EXHIBIT 4.4
CHARTER PARTY
dated as of
December 5, 1997
between
QM TANKER 1177 TRUST,
a trust created pursuant to the Delaware Business Trust Act
under the Declaration and Agreement of Trust
dated as of November 19, 1997
by Owner Participant,
Owner
and
MOBIL EQUIPMENT FINANCE COMPANY INC.
Charterer
--------------------------------------------------------------------------------
Charter of Hull No. 1177
AS SET FORTH IN ARTICLE 20 OF THIS CHARTER PARTY, CERTAIN OF THE RIGHT, TITLE
AND INTEREST OF OWNER IN AND TO THIS CHARTER PARTY HAS BEEN ASSIGNED TO AND IS
SUBJECT TO A SECURITY INTEREST IN FAVOR OF STATE STREET BANK AND TRUST COMPANY,
AS THE INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER AND
HEAD LEASE, AND SECURITY AGREEMENT DATED AS OF DECEMBER 5, 1997 BETWEEN THE
OWNER TRUST AND THE INDENTURE TRUSTEE, AS SUCH INDENTURE MAY BE AMENDED,
MODIFIED OR SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS
THEREOF. THIS CHARTER PARTY HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE
EXTENT, IF ANY, THAT THIS CHARTER PARTY CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS CHARTER PARTY MAY BE CREATED THROUGH
THE TRANSFER OF POSSESSION OF ANY EXECUTED COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART THAT CONTAINS
THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON OR IMMEDIATELY
FOLLOWING THE SIGNATURE PAGE THEREOF.
BAREBOAT CHARTER PARTY
----------------------
AGREEMENT made as of the 5th day of December, 1997 between QM TANKER
1178 TRUST, a trust created pursuant to the Delaware Business Trust Act
(hereinafter called "Owner"), having an office and authorized to conduct
business at Elizabethan Square, Grand Cayman, Cayman Islands and created under
the Declaration and Agreement of Trust, under which Deutsche Xxxxxx Xxxxxxxx
(Cayman) Limited, a Cayman Islands banking corporation is the Managing Trustee
(together with its permitted successors and assigns, hereinafter called the
"Managing Trustee") (the Managing Trustee acting not individually, but solely as
trustee for the Owner Trust, hereinafter called "Owner Trustee"), and Mobil
Equipment Finance Company Inc., a Delaware corporation having an office and
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxx, XX 00000 (hereinafter called
"Charterer"), whereby Owner will let and demise and Charterer will hire the LR1
crude oil tank vessel identified in Schedule 1 (hereinafter called the "Vessel")
on the Delivery Date.
WHEREAS, U.K. Lessor has entered into a Construction Contract dated
November 24, 1997 with Hyundai Corporation and Hyundai Heavy Industries Co. Ltd.
(together, hereinafter called the "Builder") providing for the construction and
sale of the Vessel to U.K. Lessor on the terms stated therein;
WHEREAS, Owner has entered into the Head Lease with U.K. Lessor pursuant
to which the Vessel has been let to Owner for the U.K. Lease Term; and
WHEREAS, Owner wishes to subject its interests in the Vessel, including
such interests under the Head Lease, to a charter in favor of Charterer upon the
terms set forth herein;
NOW THEREFORE, in consideration of $1.00 in hand paid and other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
ARTICLE 1.
Definitions
-----------
For the purposes hereof, capitalized terms used herein (including those
used in the preamble and in the foregoing recitals) and not otherwise defined
herein shall have the meanings assigned to them in Appendix A, which Appendix A
shall for all purposes constitute part of this Charter Party and shall be
subject to amendment in accordance with the terms hereof. References in this
Charter Party to Articles, subarticles, clauses, Schedules, Appendices and
Exhibits are to Articles, subarticles and clauses of, and Schedules, Appendices
and Exhibits to, this Charter Party unless otherwise indicated.
ARTICLE 2.
Effective Date and Charter Period
---------------------------------
Owner agrees to let and demise and Charterer agrees to hire all of
Owner's right, title and interest in the Vessel upon the terms and conditions
set forth in this Agreement for the Charter Period. As of the Charter Party
Termination Date, the Vessel shall, except as otherwise expressly provided
herein, be redelivered to Owner or its designee pursuant to the terms of Article
19. This Agreement shall be binding and effective immediately upon execution
hereof notwithstanding any failure of the Delivery Date to occur.
ARTICLE 3.
Hire
----
(a) Bareboat Hire. Charterer shall pay to Owner, as charter hire for the
-------------
Vessel Interest, Bareboat Hire in installments with respect to each Rate Period
during the Charter Period on the dates and in the amounts provided in Articles
3(c) and (d). Each installment of Bareboat Hire shall be in arrears. Bareboat
Hire with respect to any charter entered into pursuant to Article 19(c)
following the expiration of this Charter Party shall be payable as provided in
Article 19(c).
(b) Supplemental Hire. Charterer shall pay to Owner, for its own account,
-----------------
or to the Person entitled thereto, as provided herein or in any other Operative
Document, any and all Supplemental Hire promptly as the same shall become due
and payable. As part of Supplemental Hire hereunder, Charterer shall pay the
Make-Whole Amount, if any, payable upon any redemption of the Secured Notes
under the Indenture as and when such Make-Whole Amount is due, provided that
Charterer shall not be required to pay any Make-Whole Amount in respect of the
redemption or purchase of the Secured Notes pursuant to Section 3.06 of the
Indenture.
(c) Base Hire. Base Hire shall be payable to Owner semi-annually in
---------
arrears on the Base Hire Payment Dates in the amounts and commencing on the date
set forth in Schedule 2. Under no circumstances shall the Bareboat Hire for any
Rate Period be lower than the Base Hire for such Rate Period.
