface of the earth, as well as for
pollution claims resulting from a kick, blowout, seepage
or other escape of pollutants from below the surface of
the water.
(ii) the CHARTERER shall comply with and satisfy all provisions
of any applicable law, convention,
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regulation, proclamation, rule or order concerning
financial responsibility for liabilities imposed on the
CHARTERER or the Vessel with respect to pollution by any
state or nation or political subdivision thereof and shall
maintain all certificates or other evidence of financial
responsibility as may be required by any such law,
convention, regulation, proclamation, rule or order with
respect to the operations in which the Vessel is from time
to time engaged.
(c) Marketing Efforts. It is agreed that the CHARTERER shall market
and contract the Vessel and shall keep the OWNER advised of such
activities as well as general market conditions. The CHARTERER
shall also keep the OWNER advised on a monthly basis of the work
and contract status of the Vessel and the day rates being
obtained, and, upon request by the OWNER, forward copies of any
Third Party Contracts to the OWNER.
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5. Maintenance and Operation.
(a) Charterer's Control and Expenses. During the Charter Term, the
CHARTERER shall have exclusive control of the Vessel and, subject
to the terms of the Charter, will operate, navigate, man and
victual the Vessel at its own expense. The CHARTERER shall pay
all charges and expenses of every kind and nature whatsoever
incident to the use and operation of the Vessel under the
Charter, and under any Third Party Contract, throughout the
Charter Term. Such costs and expenses shall include, but not be
limited to, those relating to (i) customs duties, bonds, work
permits, fees, licenses, clearances, pilotage fees, wharfage
fees, canal fees and costs, or similar charges incurred in
connection with the importation, exportation, operation or
navigation of the Vessel by the CHARTERER, (ii) maintaining the
Vessel's classification society status with unexpired
classification certificates and its Bahamian registration,
national, local, and international trading certificates and all
other certificates required by the United States Coast Guard or
other governmental agencies or regulatory authorities having
jurisdiction over the Vessel (or the area where the Vessel is
operating from time to time), (iii) maintaining the Vessel's
machinery, appurtenances and spare parts, and drilling equipment,
including, without limitation, downhole equipment, in a good
state
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of repair and in efficient operating condition in accordance with
good offshore practices, the CHARTERER's practice for similar
drillships and equipment owned or operated by the CHARTERER or
its affiliates, and in compliance with manufacturers'
recommendations, and (iv) supervision, management, victualing
(including catering), supplies, parts service companies, port
charges, dockage and wharfage, fueling and lubrication.
(b) Maintenance and Repairs. During the Charter Term, the CHARTERER,
at its own cost and expense, will perform work on the Vessel as
necessary to keep the Vessel clean, painted and in good running
order, repair and condition in accordance with good industry
maintenance practice, the CHARTERER's practice for similar
drillships owned or operated by the CHARTERER or its owners or
affiliates, requirements set out in Third Party Contracts and as
set forth in this Charter. The CHARTERER additionally will
maintain the Vessel's machinery and drilling equipment,
including, without limitation, downhole equipment, in compliance
with manufacturer's recommendations and specifications and the
requirements of the classification societies and regulatory
agencies having authority over the Vessel and its equipment. The
CHARTERER will notify the OWNER immediately of any accident
involving the Vessel
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estimated to require repairs the cost of which will exceed USD
100,000.
(c) Inspections. On reasonable prior notice, the OWNER or any
persons designated by the OWNER shall have the right at any
reasonable time, but will be under no obligation, to inspect the
Vessel to ascertain its condition, to satisfy itself that the
Vessel is being properly maintained and repaired, and to
otherwise confirm that the CHARTERER is in compliance with the
Charter; provided, that prior to any such inspection the persons
inspecting the Vessel shall execute a release of the CHARTERER,
releasing the CHARTERER from liability for any personal claims
arising during such inspection of the Vessel. The cost of such
inspection shall be borne by the OWNER.
(d) Stacking. The CHARTERER shall be responsible for stacking the
Vessel in a safe and acceptable condition and location during
such time as the Vessel is not employed under a Third Party
Contract. During any such stacking period, the CHARTERER shall
ensure that the Vessel is adequately supervised and manned at all
times, and that the Vessel is at all times kept in a condition
which would permit reactivation and start-up of drilling
operations on thirty (30) days notice, subject to the
availability of necessary xxxxxxx and materials. The costs and
expenses in any way related
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to such stacking or reactivation shall be paid by the CHARTERER.
6. Alterations.
(a) Structural Modifications. The CHARTERER will not make any
substantial structural or other changes in the Vessel without the
prior written consent of the OWNER, which consent shall not be
unreasonably withheld.
(b) Alterations and Restoration. Subject to the re-delivery and
maintenance provisions of this Charter, the CHARTERER may at any
time alter or remove items of equipment, or may fit additional
items of equipment required to render the Vessel available for an
Operator's purpose, provided the CHARTERER absorbs the cost and
time of such alterations and refitting and restoring the Vessel
to original condition before redelivery of the Vessel. Such
changes shall not be made without the appropriate approval of the
relevant classification and certifying authorities.
