Dated April 2003
-------------------------------
XXXXX XXXXXXX (BERMUDA) LIMITED
(to be renamed SOVEREIGN XXXXXXX LIMITED) (1)
and
GOLAR GAS HOLDING COMPANY, INC. (2)
LEASE AGREEMENT
relating to "XXXXXXX"
XXXXXX XXXX
Contents
clause Page
1 Purpose and definitions..........................................1
2 Lessee's representations and warranties.........................21
3 Term of Lease...................................................26
4 Conditions......................................................30
5 Delivery and acceptance.........................................31
6 Extent of Lessor's liability....................................32
7 Rental..........................................................33
8 Payments, interest and calculations.............................33
9 Costs and indemnities...........................................35
10 Taxation........................................................39
11 General undertakings............................................44
12 Sub-leasing.....................................................48
13 Use and trade of the Ship.......................................49
14 Title, registration, name and house flag........................50
15 Maintenance and operation.......................................51
16 Insurance Undertakings: wreck removal...........................56
17 Powers of Lessor to remedy defaults.............................61
18 Redelivery......................................................62
19 Consumable stores...............................................63
20 Use of equipment and replacement................................63
21 Encumbrances: Lessor's undertakings.............................64
22 Loss and damage.................................................64
23 Salvage.........................................................67
24 Requisition for hire............................................67
25 Security Provisions.............................................69
26 Termination Events..............................................77
27 Lessor's rights following a Termination Event and
Mandatory Prepayment Event......................................80
28 Notices.........................................................83
29 Liens and indemnities...........................................84
30 Assignment and sale of Ship.....................................85
31 Increased costs, funding problems and illegality................86
32 Refinancings....................................................88
33 Miscellaneous...................................................89
34 Governing law and jurisdiction..................................91
Schedule 1 List of documents and evidence..............................92
Schedule 2 Form of Delivery Request Notice.............................94
Schedule 3 Form of Protocol of Delivery and Acceptance
under Lease.................................................95
Schedule 4 Financial Schedule..........................................96
Schedule 5 Forms of Loss Payable Clause................................97
Schedule 6 Form of Compliance Certificate..............................98
99
K:\DEPT\BD\SRH\AA39491\Legal\khannurlease01.doc THIS LEASE is dated April 2003
and made BETWEEN:
(1) XXXXX XXXXXXX (BERMUDA) LIMITED (whose name is to be changed to Sovereign
Xxxxxxx Limited), a company incorporated in Bermuda whose principal place
of business is situated at Xxxxxxxxx Xxxxx, 000 Xxxxxxxxx, Xxxxxxxxxx X0
0XX (the "Lessor"); and
(2) GOLAR GAS HOLDING COMPANY, INC., a company incorporated in the Republic
of Liberia whose registered office is situated at 00 Xxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx of Liberia (the "Lessee").
BY WHICH IT IS AGREED as follows :
1 Purpose and definitions
1.1 Purpose
This Lease sets out the terms and conditions upon and subject to which
the Lessor agrees to lease to the Lessee, and the Lessee agrees to take
on lease, the Ship.
1.2 Definitions
In this Lease, unless the context otherwise requires:
"Account Bank" means Nordea Bank Finland Plc of 0xx Xxxxx, Xxxx Xxxxx
House, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX and includes its successors
in title;
"Accounting Period" means an accounting period as defined in section 12
ICTA;
"Additional Amount" has the meaning given to that expression in the
Letter of Credit;
"Additional Security" means any additional security for the obligations
of the Lessee under this Lease provided in accordance with clause 25 in
form and content acceptable to the Lessor and, where the context so
requires, includes any replacement of such additional security issued
pursuant to clause 25;
"Additional Security Amount" means, at any time, the amount in Sterling
(as certified by the Lessor whose certificate shall, in the absence of
manifest error, be conclusive and binding on the Lessee) which is the
value of any Additional Security at such time (but for the purpose of the
definition of the Applicable Security Amount and in the case of any
Additional Security provided by a Relevant Bank, disregarding any
Relevant Bank Change of Law Event or Relevant Bank Illegality Event which
may affect the liability of the LC Bank to the Lessor in respect of the
relevant Additional Security at such time);
"Additional Security Documents" means all documents under which
Additional Security is constituted or by which such security is evidenced
or pursuant to which any person secures the provision of any Additional
Security;
"Additional Security Provider" means any entity providing Additional
Security and, where the context so requires, means any entity issuing any
replacement Additional Security pursuant to clause 25;
"Additional Security Table" has the meaning given to that expression in
the Financial Schedule;
"Adjustment Period" has the meaning given to that expression in the
Financial Schedule;
"Adverse Event" has the meaning given to that expression in the Letter of
Credit;
"Adverse Event Notice" has the meaning given to that expression in the
Letter of Credit;
"Agency and Trust Deed" means the agency and trust deed of even date
herewith made between the Lessor, the Other Lessors, the Lessor Agent,
the Lessee, the Sub-Lessee, the Other Sub-Lessees and the Standby
Purchaser relating to (inter alia) the Lessee Third Party Assignment and
the Sub-Lessee Third Party Assignment;
"Annual Financial Statements" means annual:
(a) financial statements of the Lessee, the Manager, the Sub-Lessee
and each of the Other Sub-Lessees;
(b) consolidated financial statements of the Lessee Group; and
(c) proforma combined and consolidated financial statements of the
Golar Gas Group,
each comprising a profit and loss account and a balance sheet and cash
flow statement and audited by the Lessee's Auditors;
"Applicable LC Increased Amount" has the meaning given to that expression
in clause 25.8.1;
"Applicable Rate" has the meaning given to that expression in the
Financial Schedule;
"Applicable Security Amount" means, at any relevant time, the aggregate
of the Letter of Credit Amount and the Additional Security Amount
attributable to an Additional Security Document provided by a Relevant
Bank less any amount which, by virtue of any Relevant Bank Illegality
Event and/or Relevant Bank Change of Law Event, the Relevant Bank is
relieved from its obligation to make payment under the Letter of Credit
or, as the case may be, the Additional Security Document at such relevant
time;
"Applicable Security Table" has the meaning given to that expression in
the Financial Schedule;
"Approved Brokers" means Xxxxx Marine & Energy AS or such other firm of
insurance brokers appointed by the Lessee as may from time to time be
approved in writing by the Lessor for the purposes of this Lease (such
approval not to be unreasonably withheld or delayed);
"Arranger" means Citibank N.A. of 00 Xxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx
X00 0XX and includes its successors in title;
"Arrangement Fee" has the meaning given to that expression in the
Financial Schedule;
"Assumed Rate" has the meaning given to that expression in the Financial
Schedule;
"Assumptions" has the meaning given to that expression in the Financial
Schedule;
"Auditors" means the auditors from time to time of the Lessor;
"Banking Day" means a day (other than a Saturday or Sunday) on which
dealings in deposits in Sterling are carried on in the London Interbank
Eurocurrency Market and on which banks are open for business in London
(or any other relevant place of payment under clause 8);
"Borrowed Money" means Indebtedness incurred in respect of:
(a) money borrowed or raised and debit balances at banks;
(b) any bond, note, loan stock, debenture or similar debt instrument;
(c) acceptance or documentary credit facilities;
(d) receivables sold or discounted (otherwise than on a non-recourse
basis);
(e) deferred payments for assets or services acquired (other than
assets or services acquired on normal commercial terms in the
ordinary course of business where payment is deferred by no more
than one hundred and eighty (180) days);
(f) Capitalised Lease Obligations;
(g) any other transaction (including, without limitation, forward sale
or purchase agreements) having the commercial effect of a
borrowing or raising of money;
(h) guarantees in respect of Indebtedness of any person falling within
any of (a) to (g) above; and
(i) preference share capital in the Lessee or any other member of the
Golar Gas Group which is or may be redeemable before the full and
final discharge of all Indebtedness and liabilities of the Lessee
under this Lease;
"CAA" means the Capital Allowances Xxx 0000;
"Capitalised Lease Obligation" of any person means the obligation to pay
rent or other payment amounts under a lease of (or other Borrowed Money
arrangements conveying the right to use) real or personal property which
is required to be classified and accounted for as a capitalised lease or
a liability on the face of a balance sheet of such person in accordance
with Relevant GAAP (in the case of this Lease and the Other Ship Leases,
net of an amount equal to the aggregate of the Applicable Security Amount
and the Applicable Security Amount (as defined in the Other Ship
Leases));
"Cash Balances" means, at any relevant time, an amount equal to the
aggregate amount which is, at such time, credited to and/or invested in
the Earnings Accounts;
"Casualty Amount" means five million Dollars ($5,000,000) (or the
equivalent in any other currency) or, if the context so requires in
respect of any single refurbishment of the Ship to be undertaken by the
Lessee or, as the case may be, the Sub-Lessee during the period of twenty
four (24) months from the date of this Lease, eight million Dollars
($8,000,000);
"Change of Law" means, in each case after the date of this Lease:
(a) the introduction, imposition, assessment, application or amendment
by any governmental authority, central bank or Tax, fiscal,
monetary or other authority of any applicable law, order,
regulation, official directive or guideline (whether or not having
the force of law but, if not having the force of law, compliance
with which is regarded by banks and/or other financial
institutions conducting business in the relevant jurisdiction as
customary (including, but not limited to, the introduction of or
changeover to the Euro in any participating member state of the
European Union); and/or
(b) any change in, or any new or further or different official
interpretation, administration or application after the date
hereof of, any applicable law, order, regulation, official
directive or guideline (whether or not having the force of law
but, if not having the force of law, compliance with which is
regarded by banks and/or other financial institutions conducting
business in the relevant jurisdiction as customary) or Generally
Accepted Accounting Principles; and/or
(c) any compliance with any request, requirement, directive or
guideline (whether or not having the force of law but, if not
having the force of law, compliance with which is regarded by
banks and/or other financial institutions conducting business in
the relevant jurisdiction as customary) issued by an central bank,
Tax, fiscal, monetary or governmental authority; and/or
(d) the adoption, introduction or variation of, or change in, any
ruling, decision, judgment, statement of policy, official proposal
or any other assessment or determination (whether or not having
the force of law but, if not having the force of law, compliance
with which is regarded by banks and/or other financial
institutions conducting business in the relevant jurisdiction as
customary) by any court, central bank, Tax, fiscal, monetary or
governmental authority;
"Classification" means the classification +1A1 Tanker for Liquefied Gas
EO SBM, bis, dat (-10(degree)C) or such other classification available
for liquefied natural gas carriers of the same age and type as the Ship,
in each case, with the Classification Society as the Lessor shall, at the
request of the Lessee, have agreed in writing shall be treated as the
Classification for the purposes of this Lease;
"Classification Society" means Det Norske Veritas or such other
classification society which the Lessor shall, at the request of the
Lessee, have agreed in writing shall be treated as the Classification
Society for the Ship for the purposes of this Lease;
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition, requisition, appropriation, expropriation, deprivation,
forfeiture or confiscation for any reason of the Ship by any Government
Entity or other competent authority, whether de jure or de facto, but
shall exclude requisition for use or hire not involving requisition of
title;
"Corporation Tax" means corporation tax in the context of the scheme of
taxation contained in the Corporation Taxes Act (as defined in section
831 ICTA) or any other Tax on companies imposed in the United Kingdom in
substitution for corporation tax;
"Cost of Lessor's Management Time" means the cost of the Lessor's
personnel charged at an amount of two hundred and fifty Pounds
((pound)250) per hour for a senior officer of the Lessor and one hundred
and seventy five pounds ((pound)175) per hour for a junior officer of the
Lessor, in each case excluding VAT, escalated at the rate of RPI from the
Delivery Date;
"Credit Rating" means, in respect of any person, the unsecured,
unguaranteed and unsubordinated long term debt rating of such person with
the applicable credit rating agency;
"Credit Review Date" means 31 December 2010;
"Current Assets" means, on a consolidated basis, the current assets (as
determined in accordance with Relevant GAAP) of the Golar Gas Group;
"Current Liabilities" means, on a consolidated basis, the current
liabilities (as determined in accordance with Relevant GAAP) of the Golar
Gas Group;
"Default Rate" means the rate of interest determined by the Lessor to be
one per cent (1%) per annum above the aggregate of the Margin and LIBOR
for such period not exceeding six (6) months in respect of which the
Default Rate falls to be determined as the Lessor may determine in
amounts comparable with the sum in respect of which the Default Rate
falls to be determined or, where by reason of circumstances affecting the
London Interbank Market generally, deposits in the relevant currency are
not, in the ordinary course of business, available at any relevant time
in the London Interbank Market, the rate of interest determined by the
Lessor to be one per cent (1%) above the aggregate of the Margin and the
cost (expressed as a percentage per annum) to the Lessor of obtaining
funds in the currency and in amounts comparable with the sum in respect
of which the Default Rate falls to be determined;
"Delivery" means the time when the Lessor shall deliver the Ship to the
Lessee pursuant to clause 5; "Delivery Date" means the date (which must
be a Banking Day) on which Delivery shall occur;
"Delivery Request Notice" means a notice substantially in the terms of
Schedule 2;
"Determination" have the meaning given to those expressions in the
Financial Schedule;
"DOC" means a document of compliance issued to an Operator in accordance
with the ISM Code;
"Dollars" and "$" means the lawful currency for the time being of the
United States of America and in respect of all payments to be made under
this Lease in Dollars, means funds which are for same day settlement in
the New York Clearing House Interbank Payments System (or such other U.S.
dollar funds as may at the relevant time be customary for the settlement
of international banking transactions denominated in United States
dollars);
"Earnings Account" means any of the accounts of the Lessee or the
Sub-Lessee or the Other Sub-Lessees of the Ship or any of the Other Ships
designated in writing by the Lessor (based, where applicable on
information received from the First Security Agent or the Second Security
Agent) to be an Earnings Account for the purposes of this Lease (and
includes any fixed term deposit contract or account associated with such
account) and "Earnings Accounts" means all of such accounts and fixed
term deposit contracts and/or accounts;
"EBITDA" means, for any period, the earnings before interest, taxes and
depreciation and amortisation (calculated as income from operations plus
any depreciation and amortisation, Interest Expense, and taxes on overall
net income deducted in calculating income from operations in respect of
such period) of the Golar Gas Group determined in accordance with
Relevant GAAP on a consolidated basis;
"Economically Burdensome" has the meaning given to that expression in the
Financial Schedule;
"Encumbrance" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, trust arrangement or security
interest or other encumbrance of any kind securing any obligation of any
person or any type of preferential arrangement (including, without
limitation, title transfer and/or retention arrangements having a similar
effect);
"Environmental Affiliate" means any agent or employee of the Lessee or
any other Relevant Party or any person having a contractual relationship
with the Lessee or any other Relevant Party in connection with any
Relevant Ship or its operation or the carriage of cargo and/or passengers
thereon and/or the provision of goods and/or services on or from the
Relevant Ship;
"Environmental Approval" means any consent, authorisation, licence or
approval of any governmental or public body or authorities or courts
applicable to any Relevant Ship or its operation or the carriage of cargo
and/or passengers thereon and/or the provision of goods and/or services
on or from the Relevant Ship required under any Environmental Law;
"Environmental Claim" means:
(a) any and all enforcement, clean-up, removal or any other
governmental or regulatory action or order or claim instituted or
made pursuant to any Environmental Law or any Environmental
Approval or resulting from a Spill; and
(b) any claim made by any other person relating to a Spill;
"Environmental Incident" means any Spill:
(a) from any Relevant Ship; or
(b) from any other vessel in circumstances where:
(i) the Ship or the Lessor, the Lessee, the Sub-Lessee or the
Manager may be liable to Environmental Claims arising from
the Spill; and/or
(ii) the Ship may be arrested, attached or attached in
connection with any such Environmental Claims;
"Environmental Laws" means laws, regulations and conventions concerning
pollution or protection of human health or the environment;
"Financial Schedule" means Schedule 4 and includes its appendices/annexes;
"Financial Year" has the meaning given to that expression in Schedule 1
of the Interpretation Xxx 0000;
"First Security Agent" means Den norske Bank ASA of Xxxxxxxx 00, Xxxx,
Xxxxxx and includes its successors in title;
"Fixed Liability Amount" has the meaning given to that expression in the
Letter of Credit;
"Free Available Cash" means, at any relevant time, the amount of the Cash
Balances, freely available for use by the Lessee and/or the Sub-Lessee
and/or any of the Other Sub-Lessees which may, notwithstanding any
Encumbrance, right of set-off or agreement with any other party, be
withdrawn and/or encashed and used by it for any lawful purpose without
restriction (save for restrictions that may be imposed by the First
Security Agent or the Second Security Agent);
"GIMI" means the liquefied natural gas carrier "GIMI" registered under
British flag in the ownership of the relevant Other Lessor;
"Golar Gas Group" means the Lessee, the Sub-Lessee and the Other
Sub-Lessees;
"GOLAR FREEZE" means the liquefied natural gas carrier "GOLAR FREEZE"
registered under British flag in the ownership of the relevant Other
Lessor;
"GOLAR SPIRIT" means the liquefied natural gas carrier "GOLAR SPIRIT"
registered under British flag in the ownership of the relevant Other
Lessor;
"Gotaas Xxxxxx" means Gotaas Xxxxxx Shipping Corp., a corporation
incorporated in the Republic of Liberia having its registered office at
00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx of Liberia and includes its
successors in title;
"Government Entity" means and includes (whether having a distinct legal
personality or not) any national or local government authority, board,
commission, department, division, organ, instrumentality, court or agency
and any association, organisation or institution of which any of the
foregoing is a member or to whose jurisdiction any of the foregoing is
subject or in whose activities any of the foregoing is a participant;
"HILLI" means the liquefied natural gas carrier "HILLI" registered under
British flag in the ownership of the relevant Other Lessor;
"Holding Company" means any holding company within the meaning of section
736 of the Companies Xxx 0000;
"ICTA" means the Income and Corporation Taxes Xxx 0000;
"Indebtedness" means any obligation for the payment or repayment of
money, whether as principal or as surety and whether present or future,
actual or contingent;
"Indemnified Person" means each member of the Lessor Group and their
respective officers, directors, employees, servants and agents;
"Indexation Relief Letter" means a side letter to this Lease in respect
of indexation relief, to be executed by the Lessor and the Lessee;
"Initial Security Table" has the meaning given to that expression in the
Financial Schedule;
"Insolvency Event" means, in relation to the Lessee or the Lessee Parent,
any of the events referred to in clauses 26.1.8 to 26.1.14 inclusive
occurring in respect of the Lessee or, as the case may be, the Lessee
Parent;
"Insurances" means all policies and contracts of insurance (which
expression includes all entries of the Ship in a protection and indemnity
or war risks association) which are from time to time during the Lease
Period in place or taken out or entered into by the Lessee pursuant to
clause 16 (or, during, the Sub-Lease Period, by the Sub-Lessee) for the
benefit of the Lessee alone or the Lessee and the Lessor and, during the
Sub-Lease Period, the Sub-Lessee in respect of the Ship (but excluding
any policies and contracts of insurance taken out or entered into for the
sole benefit and, save as provided in clause 16.1.1, at the cost of the
Lessor and without being subject to any indemnity provision under this
Lease (provided such policies and contracts of insurance do not affect
recoveries under the Insurances effected by the Lessee and/or the
Sub-Lessee) or otherwise howsoever in connection with the Ship and all
benefits thereof (including claims of whatsoever nature and return of
premiums);
"Interest Expense" means, for any period, interest charges and related
expenses for such period of the Golar Gas Group determined in accordance
with Relevant GAAP on a consolidated basis;
"Irrecoverable VAT" has the meaning given to that expression in the
Financial Schedule;
"ISM Code" means the International Safety Management Code for the Safe
Operation of Ships and for Pollution Prevention constituted pursuant to
Resolution A. 741 (18) of the International Maritime Organisation and
incorporated into the Safety of Life at Sea Convention and includes any
amendments or extensions of it and any regulations issued pursuant to it;
"LC Bank" means Canadian Imperial Bank of Commerce, a Canadian company
acting out of its London branch at Xxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxx
XX0 0XX and, where the context so requires, means such other bank
acceptable to the Lessor as may replace such bank as an "LC Bank"
pursuant to clause 25 and includes its successors in title;
"Lease Documents" means this Lease, the Proceeds Deed, the Third Priority
Three Party Deed, the Agency and Trust Deed, any Additional Security
Documents executed by the Lessee and any other document to which the
Lessee is party and which the Lessor and the Lessee agree shall be a
"Lease Document" for the purposes of this Lease and all notices,
consents, certificates and other documents and agreements to which the
Lessee is party issued or, as the case may be, to be issued pursuant to
any of the foregoing;
"Lease Fee" has the meaning given to that expression in the Financial
Schedule;
"Lease Obligations" means all moneys, obligations and liabilities from
time to time owing or payable, incurred or assumed by the Lessee in
favour of the Lessor under or pursuant to this Lease and the other Lease
Documents;
"Lease Period" means the period during which the Lessee shall be entitled
to the possession and use of the Ship in accordance with this Lease;
"Legal Fee" means the fees and disbursements of Messrs Xxxxxx Xxxx acting
as counsel to the Lessor, together with the fees in respect of any
correspondent counsel instructed by Messrs Xxxxxx Xxxx with the approval
of the Lessee;
"Lessee" means Golar Gas Holding Company, Inc., a Liberian corporation
having its registered office at 00 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx of
Liberia and includes its successors in title;
"Lessee Group" means together the Lessee Parent and each of its
Subsidiaries from time to time and for the purposes of "Annual Financial
Statements" and "Quarterly Financial Statements" (and the expression
"Lessee Group" where used in such definitions) any company or entity
whose accounts are to be consolidated with those of the Lessee Parent in
accordance with Relevant GAAP shall be treated as a Subsidiary of the
Lessee Parent;
"Lessee Parent" means Golar LNG Limited, a Bermudan company having its
principal place of business at Par-la-Ville Place, Second Floor, 00
Xxx-xx-Xxxxx Xxxx, Xxxxxxxx XX00, Xxxxxxx, and being the indirect Holding
Company of the Lessee and includes its successors in title;
"Lessee Parent Guarantee" means the guarantee of the obligations of the
Lessee under this Lease issued or (as the context may require) to be
issued by the Lessee Parent in favour of the Lessor in the agreed form;
"Lessee's Auditors" means PricewaterhouseCoopers or another first class
firm of international accountants;
"Lessee's Quiet Enjoyment Letter" means the letter of quiet enjoyment
executed or (as the context may required) to be extended by the Lessee in
favour of the Time Charterer;
"Lessor" means Xxxxx Xxxxxxx (Bermuda) Limited (whose name shall be
changed to Sovereign Xxxxxxx Limited), a Bermudan company whose principal
place of business is at Xxxxxxxxx Xxxxx, 000 Xxxxxxxxx, Xxxxxxxxxx X0 0XX
and includes its successors in title;
"Lessor Agent" means Sovereign Finance Plc of Xxxxxxxxx Xxxxx, 000
Xxxxxxxxx, Xxxxxxxxxx X0 0XX;
"Lessor Group" means the group of companies from time to time comprising
the Lessor Parent and all of its Subsidiaries;
"Lessor Mortgage" means the first priority statutory mortgage of the Ship
and collateral deed of covenant (containing an assignment by the Lessor
of its interest in the Insurances (other than the Insurances in respect
of protection and indemnity and other third party risks) executed or (as
the context may require) to be executed by the Lessor in favour of the
Lessee in the agreed form as security for its obligations to pay certain
sums to the Lessee under this Lease;
"Lessor Parent" means Alliance & Leicester plc;
"Lessor Payment Account" means the account of the Lessor referred to in
clause 8.1;
"Lessor Proceeds Accounts" means any proceeds accounts opened or, as the
context may require, to be opened by the Lessor pursuant to and in
accordance with clause 2.8 of the Proceeds Deed;
"Lessor Proceeds Accounts Assignment" means the assignment executed or
(as the context may require) to be executed by the Lessor in favour of
the Lessee in respect of the Lessor Proceeds Accounts, and, where the
context requires, includes any Lessor Proceeds Accounts Assignment
executed pursuant to clause 8.6 of the Proceeds Deed;
"Lessor Support Letters" means the support letters issued or (as the
context may require) to be issued by the Lessor Parent to (inter alios):
(a) the Lessee, the First Security Agent and the Second Security Agent
in respect of, amongst other things, the ownership and obligations
of the Lessor under this Lease and the other Transaction Documents
to which it is a party in the agreed form; and
(b) the Time Charterer in respect of the obligations of the Lessor
under the Quiet Enjoyment Letter;
"Lessor's Encumbrance" means any Encumbrance which arises or is created
solely as a result of:
(a) any obligation of the Lessor or a member of the Lessor Group or
any claim against or affecting the Lessor or a member of the
Lessor Group (other than (except for the purposes of clauses 3.6.3
and 21) a claim for or obligation in respect of Taxes or a claim
or obligation in respect of which the liability to pay the same,
or the amount of the same, is then being disputed by the Lessor or
a member of the Lessor Group in good faith and which will not
cause any interference to the use, possession and quiet enjoyment
of the Ship by the Lessee during the Lease Period), in each case,
that is not related to, or does not arise directly or indirectly
as a result of, the transactions contemplated by this Lease or any
of the other Transaction Documents including, without limitation,
any Encumbrance which arises as a result of the operation of any
vessel (other than the Ship and the Other Ships) of which any
member of the Lessor Group is the owner or a disponent owner;
(b) any Taxes imposed upon the Lessor or a member of the Lessor Group
which are not required to be indemnified against by the Lessee or
by any other person under this Lease or under any of the other
Transaction Documents (other than (except for the purposes of
clauses 3.6.3 and 21) Taxes in respect of which the liability to
pay the same, or the amount of the same, is being disputed by the
Lessor or a member of the Lessor Group in good faith and which
will not cause any interference to the use, possession and quiet
enjoyment of the Ship by the Lessee during the Lease Period);
(c) any act or omission of the Lessor or a member of the Lessor Group
(but not of any member of the Lessee Group acting as agent or
representative of the Lessor or a member of the Lessor Group) that
is not related to, or does not arise directly as a result of, the
transactions contemplated by this Lease or any of the other
Transaction Documents;
(d) any act or omission of the Lessor or a member of the Lessor Group
(but not of any member of the Lessee Group acting as agent or
representative of the Lessor or a member of the Lessor Group)
constituting a breach by the Lessor of its express obligations
under this Lease or any of the other Transaction Documents; or
(e) any act or omission of the Lessor which constitutes the gross
negligence or wilful misconduct of the Lessor;
"Letter of Credit" means the Letter of Credit issued or (as the context
may require) to be issued by the LC Bank in favour of the Lessor in a
form and in an amount acceptable to the Lessor and, where the context so
requires, means any replacement letter of credit executed pursuant to
clause 25, such letter of credit to be for a period expiring on the
Required Letter of Credit Expiry Date;
"Letter of Credit Amount" means, at any relevant time, the maximum amount
of the liability of the LC Bank to the Lessor under, and as determined
pursuant to, the Letter of Credit at such time (but, for the purpose of
the definition of Applicable Security Amount disregarding any Relevant
Bank Change of Law Event or Relevant Bank Illegality Event which may
affect the liability of the LC Bank to the Lessor under the Letter of
Credit at such relevant time);
"Letter of Credit Expiry Date" means, at any relevant time, the date on
which the Letter of Credit expires in accordance with its terms;
"LIBOR" has the meaning given to that expression in the Financial
Schedule;
"Loss Payable Clauses" means the provisions regulating the manner of
payment of sums receivable under the Insurances which are to be
incorporated in the relevant insurance documents, such Loss Payable
Clauses to be in the form set out in Schedule 6 or in such forms as may
from time to time be agreed in writing by the Lessor;
"Management Agreement" means an agreement entered into or (as the context
may require) to be entered into between the Sub-Lessee and the Manager on
terms acceptable to the Lessor providing for the Manager to provide
services relating to the commercial and technical management and crewing
of the Ship during the Sub-Lease Period;
"Manager" means Golar Management (UK) Limited, an English company with
company number 04396172 having its principal place of business at 00
Xxxxx Xxxx, Xxxxxx X00 0XX and includes its successors in title;
"Manager's Undertaking" means an undertaking in respect of the Ship
executed or (as the context may require) to be executed by the Manager in
favour of the Lessor Agent in respect of the Ship in the agreed form;
"Mandatory Prepayment Event" means any of the events or circumstances
described in clause 26.2;
"Manuals and Technical Records" means all such books, records, logs,
manuals, handbooks, technical data, drawings and other materials and
documents (whether or not kept or required to be kept in compliance with
any applicable laws or the requirements of the Classification Society)
relating to the Ship;
"Margin" has the meaning given to the expression "Percentage Return" in
the Financial Schedule;
"Maximum Unsecured Strip Liability Amount" means the maximum unsecured
Strip Liability Amount permitted under this Lease as determined for any
Security Period by reference to the amounts set out in column 4 of the
Initial Security Table for such Security Period set out in column 1 of
the Initial Security Table;
"Minimum Free Available Cash" means an amount equal to twenty five
million Dollars ($25,000,000);
"Minimum LC Bank Credit Rating" means, in relation to the Initial LC Bank
or any Relevant Bank, A3 "with negative credit watch" by Moodys or A- by
Standard & Poor's;
"month" means a period beginning in one (1) calendar month and ending in
the next calendar month on the day numerically corresponding to the day
of the calendar month on which it started, provided that (a) if the
period started on the last Banking Day in a calendar month or if there is
no such numerically corresponding day, it shall end on the last Banking
Day in such next calendar month and (b) if such numerically corresponding
day is not a Banking Day, the period shall end on the preceding Banking
Day and "months" and "monthly" shall be construed accordingly;
"Moodys" means Moodys Investors Services Inc. or its successors in title;
"Net Debt" means, on a consolidated basis, an amount equal to the
aggregate of all Borrowed Money of the Golar Gas Group other than
Subordinated Debt minus Free Available Cash;
"Net Sale Proceeds" means, in relation to a sale of the Ship, the amount
of all consideration actually received by the Lessor from a purchaser on
the sale of the Ship and any non-refundable deposit irrevocably paid to
the Lessor by a person acquiring or proposing to acquire the Ship under a
contract or offer to purchase or otherwise acquire the Ship which has
been withdrawn, terminated or cancelled or has lapsed, less any VAT in
respect of the sale of the Ship for which the Lessor is required to
account, the Lessor's expenses (excluding Recoverable VAT on such
expenses) reasonably incurred in connection with such sale including,
without limitation, (where applicable) broker's commissions, Lessor's
marketing expenses, legal costs, agency fees and port charges, insurance
premiums and stamp duties, registration fees and any expenses relating to
the repair of the Ship (including putting the Ship in class) intended to
restore the Ship to the condition required by this Lease or pursuant to
the provisions of any sale and purchase agreement in respect of the sale
of the Ship;
"Net Total Loss Proceeds" means the Total Loss Proceeds actually received
by the Lessor from the insurers following a Total Loss of the Ship, less
any expenses (excluding Recoverable VAT on such expenses), taxes or
duties incurred by the Lessor in connection with the collection of such
proceeds;
"Notified Termination Date" has the meaning given to that expression in
clause 3.3.1;
"Other Lessor" means:
(a) Golar Freeze (Bermuda) Limited (whose name shall be changed to
Sovereign Freeze Limited) in respect of "GOLAR FREEZE";
(b) Golar Spirit (Bermuda) Limited (whose name shall be changed to
Sovereign Spirit Limited) in respect of "GOLAR SPIRIT";
(c) Xxxxx Xxxxx (Bermuda) Limited (whose name shall be changed to
Sovereign Hilli Limited) in respect of "HILLI"; and
(d) Xxxxx Xxxx (Bermuda) Limited (whose name shall be changed to
Sovereign Gimi Limited) in respect of "GIMI",
and "Other Lessors" means all of them;
"Other Ships" means "GOLAR FREEZE", "GOLAR SPIRIT", "HILLI" and "GIMI"
and "Other Ship" means any of them;
"Other Ship Leases" means the lease agreements made or (as the context
may require) to be made between the Other Lessors and the Lessee in
respect of the Other Ships;
"Other Ship Relevant Documents" means all of the "Relevant Documents" as
that expression is defined in each of the Other Ship Leases;
"Other Sub-Lessees" has the meaning given to that expression in the
Proceeds Deed;
"Operator" means any person who is at any time during the Lease Period
concerned in the operation of the Ship and falls within the definition of
"Company" set out in the ISM Code;
"Original Time Charter" means the time charter dated 25 October 2001 as
amended by Addendum No. 1 dated 31 January 2003, both made between the
Time Charterer and Xxxxx Xxxxxxx Inc. pursuant to which the Time
Charterer has taken the Ship on time charter for a period from the Ship's
delivery thereunder and expiring between 1 June 2009 and 1 December 2009
with options for the Time Charterer to extend the term thereof for two
(2) additional five (5) year periods, plus a subsequent option for the
Time Charterer to extend the term thereof up to the Ship's next ensuing
special survey;
"Permitted Encumbrance" means:
(a) any Lessor's Encumbrance;
(b) any Encumbrance for Taxes either not yet assessed or, if assessed,
not yet due and payable or being contested in good faith by
appropriate proceedings (and for the payment of which adequate
reserves have been provided) so long as any such proceedings or
the continued existence of such Encumbrance do not involve any
likelihood of the sale, forfeiture or loss of, or of any interest
in the Ship;
(c) liens arising in the ordinary course of business by statute or by
operation of law in respect of obligations which are not overdue
or which are being contested in good faith by appropriate
proceedings (and for the payment of which adequate reserves have
been provided) so long as any such proceedings or the continued
existence of such lien do not involve any likelihood of the sale,
forfeiture or loss of, or of any interest in the Ship;
(d) any Encumbrance arising out of claims, judgments or events against
the Lessee which are being contested in good faith or which are
the subject of a pending appeal (and for the payment of which
adequate reserves have been provided or, as the case may be, which
the Lessor is satisfied are covered by Insurances) so long as any
such claims, judgments or the continued existence of such
Encumbrance do not involve in the reasonable opinion of the Lessor
any likelihood of the sale, forfeiture or loss of, or of any
interest in the Ship;
(e) Permitted Liens;
(f) any Encumbrance granted pursuant to the Transaction Documents; or
(g) any other Encumbrance, the creation of which has been expressly
permitted in writing by the Lessor;
"Permitted Liens" means:
(a) any Ship repairer's or outfitter's possessory lien for a sum not
(except with the prior written consent of the Lessor) exceeding
the Casualty Amount unless the Lessor has received evidence to its
satisfaction that the cost of the work in respect of which the
lien may arise is covered by insurances on terms satisfactory to
the Lessor (in its absolute discretion) or;
(b) any lien on the Ship for Master's, officer's or crew's wages
outstanding in the ordinary course of trading; and
(c) any lien for salvage or general average;
"Pollutant" means and includes oil and its products, any other polluting,
toxic or hazardous substance and any other substance whose release into
the atmosphere is regulated or penalised by Environmental Laws;
"Primary Period" means the period from and including the Delivery Date
and terminating, subject to the terms and conditions of this Lease, on
the earlier of (a) the date falling twenty (20) years after the Delivery
Date and (b) the date of termination of the leasing of the Ship under
this Lease;
"Primary Rental" has the meaning given to that expression in the
Financial Schedule;
"Primary Rental Date" has the meaning given to that expression in the
Financial Schedule;
"Proceeds Deed" means the agreement entered or (as the context may
require) to be entered into between (inter alios) the Lessor, the Lessee,
the Sub-Lessee, the Account Bank, the Lessor Agent, the Standby
Purchaser, the First Security Agent and the Second Security Agent in the
agreed form;
"Protocol of Delivery and Acceptance" means the protocol of delivery and
acceptance in relation to the Ship in the form of Schedule 3;
"Qualifying Replacement Bank" means a Bank incorporated in a Zone A
country (as the terms "Bank" and "Zone A" are defined in the Guidance
Notes to Bank of England Return BSD2) with a Credit Rating of not less
than the Minimum LC Bank Credit Rating and otherwise approved in writing
by the Lessor (such approval not to be unreasonably withheld but
withholding of such approval it is agreed shall be deemed to be
reasonable where, inter alia, for internal credit reasons, the Lessor is
unable to accept any additional credit exposure to such bank in an amount
equal to the liability which such bank will be assuming in relation to
the transactions contemplated by this Lease);
"Quarterly Financial Statements" means quarterly:
(a) financial statements of the Lessee, the Manager, the Sub-Lessee
and each of the Other Sub-Lessees;
(b) consolidated financial statements of the Golar LNG Group; and
(c) pro-forma consolidated and combined financial statements of the
Golar Gas Group,
prepared as at 31 March, 30 June and 30 September (but not 31 December)
in each year (or three (3), six (6) or nine (9) (but not twelve (12))
months after the commencement of the Lessee's accounting period should
its accounting reference date be changed, with the prior written consent
of the Lessor from 31 December) comprising a profit and loss account and
a balance sheet and a cash flow statement;
"Quiet Enjoyment Letter(s)" means the letter(s) of quiet enjoyment
executed or (as the context may require) to be executed by (inter alios)
the Lessor and/or the Lessor Agent in favour of, and agreed, by the Time
Charterer pursuant to the Time Charter;
"Rated Time Charterer" has the meaning given to that expression in clause
25.6;
"Recoverable VAT" means Value Added Tax which is not Irrecoverable VAT;
"Relevant Bank" means the LC Bank and/or, as the case may be, any
Additional Security Provider (other than an Additional Security Provider
which is a member of the Lessee Group);
"Relevant Bank Change of Law Event" means, in respect of any Relevant
Bank, an event or circumstance arising by virtue of a Change of Law which
requires or, in the reasonable opinion of the Lessor, will when
implemented require the Relevant Bank to make any deduction or
withholding in respect of Taxes from any payment to be made to the Lessor
under any of the Relevant Bank Documents to which such Relevant Bank is a
party and/or which would otherwise cause the amounts payable by such
Relevant Bank to the Lessor under any of such Relevant Bank Documents to
be less than the amount which would have been payable but for such event
or circumstance (save where such event or circumstance is due to a
Relevant Bank Event);
"Relevant Bank Documents" means, in relation to any Relevant Bank, each
of the documents executed from time to time by such Relevant Bank as
security for the obligations and liabilities of the Lessee under this
Lease or otherwise in connection with this Lease;
"Relevant Bank Event" means, in respect of any Relevant Bank, any of the
following events:
(a) any Relevant Bank is unable to pay its debts within the meaning of
section 123(1)(a), (b), (e) or (2) of the Insolvency Xxx 0000 or
becomes insolvent or stops or suspends making payments (whether of
principal or interest) with respect to all or any class of its
debts or announces an intention to do so; or
(b) any petition is presented or other step is taken for the purpose
of winding up such Relevant Bank or an order is made or resolution
passed for the winding up of such Relevant Bank which remains
unstayed or a notice is issued convening a meeting for the purpose
of passing any such resolution which remains unstayed; or
(c) any petition is presented or other step is taken for the purpose
of the appointment of an administrator of such Relevant Bank which
remains unstayed or an administration order is made in relation to
such Relevant Bank; or
(d) any administrative or other receiver is appointed of such Relevant
Bank or any part of its assets and/or undertaking or any other
steps are taken to enforce any Encumbrance over all or any
material (in the reasonable opinion of the Lessor) part of the
assets of such Relevant Bank; or
(e) any steps are taken, or negotiations commenced, by such Relevant
Bank or by any of its creditors with a view to the general
readjustment or rescheduling of all or part of its indebtedness or
to proposing any kind of composition, compromise or arrangement
involving such Relevant Bank and any of its creditors; or
(f) there occurs, in relation to such Relevant Bank in any country or
territory in which it carries on business or to the jurisdiction
of whose courts any part of its assets is subject, any event
which, in the reasonable opinion of the Lessor, appears in that
country or territory to correspond with, or have an effect
equivalent or similar to, any of those mentioned in paragraphs (a)
to (d) (inclusive) above or otherwise becomes subject, in any such
country or territory, to the operation of any law relating to
insolvency, bankruptcy or liquidation; or
(g) such Relevant Bank fails to pay any sum payable by it under the
Relevant Bank Documents to which it is a party at the time, in the
currency and in the manner stipulated in such Relevant Bank
Documents (having regard to any grace periods applicable to
payments contained in such Relevant Bank Documents) and such sum
remains unpaid;
"Relevant Bank Illegality Event" means, in respect of any Relevant Bank,
an event or circumstance which causes or, in the reasonable opinion of
the Lessor, will when implemented cause any of the Relevant Bank
Documents executed by such Relevant Bank to become at any time and for
any reason illegal, invalid or unenforceable or otherwise to cease to
remain in full force or effect or makes it illegal, impossible or
unlawful at any time for such Relevant Bank to fulfil any of the
covenants and obligations expressed to be assumed by such Relevant Bank
in the Relevant Bank Documents executed by such Relevant Bank or for the
Lessor to exercise the rights or any of them vested in it under any of
the Relevant Bank Documents executed by such Relevant Bank but in any
such case other than in circumstances where, in relation to the Relevant
Bank, the relevant event or circumstance arises by reason of a Relevant
Bank Event in respect of the Relevant Bank;
"Relevant Bank Security" means:
(a) in relation to the LC Bank, the Letter of Credit; and
(b) in relation to any Additional Security Provider which is not a
member of the Lessee Group, the Additional Security provided by
such Additional Security Provider;
"Relevant Documents" means the Lease Documents, the Standby Documents,
the Management Agreement, the Lessee Parent Guarantee, the Manager's
Undertaking, the Third Sub-Lessee Share Security, the Letter of Credit,
any Additional Security Documents, the Quiet Enjoyment Letter, the Third
Earnings Account Security, the Supplemental Agreement and any other
document or instrument from time to time executed as a guarantee and/or
security for the obligations of the Lessee and/or any sums of money from
time to time owing whether actually or contingently, under or pursuant to
this Lease or any of the other Lease Documents and any other documents
supplemental to any of them of which the parties agree from time to time
shall be Relevant Documents for the purpose of this Lease and all
notices, consents, certificates and other documents and agreements issued
or, as the case may be, to be issued pursuant to any of the foregoing;
"Relevant Event" means any Termination Event or any Mandatory Prepayment
Event or any event which after the giving of notice or lapse of time or
the satisfaction of any other condition (or any combination thereof)
would constitute a Termination Event or a Mandatory Prepayment Event;
"Relevant GAAP" means accounting principles, concepts, bases and policies
generally adopted and accepted in the respective jurisdictions in which
the Lessee, the Sub-Lessee, the Other Sub-Lessees and the Lessee Parent
are required to produce and file accounts from time to time;
"Relevant Jurisdiction" means any jurisdiction in which or where any
Relevant Party is incorporated, resident, domiciled, has a permanent
establishment, carries on, or has a place of business or to which it is
otherwise effectively connected;
"Relevant Party" means any of the Lessee, the Sub-Lessee, the Lessee
Parent, the Manager or any other party which is a member of the Lessee
Group who is a party to any of the other Relevant Documents;
"Relevant Period" means:
(a) in relation to a Relevant Bank Illegality Event, the period of
sixty (60) days from the occurrence or announcement of the
Relevant Bank Illegality Event or, if shorter, the period from the
occurrence or announcement of such Relevant Bank Illegality Event
up to the date falling five (5) days prior to the date upon which
the Relevant Bank Illegality Event is to take effect; and
(b) in relation to a Relevant Bank Change of Law Event, the period of
sixty (60) days from the occurrence or announcement of the
Relevant Bank Change of Law Event or, if shorter, the period from
the occurrence or announcement of such Relevant Bank Change of Law
Event up to the date falling five (5) days prior to the date upon
which such Relevant Bank Change of Law Event is to take place;
"Relevant Security Agent" has the meaning given to that expression in the
Proceeds Deed;
"Relevant Shareholder" has the meaning given to that expression in clause
2.2.10;
"Relevant Ship" means the Ship, the Other Ships and any other vessel from
time to time (whether before or after the date of this Lease) owned,
managed or crewed by, or leased to the Lessee or the Sub-Lessee for which
that person has or may have responsibility for liabilities or claims
resulting from non-compliance with Environmental Laws and/or the
occurrence of an Environmental Incident;
"Rental" has the meaning given to that expression in the Financial
Schedule;
"Required LC Amount" means an amount equal during each Security Period
shown in the Applicable Security Table to the Total Security Amount for
and during each such Security Period minus the corresponding Maximum
Unsecured Strip Liability Amount for and during each such Security
Period;
"Required Letter of Credit Expiry Date" means the date falling ten (10)
days after the expiry of the Primary Period;
"Required Security Amount" means, in relation to each new Additional
Security Table provided in accordance with paragraph 9 of the Financial
Schedule, the amount shown in column (6) of that new Additional Security
Table and, where additional security is required to be provided pursuant
to clause 25.2 by reference to such amount, ignoring for this purpose the
fact that such amount is shown as a negative figure for the purpose of
that new Additional Security Table;
"Requisition Compensation" means all sums of money or other compensation
from time to time payable in respect of the Compulsory Acquisition of the
Ship;
"RPI" has the meaning given to that expression in the Financial Schedule;
"Secondary Period" means the period for which the Lease Period is
extended in accordance with clause 3.2;
"Secondary Rental" has the meaning given to that expression in the
Financial Schedule;
"Second Security Agent" means Nordea Bank Norge ASA of Xxxxxxxxxxxxxxx
00, 0000 Xxxx, Xxxxxx and includes its successors in title;
"Security Period" has the meaning given to that expression in the
Financial Schedule;
"Ship" means the liquefied natural gas carrier "XXXXXXX" having
International Maritime Organisation Number 7382744 registered in the name
of the Lessor under the British flag with Official Number 905532 and
includes any share or interest therein and her engines, machinery, boats,
tackle, outfit, equipment, spare gear, belongings and appurtenances
whether on board or ashore, (but excluding consumable or other stores and
provisions, bunkers, domestic fuel, lubricants, rented or leased
equipment and charterer's and sub-charterer's additions) which are
property of the Lessor on the Delivery Date or become installed on the
Ship thereafter or which, having been removed therefrom, remain the
property of the Lessor pursuant to this Lease, together with any and all
substitutions therefor and all additions, improvements and replacements
and removals thereof from time to time made in or to her in accordance
with the provisions of this Lease and, where the context permits "Ship"
shall include the Manual and Technical Records;
"SMC" means a safety management certificate issued in respect of the Ship
in accordance with the ISM Code;
"Spill" means any emission, spill, release or discharge of a Pollutant
from any Relevant Ship into the environment;
"Standard & Poor's" means Standard & Poor's Rating Services and includes
its successors in title;
"Standby Documents" means the Standby Put Option Agreement, the Third
Standby Purchaser Assignment, the Third Standby Purchaser Share Security,
the Standby Lease Agreement, the Standby Rental Assignment, the Third
Standby Mortgage and any other document, notice, letter or instrument
entered into or given pursuant to the terms of any of the foregoing or
any document which it is agreed should be a "Standby Document" for the
purpose of this Lease;
"Standby Lease Agreement" means the standby lease agreement entered or to
be entered into between the Lessee and the Standby Purchaser pursuant to
which the Standby Purchaser shall, following the purchase of the Ship or
by the Standby Purchaser, lease the Ship to the Lessee;
"Standby Option Notice" has the meaning given to that expression in the
Standby Put Option Agreement;
"Standby Purchaser" means LNG Shipping Co., a Cayman Islands company
having its principal place of business at X.X. Xxx 000XX, CIBC Financial
Centre, 11 Xx Xxxx Drive, Xxxxxx Town, Grand Cayman, Cayman Islands, or
any other person who may from time to time, with the approval of the
Lessor, replace that person as Standby Purchaser and includes its
successors in title;
"Standby Put Option Agreement" means the agreement entered into or to be
entered into between the Lessor and the Standby Purchaser pursuant to
which the Lessor may sell its interest in the Ship to the Standby
Purchaser on the terms and conditions set out therein;
"Standby Rental Assignment" means the assignment executed or (as the
context may require) to be executed by the Lessee, the Standby Purchaser
and the Lessor in the agreed form pursuant to which the Lessee shall
assign in favour of the Standby Purchaser its rights under clause 5.1.1
of the Proceeds Deed and the Standby Purchaser shall assign in favour of
the Lessor the Initial Rental (as defined in the Standby Lease) and the
property assigned by the Lessee in favour of the Standby Purchaser under
this assignment;
"Sterling", "Pounds" and "(pound)" means the lawful currency for the time
being of the United Kingdom and in respect of all payments to be made
under this Lease in Sterling mean immediately available, freely
transferable cleared funds in Sterling;
"Strip Liability Amount" means, at any date, an amount equal to the
difference between the Total Security Amount and the aggregate of the
Letter of Credit Amount and the Additional Security Amount at that date;
"Sub-Lease" means a lease made or (as the context may require) to be made
between the Lessee and the Sub-Lessee for a period of twenty (20) years
in the agreed form;
"Sub-Lease Period" means the period during which the Sub-Lessee shall be
entitled to the use and possession of the Ship in accordance with the
Sub-Lease;
"Sub-Lessee" means Xxxxx Xxxxxxx UK Ltd., an English company with company
number 04679428 having its principal place of business at 00 Xxxxx Xxxx,
Xxxxxx X00 0XX and includes its successors in title;
"Subordinated Debt" means any Indebtedness of the Lessee, the Manager or
any of their Subsidiaries which is a Relevant Party owing to the Lessee
Parent which is subject to the Subordination Deed;
"Subordination Deed" means a deed dated April 2003 entered or (as the
context may require) to be entered into between (inter alios) the Lessee,
the Sub-Lessee, the Other Sub-Lessees, the Manager, Gotaas Xxxxxx, the
Lessee Parent and the First Security Agent in the agreed form;
"Subsidiary" of any person means:
(a) in respect of a person incorporated outside England and Wales
means any company or entity directly or indirectly controlled by
such person, and for this purpose "control" means either the
ownership of more than fifty per cent (50%) of the voting share
capital (or equivalent rights of ownership) of such company or
entity or the power to direct its policies and management whether
by contract or otherwise; and
(b) in respect of a person incorporated in England and Wales, a
subsidiary within the meaning of section 736 Companies Xxx 0000;
"Supplemental Agreement" means the Supplemental Agreement of even date
herewith relating to a certain tax deed made between the Lessor Agent and
the Lessee;
"Swap Liabilities" means Indebtedness incurred in respect of swaps,
foreign exchange contracts, futures and other derivatives (but so that
when calculating the value of any derivative transaction, only the marked
to market value shall be taken into account) and guarantees in respect of
such Indebtedness;
"Tax Authority" has the meaning given to that expression in the Financial
Schedule;
"Tax Contest Letter" means a side letter to this Lease to be entered into
by the Lessor and the Lessee and regulating the conduct of tax disputes;
"Tax Written Down Value" has the meaning given to that expression in the
Financial Schedule;
"Taxes" includes all present and future taxes, levies, imposts, duties,
fees or charges in the nature of a tax including, without limitation,
corporation, capital gains, income, gross receipts, franchise, transfer,
sales, use, business, occupation, transaction, purchase, value added,
excise, personal property, real property, stamp, documentary, national
insurance or other taxes at the rate applicable for the time being
imposed by any national or local taxing or fiscal authority or any other
agency or government, together with interest thereon and penalties in
respect thereof and "Tax" and "Taxation" shall be construed accordingly;
"Termination" means the termination of the leasing of the Ship under this
Lease otherwise than by the expiry of the Lease Period by effluxion of
time;
"Termination Event" means any of the events or circumstances described in
clause 26.1;
"Termination Fee" means a sum calculated pursuant to paragraph 6.3 of the
Financial Schedule;
"Termination Notice" means a notice served by the Lessor on the Lessee
pursuant to clause 27.1;
"Termination Payment Date" has the meaning given to that expression in
the Financial Schedule;
"Termination Sum" has the meaning given to that expression in the
Financial Schedule and shall include, for the purpose of this Lease
(except the Financial Schedule), any Termination Fee;
"Third Earnings Account Security" means third priority deed(s) of
assignment executed or (as the context may require) to be executed by any
person in favour of the Lessor Agent in respect of (inter alia) an
Earnings Account as security for the obligations of the Lessee under
(inter alia) this Lease in the agreed form or in such other form as the
Lessor may reasonably require for the purpose of creating effective
security over such account under any applicable laws;
"Third Priority Three Party Deed" means the third priority assignment of
(a) the Lessee's rights, title and interest in and to (i) all Insurances
and Requisition Compensation of the Ship, (ii) the Lease and (iii) the
Sub-Lease and (b) the Sub-Lessee's rights, title and interest in and to
(i) all Insurances and Requisition Compensation of the Ship and (ii) the
Time Charter executed or (as the context may require) to be executed by
the Lessee and the Sub-Lessee in favour of the Lessor Agent in the agreed
form;
"Third Standby Mortgage" means any third priority mortgage in respect of
the Ship executed by the Standby Purchaser in favour of the Lessor
pursuant to clause 5.2.5 of the Proceeds Deed;
"Third Standby Purchaser Assignment" means the third priority assignment
executed or (as the context may require) to be executed by the Standby
Purchaser in favour of the Lessor Agent in the agreed form in respect of
the rights, title and interest of the Standby Purchaser in and to (inter
alia) the Insurances and Requisition Compensation;
"Third Standby Purchaser Share Security" means the third priority charge
of the issued and outstanding share capital of the Standby Purchaser
executed or (as the context may require) to be executed by the
shareholder of the Standby Purchaser in favour of the Lessor Agent in the
agreed form;
"Third Sub-Lessee Share Security" means the third priority charge of the
issued and outstanding share capital of the Sub-Lessee executed or (as
the context may require) to be executed by the Manager in favour of the
Lessor Agent in the agreed form;
"Time Charter" means the Original Time Charter as novated by the Time
Charter Novation Agreement and as further amended and supplemented
pursuant to Addendum No. 2 dated April 2003 and including any extensions
and replacement thereof pursuant to the terms thereof and including any
other time charter(s) approved by the Lessor pursuant to clause 25.6;
"Time Charter Novation Agreement" means the novation agreement dated 4
April 2003 made between the Time Charterer, Xxxxx Xxxxxxx Inc. and the
Sub-Lessee pursuant to which the rights, title and interest and all
obligations of Xxxxx Xxxxxxx Inc. under the Original Time Charter have
been novated in favour of the Sub-Lessee;
"Time Charterer" means Methane Services Limited, an English company with
company number 0737366 having its principal place of business at 000
Xxxxxx Xxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxxx, XX0 0XX and includes its
successors in title and includes any other person which is a party to a
Time Charter as charterer from time to time;
"Total Loss" means:
(a) actual or constructive or compromised or arranged total loss of
the Ship; or
(b) the Compulsory Acquisition of the Ship; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of the Ship (other than where the same
amounts to Compulsory Acquisition of the Ship) by any persons,
unless the Ship be released and restored to the Lessee or, during
the Sub-Lease Period, the Sub-Lessee from such hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation
within sixty (60) days after the occurrence thereof; or
(d) the expiry of one hundred and eighty (180) days (or such longer
period as the Lessor, the Lessee and the Relevant Security Agent
may agree) after the Ship shall have been requisitioned for hire
by a Government Entity or other competent authority, whether de
jure or de facto;
"Total Loss Date" means the date upon which the Ship is deemed to have
become a Total Loss pursuant to clause 22.2.2;
"Total Loss Payment Date" means the earliest of any of the following
dates next occurring after the Total Loss Date:
(a) the date falling one hundred and twenty (120) days after the Total
Loss Date (or such later day as the Lessor may agree from time to
time); or
(b) the first Banking Day after the day on which the Lessor receives
the Total Loss Proceeds or Requisition Compensation;
"Total Loss Proceeds" means the proceeds of any policy or contract of
insurance arising in respect of a Total Loss;
"Total Security Amount" has the meaning given to that expression in the
Financial Schedule;
"Transaction Documents" has the meaning given to that expression in the
Proceeds Deed;
"Transaction Fees" means the Arrangement Fee, the Lease Fee and the Legal
Fee;
"United Kingdom" means Great Britain and Northern Ireland;
"Value Added Tax" or "VAT" means value added tax as provided for in VATA
and legislation (whether delegated or otherwise) supplemental thereto or
in any primary or subordinate legislation promulgated by the European
Union or any body or agency thereof and any tax similar or equivalent to
value added tax imposed by any country other than the United Kingdom and
any similar or turnover Tax replacing or introduced in addition to any of
the same;
"Variable Liability Amount" has the meaning given to that expression in
the Letter of Credit;
"Variable Assumption" has the meaning given to that expression in the
Financial Schedule;
"VATA" means the Value Added Tax Xxx 0000; and
"WDA Letter" means a side letter to this Lease to be entered into by the
Lessor and the Lessee in relation to the rate of writing down allowances.