(d) Excess Hire. Payment of Excess Hire shall be payable to Owner or in
-----------
accordance with its instructions, semi-annually in arrears on March 1 and
September 1 of each year following the applicable Rate Period. The amount of
Excess Hire shall be determined in accordance with Schedule 2A.
(e) Method of Payment. Subject to Article 20(b), all Bareboat Hire and
-----------------
Supplemental Hire payable to Owner shall be paid to Owner's account specified in
Schedule 1 to the Participation Agreement or to such other Person or account at
such other place as Owner shall specify in writing to Charterer at least five
Business Days
2
prior to the due date thereof. All Supplemental Hire payable to any Person other
than Owner pursuant to any Operative Document shall be paid directly to such
Person as provided in such Operative Document. Each payment of Hire shall be
made by Charterer in immediately available funds, on or before 12:00 noon, local
time at the place of receipt, on the scheduled date on which such payment shall
be due, unless such scheduled date shall not be a Business Day in which case
such payment shall be due and payable on the next succeeding Business Day with
the same force and effect as if made on such scheduled date and (provided such
payment is made on such next succeeding Business Day) no interest shall accrue
on the amount of such payment from and after such scheduled date.
(f) Late Payment. If any Hire shall not be paid when due, Charterer shall
------------
pay to Owner (or, in the case of Supplemental Hire, to Owner for its own account
or to the Person entitled thereto as provided herein or in any other Operative
Document), as Supplemental Hire, interest (to the extent permitted by law) on
such overdue amount from and including the due date thereof to but excluding the
date of payment thereof (unless payment is made after 12:00 noon, local time at
the place of receipt, in which event such date of payment shall be included) at
the Overdue Rate.
(g) Minimum Payment. Notwithstanding any other provision of this
---------------
Charter Party or any other Operative Document, (a) the amount of Base Hire
payable on each Base Hire Payment Date, shall be at least equal to the aggregate
amount of scheduled principal and accrued interest due and payable on the
Secured Notes Outstanding on such Base Hire Payment Date and (b) the amount of
Termination Value as of any date, together with any Base Hire payable hereunder
on such date, shall be at least equal to the aggregate amount of principal and
accrued interest which would be due and payable on the Secured Notes Outstanding
on such date.
ARTICLE 4.
Description of the Vessel; Documentation
----------------------------------------
(a) Description of Vessel. The Vessel will be built by Builder and at the
---------------------
Delivery Yard shown on Schedule 1 in accordance with the Construction Contract
which calls for delivery thereof on or prior to the scheduled delivery date
shown on Schedule 1. The Vessel will have a designed deadweight capacity of
approximately 105,500 metric tons, and otherwise will conform to the description
set forth in Schedule 1.
(b) Documentation. As of the Delivery Date the Vessel shall be registered
-------------
under the laws of the Xxxxxxxx Islands or under the laws of such other country
as Owner and Charterer may agree which is not materially less favorable to the
Indenture Trustee as trustee for holders of Secured Notes; and Charterer shall,
throughout the Charter Period maintain said documentation. Owner shall, at the
request of Charterer, immediately execute or file all documents necessary to
maintain such documentation and to effect any name change(s). Charterer may, at
any time, instruct Owner to change the name of the
3
Vessel, it being understood that all costs for changing the Vessel's name shall
be payable by Charterer.
ARTICLE 5.
Owner's Warranties and Representations
and Certain Charterer Undertakings
--------------------------------------
(a) Owner's Representations. Owner represents and warrants that as of the
-----------------------
Delivery Date (i) legal title in the Vessel will be held by U.K. Lessor, (ii)
unless the Head Lease shall have been terminated, Owner shall be the lessee
under the Head Lease, which shall be in full force and effect, (iii) Owner's
rights to the Vessel shall be subject to no Owner's Liens, and (iv) the
description of the Vessel set forth herein will be true and accurate in all
material respects.
(b) Indenture. The Charterer acknowledges the assignment of certain of
---------
Owner's rights hereunder in accordance with the terms and conditions of the
Indenture, and agrees to comply in accordance with the terms of this Charter,
with such instructions and directions as the Indenture Trustee may, in place of
Owner, give hereunder in accordance with the provisions of the Indenture
following an Indenture Event of Default.
(c) U.K. Documents. Charterer has acquainted itself with all terms,
--------------
conditions and provisions of the Head Lease and the other U.K. Documents. To
the extent there are any obligations imposed on Owner under the Head Lease other
than obligations to pay rentals, termination amounts, and related adjustments
under Articles 7, 8, 18, 19, 21, 22 of the Head Lease and the Financial Schedule
thereto that are not imposed on Charterer hereunder, Charterer shall take such
action as may be required to permit Owner to perform, or shall itself perform,
such obligations to the extent necessary to keep the Head Lease in full force
and effect. Nothing in this Article 5(c) shall create a separate obligation of
Charterer to perform any of the covenants contained in the Head Lease except to
the extent expressly required in the preceding sentence.
ARTICLE 6.
DELIVERY DATE
-------------
(a) Delivery. Owner shall deliver and demise the Vessel to Charterer, and
--------
Charterer shall accept the delivery and demise of the Vessel immediately upon
delivery of the Vessel by the Builder to U.K. Lessor, on the Delivery Date at
the Delivery Yard, such delivery and acceptance to be conclusively evidenced by
Charterer's execution of the Protocol of Delivery and Acceptance.