(c) Replacements. The CHARTERER shall from time to time during this
Charter, at its own cost and expense, replace such items of
equipment as shall be so damaged or worn as to be unfit for use.
All such items of equipment so replaced by the CHARTERER shall
without further action become the property of the OWNER.
(d) Capital Expenditures. The cost associated with any addition of
capital equipment not on the Vessel or
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replacement of functioning equipment with higher capability
equipment shall be considered to be a "Capital Expenditure". Any
Capital Expenditure that requires a material structural
modification of the Vessel shall be in all respects subject to
the prior written approval of the OWNER which approval shall not
be unreasonably withheld. The CHARTERER shall have the right to
pay for any Capital Expenditure if it so elects. In the event
that the CHARTERER does not elect to pay for a Capital
Expenditure, and the OWNER elects to pay for such Capital
Expenditure at the request of or with the agreement of the
CHARTERER, all items, improvements, additions or replacement so
made to the Vessel or its equipment shall become the property of
the OWNER and the Charter Hire for the remainder of the Charter
Term shall be increased by an amount equal to the Capital
Expenditure multiplied by 0.00073 for each day in the applicable
month (the collective amount of such increase in the Charter Hire
paid by the CHARTERER to the OWNER at any given time is referred
to as the "Capital Payments"). In the event the OWNER does not
pay for a Capital Expenditure, any items, improvements and
additions to the Vessel or its equipment so purchased or made by
the CHARTERER shall become the property of the CHARTERER so long
as the removal thereof from the Vessel upon its re-delivery to
the
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OWNER does not render the Vessel unfit for its intended use and
provided the Vessel is restored to its original condition, normal
wear and tear excepted, at the CHARTERER's time and expense prior
to re-delivery. To the extent any reimbursement or adjustment of
compensation is made by an Operator with respect to any Capital
Expenditure, such amounts will be the property of the party that
paid for such Capital Expenditure. Capital Expenditures required
by new applicable regulatory or classification requirements
arising after the purchase of the Vessel by the OWNER shall be
paid by the OWNER; provided, however, that the total amount of
all such Capital Expenditures paid by the OWNER shall be added to
the amount of the Purchase Price as defined in Section 18 below.
7. (a) Insurance-General. The CHARTERER shall, at its own expense, keep
the Vessel insured against such risks which should be covered by
experienced, prudent and responsible companies engaged in the
offshore contract drilling of hydrocarbons in places and under
conditions comparable to those in which the Vessel is employed
from time to time, and possessing financial and operating
characteristics similar to the CHARTERER ("Similar Companies") in
accordance with the practices of Similar Companies, with present
underwriters or other insurers reasonably acceptable to the
OWNER, in
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conformance with good marine practice, including, without
limiting the generality of the foregoing, insurance for damage to
the Vessel, hull and machinery, trip/tow protection and
indemnity, collision liability, employer's liability, pollution
(excluding that emanating from the well bore), comprehensive
general liability, property damage, fire, and theft. All
insurance coverage shall be placed through independent brokers of
recognized standing and with the CHARTERER's current club or
underwriters or with a club or first-class underwriters
reasonably acceptable to the OWNER. The limits specified below
shall be minimum limits with respect to the Vessel, and shall in
no way diminish the CHARTERER's insurance or indemnity
obligations herein:
(i) Marine full form hull and machinery and increased
value insurance extended to insure against all
risks of loss or damage, including, but not limited
to, the risk of blowout and cratering and against
such other risks as are typically insured against
by Similar Companies for the protection of the
interests of the OWNER and the CHARTERER for not
less than the Insured Value as set forth in Section
7(g) below. The deductible or self-insured
retention under the policy shall
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not exceed USD 250,000 per occurrence;
(ii) Marine full form protection and indemnity insurance
and comprehensive general lability insurance, under
forms typically maintained by Similar Companies.
Such insurance shall be maintained in the United
States or London markets, or other major insurance
market approved by the OWNER, and shall be in an
amount not less than that: (A) carried by Similar
Companies or (B) carried by the CHARTERER for any
other drillship owned or chartered by the CHARTERER
or its affiliates. Said policy shall not include a
deductible or self-insured retention in excess of
USD 250,000 per occurrence;
(iii) The CHARTERER shall, at all times during which the
Vessel is within the jurisdiction of the United
States of America, maintain insurance or post bond
or maintain evidence of financial responsibility
with respect to the Vessel to cover the actual cost
of removal of discharged oil for which the
CHARTERER or the Vessel may be held strictly liable
(or held liable due to the negligence of the
CHARTERER or any other person) under the Clean
Water Act of 1977, the Oil
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Pollution Act of 1990 or the Outer Continental
Shelf Lands Act, or any subsequent enactment, or
under any other federal, state or local law, rule,
regulation or ordinance applicable where the Vessel
is located which may apply to the Vessel or to the
CHARTERER; and the CHARTERER shall maintain
insurance covering similar pollution risks or
liabilities incident thereto under any law, rule,
regulation or judicial decision of any foreign
jurisdiction or jurisdictions or political
subdivision thereof applicable to the CHARTERER,
the Vessel, or its operations;
(iv) Such workers' compensation insurance, including,
without limitation, longshoremen's and harbor
workers' insurance, as shall be required by
applicable law, including endorsements for Outer
Continental Shelf operations, borrowed servant,
voluntary compensation, and in rem claims;
(v) Insurance (with a minimum limit of USD 20,000,000
per occurrence or such greater amount as is carried
by the CHARTERER or its affiliates on their owned
or chartered rigs) naming the CHARTERER and the
OWNER as
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assureds and loss payees, as their interests may
appear, against Contingent Operator's Extra Expense
("C.O.E.E.") liability in connection with
operations conducted by the Vessel under a Third
Party Contract with a financially responsible
Operator that indemnifies against such C.O.E.E.