1.3 Insurance definitions
In clause 16:
1.3.1 "excess risks" means the proportion (if any) of claims for general
average, salvage and salvage charges and under the ordinary collision
clause not recoverable in consequence of the value at which a vessel is
assessed for the purpose of such claims exceeding her insured value;
1.3.2 "protection and indemnity risks" means:
(a) the usual risks (including oil pollution) covered by a United
Kingdom protection and indemnity association or a protection and
indemnity association which is managed in London or Norway or is
otherwise a member of the "International Group" of protection and
indemnity associations (including, without limitation, the
proportion (if any) of any sums payable to any other person or
persons in case of collision which are not recoverable under the
hull and machinery policies by reason of the incorporation therein
of clause 8 of the Institute Time Clauses (1/11/95) or the
Institute Amended Running Down clause (1/10/71) or any equivalent
provision); or
(b) (if placed on Norwegian terms) means protection and indemnity
risks as defined in the Norwegian Marine Insurance Plan of 1964 as
amended; and
1.3.3 "war risks" includes those risks covered by the standard form of English
marine policy with Institute War and Strike Clauses (Time) (1/11/95)
attached or similar cover (or if placed on Norwegian terms, means the war
risks described in The Norwegian Maritime Insurance Plan of 1966 as
amended).
1.4 Headings
Clause headings and the index are inserted for convenience of reference
only and shall be ignored in the interpretation of this Lease.
1.5 References
In this Lease, unless the context otherwise requires:
1.5.1 references to Clauses and Schedules are to be construed as references to
Clauses of, and Schedules to, this Lease and references to this Lease
include its Schedules;
1.5.2 references to (or to any specified provision of) this Lease or any other
document shall be construed as references to this Lease, that provision
or that document as in force for the time being and as amended in
accordance with the terms thereof, or, as the case may be, with the
agreement of the relevant parties;
1.5.3 references to a "regulation" include any present or future regulation,
rule, directive, requirement, request or guideline (whether or not having
the force of law) of any agency, authority, central bank or government
department or any self-regulatory or other national or supra-national
authority;
1.5.4 words importing the plural shall include the singular and vice versa;
1.5.5 references to a time of day are to London time;
1.5.6 references to a person shall be construed as references to an individual,
firm, company, corporation, unincorporated body of persons or any
Government Entity;
1.5.7 references to a "guarantee" include references to an indemnity or other
assurance against financial loss including, without limitation, an
obligation to purchase assets or services as a consequence of a default
by any other person to pay any Indebtedness and "guarantees" shall be
construed accordingly;
1.5.8 references to an "obligation" include, for the avoidance of doubt, an
obligation to make a payment;
1.5.9 except in the Financial Schedule references to any enactment shall be
construed as references to such enactment as re-enacted, amended or
extended; and
1.5.10 references to any person include the successors and permitted assigns of
such person.
1.6 Value added tax
Any Value Added Tax or any similar tax properly chargeable in respect of
supplies of goods or services under the terms of this Lease or any of the
other Relevant Documents shall be payable (subject to production of an
appropriate Value Added Tax invoice) in addition to the amounts otherwise
payable hereunder or thereunder, which amounts are determined exclusive
of Value Added Tax.
1.7 Conflicts
In the event of any conflict between this Lease and any of the other
Lease Documents, the provisions of this Lease shall prevail but in the
event of any conflict between a Lease Document and the Proceeds Deed, the
provisions of the Proceeds Deed shall prevail.
1.8 Agreed forms
In this Lease, any document expressed to be "in the agreed form" means a
document in a form agreed by (and for the purposes of identification
signed by or on behalf of) the Lessee and the Lessor or (in the case of
any of the Relevant Documents) a document in the form actually executed
by both the Relevant Party or Relevant Parties and the Lessor.
1.9 Contracts (Rights of Third Parties) Xxx 0000
With the exception of any Indemnified Persons, no term of this Lease
shall be enforceable pursuant to the Contracts (Rights of Third Parties)
Xxx 0000 by a person who is not a party to this Lease. For the avoidance
of doubt however it shall not be necessary for the parties to this Lease
to obtain the consent of the Indemnified Persons in order to amend,
supplement or modify the terms of this Lease.
2 Lessee's representations and warranties
2.1 Continuing representations and warranties
The Lessee represents and warrants to the Lessor that:
2.1.1 Due incorporation
each Relevant Party is duly incorporated and validly existing under the
laws of its country or state of incorporation as a limited liability
company and has power to carry on its business as it is now being
conducted and to own its property and other assets;
2.1.2 Corporate power
each Relevant Party has power to execute, deliver and perform its
obligations under the Relevant Documents to which it is or is to be party
and all necessary corporate, shareholder and other action has been taken
to authorise the execution, delivery and performance of the same;
2.1.3 Binding obligations
this Lease constitutes and each other of the Relevant Documents, upon
execution and delivery thereof, will constitute the legal, valid and
binding obligations of each Relevant Party enforceable in accordance with
its terms except as such enforcement may be limited by any relevant
bankruptcy, insolvency, administration or similar laws affecting
creditors' rights generally and by general principles of equity;
2.1.4 No conflict with other obligations
the execution and delivery of, and the performance of the Relevant
Documents to which any Relevant Party is a party will not (a) contravene
any existing applicable law, statute, rule or regulation or any judgment,
decree or permit to which any Relevant Party is subject, (b) conflict
with, or result in any breach of any of the terms of, or constitute a
default under, any agreement or other instrument to which any Relevant
Party is a party or is subject or by which it or any of its property is
bound, (c) contravene or conflict with any provision of the memorandum
and articles of association/articles of incorporation and by-laws or
other constitutional documents of any Relevant Party or (d) result in the
creation or imposition of or oblige any Relevant Party to create any
Encumbrance (other than a Permitted Encumbrance) on the undertakings,
assets, rights or revenues of any Relevant Party;
2.1.5 Choice of law
the choice by the Relevant Parties of English law to govern the Relevant
Documents and, where applicable, the submission by the Relevant Parties
to the non-exclusive jurisdiction of the English courts are valid and
binding;
2.1.6 No immunity
no Relevant Party nor any of its assets is entitled to immunity on the
grounds of sovereignty or otherwise from any legal action or proceeding
(which shall include, without limitation, suit, attachment prior to
judgment, execution or other enforcement);
2.1.7 Financial statements correct and complete
the unaudited proforma consolidated and combined financial statements of
the Lessee and its Subsidiaries (excluding Oxbow Holdings Inc. and Golar
Maritime (Asia) Inc.) and the audited consolidated financial statements
of the Lessee Group in respect of the financial year ended on 31 December
2001 and the financial statements of the Golar Gas Group in respect of
the nine (9) months ended as of 30 September 2002 (prepared on a
pro-forma consolidated and combined basis) as delivered to the Lessor
have been prepared in accordance with Relevant GAAP consistently applied
and present fairly and accurately the consolidated and combined financial
position of the Lessee and its Subsidiaries (excluding Oxbow Holdings
Inc. and Golar Maritime (Asia) Inc.) and the Lessee Group and the
consolidated and combined financial position of the Golar Gas Group as at
the relevant date and the consolidated results of the operations of the
Lessee and its Subsidiaries (excluding Oxbow Holdings Inc. and Golar
Maritime (Asia) Inc.) and the Lessee Group for the financial year ended
as at the relevant date and the consolidated and combined results of the
operations of the Golar Gas Group respectively for the nine (9) months
ended as at the relevant date, and, as at the relevant date, neither the
Lessee nor any of its Subsidiaries (excluding Oxbow Holdings Inc. and
Golar Maritime (Asia) Inc.) nor any of the Lessee Group nor any of the
Golar Gas Group had any significant liabilities (contingent or otherwise)
which are not disclosed by, or reserved against in, such financial
statements and neither the Lessee nor any of its Subsidiaries (excluding
Oxbow Holdings Inc. and Golar Maritime (Asia) Inc.) nor any of the Lessee
Group nor any of the Golar Gas Group had any unrealised or anticipated
losses which are not disclosed by, or reserved against or provided for
in, such financial statements; and
2.1.8 Tax residence
the Sub-Lessee is resident in the United Kingdom and is not resident for
Tax purposes in any jurisdiction other than the United Kingdom.
2.2 Initial representations and warranties
The Lessee further represents and warrants to the Lessor that:
2.2.1 Consents obtained
every consent, authorisation, licence or approval of, or registration
with or declaration to, governmental or public bodies or authorities or
courts required by each Relevant Party to authorise, or required by such
Relevant Party in connection with, the execution, delivery, validity,
enforceability or admissibility in evidence of the Relevant Documents to
which it is a party or the performance by each Relevant Party of its
obligations under the Relevant Documents to which it is a party has been
obtained or made and is in full force and effect and there has been no
default in the observance of any of the conditions or restrictions (if
any) imposed in, or in connection with, any of the same;
2.2.2 Pari passu
the obligations of each Relevant Party under the Relevant Documents are
direct, general and unconditional obligations of such Relevant Party and
rank at least pari passu with all other present and future unsecured and
unsubordinated Indebtedness of each Relevant Party save for obligations
mandatorily preferred by law and not by contract;
2.2.3 No default under other Indebtedness
no Relevant Party is (nor would be with the giving of notice or lapse of
time or the satisfaction of any other condition or combination thereof
be) in material breach of or in default under any agreement relating to
(a) Borrowed Money or (b) Indebtedness in respect of amounts exceeding
one million Dollars ($1,000,000), to which it is a party or by which it
may be bound;
2.2.4 Information
the information, exhibits and reports furnished by the Lessee to the
Lessor in connection with the matters contemplated by the Relevant
Documents or in connection with the negotiation and preparation of the
Relevant Documents are true and accurate in all material respects and not
misleading, do not omit material facts and all reasonable enquiries have
been made to verify the facts and statements contained therein;
2.2.5 No withholding taxes
(a) no Taxes are imposed by withholding or otherwise on any payment to
be made by any Relevant Party under any of the Relevant Documents
or are imposed on or by virtue of the execution or delivery by any
Relevant Party of the Relevant Documents or any other document or
instrument to be executed or delivered under any of the Relevant
Documents;
(b) the Lessee is exempt from tax in the Republic of Liberia;
(c) neither the Lessee nor any of its Subsidiaries or affiliates is a
division, bureau, office, agency, department, committee or
political subdivisions of the Government of the Republic of
Liberia or another sovereign jurisdiction;
(d) the Lessee is not regularly engaged in the conduct of activities
pursuant to contractual arrangements with the Republic of Liberia
or any division, bureau, office, agency, department, committee or
political subdivisions thereof;
(e) the Lessee is not:
(i) regularly engaged in the ownership, use or disposition of
real property located in the Republic of Liberia or
agricultural or mineral products derived therefrom; nor
(ii) regularly engaged in the conduct of activities pursuant to
a contractual arrangement with the Republic of Liberia or
any agency or political subdivision thereof;
(iii) a corporation in respect of which more than twenty five
percent (25%) of the total combined voting power and more
than twenty five percent (25%) of the total value of
outstanding equity stock is owned directly or indirectly by
Liberian resident persons; nor
(iv) carrying on business operations in the Republic of Liberia;
2.2.6 No Relevant Event
no Relevant Event has occurred and is continuing;
2.2.7 The Ship
the Ship on the Delivery Date will:
(a) be in the absolute ownership of the Lessor;
(b) maintain the Classification free of all requirements and
recommendations of the Classification Society that are overdue or
have not been complied with in accordance with their relevant
terms; and
(c) save in respect of or pursuant to the Sub-Lease and the Time
Charter, not be subject to any lease or contract or to any
agreement to enter into any charter or contract which, if entered
into by the Lessee after the date of any or all of the Lease
Documents, would have required the consent of the Lessor;
2.2.8 Freedom from Encumbrances
neither the Lessee's interest in the Ship, the Insurances or any
Requisition Compensation nor any part thereof will be on the Delivery
Date subject to any Encumbrances save for any Permitted Encumbrances;
2.2.9 Environmental matters
to the best of the knowledge and belief of the Lessee and its officers:
(a) all Environmental Laws applicable to the Ship have been complied
with and all consents, licences and approvals required under such
Environmental Laws have been obtained and complied with;
(b) no Environmental Claim has been made, or is pending, against the
Lessee or the Ship and not fully satisfied;
(c) no Environmental Claim has been made, or is pending, against any
Relevant Party (other than the Lessee) or any Relevant Ship (other
than the Ship) and not fully satisfied which constitutes or may
give rise to a Termination Event of the type specified in clause
26.1.18; and
(d) there has been no Environmental Incident;
2.2.10 Share ownership
(a) Gotaas Xxxxxx is the sole legal and beneficial owner of the whole
of the issued share capital of the Lessee as at the date of this
Lease;
(b) the Lessee Parent is the sole, legal and beneficial owner of the
whole of the issued share capital of Gotaas Xxxxxx as at the date
of this Lease; and
(c) not less than twenty five percent (25%) of the issued and
outstanding share capital of the Lessee Parent is directly or
indirectly, legally and beneficially owned by Xx. Xxxx Xxxxxxxxxx
(the "Relevant Shareholder");
2.2.11 Copies true and complete
the copies of the Management Agreement and such of the Transaction
Documents to which the Lessor is not a party delivered by the Lessee to
the Lessor are true and complete copies of such documents, each of such
documents constitutes the valid, legally binding and enforceable
obligations of the Relevant Parties which are parties thereto, are in
full force and effect and there have been no material amendments or
variations thereof or defaults thereunder;
2.2.12 No litigation
no litigation, arbitration or administrative proceeding is taking place,
pending or, to the knowledge of the officers of the Lessee, threatened
against any Relevant Party which could, if adversely determined, have a
material adverse effect on the business, assets or financial condition of
the Lessee Group taken as a whole; and
2.2.13 No filings required
save for the filing of the Third Priority Three Party Deed, the Third
Standby Purchaser Share Security, the Third Sub-Lessee Share Security,
the Standby Rental Assignment and the Third Standby Purchaser Assignment
and the Third Earnings Account Security with the Companies Registry in
England and Wales and the filing of the Third Standby Purchaser Share
Security, the Standby Rental Assignment and the Third Standby Purchaser
Assignment with the Companies Registry in the Cayman Islands, it is not
necessary to ensure the legality, validity, enforceability or
admissibility in evidence of the Relevant Documents that any of them or
any other instrument be notarised, filed, recorded, registered or
enrolled in any court, public office or elsewhere in any Relevant
Jurisdiction or that any stamp, registration or similar tax or charge be
paid in any Relevant Jurisdiction on or in relation to the Relevant
Documents and the Relevant Documents are, or will, upon execution thereof
by any Relevant Party, be in proper form for their enforcement in the
courts of each Relevant Jurisdiction.
2.3 Repetition of representations and warranties
On and as of the Delivery Date and (except in relation to the
representations and warranties in clause 2.2) on each Primary Rental Date
the Lessee shall be deemed to repeat the representations and warranties
in clause 2.1 (and so that the representation and warranty in clause
2.1.7 shall for this purpose refer to the then latest audited financial
statements of the Lessee, the Sub-Lessee, the Other Sub-Lessees and the
Manager, the audited consolidated financial statements of the Lessee
Group and the consolidated and combined financial statements of the Golar
Gas Group delivered to the Lessor under clause 11.1.4) as if made with
reference to the facts and circumstances existing on such day.
2.4 Not prejudiced by Lessor's investigation
The rights and remedies of the Lessor in relation to any
misrepresentation or breach of warranty on the part of the Lessee shall
not be prejudiced by any investigation by or on behalf of the Lessor into
the affairs of any person (other than the Lessor) being a party to any of
the Relevant Documents, by the performance of any of the Relevant
Documents, or by any other act or thing which may be done or omitted to
be done by the Lessor under any of the Relevant Documents which would or
might, but for this clause 2.4, prejudice such rights and remedies.
3 Term of Lease
3.1 Primary Period
The Lessor shall let and demise to the Lessee and the Lessee shall lease
the Ship, subject to the terms and conditions of this Lease, for the
Primary Period.
3.2 Secondary Period
The Lessee shall be entitled, provided that no Relevant Event has
occurred and is continuing, on giving to the Lessor notice (which notice,
when given, shall be irrevocable) not less than thirty (30) days prior to
the end of (a) the Primary Period and (b) (subject as hereinafter
provided) each succeeding period of twelve (12) months from the end of
the Primary Period, to extend the Lease Period for a period of twelve
(12) months or, if less, up to a maximum period equivalent to any
remaining useful life of the Ship. The Lessee's entitlement to extend the
Lease Period in the manner referred to above is subject to the Lessee
providing evidence reasonably satisfactory to the Lessor that the Ship
remains seaworthy and has a remaining useful life equal to the term for
which the Lease Period is to be extended pursuant to this clause 3.2.
3.3 Voluntary termination and expiry
3.3.1 Notice of termination
The Lessee shall, subject to clause 25.5, be entitled to terminate the
Lease Period on any date provided that:
(a) the Lessee shall have given to the Lessor notice of the proposed
date of termination not less than thirty (30) days before such
date; or
(b) if the Lessee becomes liable to make a payment in respect of an
increased cost to the Lessor under clause 31.1 or if the Lessee
certifies in writing that it wishes to terminate the Lease Period
because it has become Economically Burdensome, the Lessee shall be
entitled to give to the Lessor notice of the proposed termination
not less than five (5) Banking Days before such date.
A voluntary termination under this clause 3.3 will also occur in
the circumstances contemplated by clauses 3.8, 25, 27.3 and 31.3.
For the purpose of this clause 3.3, the date specified as the
proposed date of any termination in any notices delivered pursuant
to sub-clauses (a) and (b) above or the date of any notices given
pursuant to clause 3.8, 25 or, as the case may be, the date five
(5) Banking Days following the issue of a notice of termination
pursuant to clauses 27.3 or 31.3, shall be referred to as the
"Notified Termination Date".
3.3.2 Continuation of Lease Period
Notwithstanding anything to the contrary in this Lease where the Lease
Period expires by effluxion of time or if the Lessee gives notice to
terminate the Lease Period pursuant to this clause 3.3, the Lease Period
shall continue on the terms set out in clause 18.3 until and end on the
date on which the Ship shall be delivered to a purchaser thereof pursuant
to a sale of the Ship as contemplated by clause 3.4, whenever such
delivery shall take place.
3.3.3 Termination payments
On the Notified Termination Date the Lessee shall pay to the Lessor an
amount equal to the Termination Sum on such date together with all
amounts of Rental and other moneys then due and owing by the Lessee to
the Lessor under this Lease or any of the other Lease Documents.
3.3.4 Mitigation
Where the Lease Period is terminated because it has become Economically
Burdensome to the Lessee, the Lessor and the Lessee agree that they
shall, at the cost of the Lessee, use all reasonable endeavours to
arrange for a termination of the Lease Period in an efficient manner so
as to try and minimise the after-tax cost to the Lessee arising from such
termination. It is acknowledged and agreed, however, that the Lessor
shall not be obliged to agree to any arrangement or take any action in
connection with the above mitigation arrangements if to do so would give
rise to any additional cost or liabilities to the Lessor in respect of
any such termination of the Lease Period unless the Lessor is indemnified
or otherwise secured in a manner satisfactory to it, in its absolute
discretion, in respect of any such additional costs or liabilities.
3.4 Sale of Ship on expiry or voluntary termination
During the period commencing ninety (90) days before the last day of the
Lease Period (or, as the case may be, commencing on the date of notice
being given under clause 3.3) and ending on the date on which the
completion of the sale or disposal of the Ship takes place the Lessor
shall, subject to the provisions of the Proceeds Deed relating to the
sale or other transfer or disposal of the Ship and provided it shall not
be prevented from so doing for any reason whatsoever which is beyond its
reasonable control, endeavour to sell all of its rights, title and
interest in and to the Ship with an intended delivery or completion on,
or as soon as practicable after, the Notified Termination Date or, as the
case may be, the date of expiry of the Lease Period by effluxion of time.
The Net Sale Proceeds arising in respect of any sale shall be applied,
subject to clause 10.4 and the provisions of clauses 3.1 and 3.3 of the
Proceeds Deed, as follows:
3.4.1 first, in retention by the Lessor of an amount equal to one tenth of one
per cent (0.1%) of the amount of the Net Sale Proceeds;
3.4.2 secondly, in or towards retention by the Lessor of an amount equal to all
or any part of the Termination Sum which the Lessee shall not, on or
before the date of application of the Net Sale Proceeds, have paid to the
Lessor in accordance with clause 3.3;
3.4.3 thirdly, in or towards settlement of any other amounts owing by the
Lessee to the Lessor under this Lease or any of the other Lease Documents
(including any interest due in respect thereof);
3.4.4 fourthly, in or towards refunding to the Lessee by way of rebate of
Rental an amount not exceeding all Rental (including, without limitation,
any Termination Sum) paid to the Lessor by the Lessee under this Lease;
and
3.4.5 fifthly, to the Lessee, by way of sales commission determined in
accordance with the provisions of clause 3.6.4 or otherwise as
appropriate.
3.5 Redelivery voyage
Should the Ship be upon a voyage (other than under requisition for hire)
at the time the Lease Period would (but for the provisions of this clause
3.5) have terminated the Lease Period shall (if required by the Lessee)
continue for such additional time as may be necessary for the completion
of such voyage. The Lease Period shall also continue for such additional
time as may be necessary in order to bring the Ship to a port of
re-delivery as provided in clause 18.1 The Lessee shall use all
reasonable endeavours to bring the Ship to such port of re-delivery as
soon as practicable following completion of the relevant voyage. Nothing
in this clause 3.5 shall, where the Lease Period is terminated following
the issue of a Termination Notice, operate to modify the dates on which
the Lessee is required to make any payments (whether of any Termination
Sum or otherwise) under this Lease.
3.6 Sales agency
In respect of any sale of the Ship in accordance with clause 3.4, the
Lessor hereby appoints the Lessee (and such appointment shall, without
prejudice to clause 3.4.5, constitute a full discharge by the Lessor of
its obligation under clause 3.4 to endeavour to sell the Ship) to act as
the sole and exclusive agent of the Lessor for the purpose of negotiating
the sale of the Ship on the following terms:
3.6.1 the Lessee will (if and to the extent it is permitted to do so under the
Proceeds Deed) endeavour to arrange the sale of the Ship for a cash
consideration payable by the purchaser in full on completion of such sale
in Pounds, Dollars or such other currency as the Lessor may approve (such
approval not to be withheld in the case of a currency which is then
freely convertible into Pounds) on the best terms (including price)
reasonably obtainable on the open market (and in any event for no less
than the Tax Written Down Value of the Ship as at the date of such sale)
provided that the Ship shall not be sold to:
(a) the Lessee or the Sub-Lessee; or
(b) any person acting in trust for, as nominee of, as agent, or
otherwise as representative of, or on behalf of any of the persons
referred to in (a) above,
and the Lessee will keep the Lessor informed from time to time of its
progress;
3.6.2 the Lessee's authority will not extend to concluding a contract for the
sale of the Ship for which the Lessor's specific written authority will
be required (which authority shall not be withheld or delayed where (a)
the sale complies with the other provisions of this clause 3.6, (b) the
resulting Net Sale Proceeds will equal or exceed the Tax Written Down
Value as at the proposed date of sale and (c) the aggregate of the Net
Sale Proceeds which can be retained by the Lessor pursuant to clauses 3.1
and 3.3 of the Proceeds Deed and the Applicable Security Amount as at the
proposed date of sale will exceed the aggregate amount of the Termination
Sum and all other amounts owing by the Lessee to the Lessor under this
Lease and any amounts due but unpaid under any of the other Lease
Documents (including any interest due in respect thereof) as at the
proposed date of sale or that, to the extent that either (b) or (c) above
do not apply, the Lessee has satisfied the Lessor that the Lessee and/or
the Lessee Parent will have adequate financial resources available to
enable the Lessee to pay the balance of such aggregate amount to the
Lessor in accordance with clause 3.4));
3.6.3 the Ship shall be offered for sale on an "as is where is" basis and for
delivery on, or as soon as practical after, termination or expiry of the
Lease Period and any contract for its sale shall include terms to the
following effect:
(a) that all terms, conditions, representations or warranties,
expressed or implied by statute or otherwise, whether as to the
state or quality of the Ship or as to description, fitness for
purpose, merchantable quality, satisfactory quality or otherwise,
are, so far as is permitted by law, expressly excluded as between
the Lessor and the buyer save in respect of the warranty that the
Lessor shall be passing such title to the Ship as the Lessor
received from Xxxxx Xxxxxxx Inc. free from any Lessor's
Encumbrances;
(b) that, if the proposed sale contract provides for delivery of the
Ship by the Lessor, such obligation is conditional upon the Ship
first being redelivered to the Lessor;
(c) that the purchase moneys shall be paid to the Lessor in full in
cash on completion of the sale to the relevant Lessor Proceeds
Account and otherwise, where applicable, in accordance with, the
provisions of the Proceeds Deed;
3.6.4 if the Net Sale Proceeds exceed the aggregate of:
(a) any sums which the Lessor may be entitled to retain in accordance
with clauses 3.4.1, 3.4.2 and 3.4.3; and
(b) any sums which the Lessor shall be obliged to pay to the Lessee by
way of rebate of Rental in accordance with clause 3.4.4 and as
determined pursuant to clause 3.4 then,
subject to clause 10.4 the Lessor shall promptly pay to the Lessee by way
of sales commission, an amount equal to such excess;
3.6.5 the Lessee shall be entitled to delegate its rights and duties under this
clause 3.6 to any member of the Lessee Group or to any other person as
the Lessor may approve, such approval not to be unreasonably withheld;
and
3.6.6 the sales agency rights under this clause shall not apply or shall be
terminated if at the time the sales agency appointment would arise or at
any time thereafter a Termination Event occurs and is continuing and the
Lessor has served a Termination Notice.
3.7 Credit review
The Lessor shall be entitled during the period between the dates falling
one hundred and eighty (180) and ninety (90) days prior to the Credit
Review Date (in this clause 3.7 the "Credit Review Period") to carry out
a review of the security arrangements constituted by the Relevant
Documents and the creditworthiness of the Lessee and the Lessee Parent
(taking into account the exposure of the Lessee and the Lessee Parent
under the Relevant Documents having regard to any Relevant Bank Documents
which will continue in full force and effect after the Credit Review
Date, any new valuations of the Ships and the Other Ships provided to the
Lessor at such time and any surplus amounts available in respect of the
Ships and the Other Ships as security to the Lessor and the Other Lessors
at that time) and, at the absolute discretion of the Lessor, to determine
whether such security arrangements and/or creditworthiness are adequate
to secure the Strip Liability Amount and any other unsecured obligations
of the Lessee under this Lease and the other Lease Documents in respect
of the period falling after the Credit Review Date. The Lessor agrees
that it shall consult with the Lessee during the Credit Review Period
when considering the matters to be considered by the Lessor pursuant to
this clause.
Following such review the Lessor shall notify the Lessee of its decision
on or before the expiry of the Credit Review Period and, if it considers
that such security arrangements and/or creditworthiness are inadequate,
the Lessor will initially notify the Lessee in writing and during the
period from the date of such notification up to the date falling forty
five (45) days prior to the Credit Review Date and if the Lessee so
requests, the Lessor and the Lessee shall discuss in good faith
alternative arrangements which, if implemented, would cause the Lessor to
be comfortable with the security arrangements and/or creditworthiness of
the Lessee and the Lessee Parent and if agreement in principle can be
reached on such alternative arrangements then such alternative
arrangements shall be documented on terms and in a form acceptable to the
Lessor on or prior to the Credit Review Date.
If, notwithstanding the said good faith discussions, the Lessor is still
not satisfied that the security arrangements and/or creditworthiness of
the Lessee and the Lessee Parent, even on a modified basis, are adequate,
the Lessee will be entitled at the Lessee's option to either:
3.7.1 issue a notice of the type referred to in clause 3.8 under clause 3.8; or
3.7.2 constitute to the satisfaction of the Lessor prior to the Credit Review
Date, such additional security as shall be acceptable to the Lessor and
having a value for security purposes (as determined by the Lessor) at the
date upon which such further security shall be constituted as the Lessor
shall in its absolute discretion require to secure the Strip Liability
Amount and any other unsecured obligations of the Lessee under this Lease
and the other Lease Documents having regard to the circumstances in which
such additional security is required to be provided under this clause.
The Lessor agrees that for the purpose of clause 3.7.2 the provision by
the Lessee of a letter of credit or bank guarantee from a Qualifying
Replacement Bank on terms acceptable to the Lessor in an amount equal to
the amount of the Strip Liability Amount and/or such other additional
security requirement to be provided under this clause shall be acceptable
additional security for the relevant amount secured for the purpose of
this clause.
3.8 Credit review notice
If the Lessee shall, pursuant to clause 3.7 elect to give a notice of the
type referred to in this clause 3.8, the Lessee shall be immediately
obliged to give a notice pursuant to clause 3.3 (other than with respect
to the period of such notice) to terminate the Lease Period on the Credit
Review Date. The provisions of clauses 3.4, 3.5 and 3.6 shall apply to
such termination of the Lease Period.
4 Conditions
4.1 Lessee's conditions precedent
The obligation of the Lessor (in each case as between the Lessor and the
Lessee pursuant to clause 4.5) to pay the Transaction Fees and to let and
demise the Ship to the Lessee under this Lease is subject to the
condition that on the Delivery Date the Lessor shall have received the
documents and evidence specified in Schedule 1, in each case, in form and
substance satisfactory to the Lessor (and that, unless otherwise agreed
by the Lessor and the Lessee, Delivery shall occur on or prior to 11
April 2003).
4.2 Further conditions
The obligation of the Lessor to pay the Transaction Fees and to demise
the Ship to the Lessee under this Lease shall be subject to the further
condition that the Lessor shall have received a Delivery Request Notice
not less than two (2) Banking Days (or such shorter period as the Lessor
and the Lessee may agree) prior to the required date for payment of the
Transaction Fees and the proposed date of delivery of the Ship to the
Lessee under this Lease and to the further conditions that at the time of
the giving of the Delivery Request Notice and immediately prior to the
time when Delivery is to take place:
(a) the representations and warranties set out in clauses 2.1 and 2.2
(and so that the representation and warranty in clause 2.1.7 shall
for this purpose refer to the then latest audited financial
statements delivered to the Lessor under clause 11.1) and the
representations and warranties set out in clauses 4.1 and 4.2 of
the Lessee Parent Guarantee (and so that the representation and
warranty in clause 4.1.6 of the Lessee Parent Guarantee shall for
this purpose refer to the then latest audited financial statements
delivered to the Lessor under clause 5.1.4 of the Lessee Parent
Guarantee) are true and correct as if each was made with respect
to the facts and circumstances existing at such time;
(b) no Relevant Event shall have occurred and be continuing or would
arise by reason of payment of the Transaction Fees or by reason of
Delivery taking place; and
(c) no Relevant Bank Event, Relevant Bank Change of Law Event or
Relevant Bank Illegality Event shall have occurred and be
continuing.
4.3 Temporary waivers
The conditions specified in clauses 4.1 and 4.2 are inserted for the sole
benefit of the Lessor and may be waived in whole or in part and with or
without conditions by the Lessor provided always that if any of the said
conditions are outstanding after Delivery then, unless the Lessor shall
have given a specific written waiver or deferral in respect thereof, the
Lessee shall ensure that each such outstanding condition is fulfilled
within thirty (30) days of the Delivery Date and provided further that
the Lessor shall be entitled to treat the failure of the Lessee to
perform such outstanding conditions within such period of thirty (30)
days as a Termination Event and as a repudiatory breach of this Lease by
the Lessee.
4.4 Payment of Transaction Fees
4.4.1 Subject to satisfaction of the conditions precedent to the payment of the
Transaction Fees referred to in clause 4, the Lessor agrees to pay the
Arrangement Fee to the Arranger, the Lease Fee to Sovereign Finance Plc
and the Legal Fee to Messrs Xxxxxx Xxxx.
4.4.2 The Lessor shall not be entitled to set off or withhold from the
Transaction Fees payable by the Lessor pursuant to this clause 4.4 any
amounts due or expressed to be due from any Relevant Party under this
Lease or any of the Relevant Documents.
4.5 Lessor's conditions precedent
The obligations of the Lessee under this Lease are conditional upon the
Lessee having received on or prior to the Delivery Date the following
documents and evidence to its satisfaction:
4.5.1 a copy, certified by a director of the Lessor, of resolutions of the
board of directors of the Lessor approving the transactions contemplated
by the Relevant Documents and the execution of the Relevant Documents to
which the Lessor is a party; and
4.5.2 the Proceeds Deed, the WDA Letter, the Tax Contest Letter, the Indexation
Relief Letter, the Lessor Mortgage, the Lessor Proceeds Accounts
Assignment and the Quiet Enjoyment Letter duly executed by the Lessor,
the Lessor Support Letters duly executed by the Lessor Parent and the
Supplemental Agreement and the Quiet Enjoyment Letter duly executed by
the Lessor Agent.
5 Delivery and acceptance
5.1 Commencement of Lease Period
On or before the date falling three (3) Banking Days after the service of
the Delivery Request Notice, the Lessor confirming its satisfaction with
the conditions set out in clauses 4.1 and 4.2, the Lessor shall, subject
to the provisions of clauses 4.1 and 4.2, deliver the Ship to the Lessee
under this Lease and the Ship shall become subject to and governed by
this Lease, the Lease Period shall commence and the Lessee shall be
deemed to have accepted delivery of the Ship under this Lease. Delivery
shall be conclusively evidenced by the execution of the Protocol of
Delivery and Acceptance by the Lessor and the Lessee.
5.2 Condition of Ship Lessee's responsibility
The Lessee acknowledges that the condition of the Ship on delivery to the
Lessee shall be the sole responsibility of the Lessee. Accordingly, the
Lessee shall not be entitled for any reason whatsoever to refuse to
accept delivery of the Ship under this Lease once the Delivery Request
Notice has been served on the Lessor and the Lessor shall have confirmed
its satisfaction with the conditions set out in clauses 4.1 and 4.2 and
the Lessor shall not be liable for any loss or expense, or any loss of
profit, resulting directly or indirectly from any defect or alleged
defect in the Ship.
5.3 Delays in Delivery
The Lessor shall not be responsible for any loss or expense, or any loss
of profit, arising from any delay in the delivery of, or failure to
deliver, the Ship to the Lessee under this Lease where such delay or
failure is not caused by the wilful misconduct or gross negligence of the
Lessor or breach of its express obligations under this Lease.
5.4 Cancellation before Delivery
If for any reason, other than a default by the Lessor, the Ship shall not
have been delivered to and accepted by the Lessee in accordance with
clause 5 by 11 April 2003 then the Lessor may cancel its obligation under
this Lease to lease the Ship to the Lessee by giving notice to the Lessee
to that effect.
5.5 Indemnity for delay and non-delivery
The Lessee shall (in addition to any other obligation it may then have
under clause 9 to indemnify and hold harmless the Lessor as therein
provided) indemnify the Lessor in respect of any liabilities, losses
(other than the loss of profit which, had such delivery occurred without
delay or at all, would have accrued to the Lessor as a consequence of the
payment by the Lessee of the Rentals payable hereunder), costs or
expenses reasonably incurred by the Lessor as a consequence of any delay
in the delivery or non-delivery of the Ship to the Lessee under this
Lease following the Lessor confirming its satisfaction with the
conditions set out in clauses 4.1 and 4.2 (including, but without
prejudice to the generality of the foregoing, any amounts of principal,
interest, fees or other sums whatsoever paid or payable on account of any
funds borrowed and any loss, premium, penalty or expense which may be
incurred in liquidating or employing funds acquired to purchase or
finance any or all of the Ship and to maintain or fund such amounts (or
any part thereof) or any other amount due or to become due under this
Lease) save and to the extent that such delay in delivery or non-delivery
arises as a direct consequence of the wilful misconduct or gross
negligence of the Lessor or breach of its express obligations under this
Lease.
6 Extent of Lessor's liability
6.1 Quiet enjoyment
The Lessor:
6.1.1 warrants and undertakes to the Lessee that, subject to clauses 17 and 27,
the Lessor shall not interfere during the Lease Period with the use,
possession and quiet enjoyment of the Ship by the Lessee on the terms of
this Lease, provided that the Lessor shall not be liable to the Lessee
for or in respect of any interruption to the Lessee's use, possession or
quiet enjoyment of the Ship which results directly or indirectly, wholly
or partly, from any act or omission of any person other than the Lessor
and which does not, subject to clause 29, arise in consequence of any
acts of Lessor or any member of the Lessor Group and which are not acts
of the Lessee acting as agent on behalf of the Lessor or any member of
the Lessor Group); and
6.1.2 the Lessor further undertakes, if reasonably requested to do so by the
Lessee and at the Lessee's expense, to take such action as is available
to it to protect the use, possession and quiet enjoyment of the Ship
during the Lease Period by the Lessee from interference by third parties.