4
(b) Delivery Conditions. Satisfaction of the following in all material
-------------------
respects on or prior to the Delivery Date shall be a condition to the occurrence
of the Delivery Date:
(i) The Builder and the Supervisory Agent shall have been paid any
additional amounts then due under the Construction Contract and the Supervisory
Agreement, respectively, out of funds available for the purpose as contemplated
by the Operative Documents;
(ii) U.K. Lessor (or a person acting on behalf of U.K. Lessor in
accordance with the Supervisory Agreement) shall have accepted delivery of the
Vessel from the Builder and Owner shall have accepted delivery of the Vessel
from U.K. Lessor under the Head Lease and in evidence thereof appropriate
protocols of delivery and acceptance shall have been executed;
(iii) Owner shall have accepted possession and use of the Vessel under
the Head Lease;
(iv) Charterer shall have accepted delivery of the Vessel under this
Charter and in evidence thereof shall have executed and delivered to Owner the
Protocol of Delivery and Acceptance;
(v) title to the Vessel shall have been registered in the name of U.K.
Lessor in the Xxxxxxxx Islands (or other jurisdiction designated by Owner
Participant acceptable to Charterer and not materially less favorable to the
Indenture Trustee as trustee for holders of the Secured Note);
(vi) U.K. Lessor shall have executed and delivered to Owner the Ship
Mortgage in the form attached to the Head Lease with such changes thereto as
Owner and the Indenture Trustee may agree and are not materially adverse to the
holder of the Secured Note, and Owner shall have caused the Ship Mortgage to be
filed and recorded in the registry of the Xxxxxxxx Islands or, if applicable,
the appropriate registry of such other jurisdiction in which the Vessel has been
registered, and the rights of Owner to receive the proceeds of the Ship Mortgage
shall to the extent feasible have been validly assigned to the Indenture Trustee
as security for the Secured Notes;
(vii) Charterer shall have caused to be accomplished all other filings,
recordings or other action that are reasonably feasible and necessary or
desirable to establish Owner's right, title and interest in and to the Vessel
Interest, and to perfect the Lien on and security interest in the Indenture
Estate created by the Indenture;
(viii) on or prior to the Delivery Date, insurance complying in all
respects with the provisions of Section 16(a)(i) of this Charter shall be in
full force and effect and Owner Participant, the Pass Through Trustee and the
Indenture Trustee shall have received an Officer's Certificate of Charterer,
dated the Delivery Date, stating that such insurance complies in all respects
with the provisions of such Section 16(a)(i); and
5
(ix) Charterer shall have caused to be delivered to the other parties
hereto favorable opinions of counsel as to the matters referred to in clauses
(v), (vi) and (vii) of this Section 6(b)(i).
Any of such conditions may be amended or waived by agreement of Owner and
Charterer subject, in the case of any such amendment or waiver that would be
adverse to the interests of the holders of Secured Notes in any material
respect, to the prior consent of the Indenture Trustee.
(c) Determination to Accept Delivery. Nothing in this Article 6 shall
--------------------------------
affect in any way the rights of MOSAT in accordance with Article 5 of the Joint
Venture Agreement or in accordance with the Supervisory Agreement, to determine
when and whether to accept delivery of the Vessel.
(d) Notice of Delivery. Owner will provide Charterer with the earliest
------------------
possible notification of the intended Delivery Date, and shall confirm this
information fifteen (15) days, seven (7) days and three (3) days prior to the
Delivery Date; provided that the failure to provide any such notice shall not
otherwise affect Charterer's obligations hereunder.
ARTICLE 7.
Quiet Enjoyment; Use and Trade of the Vessel
--------------------------------------------
(a) Quiet Enjoyment. Owner warrants and covenants that, unless a Charter
---------------
Event of Default shall have occurred and be continuing and this Charter Party
shall have been declared to be in default pursuant to Article 22(a), Charterer
shall at all times during the Charter Period be entitled to the quiet use and
enjoyment of the benefits of the Vessel, including the right to uninterrupted
possession and use of the Vessel but subject to the rights of the parties to the
U.K. Documents, and Owner shall not, save as provided under the U.K. Documents,
take or permit any Person lawfully claiming by, through or under it to take any
action which interferes with such quiet use or enjoyment or such possession or
use or the rights of any subcharterer or assignee to such quiet use or enjoyment
or such possession or use under any subcharter or assignment permitted hereunder
(including, without limitation, the rights of MSCL under the Initial
Subcharter).
(b) Use of Vessel. During the Charter Period, Charterer shall have the
-------------
full use of the Vessel and may employ it worldwide in any lawful trades
permitted by laws and regulations of the U.S. and of the Xxxxxxxx Islands or
such other jurisdiction where the Vessel is registered, subject to the limits of
then current Institute Warranties and Clauses, carrying such lawful cargoes as
Charterer, Permitted Subcharterer or their authorized agents may direct.
6
ARTICLE 8.