arising out of blowout (above and below ground),
cratering, re-drilling/re-completion, cost of
control, clean-up, containment, seepage, pollution,
spillage or leakage in connection with operations
conducted by the Vessel, in form and substance
typically maintained by Similar Companies, and
third party liabilities that may be assumed by a
contract which is legally enforceable and in form
and substance typically maintained by Similar
Companies. Deductibles or self-insured retention
shall not exceed USD 250,000 and shall be for the
account of the CHARTERER;
(vi) If the Vessel is used outside the U.S. Gulf of
Mexico, war-risk and political-risk insurance
naming the CHARTERER and the OWNER as assureds and
loss payees, which shall be maintained in the
broadest forms generally available in the United
States market, and
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shall include coverage for war risk hull and
machinery, confiscation, terrorist acts,
expropriation, nationalization, and deprivation.
Such insurance and deductibles shall be in amounts
equal to the corresponding policies described in
sub-paragraphs (i) and (ii) above; and
(vii) The insurance set out in section 7(a)(i) above
shall be endorsed by the CHARTERER at its own
expense to include breach of warranty coverage for
the benefit of the OWNER.
(b) Form of Insurance. All insurance required under Section 7(a)
above shall be in such form and with such underwriters, companies
or clubs as the OWNER shall reasonably approve. The OWNER (and
if applicable, the OWNER's bank as mortgagee of the Vessel) shall
be named as named assureds as their interest may appear, but
without liability for premiums, club calls, or assessments; and
in respect of insurance pursuant to 7(a), shall be named as loss
payee(s) up to the Insured Value. All policies shall provide
that the OWNER (and if applicable, the OWNER's bank as mortgagee
of the Vessel) and the CHARTERER will be given at least thirty
(30) days notice of cancellation, non-renewal or material
alteration. Any deductibles under such policies shall always be
for the account of the
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CHARTERER. Unless otherwise required by the OWNER, such coverage
shall be in the same form as the CHARTERER or its affiliates
maintains in force on the drillships owned or operated by them.
(c) Proof of Insurance. The CHARTERER shall furnish the OWNER from
time to time on request, and in any event at least annually, with
copies of all insurance policies, cover notes or other documents
evidencing the creation, renewal, amount and payment of the
insurance maintained on the Vessel and for which period the
insurance premiums are paid.
(d) Forced Insurance. In the event the CHARTERER fails to procure
and maintain insurance in accordance with this Section 7, the
OWNER may, but shall not be obligated to, effect and maintain the
insurance or entries in a protection and indemnity association or
club as required herein and to pay the premiums therefore and,
upon the OWNER's giving notice to the CHARTERER of the amounts of
premiums and costs so incurred, the CHARTERER shall reimburse the
OWNER for such amounts not later than fifteen (15) days after
such notice.
(e) Insurance Indemnity. Should the CHARTERER fail or neglect to
fulfill any of the insurance requirements of a Third Party
Contract, the CHARTERER hereby undertakes to indemnify and hold
the OWNER harmless from and against any loss, claim, damage,
expense or costs
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(including all legal fees and costs) incurred as a consequence of
such failure or neglect.
(f) Termination Due To Loss. This Charter shall be terminated due to
a total or constructive total loss of the Vessel as determined by
underwriters, and Charter Hire pursuant to Section 3 hereof shall
be payable until the date of such total or constructive loss, as
ultimately determined by the underwriters.
(g) Payments in Event of Total or Constructive Loss. In the event of
a total or constructive loss of the Vessel, the OWNER, in lieu of
any and all other claims and damages, shall receive from the
CHARTERER, and the CHARTERER shall pay to the OWNER, an amount
equal to the sum of (i) any accrued and unpaid Charter Hire
payable in accordance with Section 3 hereof calculated through
the date of such loss, (ii) the value of the hull and machinery
of the Vessel which is hereby agreed to be the Purchase Price (as
defined in Section 18 hereof), determined as if the date of such
total or constructive loss were the Effective Date (as defined in
Section 18 hereof), plus one-hundred ten (110) percent of any
Capital Expenditure paid for by the OWNER (the "Insured Value")
and (iii) all other sums that may be due and payable by the
CHARTERER on the date of such loss under this Charter, less (x)
all insurance proceeds received directly by the OWNER
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attributable for such total or constructive loss (other than
those relating to any insurance policies paid for by the OWNER),
and (y) all payments of Charter Hire paid by the CHARTERER with
respect to the period beginning upon the date of such total loss,
together with interest calculated at an annual rate of ten (10)
percent. The CHARTERER's obligation to pay amounts set forth in
(i), (ii) and (iii) above shall be absolute and shall be due to
the OWNER upon the earlier of the CHARTERER's receipt of
insurance proceeds and ninety (90) days following the date of the
declaration of such total loss. The OWNER may, at its own
expense, place additional Total Loss Only coverage. Any proceeds
paid under such additional insurance shall be paid directly by
insurers to the OWNER and shall not be included in the
calculation set forth above.