6.2 Limitation of Lessor's liability
The Lessee expressly agrees and acknowledges that, save only as provided
in clause 6.1, no condition, warranty or representation of any kind is or
has been given by or shall be deemed to be or to have been given by or on
behalf of the Lessor in respect of the Ship, and accordingly the Lessee
confirms that it has not, in entering into this Lease, relied on any
condition, warranty, representation or covenant by or deemed to have been
made by the Lessor or any person on the Lessor's behalf (whether
authorised or not), express or implied, whether arising by law, statute
or otherwise in relation to the Ship, including, without limitation,
warranties or representations as to the description, seaworthiness,
quality, construction, suitability, merchantability, satisfactory
quality, fitness for any purpose, value, state, condition, appearance,
finish, safety, durability, design or operation of any kind or nature of
the Ship, and the benefit of any such condition, warranty or
representation by the Lessor is hereby irrevocably and unconditionally
waived by the Lessee. To the extent permissible under applicable law, the
Lessee also waives any rights which it may have in tort or otherwise
(including, without limitation, negligence) in respect of any of the
matters referred to above and irrevocably agrees that the Lessor shall
have no greater liability in tort or otherwise (including, without
limitation, negligence) in respect of any such matter than it would have
in contract after taking account of all the foregoing exclusions. No
third party making any representation or warranty relating to the Ship or
any part of the Ship is the agent of the Lessor nor has any such third
party authority to bind the Lessor thereby.
6.3 Unfair Xxxxxxxx Xxxxx Xxx 0000
Notwithstanding the foregoing provisions of this clause 6 (but without
prejudice to the indemnities contained in this Lease and the other Lease
Documents), nothing herein shall afford to the Lessor any wider exclusion
of any liability of the Lessor for death or personal injury than the
Lessor may effectively exclude having regard to the provisions of the
Unfair Contract Terms Xxx 0000.
7 Rental
7.1 Rental amounts
During the Primary Period the Lessee shall pay instalments of Primary
Rental to the Lessor on each Primary Rental Date and, where applicable,
during the Secondary Period instalments of Secondary Rental for the Ship
and, throughout the Lease Period, any other Rental in each such case in
the amounts, at the times and in the manner provided in the Financial
Schedule.
7.2 Unconditional payment obligations
The Lessee's obligation to pay Rental and make other payments in
accordance with any of the Lease Documents shall, subject to clause 22.3,
be absolute and unconditional irrespective of any contingency whatsoever
including (but not limited to) (a) any right of set-off, counterclaim,
recoupment, defence or other right which either party hereto may have
against the other, (b) any unavailability of the Ship for any reason,
including, but not limited to, any lack or invalidity of title or any
other defect in the title, seaworthiness, merchantability, satisfactory
quality, fitness for any purpose, condition, design, or operation of any
kind or nature of the Ship, or the ineligibility of the Ship for any
particular use or trade, or for registration or documentation under the
laws of any relevant jurisdiction, or the Total Loss of, or any damage
to, the Ship, (c) any failure or delay on the part of either party
hereto, whether with or without fault on its part, in performing or
complying with any of the terms or conditions of this Lease, (d) any
insolvency, bankruptcy, winding up, administration, reorganisation,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceedings by or against the Lessor or the Lessee or (e) any lack of due
authorisation of, or other defect in, this Lease or any of the other
Lease Documents.
7.3 Rental adjustments
The calculation and payment of Rental during the Primary Period are
subject to adjustment in accordance with the provisions of the Financial
Schedule.
7.4 Advance payments
No Rental paid in advance shall (except as expressly contemplated by the
provisions of this Lease or the Financial Schedule) be repayable by or
recoverable from the Lessor.
7.5 Extent of restriction of Lessee's rights
Nothing contained in clause 7.2 shall constitute a waiver by the Lessee
of any right giving rise to a claim by the Lessee for damages or specific
performance or any other injunctive relief against the Lessor arising out
of a breach by the Lessor of its obligations under this Lease.
8 Payments, interest and calculations
8.1 Manner of payment
All payments to be made by the Lessee under this Lease or any of the
other Lease Documents shall be made (unless specifically otherwise
provided in this Lease or any of the other Lease Documents) without prior
demand and in full, without any set-off or counterclaim whatsoever and,
subject as provided in clause 10.3, free and clear of any deductions or
withholdings in Sterling (or, in the case of indemnity payments, in the
currency in which the cost or expense which is the subject of the
indemnity payment is incurred) for value on the day on which payment is
due to the bank account of the Lessor at Girobank Plc of Bridle Road,
Bootle, Merseyside GIR 0AA, Account Number 00000000, reference Sovereign
Finance plc - Payments Account or to such other bank account as the
Lessor may from time to time have notified to the Lessee in writing not
less than five (5) Banking Days prior to the due date for payment.
8.2 Payments on Banking Days
When any payment under this Lease or any of the other Lease Documents
would otherwise be due on a day which is not a Banking Day, the due date
for payment shall be extended to the next following Banking Day unless
such Banking Day falls in the next calendar month in which case payment
shall be made on the immediately preceding Banking Day.
8.3 Interest on delayed payments
If the Lessee fails to pay any sum (including, without limitation, any
sum payable pursuant to this clause 8.3) on its due date for payment
under this Lease or any of the other Lease Documents, the Lessee shall
pay to the Lessor on demand interest on such sum from the due date up to
the date of actual payment (after as well as before any relevant
judgment) at the Default Rate.
8.4 Calculation of interest
All interest and other payments of an annual nature under this Lease or
any of the other Lease Documents shall accrue from day to day and shall
be calculated on the basis of the actual days elapsed and a three hundred
and sixty-five (365) day year in the case of a Sterling payment and
payments in other currencies where that is the normal basis for interest
calculations by banks in such currencies and a three hundred and sixty
(360) day year in the case of payments in all other currencies.
8.5 Certificates
Any certificate or determination of the Lessor as to any rate of interest
or any other amount payable under any of the Lease Documents shall, in
the absence of manifest error, be conclusive and binding on the Lessee
but such certificate or determination shall not override the express
provisions of the Financial Schedule. The Lessor shall provide the Lessee
with such information pertaining to any certificate or determination
referred to in this clause 8.5 (including any calculations set out
therein and the basis upon which those calculations have been prepared)
as it considers, acting reasonably, appropriate in the circumstances
existing at such time.
8.6 Currency indemnity
If any sum due from the Lessee under this Lease or any of the other Lease
Documents or under any order or judgment given or made in relation
thereto has to be converted from the currency (the "first currency") in
which the same is payable under this Lease or the relevant Lease
Documents or under such order or judgment into another currency (the
"second currency") for the purpose of (a) making or filing a claim or
proof against the Lessee, (b) obtaining an order or judgment in any court
or other tribunal or (c) enforcing any order or judgment given or made in
relation to such Lease Document, the Lessee shall on demand indemnify and
hold harmless the Lessor from and against any loss suffered as a result
of any difference between (i) the rate of exchange used for such purpose
to convert the sum in question from the first currency into the second
currency and (ii) the rate or rates of exchange at which the Lessor may
in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in
whole or in part, of any such order, judgment, claim or proof. Any amount
due from the Lessee under this clause 8.6 shall be due as a separate debt
and shall not be affected by judgment being obtained for any other sums
due under or in respect of this Lease or any of the other Lease Documents
and the term "rate of exchange" includes any premium and costs of
exchange payable in connection with the purchase of the first currency
with the second currency.
8.7 Double recovery
Notwithstanding anything to the contrary contained in this Lease and any
of the Lease Documents, to the extent that the Lessor has recovered any
liability from the Lessee pursuant to the terms of any particular Lease
Document the same liability shall not also be recoverable under the
provisions of any of the other Lease Documents.
9 Costs and indemnities
9.1 Ship and corporate administration related expenses
Subject to clause 9.10, the Lessee shall promptly pay and discharge or
cause to be paid or discharged, as soon as the same become payable and
indemnify and keep the Lessor fully indemnified at all times on a full
indemnity basis from and against all costs or expenses (other than the
payment to the Arranger of the Arrangement Fee, payment to Sovereign
Finance Plc of the Lease Fee, payment of the Legal Fee and Taxes which
are otherwise the subject of clause 10 or which would be so subject but
for the operation of clause 10.8) reasonably incurred by the Lessor in
respect of, or arising from:
9.1.1 the delivery, import, export, registration, classification, ownership,
possession, control, use, management, xxxxxxx, victualling, the provision
of bunkers and lubricating oils, leasing, insurance, maintenance, repair,
dry-docking, survey, refurbishment, service, overhaul, modification,
change, alteration, loss, damage, storage, laying-up, removal,
redelivery, transfer to required redelivery location, sale or disposal
of, in or to the Ship, and all costs or expenses which are reasonably
incurred by the Lessor and which otherwise arise in connection with the
Ship or the performance of the Lessee's obligations under this Lease or
any of the other Lease Documents; and
9.1.2 the corporate administration in Bermuda of the Lessor including, without
limitation, any amounts payable by the Lessor to Codan Services Limited
pursuant to the administration agreement executed on or about the date
hereof between Cedar Services Limited, the Lessor and the Lessor Agent.
9.2 Transaction related expenses
Whether or not the Ship is delivered to the Lessee pursuant to this
Lease, the Lessee shall (to the extent that the same has not been taken
into account in accordance with the Financial Schedule in computing the
amount of any Rental or any adjustments thereto or would be taken into
account but for paragraph 10 of the Financial Schedule) pay to the Lessor
on demand:
9.2.1 all expenses (including legal, advisory, printing and out-of-pocket
expenses) reasonably incurred by the Lessor in connection with the
negotiation, preparation and execution of the Transaction Documents (but
provided that Delivery does occur, excluding such amount of such expenses
paid by the Lessor as referred to in Variable Assumption 1.19.3 in the
Financial Schedule);
9.2.2 all expenses (including the Cost of Lessor's Management Time) reasonably
incurred by the Lessor in respect of any amendment or extension of, or
the granting of any waiver or consent under, any of the Relevant
Documents and/or in accordance with any action required to be taken, or
documents required to be provided, pursuant to clauses 3.3.4, 3.6, 12,
14.2 or 32 (it being agreed that, for the purpose of determining the
entitlement of the Lessor to recover the Cost of Lessor's Management
Time, such entitlement shall arise in respect of any event or
circumstance which is not contemplated by the Relevant Documents or which
arises otherwise than in the ordinary course of managing a lease
transaction of the type contemplated by this Lease (and, for the
avoidance of doubt, actions required to be taken, or documents required
to be produced pursuant to clauses 3.3.4, 3.6, 12, 14.2 or 32 shall not
be treated as having arisen in the ordinary course of managing such a
lease transaction)); and
9.2.3 all expenses (including the Cost of Lessor's Management Time, legal,
survey and other costs) properly incurred by the Lessor following the
occurrence and during the continuance of a Termination Event or Relevant
Event or in contemplation of, or otherwise in connection with, the
enforcement of, or preservation of any rights under, the Relevant
Documents, or in respect of a breach (other than by the Lessor or the
Lessor Agent) of any representation, warranty, consent, agreement,
condition or stipulation therein contained, or in respect of the
repossession of the Ship.
The Lessor shall notify the Lessee as soon as practicable after any Cost
of Lessor's Management Time has started to accrue in accordance with this
Lease and the other Relevant Documents (advising the Lessee, if
practicable, which of its personnel are senior officers and junior
officers) and the Lessor agrees that it shall not invoice the Lessee for
the first two thousand Pounds ((pound)2,000) of the Cost of Lessor's
Management Time.
All expenses payable pursuant to this clause 9.2 shall be paid together
with any Irrecoverable VAT, and in the currency in which the same are
incurred by the Lessor.
9.3 Indemnity for non-payment by Lessee
The Lessee shall on demand indemnify and hold harmless the Lessor,
without prejudice to any of the Lessor's other rights under any of the
Relevant Documents, from and against (other than to the extent that the
Financial Schedule specifically provides, or would provide but for
paragraph 10 thereof, for there to be a corresponding payment of Rental
or to the extent that the Lessor has not been compensated pursuant to the
provisions of clause 8.3):
9.3.1 any costs or expenses which the Lessee has agreed to pay and which shall
be claimed from or assessed against or paid by the Lessor and against any
liability incurred by the Lessor by reason of any delay or failure of the
Lessee to pay any such costs or expenses; and
9.3.2 any Taxes which the Lessee has agreed to pay and which shall nevertheless
be claimed from or assessed against or paid by the Lessor and against any
liability incurred by the Lessor by reason of any delay or failure of the
Lessee to pay any such Taxes including, without limitation, any delay or
failure of the Lessee to make any such deduction or withholding as is
referred to in clause 10.3 or by reason of any increased payment as is
referred to in clause 10.3 not being made on the due date for such
payment.
9.4 Indemnities relating to the Ship
Subject to clause 9.10, but without prejudice to the Lessee's obligations
under clauses 9.1 to 9.3 inclusive, the Lessee agrees at all times,
whether before, during or after the Lease Period (but if after the Lease
Period to the extent that the same arise by matters arising out of or in
respect of the Lease Period), to indemnify and hold harmless the Lessor
and each of the other Indemnified Persons from and against all costs,
expenses, payments (other than the payment to the Arranger of the
Arrangement Fee, payment to Sovereign Finance Plc of the Lease Fee and
payment of the Legal Fee), charges, losses, demands, liabilities, claims,
actions, proceedings (whether civil or criminal), penalties, fines,
damages, judgments, orders or other sanctions, liens, salvage and general
average (other than Taxes which are otherwise the subject of clause 10
(or which would be so subject but for the operation of clause 10.6 or
10.8)) (in this clause 9 together referred to as "Indemnity Losses")
which may be incurred by, or made or asserted against, the Lessor or any
other Indemnified Person at any time:
9.4.1 relating to, or arising directly or indirectly in any manner or for any
cause or reason whatsoever out of, the design, nature, description,
manufacture, construction, testing, delivery, acceptance, import, export,
registration, flag, classification, certification, ownership, possession,
control, use, management, operation, xxxxxxx, crewing, navigation,
victualling, supply or servicing (whether at sea or not), provision of
bunkers and lubricating oils, leasing, sub-leasing, insurance,
maintenance, repair, overhaul, dry-docking, surveys, refurbishment,
condition, service, modification, change, alteration, loss, damage,
storage, laying up, removal, repossession, re-delivery, return, sale or
disposal of, in or to the Ship, or otherwise in connection with the Ship
or which arise out of the use or operation of any other vessel owned by
or chartered to the Lessee or any company associated with, the Lessee or
which arise out of any other claims of whatsoever nature made against the
Lessee, or any company associated with the Lessee, or relating to loss or
destruction of or damage to any property, or death or injury of, or other
loss of whatsoever nature suffered by, any person caused by, relating to,
or arising from or out of (in each case whether directly or indirectly)
any of the foregoing matters;
9.4.2 which may at any time be made or brought on the ground that any design,
article or material in the Ship or the operation or use thereof
constitutes an infringement of patent, intellectual property right or any
other right whatsoever;
9.4.3 in preventing or attempting to prevent the arrest, confiscation, seizure,
taking in execution, impounding, forfeiture or detention of the Ship, or
in securing or attempting to secure the release of the Ship; and
9.4.4 as a consequence of any default in payment by the Lessee of any sum under
any of the Lease Documents when due or any other default by the Lessee in
the due and punctual performance of its obligations under any of the
Lease Documents (to the extent that the Lessor has not already been
compensated pursuant to any of the other provisions of this Lease)
including, without limitation, any exercise by the Lessor of its rights
under the Standby Documents and any action required to be taken by the
Lessor in connection with the exercise of any such rights and the Standby
Loan (as defined in the Proceeds Deed) required to be provided to the
Standby Purchaser in connection with the Standby Put Option Agreement.
9.5 Conduct of claims
Unless and until a Relevant Event shall have occurred, and without
prejudice to, or constituting a pre-condition to, the Lessor's right to
be indemnified pursuant to, this Lease:
9.5.1 the Lessor shall notify the Lessee upon receiving a claim in respect of
which the Lessor is or may become entitled to an indemnity under clause
9.4 as soon as practicable following receipt of such claim;
9.5.2 subject to the prior written approval of the Lessor (such approval not to
be unreasonably withheld or unreasonably delayed), the Lessee shall be
entitled to take, in the name of the Lessor, such action as the Lessee
shall see fit to defend or avoid any such Indemnity Losses as are
referred to in clauses 9.4.1, 9.4.2, 9.4.3 or 9.4.4 or to recover the
same from any third party, subject to the Lessee first ensuring that the
Lessor is indemnified and, if the Lessor so requires, secured to its
reasonable satisfaction against all Indemnity Losses thereby incurred or
to be incurred and all Taxes incurred or to be incurred as a consequence
thereof; and
9.5.3 the Lessor shall, to the extent that it is practical so to do, consult
with the Lessee before making any payment to a third party in respect of
such Indemnity Losses as are referred to in clauses 9.4.1, 9.4.2, 9.4.3
or 9.4.4 and, to the extent that the Lessee is entitled to take action to
avoid such Indemnity Losses in accordance with clause 9.5.2 and subject
to the Lessee first ensuring that the Lessor is indemnified and secured
to the Lessor's reasonable satisfaction against all Indemnity Losses
thereby incurred or to be incurred and all Taxes incurred or to be
incurred as a consequence thereof, the Lessor shall at the Lessee's
request co-operate with the Lessee in taking such action.
Notwithstanding the above, the Lessor shall not be obliged to take any
such action where the Lessor notifies the Lessee that it considers in its
conclusive opinion but acting in good faith that it is or would be
materially prejudicial to the interests of the Lessor Group or any member
thereof for such action to be taken. The Lessor shall not be obliged to
give any reasons for such notification but, when providing the Lessee
with such notification, the Lessor will provide the Lessee with written
confirmation from a board member of (a) the Lessor Agent where the claim
referred to in clause 9.5.1 shall be in respect of an amount less than or
equal to five million Pounds ((pound)5,000,000) or (b) the Lessor Parent
where the claim referred to in clause 9.5.1 shall be in respect of an
amount in excess of five million Pounds ((pound)5,000,000), that the
decision not to take any such action was taken after consideration by the
senior management of the Lessor Agent or, as the case may be, the Lessor
Parent. Any amount or any increase in any amount payable by the Lessor as
a result of any delay consequent upon the operation of clauses 9.5.2 and
9.5.3 shall, for the avoidance of doubt, be for the account of the
Lessee.
9.6 VAT and indemnity claims
Any amounts payable pursuant to clause 9.4 and/or clause 9.5 shall be
paid together with any Irrecoverable VAT, and in the currency in which
the same are incurred by the Lessor.
9.7 Environmental Indemnity
Subject to clauses 9.5 and 9.10, the Lessee shall indemnify the Lessor on
demand in respect of all costs, claims, expenses, losses, demands,
liabilities, penalties and fines of whatever nature (including, without
limitation, those arising under Environmental Laws) which may be incurred
or made against the Lessor) at any time relating to, or arising directly
or indirectly in any manner or for any cause or reason whatsoever out of
an Environmental Claim made or asserted against the Lessor which would or
could not have been brought if the Lessor had not entered into this Lease
or any of the other Relevant Documents.
9.8 Survival of indemnities
Notwithstanding anything to the contrary contained in this Lease or any
of the other Lease Documents and without prejudice to any right to
damages or other claim which the Lessee may have at any time against the
Lessor under this Lease, the indemnities by the Lessee in favour of the
Lessor and the other Indemnified Persons contained in this Lease and the
other Lease Documents shall continue in full force and effect
notwithstanding any breach of the terms of this Lease or any of the other
Lease Documents (including any fundamental or repudiatory breach) by the
Lessor or the Lessee, the termination of the leasing of the Ship to the
Lessee under this Lease, the repudiation by the Lessor or the Lessee of
this Lease, or the expiration or termination of the Lease Period by
effluxion of time or otherwise.
9.9 Interest on indemnity payments
Moneys becoming due by the Lessee to the Lessor under the indemnities
contained in this clause 9 or elsewhere in this Lease or any of the other
Lease Documents shall be paid on demand made by the Lessor and shall be
paid together with interest thereon at the Default Rate in respect of the
period from the date on which the Lessor suffered or incurred the
Indemnity Loss until the date of payment by the Lessee to the Lessor
(after as well as before judgment) and the Lessor agrees that it will
issue a demand hereunder as soon as reasonably practicable after
determining that it has suffered or incurred any such Indemnity Loss, and
will make such determination as soon as reasonably practicable after
becoming aware that it may have suffered or incurred an Indemnity Loss.
9.10 Exclusions from general indemnity
The indemnities contained in clauses 9.1, 9.4 and 9.7 shall not extend to
any costs, expenses, payments, charges, losses, demands, statutes,
claims, actions, proceedings (whether and or criminal) penalties, fines,
damages, judgments, orders or other sanctions, liens, salvage and general
average:
9.10.1 to the extent that the same arises from any act or omission of the Lessor
or any other Indemnified Person which constitutes the gross negligence or
wilful misconduct of the Lessor or such other Indemnified Person;
9.10.2 to the extent it is caused by any failure on the part of the Lessor to
comply with any of its express obligations under any of the Transaction
Documents to which the Lessor is a party Provided that any breach by the
Lessor of its obligations under any of the Transaction Documents shall
not be included within the ambit of this clause 9.10.2 to the extent that
such breach is itself caused by, or arises by means of, any act or
omission of the Lessee or any other member of the Lessee Group of any
Transaction Document;
9.10.3 in respect of which the Lessor and/or any other Indemnified Person is
expressly indemnified under any other Lease Document or to the extent
that the Lessor and/or any other Indemnified Person has actually been
indemnified by any other person;
9.10.4 to the extent that the Lessor or any Indemnified Person has recovered
such liability pursuant to clause 10; or
9.10.5 to the extent that such liability is taken into account in the
calculations contained in the Financial Schedule in computing the Rental
payable under this Lease.
9.11 Mitigation
If the Lessee shall become liable to indemnify the Lessor or any other
Indemnified Person pursuant to this clause 9, the Lessor and the Lessee
shall, provided no Relevant Event has occurred and is continuing, consult
in good faith for a period not exceeding the earlier of thirty (30) days
and the date the Lessor or such other Indemnified Person is/are obliged
to satisfy or discharge such losses and each of them shall, at the cost
of the Lessee, use all reasonable endeavours to avoid (or reduce the
amount) of the losses giving rise to such indemnification.
9.12 Lessor as trustee
The Lessor shall, to the extent that clause 9.13 is not applicable, be
the agent and trustee of each of the other Indemnified Persons for the
purpose of the indemnities given in their favour under this Lease and any
amounts received by the Lessor in such capacity shall be held for the
other Indemnified Persons severally.
9.13 Pass through of indemnity benefits
Without duplicating the liabilities of the Lessee under this Lease, where
in this clause 9 an indemnity is expressed to be for the benefit of any
Indemnified Person, the Lessor shall be entitled to indemnify such
Indemnified Person on the same terms mutatis mutandis as the indemnities
expressed to be for the benefit of such Indemnified Person in this clause
9 and the Lessee shall indemnify the Lessor and hold the Lessor harmless
on a full indemnity basis from and against each amount paid or payable by
the Lessor to such Indemnified Person under any such indemnity.
10 Taxation
10.1 General
The Lessee shall on demand indemnify the Lessor from and against all or
any Taxes imposed on or payable by the Lessor arising by reason or in
consequence (whether alone or in conjunction with any other reason or
circumstance) of this Lease or any of the other Relevant Documents, or in
respect of instruments delivered hereunder or thereunder, or the
manufacture, purchase, sale, disposal, supply, delivery, management,
control, possession, ownership, leasing, use, operation, existence,
design, condition, construction, testing, alteration, maintenance,
service, repair, overhaul, import or export from any country or area,
return, recovery, storage or sale of the Ship or upon receipt of earnings
arising therefrom or on or in respect of any profits of any other party
to any of the Relevant Documents or which arise or become payable as a
result (whether alone or in conjunction with any other matter or
circumstance) of anything done in response to any request by the Lessee.
10.2 Gross-up of indemnity payments
10.2.1 Sums payable to the Lessor under this Lease or any of the other Relevant
Documents by way of indemnity or reimbursement shall be calculated on an
after-tax basis. Accordingly, if and to the extent that any such sum
payable to the Lessor is determined by the Lessor, acting in good faith,
to be taxable in the hands of the Lessor, such sum shall, where the
payment is to be made by the Lessee, be increased to, or where payment is
to be made by any other person, the Lessee shall pay to the Lessor, such
amount which (after subtracting any Taxation suffered by the Lessor on
the increased payment or, as the case may be, the payment by the Lessee,
and after taking into account any deduction for Taxation purposes
available to the Lessor and the timing of any such deduction in respect
of the discharge by the Lessor of any corresponding liability to a third
party) shall equal the amount which the Lessor would have received had
the sum payable by the Lessee or such other person not been taxable in
the hands of the Lessor. If any sum payable to the Lessor is initially
paid on the basis that it is not taxable in the hands of the Lessor and
it is subsequently determined to be taxable or vice versa, such
adjustment and payment shall be made between the Lessor and the Lessee as
the Lessor shall certify as appropriate to restore the after-tax position
of the Lessor to that which it would have been had the adjustment not
been necessary.
10.2.2 If and to the extent that any sum (the "indemnity sum") constituting
(directly or indirectly) an indemnity to the Lessor but paid by the
Lessee to any person other than the Lessor, shall be treated as taxable
in the hands of the Lessor, the Lessee shall pay to the Lessor such sum
(the "compensating sum") as (after subtracting any Taxation suffered by
the Lessor on the compensating sum and after taking into account any
deductions for Taxation purposes which in the Lessor's sole opinion
acting reasonably in good faith are available to the Lessor in respect of
any corresponding payment treated as made by the Lessor to such person)
shall reimburse the Lessor for any Taxation suffered by it in respect of
the indemnity sum.
10.2.3 For the purposes of this clause 10.2 a sum shall be deemed to be taxable
in the hands of the Lessor if it falls to be taken into account in
computing the profits or gains of the Lessor for the purposes of Taxation
and if so the Lessor shall be deemed to have suffered Taxation thereon at
the rate of Taxation applicable to the Lessor's profits or gains for the
period in which the payment falls to be taken into account for the
purposes of such Taxation.
10.3 Withholding Taxes
10.3.1 If at any time any applicable law, regulation or regulatory requirement,
(whether or not having the force of law but in respect of which
compliance by banks or other financial institutions or institutions of a
similar nature to the Lessor in the relevant jurisdiction is generally
customary) or any governmental authority, monetary agency or central bank
requires any deduction or withholding in respect of Taxes from any
payment due to the Lessor or any other Indemnified Person under this
Lease or any of the other Relevant Documents the Lessee shall (unless
otherwise agreed under or pursuant to any Relevant Document):
(a) if the payment is to be made by the Lessee, increase the payment
in respect of which the deduction or withholding is required to
the extent necessary to ensure that, after the making of such
deduction or withholding, the Lessor receives on the due date for
such payment a net sum equal to the sum which it would have
received had no such deduction or withholding been required to be
made;
(b) if the payment is to be made by any person other than the Lessee,
pay directly to the Lessor such sum as will, after taking into
account any deduction or withholding which is required to be made
in respect of such sum, enable the Lessor to receive on the due
date for payment a net sum equal to the sum which the Lessor would
have received in the absence of any obligation to make a deduction
or withholding;
(c) if paragraph (a) applies the Lessee shall pay to the relevant
authority within the period for payment permitted by applicable
law the full amount of the deduction or withholding (including,
but without prejudice to the generality of the foregoing, the full
amount of any deduction or withholding from any increased amount
paid pursuant to this clause 10.3); and
(d) if paragraph (a) applies the Lessee shall furnish to the Lessor
within the period for payment permitted by applicable law,
appropriate receipts evidencing payment to the relevant authority
of all amounts deducted or withheld as aforesaid.
10.3.2 If the Lessor determines acting reasonably and in good faith that the
Lessor or a member of the Lessor Group has retained and utilised a tax
benefit by reason of any deduction or withholding as aforesaid (and the
Lessor shall endeavour to realise or receive such a tax benefit provided
it is not otherwise disadvantaged by doing so), which, in the Lessor's
determination acting reasonably and in good faith is referable to any
deduction or withholding as aforesaid, subject to the Lessee having
complied with clause 10.3.1, the Lessor will, as soon as reasonably
practicable thereafter, reimburse to the Lessee the payment, or such part
of the payment as will leave the Lessor or such Indemnified Person (after
such reimbursement) in no better and no worse position than it would have
been in if no such deduction or withholding had been required to be made,
provided always that:
(a) the Lessor shall be sole judge (acting in good faith) of the
amount of any such benefit and of the date on which such benefit
is received or realised and it shall give a certificate setting
out the basis of the computation of the amount of any tax benefit
referred to in clause 10.3.2;
(b) the Lessor and each such Indemnified Person shall have an absolute
discretion as to the arrangement of its Taxation affairs and, in
particular, the order in which it employs or claims credits,
refunds and allowances available to it;
(c) if, following any such reimbursement by the Lessor, the tax
benefit in respect of which such reimbursement was made is
disallowed in whole or in part by any applicable taxing or other
authority, the Lessee shall, upon demand, pay to the Lessor the
amount necessary to restore the after tax position of the Lessor
or such Indemnified Person to that which it would have been had no
adjustment under this proviso (c) been necessary; and
(d) the Lessor shall not be obliged to make any such reimbursement if,
by doing so, it would contravene the terms of any applicable
notice, direction or requirement (having the force of law).
Provided that if the Lessee requests the Indemnified Person, in writing,
to make an application for relief (whether in whole or in part) in
respect of any deduction or withholding required by law pursuant to the
provisions of a double tax treaty, the Indemnified Person shall (at the
cost of the Lessee) take such action as the Lessee shall reasonably
request to make such application to an applicable Tax Authority. Provided
that in determining whether any request under this proviso is reasonable,
the Lessor, in its capacity as an Indemnified Person, shall be entitled
to take into account the interests of the other customers of the Lessor
Group, in its absolute discretion acting in good faith, and the future
liability to Tax of the members of the Lessor Group. If the Indemnified
Person subsequently obtains a repayment (whether in whole or in part) of
such deduction or withholding from that Tax Authority in circumstances
where the Lessee has made an increased payment or paid a compensating sum
under this clause 10.3 the Indemnified Person shall, provided that the
Indemnified Person has received all amounts which are then due and
payable to it under any provisions of this Lease or the other Relevant
Documents pay to the Lessee such amount as will leave the Indemnified
Person in no better and in no worse position than the Indemnified Person
would have been in if the deduction or withholding had not been required.
10.4 Non-deductibility
If the Lessor is required to pay any sum under this Lease or any of the
other Relevant Documents and such sum is payable out of or represents a
reimbursement of an amount which is brought into account in computing the
profits or gains of the Lessor for the purposes of Taxation and the
Lessor Determines acting in good faith that such payment will not be
allowed to the Lessor as a deductible trading expense or as a basis for,
or otherwise as, a deduction or off-set for Taxation purposes in the
Accounting Period of the Lessor in which it is required to be paid, the
Lessee shall (without prejudice to the generality of clause 1.7), subject
to any restrictions set out in the Proceeds Deed, pay to the Lessor such
amount as shall put the Lessor in the same after-tax position as the
Lessor would have been in had the payment been allowed as a deductible
trading expense or as a basis for, or otherwise as, a deduction or
off-set as aforesaid. If any such payment is initially made on the basis
that it is a deductible trading expense, or that it will be allowed as a
basis for, or otherwise as, a deduction or off-set of the Lessor for
Taxation purposes in the Accounting Period of the Lessor in which it is
incurred and it is subsequently determined that it is not so deductible
or allowed, or vice versa, such adjustments and payments, if any, shall
be made between the Lessor and the Lessee as the Lessor may certify as
appropriate in order to restore the after-tax position of the Lessor to
that which it would have been had the adjustment not been necessary.
10.5 Undertakings concerning Taxation
The Lessee undertakes that it will, taking into account any time limit
for the production of information imposed by any Tax Authority, furnish
when the Lessor shall so require, such information as may be required to
be so furnished by the Lessor to the Board of Inland Revenue or an
Inspector of Taxes regarding the leasing of the Ship or the use to which
it is being or has been put, and promptly upon request by the Lessor,
furnish to the Lessor such information, books, records or other documents
in the possession of or under the control of the Lessee (or photocopies
thereof) as the Lessor may request in order to enable the Lessor to
comply with the provisions of sections 118, 119 and 120 CAA or to respond
to a request for information given to the Lessor by the Inland Revenue.
10.6 No double counting
Notwithstanding the preceding provisions of this clause 10, if a
liability to Taxation of the Lessor arises (or would have arisen but for
an insufficiency of taxable profits) or an event giving rise to such a
liability occurs (which would not have been, or given rise to, such a
liability had all of the Variable Assumptions proved to be correct) by
reason of which the Lessee is (or would, but for this provision be)
liable to make a payment under the preceding provisions of this clause 10
and, in consequence of any such Variable Assumptions proving not to be
correct, the amount of Rental payable under this Lease is adjusted
upwards (or would be so adjusted but for the provisions of paragraph 10
of the Financial Schedule) then the Lessee shall not in such
circumstances be liable to make any payments to the Lessor or otherwise
in respect of Taxes under this clause 10 to the extent that the Lessor is
(or, as the case may be, would be) fully compensated (or would be so
compensated but for the provisions of paragraph 10 of the Financial
Schedule) in respect of such liability or event by such upward adjustment
to the amount of such Rental.
10.7 Duties and other taxes
The Lessee shall pay all stamp, documentary, registration or other like
duties or Taxes (including any such Taxes payable by the Lessor) imposed
on or in connection with any of the Relevant Documents and shall
indemnify the Lessor against any liability arising by reason of any delay
or omission by the Lessee to pay such duties or Taxes. The Lessor by way
of covenant but not as a condition precedent to the liability of the
Lessee hereunder shall, except to the extent that its business or
taxation interests are otherwise prejudiced, use its reasonable
endeavours to avoid unnecessarily rendering the Lessee liable under this
clause.
10.8 Exclusion from tax indemnities
The Lessee shall not be obliged to indemnify the Lessor under clause 10.1
in respect of any Taxes in respect of the following (including any
interest, penalties or fines thereon):
10.8.1 any Tax liability which is imposed by way of deduction or withholding
from any payment due from the Lessee under this Lease or any of the other
Relevant Documents to the Lessor in circumstances where the Lessee is
required to make any payment or increased payment in respect thereof
under clause 10.3 (the Lessee's liability for which shall be as set forth
in clause 10.3); or
10.8.2 Taxes which are imposed by reason of the wilful misconduct or gross
negligence of the Lessor, or any affiliate thereof or to the extent they
result from any breach of, or a failure on the part of the Lessor to
comply with, any of the terms of this Lease or any of the other Relevant
Documents to which the Lessor is a party; or
10.8.3 any Taxes assessed against the Lessor by reference to its overall income,
profits or gains attributable to any Rental or Termination Sum or any
adjustment thereto actually receivable hereunder or its overall income,
profits or gains, if any, realised in connection with the ultimate
disposal of the Ship or arising out of a Total Loss. Provided that, for
the avoidance of doubt, the interest (if any) accruing by the Lessor in
respect of amounts held from time to time in the Lessor's Proceeds
Accounts and/or any foreign exchange gain relating to such amounts shall
not be treated as realised in connection with the ultimate disposal of
the Ship or arising out of a Total Loss; or
10.8.4 any Taxes to the extent that they would not have arisen but for the
reasonably avoidable delay or failure by the Lessor in the filing of tax
returns or any other documents or the payment of Taxes assessed on or
payable by the Lessor in the United Kingdom which delay or failure has
not been expressly consented to, or requested by the Lessee or unless
such a failure or delay by the Lessor results from a failure by the
Lessee promptly to provide the Lessor with correct, suitable and adequate
information to enable the Lessor to file the relevant tax return or pay
such Taxes or other amounts; or
10.8.5 where the Lessee is liable to compensate the Lessor in respect of the
liability under any other provision of this Lease and has discharged its
obligation in respect thereof; or
10.8.6 any Taxes which would not have been imposed but for, or to the extent
increased by reason of an assignment or transfer by an Indemnified Person
of its rights or obligations under this Lease or any Relevant Document or
by reason of the bankruptcy or insolvency of an Indemnified Person; or
10.8.7 any Taxes or Tax Liability to the extent that the same has resulted in a
change of Assumption for the purposes of the Financial Schedule which has
either resulted in an adjustment to any Primary Rental or Termination
such or which would have given rise to such an adjustment but for the
limitations on adjustment contained in paragraph 10 of the Financial
Schedule.
10.9 VAT
10.9.1 If the Lessor makes any supply to the Lessee for Value Added Tax purposes
pursuant to or in connection with this Lease or any of the other Relevant
Documents or any transaction or document contemplated herein or therein,
the Lessee shall promptly upon receipt of a valid VAT invoice (or other
evidence that the Lessor has been obliged to account for VAT in respect
of that supply in accordance with applicable law) pay to the Lessor an
amount equal to any Value Added Tax which is payable in respect of that
supply.
10.9.2 If and to the extent that any payment or other consideration to be made
or furnished by the Lessor to any person, other than the Lessee, pursuant
to or in connection with this Lease or any of the other Relevant
Documents or any transaction or document contemplated herein or therein
may be increased or added to by reference to (or as a result of any
increase in the rate of) any Value Added Tax, the Lessee shall pay to the
Lessor within ten (10) days of demand an amount equal to any Value Added
Tax in relation thereto that proves to be Irrecoverable VAT.
10.9.3 No payment or other consideration to be made or furnished by the Lessor
to the Lessee pursuant to or in connection with this Lease or any of the
other Relevant Documents or any transaction or document contemplated
herein or therein may be increased or added to by reference to (or as the
result of any increase in the rate of) any Value Added Tax which shall be
or may become chargeable in respect of the taxable supply in question
provided that if the Lessor determines in good faith that any amount of
such Value Added Tax is not Irrecoverable VAT it shall, promptly
following such determination, pay to the Lessee an amount equal to the
amount of that Value Added Tax determined not to be Irrecoverable VAT,
and on presentation of a valid VAT invoice by the Lessee.
10.9.4 The Lessee and the Lessor agree to co-operate with a view to minimising
any Irrecoverable VAT suffered by either party under any transaction or
document contemplated by any Relevant Document but so that neither party
shall be required to do anything which would not be good business
practice and legal or which would involve any adverse consequences to it.
10.10 Tonnage Tax
10.10.1 The Lessee undertakes that it has not, as at the date of this Lease,
made a tonnage tax election or been included in a tonnage tax group for
the purposes of Section 82 and Schedule 22 of the Finance Xxx 0000 (a
"Tonnage Tax Election").
10.10.2 If any member of the Lessee Group, or any Time Charterer, or any other
charterer makes a Tonnage Tax Election or becomes a member of a tonnage
tax group then the Lessee will give the Lessor written notice of the
making of that election or its membership of a tonnage tax group and the
date from which that election is effective or such membership commenced
within thirty (30) Banking Days after the making of that election or the
commencement of such membership.
10.10.3 The Lessee will enter into the joint certificate required to be provided
by the Lessor and the Lessee under paragraph 93 of Schedule 22 to the
Finance Xxx 0000.
10.10.4 The Lessee agrees that it will provide the Lessor on an ongoing basis
with such information as may be properly required to be furnished by the
Lessor to any Tax Authority regarding the transaction contemplated by
the Transaction Documents as may be required to be furnished under the
provisions of Schedule 22 to the Finance Xxx 0000, including, without
limitation, any information to be provided by the Lessor and the Lessee
to the Inland Revenue pursuant to paragraph 93 of Schedule 22 to the
Finance Xxx 0000.
11 General undertakings
11.1 Information and compliance undertakings
The Lessee undertakes with the Lessor that from the date of this Lease
and thereafter so long as any moneys are owing under this Lease or any
of the other Lease Documents it will:
11.1.1 Notification of Relevant Event
promptly inform the Lessor of any occurrence of which it becomes aware
which would or is reasonably likely to adversely affect any Relevant
Party's ability to perform its obligations under any of the Relevant
Documents and, without limiting the generality of the foregoing, will
inform the Lessor of any Relevant Event promptly upon becoming aware
thereof and will from time to time, if so requested by the Lessor where
the Lessor has good reason to believe that a Termination Event may have
occurred, confirm to the Lessor in writing that, save as otherwise
stated in such confirmation, no Termination Event has occurred and is
continuing;
11.1.2 Consents and authorisations
without prejudice to clauses 2.2 and 4, obtain or cause to be obtained,
maintain in full force and effect and comply in all material respects
with the conditions and restrictions (if any) imposed in, or in
connection with, every consent, authorisation, licence or approval of
governmental or public bodies or authorities or courts and do, or cause
to be done, all other acts and things, which in each case may from time
to time be necessary or desirable under applicable law for the continued
due performance of all of any Relevant Party's obligations under each of
the Relevant Documents;
11.1.3 Pari passu
ensure that its obligations under this Lease and the other Lease
Documents shall all times rank at least pari passu with all its present
and future unsecured and unsubordinated Indebtedness other than any
obligations which are mandatorily preferred by law and not by contract;
11.1.4 Financial statements
prepare Annual Financial Statements in accordance with Relevant GAAP
consistently applied in respect of each financial year and cause the
same to be reported on by the Lessee's Auditors and prepare Quarterly
Financial Statements on the same basis as the Annual Financial
Statements and deliver a copy of the same to the Lessor as soon as
practicable but not later than one hundred and eighty (180) days (in the
case of Annual Financial Statements) or sixty (60) days (in the case of
Quarterly Financial Statements) (or, in any such case, such longer
period as may be agreed in writing by the Lessor) after the end of the
financial period to which they relate provided always that in the case
of the Annual Financial Statements the Lessee shall deliver unaudited
draft Annual Financial Statements no later than one hundred and twenty
(120) days after the end of the financial period to which they relate if
the audited Annual Financial Statements are not ready at that time;
11.1.5 Delivery of reports
deliver to the Lessor a copy of every material report, circular, notice
or like document issued by the Lessee to its shareholders or creditors
generally, in each case at the time of issue thereof;
11.1.6 Provision of further information
provide the Lessor with such financial and other information concerning
the Lessee, the Sub-Lessee and the Lessee Parent and their respective
affairs as the Lessor may from time to time reasonably request in
writing;
11.1.7 Obligations under Lease Documents
duly and punctually perform each of its obligations under the Lease
Documents;
11.1.8 No merger or consolidation
not without the prior written consent (such consent not to be
unreasonably withheld) of the Lessor merge or consolidate with any other
company or person which is not a member of the Lessee Group and to
notify the Lessor of any merger or consolidation with another company
which is a member of the Lessee Group;
11.1.9 Financial Ratios
ensure that:
(a) Free Available Cash
at all times the Free Available Cash shall not be less than the
Minimum Free Available Cash at the relevant time. The Lessor
agrees that for the purpose of satisfying this covenant the
requirement to evidence Minimum Free Available Cash for amounts
or Free Available Cash in excess of fifteen million Dollars
($15,000,000) may be satisfied by the Lessee providing evidence
to the Lessor that the Lessee Parent has made available to the
Lessee an unconditional on demand loan in an amount equal to
such excess amounts and which loan is capable of being drawn
down on an unqualified and unrestricted basis by the Lessee at
any time;
(b) Working Capital
as at the end of each quarterly period during and at the end of
each financial year of the Lessee, the ratio of Current Assets
to Current Liabilities (excluding the current portion of
long-term debt) shall not be less than one point five (1.5) to
(1); and
(c) Leverage
as at 31 March 2003 and as at the end of each subsequent
quarterly period during and at the end of each financial year of
the Lessee, the ratio of Net Debt as at the end of such period
to Annualised EBITDA calculated by reference to such quarter
shall not exceed:
(i) six point five (6.5) to one (1) for quarterly periods
ending during or at the end of 2003;
(ii) six (6) to one (1) for quarterly periods ending during
and at the end of 2004; and
(iii) five (5) to one (1) for all subsequent quarterly
periods;
11.1.10 Dividends
at any time after the date falling five (5) days after the Delivery
Date, not without the prior written consent of the Lessor, declare or
pay any dividends unless the Lessee can evidence to the Lessor's
satisfaction that the Free Available Cash is not less than thirty five
million Dollars ($35,000,000); and
11.1.11 Certificate of compliance with clause 11.1.9
at the same time as the Lessee delivers to the Lessor, pursuant to
clause 11.1.4, a copy of the Annual Financial Statements or Quarterly
Financial Statements (as the case may be) the Lessee shall provide a
statement signed by the Chief Financial Officer or another senior
officer of the Lessee (in substantially the form set out in Schedule 6)
confirming:
(a) the respective amounts of:
(i) the Cash Balances and Minimum Free Available Cash;
(ii) Current Assets, Current Liabilities and the current
portion of long-term debt;
(iii) Annualised EBITDA and Interest Expense; and
(iv) Net Debt,
in respect of or, as the case may be, as at the end of the
financial period expiring on the date as at and for which the
relevant financial statements were prepared (or, in the case of
Annualised EBITDA, calculated by reference to the three (3)
month period expiring on such date) (or, in the case of Interest
Expense, for the twelve (12) month period expiring on such date)
and that such amounts were calculated in accordance with this
Lease and Relevant GAAP;
(b) that such Annual Financial Statements or Quarterly Financial
Statements were prepared in accordance with Relevant GAAP or, if
not so prepared, setting forth full details of the adjustments
required to be made to such statements to reflect Relevant GAAP
as necessary to calculate the amounts referred to in clause
11.1.9;
(c) that as at the date to which the relevant financial statements
are made up, the Lessee was in compliance with the covenants and
undertakings set out in clause 11.1.9 (or, if it was not in such
compliance, indicating the extent of the breach and the steps
intended to be taken to remedy the same); and
(d) that, as at the date not more than seven (7) days prior to the
delivery of the certificate, no Relevant Event has occurred and
is continuing (or, if such is not the case, specifying the
same).
11.2 Protection of Lessor's rights
The Lessee hereby further undertakes with the Lessor that from the date
of this Lease until the end of the Lease Period it will:
11.2.1 Disposal of the Ship
not attempt or hold itself out as having any power to sell, agree to
sell, transfer or otherwise dispose of or (except to avoid loss of life
or personal injury or as otherwise agreed pursuant to clause 22) abandon
the Ship or any share or interest therein;
11.2.2 Encumbrances
not create or agree or purport to create any Encumbrance over the Ship,
any share or interest therein or in the Insurances or Requisition
Compensation or any part thereof (other than for Permitted
Encumbrances);
11.2.3 Notification of arrest
notify the Lessor promptly by facsimile of any arrest or detention of
the Ship or any exercise or purported exercise of a lien or other claim
on the Ship or the Insurances or any part thereof;
11.2.4 Prevention of and release from arrest
without prejudice to clause 29.3 promptly pay and discharge or procure
that there is paid or discharged (by settlement, providing bail or
procuring the provision of security or otherwise as the circumstances
may allow or require) all debts, damages, liabilities and outgoings
whatsoever which have given or may give rise to maritime, statutory or
possessory liens on, or claims enforceable against the Ship or the
Insurances or any part thereof and, in the event of a writ or libel
being filed against the Ship or the Insurances or any part thereof, or
of any of the same being arrested, attached or levied upon pursuant to
legal process or purported legal process or in the event of detention of
the Ship in exercise or purported exercise of any such lien or claim as
aforesaid, procure the release of the Ship and the Insurances from such
arrest, detention, attachment or levy or, as the case may be, the
discharge of the writ or libel promptly (and, in the case of an arrest
of the Ship, within the period provided therefor in clause 26.1.17) upon
receiving notice thereof by providing bail or procuring the provision of
security or otherwise as the circumstances may require;
11.2.5 No pledging of Lessor's credit
not pledge the credit of the Lessor for any maintenance, service,
repairs, drydocking, or modifications to, or changes or alterations in,
the Ship or for any other purpose whatsoever;
11.2.6 Protection of Lessor's rights in relation to the Ship
not do or permit to be done any act or thing which might jeopardise the
title, rights and interest of the Lessor in the Ship or omit or permit
to be omitted to be done any act within the control of the Lessee or
other member of the Lessee Group which might prevent that title and
those rights and interest from being jeopardised; and
11.2.7 Ownership of Ship
generally on all occasions when the ownership of the Ship is relevant
make clear to third parties that the same is not the property of the
Lessee.