Condition Upon Delivery
-----------------------
Disclaimer of Warranties. Neither Owner nor Owner Participant makes any
------------------------
representations or warranties whether written, oral or implied, with respect to
the Vessel Interest, the Vessel, or any part thereof, except as expressly set
forth in Section 7 or 9 of the Participation Agreement or in any Officer's
Certificate of the Owner Trust or Owner Participant, in each case delivered
pursuant to the Participation Agreement. As between Owner and Charterer,
execution by Charterer of this Charter Party and the Protocol of Delivery and
Acceptance shall be conclusive proof of Charterer's acceptance of the Vessel and
the Vessel Interest for all purposes hereof and of the commencement of the
Charter Period with respect thereto and that the Vessel and the Vessel Interest
are satisfactory to Charterer in all respects. CHARTERER ACKNOWLEDGES THAT
OWNER IS NOT A MANUFACTURER OR DEALER IN SHIPS OR THE COMPONENTS THEREOF AND
OWNER CHARTERS AND CHARTERER TAKES THE VESSEL AND THE VESSEL INTEREST AND EACH
PART THEREOF AS IS AND WHERE IS, AND NEITHER OWNER NOR OWNER PARTICIPANT SHALL
BE DEEMED TO HAVE MADE, AND OWNER HEREBY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY OTHER THAN THOSE REFERRED TO IN THE SECOND PRECEDING SENTENCE, EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION,
THE DESIGN OR CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY
THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE
VESSEL TO PERFORM ANY FUNCTION, TITLE TO THE VESSEL OR ANY PART THEREOF, THE
QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO
SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE. CHARTERER CONFIRMS THAT IT HAS SELECTED THE VESSEL
AND EACH PART THEREOF ON THE BASIS OF ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS
RELIANCE IN CONNECTION WITH SUCH SELECTION UPON ANY STATEMENTS, REPRESENTATIONS
OR WARRANTIES MADE BY OWNER OR OWNER PARTICIPANT. The provisions of this
Article have been negotiated and, except as expressly set forth in Sections 7
and 9 of the Participation Agreement or in any Officer's Certificate of the
Owner Trust or Owner Participant, the foregoing provisions are intended to be a
complete exclusion and negation of any representation or warranty by Owner or
Owner Participant, express or implied, with respect to this Charter Party, the
Vessel, the Vessel Interest or any part thereof that may arise pursuant to any
law now or hereafter in effect or otherwise. Nothing contained in this Article
shall be construed as a waiver of any warranty or other claim against any
manufacturer, supplier, dealer, vendor, contractor, subcontractor or installer,
including the Builder.
7
ARTICLE 9.
Net Charter
-----------
This is a net bareboat charter and, notwithstanding any other provision of this
Charter Party, the obligation of Charterer to pay Hire hereunder shall be
absolute and unconditional and shall not be affected by any circumstance of any
character, including, without limitation: (a) counterclaim, setoff, deduction,
defense, abatement, suspension, deferment, diminution or reduction; (b) any
defect in the condition, design, quality or fitness for use of the Vessel, or
any part thereof or interest therein or the failure of the Builder to construct
or deliver the Vessel; (c) any damage to, removal, abandonment, salvage, loss,
scrapping or destruction of or any requisition or taking of, the Vessel
Interest, the Vessel or any part thereof or interest therein; (d) any
restriction, prevention, interruption or curtailment of or interference with any
use, operation or possession of the Vessel Interest, the Vessel or any part
thereof or interest therein, including, without limitation, as a result of a
termination of or default under the Head Lease or any other U.K. Document; (e)
any defect in, or any Lien on, title to the Vessel Interest, the Vessel or any
part thereof or interest therein; (f) any change, waiver, extension, indulgence
or other action or omission in respect of any obligation or liability of
Charterer or Owner; (g) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Charterer, the Indenture Trustee, Owner, Owner Participant, U.K. Lessor, any
Loan Participant, any Holder or any other Person, or any action taken with
respect to this Charter Party by any trustee or receiver of any Person mentioned
above, or by any court; (h) any claim that Charterer has or might have against
any Person, including, without limitation, the Indenture Trustee, any Loan
Participant, Owner, Owner Participant, Managing Trustee or any Holder (but this
Article 9 shall not constitute a waiver of any such claim); (i) any failure on
the part of Owner, U.K. Lessor, the Indenture Trustee, Owner Participant,
Managing Trustee or any Loan Participant to perform or comply with any of the
terms hereof or of any other agreement; (j) any invalidity or unenforceability
or disaffirmance of this Charter Party or any provision hereof or any of the
other Operative Documents or the U.K. Documents or any provision of any thereof,
whether against or by Charterer or otherwise; or (k) any other occurrence
whatsoever, whether similar or dissimilar to the foregoing, whether or not
Charterer shall have notice or knowledge of any of the foregoing. Except as
expressly provided herein, Charterer, to the extent permitted by law, waives all
rights now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Charter Party, or to any diminution or reduction of Assigned Hire
payable by Charterer hereunder. All payments by Charterer of Base Hire and
Termination Value (or amounts payable by reference thereto) and other Assigned
Hire made hereunder as required hereby shall be final absent manifest error, and
Charterer shall not seek to recover any such payment or any part thereof for any
reason whatsoever absent manifest error. If this Charter Party shall be
terminated in whole or in part for any reason whatsoever Charterer shall, except
as expressly provided herein, nonetheless pay to Owner (or, in the case of
Supplemental Hire, to the Person entitled to such Supplemental Hire as specified
herein or in the appropriate Operative Document) an amount equal to each payment
of Assigned Hire at the time and in the manner that such payment would have
become due and
8
payable under the terms of this Charter Party if it had not been terminated in
whole or in part. Nothing contained in this Article 9 shall be construed as (a)
a guaranty of (i) the value of the Vessel Interest or the Vessel upon the
expiration or termination of the Charter Period or (ii) the useful life of the
Vessel or (iii) payment of any of the Secured Notes or (b) a prohibition of
assertion of any claim against any manufacturer, supplier, dealer, vendor,
contractor, subcontractor or installer with respect to the Vessel or (c) a
waiver by Charterer of its right to assert and xxx upon any claims it may have
against any other Person in one or more separate actions.
ARTICLE 10.
Xxxxxxx
-------
Solely as between Owner and Charterer, the master, officers and crew of the
Vessel and all other persons at any time during the Charter Period on board the
Vessel shall be deemed to be engaged and employed exclusively by Charterer or
Permitted Subcharterers and shall be deemed to be and remain Charterer's or
Permitted Subcharterers' servants, navigating and working the Vessel solely on
behalf of and at the risk of Charterer or such Permitted Subcharterers. Owner
shall not have any interest in any hire, freight or salvage moneys earned by the
Vessel or received by Charterer or any Permitted Subcharterer.
ARTICLE 11.