(h) Limitation of Liability. Nothing in this Charter shall be
construed or held to deprive the OWNER, the CHARTERER or the
Vessel of any right to claim limitation of liability against
third parties provided by any applicable statute of any
jurisdiction.
(i) Wreck Removal. In the event the Vessel becomes a wreck or
obstruction to navigation, the CHARTERER shall indemnify the
OWNER against any sums whatsoever which the OWNER shall become
liable to pay or shall pay in consequence of the Vessel becoming
a wreck or
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obstruction to navigation.
8. Liens.
Neither the CHARTERER nor any of its employees shall have any right,
power or authority to create,incur or permit to be imposed upon the
Vessel any lien whatsoever during the Charter Term, except for crew's
wages, general average and salvage. The CHARTERER shall carry a copy of
this Charter with the Vessel's papers, and on demand will exhibit the
same to any person having business with the Vessel which might give rise
to any lien thereon, other than liens for crew's wages, general average
and salvage. The CHARTERER will place and keep prominently displayed in
the chart room and the captain's cabin on the Vessel in a conspicuous
place, a notice, framed under glass, printed in plain type of such size
that the paragraph of reading material shall cover a reasonable space
acceptable to the OWNER reading as follows:
"THIS VESSEL IS UNDER CHARTER TO FALCON DRILLING COMPANY, INC.
UNDER THE TERMS OF SAID CHARTER, NEITHER THE CHARTERER, NOR ANY
SUB-CHARTERER, NOR THE MASTER, NOR ANY OTHER PERSON HAS THE
RIGHT, POWER OR AUTHORITY TO CREATE, INCUR OR PERMIT TO BE PLACED
OR IMPOSED UPON THIS VESSEL ANY LIEN WHATSOEVER OTHER THAN LIENS
FOR CREW'S WAGES, GENERAL AVERAGE AND SALVAGE."
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9. Mortgages; Financing.
The CHARTERER hereby agrees that should the OWNER wish to mortgage the
Vessel or assign this Charter in connection with any financing
arrangements of the OWNER, the CHARTERER shall agree to post notices of
the mortgage and the Charter as reasonably required, execute such
documents acknowledging the terms and existence of the mortgage, and
otherwise cooperate reasonably with the OWNER and any mortgagee in
respect of such financing. Any such mortgage shall provide that the
CHARTERER shall have the right of quiet enjoyment so long as no Event of
Default has occurred under this Charter and that the Option contained in
Section 18 below shall not be adversely effected by the mortgage or the
acts of the mortgagee. Any reasonable costs and expenses associated
with such activity will be borne by the OWNER.
10. Sale of Vessel During Charter.
(a) OWNER shall have the right to sell the Vessel and assign
the Charter at any time during the Charter Term; provided,
however, that any such sale and assignment shall be
subject to the continued effectiveness of this Charter,
including, but not limited to the Option contained in
Section 18 below. Upon such sale and assignment, if the
CHARTERER consents to such sale and assignment, which
consent shall not to be unreasonably withheld, the OWNER
shall be relieved of all of its obligations under the
Charter
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except for the indemnities provided for in Section 16(b)
and Section 16(c)(ii) herein.
(b) If the OWNER shall decide to sell the Vessel or to market
the Vessel for possible sale, it shall give the CHARTERER
written notice of such decision. The CHARTERER shall have
the right, notwithstanding the provisions of Section 18
below, within ten (10) days of receipt of such notice to
inform the OWNER in writing of its exercise of its Option
under Section 18 below.
(c) If the CHARTERER elects not to exercise its Option under
Section 18 below after receiving the OWNER'S notice
pursuant to Section 10(b) above, the CHARTERER shall have,
in addition to its rights under Section 18 below, a right
of first refusal as to any third party offer to purchase
the Vessel received by the OWNER. The right of the
CHARTERER to purchase the Vessel shall be on the same
terms and conditions as contained in the third party offer
and the CHARTERER shall exercise such right by written
notice to the OWNER delivered within three (3) days of
being notified in writing of the third party offer and its
terms and conditions by the OWNER.