12 Sub-leasing
12.1 Restrictions on sub-leasing
Save for the Sub-Lease, the Lessee will not and will procure that the
Sub-Lessee will not at any time without the prior written consent of the
Lessor (which the Lessor shall have full liberty to withhold its
consent) and, if such consent is given, only subject to such conditions
as the Lessor may require, part with the possession or operational
control of the Ship (except to the Manager pursuant to the Management
Agreement or for the purpose of maintenance, service, repair or overhaul
work or any modifications, changes or alterations permitted under this
Lease) or sub-let the Ship. The Lessee shall provide the Lessor with a
certified copy of any sub-lease consented to pursuant to this clause
promptly following execution of the same.
12.2 Terms of sub-lease
The Lessee will not and will procure that the Sub-Lessee will not at any
time sub-let the Ship on a bareboat or demise charter basis pursuant to
any sub-lease unless:
12.2.1 the relevant sub-lease shall contain such terms and provisions as shall
ensure that the sub-lessee thereunder, if complying with the said terms
and conditions, will not do anything which would contravene the
provisions of this Lease (including, without limitation, the provisions
of clause 13.2.4 relating to qualifying purpose during the designated
period as therein referred to and clause 13.1) and not prevent the
Lessee from complying with the provisions of this Lease;
12.2.2 any such sub-lease will not result in any of the Variable Assumptions
becoming incorrect;
12.2.3 by its terms such sub-lease prohibits sub-leasing by the sub-lessee
without the prior written consent of the Lessor (which the Lessor shall
not unreasonably withhold);
12.2.4 the sub-lease shall not involve or purport to involve any transfer of
title or interest in the Ship and shall not in any way discharge or
diminish any of the Lessee's obligations to the Lessor under this Lease;
12.2.5 any such sub-lease will not be capable of expiring after the Lease
Period, will be expressed to be subject and subordinate to this Lease
and any sub-lessee will confirm such subordination arrangements in
writing to the Lessor on terms satisfactory to the Lessor; and
12.2.6 any sub-lessee shall as a condition to the effectiveness of such
sub-lease agree to adhere to the provisions of the Proceeds Deed or
otherwise agree to the provisions of this Lease relating to the
application of proceeds of Insurances in respect of the Ship.
12.3 Undertakings concerning the Sub-Lease
The Lessee hereby undertakes with the Lessor that throughout the Lease
Period:
12.3.1 it will not, except with the previous written consent of the Lessor and
save to the extent otherwise provided in the Quiet Enjoyment Letter and
the Lessee's Quiet Enjoyment Letter, agree to any variation of the
Sub-Lease or release the Sub-Lessee from any of the Sub-Lessee's
obligations under the Sub-Lease or waive any breach of the Sub-Lessee's
obligations thereunder or consent to any such act or omission of the
Sub-Lessee as would otherwise constitute such breach;
12.3.2 it will not claim or exercise any lien upon sub-freights which might
otherwise be available to it under the Sub-Lease;
12.3.3 it will perform its obligations under the Sub-Lease and use its best
endeavours to procure that the Sub-Lessee shall perform its obligations
under the Sub-Lease;
12.3.4 the Sub-Lease shall not in any circumstances be determined by it by
reason of any breach or alleged breach thereof by the Lessee unless the
Lessor shall first have given its consent in writing to such
determination provided always that any determination of the Sub-Lease by
the Lessee after such consent is given shall be without responsibility
on the part of the Lessor who shall be under no liability whatsoever in
event that such determination be thereafter adjudged to constitute a
repudiation of the Sub-Lease by the Lessee; and
12.3.5 at the request of the Lessor it will supply to the Lessor all
information, accounts and records that may be reasonably necessary or of
assistance to enable the Lessor to verify the amount of all payments of
charterhire and other amounts payable under the Sub-Lease.
13 Use and trade of the Ship
13.1 Permitted use
Subject to the other terms and conditions of this Lease and the other
Lease Documents, the Lessee shall (save as herein provided) have the
full and exclusive use, control and command of the Ship during the Lease
Period and may operate or employ it within any lawful trade for which it
is suitable.
13.2 Undertakings concerning use
The Lessee hereby undertakes with the Lessor that throughout the Lease
Period it will:
13.2.1 Ship's registration
not to do or suffer to be done anything whereby the documentation of the
Ship for the time being in accordance with the provisions of clause 14.2
may be forfeited or imperilled;
13.2.2 Employment
not employ the Ship or permit its employment in any manner, trade or
business which is forbidden by international law, or which is unlawful
or illicit under the law of any relevant jurisdiction, or in any manner
whatsoever which may render it liable to destruction, seizure,
confiscation, penalty or sanctions and, in the event of hostilities in
any part of the world (whether war be declared or not), not enter or
trade to or continue to trade in any zone which is declared a war zone
by any Government Entity or by the insurers unless the prior written
consent of the Lessor is obtained and such special insurance cover as
the Lessor may require shall have been effected by the Lessee and at its
expense;
13.2.3 Payment of outgoings and evidence of payments
pay in accordance with good business practice all tolls, dues and other
outgoings whatsoever in respect of the Ship and the Insurances and keep
proper books of account in respect of the Ship and, as and when the
Lessor may so reasonably require, make such books available for
inspection on behalf of the Lessor and furnish satisfactory evidence
that the wages and allotments and the insurance and pension
contributions of the Master and crew are being promptly and regularly
paid and that all deductions from crew's wages in respect of United
Kingdom tax liability are being properly accounted for and that the
Master has no claim for disbursements other than those incurred by him
in the ordinary course of trading on the voyage then in progress;
13.2.4 Use for a qualifying purpose
not use the Ship or permit the Ship to be used and procure that the Ship
is not used during the designated period (as defined in section 106 CAA)
so as to result in the application of sections 109, 110, 111, 112, 113
and 117 CAA and shall immediately notify the Lessor if at any time
within such designated period the Ship is used for leasing to a
non-resident within the meaning of section 105 (2) CAA and also notify
the Lessor of any event or matter which under sections 118, 119 and 120
CAA ought to be notified by the Lessor to the Board of Inland Revenue or
any Inspector of Taxes in connection with the Ship or the leasing
thereof and shall promptly furnish to the Lessor when the Lessor may
require such information as may be required to be so furnished by the
Lessor to the Board of the Inland Revenue or Inspector of Taxes
regarding the leasing of the Ship or the use to which it is being put or
has been put, in order to enable the Lessor to comply with the
provisions of sections 118, 119 and 120 CAA or to respond to such a
request;
13.2.5 Anti-Drug Abuse
without prejudice to clause 13.2.2, take all necessary and proper
precautions to prevent any infringements of the Anti-Drug Abuse Act of
1986 of the United States of America or any similar legislation
applicable to the Ship in any jurisdiction in or to which the Ship shall
be employed or trade; and
13.2.6 Bills of Lading
except as otherwise required pursuant to the Time Charter, procure that
all Bills of Lading issued for carriage of goods by the Ship shall
contain a Paramount clause incorporating any legislation relating to
carrier's liability for cargo compulsorily applicable in the trade or,
if no such legislation exists, that such Bills of Lading shall
incorporate the British Carriage of Goods by Sea Acts 1971 and that all
such Bills of Lading shall also contain the amended New Xxxxx clause as
approved by the Baltic International Maritime Council from time to time
and the Both-to-Blame Collision clause and without prejudice to the
provisions of clause 33.5, provide that the General Average, if any,
shall be settled according to the York-Antwerp Rules of 1994 in London.
14 Title, registration, name and house flag
14.1 Title
The Lessee shall have no right, title or interest in or to the Ship or
any part thereof except the right to use the same upon the terms and
conditions contained in this Lease. It is hereby expressly declared that
the Lessee shall not have any option or right to acquire title to or any
proprietary interest in the Ship or any part thereof. The Lessee shall
not sell or purport to sell the Ship otherwise than in exercise of its
rights under clause 3.6. Subject to clauses 6.1 and 6.2, nothing herein
contained shall be construed as imposing any liability on the Lessor to
the Lessee in respect of or arising out of the acts or omissions of any
third party (including any charterer or lessee of any other vessel or
assets of the Lessor unless that third party is a member of the Lessor
Group) affecting the Lessee or the Ship or otherwise.
14.2 The Lessee may at any time and from time to time during the Lease
Period, request the Lessor to transfer the register of the Ship to any
port and/or to re-document the Ship under laws of any jurisdiction other
than the port and/or jurisdiction at which the Ship is for the time
being registered and/or under whose laws the Ship is for the time being
documented. If the Lessor approves of such transfer of register and/or
re-documentation of the Ship, the Lessor shall, at the request of the
Lessee, co-operate with and permit the Lessee to take all necessary
steps to comply with such request and thereafter shall during the Lease
Period co-operate with the Lessee to take such action as the Lessee may
reasonably require to maintain the documentation of the Ship at the port
to which the register of the Ship is so transferred and/or under the
laws of the jurisdiction under whose laws the Ship is so re-documented.
For the purposes of this clause 14.2, the Lessor shall in accordance
with the provisions of this Lease and the Proceeds Deed not unreasonably
withhold its approval to the transfer of the register of the Ship to any
port and/or the re-documentation of the Ship under the laws of any
jurisdiction and/or under whose flag the Lessor is entitled, without
breach of any applicable laws, to register and/or re-document the Ship.
The Lessee undertakes that if at any time it requests a transfer of the
register and/or the redocumenting of the Ship following a request from
the Time Charterer, and if the Lessor agrees to such request, the Lessee
shall use its best endeavours to obtain the agreement of the Time
Charterer that the consent to such transfer is given on the basis that
the Time Charterer agrees to a subsequent transfer of the register
and/or the redocumenting of the Ship under British flag in the
circumstances described below in this clause 14.2.
If the Ship is, in accordance with the provisions of this Lease and the
Proceeds Deed, no longer registered at any time under British flag and,
in the reasonable opinion of the Lessor acting in good faith, it shall
become impossible, unlawful, impracticable or undesirable for the Lessor
to maintain the documentation of the Ship under the laws of any
jurisdiction under which the Ship is then documented (other than the
United Kingdom), the Lessor shall give notice thereof to the Lessee and
the Lessor and the Lessee shall forthwith enter into negotiations in
good faith with a view to agreeing upon an alternative jurisdiction for
the documentation of the Ship, but if no such agreement shall be reached
within thirty (30) days after the Lessor shall have given such notice to
the Lessee, the Lessor shall be at liberty to take and/or require the
Lessee to take such action to re-document the Ship as a British ship in
the United Kingdom and/or to transfer the registry of the Ship to the
United Kingdom and in any such case the Lessee shall do all that may be
necessary on its part to give effect to such re-documentation and/or
transfer of register. Where the Lessee has complied with its obligations
under the second paragraph of this clause 14.2, the Lessor agrees that
it shall not require the reflagging or redocumenting of the Ship to
British flag where it shall be impracticable or undesirable for the
Lessor to maintain the documentation of the Ship under the flag of a
particular jurisdiction where such reflagging or redocumenting of the
Ship shall result in a breach of the Time Charter or any sub-charters
entered into by the Time Charterer pursuant to the Time Charter.
Without prejudice to the generality of the provisions of clause 9, the
Lessee shall indemnify and hold harmless the Lessor against all losses,
costs, expenses and liabilities of whatsoever nature (including
penalties, claims, demands, orders or judgments) which the Lessor may
suffer or incur and which arise directly or indirectly out of the
re-documentation of the Ship in accordance with this clause 14.2.
14.3 Name and house flag
The Ship shall be painted in such colours, display such insignia and fly
such house flag as the Lessee may require. The Lessee shall notify the
Lessor of any intended change in the name of the Ship.
14.4 Proceeds Deed
The arrangements concerning the transfer of flag or registry contained
in this clause 14 shall be subject to the provisions of clause 8.7 of
the Proceeds Deed.
15 Maintenance and operation
15.1 Possession and control of Ship by Lessee
During the Lease Period the Ship shall, subject to the terms and
conditions of this Lease, be in the full and exclusive possession and at
the absolute disposal of the Lessee for all purposes and under its
complete control in every respect and the Master, officers and crew of
the Ship shall be the servants of the Lessee, or during the Sub-Lease
Period, the Sub-Lessee (or any other permitted sub-lessee) for all
purposes whatsoever.
Notwithstanding any other provision of this Lease, and without prejudice
to any of the obligations of the Lessee under this Lease or any of the
other Lease Documents imposing any higher standard of performance upon
the Lessee, the Lessee shall make, and shall have sole responsibility
for making, all such arrangements as may be necessary to ensure that the
Ship is fit to operate at sea without serious danger to human life.
15.2 Undertakings concerning maintenance and operation during Lease Period
The Lessee further undertakes with the Lessor that throughout the Lease
Period and thereafter, whilst the Lessee continues to have possession of
the Ship, until the sale of the Ship it will:
15.2.1 Maintenance of classification; compliance with regulations
maintain the Classification as the class of the Ship and to comply with
and ensure that the Ship at all times complies with the provisions of
the Merchant Shipping Acts and all regulations and requirements
(statutory or otherwise) from time to time applicable to vessels
registered under British flag or otherwise applicable to the Ship, her
Master, officers and crew wherever the Ship may proceed or trade and
(without prejudice to the generality of the foregoing) at its own
expense maintain in force for the Ship all safety, radio, loadline and
other certificates whatsoever and all licences and permits which may
from time to time be prescribed by any legislation in force in the
United Kingdom or other applicable jurisdiction;
15.2.2 Supply and crewing
by its own or the Sub-Lessee's procurement (which may include the
engagement of the Manager to provide certain services under the
Management Agreement), man, victual, navigate, operate, supply, fuel,
and repair the Ship whenever required during the Lease Period;
15.2.3 Surveys
submit the Ship to continuous surveys and such periodical or other
surveys as may be required for classification purposes, comply with all
recommendations and requirements of the Classification Society in
accordance with their terms and supply to the Lessor copies of all
survey reports issued in respect thereof;
15.2.4 Repair
keep the Ship and every part of it in a good and efficient state of
repair, in efficient operating condition, seaworthy in all respects and
in accordance with good maintenance practice (fair wear and tear
excepted and having regard to the type and age of the Ship) and procure
that all repairs to, or replacement of, any damaged, worn or lost parts
or equipment are effected in such manner (both as regards workmanship
and quality of materials) as not to materially diminish the value of the
Ship without the prior written consent of the Lessor;
15.2.5 Drydocking
drydock the Ship and clean and paint her underwater parts in accordance
with good commercial practice for vessels of the type and age of the
Ship and, in any event, in accordance with the requirements from time to
time of the Classification Society;
15.2.6 Inspection of the Ship
permit the Lessor by surveyors or other persons appointed by it for such
purpose to board the Ship at annual intervals during the Lease Period
and after the occurrence of a Termination Event which is continuing at
such intervals as the Lessor considers appropriate for the purpose of
inspecting her and afford all proper facilities for such inspections and
for this purpose give the Lessor reasonable advance notice of any
intended dry docking of the Ship (whether for the purpose of
classification, survey or otherwise). The cost of such inspections and
surveys properly incurred by the Lessor shall be paid by the Lessee (if
a Relevant Event has occurred and is continuing or if such inspection
reveals any material failure to comply with the Lessee's maintenance
obligations under this Lease) or by the Lessor (if no Relevant Event has
occurred and is continuing or no such material failure is revealed.)
All time taken in respect of such inspection or survey shall form part
of the Lease Period. All inspections and surveys of the Ship prior to
the occurrence of a Termination Event which is continuing shall be
carried out at such times and places and in such manner as not to
interfere with the use, operation, maintenance and repair as required
under the Time Charter or other contractual arrangements with third
parties, of the Ship but the Lessor shall not be obliged to carry out
such inspections only during periods of drydocking;
15.2.7 Verification reports
provide to the Lessor certified copies of all reports and
recommendations of any safety inspector or other regulatory body from
time to time issued in respect of the compliance or otherwise with any
statutes and regulations from time to time in force regarding the safe
operation, management, maintenance and integrity of the Ship;
15.2.8 Manuals and technical records
maintain all such other records, logs, manuals, technical data and other
materials and documents which are required to be maintained in respect
of the Ship to comply with any applicable laws or the requirements of
the Classification Society and keep accurate, complete and up to date
logs and records of all voyages made by the Ship and of all maintenance,
repairs, alterations, modifications and additions to the Ship and, on
reasonable advance notice from the Lessor, permit the Lessor or its
representatives at any time to examine and take copies of such logs and
records and other records;
15.2.9 Information regarding casualties
furnish the Lessor with full information regarding any single casualty
or other accident or damage to the Ship which shall involve repairs
costing more than the Casualty Amount;
15.2.10 Modification; removal of parts; equipment owned by third parties
except as required pursuant to clause 3(e) of the Time Charter, not
without the prior written consent of the Lessor (and then only on and
subject to such terms as the Lessor may agree):
(a) make any modification to the Ship in consequence of which her
structure, type or performance characteristics could or might be
materially altered or her value materially reduced; or
(b) permanently remove any material part of the Ship or any
equipment the value of which is such that its removal from the
Ship would materially reduce the value of the Ship without
replacing the same with equivalent parts or equipment which are
owned by the Lessor free from Encumbrances (other than Permitted
Encumbrances); or
(c) install on the Ship any equipment owned by a third party which
cannot be removed without causing significant or permanent
damage to the structure or fabric of the Ship;
15.2.11 Information
promptly furnish the Lessor with all such information as it may from
time to time reasonably require regarding the Ship, her employment,
position and engagements, particulars of all towages and salvages, and
copies of all charters and other contracts for her employment and
related information, or otherwise howsoever concerning her;
15.2.12 Manager
not without the previous consent in writing of the Lessor (and then only
on and subject to such terms as the Lessor may agree) permit the
Sub-Lessee to replace the Manager or appoint a manager of the Ship or
allow a manager of the Ship to be appointed (and for the purposes of
this Lease "manager" shall include any shipmanager or other person
providing to the Lessee or the Sub-Lessee analogous specialised services
in respect of the Ship);
15.2.13 Notification of certain events
notify the Lessor forthwith by facsimile thereafter confirmed by letter
of:
(a) any damage to the Ship requiring repairs the cost of which might
exceed the Casualty Amount;
(b) any occurrence in consequence of which the Ship has or may
become a Total Loss;
(c) any requisition of the Ship for hire;
(d) any requirement or recommendation made by any insurer or the
Classification Society or by any competent authority which is
not, or cannot be, complied with in accordance with its terms;
(e) any claim in an amount in excess of the Casualty Amount (or the
equivalent in any other currency) arising as a result of any
serious or potentially serious injury to a third party caused
by, or in connection with, the Ship;
(f) any substantial damage to property in an amount in excess of the
Casualty Amount (or the equivalent in any other currency) caused
by, or in connection with, the Ship;
(g) any assistance which has been given to the Ship which has
resulted or may result in a lien for salvage being acquired over
the Ship;
(h) any other event which occurs in connection with the Ship which
affects or might materially and adversely affect the rights of
the Lessor or involves or might involve any material loss or
liability;
(i) the making of any Environmental Claim for an amount in excess of
the Casualty Amount (or the equivalent in any other currency)
against the Lessee or the Ship;
(j) the occurrence of any Environmental Incident which may give rise
to any such Environmental Claim for an amount in excess of the
Casualty Amount (or the equivalent in any other currency); or
(k) any drydocking of the Ship;
15.2.14 Repairer's liens
not without the previous written consent of the Lessor put the Ship into
the possession of any person for the purpose of work being done upon her
in an amount exceeding or likely to exceed the Casualty Amount unless
(a) such person shall first have given to the Lessor in terms
satisfactory to it, a written undertaking not to exercise any lien on
the Ship for the cost of such work or otherwise or (b) no Termination
Event has occurred and is continuing, the cost of the work to be done on
the Vessel is covered by insurances and the underwriters have agreed to
make payment direct to the person who is to carry out the work or (c)
the Lessee can demonstrate to the Lessor's reasonable satisfaction that
it has access to committed funds in an amount sufficient to cover the
cost of such work;
15.2.15 Health and safety
take such steps as are reasonably practicable to ensure that the Ship
and all constituent parts thereof will be safe and without risk to
health when properly used and (without prejudice to the generality of
the foregoing):
(a) take such steps as are reasonably practicable to ensure that any
defects in the Ship and all constituent parts thereof which
could be or cause a danger to safety and/or a risk to health
shall be made good;
(b) for such purpose, have a detailed inspection of the Ship carried
out from time to time including all electrical, fluid, oil and
gas connections (being either supplies to, or discharges from,
the Ship) and all constituent parts thereof;
(c) take such action as is reasonably practicable to see that
appropriate safety measures are adopted; and
(d) not use or permit the Ship or any constituent parts thereof to
be used beyond their limits and capacities;
15.2.16 No operational interest
procure that the Lessor is not at any time represented as carrying goods
or passengers or providing any other service on or from the Ship, or as
being in any way connected or associated with any operations or carriage
or other service which may be undertaken by the Lessee or the
Sub-Lessee, or as having any operational interest in, or responsibility
for, the Ship;
15.2.17 Safe operation
take all reasonable steps to secure that the Ship is navigated and
operated in a proper, safe and xxxxxx-like manner and in the manner
prescribed by any legislation in force in the United Kingdom or any
other applicable jurisdiction for the time being and ensure that, where
applicable, the Ship is at all times manned and operated by properly
licensed and/or qualified persons and that such persons at all times
comply with all applicable laws relating to such xxxxxxx and operation;
15.2.18 Fitness to go to sea
procure that the Ship shall at all times be fit to go to sea without
serious danger to human life (by reason of the condition, or the
unsuitability for its purpose, of either the Ship or its machinery or
equipment or any part of the Ship or its machinery or equipment or
undermanning or overloading or unsafe or improper loading or any other
matter relevant to the safety of the Ship) unless arrangements have been
made which are appropriate to ensure that before the Ship goes to sea it
is made fit to do so without serious danger to human life by reason of
any such matters or it is reasonable for such arrangements not to be
made at such time;
15.2.19 Compliance with oil pollution and environmental laws
comply with, and procure compliance in all material respects with all
Environmental Laws applicable to all Relevant Ships and the terms of all
Environmental Approvals including, without limitation, requirements
relating to xxxxxxx and establishment of financial responsibility and,
promptly upon receipt of the same, notify the Lessor of any claim,
notice or other communication served on it in respect of any alleged
breach of any applicable Environmental Law which might, if
substantiated, have a material adverse effect on any Relevant Party's
ability to perform its respective obligations under the Relevant
Documents and (without prejudice to the generality of the foregoing)
procure that (a) no oil, hazardous substances or solid wastes are
disposed of, discharged or otherwise released from or in connection with
the Ship except in compliance with Environmental Laws, (b) no hazardous
substance will be released in a quantity equal to or exceeding that
quantity which requires reporting pursuant to Section 103 of
Comprehensive Environmental Response, Compensation and Liability Xxx
0000, and (c) no oil or hazardous substance is discharged or released so
as to pose an imminent and substantial endangerment to public health or
welfare or the environment which will result in damages recoverable
under the Oil Pollution Xxx 0000 of the United States of America;
15.2.20 ISM Code
(a) comply with, and ensure that the Ship and its Operator at all
times comply with the requirements of the ISM Code;
(b) immediately inform the Lessor if there is any threatened or
actual withdrawal of its or an Operator's DOC or the Ship's SMC;
and
(c) promptly inform the Lessor upon the issue to the Lessee, the
Sub-Lessee or any Operator of a DOC and to the Ship of an SMC or
the receipt by the Lessee, the Sub-Lessee or any Operator of
notification that its application for the same had been refused;
and
15.2.21 Chartering
without prejudice to clause 12 not and will procure that the Sub-Lessee
will not, in either case, without the prior written consent of the
Lessor (a request for which shall be promptly responded to but which
consent the Lessor shall have full liberty to withhold) let the Ship on
time or voyage charter except to:
(a) a member of the Lessee Group on terms whereby the relevant
member undertakes that its rights and interests in respect of
the Ship are subordinated to the rights and interests of the
Lessor; or
(b) a Rated Time Charterer; or
(c) any other person,
as long as the chartering of the Ship to any of the persons specified in
(a), (b) and (c) shall not be illegal or result in a breach by the
Lessor and/or the Lessee and/or the Sub-Lessee of any regulation in any
Relevant Jurisdiction and, where applicable, in the case of
sub-paragraphs (a) and (c) above, the provisions of clause 25.6 have
been satisfied in full.
16 Insurance Undertakings: wreck removal
16.1 Insurance undertakings
The Lessee hereby covenants with the Lessor and undertakes that
throughout the Lease Period and thereafter, whilst the Lessee continues
to have possession of the Ship, until the sale of the Ship (other than a
sale to the Standby Purchaser), it will:
16.1.1 Insured risks, amounts and terms
insure and keep the Ship insured free of cost and expense to the Lessor
and in the joint names of the Lessee, the Sub-Lessee and the Lessor (but
without liability on the part of the Lessor for premiums or calls) in
connection with the operation of the Ship (each as their interests may
appear):
(a) against fire and usual marine risks (including excess risks) and
war risks, on an agreed value basis, in such amounts (but not in
any event for an amount less than whichever shall be the greater
of (i) the market value of the Ship for the time being and (ii)
such amount as shall from time to time be not less than the
aggregate, from time to time, of (A) the amount of the Strip
Liability Amount and (B) the aggregate amount of insurance
required to be placed by the Lessee by persons other than the
Lessor and in whose favour the Lessee has created a prior
ranking Encumbrance in respect of the Insurances and which is
determined independently of the market value of the Ship;
(b) against protection and indemnity risks (including pollution
risks) for the highest amount (but, in the case of pollution
risks, for a minimum amount of one billion Dollars
($1,000,000,000) (or such other amount as is from time to time
deemed to be the maximum insurable amount of the International
Group of Protection and Indemnity Associations)) in respect of
which cover is in accordance with customary insurance market
practice taken out for vessels of the same type, size, age and
flag as the Ship) for the full tonnage of the Ship (as approved
in writing by the Lessor) and upon such terms as shall from time
to time be approved in writing by the Lessor; and
(c) in respect of such other matters of whatsoever nature and
howsoever arising in respect of which insurance would be
maintained by a prudent owner of the Ship,
and that it will pay to the Lessor the cost (as conclusively
certified by the Lessor) of any (aa) innocent owner's insurance
which the Lessor may from time to time effect in respect of the
Ship upon such terms and in such amounts as shall from time to
time be approved in writing by the Lessor and (bb) any other
insurance cover which the Lessor may from time to time require
to be effected in respect of the Ship and/or in respect of its
interest or potential liability as owner and/or lessor of the
Ship as the Lessor shall deem desirable having regard to any
limitations in respect of the amount or extent of cover which
may from time to time be applicable in any of the other
insurances referred to in this clause 16.1.1 and also having
regard to such insurance cover which from time to time it is
customary for finance lessors such as the Lessor to effect in
respect of similar transactions to the transaction constituted
by this Lease and the other Relevant Documents.
Notwithstanding the above, if at any time the Lessor proposes to
effect any insurance of the nature referred to at (aa) or (bb)
above, the Lessor shall first notify the Lessee of the insurance
which it proposes to effect, the terms on which it requires it
to be effected and the date from which it requires it to be so
effected. If, before the date on which the Lessor requires that
insurance to be effected, the Lessee can demonstrate to the
Lessor that a firm of insurance brokers with a reputation
acceptable to the Lessor is able to arrange that insurance upon
those terms, before that date, for a price lower than that for
which any firm of insurance brokers nominated by the Lessor is
prepared to arrange that insurance and with underwriters
acceptable to the Lessor, and if that firm of insurance brokers
will enter into such agreements with the Lessor as the Lessor
may require taking into account the identity of that firm of
insurance brokers, the Lessor shall not unreasonably refuse to
effect that insurance through that firm of insurance brokers so
nominated by the Lessee;
16.1.2 Brokers insurers and general terms of insurance
effect the Insurances aforesaid in Sterling or Dollars or such other
currency as the Lessor may approve and through the Approved Brokers
(other than the said innocent owners and contingent liability insurance
which may be effected through brokers nominated by the Lessor) and with
such insurance companies and/or underwriters or a mutual insurance
association or club as shall from time to time be approved in writing by
the Lessor and upon such terms as shall from time to time be approved in
writing by the Lessor, such approval not to be unreasonably withheld, it
being agreed that, without limitation, it shall not be unreasonable to
withhold such approval if withholding such approval is consistent with
the insurance report referred to in clause 16.1.12 or the advice of the
brokers producing such report;
16.1.3 Specific terms
each policy or entry with any mutual insurance association or club
maintained by the Lessee in accordance with the provisions of clause
16.1.1 shall:
(a) contain an endorsement reflecting the interest of the Lessor in
the Ship or otherwise covers the Lessor in respect of claims
which may be forthcoming thereunder;
(b) be in the joint names of the Lessor, the Lessee and the
Sub-Lessee according to their respective interests;
(c) provide that all moneys payable thereunder shall, after the
giving of written notice by the Lessor (which notice the Lessor
agrees not to give unless a Termination Event has occurred which
is continuing) (and subject to the provisions of clauses 2.2,
2.3 and 2.5 of the Proceeds Deed), be payable to or to the order
of the Lessor;
(d) provide that the Lessor will be given either thirty (30) days
prior written notice of any intention of the Lessee or seven (7)
days of any intention of the insurance company in each case to
cancel the policy or to materially alter its terms or not renew
the policy on materially the same terms; or, in the absence of
such terms, the Lessee shall cause the Approved Brokers (or, if
any premium payments in respect of Insurances are financed, the
relevant insurance premium finance company), to give the notice
required by this clause and the Lessee shall provide written
evidence as to the Approved Brokers or, as the case may be,
insurance premium finance company's agreement at all times to
provide the notice required by this sub-clause;
(e) not have an excess or deductible under the policy or policies
referred to in clause 16.1.1(a) exceeding two hundred and fifty
thousand Dollars ($250,000) as the same shall be escalated at
the rate of RPI from the Delivery Date, per occurrence (or the
equivalent in any other currency); and
(f) be in Dollars or Sterling and, if in Dollars, in a Dollar amount
which at the commencement of any policy year satisfies the
Sterling element of any minimum insurance cover of the type
referred to in clause 16.1.1(a)(ii)(A) throughout the term of
the policy.
16.1.4 Fleet cover
if any of the insurances referred to in clause 16.1.1(a) form part of a
fleet cover, procure that the Approved Brokers shall undertake to the
Lessor that they shall neither set off against any claims in respect of
the Ship any premiums due in respect of other vessels or equipment under
such fleet cover or any premiums due for other insurances, nor cancel
the insurance for reason of non-payment of premiums for other vessels
under such fleet cover or of premiums for such other insurances, and, if
the Approved Brokers are not prepared to provide an undertaking of the
type referred to above, shall undertake to issue a separate policy in
respect of the Ship if and when so requested by the Lessor;
16.1.5 Payment of premiums
punctually pay all premiums, calls, contributions or other sums payable
in respect of all such insurances and to produce copies of all relevant
receipts or other evidence of payment when so reasonably required by the
Lessor;
16.1.6 Renewal
at least fourteen (14) days before the relevant policies, contracts or
entries expire, notify the Lessor of the names of the brokers proposed
to be employed by the Lessee, the Sub-Lessee or any other party for the
purposes of the renewal of such insurances and of the amounts in which
such insurances are proposed to be renewed and the risks to be covered
and, subject to compliance with requirements of the Lessor pursuant to
this clause 16.1, procure that appropriate instructions for the renewal
of such insurances on the terms so specified are given to the Approved
Brokers at least ten (10) days (or such shorter period as the Lessor may
from time to time agree) before the relevant policies, contracts or
entries expire. In all circumstances the Lessee shall procure that the
Approved Brokers will at least seven (7) days before such expiry (or
within such shorter period as the Lessor may from time to time agree)
confirm in writing to the Lessor as and when such renewals have been
effected in accordance with the instructions so given and, where there
is no change to the identity of the brokers, the level of insurance
cover or any material change in the terms of the relevant policies,
contracts or entries, confirmation that there has been no such change.
16.1.7 Guarantees
arrange for the execution and delivery of such guarantees or indemnities
as may from time to time be required by any protection and indemnity
and/or war risks association;
16.1.8 Hull policy documents, notices, loss payable clauses and brokers'
undertakings
deposit with the Approved Brokers (or procure the deposit of) all slips,
cover notes, policies, certificates of entry or other instruments of
insurance from time to time issued in connection with such of the
insurances referred to in clause 16.1.1 as are effected through the
Approved Brokers and procure that the interest of the Lessor shall be
endorsed thereon by incorporation of the relevant Loss Payable clause
and that the Lessor shall be furnished with pro forma copies thereof
and, unless insurances are placed on the terms of the Norwegian Maritime
Insurance Plan of 1966 as amended, a letter or letters of undertaking
from the Approved Brokers in such form as shall from time to time be
reasonably required by the Lessor having regard to current market
practice at the time of issue of any such letter of undertaking;
16.1.9 Associations' loss payable clauses, undertakings and certificates
procure that any protection and indemnity and/or war risks associations
in which the Ship is for the time being entered shall endorse the
relevant Loss Payable clause on the relevant certificate of entry or
policy and shall furnish the Lessor with a copy of such certificate of
entry or policy and a letter or letters of undertaking in such form as
shall from time to time be reasonably required by the Lessor having
regard to current market practice at the time of issue of any such
letter of undertaking;
16.1.10 Extent of cover and exclusions
take all necessary action and comply with all requirements which may
from time to time be applicable to the Insurances (including, without
limitation, the making of all requisite declarations within any
prescribed time limits and the payment of any additional premiums or
calls) so as to ensure that the Insurances are not made subject to any
exclusions or qualifications to which the Lessor has not given its prior
written consent and are otherwise maintained on terms and condition from
time to time approved in writing by the Lessor;
16.1.11 Correspondence with brokers and associations
to provide to the Lessor, at the time of each such communication, copies
of all written communications between the Lessee or the Sub-Lessee and
the Approved Brokers and approved war risks and protection and indemnity
associations which relate to requisite declarations and payment of
additional premiums or calls referred to in clause 16.1.10, notices of
renewal of the Insurances and all material amendments to the terms and
conditions relating to such Insurances;
16.1.12 Independent report
the Lessor shall be entitled to request the Lessee (at the cost of the
Lessee), to furnish the Lessor with a detailed report signed by an
independent firm of insurance brokers appointed by the Lessor dealing
with the insurances maintained on the Ship and stating the opinion of
such firm as to the adequacy thereof. The Lessor shall be entitled to
request the furnishing of a report under this clause at the time of
Delivery and thereafter if the insurance advisors of the Lessor
recommend that a report be obtained following the annual audit of the
shipping insurance portfolio of the Lessor Group or, if earlier, at the
time of any material change in the Insurances or in the identity of the
Approved Brokers or the protection and indemnity and/or war risks
association responsible for such Insurances or if the Lessor reasonably
believes that there has been a material change in insurance market
practice in respect of vessels of similar type to the Ship;
16.1.13 Collection of claims
do all things necessary and provide all documents, evidence and
information to enable the Lessor to collect or recover any moneys which
shall at any time become due to the Lessor pursuant to this Lease in
respect of the Insurances;
16.1.14 Compliance with Insurances
comply with the terms and conditions of the Insurances, not do, consent
to or permit any act or omission which might invalidate or render
unenforceable the whole or any part of the Insurances and not (without
first obtaining the consent of the insurers to such employment and
complying with such requirements as to extra premium or otherwise as the
insurers may prescribe) employ the Ship or permit the Ship to be
employed otherwise than in conformity with the terms of the Insurances
(including any warranties express or implied therein);
16.1.15 Application of recoveries
apply all sums receivable under the Insurances which are paid to the
Lessee, in accordance with the Loss Payable Clauses and clause 22, or
procure the application of such sums to the extent received by the
Sub-Lessee, in repairing all damage and/or in discharging the liability
in respect of which such sums shall have been received;
16.1.16 Other insurances and assureds
not, without the prior written consent of the Lessor, take out
additional insurances for the Lessee's or, during the Sub-Lease Period,
the Sub-Lessee's sole benefit, or permit the Lessee or the Lessor to be
named insured in insurances with respect to the Ship, other than as
required under this Lease, where such additional insurances will or may
prejudice the Insurances or recovery thereunder or will exceed the
amount permitted by the warranties or other conditions of the Insurances
(unless the insurers under the Insurances have consented thereto) and
will, upon the Lessor's request, immediately furnish the Lessor with
particulars of any such additional insurances (including copies of any
cover notes or policies) and of the written consent of the insurers
under the Insurances in any case where such consent is necessary;
16.1.17 Oil Pollution Cover
ensure that the certificate of entry for the Ship issued by the
protection and indemnity association with which the Ship is entered is
endorsed with the U.S. Oil Pollution Clause 20/2/91 (as amended or
replaced from time to time) and procure that written confirmation is
given to the Lessor that the Lessee or, during the Sub-Lease Period, the
Sub-Lessee, the Manager has provided all declarations and satisfied all
other requirements of such association and that the U.S. Trading
Exclusion Clause has been deleted from the terms upon which such
association covers the Ship against protection and indemnity risks
(including oil pollution risks);
16.1.18 Submission of Protection and Indemnity Declarations
promptly (and within any applicable time limits) complete and submit to
the protection and indemnity association with which the Ship shall be
entered:
(a) a declaration made by or on behalf of the Lessor, the Lessee or,
during the Sub-Lease Period, the Sub-Lessee, the Manager and any
other demise or bareboat charterer, manager or other operator of
the Ship who is named as an assured or co-assured in the Ship's
entry with such association that they will comply with all
special terms and conditions of the association (including,
without limitation, payment of additional premiums for
additional voyages) applying to any voyage (a "US voyage")
involving loading or discharging cargo anywhere in the United
States of America or within the USA Exclusive Economic Zone (as
defined in the Oil Pollution Act of 1990 of the United States of
America); and
(b) such quarterly or other declarations as such association may
require to be made (including, without limitation, declarations
listing all voyages of the Ship) to ensure that the Ship is
covered for protection and indemnity risks (including oil
pollution risks) on any US voyage,
and procure that all such declarations shall be in a form acceptable to,
and contain all information required by, such association;
16.1.19 Maintenance of Oil Pollution Insurance Cover
comply with all other requirements of the protection and indemnity
association with which the Ship is entered to ensure that the Ship is
fully covered for oil pollution risks;
16.1.20 Evidence of Oil Pollution Insurance Cover
deliver to the Lessor upon reasonable notice at the expense of the
Lessee certified true copies of all declarations to the protection and
indemnity association with which the Ship is entered, all certificates
issued by the United States Coast Guard, all confirmations by such
association of cover for oil pollution risks and such other information
and documents relating to oil pollution risks or insurance as the Lessor
may from time to time reasonably request;
16.1.21 Encumbrances
not create or permit to exist any Encumbrance over the Insurances or any
Requisition Compensation, or its interest therein save as contemplated
by this Lease; and
16.1.22 Information concerning Insurances
supply to the Lessor all necessary information, documentation and
assistance which may be required by the Lessor in connection with making
any claim under the Insurances.
16.2 Further requirements
Notwithstanding the other provisions of this clause 16, the Lessee shall
and shall procure that the Sub-Lessee shall also, during the Sub-Lease
Period, comply with such further requirements relative to insurance as
the Lessor may, based upon the insurance report or the advice of the
Lessor's insurance brokers referred to in clause 16.1.12 and following
discussions with the Lessee, from time to time reasonably stipulate.
16.3 Wreck removal
In the event of the Ship becoming an obstruction to navigation the
Lessee shall (in addition to any other obligation it may have under
clause 9) indemnify and hold harmless the Lessor against all costs,
expenses, payments, charges, losses, demands, any liabilities, claims,
actions, proceedings (whether civil or criminal) penalties, fines,
damages, judgments, orders or other sanctions which may be incurred, by,
or made or asserted against the Lessor by reason that the Ship shall
have become an obstruction to navigation (including, without limitation)
in respect of the removal or destruction of the obstruction under
statutory powers but only to the extent that such has not been recovered
from the Ship's insurers.
17 Powers of Lessor to remedy defaults
17.1 Failure to perform insurance undertakings
If the Lessee fails to comply with any of the provisions of clause 16.1,
the Lessor may, without being in any way obliged so to do, or
responsible for so doing, and without prejudice to the ability of the
Lessor to treat that non-compliance as a Termination Event, effect and
thereafter maintain all such insurances upon the Ship as in its
discretion it may think fit in order to procure the compliance with such
provisions or alternatively, require the Ship (at the Lessee's risk) to
remain in, or to proceed to and remain in, a port designated by the
Lessor until such provisions are fully complied with.
17.2 Failure to perform maintenance undertakings
If the Lessee fails to comply with any of the provisions of clauses
15.2.1, 15.2.3. 15.2.4 or 15.2.5, the Lessor may, without being in any
way obliged so to do, or responsible for so doing, and without prejudice
to the ability of the Lessor to treat that non-compliance as a
Termination Event, arrange for the carrying out of such repairs, changes
or surveys as it may deem expedient or necessary in order to procure the
compliance with such provisions.
17.3 Failure to prevent or release from arrest
If the Lessee fails to comply with the provisions of clause 11.2.4 the
Lessor may, without being in any way obliged so to do, or responsible
for so doing, and without prejudice to the ability of the Lessor to
treat that non-compliance as a Termination Event, pay and discharge all
such debts, damages, liabilities and outgoings as are therein mentioned
and/or take any such measures as it may deem expedient or necessary for
the purpose of securing the release of the Ship in order to procure the
compliance with such provisions.
17.4 Failure to comply with other obligations
If the Lessee fails to comply with any of its other obligations under
this Lease any of the other Lease Documents, the Lessor may, without
being in any way obliged to do so or responsible for so doing, and
without prejudice to the ability of the Lessor to treat that
non-compliance as a Termination Event, take such action as it may deem
expedient or necessary in order to procure the compliance with such
provisions.
17.5 Costs of remedying defaults
Without prejudice to clause 27.1, all losses, liabilities, costs,
charges, expenses, damages and outgoings of whatsoever nature
(including, without limitation, Taxes, repair costs, registration fees
and insurance premiums) suffered, incurred or paid by the Lessor in
connection with the exercise by the Lessor of any of its powers under
clauses 17.1, 17.2, 17.3 and 17.4 and interest on all such losses,
liabilities, costs, charges, expenses, damages and outgoings from the
date on which the same were suffered, incurred or paid by the Lessor
until the date of receipt or recovery thereof (both before and after any
relevant judgment) at the Default Rate shall be repayable by the Lessee
to the Lessor on demand and the Lessor agrees that it will issue a
demand hereunder within a reasonable period of determining that it has
suffered or incurred any such amounts.
17.6 Rental still payable
Notwithstanding any exercise by the Lessor of any of the powers
contained in this clause 17, Rental shall continue to accrue during such
time.
18 Redelivery
18.1 Redelivery procedure and condition
Except in the event of a Total Loss of the Ship and subject to the
provisions of clause 24.6, the Lessee shall at the end of the Lease
Period in relation to the Ship redeliver the Ship to the Lessor free of
all Encumbrances (other than Permitted Encumbrances, but excluding for
this purpose Permitted Liens), and the Lessor shall accept such
redelivery, and save where different arrangements are agreed in
connection with any sale of the Ship pursuant to clause 3.6, at a safe
port to be mutually agreed between the parties or, in the absence of
such agreement, at such nearby safe port as the Lessor may designate
acting reasonably and having regard to the location of the Ship at the
time of any required redelivery. Subject to the provisions of clause
24.5, the Lessee shall at its expense before such redelivery make all
such repairs and do all such work as may be necessary so that the Ship
at the date of redelivery shall have installed the machinery and other
equipment installed on the Ship at Delivery or replacements for the same
made in accordance with the provisions of this Lease, shall maintain the
Classification unexpired, shall otherwise be in compliance with any
applicable rules of the Classification Society and shall be in as good
structure, state and condition as at Delivery, fair wear and tear and
changes and alterations properly made by the Lessee as permitted under
this Lease excepted and shall be with all required trading and operating
(and if trading, appropriate trading related) certificates belonging to
the Ship in full force and effect for a minimum period of six (6) months
from the date of redelivery.
18.2 Redelivery survey
At or about the time of redelivery thereof a survey shall, if the Lessor
so requires, be made to determine the state and condition of the Ship,
her machinery and equipment. In that event, the Lessee and the Lessor
shall each appoint surveyors to be present at such survey and the
surveyors present shall determine the condition of the Ship, her
machinery and equipment and shall state the repairs or work necessary to
place the Ship at the date of redelivery in the structure state,
condition and classification referred to in clause 18.1. If the said
surveyors disagree they shall refer the matter to a senior surveyor of
the relevant Classification Society whose decision shall be final and
binding on the parties hereto. All reasonable costs occasioned by any
such survey including the costs of the said surveyors appointed by the
Lessee and the Lessor and, if appointed, the costs of the senior
surveyor of the Classification Society shall be payable by the Lessee
but if the Ship is found to be in the condition provided for in clauses
18.1, fair wear and tear alone and changes and alterations properly made
by the Lessee as permitted under this Lease excepted, such cost shall be
payable by the Lessor.
18.3 Storage until sale
From the end of the Lease Period until the Ship shall have been sold,
the Lessee shall, at no cost to the Lessor:
18.3.1 continue to perform all its obligations under this Lease other than its
obligations to pay periodic Rental and, in particular, it shall continue
(a) to perform its undertakings under clauses 11 to 14 (both inclusive),
(b) to procure that the Ship is maintained in accordance with clause 15
(save that the Lessee shall not be required to procure that any
maintenance and repairs are carried out other than as necessary to
ensure that, until the sale of the Ship, the Ship complies and continues
to comply in all material respects with the provisions of clause 18.1)
and (c) to procure that the Ship is insured in accordance with clause
16.1 or clause 16.2; and
18.3.2 unless the Lessor otherwise directs, store or procure the storing of the
Ship at a place and under conditions reasonably approved by the Lessor
and the Relevant Security Agent until the sale of the Ship shall have
been completed.
19 Consumable stores
19.1 Upon Delivery
It is acknowledged that all consumable stores, unused diesel and
lubricating oils, bunkers, duty free stocks and other merchandise on
board the Ship at Delivery belong to the Sub-Lessee.
19.2 Upon redelivery
All consumable stores, unused diesel and lubricating oils and bunkers on
board the Ship which are owned by the Lessee or the Sub-Lessee at the
time of re-delivery shall be sold by the Lessee or, as the case may be,
the Sub-Lessee to the purchaser of the Ship.