Maintenance; Inspection
-----------------------
(a) Maintenance. During the Charter Period, Charterer shall maintain and
-----------
preserve the Vessel in such condition as will entitle it to maintain the same
classification and rating of American Bureau of Shipping (hereinafter called the
"Classification Society") as when delivered to Charterer under this Charter
Party. Charterer shall furnish to Owner a copy of all reports and certificates
issued by the Classification Society evidencing the maintenance of such
classification and safety standards. At all times during the Charter Period,
Charterer shall operate and maintain (or cause the Permitted Subcharterer to
operate and maintain) the Vessel in accordance with MOSAT's established
maintenance, rebuild and repair programs for similar Vessels (and without
discriminating against the Vessel based on the leased status of the Vessel
Interest or otherwise) so as to keep the Vessel (i) in good working order and
condition, ordinary wear and tear excepted and (ii) in compliance in all
material respects with all applicable Governmental Rules and Governmental
Actions and the requirements of the Classification Society; provided, however,
-------- -------
that Charterer shall not be obligated to comply with any Governmental Rule or
Governmental Action (A) whose application or validity is being contested
diligently and in good faith by appropriate proceedings, (B) compliance with
which shall have been excused or exempted by a nonconforming use permit, waiver,
extension or forbearance exempting it from such Governmental Rule or
Governmental Action but only to the extent that Charterer's noncompliance is in
9
accordance therewith, (C) if good faith efforts and appropriate steps are being
taken to comply (in which case such compliance shall be effected prior to the
date the Vessel is to be returned to Owner hereunder), or (D) if failure of
compliance (individually and in the aggregate with all other instances of
continuing noncompliance by Charterer) would result in no material adverse
consequences to Charterer, Owner, Owner Participant or U.K. Lessor, so long as,
in the case of each of clauses (A) through (D) of this proviso, neither such
failure of compliance nor such contest shall result in any material risk or
danger of (1) the sale, forfeiture or loss of any material part of or interest
in the Vessel or the Vessel Interest, the Trust Estate or the Indenture Estate
or title thereto, (2) any interference with the payment of Hire when due, or (3)
the imposition of any criminal liability on the part of, or any other material
adverse effect on, Owner, Owner Participant, U.K. Lessor, the Trust Estate, the
Indenture Estate or the Vessel Interest. Charterer shall have the right to make
such repairs to the Vessel as it deems advisable in its sole discretion, subject
to compliance with the express provisions of this Charter Party. Owner shall
have no obligation to maintain, alter, repair, rebuild or replace the Vessel or
any part thereof, and Charterer expressly waives (to the extent legally
permitted to do so but without prejudice to any rights it may have against, or
obligation of, Owner Participant with respect thereto) the right to perform any
such action at the expense of Owner pursuant to any law at any time in effect.
During the Charter Period, Charterer shall keep and maintain (or cause to be
kept and maintained) proper books and records relating to all services rendered
and all funds expended for operation, maintenance, repair and replacement of the
Vessel and the acquisition, construction or installation of all Components,
Replacement Components and Modifications, all in accordance with customary
practices in the oil tanker industry.
(b) Inspection. During the Charter Period, Owner shall have the right at
----------
any time, on reasonable notice, to inspect the Vessel in order to ascertain
whether the Vessel is being properly repaired and maintained; provided that
unless a Charter Event of Default shall have occurred and be continuing, no such
inspection shall be made more than once in any calendar year. Charterer shall
also permit Owner to inspect the Vessel's logs whenever requested, on reasonable
notice, and shall promptly furnish Owner with information in such detail as may
reasonably be requested regarding any material casualties or oil pollution
incidents involving the Vessel. During the Charter Period, the Indenture
Trustee shall have the same right to inspect the Vessel and the related books
and records, provided that, unless an Event of Default shall have occurred and
be continuing, such inspection shall be not more often than once per year.
(c) Certain Operating Costs. The provisions of Articles 11, 12 and 13 as
-----------------------
to the costs of maintaining, operating and modifying the Vessel and equipping it
with spares and of Article 5(c) as to the costs of maintaining the Head Lease in
force shall be without prejudice to the calculation of Daily Operating Costs in
accordance with the terms of clause (d) of Schedule 2B and without prejudice to
the obligation of Owner to comply with the provisions of Articles 13 and 14 of
the Joint Venture Agreement relating to operating, repair and maintenance costs
and drydock costs.
10
ARTICLE 12.
Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts
-------------------------------------
(a) Fuel and Lubricants. On or as soon as possible following the Delivery
-------------------
Date, Charterer agrees to pay or cause to be paid to Builder in accordance with
the provisions of Article 4 of the Joint Venture Agreement, the amount payable
under Section 6(k) of the Shipbuilding Contract for such fuel, unbroached
lubricating oil, unused lubricating oil in storage tanks, and unbroached
consumable stores as may be aboard the Vessel as of the Delivery Date. In the
event the Vessel is redelivered to Owner or its designee at the expiration of
this Charter Party, on the date of such redelivery (hereinafter the "Redelivery
Date"), Owner or its designee shall accept and pay Charterer the latter's actual
costs for such fuel, unbroached lubricating oil, unused lubricating oil in
storage tanks and unbroached consumable stores as then remain on board the
Vessel.
(b) Use of Equipment and Appurtenances. Charterer shall have the use,
----------------------------------
without extra cost, of such equipment, outfit, appurtenances, as are on board
the Vessel on the Delivery Date. Such items or their substantial equivalent
shall be returned to Owner or its designee on the Redelivery Date in the same
good order and condition as when received, reasonable wear and tear excepted.
Charterer shall have the use, without extra cost, of spare and replacement parts
as are on board the Vessel on the Delivery Date. The same or their substantial
equivalent shall be returned to Owner or its designee on the Redelivery Date in
the same good condition as when received, reasonable wear and tear excepted.