11. Representations and Warranties.
(a) CHARTERER's Representations. The CHARTERER represents,
warrants, covenants, and agrees to and with the OWNER
that: (i) the CHARTERER is a corporation duly
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organized, validly existing, and in good standing under
the laws of the State of Delaware, has the corporate power
to own its property and assets, and is duly qualified in
each jurisdiction where the nature of its operations
requires such qualification; and (ii) the execution,
delivery, and performance of this Charter are within the
CHARTERER's power, have been duly authorized by all
necessary corporate action, do not contravene the
CHARTERER's articles or certificate of incorporation or
bylaws, or similar documents, and do not contravene any
law, any order of any court or other agency of government,
or any agreement or instrument or contractual restriction
binding on or affecting any of its property, or constitute
a default thereunder.
(b) OWNER's Representations. The OWNER represents, warrants,
covenants, and agrees to and with the CHARTERER that (i)
the OWNER is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State
of California, has the legal power to own its property and
assets, and is duly qualified in each jurisdiction where
the nature of its operations requires such qualification;
and (ii) the execution, delivery, and performance of this
Charter are within the OWNER's power, have been duly
authorized by all necessary partnership action, do not
contravene the OWNER's certificate of limited partnership,
and do
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not contravene any law, any order of any court or other
agency of government, or any agreement or instrument or
contractual restriction binding or affecting any of its
property, or constitute a default thereunder.
12. Assignment; Sub-charter.
(a) The CHARTERER does not have the right to, and shall not,
assign, pledge, or hypothecate this Charter (by operation
of law or otherwise), in whole or in part, or any interest
herein, or any right, duty or obligation hereunder, or to
sub-charter the Vessel (collectively, an "Assignment")
without the prior written consent of the OWNER, and any
purported Assignment without the OWNER's prior written
consent shall be void and unenforceable against the OWNER.
The CHARTERER shall remain primarily liable under this
Charter in the event of any permitted Assignment, which
will in no event be considered a novation of this Charter
unless the OWNER expressly agrees to the contrary in
writing.
(b) Notwithstanding the foregoing:
(i) the CHARTERER may sub-charter the Vessel
without the necessity of obtaining the OWNER's consent
provided physical, financial and operational control of
the Vessel remains in the hands of the CHARTERER for the
duration of the
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sub-charter, the sub-charter is subordinate to this
Charter, and the sub-charterer executes an acknowledgement
of the existence and priority of this Charter, in form and
substance reasonably satisfactory to the OWNER and;
(ii) the CHARTERER may sub-charter the Vessel to
any entity wholly owned by the CHARTERER so long as the
CHARTERER remains primarily liabile under this Charter.
13. Logo and Vessel Names.
The OWNER agrees that the CHARTERER may display the CHARTERER's logo and
the CHARTERER's designated name on the Vessel during the Charter Term.
14. Notices.
All notices and other communications required under this Charter shall
be by personal delivery or facsimile, confirmed in writing by letter, to
each party at its address as it may declare from time to time pursuant
to this notice provision. Any such notice or communication shall be
deemed effective on the date of delivery, if by personal delivery, or on
the next business day after transmission if by facsimile.
OWNER: CHARTERER:
Hyde Offshore Limited Partnership Falcon Drilling Company, Inc.
Xxx Xxxxxx Xxxxx 0000 Xxxx Xxxx Xxxxx
Xxxxxxx Street Tower, Suite 800 Suite 1800
San Francisco, California 94105-1301 Xxxxxxx, Xxxxx 00000
Attn: Legal Department Attn: Xxxxx X. Xxxxxxx
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Telex: 34430
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15. Defaults; Remedies.
(a) Events of Default. Any one or more of the following is an Event
of Default by the CHARTERER:
(i) the CHARTERER shall fail to pay the whole or part of any
Basic Charter Hire or Additional Hire specified in Section
3 hereof on the due date thereof, and the same shall
continue for three (3) business days following the due
date thereof;
(ii) the CHARTERER shall fail to pay when due the whole or any
part of the Insured Value of the Vessel when required by
this Charter, and the same shall have continued for three
(3) business days following the due date thereof;
(iii) the CHARTERER shall fail to carry and maintain insurance
on or with respect to the Vessel in accordance with the
provisions of Section 7 hereof;
(iv) the CHARTERER shall fail to perform or comply with any
other covenant, condition, or agreement to be performed or
observed by it hereunder and the CHARTERER shall fail to
cure such failure to perform or comply within ten (10)
business days
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after the OWNER shall have demanded in writing the cure
thereof;
(v) Any representation or warranty made by the CHARTERER
herein shall prove to have been incorrect in any material
respect as of the date on which made, or any statement,
report, schedule, notice or other writing furnished by the
CHARTERER to the OWNER in connection herewith shall prove
to have been incorrect in any material respect as of the
date on which the facts set forth therein are stated or
certified, and the CHARTERER shall fail to cure such
defect within five (5) business days after the OWNER shall
have demanded in writing the cure thereof;
(vi) the CHARTERER or any sub-charterer shall become insolvent
or bankrupt or shall cease paying or providing for the
payment of its debts generally; the CHARTERER or any sub-
charterer shall be dissolved, shall be adjudged a bankrupt
by a court of competent jurisdiction, shall make a general
assignment for the benefit of its creditors, or shall lose
its charter by forfeiture or otherwise; or a petition for
an arrangement or for reorganization of the CHARTERER,
FALCON or any sub-charterer under the bankruptcy laws of
the relevant jurisdiction shall be filed by the
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CHARTERER, FALCON or such sub-charterer, or such petition
shall be filed by creditors and the same shall be approved
by a court of competent jurisdiction; and
(vii) An arrangement or reorganization of the CHARTERER or any
sub-charterer under the bankruptcy laws of the relevant
jurisdiction shall be approved by a court, whether
proposed by a creditor, a stockholder or any other party
or person whatsoever; or a receiver or receivers of any
kind whatsoever, whether appointed in admiralty,
bankruptcy, common law or equity proceedings, shall be
appointed by a decree of a court of competent jurisdiction
with respect to the Vessel or all or substantially all of
the property of the CHARTERER or any sub-charterer.