20 Use of equipment and replacement
20.1 Use of equipment and Manuals and Technical Records
The Lessee shall have the use of all outfit, equipment (including cabin,
crew and galley equipment), furnishings, furniture and fittings, spare
and replacement parts which are the property of the Lessor on board the
Ship at the time of Delivery and the Manuals and Technical Records and
the same or their substantial equivalent shall be returned to the Lessor
on re-delivery in good order and condition, fair wear and tear alone and
changes and alterations properly made by the Lessee as permitted under
this Lease excepted.
20.2 Renewal of equipment
The Lessee shall at its own expense from time to time during the Lease
Period replace, renew or obtain substitutions for such items of
equipment as shall be so damaged or worn as to be unfit for use provided
always that in any such case the Lessee shall procure that title to the
part replaced, renewed or substituted shall promptly vest in the Lessor
and title to any part replaced, renewed or substituted shall remain with
the Lessor until the part which replaced it or the new or substituted
part becomes the property of the Lessor or is replaced, renewed or
substituted by a part which thereupon becomes the property of the Lessor
and the Lessee agrees that if any replaced, renewed or substituted part
is not the property of the Lessor it will as soon as practicable replace
the same with a part which thereupon becomes the property of the Lessor.
20.3 Alteration of equipment; additional equipment
The Lessee may at any time alter or remove all or any items of equipment
or may fit any additional equipment required to render the Ship
available for any purpose for which the Lessee may require to use her in
accordance with the provisions of clause 13 provided that the Lessee
shall first have obtained the prior written consent of the Lessor
thereto if and to the extent such consent may be required pursuant to
clause 15.2.10. Any additional equipment so fitted by the Lessee shall
be considered the property of the Lessee or relevant sub-lessee who may
remove such additional equipment at any time before the expiration of
the Lease Period. The cost of fitting or removing any equipment together
with the cost of making good any damage caused by such fitting or
removal shall be payable in full by the Lessee who shall re-deliver the
Ship's equipment to the Lessor in accordance with the provisions of
clause 20.1 unless it is agreed between the Lessor and the Lessee that
any extra fittings or equipment which have been supplied by the Lessee
during the Lease Period shall remain on the Ship after redelivery, in
which event such fittings or equipment shall as from redelivery become
the property of the Lessor.
21 Encumbrances: Lessor's undertakings
The Lessor warrants that the Ship and the Lessor's interest in the
Insurances or any Requisition Compensation will at the Delivery Date be
free of any Lessor's Encumbrances created by it and undertakes that it
will not during the Lease Period, without the prior written consent of
the Lessee, create or, by its own acts or omissions, permit to arise any
Lessor's Encumbrance over the Ship, or any share or interest therein or
the Lessor's interest in the Insurances or any Requisition Compensation.
If, notwithstanding the Lessor's undertaking set out above, a Lessor's
Encumbrance shall arise, the Lessor hereby agrees to discharge promptly
such Lessor's Encumbrance. If the Lessor does not promptly discharge the
Lessor's Encumbrance the Lessee shall be entitled to act as the agent of
the Lessor for the purpose of procuring such discharge (and for no other
purpose) and the Lessor shall reimburse the Lessee in respect of any
costs reasonably and properly incurred by the Lessee, in its capacity as
agent, in connection with such discharge.
22 Loss and damage
22.1 Risk
The Ship shall throughout the Lease Period be in every respect at the
risk of the Lessee who shall bear all risks howsoever arising whether of
navigation, operation and maintenance of the Ship or otherwise and,
subject to clause 6.1, of any other occurrence of whatever kind which
shall deprive the Lessee of the use, possession or enjoyment thereof.
22.2 Total Loss
22.2.1 If the Ship shall become a Total Loss during the Lease Period, all
insurance proceeds in respect thereof shall be applied in accordance
with clause 22.5 and the Lessee shall on the Total Loss Payment Date
become liable to pay to the Lessor an amount equal to the Termination
Sum for the Ship as at that date together with all amounts of Rental and
any other amounts then due and payable under this Lease or any of the
other Lease Documents. If the Lessor serves a notice on the Lessee
pursuant to clause 27.1 the provisions of clause 27.1 shall prevail over
this clause and the Lessee shall be obliged to make the payments
required to be made under clause 27.1 in accordance with such clause
notwithstanding that the date for payment of such amounts may be prior
to the Total Loss Payment Date.
22.2.2 For the purposes of this Lease, a Total Loss shall be deemed to have
occurred:
(a) in the case of an actual total loss of the Ship on the actual
date and at the time the Ship was lost or, if such date is not
known, on the day on which the Ship was last reported;
(b) in the case of a constructive total loss of the Ship, upon the
date and at the time notice of abandonment of the Ship is given
to the insurers of the Ship for the time being (provided a claim
for such constructive total loss is admitted by the insurers)
or, if the insurers do not admit such a claim, at the date and
at the time at either a total loss is subsequently admitted by
the insurers or a total loss is subsequently adjudged by a
competent court of law or arbitration panel to have occurred or,
if earlier, the date falling one hundred and eighty (180) days
after notice of abandonment of the Ship was given to the
insurers;
(c) in the case of a compromised or arranged total loss, on the date
upon which a binding agreement as to such compromised or
arranged total loss has been entered into by the insurers of the
Ship;
(d) in the case of Compulsory Acquisition, on the date upon which
the relevant requisition of title or other compulsory
acquisition occurs;
(e) in the case of hijacking, theft, condemnation, confiscation,
capture, detention, seizure of the Ship (other than where the
same amounts to Compulsory Acquisition of the Ship) by any
persons which deprives the Lessee of the use of the Ship for
more than thirty (30) days, upon the expiry of the period of
sixty (60) days after the date upon which the relevant
hijacking, theft, condemnation, confiscation, capture, detention
or seizure occurred; and
(f) in the case of any of the events described in sub-paragraph (d)
of the definition of Total Loss, upon the expiry of the period
of one hundred and eighty (180) days referred to in such
sub-paragraph (d).
22.2.3 The Lessee agrees that it will, in the event that, upon a Total Loss of
the Ship, the Lessor is disabled from recovering under the Insurances or
any of them or the amount of the recovery thereunder is diminished and
such disablement or diminution results from any breach by the Lessee of
any of its obligations under this Lease or in respect of the terms of
the relevant Insurances, pay to the Lessor on demand by way of
compensation for the loss of the Ship a capital sum (which shall be
applied in accordance with clause 22.5 as if the same had been a
recovery under the Insurances in respect of such Total Loss) equal to
the amount which would but for such disablement have been recoverable
under the Insurances or (as the case may be) a sum equal to the amount
by which the insurance recovery has been diminished or, in either case
and if greater, an amount equal to the Tax Written Date Value of the
Ship.
22.3 Continuation of Lease Period
The Lessee shall continue to pay Rental on the days and in the amounts
required under this Lease notwithstanding that the Ship shall become a
Total Loss, or if for any reason the Lessee shall be permanently
deprived of her use prior to the end of the Lease Period, provided
always that no further instalments of Rental shall become due and
payable after the date on which all sums due under clause 22.2.1 shall
have been paid in full and the Lease Period shall terminate on the date
of such final payment.
22.4 Application of Requisition Compensation
In the event of the Compulsory Acquisition of the Ship after Delivery,
all Requisition Compensation received by the Lessor shall be applied by
the Lessor (or, if received by the Lessee, shall be held in trust by the
Lessee for application) in accordance with clause 22.5.
22.5 Application of Net Total Loss Proceeds and Requisition Compensation
All Net Total Loss Proceeds and Requisition Compensation received by the
Lessor shall be applied by the Lessor, subject to clause 10.4 and to the
provisions of clause 2.1 of the Proceeds Deed, as follows:
22.5.1 first, in retention by the Lessor of an amount equal to one tenth of one
per cent (0.1%) of the amount of the Net Total Loss Proceeds;
22.5.2 secondly, in or towards settlement of any other amounts owing by the
Lessee to the Lessor under this Lease or any of the other Lease
Documents (including any interest due in respect thereof);
22.5.3 thirdly, by way of rebate of Rental, in or towards settlement of any
amounts owing to the Other Lessors under the Other Ship Leases or any of
the Other Ship Relevant Documents, such amounts to be paid to the Lessor
Agent for application in accordance with clause 4.3 of the Agency and
Trust Deed and clauses 27.2.2 and 27.2.3 of each of the Other Ship
Leases;
22.5.4 fourthly, if the Lessee shall on or before the date of application of
such moneys have paid the Termination Sum in accordance with clause
22.2.1 or a part thereof in or towards refunding by way of rebate of
Rental to the Lessee an amount equal to the Termination Sum or part
thereof so paid by the Lessee under this Lease; and
22.5.5 fifthly, the balance to the Lessee by way of rebate of Rental or
otherwise as appropriate.
22.6 Damage claims
In the event of repairable damage to the Ship, the Lessor shall, subject
to clause 2.2.1 of the Proceeds Deed, pay any insurance moneys received
by it to the Lessee or, during the Sub-Lease Period, the Sub-Lessee upon
the Lessee or, during the Sub-Lease Period, the Sub-Lessee furnishing
evidence satisfactory to the Lessor that such damage has been properly
made good or repaired and that all repair accounts and other liabilities
whatsoever in connection with the damage have been paid in full and
discharged by the Lessee or, during the Sub-Lease Period, the
Sub-Lessee, provided always that if a Relevant Event has occurred and is
continuing, the Lessor shall be entitled to apply such insurance moneys
in or towards settlement of any amounts due and owing by the Lessee to
the Lessor under this Lease or any of the other Lease Documents. If the
insurers with whom the fire and marine risks insurances are effected are
prepared to make payment on account of repairs in the course of being
effected then such payment may only be requested by the Lessee or,
during the Sub-Lease Period, the Sub-Lessee if no Relevant Event has
occurred and is continuing and if, in the case of a claim in excess of
the Casualty Amount, the Lessor has first consented in writing (such
consent not to be unreasonably withheld or unreasonably delayed).
22.7 Third party claims
Any insurance moneys paid under the insurances taken out or entries made
referred to in clause 16.1.1(b) shall, subject to clause 2.2.2 of the
Proceeds Deed, be paid to the person to whom the liability (or alleged
liability) covered by such insurances or entry was incurred or, if the
liability (or alleged liability) to such person has previously been
discharged by the Lessee or, during the Sub-Lease Period, the Sub-Lessee
such moneys shall be paid to the Lessee or, during the Sub-Lease Period,
the Sub-Lessee in reimbursement of the moneys so expended by it in
satisfaction of such liability or alleged liability and, in such case,
the Lessor shall pay any insurance moneys received by it in respect of
such liability or alleged liability to the Lessee or, during the
Sub-Lease Period, the Sub-Lessee upon the Lessee or, during the
Sub-Lease Period, the Sub-Lessee furnishing evidence to the Lessor that
such liability or alleged liability has previously been discharged,
provided always that if a Relevant Event has occurred and is continuing
the Lessor shall be entitled to apply such moneys in or towards
settlement of any amounts due and owing by the Lessee to the Lessor
under this Lease or any of the other Lease Documents.
22.8 Insufficient insurance recovery
In the event of repairable damage to the Ship or a liability or alleged
liability covered by the insurances taken out or entries made referred
to in clause 16.1.1 being incurred or alleged, and if the insurance
moneys paid in respect thereof are insufficient to pay the cost or
estimated cost of making good or repairing such damage or discharging
the liability or alleged liability, the Lessee will pay the deficiency
or, during the Sub-Lease Period, will procure that the Sub-Lessee will
pay the deficiency.
22.9 Payment of claims
Notwithstanding anything to the contrary herein, any moneys payable
under the Insurances shall be payable in accordance with the terms of
the relevant Loss Payable clause and, where relevant, the Proceeds Deed.
22.10 Sale of Ship following Total Loss
If the insurers of the Ship have satisfied or admitted in full their
obligations under the Insurances and have expressly waived any rights
they may have, or would or might acquire, in the Ship the Lessor shall,
as soon as practicable after the Total Loss date, endeavour to sell the
Ship. Any such sale shall comply with clauses 3.4 and 3.6.
22.11 Notice of abandonment
Provided no Relevant Event shall have occurred and be continuing the
Lessee shall have the sole right to determine whether or not a case has
arisen for the giving of notice of abandonment to abandon the Ship to
the insurers and/or claim a constructive total loss and the Lessee is
hereby irrevocably authorised by the Lessor to give the same if it so
determines.
The Lessor shall, upon the written request of the Lessee, promptly
execute such documents as may be required to enable the Lessee and/or,
during the Sub-Lease Period, the Sub-Lessee to abandon the Ship to the
insurers and/or claim a constructive total loss and the Lessor shall
give the Lessee and/or, during the Sub-Lease Period, the Sub-Lessee all
appropriate assistance in pursuing the said claim.
23 Salvage
All salvage and towage and all proceeds from derelicts shall, subject to
the Lessor's prior right to retain thereout any sums which may be due
from the Lessee to the Lessor under this Lease or any of the other Lease
Documents, be for the Lessee's benefit and the cost of repairing damage
occasioned thereby shall be borne by the Lessee.
24 Requisition for hire
24.1 Effect of requisition for hire
If the Ship is requisitioned for hire by any Government Entity or other
competent authority during the Lease Period then, unless and until the
Ship becomes a Total Loss following such requisition and the Lessee
shall have made payment of all sums due pursuant to clause 22.2.1, this
Lease shall continue in full force and effect (subject always to the
provisions of clauses 26 and 31.3) for the remainder of the Lease Period
and the Lessee shall remain fully responsible for the due compliance
with all its obligations under this Lease and the other Lease Documents
other than such obligations which the Lessee is unable to comply with
solely by virtue of such requisition.
24.2 Payment of requisition hire
If the Lessee shall duly comply with its obligations under this Lease
and the other Lease Documents during the Lease Period the Lessee shall
be entitled to all requisition hire paid to the Lessor or to the Lessee
by such Government Entity or other competent authority on account of
such requisition.
24.3 Lessor to account for requisition hire
The Lessor shall, subject to clause 33.7, pay any requisition hire to
the Lessee promptly upon receipt.
24.4 Reinstatement of Ship
The Lessee shall, as soon as practicable after the end of any
requisition for hire, cause the Ship to be put into the condition
required by this Lease, and where that requisition shall end after the
expiry or termination of the Lease Period, the Lessee shall, as soon as
practicable, cause the Ship to be put into the redelivery condition
required by clause 18, allowance being made for fair wear and tear in
respect of the period from the expiry or termination of the Lease
Period.
24.5 Compensation for reinstatement
The Lessor shall be entitled to all compensation payable in respect of
any change in the structure, state or condition of the Ship arising
during the period of requisition for hire. The Lessor shall apply such
compensation in reimbursing the Lessee for its cost of complying with
its obligations under clause 24.4, provided always that if a Relevant
Event has occurred and is continuing, the Lessor shall be entitled to
apply such compensation in or towards settlement of any amounts owing by
the Lessee under this Lease or any of the other Lease Documents and the
balance, if any, shall be paid to the Lessee.
24.6 Continuing requisition for hire
Should the Ship be under requisition for hire at the end of the Lease
Period:
24.6.1 the leasing of the Ship under this Lease shall (unless otherwise agreed
between the parties hereto) nevertheless be terminated at such end but
without prejudice to the accrued rights of the parties including,
without prejudice to the generality of the foregoing, the obligation of
the Lessee contained in clause 24.4, and the Lessor shall be entitled to
receive and retain any requisition hire payable in respect of the period
from the expiry or termination of the Lease Period;
24.6.2 the Lessee shall, if and for so long as it is prevented by reason of the
requisition for hire from re-delivering the Ship under clause 18, be
relieved from its obligations so to do, but shall consult with the
Lessor as to the most convenient method of enabling the Lessor to obtain
redelivery of the Ship when the Ship is released from such requisition;
and
24.6.3 after such release the Lessee shall be given a reasonable opportunity of
removing any such additional equipment as is referred to in clause 20.3
on the terms referred to in such clause.
Provided that nothing in this clause 24.6 shall, where the Lease is
terminated following the issue of a Termination Notice, operate to
modify the dates on which the Lessee is required to make any payments
(whether of any Termination Sum or otherwise) under this Lease.
24.7 Insurance claims during requisition
If the Ship shall be requisitioned for hire, insurance recoveries in
respect of all claims whatsoever (otherwise than in respect of a Total
Loss) arising during the period of requisition shall (to the extent to
which such recoveries have not been expended by the Lessee in repairs to
the Ship and to the extent the Ship is still requisitioned for hire at
the end of the Lease Period) be paid to the Lessor and in respect of any
amount so paid the Lessee shall to that extent be relieved from its
repair obligations under the last sentence of clause 18.1 and under
clause 20.3.
25 Security Provisions
25.1 LC Bank credit review
25.1.1 If at any time during the Primary Period the Credit Rating of the LC
Bank is less than the Minimum LC Bank Credit Rating (other than
following the occurrence of a Relevant Bank Event in relation to such LC
Bank), the Lessor shall be entitled to notify the Lessee in writing
advising the Lessee that either:
(a) notwithstanding the failure of the LC Bank to satisfy the
Minimum LC Bank Credit Rating, the Lessor is willing, but
without prejudice to its rights to exercise its entitlement
under this clause upon a further deterioration in the Credit
Rating or under clause 25.1, to allow the LC Bank to continue as
the "LC Bank" for the purpose of this Lease and the Letter of
Credit; or
(b) the Lessee is required to replace the existing LC Bank with a
Qualifying Replacement Bank acceptable to the Lessor and procure
that such bank executes a new letter of credit on the same
terms, mutatis mutandis, as the existing Letter of Credit.
Upon receipt of the notice from the Lessor pursuant to this
clause advising the Lessee that clause 25.1.1(b) is applicable
the Lessee shall procure that within thirty (30) days of receipt
of such notice the Lessee shall have complied with the
obligations imposed on the Lessee by clause 25.1.1(b).
If the Lessor determines that the Lessee has failed to comply with the
obligations imposed on the Lessee by such sub-clause within the said
thirty (30) day period, the Lessee shall become immediately obliged on
such date to give an irrevocable notice to the Lessor terminating the
Lease Period in accordance with the provisions of clause 3.3 (other than
with respect to the period by such notice) and the Lease Period shall
terminate upon the giving of such notice. Save as set out above, the
provisions of clauses 3.3, 3.4 and 3.5 shall apply to such termination
of the Lease Period.
25.1.2 If at any time during the Primary Period a Relevant Bank Event shall
occur in respect of a Relevant Bank, the Lessee shall, if so requested
by the Lessor by notice in writing and at the Lessor's cost (and at no
cost to the Lessee), consult with the Lessor in relation to the
replacement of that Relevant Bank and generally assist the Lessor, and
take such steps as the Lessee may lawfully and reasonably be able to
take at such time, to replace that Relevant Bank with a Qualifying
Replacement Bank acceptable to the Lessor and to provide assistance in
respect of the issue of a new letter of credit by the replacement LC
bank or, as the case may be, the issue of a new additional security
document on the same terms, mutatis mutandis, as the existing Letter of
Credit or, as the case may be, the Additional Security Document issued
by such Relevant Bank.
25.2 Additional Security re: Strip Liability
25.2.1 Where a new Additional Security Table is required to be prepared by the
Lessor after the Delivery Date in accordance with paragraph 9 of the
Financial Schedule and the Required Security Amount shown in that new
Additional Security Table is a negative figure and in consequence the
Total Security Amount for and during such Security Period as shown in
the new Additional Security Table is greater than the aggregate of the
Letter of Credit Amount, any Additional Security Amount and the Maximum
Unsecured Strip Liability Amount for and during any such Security Period
(including, without limitation, by virtue of the fact that VAT has
become payable on the amount of any Termination Sum payable under this
Lease), the Lessee shall, within thirty (30) days of receipt of written
notice from the Lessor (which notice shall attach new such Additional
Security Table) either:
(a) procure that, subject to the approval of the Lessor, the face
amount of the Letter of Credit is increased by an amount equal
to the Required Security Amount so that, with effect from said
increase, the Total Security Amount for and during each Security
Period shown in such new Additional Security Table is equal to
or less than and will continue to be equal to or less than the
aggregate of the Letter of Credit Amount (as so increased), the
Maximum Unsecured Strip Liability Amount and any Additional
Security Amount in each case for and during each such Security
Period and thereafter; or
(b) constitute to the satisfaction of the Lessor such additional
security as shall be acceptable to the Lessor and having a value
for security purposes (as determined by the Lessor) at the date
upon which such additional security shall be constituted which
is equal to the amount of the Required Security Amount so that,
when aggregated with the amount of the Letter of Credit Amount,
the Maximum Unsecured Strip Liability Amount and any Additional
Security Amount for and during any such Security Period shown in
such new Additional Security Table, shall be at such time, and
will continue to be thereafter, not less than the Total Security
Amount for and during each such Security Period and thereafter;
or
(c) prepay the amount of Primary Rental notified by the Lessor to
the Lessee, following receipt by the Lessor of the written
notice from the Lessee referred to below, in accordance with
paragraph 8 of the Financial Schedule and being in such amount
as will result, taking into account such prepayment, in a
reduction in the Total Security Amount for each Security Period
shown in such new Applicable Security Table such that the Total
Security Amount for and during each Security Period shown in
such new Applicable Security Table is equal or less than and
will continue to be equal to or less than the aggregate of the
Letter of Credit Amount, the Maximum Unsecured Strip Liability
Amount and any Additional Security Amount in each case for and
during each such Security Period and thereafter.
If the Lessee wishes to exercise the option referred to in clause
25.2.1(c) it shall notify the Lessor within five (5) days of receipt of
the notice from the Lessor pursuant to this clause so that the Lessor
can provide the Lessee with a Prepayment Cash Flow (as defined in the
Financial Schedule) for the purpose of paragraph 8 of the Financial
Schedule;
The Lessor agrees that for the purpose of clause 25.2.1(b) the provision
by the Lessee of a letter of credit or bank guarantee from a Qualifying
Replacement Bank on terms acceptable to the Lessor in an amount equal to
the amount of the additional security required to be provided under this
clause shall be acceptable additional security for the purpose of this
clause.
If the action required to be taken by the Lessee under this clause
25.2.1 is not taken within the time period and otherwise on the terms
contained in this clause the Lessor shall have the option to require the
Lessee to terminate the leasing of the Ship under this Lease and if the
Lessor wishes to exercise this option it shall notify the Lessee in
writing whereupon the Lessee shall become immediately obliged to give an
irrevocable notice to the Lessor terminating the Lease Period in
accordance with the provisions of clause 3.3 (other than with respect to
the period of such notice) and the Lease Period shall terminate upon the
giving of such notice. Save as set out above, the provisions of clauses
3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.
25.2.2 Where either an increase in the amount of the Letter of Credit has taken
place or any additional security of the type referred to in clause
25.2.1 has been provided by the Lessee, in each case in accordance with
clause 25.2.1 and has not been released in full by the Lessor and a new
Additional Security Table is required to be prepared by the Lessor in
accordance with paragraph 9 of the Financial Schedule and the Required
Security Amount shown in that new Additional Security Table is a
positive figure and in consequence the Total Security Amount for and
during such Security Period shown in such new Additional Security Table
is less than the aggregate of the Letter of Credit Amount, the Maximum
Unsecured Strip Liability Amount and any Additional Security Amount for
and during such Security Period (taking into account any VAT that may be
payable in respect of the Termination Sum under this Lease) then the
Lessor shall notify the Lessee (with such notice attaching a copy of the
new Additional Security Table) and on the next Adjustment Date falling
at least ten (10) Banking Days after the delivery of such Additional
Security Table, the Lessor shall either agree to a reduction in the
Letter of Credit Amount and/or, depending on the action previously taken
by the Lessee pursuant to clause 25.2.1, shall release (whether in whole
or in part and to the extent applicable) any additional security
provided pursuant to clause 25.2.1 in an amount equal to the amount of
the Required Security Amount shown in the new Additional Security Table
such that following such reduction, amendment or, as the case may be,
release the Total Security Amount for and during such Security Period as
shown in such new Additional Security Table is at such time, and
thereafter will continue to be, equal to or less than the aggregate of
the Letter of Credit Amount, the Maximum Unsecured Strip Liability
Amount and any Additional Security Amount for and during each such
Security Period and, as the case may be, thereafter. It is agreed that
any such reduction, amendment or release pursuant to this clause 25.2.2
shall be without prejudice to the rights of the Lessor to require the
provision of additional security in the manner contemplated, and to the
extent required, by clause 25.2.1.
25.3 Relevant Bank Change of Law Event
Upon the occurrence of a Relevant Bank Change of Law Event in respect of
any Relevant Bank then the Lessee shall, within the Relevant Period
applicable to such Relevant Bank Change of Law Event, either:
25.3.1 change the Relevant Bank Security provided by such Relevant Bank and/or,
as the case may be, replace such Relevant Bank with a Qualifying
Replacement Bank, such that the circumstances constituted by such
Relevant Bank Change of Law Event no longer apply and thereafter enter
into either (a) such supplemental documentation to the Relevant Bank
Security as such Relevant Bank and the Lessor may consider reasonably
necessary or, as the case may be, (b) replacement bank security with any
such replacement bank on the same terms, mutatis mutandis, as the
Relevant Bank Security or with such amendments thereto as the Lessor may
approve;
25.3.2 provide such other security to replace the Relevant Bank Security
provided by such Relevant Bank as the Lessor may approve; or
25.3.3 provide such other additional security as the Lessor may approve which
will result in the Lessor being satisfied that the aggregate of the
payments to be made by such Relevant Bank under the Relevant Bank
Security and the payments receivable by the Lessor in respect of such
additional security will be equal, after the making of the required
deduction or withholding in respect of the Relevant Bank Security, to
the amounts which would have been made by such Relevant Bank to the
Lessor pursuant to such Relevant Bank Security had no such Relevant Bank
Change of Law Event occurred in relation to such Relevant Bank.
If the Lessee fails to take any of the steps referred to in clauses
25.3.1, 25.3.2 or 25.3.3 within such Relevant Period and otherwise on
the terms contained in this clause the Lessor shall have the option to
require the Lessee to terminate the leasing of the Ship under this Lease
and if the Lessor wishes to exercise this option it shall notify the
Lessee in writing whereupon the Lessee shall become immediately obliged
to give an irrevocable notice to the Lessor terminating the Lease Period
in accordance with the provisions of clause 3.3 (other than with respect
to the period of such notice) and the Lease Period shall terminate upon
the giving of such notice. Save as set out above, the provisions of
clauses 3.3, 3.4 and 3.5 shall apply to such termination of the Lease
Period.
The provisions of this clause 25.3 are subject to the issue of a notice
by the Lessor pursuant to the provisions of clause 25.10.
25.4 Relevant Bank Illegality Event
Upon the occurrence of a Relevant Bank Illegality Event in respect of
any Relevant Bank then the Lessee shall, within the Relevant Period
applicable to such Relevant Bank Illegality Event, either:
25.4.1 change the Relevant Bank Security provided by such Relevant Bank and/or,
as the case may be, replace such Relevant Bank with a Qualifying
Replacement Bank, such that the circumstances constituted by such
Relevant Bank Illegality Event no longer apply and thereafter enter into
either (a) such supplemental documentation to the Relevant Bank Security
as such Relevant Bank and the Lessor may consider reasonably necessary
or, as the case may be, (b) replacement bank security with any such
replacement bank on the same terms, mutatis mutandis, as the Relevant
Bank Security or with such amendments thereto as the Lessor may approve;
or
25.4.2 provide such other security to replace the Relevant Bank Security
provided by such Relevant Bank as the Lessor may approve.
If the Lessee fails to take any of the steps referred to in clauses
25.4.1 or 25.4.2 within such Relevant Period and otherwise on the terms
contained in this clause the Lessor shall have the option to require the
Lessee to terminate the leasing of the Ship under this Lease and if the
Lessor wishes to exercise this option it shall notify the Lessee in
writing whereupon the Lessee shall become immediately obliged to give an
irrevocable notice to the Lessor terminating the Lease Period in
accordance with the provisions of clause 3.3 (other than with respect to
the period by such notice) and the Lease Period shall terminate upon the
giving of such notice. Save as set out above, the provisions of clauses
3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.
The provisions of this clause 25.4 are subject to the issue of a notice
by the Lessor pursuant to the provisions of clause 25.10.
25.5 Termination security requirements
25.5.1 If at any time after Delivery the leasing of the Ship shall be
terminated, whether pursuant to clauses 3.3, 3.4, 3.7, 22 or 27 or
otherwise, and at the time of such termination the Lessor shall not have
finally agreed with the Board of Inland Revenue the Lessor's Corporation
Tax computations regarding any liabilities to Corporation Tax (the
"Potential Liabilities") which it may have with respect to the leasing
of the Ship to the Lessee under this Lease or the termination of such
leasing and the sale of the Ship (and which will be taken into account
under the Financial Schedule) or if there shall be a dispute (of
whatsoever nature) between the Lessor and the Board of Inland Revenue
regarding the Lessor's Corporation Tax computations of the Potential
Liabilities, the Lessee shall ensure and (when such termination is a
voluntary termination) as a condition to the consent of the Lessor to
such voluntary termination that all the existing security including,
without limitation, the Letter of Credit and any Additional Security
held by the Lessor at the time of such termination shall remain in full
force and effect until such time as the Board of Inland Revenue shall
have finally agreed the Lessor's said Corporation Tax computations.
25.5.2 If the Lessor is of the opinion that the amount of such existing
security shall not be sufficient to secure the Potential Liabilities the
Lessee shall and (where such termination is a voluntary termination) as
a condition to the consent of the Lessor to such voluntary termination,
constitute to the satisfaction of the Lessor such additional security as
shall be acceptable to the Lessor and having a value, for security
purposes (as calculated by the Lessor), at the date upon which such
further security shall be constituted as the Lessor, in its opinion,
calculates will, when aggregated with any existing security, secure the
Potential Liabilities (after taking into account the relevant
circumstances in which the termination has arisen and the arrangements
relating to the Ship which have taken place or are proposed shall take
place in respect of the disposal of the Ship at such time including,
without limitation, the amount of any Net Sale Proceeds or Net Total
Loss Proceeds received or receivable by the Lessor at such time). For
the purpose of this clause, the Lessor agrees to discuss any such
voluntary termination with the Lessee and agrees to accommodate, where
possible, any requests that the Lessee may make to increase the
efficiency of the said voluntary termination and thereby reduce any
Potential Liabilities.
25.5.3 For the purposes of this clause 25.5, the Lessor's and Lessor Agent's
Corporation Tax computations for an Accounting Period shall be treated
as having been agreed with the Board of Inland Revenue on the later of:
(a) the seventh (7th) anniversary of the Final Date; or
(b) the date on which the Lessor and Lessor Agent determine, acting
reasonably and in good faith, and certify in writing to the
Lessee, as being the date on which they are satisfied that the
Corporation Tax computations for all Accounting Periods of the
Lessor and Lessor Agent have become conclusive and the Inland
Revenue shall have no powers to reopen assessment of such
Corporation Tax computations in the absence of fraud or wilful
neglect on the part of the Lessor or Lessor Agent.
25.5.4 If the Lessor is of the opinion that the amount of the security required
to be provided to secure the Potential Liabilities (and after taking
into account the relevant circumstances in which the termination has
arisen including, without limitation, the amount of any Net Sales
Proceeds or Net Total Loss Proceeds received or receivable by the
Lessor) is in fact less than the amount of the security held by the
Lessor at the time of termination of the leasing of the Ship then the
Lessor shall, at the time of termination and, to the extent that the
relevant security held by the Lessor at such time permits partial
release or reductions, release the amount of the surplus security to the
Lessee. Notwithstanding the generality of the foregoing, if security has
been provided in respect of a Potential Liability which is attributable
to an accounting period and the Lessor's and Lessor Agent's Corporation
Tax computation for that period is treated as agreed or determined in
accordance with the provisions of this clause 25.5, the Lessor shall
release such security to the extent that it exceeds the actual
Corporation Tax, as so determined or agreed, relating to that accounting
period.
25.5.5 If any security is required to be retained by the Lessor pursuant to
this clause then the Lessee shall be entitled to send a written notice
to the Lessor requesting that any or all of the existing security be
replaced by alternative security acceptable to the Lessor and in an
amount sufficient to secure the relevant Potential Liabilities and the
Lessor agrees to consider and discuss with the Lessee, in good faith,
any such alternative security proposals.
25.5.6 Where any opinion or accommodation is to be exercised or given by the
Lessor pursuant to this clause 25.5 it shall be exercised or given by
the Lessor in its sole and absolute discretion but in so exercising or
giving that opinion the Lessor shall act reasonably and in good faith.
25.6 Termination of Time Charter
If the chartering of the Ship under the Time Charter shall at any time
be terminated (including, without limitation, by effluxion of time) and
within ninety (90) days of such termination either:
25.6.1 the Time Charter is not replaced by a new time charter entered into by
the Sub-Lessee with the Time Charterer on substantially the same terms
(except as to term) as the Time Charter (including, without limitation,
in relation to the amount of charterhire); or
25.6.2 a new time charter is not entered into by the Sub-Lessee with a time
charterer who has a minimum credit rating of BBB+ by Standard & Poor's
or Baa1 with Xxxxx'x (a "Rated Time Charterer") or with another major or
national company approved by the Lessor (in its absolute discretion)
pursuant to clause 15.2.21 notwithstanding that such company is not a
Rated Time Charterer,
the Lessee shall, within ten (10) Banking Days of its receipt of written
notice from the Lessor constitute to the satisfaction of the Lessor such
additional security as shall be acceptable to the Lessor and having a
value for security purposes (as determined by the Lessor) at the date
upon which such additional security shall be constituted equal to the
Strip Liability Amount at such time and during each Security Period
falling thereafter and any other unsecured obligations of the Lessee
under this Lease and the other Lease Documents.
Where the Lessee is required to provide security to the Lessor pursuant
to this clause 25.6, the Lessor agrees that it will consider, but in its
absolute discretion and without obligation, a request from the Lessee
that the Lessor accept additional security of an amount less than the
Strip Liability Amount and any other unsecured obligations of the Lessee
under this Lease and the other Lease Documents to recognise any
available security value in the Ship at that time.
The Lessor agrees that for the purpose of clause 25.6 the provision by
the Lessee of a letter of credit or bank guarantee from a Qualifying
Replacement Bank acceptable to the Lessor, on terms acceptable to the
Lessor and in an amount equal to the amount of the additional security
required to be provided under this clause shall be acceptable additional
security for the purpose of this clause.
If the action required to be taken by the Lessee under this clause 25.6
is not taken within the time period and otherwise on the terms contained
in this clause the Lessor shall have the option to require the Lessee to
terminate the leasing of the Ship under this Lease and if the Lessor
wishes to exercise this option it shall notify the Lessee in writing
whereupon the Lessee shall become immediately obliged to give an
irrevocable notice to the Lessor terminating the Lease Period in
accordance with the provisions of clause 3.3 (other than with respect to
the period of such notice) and the Lease Period shall terminate upon the
giving of such notice. Save as set out above, the provisions of clauses
3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.
Where the Time Charter is replaced in accordance with clauses 25.6.1 or
25.6.2 then the provisions of this clause 25.6 shall apply with equal
effect to any subsequent termination of the chartering of the Ship under
such replacement Time Charter.
25.7 [Clause intentionally deleted]
25.8 Required Security Amount
25.8.1 On the first day of each Adjustment Period, the Lessor shall notify the
Lessee in writing and shall advise the Lessee of the amount (the
"Applicable LC Increased Amount") by which the amount of the security
required to be provided by the Lessee pursuant to the Letter of Credit
Amount for the Security Period commencing on the first day of the
relevant Adjustment Period needs to increase so that during each day of
that Security Period the Letter of Credit Amount is equal to the
Required LC Amount during each day of that Security Period. The Lessor
shall, as contemplated by paragraph 2(a) of the Letter of Credit, copy
to the LC Bank any such notice delivered to the Lessee pursuant to this
sub-clause at the same time such notice is delivered to the Lessee.
25.8.2 Following receipt of any written notice from the Lessor pursuant to
clause 25.8.1, if the Applicable LC Increased Amount for each day of the
relevant Security Period exceeds the Variable Liability Amount of the LC
Bank for each corresponding day of that Security Period as notified by
the LC Bank to the Lessor pursuant to paragraph 2(b) of the Letter of
Credit, the Lessee shall, on or before the date falling five (5) Banking
Days after the commencement of the relevant Adjustment Period referred
to in clause 25.8.1, procure that the LC Bank agrees, by means of the
issue of a notice pursuant to paragraph 2(c) of the Letter of Credit, to
increase the Letter of Credit Amount by an amount equal to the relevant
shortfall such that the Applicable LC Increased Amount set out in that
written notice for each day falling during that Security Period is equal
to or less than the Variable Liability Amount for each day falling
during that Security Period.
25.8.3 In addition to the obligations contained in clause 25.8.2, if at any
time the Fixed Liability Amount shall be less than the Required LC
Amount during any Security Period, the Lessor shall be entitled to
notify the Lessee in writing not less than fifteen (15) Banking Days
prior to the commencement of the relevant Security Period in which such
shortfall shall arise and, upon receipt of that written notice, the
Lessee shall, not later than ten (10) Banking Days prior to the
commencement of the relevant Security Period, procure that the LC Bank
agrees to increase the Letter of Credit Amount, in accordance with the
provisions of paragraph 2(e) of the Letter of Credit, by an amount equal
to the relevant shortfall and with effect from the commencement of the
relevant Security Period such that with effect from the commencement of
the relevant Security Period, the Fixed Liability Amount shall,
following the relevant increase, be equal to the Required LC Amount for
that Security Period and thereafter.
25.8.4 The provisions of this clause 25.8 set out the primary security
requirements of the Lessor and apply independently of clause 25.2.
25.9 General
For the purpose of this clause 25, the value of any additional security
provided or to be provided to the Lessor shall be determined by the
Lessor without any necessity for the Lessor giving to the Lessee any
reason for that determination save that:
25.9.1 where such additional security is constituted by security over cash
deposits, the value of such additional security shall be equal to the
amount of such cash deposit at any relevant time; and
25.9.2 where such additional security comprises a letter of credit or demand
guarantee issued by a Qualifying Replacement Bank, the value of such
additional security shall be the face value of such letter of credit or
demand guarantee.
In connection with any Additional Security provided, or any replacement
of the LC Bank effected, in accordance with this clause 25, the Lessor
shall be entitled to receive such evidence and documents of the kind
referred to in Schedule 1 as may in the Lessor's opinion be appropriate
and such favourable legal opinions as the Lessor shall in its reasonable
discretion require and the Lessor and the Lessee shall agree, as a
condition precedent to the implementation of such security arrangements,
such reasonable changes to the terms of this Lease and any of the other
Relevant Documents as the Lessor considers necessary having regard to
the proposed nature of the change or changes to the security
arrangements in respect of this Lease. Any Additional Security shall,
unless otherwise agreed by the Lessor, be free from Encumbrances other
than any Encumbrance in favour of the Lessor.
25.9.3 If either party becomes aware of the occurrence of a Relevant Bank
Change of Law Event or a Relevant Bank Illegality Event, then it shall
promptly notify the other in writing.
25.9.4 Where any replacement security is to be provided by a Relevant Bank
(other than the Initial LC Bank) the Lessor shall be entitled, as a
condition to the Lessor's acceptance of such Relevant Bank and without
prejudice to any other conditions which may be imposed in connection
with such replacement security, to require that a minimum Credit Rating
test be applied in respect of such Relevant Bank.
25.10 Letter of Credit Adverse Event and liability reduction notice
25.10.1 If the Lessor receives an Adverse Event Notice pursuant to paragraph 11
of the Letter of Credit then, without prejudice to the provisions of
clauses 25.3 and 25.4, the Lessor agrees to consult with the LC Bank,
the Lessee and the Lessee Parent in accordance with paragraph 11(b) of
the Letter of Credit where such consultation is contemplated by the said
paragraph 11(b). If, notwithstanding any such applicable consultation
(where consultation is to take place pursuant to the said paragraph
11(b)), the LC Bank serves a notice on the Lessor pursuant to paragraph
11(c) of the Letter of Credit and, at the time that notice is served,
the Lessee has not complied with its obligations under clauses 25.3.1,
25.3.2 or 25.3.3 or, as applicable, clauses 25.4.1 or 25.4.2 in respect
of that Adverse Event, then the Lessor shall be entitled to serve a
written notice on the Lessee and in such circumstances the issue of that
notice shall give rise to a Termination Event pursuant to clause
26.1.3(d).
25.10.2 If the Lessor does not receive a notice from the LC Bank pursuant to
paragraph 2(e) of the Letter of Credit advising the Lessor that the
Fixed Liability Amount shall not increase by an amount equal to the
applicable Additional Amount by which the Fixed Liability Amount is
intended to increase at such time in accordance with the provisions of
the said paragraph 2(e) then, without prejudice to the provisions of
clause 25.8.3, the Lessor shall be entitled to serve a written notice on
the Lessee and in such circumstances the issue of that notice shall give
rise to a Termination pursuant to clause 26.1.3(d).
25.11 Demands under the Letter of Credit
The Lessor will not make a demand under a Letter of Credit unless and
until:
25.11.1 the Termination Sum has become due and payable (having regard to clause
27.4.1(a) for this purpose); and
25.11.2 the Termination Sum has not been paid in full on the due date for
payment.
26 Termination Events
26.1 Termination Events
The Lessor and the Lessee agree that it is a fundamental term and
condition of this Lease that none of the following events shall occur
during the Lease Period and that the occurrence of any of the following
events shall constitute a repudiatory breach of this Lease by the
Lessee:
26.1.1 Non-payment: any Relevant Party fails to pay any sum payable by it under
any of the Relevant Documents at the time, in the currency and in the
manner stipulated in the Relevant Documents (and so that, for this
purpose, sums payable on demand shall be treated as having been paid at
the stipulated time if paid within three (3) Banking Days of demand); or
26.1.2 Breach of Insurance and certain other obligations:
(a) the Lessee fails to obtain and/or maintain the Insurances or if
any insurer in respect of the Insurances cancels the Insurances
or disclaims liability by reason of mis-statement in any
proposal for the Insurances or for any other failure or default
on the part of the Lessee, the Sub-Lessee, the Manager or any
other member of the Golar Gas Group; or
(b) the Lessee fails to comply with its obligations under clauses
11.1.9 or 11.1.10; or
26.1.3 Security provision: the Lessee:
(a) fails to comply with any obligation on its part contained in
clause 25 to provide Additional Security for its obligations
hereunder within the time provided in that clause; or
(b) fails to give any notice of termination required to be given
under, and within the time period specified in, the relevant
sub-clauses of clause 25; or
(c) fails to perform its obligations under clauses 25.8.2 and 25.8.3
within the time period provided in those clauses; or
(d) the Lessor services a notice on the Lessee pursuant to clauses
25.10.1 or 25.10.2;
26.1.4 Breach of other obligations: any Relevant Party commits any breach of or
omits to observe any of the obligations or undertakings expressed to be
assumed by it under any of the Relevant Documents (other than those
referred to in clauses 15.2.19, 26.1.1, 26.1.2 and 26.1.3) and in
respect of any such breach or omission which is capable of remedy,
within ten (10) Banking Days of the Lessor notifying such Relevant Party
of such breach or omission, the Lessee has not demonstrated to the
reasonable satisfaction of the Lessor that such breach or omission has
been remedied; or
26.1.5 Misrepresentation: any representation or warranty made or deemed to be
made or repeated by any Relevant Party in or pursuant to any of the
Relevant Documents or in any document or certificate or statement
referred to in or delivered under any of the Relevant Documents is or
proves to have been incorrect in any material respect when made or
deemed to be made or repeated unless the circumstances giving rise to
the incorrectness are, in the reasonable opinion of the Lessor, capable
of remedy and are remedied within ten (10) Banking Days of the Lessor
notifying the Relevant Party of the requirement to remedy; or
26.1.6 Cross-default:
(a) at any time the aggregate amount at such time of:
(i) any Borrowed Money or Swap Liabilities of any Relevant
Party or any other member of the Lessee Group which is
not paid when due and remains unpaid;
(ii) any Borrowed Money of any Relevant Party or any other
member of the Lessee Group which has become (whether by
declaration or automatically in accordance with the
relevant agreement or instrument constituting the same),
or is capable of being declared due and payable prior to
the date when it would otherwise have become due (unless
as a result of the exercise by the relevant person of a
voluntary right of prepayment or upon mandatory
prepayment as a result of a change of law or other
circumstances not constituting an event of default
under, or breach of, any agreement regulating and/or
securing the relevant Borrowed Money);
(iii) any facility or commitment available to any Relevant
Party or any other member of the Lessee Group relating
to Borrowed Money which has been withdrawn, suspended or
cancelled by reason of any default (however described)
of the person concerned;
(iv) the amount of Swap Liabilities of any Relevant Party or
any other member of the Lessee Group which are due or
capable of being declared due upon early termination of
the relevant transaction by the relevant counterparty;
and
(v) any amounts demanded of, but not paid when due and
remaining unpaid by any Relevant Party or any other
member of the Lessee Group under any guarantee in
respect of Borrowed Money or Swap Liabilities,
exceeds five million Dollars ($5,000,000); or
(b) any event set out in clause 26 of any Other Ship Lease occurs
and is continuing;
26.1.7 Legal process: any judgment or order made against any Relevant Party is
not stayed or complied with within seven (7) days or a creditor attaches
or takes possession of, or a distress, execution, sequestration or other
process is levied or enforced upon or sued out against, any material
part (in the reasonable opinion of the Lessor) of the undertakings,
assets, rights or revenues of any Relevant Party and is not discharged
within seven (7) days; or
26.1.8 Insolvency: the Sub-Lessee or the Manager is deemed unable to pay its
debts within the meaning of section 123(1)(a), (b), (c) or (2) of the
Insolvency Xxx 0000 or any other Relevant Party becomes insolvent under
the applicable insolvency laws of the place of incorporation of such
Relevant Party or stops or suspends making payments (whether of
principal or interest) with respect to all or any class of its debts or
announces an intention to do so; or
26.1.9 Reduction or loss of capital: a meeting is convened (without the prior
written approval of the Lessor) by any Relevant Party for the purpose of
passing any resolution to purchase, reduce or redeem any of its share
capital; or
26.1.10 Winding up: any petition is presented or other step is taken for the
purpose of winding up any Relevant Party (not being a petition which the
Lessee or such other Relevant Party can demonstrate to the satisfaction
of the Lessor, by providing an opinion of leading counsel to that
effect, is frivolous, vexatious or an abuse of the process of the court
or relates to a claim to which such Relevant Party has a good defence
and which is being vigorously contested by such Relevant Party and in
respect of which reserves acceptable to the Lessor have been made) or an
order is made or resolution passed for the winding up of any Relevant
Party or a notice is issued convening a meeting for the purpose of
passing any such resolution; or
26.1.11 Administration: any petition is presented or other step is taken for the
purpose of the appointment of an administrator of any Relevant Party or
the Lessor believes that any such petition or other step is imminent or
an administration order is made in relation to any Relevant Party; or
26.1.12 Appointment of receivers and managers: any administrative or other
receiver is appointed of any Relevant Party or any material part (in the
reasonable opinion of the Lessor) of its assets and/or undertaking or
any other steps are taken to enforce any Encumbrance over all or any
material part (in the reasonable opinion of the Lessor) of the assets of
any Relevant Party; or
26.1.13 Compositions: any steps are taken, or negotiations commenced, by any
Relevant Party or by any of its creditors with a view to the general
readjustment or rescheduling of all or part of its Indebtedness or to
proposing any kind of composition, compromise or arrangement involving
such company and any of its creditors; or
26.1.14 Analogous proceedings: there occurs, in relation to any Relevant Party
in any country or territory in which any of them carries on business or
to the jurisdiction of whose courts any part of their assets is subject,
any event which, in the reasonable opinion of the Lessor, appears in
that country or territory to correspond with, or have an effect
equivalent or similar to, any of those mentioned in clauses 26.1.8 to
26.1.12 (inclusive) or any Relevant Party otherwise becomes subject, in
any such country or territory, to the operation of any law relating to
insolvency, bankruptcy or liquidation; or
26.1.15 Cessation of business: any Relevant Party suspends or ceases or
threatens to suspend or cease to carry on the whole or a substantial
part of its business; or
26.1.16 Repudiation: any Relevant Party repudiates any of the Relevant Documents
or does or causes or permits to be done any act or thing evidencing an
intention to repudiate any of the Transaction Documents or if the
validity or enforceability of any of the Relevant Documents shall at any
time and for any reason be contested by any Relevant Party which is a
party thereto, or if any such Relevant Party shall deny that it has any,
or any further, liability thereunder; or
26.1.17 Arrest: the Ship is arrested, confiscated, seized, taken in execution,
impounded, forfeited, detained in exercise or purported exercise of any
possessory lien or other claim, or otherwise taken from the possession,
other than due to a Lessor's Encumbrance, of the Lessee and/or, during
the Sub-Lease Period, the Sub-Lessee and the Lessee and/or, during the
Sub-Lease Period, the Sub-Lessee shall fail to procure the release of
the Ship within a period of ten (10) Banking Days; or
26.1.18 Environment: the Lessee and/or the Sub-Lessee and/or any of their
respective Environmental Affiliates fails to comply with any
Environmental Law or any Environmental Approval or the Ship or any other
Relevant Ship is involved in an Environmental Incident which gives rise
or would be likely to give rise to Environmental Claims which could, in
the opinion of the Lessor, be expected to have a material adverse effect
on the business, assets, operations, property or financial condition of
the Lessee Group taken as a whole; or
26.1.19 Qualifying purpose: if, during the designated period (as defined in
section 106 CAA), the Ship shall be used in a manner or for a purpose
which results in the application of sections 109, 110, 111, 112, 113 and
117 CAA (including, without limitation and where applicable, in
circumstances arising in consequence of the conversion of the Time
Charter into a bareboat charter pursuant to clause 46(b)(ii) of the Time
Charter); or
26.1.20 Lessee ceases to be Subsidiary: (a) the Lessee shall cease to be a
wholly owned subsidiary of Gotaas Xxxxxx or (b) Gotaas Xxxxxx shall
cease to be a wholly owned subsidiary of the Lessee Parent or (c) the
Relevant Shareholder shall cease to directly or indirectly, legally and
beneficially own twenty five percent (25%) or more of the issued and
outstanding share capital of the Lessee Parent; or
26.1.21 Termination of Sub-Lease: the Sub-Lease terminates for any reason
whatsoever.