(c) Spares and Replacement Parts. Subject to Article 13 below, during the
----------------------------
Charter Period, Charterer shall provide such additional equipment, outfit,
tools, spare and replacement parts, crockery and linen as may be required for
Charterer's operation of the Vessel. Spare and replacement parts ordered for,
but not delivered to, the Vessel by or for Owner on or before the Delivery Date,
or the same or the substantial equivalent of such spare and replacement parts
ordered by or for Charterer on or before the Redelivery Date shall be taken over
and paid for, respectively, by Charterer or Owner, as the case may be, when
delivered to the Vessel; and such equipment shall remain the property of,
respectively, Charterer or Owner as the case may be. The foregoing shall not
apply to spare and replacement parts ordered for the pumps, gear and equipment
described in Article 13(b).
(d) Certificate of Master. For the purposes of Article 12(a), the
---------------------
certificate of the master of the Vessel shall in the absence of manifest error
be binding on Charterer and Owner as to the inventory fuel, unbroached
lubricating oil, unused lubricating oil in storage tanks and unbroached
consumable stores on board the Vessel at the Delivery Date and Redelivery Date;
and said inventories shall be used to determine the sums, if any, owing to
Builder pursuant to Article 12(a) on the Delivery Date and Redelivery Date,
11
respectively, which sums shall be due and payable in United States Dollars on
presentation of the respective party's invoice.
ARTICLE 13.
Vessel Modification
(a) Required Modifications. At all times during the Charter Period,
----------------------
Charterer shall make (or cause to be made) all Severable and Nonseverable
Modifications to the Vessel as may be required from time to time to meet the
requirements of clause (ii) of Article 11(a) or to maintain any insurance
coverage required by Article 16 (subject to the qualifications set forth in such
Article) unless Charterer shall have elected to terminate this Charter Party
pursuant to Article 18 or unless Charterer shall have made the election provided
in Article 13(f) ("Required Modifications"). Charterer shall complete (or cause
to be completed) all Required Modifications in a good and workmanlike manner,
with reasonable dispatch and in a manner (but only to the extent practicable in
the case of Modifications to the Vessel required pursuant to clause (ii) of
Article 11(a) or to maintain any insurance coverage required by Article 16)
which does not decrease except to a de minimis extent the Fair Market Sales
-- -------
Value of the Vessel or decrease the remaining useful life or utility of the
Vessel or cause the Vessel to become "limited use property" within the meaning
of Revenue Procedure 76-30.
(b) Optional Modifications. Charterer may, at no expense to Owner, make
----------------------
(or cause or allow to be made) such other Severable and Nonseverable
Modifications to the Vessel not required by Article 11(a), including the
installation of pumps, gear and equipment in addition to that on board as of the
Delivery Date, as do not decrease the Fair Market Sales Value (except to a de
--
minimis extent) of the Vessel or decrease the remaining useful life or cause the
-------
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(c) Title to Modifications; Purchase Option for Severable Modifications.
-------------------------------------------------------------------
(i) Title to all Severable Modifications to the Vessel that are not Required
Modifications shall vest in Charterer or any Person designated by Charterer.
Charterer may, with the written consent of Owner Participant, remove (or allow
to be removed) any such Severable Modification prior to or upon the expiration
of the Charter Period. Title to any such Severable Modification remaining on
the Vessel upon the expiration of the Charter Period shall, to the extent
required by the Head Lease, vest in the Head Lessor.
(ii) Title to (x) Severable Modifications to the Vessel that are Required
Modifications and (y) Nonseverable Modifications to the Vessel, shall to the
extent required by the Head Lease vest in U.K. Lessor and shall otherwise vest
in Owner free and clear of all Liens except Permitted Liens.
(d) Payment for Modifications and Replacement Components. (i) Charterer
----------------------------------------------------
shall, with the written consent of Owner Participant, be permitted at any time
to finance
12
the cost of any Severable Modification to the Vessel that is not a Required
Modification by any Governmental Rule or Governmental Action, directly or
indirectly, including, without limitation, on a third party ownership basis.
(ii) Charterer may with the written consent of Owner Participant seek
financing for the cost of any Modification (including any alterations to the
Vessel pursuant to Article 15 of the Construction Contract) to the Vessel by the
issuance of Additional Notes pursuant to Section 2.08 of the Indenture.
Charterer shall first provide Owner and Owner Participant with written notice of
such Modification at least 30 days prior to the date of such proposed financing.
(e) Replacement of Components; Removal of Property. (i) In the ordinary
----------------------------------------------
course of maintenance, service, repair or testing during the Charter Period, any
Component or Replacement Component may be removed and replaced with a
Replacement Component and, upon such replacement, Charterer (or its designee)
shall be entitled to retain the amount of the net proceeds of any sale or
disposition of any such removed Component or Replacement Component. Any such
Replacement Components shall be free and clear of all Liens, except Permitted
Liens, and in as good operating condition as, and with a value, utility and
useful life at least equal to, the Components or Replacement Components
replaced, assuming such replaced Components or Replacement Components were in at
least the condition and repair required to be maintained hereunder. Immediately
upon any Replacement Component becoming incorporated in the Vessel without
further act, (x) title to such Replacement Component thereupon shall vest in
U.K. Lessor and Owner's interest therein under the Head Lease shall be subject
to the Lien of the Indenture, (y) such Replacement Component shall become
subject to this Charter Party and Owner's interest therein under the Head Lease
shall be deemed a part of the Vessel Interest for all purposes hereof to the
same extent as the Component or Replacement Component it replaced and (z) title
to such removed Component or Replacement Component shall vest in Charterer or
such Person as shall be designated by Charterer, free and clear of all rights of
Owner and the Indenture Trustee and shall no longer be deemed a Component or a
Replacement Component hereunder.