(b) Remedies. At any time that an Event of Default has occurred and
is continuing, the OWNER, by written notice to the CHARTERER, may
declare the CHARTERER in default hereunder, in which case the
OWNER shall be entitled to pursue all remedies available at law
or in equity, including, without limitation, the following
remedies:
(i) By notice to the CHARTERER, the OWNER may terminate this
Charter, whereupon the CHARTERER will re-deliver the
Vessel to the OWNER with all
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reasonable dispatch and in accordance with all of the
relevant provisions of Section 2;
(ii) The OWNER may, after notice to the CHARTERER, re-take the
Vessel wherever found, whether upon the high seas or at
any port, harbor or other place and irrespective of
whether the CHARTERER, any sub-charterer or any other
person is in possession of the Vessel, all without prior
demand and without legal process, the CHARTERER HEREBY
WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND A JUDICIAL
HEARING WITH RESPECT TO THE REPOSSESSION OF THE VESSEL BY
THE OWNER, and for that purpose the OWNER or its agent may
enter upon any dock, pier or other premises where the
Vessel is and may take possession thereof, without the
OWNER or its agent incurring any liability by reason of
such re-taking, whether for the restoration of damage to
property caused by such re-taking or for damages of any
kind for any reason to the CHARTERER or any person
claiming under the CHARTERER;
(iii) The OWNER may sell or otherwise dispose of the Vessel at
public auction or by private sale, without prior notice to
the CHARTERER, at such time or times and upon such terms
as the OWNER may determine, for cash or credit, at such
price as
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the OWNER shall deem fair, with the Vessel in its then
condition or following any commercially reasonable
preparation, or otherwise dispose of, hold, use, operate,
charter to others the Vessel, in a commercially reasonable
manner, all free and clear of any rights of the CHARTER,
including any right of redemption, and without any duty to
account to the CHARTERER with respect to such action or
inaction or for any proceeds with respect hereto; any
disposition or holding of the Vessel shall not be deemed a
retention by the OWNER in satisfaction of the CHARTERER's
obligations under this Charter; and
(iv) The OWNER may proceed by appropriate action for collection
from the CHARTERER of all costs and expenses, including
attorneys' fees, court costs, and other expenses, incurred
by the OWNER in connection with the enforcement of this
Charter and the exercise of remedies hereunder. Further,
in addition to any other amounts to which the OWNER may be
entitled, the CHARTERER shall be liable for all costs and
expenses incurred by the OWNER, which shall include all
insurance premiums, all demurrage, dockage, and anchorage
charges, all legal fees, and all other costs and expenses
whatsoever incurred by the OWNER by reason of the
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occurrence of an Event of Default or by reason of the
exercise by the OWNER of any remedy hereunder, including,
without limitation, any cost or expense incurred by the
OWNER in connection with any re-taking of the Vessel. No
remedy referred to in this Section 15(b) is intended to be
exclusive, but each remedy shall be cumulative and in
addition to, and may exercised concurrently with, any
other remedy which is referred to herein or which may
otherwise be available to the OWNER at law, in equity or
in admiralty.
16. (a) CHARTERER's Indemnification of the OWNER. The CHARTERER hereby
assumes liability for, and shall defend, indemnify and hold
harmless the OWNER, its owners and affiliates and any mortgagee
of the Vessel, and each of their respective successors and
assigns, and the directors, officers, employees, representatives,
agents and servants of any of the foregoing (collectively, the
"Indemnified Parties") from and against any and all Claims (as
hereinafter defined) which may be imposed on, incurred by or
asserted against any of the Indemnified Parties or the Vessel
(whether or not also indemnified against pursuant to any other
agreement or by any other person), regardless of when asserted
(whether before, after or during the Charter Term), in any way
relating
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to or arising out of any of the following occurring during the
Charter Term: the construction, documentation, registry,
delivery, possession, ownership (as owner pro hac vice), use,
operation, chartering, sub-chartering, condition, maintenance,
repair, and return of the Vessel. Notwithstanding the foregoing,
the CHARTERER shall not be obligated to indemnify the OWNER in
respect of any act or omission constituting gross negligence or
willful misconduct by the OWNER or its agents or representatives.