26.2 Mandatory Prepayment Events
Each of the following shall be a Mandatory Prepayment Event for the
purpose of this Agreement:
26.2.1 Seizure: all or a material part of the undertaking, assets, rights or
revenues of, or shares or other ownership interest in, any Relevant
Party are seized, nationalised, expropriated or compulsorily acquired by
or under the authority of any government in any manner which would, in
the reasonable opinion of the Lessor, affect the ability of the Relevant
Party to perform its obligations under the Relevant Documents to which
it is a party; or
26.2.2 Invalidity: (except where due to a Relevant Bank Illegality Event in
which case clause 25.4 shall apply) any of the Relevant Documents shall
at any time and for any reason become invalid or unenforceable or
otherwise cease to remain in full force and effect and (unless in the
reasonable opinion of the Lessor any such invalidity or unenforceability
is incapable of rectification or remedy) the Relevant Party shall have
failed to procure within ten (10) Banking Days notice from the Lessor to
do so that the foregoing is no longer invalid or unenforceable; or
26.2.3 Unlawfulness: (except where due to a Relevant Bank Illegality Event in
which case clause 25.4 shall apply) it becomes impossible or unlawful at
any time for any Relevant Party or the Standby Purchaser to fulfil any
of the covenants and obligations expressed to be assumed by it in any of
the Relevant Documents or for the Lessor to exercise the rights or any
of them vested in it under any of the Relevant Documents or otherwise
and (unless in the reasonable opinion of the Lessor any such
impossibility or unlawfulness is incapable of rectification or remedy)
the Relevant Party or the Standby Purchaser shall have failed to procure
within ten (10) Banking Days notice from the Lessor to do so that the
foregoing is no longer impossible or unlawful; or
26.2.4 Change in Law: there occurs any Change in Law (considered by the Lessor
in its absolute discretion, to be materially adverse to the Lessor's
interests) pursuant to which there is, in the Lessor's opinion, a
potential risk of the Lessor incurring any liability or increased
liability to any third party by virtue of its rights in relation to the
Ship or otherwise in connection with the Relevant Documents and/or the
rights and obligations of the Lessor thereunder and (a) such liability
or increased liability is not, or does not continue to be, covered by
insurance which is, in the reasonable opinion of the Lessor,
satisfactory having regard to such liability or increased liability or
(b) such potential risk is not promptly removed or terminated by the
Lessee moving the Ship to, and keeping the Ship in, a location or
locations to which such potential risk would not apply or (c) such other
steps as the Lessor considers reasonably necessary to remove such
potential risk in such circumstances are not promptly taken by the
Lessee.
27 Lessor's rights following a Termination Event and Mandatory Prepayment
Event
27.1 Termination rights and payments
At any time after the occurrence of any Termination Event (and provided
that the same is continuing) the Lessor may, by notice to the Lessee,
accept any repudiation by the Lessee of this Lease constituted by the
occurrence of that Termination Event (whereupon, the Lessee agrees and
acknowledges, the Lessee's and the Sub-Lessee's right, title and
interest in and to the Ship and to possess and operate the Ship, shall
terminate) and, subject to the terms of the Quiet Enjoyment Letter,
retake possession of the Ship and the Lessee agrees that the Lessor may
for this purpose enter upon any premises belonging to or in the
occupation or under the control of the Lessee where the Ship or any part
thereof may be located and upon the serving of the Termination Notice
(and irrespective of whether possession is retaken by the Lessor) the
Lessee shall pay to the Lessor forthwith upon such termination such sum
as shall equal the aggregate of:
27.1.1 all amounts due under this Lease and any of the other Lease Documents as
shall be payable and remain outstanding; and
27.1.2 all Indemnity Losses (as defined in clause 9.4 but which Indemnity
Losses shall not include, for the avoidance of doubt, any loss of profit
other than any Termination Fee) incurred by the Lessor in connection
with such termination including, without prejudice to the generality of
the foregoing, all costs and expenses so incurred in recovering
possession of the Ship or any part thereof and in carrying out any works
or modifications required to bring the Ship or any part thereof up to
the condition specified in clause 18.1,
and the Lessee shall also pay to the Lessor forthwith upon such
termination by way of agreed compensation and not as a penalty the
amount of the Termination Sum as at the date of termination.
If a Termination Notice is served pursuant to this clause 27.1, the
Termination Sum shall become due in accordance with such notice and this
clause 27.1 notwithstanding the existence of a Total Loss at such time.
27.2 Application of Net Sale Proceeds
Without prejudice to the obligation of the Lessee to make the payments
referred to in clause 27.1, upon any such termination as is referred to
in clause 27.1 and provided that the Lessor shall not be prevented from
so doing for any reason whatsoever (including, without limitation, if
prevented from doing so by reason of the provisions of clause 9 of the
Proceeds Deed), the Lessor or, where applicable, the Relevant Security
Agent as agent of the Lessor pursuant to the provisions of clause 9 of
the Proceeds Deed shall endeavour to sell the Ship as soon as
practicable. The Net Sale Proceeds shall be applied by the Lessor as
follows:
27.2.1 first, in retention by the Lessor of an amount equal to one tenth of one
per cent (0.1%) of the Net Sale Proceeds;
27.2.2 secondly, in retention by the Lessor of an amount equal to the lesser
of:
(a) all or any part of the Termination Sum which the Lessee shall
not, on or before the date of application of the Net Sale
Proceeds, have paid to the Lessor in accordance with clause
27.1; and
(b) the balance of the Net Sale Proceeds;
27.2.3 thirdly, in or towards settlement of any other amounts owing by the
Lessee to the Lessor under this Lease or any of the other Lease
Documents (including any interest due in respect thereof);
27.2.4 fourthly, by way of rebate of Rental, in or towards settlement of any
amounts owing to the Other Lessors under the Other Ship Leases or any of
the Other Ship Relevant Documents, such amounts to be paid to the Lessor
Agent for application in accordance with clause 4.3 of the Agency and
Trust Deed and clauses 27.2.2 and 27.2.3 of each of the Other Ship
Leases;
27.2.5 fifthly, in or towards refunding to the Lessee by way of rebate of
Rental an amount equal to all Rental (including, without limitation, any
Termination Sum) paid to the Lessor by the Lessee under this Lease; and
27.2.6 sixthly, to the Lessee, by way of sales commission or otherwise as
appropriate.
27.3 Mandatory Prepayment
On or at any time after the occurrence of a Mandatory Prepayment Event
and whilst it is continuing:
27.3.1 the Lessor may, by notice to the Lessee after the Delivery Date, elect
to treat the occurrence of that event as constituting notice by the
Lessee pursuant to clause 3.3 but without reference to the notice period
referred to in that clause;
27.3.2 on the date falling five (5) Banking Days after the date of the notice
from the Lessor referred to in clause 27.3.1, the Lessee will pay to the
Lessor the amounts referred to in clause 27.1 as at the required date of
that payment;
27.3.3 the Lessor will use reasonable endeavours to sell the Ship in accordance
with the applicable provisions of clause 3;
27.3.4 any Net Sale Proceeds from a sale of the Ship pursuant to clause 27.3.3
will be applied in the manner described in clause 3.4 or, if a
Termination Event has occurred and is continuing at the time of receipt
of the Net Sale Proceeds, clause 27.2;
27.3.5 with effect on and from the date of the payment by the Lessee of all
amounts pursuant to clause 27.3.2, the Lessee shall cease to be liable
to pay Rental under this Lease but without prejudice to the Lessee's
obligations pursuant to paragraphs 4, 6 and/or 7 of the Financial
Schedule; and
27.3.6 notwithstanding anything else to the contrary in this Lease but subject
to any rights of the Lessor under this Lease following the occurrence of
a Termination Event, the Lease Period will continue until and end on the
date on which the Ship is delivered to a purchaser of the Ship following
a sale pursuant to clause 27.3.3.
27.4 Termination Sum liabilities
27.4.1 Limitation on recourse
Notwithstanding anything to the contrary expressed or implied herein,
where the Termination Sum becomes payable by the Lessee pursuant to
clauses 27.1 or 27.3.1 or, if at the time of any voluntary termination
of the leasing of the Ship pursuant to clause 3.3 a Relevant Bank Event
has arisen, the Lessor shall have no recourse against the Lessee or any
of the assets and undertakings of the Lessee in respect of such part of
the Termination Sum as is equal to the Applicable Security Amount at the
relevant time and the relevant part of the Termination Sum which is
equal to the said Applicable Security Amount shall be recoverable by the
Lessor only from and to the extent of the payments made by a Relevant
Bank under the Letter of Credit or other Additional Security Document.
The limitation on recourse contained in this clause 27.4 is given on the
basis that:
(a) the foregoing limitation on recourse shall be ignored in the
determination of the Lease Obligations and the Lease Obligations
shall include all moneys, obligations and liabilities which are
to be paid, repaid, performed, satisfied or discharged by the
Lessee, notwithstanding the foregoing limitation of recourse;
(b) to the extent that a claim or proof is a necessary procedural
step to enable the realisation or enforcement of the full
benefit of this Lease or the other Relevant Documents, or to the
exercise by the Lessor of any right, title, interest and benefit
in, to, under or pursuant to this Lease and the other Relevant
Documents, the Lessor shall be entitled to make or file a claim
or proof in any Insolvency Event in relation to the Lessee, but
not itself to take any legal action or proceeding to instigate
any such Insolvency Event in respect of amounts to which the
obligations of the Lessee are limited recourse pursuant to this
clause; and
(c) save where the Lessor has agreed to limit its rights of recourse
against the Lessee under, or as referred to in, this clause
27.4, the Lessor shall have full recourse against the Lessee in
respect of all of the Lease Obligations. Accordingly, and
without limiting the generality of the foregoing, to the extent
that the Termination Sum and any other amounts due and owing by
the Lessee to the Lessor under this Lease and the other Lease
Documents exceeds the Applicable Security Amount at the
applicable time, the Lessee shall be obliged to make payment for
the relevant excess in full and the Lessor shall have full
recourse to the Lessee and its assets to the extent that such
payment is not made.
Where the limitation on recourse arises by reason of the existence of a
Relevant Bank Event at the time of any termination of the leasing of the
Ship pursuant to clause 3.3, the Lessee acknowledges and agrees that the
Lessor shall be entitled to make a demand and/or, as the case may be,
exercise all its rights under any Letter of Credit or Additional
Security Document provided by that Relevant Bank.
27.4.2 Suspense accounts
Any money received by the Lessor under any Letter of Credit or any
Additional Security Document may, following the occurrence of an
Insolvency Event in respect of either the Lessee or the Lessee Parent
which is continuing, be placed by the Lessor to the credit of an
interest bearing suspense account with the Account Bank with a view to
preserving the rights of the Lessor to prove for the whole of its claims
against the Lessee and/or the Lessee Parent or any other person liable
or, as the Lessor may elect, may be applied in or towards satisfaction
of the amounts then due and payable to the Lessor under the Lease
Documents.
28 Notices
Every notice, request, demand or other communication under this Lease or
any of the other Lease Documents shall:
28.1.1 be in writing delivered personally or by first class prepaid letter
(airmail if available), or facsimile transmission or other means of
communication in permanent written form;
28.1.2 be deemed to have been received, subject as otherwise provided in this
Lease, in the case of a letter, when delivered personally or five (5)
days after it has been put to the post and, in the case of a facsimile
transmission or other means of telecommunication or permanent written
form, at the time of despatch (provided that if the date of despatch is
not a business day in the country of the addressee it shall be deemed to
have been received at the opening of business on the next such business
day); and
28.1.3 be sent:
(1) to the Lessor at
x/x Xxxxxxxxx Xxxxx
XX Xxx 000
298 Deansgate
Manchester M3 4HH
Fax No 0000 000 0000
Attention: Corporate Administration Manager
(2) to the Lessee at:
00 Xxxxx Xxxx
Xxxxxx X00 0XX
Fax No: (00) 000 000 0000
Attention: the President
or to such other address, and/or numbers as is notified by one party to
the other under this Lease.
29 Liens and indemnities
29.1 No authority to impose liens
Neither the Lessee nor the Master of the Ship shall have any right,
power or authority to create incur or permit to be imposed upon the Ship
any liens whatsoever except for Permitted Liens. The Lessee agrees to
exhibit a certified copy of this Lease with the Ship's papers and to
exhibit the same to any person having business with the Ship which might
give rise to any lien thereon other than Permitted Liens.
The Lessee further agrees to fasten to the Ship in a conspicuous place
and to keep so fastened during the Lease Period a notice reading as
follows:
"This Ship is the property of Xxxxx Xxxxxxx (Bermuda) Limited (whose
name is to be changed to Sovereign Xxxxxxx Limited) (the "Lessor") and
is under demise charter to Golar Gas Holding Company, Inc. (the
"Lessee") and sub-demise charter to Xxxxx Xxxxxxx UK Ltd. (the
"Sub-Lessee") and, by the terms of the Lease, neither the Lessee, the
Sub-Lessee nor the Master nor any servant or agent thereof has any
right, power or authority whatsoever to contract on behalf of the Lessor
or to pledge the Lessor's credit or to involve the Lessor in any
liability whatsoever or to create, incur, or permit to be imposed on the
Ship any lien whatsoever except for general average, crews' wages and
salvage",
or in such other form as the Lessor may reasonably require from time to
time.
The Lessee shall not remove or cover up such notice and will not place
or permit to be placed any other notice (affecting the ownership of the
Ship or otherwise relating to the rights of the Lessor and dealing with
the rights of any person other than the Lessor, the First Security Agent
and the Second Security Agent) in or on the Ship without the prior
written consent of the Lessor (such consent not to be unreasonably
withheld so long as the same is not inconsistent with the rights of the
Lessor.
The Lessee agrees to give written instructions with regard to the
foregoing matters to the Master of the Ship, such instructions to be in
such terms as may from time to time be required by the Lessor.
29.2 Release from arrest: Lessor's vessels
If the Ship or any other vessel for the time being owned (in whole or in
part) by or leased to the Lessor shall at any time have a writ or libel
filed against it or be arrested, attached or levied upon pursuant to any
legal process or purported legal process or be detained in exercise or
purported exercise of any lien or claim of whatsoever nature, whether
arising out of the use or operation of the Ship or out of the use or
operation of any other vessel owned by or leased or chartered to the
Lessee or the Sub-Lessee or otherwise by reason of the act or omission
of any of the aforesaid persons, the Lessee shall forthwith upon
receiving notice thereof at its expense procure the release of the Ship
or such other vessel (as the case may require) from such arrest,
detention, attachment or levy or, as the case may be, the discharge of
the writ or libel by providing bail or procuring the provision of
security or otherwise as the circumstances may require and the Lessee
shall be responsible for discharging each and every liability in
connection with any such process, claim, lien or other action. Without
prejudice to the generality of the other indemnities contained in this
Lease or any of the other Lease Documents, should any other vessel owned
by the Lessor and leased by it otherwise than to the Lessee be arrested,
detained, attached or levied upon or be the subject of a writ or libel
in such circumstances, the Lessee shall indemnify the Lessor against all
claims made on the Lessor by the charterers of such other vessel in
connection with such arrest, detention, attachment, levy, writ or libel.
29.3 Release from arrest: Lessee's vessels
If the Ship shall at any time have a writ or libel filed against it or
be arrested, attached or levied upon pursuant to any legal process or
purported legal process or be detained in exercise or purported exercise
of any lien or claim of whatsoever nature in each such case arising out
of the use or operation of any other vessel for the time being owned by
the Lessor or any other company in the Lessor Group and leased or
chartered by it otherwise than to the Lessee and should the charterers
of such other vessel (being in that situation under obligations to the
Lessor or such other company in the Lessor Group equivalent to those
assumed by the Lessee under clause 29.2) fail to fulfil their said
obligations, provided that the Lessee shall first have given prior
notice thereof to the Lessor and, to the extent practicable, consulted
with the Lessor or such other company in the Lessor Group as far in
advance as is reasonable in all the circumstances, the Lessee shall be
entitled to act as agent for the Lessor or such other company in the
Lessor Group to procure release of the Ship or such other vessel (as the
case may require) from such arrest, detention, attachment or levy or, as
the case may be, the discharge of the writ or libel and the discharge of
all liabilities in connection with such process, claim, lien or other
action but shall be entitled to be indemnified by the Lessor and such
other company in the Lessor Group against all losses and expenses
reasonably and properly so incurred by it.
30 Assignment and sale of Ship
30.1 Assignment by Lessee
The Lessee may not with the exception of an assignment by way of
security in favour of the First Security Agent and the Second Security
Agent assign or transfer any of its rights or obligations under this
Lease or any of the other Lease Documents without the prior written
consent of the Lessor, but the Lessor shall not unreasonably withhold
its consent in the circumstances of;
30.1.1 any assignment or transfer or novation to a company which is part of the
Lessee Group where:
(a) the Lessee Parent Guarantee, the Standby Documents and any
Additional Security Documents and the respective obligations of
the Lessee Parent, the LC Bank and any Additional Security
Providers thereunder remain in full force and effect;
(b) the replacement of the Lessee will not give rise to a breach of
the provisions of clause 13.2.4;
(c) the liabilities and obligations of the Lessee under this Lease
will not be increased following such transfer;
(d) the rights of the Lessor under this Lease will not be reduced
and the liabilities and obligations of the Lessor under this
Lease will not be increased in each case following such
transfer; and
(e) the Lessor has received a legal opinion from a lawyer chosen by
the Lessor qualified and practising in the country of
incorporation of the relevant assignee or transferee which is no
worse in form and substance than the legal opinion to be
provided in favour of the Lessor in respect of the Lessee
pursuant to clause 4.1 and Schedule 1.
30.2 Assignment by the Lessor
The Lessor may not, save as provided below, assign or transfer any of
its rights or obligations under this Lease or any of the other Relevant
Documents without the prior written consent of the Lessee which consent
may not unreasonably be withheld. Notwithstanding the above provision,
the Lessor shall be at liberty to transfer (by way of assignment or
novation) its rights, benefits or obligations under this Lease and any
of the other Relevant Documents to any leasing company chosen by it
within the Lessor Group which is resident in the United Kingdom for the
purpose of the charge to Corporation Tax on the basis that:
30.2.1 subject to the First Security Agent, the Second Security Agent and the
Lessee complying with their obligations under, and on the basis of the
provisions of clause 8.6 of the Proceeds Deed, ownership of the Ship
shall be transferred to such company at the same time and such company
shall execute a replacement Lessor Mortgage and Lessor Proceeds Accounts
Assignment in accordance with clause 8.6 of the Proceeds Deed;
30.2.2 any costs, charges or expenses including stamp duties payable in respect
of any transfer shall be for the Lessor's account;
30.2.3 notwithstanding any other provision of this Lease or any of the other
Lease Documents all amounts payable or receivable by the Lessee or other
Relevant Parties under this Lease and the other Relevant Documents shall
be calculated as if no such transfer had taken place; and
30.2.4 the Lessor Parent shall comply with its obligations under the Lessor
Support Letters in respect of such transfer.
30.3 Sale of Ship
During the Lease Period the Lessor shall not sell, transfer, assign or
otherwise dispose of the legal title to, or beneficial interest in the
Ship, or agree to do so, save as expressly contemplated by the
provisions of this Lease, the Proceeds Deed and the Quiet Enjoyment
Letter.
31 Increased costs, funding problems and illegality
31.1 Increased costs
If any law, regulation or regulatory requirement or any judgment, order
or direction of any court, tribunal or authority taking effect after the
date of this Lease which is binding upon the Lessor in the jurisdiction
in which it is formed or in which any action is required to be performed
by it for the purposes of this Lease of any monetary agency, central
bank or competent governmental or other authority shall:
31.1.1 subject the Lessor to Taxes or change the basis of Taxation of the
Lessor with respect to any payment under any of the Relevant Documents
(other than Taxes or Taxation which are the subject of an indemnity from
the Lessee to the Lessor under clause 10 or would be so subject but for
the provisions of clauses 10.6 and 10.8); or
31.1.2 impose, modify or deem applicable any reserve requirements or require
the making of any special deposits against or in respect of any assets
or liabilities of, deposits with or for the account of, or loans by, the
Lessor or its holding company; or
31.1.3 impose on the Lessor or its holding company any other condition with
respect to any of the Relevant Documents or its obligations under any of
the Transaction Documents,
and, as a result of any of the foregoing, the cost to the Lessor or its
holding company of funding, financing or re-financing, directly or
indirectly, its purchase of the Ship or of owning the Ship or leasing
the Ship to the Lessee under this Lease is increased or the amount
payable or the effective return to the Lessor under this Lease is
reduced or the Lessor or its holding company makes a payment or foregoes
a return on or calculated by reference to any amount payable to it under
this Lease (other than as provided in clause 31.1.1), then and in each
such case the Lessor shall as soon as practicable after becoming aware
of the same notify the Lessee of the circumstances thereof and the
Lessee shall pay to the Lessor on demand the amount which the Lessor
specifies (in a certificate setting forth the basis of the computation
of such amount) is required to compensate the Lessor or its holding
company for such increased cost, reduced return, payment or foregone
return.
Any demand under clause 31.1 may be made at any time whether or not the
Lease Period shall have terminated or expired.
For the purpose of this clause 31.1 "holding company" means the company
or entity (if any) within the consolidated supervision of which the
Lessor is included.
31.2 Funding problems
If the Lessor notifies the Lessee that adequate and fair means do not
exist for determining the Default Rate or for determining LIBOR (as
defined in the Financial Schedule) then the Lessor shall give notice
thereof to the Lessee and the Lessor and the Lessee shall meet together
to discuss the matter in good faith and, unless within thirty (30) days
of the giving of such notice the Lessor and the Lessee arrive, by
negotiation in good faith, at an alternative basis reasonably acceptable
to the Lessor and the Lessee for continuing the leasing of the Ship
hereunder and determining the Default Rate or LIBOR (and any alternative
basis agreed in writing shall be retroactive to and effective from the
commencement of the relevant period and shall continue until the Lessor
determines that circumstances are such that such alternative basis may
cease to be effective) the Lessee shall indemnify the Lessor from and
against any liability, loss or expense suffered or incurred by the
Lessor during the relevant period as a result of the circumstances so
notified by the Lessor to the Lessee.
31.3 Illegality
If any law, regulation or regulatory requirement or any judgment, order
or direction of any court, tribunal or authority binding upon the Lessor
in the jurisdiction in which it is formed or in which any action is
required to be performed by it for the purposes of any of the Relevant
Documents (whether or not in force before the date of this Lease)
renders it unlawful for the Lessor to continue to lease the Ship to the
Lessee under this Lease, the Lessor shall promptly inform the Lessee and
the Lessor shall be entitled by written notice to the Lessee to
terminate the Lease Period, the termination of the Lease Period to occur
either (a) forthwith or (b) on a future specified date not being earlier
than the date upon which it becomes unlawful for the Lessor to continue
to lease the Ship to the Lessee under this Lease.
Such termination shall be deemed to be a voluntary termination of the
Lease Period in accordance with clause 3.3 (notwithstanding that such
termination shall not have occurred on a Primary Rental Date or that the
Lessor shall not have received thirty (30) days' notice thereof) and the
provisions of clauses 3.3 to 3.6 shall apply thereto.
31.4 Mitigation
If circumstances arise which would, or would upon the giving of notice,
result in:
31.4.1 the Lessee being required to make a payment to the Lessor to compensate
the Lessor or its holding company for a liability to Taxes, increased or
additional cost, reduction, payment, foregone return or loss pursuant to
clause 31.1;
31.4.2 the Lessee being required to make an increased payment to the Lessor
pursuant to clause 31.2;
31.4.3 the provision of additional security and/or the termination of the
leasing of the Ship pursuant to clauses 25.3, 25.4, 25.5 and 31.3; or
31.4.4 the mandatory prepayment of the amounts referred to in clause 27.1
pursuant to clauses 26.2.3 or 26.2.4,
then, without in any way limiting, reducing or otherwise qualifying the
obligations of the Lessee under clauses 25, 26 and this clause 31, the
Lessor shall, at the cost of the Lessee, endeavour to take such
reasonable steps (and/or, in the case of clause 31.1 and where the
increased or additional cost, reduction, payment, foregone return or
loss is that of its holding company, endeavour to procure that its
holding company takes such reasonable steps) as may be open to it (or,
as the case may be, its holding company) to mitigate or remove such
circumstances and shall consult with the Lessee in connection with such
mitigation arrangements. The Lessee acknowledges that nothing in this
clause shall oblige the Lessor (or its holding company) to take any
steps which might (in the opinion of the Lessor) be prejudicial to the
Lessor (or, as the case may be, its holding company) or be in conflict
with the Lessor's (or, as the case may be, its holding company's)
general banking policies or involve the Lessor (or, as the case may be,
its holding company) in expense or an increased administrative burden.
32 Refinancings
32.1 Refinancing by Lessee
32.1.1 Where the First Bank Loan (as defined in the Proceeds Deed) and the
Second Bank Loan (as defined in the Proceeds Deed) have been repaid in
full (or will be repaid in full out of the proceeds of any refinancing
contemplated by this clause 32), the Lessee shall be entitled, subject
to clause 32.2, to refinance its interest in the Ship and to assign the
Lessor Mortgage to the relevant refinancing banks or any security agent
acting on their behalf and to grant other first and/or second priority
security of the kind required under or in connection with the First Bank
Loan and the Second Bank Loan and more generally referred to in the
Proceeds Deed.
32.1.2 In connection with any refinancing consented to pursuant to clause 32,
the Lessor shall enter into such documents as the other party or the
Lessee may reasonably require to amend this Lease and the other Relevant
Documents to reflect the new financing structure.
32.2 Conditions
The agreement of the Lessor to any refinancing referred to in clause
32.1.1 shall be subject to the following conditions:
32.2.1 no Relevant Event shall have occurred and be continuing;
32.2.2 the Lessor shall be satisfied that the proceeds of the refinancing are
sufficient to repay the First Bank Loan and the Second Bank Loan in full
or, if not, that the Lessee (or any other person obliged to repay the
First Bank Loan and the Second Bank Loan) has sufficient other funds
available to repay the First Bank Loan and the Second Bank Loan in full;
32.2.3 the Lessor shall be reasonably satisfied that the Third Priority Three
Party Deed shall, following the refinancing, continue to provide
security for the Lessee's obligations under this Lease in a form and
with effect substantively equivalent to that negotiated and agreed in
relation to the First Bank Loan and the Second Bank Loan as at the date
of this Lease;
32.2.4 the Standby Documents shall remain in full force and effect following
the refinancing with such amendments to such Standby Documents having
been made as may, with the approval, or at the request, of the Lessor,
be required having regard to the terms of the relevant refinancing:
32.2.5 the refinancing banks or the security agent acting on their behalf shall
adhere to the provisions of the Proceeds Deed on terms acceptable to the
Lessor and such changes as may be required, and as may be approved by
the Lessor, shall be made to the terms of the Proceeds Deed to reflect
such refinancing;
32.2.6 the refinancing shall be on terms whereby:
(a) the principal amount shall be no greater than one hundred and
forty seven million Dollars ($147,000,000);
(b) the principal amount shall amortise on a straight-line basis to
zero over ten (10) years; or
(c) the refinancing shall be on terms whereby the proceeds of the
refinancing (or part thereof) will be paid direct to the account
of the First Security Agent to repay the First Bank Loan and/or,
as the case may be, the Second Security Agent to repay the
Second Bank Loan in full.
The amounts referred to in sub-clauses (a) and (b) assume that the Ship
and the Other Ships shall all be refinanced at the same time. If in fact
the Ship and the Other Ships are not all refinanced at the same time
then the Lessee shall as an additional condition to the consent of the
Lessor to any refinancing, be required to agree with the Lessor a
revised Dollar amount for the purpose of sub-clause (a) above; and
32.2.7 the Lessor shall be entitled to receive such evidence and documents of
the kind referred to in Schedule 1 as may in the Lessor's opinion be
appropriate and such favourable legal opinions as the Lessor shall in
its reasonable discretion require.
33 Miscellaneous
33.1 Entire agreement
This Lease and the other Lease Documents contain the entire agreement
between the Lessor and the Lessee relating to the leasing of the Ship
and the terms and conditions of this Lease and the other Lease Documents
shall not be varied otherwise than by an instrument in writing of even
date herewith or subsequent hereto executed by or on behalf of the
Lessor and the Lessee and shall supersede all previous term sheets
relating thereto.
33.2 Waivers
No failure or delay on the part of the Lessor in exercising any right,
power or remedy under this Lease or any of the other Lease Documents
shall operate as a waiver thereof nor shall any single or partial
exercise by the Lessor of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy.
33.3 Remedies cumulative
The remedies provided in this Lease or any of the other Lease Documents
are cumulative and are not exclusive of any remedies provided by law.
33.4 Time of the essence
Subject to the periods of grace referred to in clause 26, time shall be
of the essence as regards the performance by the Lessee of its
obligations under this Lease and the other Lease Documents.
33.5 General average
All rights and liabilities in respect of the Ship by way of general
average shall be for the account of the Lessee.
33.6 Partial illegality
If any term or provision of this Lease or any of the other Lease
Documents or the application thereof to any person or circumstances
shall to any extent be invalid or unenforceable, the remainder of this
Lease and the other Lease Documents and application of such term or
provision to persons or circumstances (other than those as to which it
is already invalid or unenforceable) shall not be affected thereby and
each term and provision of this Lease and the other Lease Documents
shall be valid and be enforceable to the fullest extent permitted by
law.
33.7 Set-off
The Lessee authorises the Lessor without prejudice to any of the
Lessor's rights of set-off at law, in equity or otherwise, at any time
that a Relevant Event has occurred and is continuing or when otherwise
permitted under this Lease or the other Lease Documents and without
notice to the Lessee to set off or withhold from any sum or sums
expressed in this Lease or any of the other Lease Documents to be
payable to the Lessee by the Lessor any amount due and payable to the
Lessor from the Lessee under this Lease or any of the other Lease
Documents. For any such purpose the Lessor is authorised to purchase
with the sums which would but for this clause 33.7 be so payable to the
Lessee, such other currencies as may be necessary to effect such set off
or withholding. The Lessor shall not be obliged to exercise any right
given to it by this clause 33.7. The Lessor shall notify the Lessee
forthwith upon the exercise or purported exercise of any right of
set-off or withholding.
33.8 Further assurance
The Lessee undertakes that it will at its expense execute, sign, perfect
and do any and every such further assurance, document, act or thing as
in the reasonable opinion of the Lessor may be necessary or desirable to
carry out the purpose of this Lease or any of the other Lease Documents
or the Standby Documents or protect or enforce any right of the Lessor
hereunder or thereunder or the title of the Lessor in the Ship.
33.9 Counterparts
This Lease may be entered into the form of two or more counterparts,
each executed by one of the parties, and, provided both the parties
shall so enter into this Lease, each of the executed counterparts, when
duly exchanged or delivered, shall be deemed to be an original but,
taken together, they shall constitute one instrument.
33.10 Confidentiality
At all times during the Lease Period, each of the parties hereto shall
keep confidential and shall not, without the prior written consent of
the other party, issue any press release in relation to the transactions
evidenced by this Lease and the other Relevant Documents, or disclose to
any other person, the business, financial or other information contained
in or supplied in connection with this Lease or any other Relevant
Document and the transactions contemplated hereby or thereby or any
other agreement entered into after the date hereof by the Lessor and any
Relevant Party or in connection with this Lease or any other Relevant
Document, or release copies or drafts of any such document which
disclose or reveal the identity of the parties (or any of them) provided
that (a) the Lessor will not unreasonably withhold or delay its consent
to any proposed press release and (b) the parties hereto shall be
entitled, without any such consent, to disclose the same:
33.10.1 in connection with any proceedings arising out of or in connection with
this Lease or any of the other Relevant Documents; or
33.10.2 if required to do so by an order of a court of competent jurisdiction
whether in pursuance of any procedure for discovery of documents or
otherwise; or
33.10.3 pursuant to any law or regulation having the force of law; or
33.10.4 to any fiscal, monetary, tax, governmental or other competent authority;
or
33.10.5 to the auditors, legal, insurance or other professional advisors or
insurers or underwriters of any member of either the Lessee Group or the
Lessor Group; or
33.10.6 if required to do so in order to obtain any permits, consents, licences
which any Relevant Party is required to obtain pursuant to the Relevant
Documents; or
33.10.7 if any of the same is or shall become publicly known otherwise than as a
result of a breach by such party of this clause 33.10; or
33.10.8 in any manner contemplated by any of the Relevant Documents; or
33.10.9 in the case of the Lessee, to the Lessee Group and the Related Companies
and in the case of the Lessor, to the Lessor Group provided that in each
case the Lessee or the Lessor shall procure that the party to whom such
disclosure is made shall comply with the requirements of this clause
33.10; or
33.10.10 to the First Security Agent or any other party to the First Bank Loan
or to the transactions arising in respect of the First Bank Loan or, as
the case may be, to the Second Security Agent or any other party to the
Second Bank Loan or to the transactions arising in respect of the Second
Bank Loan; or
33.10.11 in the case of the Lessee, to any persons who may be involved in the
refinancing arrangements contemplated by clause 32.
34 Governing law and jurisdiction
34.1 Law
This Lease is governed by and shall be construed in accordance with
English law.
34.2 Submission to jurisdiction
The Lessee agrees, for the benefit of the Lessor, that any legal action
or proceedings in connection with this Lease or any of the other Lease
Documents against the Lessee or any of its assets may be brought in the
English courts. The Lessee irrevocably and unconditionally submits to
the jurisdiction of such courts and irrevocably and unconditionally
designates, appoints and empowers Golar Management (UK) Limited at
present of 00 Xxxxx Xxxx, Xxxxxx X00 0XX to receive for it and on its
behalf service of process issued out of the English courts in any such
legal action or proceedings. The submission to such jurisdiction shall
not (and shall not be construed so as to) limit the right of the Lessor
to take proceedings against the Lessee in any other court of competent
jurisdiction, nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not. The parties further agree
that only the courts of England and not those of any other State shall
have jurisdiction to determine any claim which the Lessee may have
against the Lessor arising out of or in connection with this Lease or
any of the other Lease Documents.
IN WITNESS whereof the parties hereto have entered into this Lease the day and
year first above written.
Schedule 1
List of documents and evidence
1 A copy certified by an officer of the Lessee or the Relevant Party to be
a true, complete and up-to-date copy, of the Articles of Incorporation
and By-Laws of the Lessee and the constitutional documents of each of
the other Relevant Parties.
2 A copy, certified by a Director or the Secretary of the Lessee or the
relevant company to be a true copy, and as being in full force and
effect and not amended or rescinded, of resolutions of the board of
directors and, if required, of meetings of the shareholders of each of
the Lessee and the other Relevant Parties:
(a) approving the transactions contemplated by such of the Relevant
Documents to which the relevant company is a party;
(b) authorising a person or persons to execute on behalf of the
relevant company such of the Relevant Documents to which it is a
party and any notices or other documents to be given pursuant
thereto.
3 A copy certified by a Director or the Secretary of the relevant company
to be a true copy, and as being in full force and effect and not revoked
or withdrawn, of any power of attorney issued by the relevant company
pursuant to the said resolutions.
4 A list, certified as true, complete and up to date by a Director or the
Secretary of each of the Relevant Parties of its directors and officers.
5 Evidence that all governmental and other licences, approvals, consents,
registrations and filings necessary for any matter or thing contemplated
by the Relevant Documents and for the legality, validity, enforceability,
admissibility in evidence and effectiveness thereof have been obtained or
effected on an unconditional basis or, if conditional, on a basis
approved by the Lessor (in its absolute discretion) and remain in full
force and effect (or, in the case of effecting of any registrations and
filings, that arrangements satisfactory to the Lessor have been made for
the effecting of the same within any applicable time limit).
6 A copy, certified as a true and complete copy and as being in full force
and effect and not amended or rescinded, of the Sub-Lease in a form
previously approved by the Lessor.
7 A copy, certified as a true and complete copy and as being in full force
and effect and not amended or rescinded, of the Time Charter (including
the Time Charter Novation Agreement and any documents executed in
connection with the Time Charter and which amend the terms of the Time
Charter).
8 Copies of all classification certificates relating to the Ship including
(without limitation) the Certificate of Financial Responsibility.
9 An original of the Letter of Credit duly executed by the LC Bank.
10 A copy of the signature book, power of attorney or other evidence of
signing authority satisfactory to the Lessor of the LC Bank together
with evidence reasonably satisfactory to the Lessor as to the due
approval and authorisation for execution, delivery and performance by
the LC Bank of, and the validity and enforceability against the LC Bank,
of the Letter of Credit.
11 The Lessee Parent Guarantee duly executed by the Lessee Parent.
12 The Proceeds Deed duly executed by the parties thereto other than the
Lessor.
13 The Third Priority Three Party Deed duly executed by the Lessee and the
Sub-Lessee respectively.
14 A copy of the signature book, power of attorney or other evidence of
signing authority satisfactory to the Lessor of the First Security Agent
and the Second Security Agent together with evidence reasonably
satisfactory to the Lessor as to the due approval and authorisation for
execution, delivery and performance by the First Security Agent and the
Second Security Agent of the Proceeds Deed.
15 The Manager's Undertaking duly executed by the Manager.
16 A letter from each Relevant Party's agent for receipt of service of
proceedings referred to in any of the other Transaction Documents
accepting its appointment.
17 Opinions of Holland & Knight LLP, Xxxxxxx, Xxxx & Xxxxxxx and Xxxxxx &
Hunter special legal advisers to the Lessor on matters of the laws of
the Republic of Liberia, Bermuda and the Cayman Islands respectively.
18 The Lessor is satisfied that at the time of Delivery the Lessee will be
in compliance with the provisions of clause 13.2.4.
19 Equivalent documents to those referred to in paragraphs 1, 2, 3, 4 and 5
in relation to the Standby Purchaser.
20 Each of the Standby Documents duly executed by each of the parties
thereto other than the Lessor.
21 A copy, certified as a true and complete copy and as being in full force
and effect and not amended or rescinded, of the DOC issued to the
Operator and the SMC for the Ship.
22 Evidence that the Ship:
(a) maintains the Classification with the Classification Society
free of all requirements and recommendations of the
Classification Society that are overdue or have not been
complied with in accordance with their relevant terms; and
(b) is insured in accordance with the provisions of this Lease and
all requirements of this Lease in respect of such insurance have
been complied with.
23 The Protocol of Delivery and Acceptance duly signed by the Lessor and
the Lessee.
24 An insurance report from Xxxxx Limited as to the acceptability of the
insurances referred to in paragraph 1(b) above.
25 Evidence that (a) the Lessee is a wholly owned subsidiary of Gotaas
Xxxxxx, (b) Xxxxxx Xxxxxx is a wholly owned subsidiary of the Lessee
Parent and (c) not less than twenty five percent (25%) of the issued and
outstanding share capital of the Lessee Parent is directly or
indirectly, legally and beneficially owned by the Relevant Shareholder.
26 Any such further opinions as may be reasonably required by the Lessor.
27 Evidence that the Lessor's obligations under a guarantee dated 4 April
2003 in favour of the Time Charterer have been irrevocably discharged.
Schedule 2
Form of Delivery Request Notice
To: Xxxxx Xxxxxxx (Bermuda) Limited
x/x Xxxxxxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxxxxx
X0 0XX
April 2003
Lease dated [o] April 2003
relating to m.v. "XXXXXXX"
We refer to the above Lease and hereby give you notice that we wish to take
delivery of the Ship on [o].
We confirm that:
(a) no event or circumstance has occurred and is continuing which
constitutes a Relevant Event, a Relevant Bank Event, a Relevant
Bank Change of Law Event or a Relevant Bank Illegality Event;
(b) the representations and warranties contained in clauses 2.1 and
2.2 of the Lease (and so that representation and warranty in
clause 2.1.7 shall for this purpose refer to the then latest
audited financial statements delivered to the Lessor under
clause 11.1.4) and in clauses 4.1 and 4.2 of the Lessee Parent
Guarantee (and so that the representation and warranty in clause
4.1.6 thereof shall for this purpose refer to the then latest
audited financial statements delivered to the Lessor under
clause 5.1.4 thereof) are true and correct at the date hereof as
if made with respect to the facts and circumstances existing at
such date; and
(c) the leasing of the Ship in accordance with the Lease will be
within our corporate powers, has been validly authorised by
appropriate corporate action and will not cause any limit on our
borrowings (whether imposed by statute, regulation, agreement or
otherwise) to be exceeded.
Words and expressions defined in the Lease shall have the same meanings when
used herein.
For and on behalf of
GOLAR GAS HOLDING COMPANY, INC.
Schedule 3
Form of Protocol of Delivery and Acceptance under Lease
m.v. "XXXXXXX"
It is hereby certified that, pursuant to a lease dated o April 2003 (the
"Lease") and made between (1) Xxxxx Xxxxxxx (Bermuda) Limited (whose name is to
be changed to Sovereign Xxxxxxx Limited) (the "Lessor") and (2) Golar Gas
Holding Company, Inc. (the "Lessee") in respect of the m.v. "XXXXXXX" (the
"Ship"), registered under British flag with and on the basis of the confirmation
given by the Lessee below the Ship was delivered by the Lessor to the Lessee and
accepted by the Lessee from the Lessor at [o] hours [GMT] on [o] April 2003 at
[insert location] under, and in accordance with the terms and conditions of, the
Lease.
The Lessee hereby confirms that as at the date hereof:
(a) no Relevant Event has occurred and is continuing; and
(b) the representations and warranties set out in clauses 2.1 and
2.2 of the Lease and clauses 4.1 and 4.2 of the Lessee Parent
Guarantee are true and correct as if each was made with respect
to the facts and circumstances existing at such time.
Dated: o April 2003
For and on behalf of
Xxxxx Xxxxxxx (Bermuda) Limited as Lessor
By: ..............................
For and on behalf of
Golar Gas Holding Company, Inc. as Lessee
By: ..............................
Schedule 4
Financial Schedule
Schedule 5
Forms of Loss Payable Clause
Hull and Machinery (Marine and War Risks)
By a charterparty by way of demise made the [o] day of April 2003 between Xxxxx
Xxxxxxx (Bermuda) Limited (whose name is to be changed to Sovereign Xxxxxxx
Limited) (the "Lessor") and Golar Gas Holding Company, Inc. (the "Lessee") the
Lessor has demise chartered the Ship to the Lessee.
By a sub charterparty by way of demise made the [o] day of April 2003 between
the Lessee and Xxxxx Xxxxxxx UK Ltd. (the "Sub-Lessee"), the Lessee has
sub-demise chartered the Ship to the Sub-Lessee.
All recoveries under this policy shall be applied as follows:
(a) all claims hereunder in respect of an actual or constructive or
compromised or arranged total loss shall be paid in full to the Lessor;
(b) all claims in respect of a major casualty (that is to say any casualty
the claim in respect of which exceeds five million Dollars ($5,000,000)
(or the equivalent) inclusive of any deductible) shall be paid in full to
the Lessor; and
(c) all other claims hereunder shall be paid in full to the Sub-Lessee or to
its order unless and until the Lessor shall have notified insurers
hereunder to the contrary, whereupon all such claims shall be paid to the
Lessor.