(ii) If, at any time during the Charter Period, Charterer shall conclude
that any property included in the Vessel is obsolete, redundant or unnecessary
and can be removed without diminishment of the value or utility of the Vessel or
reduction of the remaining useful life of the Vessel and without causing the
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30, Charterer may remove (or allow to be removed) such property and upon such
removal, without further act, title to such property shall vest in Charterer or
in such Person as shall be designated by Charterer, free of the rights of U.K.
Lessor and the Lien of the Indenture; provided that Charterer shall account for
any net proceeds from any sale or other disposition of any items of such
property in accordance with the provisions of Schedule 2B and Articles 13 and 14
of the Joint Venture Agreement.
(f) Exemption from Certain Modifications. Notwithstanding the provisions
------------------------------------
of Article 13 (a), if in the reasonable estimation of Charterer any Severable or
13
Nonseverable Modification that would otherwise be a Required Modifications
exceeds $1,000,000 multiplied by the Inflation Factor for the date of such
estimate, Charterer may, by notice to Owner, elect not to make such Modification
provided the failure to make such Modification will not prevent economic
operation of the Vessel in jurisdictions and between ports not affected by such
Governmental Rules, provided, further, the failure to make such modification
-------- -------
shall not result in any material risk or danger of (1) the sale, forfeiture or
loss of any material part of or interest in the Vessel or the Vessel Interest,
the Trust Estate or the Indenture Estate or title thereto, (2) any interference
with the payment of Hire when due or (3) the imposition of any criminal
liability on the part of, or any other material adverse effect on, Owner, Owner
Participant, U.K. Lessor, the Trust Estate, the Indenture Estate or the Vessel
Interest.
(g) Cost of Modifications. Charterer shall be entitled to recover from
---------------------
Owner Participant the cost of any Modification required to be paid by Owner
Participant pursuant to as provided in accordance with Schedule 2B hereto or
Articles 13 or 14 of the Joint Venture Agreement, as applicable, provided that
so long as the Lien of the Indenture shall not have been discharged, no failure
of Owner Participant to pay such reimbursement shall constitute a default under
this Charter Party, reduce the obligations or rights of Charterer or Owner
hereunder or affect the continued validity and enforceability of this Charter
Party in any manner.
ARTICLE 14.
Event of Loss
(a) Notice of Event of Loss. If there shall occur an Event of Loss,
-----------------------
Charterer shall promptly notify Owner and the Indenture Trustee of the
occurrence thereof and the Termination Value Determination Date on which the
Termination Value will be paid.
(b) Payment of Termination Value, Etc. If an Event of Loss shall occur,
---------------------------------
Charterer shall pay to Owner as compensation for such Event of Loss, on the date
which is the latest Termination Value Determination Date occurring not later
than 180 days after the date of such Event of Loss, the Termination Value as of
such Termination Value Determination Date. Charterer shall pay, simultaneously
therewith, (i) all Bareboat Hire due and owing prior to the date of such
payment, (ii) all Supplemental Hire due and owing on or prior to the date of
such payment, (iii) if such Termination Value Determination Date is a Base Hire
Payment Date, all Base Hire payable on such Base Hire Payment Date, and (iv) all
Excess Hire or Additional Excess Hire accrued through such Termination Value
Determination Date, whereupon (A) this Charter Party and the obligations of
Charterer hereunder shall terminate as of the date of such payment and (B) Owner
shall hold all right, title and interest of Owner in and to the Vessel Interest,
in accordance with the provisions of the Joint Venture Agreement, and shall
apply all proceeds thereof to the reimbursement of all amounts paid by Charterer
in respect of Termination Value, together with interest thereon at the Debt Rate
from the date of
14
payment, and (C) Owner shall, at Charterer's expense, take such actions under
Section 6.03 of the Indenture as Charterer may reasonably request.
(c) Application of Other Payments upon the Occurrence of an Event of Loss.
---------------------------------------------------------------------
Any amounts of condemnation or requisition proceeds received at any time by
Owner, the Indenture Trustee or Charterer as a result of the occurrence of an
Event of Loss shall be divided between Charterer and Owner as their respective
interests may appear and the amount paid to Owner shall reduce the amount that
Charterer is required to pay to Owner (but not below zero) pursuant to Article
14(b) or, if the amount payable pursuant to Article 14(b) has already been paid
by Charterer, Charterer shall be entitled to retain out of the amounts otherwise
payable to Owner pursuant to this Article 14(c), the amount that would have been
applied in reduction of the amount payable by Charterer under Article 14(b).
(d) Application of Payments Not Relating to an Event of Loss. Payments
--------------------------------------------------------
(except for payments under insurance policies described in Article 16) received
at any time by Owner, the Indenture Trustee or Charterer from any Governmental
Authority or other Person with respect to any destruction, damage, loss,
condemnation, confiscation, theft or seizure of or requisition of title to or
use of the Vessel Interest or any part thereof not constituting an Event of Loss
shall be paid over to Charterer or as it may direct and all such amounts paid to
Charterer shall be retained by Charterer.
(e) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 14, so long as any Charter Event of Default
shall have occurred and be continuing, any amount (except for payments under
insurance policies described in Article 16) that otherwise would be payable to
or for the account of, or that otherwise would be retained by, Charterer
pursuant to this Article 14 shall be paid to Owner (or to the Indenture Trustee
so long as this Charter Party is subject to the Lien of the Indenture) as
security for the obligations of Charterer under this Charter Party and, subject
to the Indenture, applied against Charterer's payment obligations hereunder when
and as they become due and payable and, at such time thereafter as no Charter
Event of Default shall be continuing, such amount shall, to the extent not
theretofore applied as provided herein or in the Indenture, be paid promptly to
Charterer or as it may direct.