The CHARTERER agrees to further indemnify, defend and hold
harmless the OWNER and the Vessel from and against all liens
created and imposed on the Vessel as a result of the CHARTERER's
xxxxxxx and operating the Vessel, and in the event of the seizure
of the Vessel under legal process to enforce such lien or
asserted lien, the CHARTERER shall secure the prompt release of
the Vessel by payment of same or otherwise as may be appropriate.
The OWNER's right to compensation provided for in Section 3
herein for the operation of the Vessel shall not be suspended
during any time when the Vessel is under seizure by legal process
as a result of such liens or asserted liens. As used herein,
"Claims" shall mean any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs, expenses,
fines, penalties and disbursements
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(including, without limitation, reasonable attorneys' fees, and
investigatory fees and disbursements) of whatsoever kind and
nature, including, without limitation, (i) claims or penalties
arising from any violation of the laws or regulations of any
authority or country or political subdivision thereof, (ii)
claims as the result of latent, patent or other defects, whether
or not discoverable by the OWNER or the CHARTERER, and (iii) tort
claims of any kind, including, without limitation, claims for
injury or damage caused by leakage, discharge or spillage of oil
or cargo or refuse.
(b) OWNER's Indemnification of the CHARTERER. The OWNER agrees to
indemnify, defend, and hold harmless the CHARTERER from all
damages or costs arising as a result of the gross negligence,
violation of any law or regulation (the performance of which
rests solely with the OWNER rather than the performance of the
CHARTERER under the terms of this Charter), or willful misconduct
of the OWNER, except to the extent such damages or costs are
contributed to or caused by the CHARTERER.
(c) Tax Indemnification.
(i) The CHARTERER agrees to pay, and shall indemnify, protect,
defend and hold harmless the OWNER from all sales taxes,
use taxes, ad valorem taxes, governmental fees, duties,
and dues of whatever
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nature, imposed, assessed, or levied on the Vessel during
the Charter Term, and shall also be responsible for and
pay any employment, payroll and other similar taxes
arising from employment of its employees. Ad valorem
taxes for any period that is not fully within the Charter
Term shall be prorated and the OWNER shall be responsible
for the portion thereof not allocable to the Charter Term.
(ii) The OWNER shall be responsible for any customs duties
levied on the Vessel or income taxes or similar charges on
the net income of the OWNER levied against the OWNER or
the Vessel by the United States or by the OWNER's country
of registration, domicile or place of business or the
country of registry of the Vessel.
(d) The obligations of the OWNER and the CHARTERER under this Section
16 shall survive the expiration or earlier termination of this
Charter in perpetuity and are expressly made for the benefit of,
and shall be enforceable by, the party to which the obligations
are owed, and its successors and assigns.
(e) Except as otherwise limited herein, it is the intent of the
parties hereto that all indemnity obligations or liabilities
assumed by such parties under this Charter be without limit and
without regard to the cause or
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causes thereof (including preexisting conditions), the
unseaworthiness of any vessel, strict liability or the negligence
of any party or parties, whether such negligence be sole, joint
or concurrent, active or passive.
(f) Consequential Damages. Neither party hereto shall be liable to
the other party for any economic losses, or incidental,
consequential or special damages, arising out of, resulting from
or relating in any way to this Charter, irrespective of the
negligence or fault of any party.
17. Arbitration. If any dispute arises between the parties with respect to
this Charter which cannot be settled amicably by mutual agreement, such
dispute shall be settled exclusively by arbitration in accordance with
the rules of the Society of Maritime Arbitrators, Inc. (the "Rules") and
this Section 17. In the event of such dispute, either party may serve
notice of arbitration ("Notice of Arbitration") on the other party.
Notwithstanding anything in Section 14 hereof to the contrary, a Notice
of Arbitration shall only be sent by facsimile, confirmed by registered
letter, postage prepaid, and shall be effective on receipt of or
facsimile by the party to whom it is addressed. Proof of receipt of a
facsimile shall be the answer back of the party to whom it is addressed
on the facsimile confirmation page. The Notice of Arbitration shall be
dated, shall name the arbitrator
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selected by such party and, without prejudice to any right under the
Rules permitting subsequent modifications, shall specify the claims or
issues which are to be subjected to arbitration. Within thirty (30)
days of the effective date of the Notice of Arbitration, the other party
shall appoint an arbitrator and notify the first party of the arbitrator
so appointed. If such other party fails to appoint an arbitrator (who
accepts such appointment) and notify the first party thereof within such
thirty (30) day period, then the arbitrator appointed by the first party
shall sit as a sole arbitrator and decide the matter with all the powers
of the arbitration tribunal, and the party who fails to appoint an
arbitrator shall cooperate fully with such arbitration, the award
rendered or any subsequent enforcement thereof on the basis of the
arbitration being conducted by and the award being rendered by a sole
arbitrator. If the party receiving the Notice of Arbitration appoints
an arbitrator (who accepts such appointment) within the foregoing thirty
(30) day period, then within sixty (60) days of the effective date of
the Notice of Arbitration the two arbitrators thus appointed shall
appoint a third arbitrator, who shall serve as chairman of the
arbitration panel. If the two arbitrators are unable to agree on the
appointment of a third arbitrator within such period, such appointment
shall be made by the President of the Society of Maritime Arbitrators,
Inc. upon application by either party. The arbitration panel shall
decide the matter
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as expeditiously as possible; however, no time limits shall be imposed.