Protection and Indemnity Risks
Payment of any recovery which Xxxxx Xxxxxxx (Bermuda) Limited (whose name is to
be changed to Sovereign Xxxxxxx Limited) (the "Lessor") or Golar Gas Holding
Company, Inc. (the "Lessee") or Xxxxx Xxxxxxx UK Ltd. (the "Sub-Lessee") is
entitled to make out of the funds of the Association in respect of any
liability, costs or expenses incurred by the Lessor, the Lessee and the
Sub-Lessee, shall be paid to the person to whom the liability (or alleged
liability) covered by the entry was incurred or to the extent that the liability
(or alleged liability) to such person has previously been discharged by the
Lessor, the Lessee and the Sub-Lessee, such moneys shall be paid to the Lessor
or its order or, as the case may be, the Lessee or its order or, as the case may
be, the Sub-Lessee or its order in reimbursement of the moneys so expended by it
in satisfaction of such liability (or alleged liability), unless and until the
Association receives notice to the contrary from the Lessor in which event all
recoveries due to the Lessee and the Sub-Lessee shall thereafter be paid to the
Lessor; provided that no liability whatsoever shall attach to the Association,
its Managers or their agents for failure to comply with the latter obligations
until the expiry of two clear Banking Days from the receipt of such notice. The
Association shall, unless it receives from the Lessor notice to the contrary, be
at liberty at the request of the Lessee and the Sub-Lessee to provide bail or
other security to prevent the arrest or obtain the release of the vessel,
without liability to the Lessor.
Schedule 6
Form of Compliance Certificate
Compliance Certificate issued pursuant to a
Lease Agreement dated [o] April 2003 in respect of m.v. "XXXXXXX" (the "Lease")
I, [o], the Chief Financial Officer of Golar Gas Holding Company, Inc. (the
"Lessee"), hereby certify that:
1 Attached hereto are the latest [Annual Financial Statements] [Quarterly
Financial Statements] for the [o] period ended on [o] (the "Reference
Date"). Such financial statements [were prepared in accordance with
Relevant GAAP] [were not prepared in accordance with Relevant GAAP and
attached hereto is a statement of the full details of the adjustments
required to in such statements to reflect Relevant GAAP as necessary to
calculate the amounts referred to in paragraph 2 below].
2 Attached hereto is a statement of the respective amounts of:
o the Cash Balances and Minimum Free Available Cash
o Current Assets, Current Liabilities and the current portion of
long-term debt
o Annualised EBITDA and Interest Expense
o Net Debt,
as at, and for each relevant period ended on, the Reference Date.
3 The Lessee has complied with each of the financial undertakings set out
in clause 11.1.9 of the Lease and is not in default in the performance
or observance of any of such covenants [specify any exceptions].
4 As at [date] no Relevant Event has occurred and is continuing [specify
any exceptions].
5 The person executing this certificate on our behalf has full information
concerning our financial affairs and has executed the same after having
made due investigation and enquiry as to the accuracy of the information
herein contained.
Terms used herein and not otherwise defined herein shall have the meanings set
forth in the said Lease. This certificate is rendered pursuant to clause 11.1.11
of the Lease.
IN WITNESS WHEREOF, the undersigned has set his hand this [o] day of [o] [20o].
XXXXX GAS HOLDING COMPANY INC.
By: ...................................................
Chief Financial Officer
SIGNED by )
XXXXX XXXXXXX (BERMUDA) LIMITED ) ...........................................
Name:
Title:
SIGNED by )
GOLAR GAS HOLDING COMPANY, INC. ) ...........................................
Name:
Title:
SCHEDULE 4
FINANCIAL SCHEDULE - (Xxxxx Xxxxxxx)
1 Definitions and Interpretations
1.1 Definitions
In this Schedule words and expressions defined in clause 1.2 of this Lease
shall have the meanings ascribed to them in such clause and the following
expressions shall have the following meanings when used in this Schedule
and this Lease:
"Accountancy Rental Earnings" means "accountancy rental earnings" for the
purposes of Schedule 12 to the Finance Xxx 0000 in respect of the leasing
of the Ship under this Lease;
"Accountancy Rental Excess" means "accountancy rental excess" for the
purposes of Schedule 12 to the Finance Xxx 0000 in respect of the leasing
of the Ship under this Lease;
"Additional Security Table" means any Security Table prepared by the
Lessor pursuant to paragraph 9.2;
"Adjustment Date" means, for any Adjustment Period, the last day of such
Adjustment Period;
"Adjustment Period" means:
(a) the period commencing on the Delivery Date and ending on 14 July
2003;
(b) thereafter and until the Tax Payment Date immediately preceding the
Primary Period End Date, each successive period commencing on the
last day of the immediately preceding Adjustment Period and ending
on the next succeeding Tax Payment Date;
(c) thereafter the period commencing on the Tax Payment Date immediately
preceding the Primary Period End Date and ending on the Primary
Period End Date;
(d) thereafter the period commencing on the Primary Period End Date and
ending on the immediately succeeding Tax Payment Date; and
(e) thereafter each successive period commencing on the last day of the
immediately preceding Adjustment Period and ending on the next
succeeding Tax Payment Date;
PROVIDED THAT:
(i) if any Adjustment Period would otherwise end on a day which is not a
Banking Day then the last day of that Adjustment Period shall
(taking into account any substitution referred to in (ii) and (iii)
below) be the immediately succeeding Banking Day unless such Banking
Day falls in the next calendar month, in which case the last day of
that Adjustment Period should be the immediately preceding Banking
Day;
(ii) if the Termination Payment Date falls otherwise than on an
Adjustment Date the Adjustment Period which would otherwise be
current on that date shall be treated as coming to an end on that
date and an Adjustment Period shall be treated as beginning on that
date and ending on the next succeeding Tax Payment Date;
(iii) the Adjustment Period which would otherwise be current on the Final
Date in relation to any Cash Flow shall be treated as having come to
an end on that date and the period ending on such date shall be the
last Adjustment Period so far as that Cash Flow is concerned;
(iv) if the Lessor pays or receives any amount which is to be reflected
in a Cash Flow on a day which does not fall on the first day of an
Adjustment Period (the "Basis Period"), the period (the "Remaining
Period") from and including the date on which the Lessor pays or
receives any such amount to and including the last day of the then
current Basis Period shall constitute an Adjustment Period for that
element only of the Notional Capital Outstanding and the rate of
interest applied during the Basis Period shall be the rate
applicable to such part of the Notional Capital Outstanding as is
funded or invested for the Basis Period and the rate of interest
applied during the Remaining Period shall be the rate applicable to
such part of the Notional Capital Outstanding as is funded or
invested for the Remaining Period;
(v) interest calculated by reference to an Adjustment Period shall be
calculated from and including the first day of such period to but
excluding the last day thereof;
"After-Tax Interest Rate" means, at any relevant time, a rate per annum
calculated in accordance with the following formula:
ATR = ((PTR x [1-TR]) + PR)
Where:
ATR is the After-Tax Interest Rate (expressed as a decimal);
PTR is the Assumed Rate (expressed as a decimal) as at the Primary
Period End Date;
TR is the Corporation Tax Applicable Rate for the Accounting Period of
the Lessor in which the above Applicable Rate is to be applied
(expressed as a decimal); and
PR is the Percentage Return (expressed as a decimal);
"Applicable Cash Flow" means the Initial Cash Flow, or any Cash Flow
prepared by the Lessor pursuant to paragraph 4;
"Applicable Rate" means, in relation to any Adjustment Period or other
relevant period:
(a) where applied to a negative balance of Notional Capital Outstanding,
the aggregate of LIBOR and the Reserve Asset Rate on the first day
of that period, and
(b) where applied to a positive balance of Notional Capital Outstanding,
LIBID on the first day of that period,
"Applicable Security Table" means the Initial Security Table or any
Security Table prepared by the Lessor pursuant to paragraph 9.3;
"Applicable Tax Report" means the Initial Tax Report or any Tax Report
prepared by the Lessor pursuant to paragraph 4.1;
"Arrangement Fee" means the fee of an amount equal to zero point five per
cent (0.5%) of the Ship Cost payable by the Lessor to the Arranger in
accordance with the letter of today's date from the Lessor to the
Arranger;
"Assumed Rate" means, subject to paragraph 6.1.4(d), in relation to any
Adjustment Period or other relevant period:
(a) in respect of Notional Capital Outstanding where a negative amount
the rate of five point three five per cent (5.35%) per annum, which
Assumed Rate shall include an amount in respect of the Reserve Asset
Rate equal to zero per cent (0%); or
(b) in respect of Notional Capital Outstanding where a positive amount
the rate of five point two two five per cent (5.225%) per annum;
"Assumptions" means the Variable Assumptions and the Non-Variable
Assumptions set out in Appendix 1 to this Schedule, all of which were
taken into account in preparing the Initial Cash Flow;
"Base Currency" has the meaning attributed to that term in the definition
of "Spot Exchange Rate";
"Broken Funding Costs" means an amount equal to the loss (if any) to the
Lessor arising by virtue of any payment being made or received hereunder
otherwise than on the last day of an Adjustment Period and in the amounts
specified herein, the amount of such loss being deemed to be the amount
(if any) by which (i) the cost to the Lessor of funding that payment in
the London Inter-Bank Market at LIBID determined as at the date on which
such payment is made or received for the unexpired portion of that
Adjustment Period exceeds (ii) the amount of interest which would have
accrued on the amount of such payment during the unexpired portion of that
Adjustment Period at the Applicable Rate as determined at the commencement
of such Adjustment Period;
"Broken Funding Gains" means an amount equal to the gain (if any) to the
Lessor arising by virtue of any payment being made or received hereunder
otherwise than on the last day of an Adjustment Period and in the amounts
specified herein, the amount of such gain being deemed to be the amount
(if any) by which (i) the amount of interest which would have accrued on
the amount of such payment during the unexpired portion of that Adjustment
Period at the Applicable Rate as determined at the commencement of such
Adjustment Period exceeds (ii) the cost to the Lessor of funding that
payment in the London Inter-Bank Market at LIBID determined as at the date
on which such payment is made or received for the unexpired portion of
that Adjustment Period;
"Capital Allowances" means any allowance made in respect of capital
expenditure on machinery or plant under the CAA and/or under any other
enactment for the time being in force providing for the making of similar
allowances and/or giving similar relief whether introduced in addition to
or as a replacement for the same;
"Cash Flow" means any cash flow prepared for the purposes hereof and
required to be provided by the Lessor to the Lessee hereunder;
"Consolidated Group Accounts" means any consolidated group accounts for
the purposes of Schedule 12 to the Finance Xxx 0000 of any group of
companies of which the Lessor is a member;
"Corporation Tax Applicable Rate" means, in relation to any Accounting
Period, the effective rate of Corporation Tax which is or would be
applicable (if there were such profits and ignoring for this purpose any
special rate applicable to small companies and to any special class of
companies unless the company concerned is itself such a company) to
taxable profits arising in such Accounting Period. Such rate is to be a
weighted average calculated on a daily basis where different statutory
rates apply for financial years which are not the same as such Accounting
Period. If, at the date at which any calculation hereunder is to be made,
the Corporation Tax Applicable Rate is not known because Corporation Tax
rates are fixed retrospectively, such calculation shall (without prejudice
to any provision of this Lease providing for such calculation to be
adjusted once the rate of Corporation Tax is known) be made on the basis
that the rate of Corporation Tax last fixed will not change unless there
has been an official announcement of a change in such rate in which case
it shall be made on the basis that the rate will change in accordance with
such announcement;
"Cumulative Accountancy Rental Excess" means the "cumulative accountancy
rental excess" for the purposes of Schedule 12 to the Finance Xxx 0000 in
respect of the leasing of the Ship under this Lease;
"Cumulative Normal Rental Excess" means the "cumulative normal rental
excess" for the purposes of Schedule 12 to the Finance Xxx 0000 in respect
of the leasing of the Ship under this Lease;
"Determination" means any determination, calculation, recalculation or
quantification made in accordance with paragraph 11 of this Financial
Schedule and "Determined", "Determination" and "Determine" shall be
construed accordingly;
"Disposal Value" means disposal value for the purposes of sections 61 and
62 of the CAA;
"Economically Burdensome" means any change in any Variable Assumption
which results or is likely to result in the net present value benefit of
the Lease to the Lessee over the Primary Period anticipated at the
Delivery Date and as notified by the Lessee in writing to the Lessor on or
before the Delivery Date decreasing by more than thirty five per cent
(35%);
"Effective Date" means the date falling ten (10) Banking Days after the
date on which a new Applicable Cash Flow is prepared and delivered to the
Lessee pursuant to paragraph 4.2;
"Event" means, where paragraph 4.9 applies, any change in any of the
Variable Assumptions or the Termination Assumptions;
"Extra Security Amounts" means in respect of any Security Period, the
amount, if any, set out in relation to that Security Period in Appendix 6,
provided that in the event that the LC Bank has notified the Lessor in
accordance with paragraph 2(e) of the Letter of Credit that it does not
consent to an increase by the Additional Amounts of the Fixed Liability
Amount for such Security Period, the amount appearing in column 5 for such
Security Period shall be zero;
"Final Date" means, in relation to any Cash Flow:
(a) except where paragraph 6.4 applies, the first anniversary of the
date on which the last payment of Corporation Tax is shown by such
Cash Flow to be paid or relieved by the Lessor in respect of:
(i) the Final Rental in the case of any Cash Flow prepared for the
purpose of determining the Primary Rentals; or
(ii) the Termination Sum or the amount of any revision thereto (as
appropriate) in the case of any Cash Flow prepared for the
purpose of determining the same; and
(b) where paragraph 6.4.2 applies at any time before the Primary
Period End Date, the date on which the last payment of
Corporation Tax is shown by the Applicable Cash Flow prepared
pursuant thereto to be paid or relieved by the Lessor in
respect of the Accounting Period of the Lessor in which the
fortieth (40th) anniversary of the Delivery Date falls; and in
relation to the Applicable Cash Flow prepared under paragraph
6.4.2 for the Primary Period End Date, the Accounting Period
of the Lessor in which the Primary Period End Date falls; and
(c) where paragraph 6.4.2 applies on the expiry by effluxion of
time of the Lease Period on the Primary Period End Date, the
date on which the last payment of Corporation Tax is shown by
the Applicable Cash Flow prepared pursuant thereto to be paid
or relieved by the Lessor in respect of the Accounting Period
of the Lessor in which the first anniversary of the Primary
Period End Date falls;
"Final Rental" means the Rental referred to in paragraph 2.1.5;
"First Accounting Period" has the meaning given in Variable Assumption
1.2;
"First UK Meeting Date" has the meaning given to it in Non-Variable
Assumption 2.16;
"Further Termination Cash Flow" means any Cash Flow produced in accordance
with paragraph 7;
"Generally Accepted Accounting Principles" means (i) insofar as any of the
same are applicable to the Lessor or any Holding Company of the Lessor,
the accounting requirements of the Companies Acts, statements of standard
accounting practice, financial reporting standards and any other
accounting standards having the like effect of financial reporting
standards issued by the Accounting Standards Board Limited (including
abstracts issued by the Urgent Issues Task Force of the Accounting
Standards Board Limited) or any other body from time to time prescribed by
regulations pursuant to section 256 of the Companies Xxx 0000, and (ii)
any other accounting principle observance of which by the Lessor (or any
Holding Company of the Lessor) is required in order to ensure that its
accounts and any Consolidated Group Accounts comply with applicable law
and with the regulations of any governmental or regulatory body compliance
with which is customary by leasing companies generally (or, in relation to
any Holding Company of the Lessor, banks generally) or which the Auditors
advise the Lessor in writing is necessary to ensure that the Auditors can
give an unqualified report on the Lessor's or, as the case may be, any
Consolidated Group Accounts;
"Group Relief" shall have the meaning attributed thereto by Variable
Assumption 1.11.2
"Group Relief Payment" means any payment taken to have been received by
the Lessor in accordance with Non-Variable Assumption 2.6;
"Group Relief Receipt" means, in respect of each Past Tax Payment Date,
the positive amount (if any) shown opposite that date in the column of the
Applicable Cash Flow headed "Tax";
"Group Relief Recipient" means the Lessor Agent or any Holding Company or
Subsidiary of the Lessor Agent being a company which presently draws
accounts up to 31st December in each year and which pays Corporation Tax
on profits arising in any Accounting Period in accordance with the
Corporation Tax (Instalment Payments) Regulations 1998;
"Initial Cash Flow" means the Cash Flow printout annexed as Appendix 2 to
this Schedule;
"Initial Insurance Premium" means the insurance premium payable by the
Lessor in respect of the first year of operation of the Ship and as more
fully described in Variable Assumption 1.38;
"Initial Security Table" means the Security Table prepared in accordance
with paragraph 9.1 and annexed as Appendix 5;
"Initial Tax Report" means the Tax Report annexed as Appendix 3 to this
Schedule;
"Inland Revenue Terms" means the basis on which, from time to time, the
Inland Revenue charge interest on underpaid Corporation Tax and pay
interest on overpaid Corporation Tax and shall include any penalty due as
a result of an underpayment of Corporation Tax;
"Interest Adjustments" means the amounts calculated in accordance with
paragraph 5.1.1 and payable in accordance with paragraph 5.1.2;
"Irrecoverable VAT" means any amounts paid or payable by or on behalf of
the Lessor in respect of Value Added Tax under or as contemplated by any
of the Transaction Documents to the extent that the Lessor shall determine
that the Lessor, or if the Lessor is a member of a group for Value Added
Tax purposes, the representative member, has not or will not receive a
credit (whether by way of credit or repayment) for that amount as "input
tax" (as that expression is defined in sub-section (1) of Section 24 of
VATA) under Sections 25 and 26 of VATA (nor receive a credit for it under
any similar or equivalent legislation);
"Lease Fee" means the fee in an amount of (pound)90,371.15 payable on the
Delivery Date by the Lessor to the Lessor Agent;
"Lessor's Professional Costs" means the Legal Fee together with the amount
of fees and disbursements paid by the Lessor to the Lessor's insurance
advisers, accountants and any other professional adviser the Lessor shall
consult in relation to the preparation, negotiation and completion of the
Transaction Documents;
"LIBID" means, in relation to any period for which LIBID is to be
determined, LIBOR for that period less one-eighth (1/8) of one per cent;
"LIBOR" means in relation to any period for which LIBOR is to be
determined:
(a) if the relevant period is equal to or greater than one month, the
rate for Sterling deposits for the number of months comprised in the
relevant period which rates appear on the display designated as
"Reuters Page LIBOR 01" on the Reuter Monitor Money Rates Service as
at or about 11.00 a.m. (London time) on the date on which the
relevant period commences or such other page as may replace "Reuters
Page LIBOR 01" on that service or, if there is no such replacement
page on that service, the page on any other service displaying the
rate so designated Provided that if the period is more than one
month but not a whole number of months, "LIBOR" shall mean the
interpolated rate calculated by reference to LIBOR for the number of
months rounded down or up to the nearest whole number; or
(b) if the relevant period is equal to or more than one week and there
is no such page on such service as referred to in sub-paragraph (a)
above, or if the relevant period is less than one week, the rate per
annum reasonably determined by the Lessor Agent to be the average
(rounded upwards, if necessary to five decimal places) of the rates
per annum offered by leading banks in the London Interbank Market to
other leading banks in the London Interbank Market for deposits in
Sterling for a period equal to, or as near as possible equal to,
that period at or about 11.00 a.m. (London time),
and for any period in respect of which LIBOR is to be determined in
relation to a currency other than Sterling, the rate per annum reasonably
determined by the Lessor Agent to be the average (rounded upwards, if
necessary, to five decimal places) of the rates offered by leading banks
in the London Interbank Market to leading banks in the London Interbank
Market for deposits in that currency for a period equal to, or as near as
possibly equal to, that period at or about 11.00 a.m. (London time) two
Banking Days prior to the commencement of that period or, in any such
case, such other rate as may be agreed in writing by the Lessor and the
Lessee;
"Other Currency" has the meaning attributed to that term in the definition
of "Spot Exchange Rate";
"Non-Variable Assumptions" means the assumptions listed as such in
paragraph 2 of Appendix 1;
"Normal Rent" means the "normal rent" for the purposes of Schedule 12 to
the Finance Xxx 0000 in respect of the leasing of the Ship under this
Lease;
"Normal Rental Excess" means the "normal rental excess" for the purposes
of Schedule 12 to the Finance Xxx 0000 in respect of the leasing of the
Ship under this Lease;
"Notional Capital Outstanding" means for any day, the sum (as the same may
be adjusted pursuant to the provisions of this Schedule) shown in the
column of any Applicable Cash Flow headed "NCI";
"Past Tax Payment Date" means any Tax Payment Date falling before the
Effective Date;
"Percentage Return" means, subject to paragraph 4.8, the Lessor's
after-tax nominal annual percentage rate of return of zero point two eight
four four percent (0.2844%);
"Prepaid Rental" means the amount determined in accordance with paragraph
8.3.5;
"Prepayment" means any election by the Lessee to make a prepayment of
Primary Rental pursuant to clause 25.2.1(c);
"Prepayment Amount" has the meaning given in paragraph 8.2;
"Prepayment Cash Flow" means the Cash Flow produced by the Lessor pursuant
to paragraph 8.3;
"Prepayment Date" means if the Lessee elects to make a Prepayment, the
date falling not less than thirty (30) days after receipt of the notice
from the Lessor referred to in clause 25.2.1, unless such Prepayment Date
would otherwise fall on a day which is not a Banking Day, then such
Prepayment Date shall be the immediately preceding Banking Day;
"Primary Period End Date" means the twentieth anniversary of the Delivery
Date;
"Primary Rental" means the Rental payable pursuant to clause 7 and
paragraph 2.1 in respect of the leasing of the Ship during the Primary
Period;
"Primary Rental Date" means 14 July 2003, each Tax Payment Date falling
thereafter until (and including) the Tax Payment Date immediately
preceding the Primary Period End Date, and the Primary Period End Date;
"Purchaser" means Sovereign Finance plc;
"Relevant Amount" means, in relation to any Past Tax Payment Date, the sum
of:
(a) the Tax Payment or Group Relief Receipt (as the case may be) in
respect of that Past Tax Payment Date; and
(b) the Revised Tax Payment or Revised Group Relief Receipt (as the case
may be) in respect of that Past Tax Payment Date,
and provided that for the purposes only of calculating any Relevant
Amount, the amount of any Revised Tax Payment and the amount of any Group
Relief Receipt shall be expressed as a negative amount, and the amount of
any Tax Payment and the amount of any Revised Group Relief Receipt shall
be expressed as a positive amount;
"Rental" means each amount calculated and payable in accordance with this
Schedule;
"Rental Date" means each Primary Rental Date and each Secondary Rental
Date;
"Reserve Asset Rate" means the rate determined in accordance with Appendix
4 to this Schedule;
"Revised Group Relief Receipt" means, in respect of any Past Tax Payment
Date, the amount of the Group Relief Payment which the Lessor would have
been assumed (on the basis of the Variable Assumptions as revised to take
the Event into account) to have received on that Past Tax Payment Date had
the Event occurred before that Past Tax Payment Date;
"Revised Tax Payment" means, in respect of any Past Tax Payment Date, the
amount of Corporation Tax which the Lessor would have been assumed (on the
basis of the Variable Assumptions as revised to take the Event into
account) to have paid on that Past Tax Payment Date had the Event occurred
before that Past Tax Payment Date;
"Risk Asset Weighting" means, in relation to any form of security, the
counterparty and/or security weightings (expressed as percentages)
attributable from time to time to so much of the transactions and matters
contemplated by the Transaction Documents as is secured by such security
for the purpose of determining the capital which the Lessor Agent or any
other relevant member of the Lessor's Group is required to maintain by the
Financial Services Authority, the Bank of England (or any other
institution requiring the Bank to maintain a particular level of capital,
where the Lessor Agent or any other relevant member of the Lessor's Group
is obliged or accustomed to comply with such requirement);
"RPI" means the General Index of Retail Prices, being that index
calculated for the time being by the Central Statistical Office at
intervals of approximately one month on one date in each and every month
of each and every year and representing the average change from month to
month in prices of goods and services bought by the majority of consumers
in Great Britain, or such similar index as may from time to time replace
the General Index of Retail Prices and the General Index of Retail Prices
for any date shall be the most recently published General Index of Retail
Prices (or other similar index);
"Sale Assumptions" has the meaning given in paragraph 6.1.5;
"Secondary Rental" has the meaning given in paragraph 2.2;
"Secondary Rental Date" means any date on which Secondary Rental is
payable;
"Security Period" means:
(a) the period commencing on the Delivery Date and ending on 14 July
2003;
(b) thereafter and until the Tax Payment Date immediately preceding the
Primary Period End Date, each successive period commencing on the
day immediately succeeding the last day of the immediately preceding
Security Period and ending on the next succeeding Tax Payment Date;
(c) thereafter, the period commencing on the day immediately succeeding
the Tax Payment Date referred to in (b) above, and ending on the
Primary Period End Date;
(d) thereafter, in the event that any Potential Liabilities have not
been agreed in accordance with clause 25.5, the period commencing on
the Primary Period End Date and ending on the immediately succeeding
Tax Payment Date;
(e) thereafter, each successive period commencing on the day immediately
succeeding the last day of the immediately preceding Security Period
and ending on the next succeeding Tax Payment Date until such time
as the Potential Liabilities have been agreed in accordance with
clause 25.5,
PROVIDED THAT if any Security Period would otherwise end on a day which is
not a Banking Day, then the last day of that Security Period shall be the
immediately succeeding Banking Day unless that day falls in the next
calendar month, in which case it shall be the immediately preceding
Banking Day;
"Security Table" means any table prepared in accordance with paragraph 9;
"Security Termination Sum" means, in respect of each day in each Security
Period, each Termination Sum which would appear in the column of a
Termination Cash Flow headed "Termination Sum" were such Termination Cash
Flow to be prepared in accordance with paragraph 6.1 and assuming a
termination of the Lease in accordance with clause 3.3 on each and every
day of such Security Period;
"Share Acquisition Documents" means the share sale and purchase agreement
entered into on 7 April 2003 between the Lessee as Vendor and the Lessor
Agent as Purchaser and any and all other documents pursuant to which the
Lessor Agent acquired the share capital of the Lessor;
"Ship Cost" means the lowest of:
(a) the Sterling Equivalent of the expenditure incurred on the Ship by
Xxxxx Xxxxxxx Inc.;
(b) the Sterling Equivalent of the price paid by the Lessor for the Ship
to Xxxxx Xxxxxxx Inc.; or
(c) the fair market value of the Vessel as at the First UK Meeting Date,
as shown in the independent valuation provided by the Lessee;
"Spot Exchange Rate" for any day and for the purchase with, or conversion
from any currency (the "Base Currency") into another currency (the "Other
Currency") the rate determined by the Lessor as the rate quoted by the
Lessor Agent in accordance with its usual practice at which the Lessor
Agent is able to purchase the Other Currency with the Base Currency in
London at or about 10.00am Two (2) Banking Days prior to such day for
delivery on such day and the Lessor's determination of any such rate shall
be conclusive and binding on the Lessee for all purposes;
"Sterling Equivalent" on any day for any amount denominated (a) in
Sterling, means that amount or (b) in a currency (as Base Currency) other
than Sterling (as Other Currency), means the equivalent in Sterling of
that amount, calculated by converting that Base Currency amount into
sterling at the Spot Exchange Rate for that day;
"Tax Authority" means the Inland Revenue, H.M. Customs & Excise or any
other revenue, customs, fiscal, governmental, statutory, state,
provincial, local governmental or municipal authority, body or person,
whether of the United Kingdom or elsewhere;
"Tax Loss" means, for any Accounting Period of the Lessor, the result
(when the same is a negative figure) of the aggregate of (i) the amount
relating to Rentals which (in accordance with Variable Assumption 1.10.2
as the same may be varied from time to time) the Lessor is required to
bring into account for tax purposes in such period; and (ii) any interest
notionally receivable by the Lessor on daily balances during the relevant
period in respect of the Lessor's notional deposit of an amount equal to
the surplus funds (represented by Notional Capital Outstanding when that
is a positive figure) assumed to be invested by the Lessor in accordance
with Non-Variable Assumption 2.1 (if such receipts were actual rather than
notional) to the extent that the same would be taxable in such period (the
Lessor preparing its computations in accordance with Variable Assumption
1.10.2, as the same may be varied from time to time) less the aggregate of
(i) Capital Allowances assumed to be available to the Lessor for that
period in respect of the Ship Cost; (ii) any interest notionally payable
by the Lessor on daily balances during the relevant period in respect of
the Lessor's notional borrowing of amounts equal to negative balances of
the Notional Capital Outstanding from time to time assumed to be borrowed
by the Lessor in accordance with Non-Variable Assumption 2.1 to the extent
that if such interest payments were actual rather than notional the same
would qualify for tax relief in such period (the Lessor preparing its
computations in accordance with Variable Assumptions 1.10.2 and 1.8 as the
same may be varied from time to time); and (iii) the Lease Fee, the
Arrangement Fee, the Lessor's Professional Costs and the Initial Insurance
Premium to the extent that the same are allowable in accordance with
Variable Assumptions 1.19, 1.20 and 1.38 (as the same may be varied from
time to time);
"Tax Payment" means, in respect of each Past Tax Payment Date, the
negative amount (if any) shown opposite that date in the column of the
Applicable Cash Flow headed "Tax";
"Tax Payment Date" means each of the dates referred to in Variable
Assumption 1.12;
"Tax Report" means any report prepared by the Lessor in accordance with
paragraph 3.2 or 4.1 hereof;
"Tax System" means the law and practice (of general application) in
relation to Corporation Tax;
"Tax Written Down Value" means, in relation to an Accounting Period of the
Lessor, the aggregate Ship Cost treated as incurred by the Lessor in that
and all previous Accounting Periods qualifying for Capital Allowances (the
Lessor preparing its computations in accordance with the Variable
Assumptions, as the same may be varied from time to time) less the
aggregate of all Capital Allowances made to the Lessor in respect of the
Ship Cost in all previous Accounting Periods of the Lessor and any
Disposal Value which the Lessor is required to bring into account in any
previous Accounting Period of the Lessor;
"Termination Assumptions" means the assumptions to be taken into account
in preparing the Termination Cash Flow or any Further Termination Cash
Flow and which are set out in paragraph 6.1.4 (as varied from time to time
in accordance herewith);
"Termination Cash Flow" means the Cash Flow produced in accordance with
paragraph 6.1;
"Termination Payment Date" means:
(a) where the leasing of the Ship to the Lessee terminates following the
occurrence of any Termination Event pursuant to clause 27, the date
specified in the notice referred to therein;
(b) in the case of a voluntary termination of the leasing of the Ship
pursuant to clause 3.3, the date upon which the Ship is delivered to
and accepted by a purchaser following a sale of the Ship pursuant to
clause 3.4;
(c) where the leasing of the Ship terminates by reason of a Total Loss
pursuant to clause 22, the Total Loss Payment Date;
"Termination Sum" has the meaning given in paragraph 6.1.4(e);
"Total Security Amount" means, in respect of each Security Period, the
highest Security Termination Sum for that Security Period; and
"Variable Assumptions" means the assumptions listed as such in paragraph 1
of Appendix 1 (as varied from time to time in accordance herewith).
2 Rentals
2.1 Primary Rental
2.1.1 Subject to the terms of this Lease the Lessee shall pay the Primary
Rentals to the Lessor on the Primary Rental Dates.
2.1.2 The Primary Rental payable on each Primary Rental Date shall be the amount
shown in the Applicable Cash Flow in the column headed "Rentals" opposite
that Primary Rental Date.
2.1.3 The Primary Rental payable under this paragraph 2.1 shall be payable in
accordance with clause 7, the first Primary Rental being paid in arrear in
respect of the period from the Delivery Date until 14 July 2003 and each
subsequent Primary Rental being payable on each subsequent Primary Rental
Date in arrear in respect of the period from the immediately preceding
Primary Rental Date until the Primary Rental Date on which such Primary
Rental is due until the Primary Rental Date immediately preceding the
Primary Period End Date, the Primary Rental payable on the Primary Period
End Date being in respect of the period from the immediately preceding
Primary Rental Date until the Primary Period End Date.
2.1.4 Each instalment of Primary Rental payable under paragraph 2.1.3 shall be
subject to adjustment in the manner specified in this Schedule.
2.1.5 The Final Rental shall (subject to paragraph 4.6 and except where no other
Primary Rental is capable of variation) be an amount equal to forty per
cent (40%) of the Ship Cost and shall be payable in respect of and shall
be payable on the Primary Period End Date as shown in the Initial Cash
Flow in the column headed "Final Rental" opposite the Primary Period End
Date.
2.2 Secondary Rental
In respect of the Secondary Period the Lessee shall on the first day
following the Primary Period End Date and on each anniversary thereof
during the Secondary Period pay to the Lessor a Rental ("Secondary
Rental") annually in advance equal to zero point one per cent (0.1%) of
the Ship Cost.
2.3 Early Termination and Prepayment
If a Primary Rental falls due on the date for which the Termination Sum is
payable, the Primary Rental falling due on that date shall not be payable.
If a Primary Rental falls due on the date for which any Prepayment Amount
is payable, the Primary Rental falling due on that date shall not be
payable (but without prejudice to paragraph 8).
3 Initial Cash Flow and Initial Tax Report
3.1 Initial Cash Flow
The Lessor has prepared the Initial Cash Flow:
3.1.1 on the basis of the Assumptions;
3.1.2 in accordance with the Initial Tax Report;
3.1.3 to ensure that Primary Rental payable in paragraph 2.1.3 increases by five
per cent (5%) per annum and accordingly:
(a) that the Primary Rental payable under paragraph 2.1.3 on 14 July
2004 is 105% of the immediately preceding Primary Rental; and
(b) that the Primary Rental payable under paragraph 2.1.3 on each 14
July falling after 14 July 2004 and before the Primary Period End
Date is 105% of the Primary Rental payable under paragraph 2.1.3 on
the immediately preceding 14 July;
3.1.4 to procure that, subject to the payment by the Lessee of the Primary
Rentals on each Primary Rental Date, the Notional Capital Outstanding on
the Final Date will be zero or as near thereto as may be;
3.2 Initial Tax Report
The Initial Tax Report has been prepared, and any revised Tax Report
prepared pursuant to paragraph 4.1 shall be prepared to show, on the basis
of Variable Assumptions 1.7 and 1.11 (as the same may be varied from time
to time), how the taxable income arising to the Lessor from the
transactions contemplated by the Transaction Documents will be calculated
in the Accounting Period of the Lessor current at the date of preparation
thereof and in all subsequent Accounting Periods of the Lessor up to the
Accounting Period of the Lessor in which the Final Date applied in the
preparation of the Applicable Cash Flow falls.
4 New Applicable Cash Flows
4.1 Applicable Tax Reports
Where an Applicable Cash Flow is to be prepared in accordance with this
paragraph 4 the Lessor shall for the purposes of preparing such Applicable
Cash Flow also prepare a new Tax Report (the "Applicable Tax Report")
which shall be delivered to the Lessee at the same time as the Applicable
Cash Flow.
4.2 New Applicable Cash Flow - Changes in Variable Assumption
As soon as reasonably practicable after any day falling after the date
hereof on which the Lessor determines that there has been a change in any
of the Variable Assumptions (determined in accordance with paragraph 4.5)
on the basis of which any Applicable Cash Flow has been prepared and the
occurrence of such an event would, if a new Applicable Cash Flow were then
prepared, produce different figures in respect of the Notional Capital
Outstanding and/or Rentals payable hereunder, the Lessor shall promptly
prepare and deliver to the Lessee a new Applicable Cash Flow prepared in
accordance with paragraph 4.3 which shall take effect on the Effective
Date.
4.3 Preparation of Applicable Cash Flows
Where any new Applicable Cash Flow is prepared pursuant to paragraph 4.2,
such Cash Flow shall:
4.3.1 subject to sub-paragraphs 4.3.2 to 4.3.7 (inclusive) below be prepared on
the same basis as the immediately preceding Applicable Cash Flow was
prepared;
4.3.2 take into account any changes in any of the Variable Assumptions which
have occurred (and are known to the Lessor) between the date of
preparation of the immediately preceding Applicable Cash Flow and the date
of preparation of such new Applicable Cash Flow and any other changes in
the Variable Assumptions not taken into account in the preparation of any
preceding Applicable Cash Flow;
4.3.3 take into account the Rentals shown in the immediately preceding
Applicable Cash Flow as payable before the Effective Date of the new
Applicable Cash Flow;
4.3.4 be prepared in accordance with the revised Applicable Tax Report prepared
by the Lessor in accordance with paragraph 4.1;
4.3.5 procure that each Primary Rental payable on a Primary Rental Date falling
after the Effective Date shall bear the same ratio to each other such
Primary Rental as the Primary Rental payable on the corresponding Primary
Rental Date shown in the immediately preceding Applicable Cash Flow bears
to each of the other Primary Rentals shown in such immediately preceding
Applicable Cash Flow as payable after the Effective Date;
4.3.6 procure that the Final Rental shall be equal to forty per cent (40%) of
the Ship Cost; and
4.3.7 procure that, subject to the payment by the Lessee of Primary Rentals on
each subsequent Primary Rental Date, (including the payment of the Final
Rental on the Primary Period End Date), the Notional Capital Outstanding
on the Final Date will be zero or as near thereto as may be.
4.4 Effect of substitution of new Applicable Cash Flows
As from the Effective Date of any new Applicable Cash Flow, the same shall
be deemed to be incorporated herein in substitution for the Initial Cash
Flow or, as the case may be, the previous Applicable Cash Flow, and
payments of Primary Rental to be made hereunder shall be determined by
reference thereto.
4.5 Occurrence of Change
4.5.1 Subject to paragraph 10, for the purposes of this Schedule, a change in a
Variable Assumption or a Termination Assumption shall be regarded as
having occurred if:
(a) without prejudice to sub-paragraphs (b) to (d) (inclusive) below,
the Lessor determines such Variable Assumption or Termination
Assumption is incorrect;
(b) any statute or statutory instrument embodying such change becomes
law or if earlier when HM Government or other regulatory body makes
an official announcement of a change even though such change will
only take effect in the future and a Cash Flow prepared, in such a
case and at that time, shall immediately take into account all
changes so embodied or announced provided that a further change
shall be regarded as having occurred if, following an announcement
of a change, such change is not implemented in accordance with such
announcement;
(c) the Lessor receives a determination, decision, assessment, notice or
other written communication from any Tax Authority from which it
appears that any matter relating to or affecting any Variable
Assumption or Termination Assumption is being disputed by such Tax
Authority, regardless of any right or decision to dispute, challenge
or appeal the same (but without prejudice to the terms of the Tax
Contest Letter) and, in the reasonable opinion of the Lessor, such
dispute cannot be resolved promptly by negotiation with such Tax
Authority on a basis which would confirm the correctness of such
Variable Assumption or Termination Assumption provided that a
further change shall be deemed to occur depending on the final
outcome of any such dispute, challenge or appeal concerning the
disputed matter; and
(d) following a Termination Event the Lessor shall be entitled to deem a
change in any of the Variable Assumptions or the Termination
Assumptions to have occurred at any time when it has reasonable
grounds for believing that such a change will occur and, in such
case, if the change does not in fact occur and take effect when
anticipated, a further change shall then be regarded as having
occurred.
4.5.2 A new Applicable Cash Flow prepared as a consequence of the occurrence of
any such change or deemed change in a Variable Assumption or Termination
Assumption shall take into account the date from which such change or
deemed change becomes effective and such new Applicable Cash Flow shall be
accompanied by a notice from the Lessor specifying:
(a) the Variable Assumption or the Termination Assumption which has
changed;
(b) the Lessor's reason or reasons for its determination that such
Variable Assumption or Termination Assumption has changed;
(c) the replacement Variable Assumption or Termination Assumption on the
basis of which the new Applicable Cash Flow has been prepared; and
(d) the date from which the replacement Variable Assumption or
Termination Assumption is to apply.
4.6 Changes in Variable Assumptions after payment of Final Rental
The provisions of paragraph 7 shall (mutatis mutandis) apply if there
shall be any change in any of the Variable Assumptions after the payment
of the Final Rental by treating the latest Applicable Cash Flow as a
Termination Cash Flow, and by treating such Final Rental as a payment in
respect of the Termination Sum.
4.7 Revision of Assumptions
4.7.1 In the event of a change in any of the Variable Assumptions or the
Termination Assumptions, that Variable Assumption or Termination
Assumption shall be deemed to be revised as necessary to reflect such
change and that Variable Assumption or Termination Assumption as so
revised shall be deemed to be incorporated herein in substitution for that
set out in this Schedule (as the same may previously have been revised
pursuant to this Schedule).
4.8 Risk Asset Weighting
4.8.1 The Percentage Return has been determined by the Lessor on the date hereof
on the basis that the Risk Asset Weighting of the Lessor's investment in
the Transactions is an average (the "Average Weighting"), which Average
Weighting has been calculated by reference to the percentage of the
Lessor's investment in the transactions contemplated in the Transaction
Documents which is to be secured by the Letter of Credit with a Risk Asset
Weighting of twenty per cent (20%) and the percentage of the Lessor's
investment in the transactions contemplated by the Transaction Documents
which is to be unsecured with a Risk Asset Weighting of one hundred per
cent (100%).
4.8.2 In the event that the Lessor reasonably determines that the Risk Asset
Weighting is increased or decreased at any time after the date hereof as a
result of a change in a Variable Assumption which gives rise to a change
in the Lessor's investment in the transactions contemplated by the
Transaction Documents, or a change in the percentage of the Lessor's
investment secured by the Letter of Credit, the provision of any
Additional Security, or any change in the percentage of the Lessor's
investment secured by any Additional Security, or any change made by the
Financial Services Authority, Bank of England or other appropriate
regulatory body to the capital required or a change to the structure of
the transactions contemplated by the Transaction Documents otherwise than
as a result of any voluntary act or omission by the Lessor or the Lessor
Agent or any member of the Lessor's Group, then, subject to paragraph
4.8.3 below, a new Cash Flow shall be prepared under paragraph 4.2 and
paragraph 4.3 shall apply as if there had been a change in a Variable
Assumption.
4.8.3 Subject to paragraph 4.8.4, where this paragraph 4.8.3 applies:
(a) the Lessor shall determine the revised average Risk Asset Weighting
of the Lessor's investment in the transactions contemplated by the
Transaction Documents (the "Revised Average Weighting"), which
Revised Average Weighting shall be calculated by reference to the
percentage of the Lessor's investment in the transactions
contemplated by the Transaction Documents on each Rental Date
falling prior to the date on which this paragraph 4.8.3 is to be
applied (the "Application Date") and by reference to the percentage
of the Lessor's investment in the Transactions on each Rental Date
falling on or after the Application Date which is to be secured by
the Letter of Credit or other Additional Security, and the Risk
Asset Weighting attributable thereto, and the percentage of the
Lessor's investment in the transactions contemplated by the
Transaction Documents on each Rental Date falling on or after the
Application Date which is to be unsecured, and the Risk Asset
Weighting attributable thereto. Where this paragraph 4.8.3 applies,
the Lessor shall notify in writing to the Lessee such Revised
Average Weighting, which shall be calculated on the same basis as
the Average Weighting, or, as the case may be, the last preceding
Revised Average Weighting notified to the Lessee, save that such new
Revised Average Weighting shall take into account the application of
paragraph 4.8.2 and the calculations to be made under this paragraph
4.8.3(a);
(b) where the Revised Average Weighting is greater than the Average
Weighting, or, following any previous application of this paragraph
4.8.3, the Revised Average Weighting last calculated under this
sub-paragraph 4.8.3 (the "Latest Average Weighting"), then a new
Cashflow Report prepared in accordance with paragraph 4.2 shall
apply as if there had been a change in an Assumption and in
preparing that Cashflow (and any subsequent Cashflow), the
Percentage Return shall be increased by zero point zero zero nine
seven (0.0097) for each one per cent (1%) increase in the Revised
Average Weighting over the Latest Average Weighting;
(c) where the Revised Average Weighting is less than the Average
Weighting or, as the case may be, the Latest Average Weighting, then
a new Cashflow Report prepared in accordance with paragraph 4.2
shall apply as if there had been a change in an Assumption and in
preparing that Cashflow (and any subsequent Cashflow), the
Percentage Return shall be decreased by zero point zero zero nine
seven (0.0097) for each one per cent (1%) decrease in the Revised
Average Weighting below the Average Weighting or the Latest Average
Weighting; (d) the increased, or, as the case may be, decreased
Percentage Return calculated in accordance with this paragraph 4.8.3
shall apply from the date of application of this paragraph 4.8 until
the Primary Period End Date, or if earlier, the date of any further
application of this paragraph 4.8.
4.8.4 The Percentage Return shall not be reduced below zero point two eight four
four (0.2844%) as a result of any application of this paragraph 4.8.
4.8.5 This paragraph 4.8 shall apply in the same way to any further change in
Risk Asset Weighting. In the event of any change in Risk Asset Weighting,
the Lessor shall notify the Lessee forthwith.
4.9 Retrospective changes in Variable Assumptions or Termination Assumptions
4.9.1 This paragraph 4.9 shall apply where the occurrence of a change in any of
the Variable Assumptions or the Termination Assumption results, in respect
of any Past Tax Payment Date, in a Relevant Amount which is other than
zero.
4.9.2 Where this paragraph 4.9 applies, the new Applicable Cash Flow required to
be prepared in accordance with paragraphs 4.2 and 4.3 shall, in respect of
any Past Tax Payment Date, be prepared on the basis that:
(a) the amount of Corporation Tax shown as payable, or as the case may
be, the Group Relief Payment shown as receivable on each Past Tax
Payment Date is unchanged from the amount shown for that date in the
immediately preceding Applicable Cash Flow;
(b) where the Relevant Amount is a negative amount there shall be
debited to the new Applicable Cash Flow in the column headed "Tax"
on the Tax Payment Date immediately succeeding the Effective Date an
amount equal to the Relevant Amount and in the column headed
"Interest on Overdue Tax" interest on the Relevant Amount calculated
on the Inland Revenue Terms for the period from and including the
relevant Past Tax Payment Date to but excluding the Tax Payment Date
immediately succeeding the Effective Date;
(c) where the Relevant Amount is a positive amount there shall be
credited to the new Applicable Cash Flow in the column headed "Tax"
on the assumed date of the receipt thereof in accordance with
Non-Variable Assumption 2.13 an amount equal to the Relevant Amount
and in the column headed "Interest on Overdue Tax" interest on the
Relevant Amount, calculated on the Inland Revenue Terms for the
period from and including the relevant Past Tax Payment Date to but
excluding that assumed date.
5 Adjustments for changes in Interest Rates
5.1 Adjustments in respect of Applicable Rate
5.1.1 In respect of the Adjustment Date for each Adjustment Period commencing
after the Delivery Date up to and including the Adjustment Period in which
the Final Date in relation to the relevant Cash Flow falls, the Lessor
shall calculate an amount ("Interest Adjustment") equal to the difference
between:
(a) the amount of interest which has been debited or credited to the
relevant Cash Flow for such Adjustment Period calculated at the
Assumed Rate; and
(b) the amount of interest which would have been debited or credited to
that Cash Flow if the amount of the debit or credit to be made had
been calculated by reference to the Applicable Rate for such
Adjustment Period instead of the Assumed Rate,
which shall be expressed as a positive amount where:
(i) the amount calculated under (b) above exceeds the amount
calculated under (a) above and the Notional Capital
Outstanding during that Adjustment Period is negative; or
(ii) the amount calculated under (a) above exceeds the amount
calculated under (b) above and the Notional Capital
Outstanding during that Adjustment Period is positive; and
shall be expressed as a negative amount where:
(iii) the amount calculated under (a) above exceeds the amount
calculated under (b) above and the Notional Capital
Outstanding during that Adjustment Period is negative; or
(iv) the amount calculated under (b) above exceeds the amount
calculated under (a) above and the Notional Capital
Outstanding during that Adjustment Period is positive; and
the Lessor shall give notice to the Lessee not less than ten (10)
Banking Days before the relevant Adjustment Date of the amount of
the Interest Adjustment and in the absence of manifest error, the
Lessor's calculation of such amount shall be conclusive and binding
on the Lessee.