The arbitration shall be conducted in the English language in New York,
New York, or at such other place or places as the parties may agree
upon. Decisions of the arbitration panel shall be by majority vote.
The costs and expenses of the arbitration panel, including, but not
limited to, the costs and expenses of administration of the arbitration
proceeding, shall be borne by the parties as determined by the
arbitration panel or, failing such determination, shall be shared
equally by the parties. The arbitration award shall be final, binding
and not subject to appeal and shall be enforceable in any court of
competent jurisdiction in any country.
18. Purchase Option. (a) The CHARTERER shall have the option (the
"Option") to purchase the Vessel at any time during the Charter Term for
the Purchase Price (as hereinafter defined) provided that (i) no Event
of Default under Section 15 (a)(i) or (ii) of this Charter shall have
occurred and be continuing, (ii) the CHARTERER shall have given the
OWNER no less than sixty (60) days written notice (the "Option Notice")
of its election to exercise the Option and (iii) the Purchase Price
shall be increased by any amounts paid by the OWNER for Capital
Expenditures pursuant to Section 6(d) above, as reduced by any Capital
Payments paid by the CHARTERER to the OWNER pursuant to Section 6(d).
The Option Notice shall specify the date on which the CHARTERER intends
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to purchase the Vessel pursuant to its exercise of the Option, which
date shall be no less than thirty (30) days nor more than ninety (90)
days after the Option Notice is received by the OWNER (the "Effective
Date"). Notwithstanding the foregoing, the CHARTERER may revoke any
Option Notice at any time prior to ten (10) days prior to the Effective
Date without affecting the CHARTERER's rights hereunder to exercise the
Option. The sale of the Vessel pursuant to the Option shall be on an
"AS IS, WHERE IS" basis and substantially in the form of the Memorandum
of Agreement attached hereto as Exhibit 2 and incorporated herein by
reference. As used herein, and subject to an increase in amount based
on any Capital Expenditure pursuant to Section 6(d) hereof, the
"Purchase Price" shall mean the following:
(i) USD 21,500,000, if the Effective Date is within the first twelve
(12) months of the Charter Term;
(ii) USD 22,500,000, if the Effective Date is within the second twelve
(12) months of the Charter Term; or
(iii) USD 23,000,000, if the Effective Date is within the third twelve
(12) months of the Charter Term or the Option is exercised
pursuant to any extension under Section 2(d)(ii) above.
(b) Upon any sale of the Vessel by the OWNER to the CHARTERER at any
time during the Charter Term, the OWNER shall refund to the CHARTERER any Basic
Charter Hire paid by the CHARTERER to the OWNER attributable to the period
after the date
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of such sale.
19. Governing Law. This Charter will be governed by and interpreted in
accordance with the general maritime laws of the United States of
America and, to the extent they are not applicable, the internal laws of
the State of New York.
20. Waiver. No waiver by either party of any breach by the other of any
obligation, agreement or covenant hereunder shall be deemed to be a
waiver of that or any subsequent breach of the same or any other
covenant, agreement or obligation nor shall any forbearance by any party
to seek a remedy for any breach by the other party may deemed a waiver
by such party of its rights or remedies with respect to such breach,
unless such waiver is in each case in writing duly executed by such
party.
21. Entire Agreement; Amendment. This Charter and its exhibits constitute
the entire agreement between the parties hereto relating to the subject
matter hereof and supersedes all prior agreements and undertakings of
the parties hereto, whether oral or written, in connection herewith. No
amendment of this Charter shall be valid unless made in writing and
signed by each of the parties hereto.
22. Counterparts. This Charter may be executed in counterparts, in which
event all executed counterparts will be treated as an original hereof.
23. Severability. The OWNER and the CHARTERER agree that with respect to
any specific provision of this Charter that is
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held by any court or other constituted legal authority to be void or
otherwise unenforceable in any particular manner, the parties hereto
consider and permit this Charter to be amended in such manner as may be
required in order to cause said provision and all other terms of this
Charter to remain binding and enforceable against the OWNER and the
CHARTERER.
24. Captions. The captions in this Charter are for convenience and
reference only and shall not define or limit any of the terms or
provisions, or otherwise affect the construction, hereof.
25. Binding Effect. Subject to Section 12 hereof, this Charter shall be
binding upon, inure to the benefit of, and be enforceable by the parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Charter as of the
date first written above.
OWNER
HYDE OFFSHORE LIMITED PARTNERSHIP
By:Hyde Offshore, Inc.,
Its General Partner
By: /s/ XXXXXX X. XXXXX
---------------------------------------
Name: Xxxxxx X. Xxxxx
-------------------------------------
Title: Vice President
------------------------------------
CHARTERER
FALCON DRILLING COMPANY, INC.
By: /s/ XXXXXXXX X. XXXX
---------------------------------------
Name: Xxxxxxxx X. Xxxx
------------------------------------
Title: Vice President
-----------------------------------
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