5.1.2 On each Adjustment Date in respect of each Adjustment Period, the Lessee
shall pay to the Lessor (where positive) or the Lessor shall pay to the
Lessee (where negative) the amount of the Interest Adjustment calculated
in accordance with paragraph 5.1.1 to the extent possible by way of
adjustment to the Rental otherwise payable on that date.
5.2 Adjustments in respect of new Applicable Cash Flow
Where any new Applicable Cash Flow is prepared the Lessor shall separately
calculate the financial adjustment (if any) which has not been taken into
account and which needs to be made as between the parties by reason of
adjustments in respect of the Applicable Rate calculated under paragraph
5.1 having been based on figures in respect of Notional Capital
Outstanding which such new Applicable Cash Flow may show to be incorrect,
which adjustment shall be notified to the Lessee and paid in accordance
with such calculation within ten (10) Banking Days of receipt by the
Lessee of such notice which shall not be reflected in any Applicable Cash
Flow.
5.3 Consequences of Termination
The Lessee undertakes and agrees to indemnify the Lessor on demand against
any Broken Funding Costs (as certified to the Lessee by the Lessor)
arising to the Lessor as a result of the Lessor repaying prior to its
specified maturity any funding assumed to be obtained by the Lessor in
respect of the transactions contemplated by the Transaction Documents or
in consequence of any Termination, or any Prepayment. If in consequence of
such repayment any Broken Funding Gains (as certified to the Lessee by the
Lessor) accrue to the Lessor in connection with an early repayment of such
funding, the Lessor undertakes to pay the Lessee an amount equal to such
Broken Funding Gains. If the Lessor is unable to repay such funding
actually entered into by the Lessor, it shall notify the Lessee of the
Lessor's best estimate of the Broken Funding Costs or Broken Funding Gains
which would have resulted to the Lessor if the Lessor had in fact repaid
such funding and such estimated amount will be treated for the purposes of
this paragraph 5.3 as if it were an actual amount.
5.4 Payments under this paragraph 5
Payments by or to the Lessee under this paragraph 5 shall be paid as
additional Rental or rebates of Rental (as appropriate) but shall not be
reflected in any Applicable Cash Flow.
6 Termination
6.1 Termination Cash Flow
In any case where the Termination Sum is to be ascertained the Lessor
shall, as soon as practicable and in any event, in the case of a
Termination other than following a Termination Event, not later than ten
(10) Banking Days before the Termination Payment Date and, in the case of
a Termination pursuant to clause 27, on or before the Termination Payment
Date, prepare and deliver to the Lessee a Cash Flow (the "Termination Cash
Flow") which shall:
6.1.1 subject as mentioned below, be prepared on the same basis as the latest
Applicable Cash Flow was prepared and on the basis of the Assumptions but
excluding Variable Assumption 1.15;
6.1.2 take into account any changes in any of the Variable Assumptions which
have occurred (in accordance with paragraph 4.5) (and are known to the
Lessor) between the date of preparation of the latest Applicable Cash Flow
and the date of preparation of the Termination Cash Flow and any other
such changes in the Variable Assumptions not taken into account in the
latest Applicable Cash Flow;
6.1.3 take into account any Primary Rental payable before the Termination
Payment Date;
6.1.4 be prepared on the basis of the following assumptions ("Termination
Assumptions", which assumptions shall be treated as Variable Assumptions):
(a) that
(i) the Ship will cease to belong to the Lessor for the purposes
of the CAA in the Accounting Period of the Lessor in which the
Termination Payment Date falls; and
(ii) the Ship will be sold and the Net Sale Proceeds and/or Net
Total Loss Proceeds, as the case may be, will be received by
the Lessor on or before the Termination Payment Date;
(b) that the aggregate amount of the Net Sale Proceeds and/or Net Total
Loss Proceeds, as the case may be, will be the only amount required
to be brought into account as Disposal Value in the Accounting
Period in which the Termination Payment Date falls;
(c) that the amount so required to be brought into account as Disposal
Value will not be less than the Tax Written Down Value of the Ship
at the commencement of the Accounting Period in which the
Termination Payment Date falls;
(d) where the Termination Sum is to be ascertained in the case of a
Termination pursuant to clause 27, the Assumed Rate in respect of
Notional Capital Outstanding where a positive amount shall be the
best estimate of LIBID as determined by the Lessor for the date
which the Termination Sum is to be calculated;
(e) assume that the Lessor receives or pays on the Termination Payment
Date a single sum (the "Termination Sum") of an amount that will
procure that the Notional Capital Outstanding as at the Final Date
for the Termination Cash Flow will be zero or as near thereto as may
be possible.
6.1.5 For the avoidance of doubt, to the extent that the Termination Assumptions
referred to in sub-paragraphs 6.1.4(a), (b) and (c) above (the "Sale
Assumptions") are correct, there shall be deemed to be available to the
Lessor in the Accounting Period of the Lessor in which the Termination
Payment Date falls a Capital Allowance equal to the Tax Written Down Value
of the Ship at the commencement of the Accounting Period in which the
Termination Payment Date falls.
6.2 Determination of Termination Sum
6.2.1 The Termination Sum shall be the number appearing in the column headed
"Termination Sum" of the Termination Cash Flow prepared in accordance with
paragraph 6.1 opposite the Termination Payment Date.
6.2.2 If the Termination Cash Flow has assumed the receipt of a sum by the
Lessor, the amount of the Termination Sum shall be payable by the Lessee
to the Lessor on the Termination Payment Date by way of Rental.
6.2.3 If the Termination Cash Flow has assumed the payment of a sum by the
Lessor, the amount of the Termination Sum shall be payable by the Lessor
to the Lessee on the Termination Payment Date by way of rebate of Rental.
6.3 Termination Fee
6.3.1 Subject to paragraph 6.3.2 below, if this Lease is terminated prior to the
date falling sixty (60) months after the Delivery Date, the Lessee shall,
in addition to the Termination Sum, pay to the Lessor on the Termination
Payment Date, the Termination Fee which shall be of an amount equal to:
A
-
B
where: A is the aggregate of each amount of the Percentage Return
which would have been debited in the column headed "Margin" in
the latest Applicable Cash Flow after the Termination Payment
Date and until and including the date falling sixty (60)
months after the Delivery Date (on the basis that the Lease
would not have Terminated before such date) discounted to the
Termination Payment Date at the rate of five point two two
five per cent (5.225%) per annum; and
B is (1-x) where x is the Corporation Tax Applicable Rate
(expressed as a decimal) for the Accounting Period of the
Lessor in which the Termination Payment Date falls.
6.3.2 The Termination Fee referred to in paragraph 6.3.1 shall not be payable:
(i) in the event that this Lease is terminated after the date falling
sixty (60) months after the Delivery Date; or (ii) in the event that this
Lease is terminated as a result of a Total Loss of the Ship; or (iii) in
the event that this Lease is terminated as a result of a Relevant Bank
Change of Law Event pursuant to clause 25.3; or (iv) in the event that
this Lease is terminated as a result of a Relevant Bank Illegality Event
pursuant to clause 25.4; or (v) in the event that this Lease is terminated
as a result of a Termination Event pursuant to clauses 26.1.8 to 26.1.14
(inclusive) and clause 26.2; or (vi) in the event that this Lease is
terminated as a result of the application of clause 31; or (vii) where
this Lease is terminated prior to the date falling sixty (60) months after
the Delivery Date and the Lessee certifies in writing to the reasonable
satisfaction of the Lessor that it is terminating this Lease because it
has become Economically Burdensome.
6.4 Change in Variable Assumption 1.15 and/or the Sale Assumptions
6.4.1 Any Applicable Cash Flow prepared to reflect a change in Variable
Assumption 1.15.1 or, as the case may be, the Sale Assumption in paragraph
6.1.4(a), shall take into account such change and be prepared on the
assumption that there will be no sale of the Ship or, as the case may be,
no receipt of Net Sale Proceeds and/or Net Total Loss Proceeds, on or
after the Termination Payment Date and that no Disposal Value will be
required to be brought into account in respect thereof.
6.4.2 Any Applicable Cash Flow prepared to reflect a change in Variable
Assumption 1.15.2 or, as the case may be, the Sale Assumptions, or as the
case may be, the assumption in paragraph 6.4.1 (each a "Relevant
Assumption") shall take into account such change and be prepared on the
basis of the following assumptions:
(a) that Capital Allowances on the amount by which any Net Sale Proceeds
and/or Net Total Loss Proceeds required to be brought into account
as Disposal Value in the relevant Accounting Period are less than
the Tax Written Down Value in respect of the Ship Cost will be
obtainable in accordance with the Tax System prevailing at the date
of such Cash Flow in the Accounting Period of the Lessor in which
the Relevant Assumption proved incorrect and in each subsequent
Accounting Period of the Lessor ending before the Primary Period End
Date;
(b) that the Corporation Tax Applicable Rate for each such Accounting
Period of the Lessor subsequent to the Accounting Period in which
such Applicable Cash Flow is prepared but prior to the Accounting
Period in which the Primary Period End Date falls will be the
Corporation Tax Applicable Rate for the Accounting Period current at
the date such Cash Flow is prepared;
(c) that Capital Allowances will be obtainable in accordance with the
Tax System prevailing at the date of preparation of such Cash Flow
for each Accounting Period of the Lessor ending after the Primary
Period End Date until the fortieth (40th) anniversary of the
Delivery Date;
(d) that, for the purposes of this calculation only, the Corporation Tax
Applicable Rate for the Accounting Period of the Lessor in which the
Primary Period End Date falls will be the lower of the Corporation
Tax Applicable Rate for the Accounting Period of the Lessor current
at such date and 25 per cent; and
(e) in an Applicable Cash Flow prepared for the Primary Period End Date
there shall be credited to the column of the Applicable Cash Flow
headed "Tax" opposite the Primary Period End Date the allowances
assumed by sub-paragraph (c) to be obtainable multiplied by the
Corporation Tax Applicable Rate assumed in sub-paragraph (d) and
discounted to the Primary Period End Date at the After-Tax Interest
Rate.
6.4.3 Any Applicable Cash Flow prepared pursuant to this paragraph 6.4 shall be
prepared on the assumption that the Assumed Rate for any Adjustment Period
commencing after the date of preparation of such Cash Flow is:
(a) the lower of (A) twelve month LIBOR (as at the date of preparation
of the Applicable Cash Flow) minus one per cent and (B) LIBID (as at
the date of preparation of the Applicable Cash Flow) in respect of
Notional Capital Outstanding when a positive amount; and
(b) the aggregate of twelve month LIBOR (as at the date of preparation
of such Applicable Cash Flow) plus four per cent in respect of
Notional Capital Outstanding when a negative amount.
6.4.4 The assumptions made in sub-paragraphs 6.4.1, 6.4.2(a) and (b) and
6.4.3(a) and (b) above shall be treated as Variable Assumptions until the
Primary Period End Date or, where the Lease Period expires by effluxion of
time on that date, the first anniversary of that date and as Non-Variable
Assumptions thereafter; and any change in those assumptions shall be
reflected in a Further Termination Cash Flow which shall only be prepared
on each 31 March falling after the Termination Payment Date and on the
Primary Period End Date and, where the Lease Period expires by effluxion
of time on the Primary Period End Date, only on the first anniversary of
the Primary Period End Date. The assumptions made in sub-paragraphs
6.4.2(c) and (d) shall be treated as Non-Variable Assumptions.
7 Variation of Termination Sum
7.1 Further Termination Cash Flow
7.1.1 In any case where the Lessor has prepared a Termination Cash Flow, the
Lessor shall prepare a further cash flow (the "Further Termination Cash
Flow") to take into account any change in any of the Variable Assumptions
and/or the Termination Assumptions which has occurred and is known to the
Lessor but which was not taken into account in the Termination Cash Flow.
7.1.2 The Further Termination Cash Flow shall be prepared on the same basis as
the Termination Cash Flow and shall ensure that, in the light of changes
in the Variable Assumptions and the Termination Assumptions and subject to
either the receipt by the Lessor of a further single sum or the payment by
the Lessor of a single sum on the last day of the month following that in
which the Further Termination Cash Flow is prepared and delivered to the
Lessee, the Notional Capital Outstanding on the Final Date for the Further
Termination Cash Flow will be zero or as near thereto as may be.
7.2 Delivery of Further Termination Cash Flow
The Lessor shall deliver the Further Termination Cash Flow to the Lessee
as soon as reasonably practicable and in any event no later than thirty
(30) Banking Days after the change in the Variable Assumption or the
Termination Assumption becomes known to the Lessor by reason of which such
Cash Flow is to be prepared.
7.3 Payment of adjustment to the Lessor
If the Further Termination Cash Flow has assumed the receipt of a sum by
the Lessor, the Lessee shall pay to the Lessor, by way of additional
Rental, the amount of such receipt on the last day of the month following
that in which the Further Termination Cash Flow is prepared and a copy
delivered to the Lessee.
7.4 Payment of adjustment to the Lessee
If the Further Termination Cash Flow has assumed the payment of a sum by
the Lessor, the amount thereof shall be paid to the Lessee by the Lessor
by way of rebate of Rental on the last day of the month following that in
which the Further Termination Cash Flow is prepared and a copy delivered
to the Lessee.
7.5 Further Changes
If any further change in the Variable Assumptions and/or the Termination
Assumptions occurs after the Further Termination Cash Flow was prepared,
which would have affected the same had it been known when it was prepared,
the provisions of this paragraph 7 shall apply, mutatis mutandis, to the
same.
8 Prepayment
8.1 Payments
Where the Lessee notifies the Lessor in accordance with clause 25.2.1 that
it wishes to make a Prepayment, the Lessor shall no later than five (5)
days before the Prepayment Date calculate the Prepayment Amount in
accordance with this paragraph 8.
8.2 Prepayment Amount
The Prepayment Amount shall be the aggregate of:
8.2.1 the Prepaid Rental; and
8.2.2 any Broken Funding Costs or, as the case may be, less any Broken Funding
Gains.
8.3 Prepayment Cash Flow
When any Prepayment Amount is required to be calculated pursuant to this
paragraph 8, the Lessor shall, as soon as practicable and in any event on
or before the date falling five (5) days prior to the Prepayment Date,
produce and deliver to the Lessee a Prepayment Cash Flow. The Prepayment
Cash Flow shall:
8.3.1 subject as mentioned below be prepared on the same basis as the last
preceding Applicable Cash Flow was prepared;
8.3.2 take into account any changes in any of the Variable Assumptions which
have occurred (and are known to the Lessor) between the date of the last
preceding Applicable Cash Flow and the preparation of the Prepayment Cash
Flow and any other changes in the Variable Assumptions not taken into
account in the last preceding Applicable Cash Flow;
8.3.3 be prepared on the assumption (which shall be a Variable Assumption) that
the Prepaid Rental shall be included as Schedule D Case I receipt of the
Lessor and taxed on the date on which such amount is payable;
8.3.4 assume that:
(a) Primary Rental due up to and including the Prepayment Date shall be
the Primary Rental determined by reference to the last preceding
Applicable Cash Flow;
(b) the Prepaid Rental is received on the Prepayment Date;
8.3.5 assume that the Lessor receives on the Prepayment Date a single sum by way
of Rental (the "Prepaid Rental") of such amount as would result, subject
to the receipt by the Lessor of the Rentals referred to in paragraph
8.3.4(b), in the Total Security Amount for and during each Security Period
shown in the new Additional Security Table prepared by the Lessor pursuant
to clause 25.2.1 being equal to or less than the aggregate of the Letter
of Credit Amount, the Maximum Unsecured Strip Liability Amount and any
Additional Security Amount in each case for and during each such Security
Period.
8.4 New Applicable Cash Flow
Subject to the payment by the Lessee of the Prepaid Rental, the Prepayment
Cash Flow produced in accordance with paragraph 8.3 above shall be
substituted for the last preceding Applicable Cash Flow to the exclusion
of any previous Cash Flow.
9 Security
9.1 Initial Security Table
9.1.1 The Lessor has prepared a Security Table (the "Initial Security Table")
based on the Initial Cash Flow setting out in column 2 the Termination Sum
on the first day of each Security Period, in column 3 the Letter of Credit
Amount on that date, in column 4 the Maximum Unsecured Strip Liability
Amount in each such case for each Security Period specified in column 1
and ending on or before the Primary Period End Date and in column 5 the
Extra Security Amounts.
9.2 Additional Security Table
In any case where the Lessor prepares an Applicable Cash Flow pursuant to
paragraph 4 on or after the date hereof, the Lessor shall as soon as
reasonably practicable prepare and deliver to the Lessee a new Security
Table ("Additional Security Table") on the same basis as the latest
Applicable Security Table was prepared save that the new Additional
Security Table shall:
9.2.1 take into account the changes in Variable Assumptions which are taken into
account in the preparation of such new Applicable Cash Flow in accordance
with paragraph 4;
9.2.2 show in column 2 the Total Security Amount for each Security Period;
9.2.3 show in column 3 the aggregate of the Letter of Credit Amount and any
Additional Security Amount;
9.2.4 show in column 5 the Extra Security Amounts; and
9.2.5 show, in an additional column 6, as a negative figure, the Required
Security Amount (if any), being the amount by which the Total Security
Amount shown in column 2 of the new Additional Security Table exceeds the
aggregate of the Letter of Credit Amount and any Additional Security
Amount shown in column 3, the Maximum Unsecured Strip Liability Amount
shown in column 4 and the Extra Security Amounts, as appropriate, in
column 5, in each case for and during each Security Period specified in
column 1 of the new Additional Security Table or, as the case may be, as a
positive figure, the Required Security Amount (if any), being the amount
by which the aggregate of each such Letter of Credit Amount, any
Additional Security Amount and the Maximum Unsecured Strip Liability
Amount and Extra Security Amounts exceeds each such Total Security Amount.
9.3 Substitution of new Applicable Security Table
9.3.1 As soon as practicable following the increase in the Letter of Credit
Amount, the provision by the Lessee of an Additional Security Amount or
the payment of a Prepayment Amount by the Lessee, as the case may be, in
each case in accordance with clause 25.2.1 or, the reduction in the Letter
of Credit Amount or the release of any Additional Security Amounts, as the
case may be, in each case in accordance with clause 25.2.2, the Lessor
shall prepare and deliver to the Lessee a new Security Table ("Applicable
Security Table") which shall be prepared on the same basis as the new
Additional Security Table referred to in paragraph 9.2 was prepared save
that:
(a) in the case of an increase or reduction in either the Letter of
Credit Amount or the Additional Security Amount, it shall show the
revised Letter of Credit Amount or, as the case may be, Additional
Security Amount; and
(b) in the case of the payment by the Lessee of a Prepayment Amount,
shall also be prepared on the same basis as the Prepayment Cash Flow
prepared to calculate such Prepayment Amount was prepared and
accordingly reflecting the revised Total Security Amount,
in each case in respect of each Security Period.
9.3.2 As from the date any new Applicable Security Table is prepared and
delivered to the Lessee, the same shall be incorporated herein in
substitution for the previous Applicable Security Table.
10 Limitations on Adjustment
Notwithstanding anything in this Schedule and this Lease to the contrary,
the Lessor shall not be entitled or required to make any adjustment under
the provisions of this Schedule or in the preparation of any Cash Flow and
no change shall be treated as occurring in any Variable Assumption or
Termination Assumption where and to the extent that, otherwise than (i) as
a result of the occurrence of any change in Variable Assumption 1.13, (ii)
by reason of any of the transactions effected under or pursuant to or
contemplated by the Transaction Documents and the Share Acquisition
Documents (other than an assignment by the Lessor pursuant to clause
30.2), (iii) as a result of a change in Generally Accepted Accounting
Principles or, (iv) as a result of a breach by the Lessee of any of its
obligations under the Transaction Documents, a Variable Assumption would
but for the provisions of this paragraph 10, be treated as changing by
reason of:
10.1 the Lessor not duly claiming on a timely basis all Capital Allowances
available to it in respect of the Ship Cost or not supplying to any
relevant Tax Authority on a due and timely basis any information and
documents which are properly required by such authority in support of any
such claim (unless such failure to make a claim or supply such document or
information on a timely basis results from a breach by the Lessee of its
obligations under this Lease or such document or information not being
available to the Lessor and/or unless such failure results from any
written request made by the Lessee to the Lessor in relation to such claim
or other matter affecting such claim) or withdraws, amends or postpones
all or any of such claim for Capital Allowances, or the Lessor not
treating the Ship Cost as capital expenditure incurred by it for Tax
purposes; or
10.2 the group of companies of which the Lessor Agent is a member for the
purposes of Group Relief not having sufficient profits to absorb Tax
Losses (calculated on the basis of the Initial Cash Flow) of the Lessor;
or
10.3 any act or omission of the Lessor (otherwise than as required by law or
statute) which is a breach by the Lessor of any of its express obligations
under any of the Transaction Documents to which it is a party; or
10.4 the Lessor submitting its Corporation Tax computations claims or returns,
as initially submitted to any relevant Tax Authority, or preparing its
accounts on a basis which is inconsistent with any of the Variable
Assumptions (as the same may be varied from time to time pursuant to this
Schedule), save where required by law, Inland Revenue practice or
Generally Accepted Accounting Principles, or not submitting its
Corporation Tax returns and computations on a timely basis; or
10.5 any voluntary act or omission by the Lessor or any member of the Lessor's
Group (other than as required or contemplated by the Transaction Documents
or the Share Acquisition Documents) at any time after the Delivery Date,
which results in the Lessor ceasing to be a member of the Lessor's Group
for Group Relief purposes; or
10.6 any Non-Variable Assumption not occurring as a fact.
11 Reference to Expert
11.1 Dispute Procedure
11.1.1 If the Lessee does not accept that any determination made by the Lessor
has been made and/or any Applicable Cash Flow (other than the Initial Cash
Flow) or any adjustment thereto or to the Rental (or any adjustment
thereto) has been prepared and/or calculated in accordance with the terms
and provisions of this Lease, the Lessee may (without prejudice to its
obligations to make payment hereunder in accordance with such Cash Flow
and/or calculation pending determination of the matter as hereinafter
provided) give notice to the Lessor within thirty (30) Banking Days of
receiving a copy of such Cash Flow and/or calculation from the Lessor
together with the Lessee's reasons for such non-acceptance. As soon as
practicable after a notification under this paragraph 11.1.1 by the
Lessee, if required in writing by the Lessee, the Lessor and the Lessee
shall discuss with each other (and any relevant advisors) the
determination in question. Such discussions shall be conducted
conscientiously and in good faith and shall allow time for full
consideration of the views of both parties of the issues concerned.
11.1.2 If the Lessor and the Lessee cannot agree the correctness or otherwise of
such determination within a further period of twenty (20) Banking Days of
the Lessee's notice referred to in paragraph 11.1.1, the Lessee's reasons
together with the Lessor's determination, calculation and/or Cash Flow
and/or any adjustment thereto and reasons therefor shall then be referred
to the Auditors who shall act as experts and not as arbitrators and whose
decision as to the correctness of such determination and/or calculations
and/or Cash Flow and/or any adjustment thereto in accordance with the
terms of this Lease shall, except in the case of manifest error until the
same has been corrected, or save where paragraph 11.1.3 below applies, be
conclusive and binding on the Lessor and the Lessee.
11.1.3 If the Auditors consider that the determination of the Lessor relates to
a matter of law, then the matter (together with the material provided to
the Auditors as referred to in paragraph 11.1.1) will instead be referred
to an independent Queen's Counsel (the "QC") who specialises in tax
matters and who is acceptable to the Lessor and the Lessee. In the event
that the parties cannot agree on the appointment of the QC then the Lessee
shall nominate as the QC one out of three tax counsel chosen by the
Lessor.
11.1.4 The costs of the Auditors, or as the case may be, the QC, in so acting
shall be borne by the Lessee unless the amount(s) resulting from the
finding of the Auditors, or as the case may be, the QC, differs from the
amount(s) resulting from the determination made by the Lessor in an amount
in excess of (pound)10,000 in respect of a calculation of any Termination
Sum or (pound)10,000 in respect of each determination or calculation of
any other amount of Rental in which case the costs of the Auditors, or as
the case may be, the QC, shall be borne by the Lessor.
11.1.5 The Lessor shall provide the Auditors, or as the case may be, the QC,
with such information as they or he may reasonably require for the
purposes of this paragraph 11.1.
11.2 If the Lessee considers that the Lessor ought to have made a determination
but has not done so, the Lessee may inform the Lessor within twenty (20)
Banking Days of the date the Lessee becomes aware of the alleged omission,
giving its written reasons why it considers that a determination ought to
have been made. For the purposes of paragraph 11 any omission by the
Lessor to make a determination as specified in a notice under this
paragraph 11.2, shall itself constitute a determination to which paragraph
11.1 shall apply.
11.3 Adjustments
Should the decision of the Auditors, or as the case may be, the QC,
require an adjustment to an amount previously paid hereunder, such
adjustment shall apply retrospectively from the date on which the relevant
amount was paid and the amount of any deficiency or excess in or of such
amount previously paid by or received by the Lessor shall, within ten (10)
Banking Days after receipt by the Lessor and the Lessee of written notice
of the decision and of a revised Cash Flow (which the Lessor shall produce
forthwith after, and in accordance with, the decision of the Auditors, or
as the case may be, the QC), be remedied by a payment by or to the Lessor
by way of adjustment to the Rental or any adjustment thereto (as
appropriate).
11.4 Detail of Calculations
All determinations to be made by the Lessor under this Lease and this
Financial Schedule shall be made reasonably and in good faith. All
calculations provided by the Lessor to the Lessee under this Financial
Schedule shall be made in good faith and in reasonably sufficient detail
to enable the Lessee to substantiate the same.
Appendix 1
The Assumptions
1 Variable Assumptions
1.1 The Lessor will become resident in the UK for the purposes of Corporation
Tax on the First UK Meeting Date.
1.2 The first Accounting Period of the Lessor ("First Accounting Period") will
commence on the First UK Meeting Date.
1.3 The Lessor will be treated under section 13 CAA as having incurred capital
expenditure on the provision of the Ship on the Delivery Date in an amount
equal to the Ship Cost.
1.4 The Lessor shall be entitled to Capital Allowances by way of writing down
allowances of twenty five per cent (25%) per annum on the reducing balance
basis on the full amount of the Ship Cost such Capital Allowances
commencing on the Delivery Date in the First Accounting Period (and in
respect of the First Accounting Period being reduced pro rata to the
proportion which the length of the First Accounting Period bears to a
period of twelve (12) months), in which the Ship Cost is treated (on the
basis assumed in paragraph 1.3) to have been incurred and to continue in
each subsequent Accounting Period of the Lessor until but excluding the
Accounting Period referred to in Variable Assumption 1.15.1.
1.5 The rate and times at which Capital Allowances are obtainable under the
Tax System at the date hereof will not change and Capital Allowances
obtained by the Lessor in respect of the Ship Cost will not at any time be
withdrawn or postponed in whole or in part nor, otherwise than on an
actual disposal or Total Loss of the Ship, be made subject to a balancing
charge at any time in so far as the Lessor is concerned.
1.6 The rate of Corporation Tax for the Financial Year ending 31 March 2002
and each subsequent financial year will be thirty per cent (30%).
1.7
1.7.1 The Lessor will not be required by law or Generally Accepted Accounting
Principles to draw up its accounts as at any other date than 31 December
in any year and/or for any other period than twelve months, except for the
First Accounting Period.
1.7.2 None of the Group Relief Recipients will be required by law or Generally
Accepted Accounting Principles to draw up its accounts as at any date
other than 31 December in any year and/or for any other period than twelve
months.
1.7.3 None of the Lessor (other than in respect of the First Accounting Period)
and any of the Group Relief Recipients will be required by law to have
Accounting Periods which are other than twelve months in duration nor will
any of them be required to draw up their accounts for periods which do not
coincide with the relevant Accounting Period.
1.8 Any interest payable or deemed to be payable in respect of any funds
borrowed or deemed to be borrowed by the Lessor for the purpose of the
transactions contemplated by the Transaction Documents (as represented by
Notional Capital Outstanding when that is a negative figure) is or would
if funds had actually been borrowed and interest actually been payable
been allowed or, as the case may be, have been allowable as a trading
expense.
1.9 The Lessor's taxable income, receipts and outgoings in respect of the
transactions contemplated by the Transaction Documents will fall to be
assessed and dealt with under Case I of Schedule D.
1.10 The Lessor will be entitled to prepare its Corporation Tax computations
(and the Inland Revenue will accept such computations as the basis for
charging Corporation Tax):
1.10.1 insofar as they relate to interest received or paid, on a daily accruals
basis for the period in respect of which it is received or paid;
1.10.2 insofar as they relate to Primary Rentals, on the basis that an amount
shall be brought into account as income in each Accounting Period equal to
the greater of:
(1) the Accountancy Rental Earnings for that Accounting Period; and
(2) the Normal Rent for that Accounting Period;
PROVIDED THAT
(A) if the Accountancy Rental Earnings in any Accounting Period
exceed the Normal Rent for that Accounting Period and there is
a Cumulative Normal Rental Excess for that Accounting Period,
the amount to be brought into account for the Accounting
Period will be the greater of:
(1) the Accountancy Rental Earnings for that Accounting
Period less the Cumulative Normal Rental Excess for that
Accounting Period; and
(2) the Normal Rent for that Accounting Period; and
(B) if the Normal Rent in any Accounting Period exceeds the
Accountancy Rental Earnings for that Accounting Period and
there is a Cumulative Accountancy Rental Excess for that
Accounting Period, the amount to be brought into account for
that Accounting Period will be the greater of:
(1) the Normal Rental for that Accounting Period less the
Cumulative Accountancy Rental Excess for that Accounting
Period; and
(2) the Accountancy Rental Earnings for that Accounting
Period.
1.11 Subject in the case of the First Accounting Period to paragraph 1.34, in
respect of the First Accounting Period and each subsequent relevant
Accounting Period of the Lessor, the Lessor shall have received and
retained the benefit of relief for the Tax Loss in respect of that
Accounting Period by reason of either:
1.11.1 a set-off of such Tax Loss against other profits of the Lessor under
section 393 and/or 393A ICTA; or
1.11.2 the surrender by the Lessor of such Tax Loss or any part thereof in
accordance with the provisions relating to group relief contained in
Chapter IV Part X and Schedule 18 ICTA as at the date of this Lease
("Group Relief") to one or more Group Relief Recipients and the receipt of
payments for Group Relief so surrendered on the dates, and in the amounts
calculated in accordance with Non-Variable Assumption 2.6.
1.12 In respect of the First Accounting Period and each relevant Accounting
Period of the Lessor thereafter and in respect of each Relevant Accounting
Period of any Group Relief Recipient, the Lessor and each Group Relief
Recipient shall be liable to pay twenty five per cent (25%) of the total
Corporation Tax on profits for each such Accounting Period on each of 14
July and 14 October in that Accounting Period and 14 January and 14 April
following the end of that Accounting Period.
1.13 There will be no change in the Tax System affecting the transactions
contemplated by the Transaction Documents after the date hereof.
1.14 In respect of the transactions contemplated by the Transaction Documents:
1.14.1 the accounts of the Lessor following the First UK Meeting Date, and any
Consolidated Group Accounts, will be prepared in accordance with SSAP 21
on the actuarial after tax basis;
1.14.2 the accounts of the Lessor following the First UK Meeting Date, and any
Consolidated Group Accounts, will be prepared on the assumption that the
leasing of the Ship will terminate on the Primary Period End Date;
1.14.3 following the First UK Meeting Date there will be no change in the basis
on which the Lessor prepares its accounts in respect of the transactions
contemplated by the Transaction Documents;
1.14.4 if and as often as Variable Assumption 1.6 is varied, a one-off
adjustment will be made to the profit and loss account of the Lessor for
the earliest Accounting Period then possible to reflect the consequences
of the change in the rate of Corporation Tax and to ensure that the
treatment described above in relation to the application of SSAP 21 can be
applied to subsequent Accounting Periods;
1.14.5 there will be no change in Generally Accepted Accounting Principles after
the date of this Lease.
1.15
1.15.1 the Ship will be sold during the Accounting Period of the Lessor in which
the Primary Period End Date falls;
1.15.2 the Net Sale Proceeds or Net Total Loss Proceeds required to be brought
into account as Disposal Value will be not less than the Tax Written Down
Value of the Ship at the commencement of the Accounting Period of the
Lessor in which the Termination Payment Date falls;
(and to the extent that this Variable Assumption 1.15 is satisfied there
shall be deemed to be available to the Lessor a Capital Allowance equal to
such Tax Written Down Value).
1.16 The Lessor will not be required to bring into account as Disposal Value
any amount in excess of the aggregate of Net Sale Proceeds or Net Total
Loss Proceeds.
1.17 The Lessor will be subject to no Tax other than Corporation Tax and Value
Added Tax in respect of the transactions contemplated by the Transaction
Documents.
1.18 Subject to paragraph 1.33 the only amounts which the Lessor will be
required to bring into account as income in calculating UK taxable profits
by reference to the leasing of the Ship will be the Primary Rental payable
in accordance with paragraph 2.1, interest received or assumed to be
received by the Lessor in accordance with this Financial Schedule, the
Termination Sum (or any adjustment thereto), any Prepaid Rental, any
Disposal Value, and any other amount payable under this Lease expressed to
be payable by way of Rental.
1.19
1.19.1 the Arrangement Fee will be (pound)263,938.14 and will be incurred on the
Delivery Date;
1.19.2 the Lease Fee will be (pound)90,371.15 and will be incurred on the
Delivery Date;
1.19.3 the Lessor's Professional Costs will be (pound)101,456.07 and will be
incurred on the Delivery Date.
1.20 The Arrangement Fee, the Lease Fee and the Lessor's Professional Costs
will be allowable as a trading expense for Corporation Tax purposes in the
First Accounting Period.
1.21 The "designated period" (as that expression is defined in section 106
CAA):
1.21.1 will commence on the First UK Meeting Date; and
1.21.2 in the "designated period", the Ship will not be used for a purpose which
results in sections 109 or 110 CAA applying.
1.22 The United Kingdom will not take part in the Third Stage and the Euro will
not replace Sterling as the United Kingdom national currency.
1.23 Chapter 10 of Part 2 CAA does not apply to the Ship.
1.24 Section 225 CAA will not apply to the transactions contemplated by the
Transaction Documents.
1.25 Interest on any late payment of Corporation Tax made by the Lessor in
respect of this Lease, and interest on any Relevant Amount which is a
negative amount is (or would be had it actually been payable by the
Lessor) deductible in computing the taxable profits of the Lessor.
1.26 Interest on any overpayment of Corporation Tax made by the Lessor in
respect of this Lease, and interest on any Relevant Amount which is a
positive amount is (or would had it actually been received by the Lessor)
taxable in computing the taxable profits of the Lessor.
1.27 The Lessee and the Sub-Lessee will not elect to include the Ship in the
tonnage tax regime (as referred to in schedule 22 of the Finance Act
2000).
1.28 The Lessee will not elect to make a Prepayment of Primary Rental pursuant
to clause 25.2.1(c).
1.29 That any amounts received or receivable from:
1.29.1 the LC Bank under any Letter of Credit;
1.29.2 the Lessee Parent under the Lessee Parent Guarantee;
1.29.3 any Additional Security Provider under any Additional Security;
will be treated in the same way for Corporation Tax purposes as the
payments due under the Transaction Documents in respect of which such
amount is received under the Letter of Credit, the Lessee Parent Guarantee
and any Additional Security.
1.30 The Lessor will become a member of the Lessor's Group for the purposes of
Group Relief on the Delivery Date.
1.31 The First UK Meeting Date will occur on 7 April 2003.
1.32 The Delivery Date will occur on 8 April 2003.
1.33
1.33.1 the Lessor will be treated as commencing a trade of operating leasing on
the First UK Meeting Date and ceasing such trade on the Delivery Date;
1.33.2 no Capital Allowances will be due to the Lessor in respect of such trade;
1.33.3 profit of (pound)18,162.45 will be earned in respect of such trade and
(pound)35,437.62 of Tax Loss will be available to shelter such profit.
1.34
1.34.1 in respect of the First Accounting Period the Lessor will only be
entitled to surrender a proportion of Tax Loss, that proportion being
equal to
Tax Loss xnumber of days from Delivery Date to end of First
Accounting Period
total number of days in the First Accounting Period
1.34.2 the balance (being (pound)17,275.17) of such Tax Loss shall be eligible
to be set off as in paragraph 1.33.3 and to the extent of any excess
carried forward and set against profits arising in the finance lease trade
of the Lessor in later Accounting Periods.
1.35 the Ship Cost will be (pound)52,769,466.18.
1.36 There will be no liability to Tax in respect of the transactions
contemplated by the Deed of Assignment, Novation and Waiver (as defined in
the Share Acquisition Documents).
1.37 The Spot Exchange Rate as between Sterling as the Base Currency and
Dollars as the Other Currency on the Primary Period End Date for the
purposes of Non Variable Assumption 2.19 is 1:1.
1.38 The Initial Insurance Premium:
1.38.1 will be (pound)6000;
1.38.2is incurred on the Delivery Date; and
1.38.3 is deductible as a trading expense for the purposes of Corporation Tax in
the Accounting Period in which it is incurred.
1.39 The Notional Capital Outstanding on 8 April 2003 is equal to the aggregate
of:
(a) (pound)52,769,466.18;
(b) the Arrangement Fee;
(c) the Lease Fee;
(d) the Lessor's Professional Costs; and
(e) the Initial Insurance Premium.
2 Non-Variable Assumptions
2.1 On each Adjustment Date the Lessor will pay or receive interest calculated
(on a daily basis and using a 365 day year) on the daily balances during
each Adjustment Period of Notional Capital Outstanding calculated at the
Assumed Rate.
2.2 The Percentage Return will be applied to the daily negative balances of
Notional Capital Outstanding using a year of 365 days during the period
from the Delivery Date until the Final Date and the product is shown in
the column of the Applicable Cash Flow headed "Margin", each such figure
being debited to the Cash Flow on each Primary Rental Date and on the
Final Date.
2.3 All notional borrowing by the Lessor of funds in connection with the
transactions of which this Lease forms part shall be deemed to have been
raised in the United Kingdom on a sterling advance from a bank (as
defined, for the purposes of section 349(3)(a) ICTA, in section 840A ICTA)
in circumstances where at the time when the interest is paid (or deemed to
be paid) the person beneficially entitled to the interest is within the
charge to Corporation Tax in respect of the interest and on a full
recourse basis.
2.4 For the purposes of preparing any Applicable Cash Flow only, it shall be
assumed that the Primary Rentals and any other amount payable under this
Lease or the other Transaction Documents and which is taken into account
in any Applicable Cash Flow will be paid on the due date for payment
thereof.
2.5 The Lessor shall have no taxable profits other than any it shall make in
respect of the transactions contemplated by the Transaction Documents and
shall be regarded as having no assets on which Capital Allowances are
available other than the Ship.
2.6 Subject only to there being no change in any Variable Assumption which
affects the operation of the following, and to paragraph 1.34.1, a single
Group Relief Recipient will make to the Lessor payments for Group Relief
which are calculated and receivable on the following basis:-
(a) by applying the provisions of section 403A ICTA to determine how
much of the Lessor's Tax Loss for any Accounting Period of the
Lessor is available for surrender to the relevant Group Relief
Recipient for such Group Relief Recipient's corresponding Accounting
Period (as that expression is used in the said section 403A);
(b) by assuming that, with the consent of the Lessor, the relevant Group
Relief Recipient makes such claim as is necessary to procure that
the full amount of such Tax Loss is available to it by way of Group
Relief;
(c) by assuming that the relevant Group Relief Recipient pays to the
Lessor by way of Group Relief Payment amounts equal to the product
of:
(i) the amount of the Tax Loss in respect of each Accounting
Period of the Group Relief Recipient assumed under
sub-paragraph (a) above to have been surrendered by the
Lessor; and
(ii) the Corporation Tax Applicable Rate in relation to the
Accounting Period of the Group Relief Recipient to which such
Tax Loss was surrendered;
(d) by assuming that the relevant Group Relief Recipient makes each
payment referred to in sub-paragraph (c) above on the date assumed
to be the date for the payment by the Group Relief Recipient of
Corporation Tax on profits in relation to that Accounting Period in
Variable Assumption 1.12.
2.7 No payments or recovery of Value Added Tax will be taken into account in
any Cash Flow.
2.8 The Lessor will pay the Arrangement Fee, the Lease Fee and the Lessor's
Professional Costs.
2.9 Subject to there being no change in the Variable Assumptions which affects
the Lessor or a Group Relief Recipient, any Group Relief Recipient will
have an Accounting Period which ends on 31 December in each year.
2.10 Where it is assumed in any of the Assumptions or in the preparation of any
Cash Flow that an amount is received or paid by the Lessor on any date, an
amount equal to such receipt or payment shall be shown as credited or
debited to such Cash Flow on such date.
2.11 The aggregate of any Relevant Amount which is a negative amount together
with interest thereon at the rate and for the period referred to in
paragraph 4.9.2(b) shall be paid by the Lessor to the Inland Revenue on
the Tax Payment Date immediately succeeding the Effective Date.
2.12 Interest on any Relevant Amount which is a negative amount as referred to
in Non-Variable Assumption 2.11 shall be deemed to be interest on
underpaid Corporation Tax payable by the Lessor to the Inland Revenue.
2.13 Any Relevant Amount which is a positive amount shall be received by the
Lessor together with interest thereon at the rate and for the period
referred to in paragraph 4.9.2(c) on the Tax Payment Date immediately
succeeding the monthly anniversary of the Effective Date.
2.14 The amount of any interest on any Relevant Amount which is a positive
amount as referred to in Non-Variable Assumption 2.13 shall be deemed to
be interest on overpaid Corporation Tax payable by the Inland Revenue to
the Lessor.
2.15 The Lessor will not be entitled to Capital Allowances or any other form of
Tax relief in respect of the Ship Cost at a rate of more than twenty five
per cent. (25%) per annum on a reducing balance basis.
2.16 Immediately following the completion of the acquisition by the Purchaser
of the shares of the Lessor pursuant to the Share Acquisition Documents, a
meeting of the board of directors of the Lessor will be held in the UK
(the "First UK Meeting Date") and all subsequent board meetings at which
major and strategic decisions relating to the Lessor's business or affairs
will be taken and subject to any Bermudan law requirements all general
meetings of the Lessor will be held within the UK and all corporate books
and accounts relating to the Lessor's affairs will be maintained in the
UK.
2.17 At the meeting referred to in Non-Variable Assumption 2.16 above and after
the First UK Meeting Date, at least a majority of the directors of the
Lessor will be UK residents and at least a majority of the directors of
the Lessor will be physically present in the UK at board meetings of the
Lessor.
2.18 Subject to there being no change in any Variable Assumption which will
affect the Lessor, after the First UK Meeting Date the Lessor will draw up
its accounts for periods ending on 31 December in each year.
2.19 The Lessor will pay a fee of the Sterling Equivalent of $12,000 on the
Primary Period End Date or, if earlier, the Termination Date and no Tax
relief will be available in respect of such fee.
Appendix 2
The Initial Cash Flow
Appendix 3
The Initial Tax Report
Appendix 4
Reserve Asset Rate
The Reserve Asset Rate for any Adjustment Period or other relevant period shall
mean the annual percentage rate of interest derived from the following formula:
XL + S (X-X) + 0.01 x F
100 - (X + S)
Where:
"X" is the amount required to be held as a non-interest bearing cash
ratio deposit with the Bank of England or other relevant authority
expressed as a percentage of an eligible institution's eligible
liabilities (above any stated minimum);
"L" is LIBOR for the relevant Interest Period;
"S" is the amount required to be placed as special deposits with the
Bank of England or other relevant authority, expressed as a
percentage of an eligible institution's eligible liabilities (above
any stated minimum);
"F" is the amount of Sterling per (pound)1,000,000 of the fee base of an
authorised institution payable to the Financial Services Authority
per annum (disregarding any minimum fee payable under the Fees
Regulations);
"D" is the lower of L and the rate of interest per annum paid by the
Bank of England or other relevant authority on special deposits at
or about 11.00 am on the date of calculation;
PROVIDED THAT:
(a) for the purposes of calculating the Reserve Asset Rate in accordance with
this Appendix 4:
(i) X, L, S and D are included in the formula as numbers and not as
percentages (for example, if X=0.15 per cent. and L=7 per cent., XL
is calculated as 0.15 x 7;
(ii) the formula is applied on the first day of each period for which is
falls to be calculated (and the result shall apply for the duration
of such period);
(A) each amount is rounded up to the nearest four decimal places;
(B) if the formula produces a negative percentage, the percentage
shall be taken as zero;
(b) if alternative or additional financial requirements are imposed by the
Bank of England, the Financial Services Authority or any other United
Kingdom governmental authority or agency which in the Lessor's opinion
makes the formula no longer appropriate, the Lessor shall be entitled by
notice to the Lessee to stipulate such other formula as shall be suitable
to apply in substitution for the formula. Any such other formula so
stipulated shall take effect in accordance with the terms of such notice;
and
(c) for the purposes of this Appendix 4:
(i) "authorised" and "institution" have the meanings given to those
terms in the Banking Xxx 0000;
(ii) "Bank of England Act" means the Bank of England Xxx 0000;
(iii) "eligible institution" has the meaning given to that term in
schedule 2 to the Bank of England Act;
(iv) "eligible liabilities" has the meaning given to that term in the
Cash Ratio Deposits (Eligible Liabilities) Order 1998 or the
applicable substitute order made under the Bank of England Act as in
force on the date of application of the formula;
(v) "fee base" has the meaning given to the term in the Fees
Regulations;
(vi) "Fees Regulations" means the Banking Supervision (Fees) Regulations
2000 or the applicable substitute regulations made under the Bank of
England Act as are in force on the date of application of the
formula; and
(vii) "special deposits" has the meaning given to that term by the Bank of
England on the date of application of the formula.
Appendix 5
Initial Security Table
Appendix 6
Extra Security Amounts
Security Period Amount (pound)
15 July 03 to 14 October 03 91,995
15 October 03 to 14 January 04 196,355
15 April 04 to 14 July 04 26,558
15 July 04 to 14 October 04 151,528
15 October 04 to 14 January 05 258,709
15 April 05 to 14 July 05 70,542
15 July 05 to 14 October 05 195,073
15 October 05 to 14 January 06 301,061
15 July 06 to 14 October 06 112,896
15 October 06 to 14 January 07 214,070
15 July 07 to 14 October 07 45,066
15 October 07 to 14 January 08 148,817
15 October 08 to 14 January 09 94,119
15 October 09 to 14 January 10 47,829
15 October 10 to 14 January 11 6,679
15 July 22 to 14 October 22 353
15 October 22 to 14 January 23 18,833