ARTICLE 15.
Liens
-----
(a) Owner's Liens. In addition to the undertakings and warranties in
-------------
Articles 4 and 5 and in the Participation Agreement concerning absence of
Owner's Liens upon delivery of the Vessel to Charterer hereunder, Owner warrants
that throughout the Charter Period Owner will not cause the Vessel or the Vessel
Interest to incur any Owner's Liens whatsoever; and Owner will defend, indemnify
and hold Charterer harmless with respect to any such Owner's Liens and/or
charters, and will promptly take,
15
at its own expense, such actions as may be required to discharge any Owner's
Lien prohibited by this Article 15(a).
(b) Charterer Liens. Charterer will not, directly or indirectly, create,
---------------
incur, assume or suffer to exist any Liens on or with respect to all or any part
of the Vessel or the Vessel Interest, title thereto or any interest therein,
other than Permitted Liens, and Charterer promptly, at its own expense, will
take such actions as may be necessary duly to discharge any such Lien not
excepted above. Neither Charterer, Permitted Subcharterers, the Master, the
Vessel nor any third party has or shall have any right, power or authority to
create, incur or permit to be placed or imposed upon the Vessel, its freights,
profits or hire, or the Vessel Interest any Lien whatsoever other than Permitted
Liens.
(c) Copy of Documents on Board Vessel. During the Charter Period,
---------------------------------
Charterer agrees to carry a true copy of this Charter Party, the Head Lease and
the Ship Mortgage with the Vessel's papers on board the Vessel and to exhibit
the same to any person having business with the Vessel which may give rise to a
maritime Lien upon the Vessel or to the sale, conveyance, mortgage or lease
thereof and on demand to any representative of Owner.
(d) Identification of Vessel. At all times during the Charter Period,
------------------------
Charterer shall cause to be placed and kept prominently displayed in the
Master's Cabin and the chart room of the Vessel a notice, framed under glass,
printed in plain type of such size that the paragraph of reading matter thereof
shall cover a space not less than six inches wide by nine inches high, reading
as follows:
"NOTICE OF MORTGAGE AND CHARTER
Title to this vessel is held by Abbey National December Leasing (4)
Limited. This vessel is under lease to Deutsche Xxxxxx Xxxxxxxx (Cayman)
Limited, not in its individual capacity but solely as Managing Trustee
of QM Tanker 1177 Trust under the Declaration and Agreement of Trust
dated as of November 19, 1997, is further demise chartered to Mobil
Equipment Finance Company Inc. pursuant to a Bareboat Charter Party,
dated as of December 5, and is covered by a first Ship Mortgage dated
in favor of said Managing Trustee. Said lease and demise
charter and mortgage provide that no person shall create, incur or
permit to be placed or imposed upon this vessel any lien or encumbrance
whatsoever except as expressly permitted therein. A copy of said lease,
demise charter and mortgage are carried on this vessel and must be
exhibited on demand to any person having business with this vessel."
Such notice shall be changed to reflect the identity of any successor Owner or
Charterer. Neither Owner nor Charterer shall take any action or omit to take
any action during the Charter Period that would (i) cause the Vessel to cease to
be documented as a vessel pursuant to the laws of the Xxxxxxxx Islands or other
relevant jurisdiction, (ii) cause the Ship Mortgage on the Vessel to cease to be
a first Ship Mortgage under the laws of the
16
Xxxxxxxx Islands or other relevant jurisdiction, or (iii) cause the Vessel to
cease to be entitled to the same classification that the Vessel had from the
Classification Society on the Delivery Date (subject to any reduction in
classification resulting from the age of the Vessel). Except as otherwise
directed by Owner or provided herein, Charterer shall prevent the name of any
Person other than that of Charterer, MSCL, the Guarantor, or any Affiliate of
any thereof or any Permitted Subcharterer from being placed on any part of the
Vessel as a designation that reasonably might be interpreted as a claim of
ownership or right to possession or use thereof.
(e) Lien on Cargoes. Owner will have a lien upon all cargoes and sub-
---------------
freights belonging to Charterer and any Xxxx of Lading freights for all claims
under this Charter Party.
ARTICLE 16
Insurance
---------
(a) Coverage. (i) Charterer shall carry and maintain or cause to be
--------
carried and maintained at all times during the Charter Period protection and
indemnity insurance (including pollution liability insurance), to the extent
such insurance is commercially available, on or with respect to the Vessel and
the operation thereof in such amounts, and with such deductibles or self-
insurance amounts, and in such forms as is consistent with Charterer's practices
for other similar vessels owned or chartered by it or its Affiliates. The
provisions of Rule 16 (Fleet Entry) of the Britannia Steam Ship Insurance
Association Limited (the "Association") will apply (or similar requirements of
any other insurer providing protection and indemnity insurance with respect to
the Vessel may apply) to the entry of the Vessel with the Association save that
the Association may not require Owner Participant or Owner to pay outstanding
calls on other ships in the fleet.
(ii) Any liability insurance carried in accordance with Section 16(a)(i)
shall provide in the policy or by special endorsement that:
(A) Owner, Owner Participant and, at such times as it is the mortgagee of
the Vessel, the Indenture Trustee, are included as additional insureds in
respect of all public liability policies, if any, carried in accordance with
Section 16(a)(i), and the Pass Through Trustee and, at such time as it is not
the mortgagee of the Vessel, the Indenture Trustee, are included as additional
insureds in respect of all such policies, if feasible, or are otherwise entitled
to the benefits of such insurance coverage; and
(B) such insurance shall be primary without right of contribution of any
other insurance carried by or on behalf of Owner, the Indenture Trustee, Owner
Participant or the Loan Participant;
(b) Adjustment of Losses. Losses, if any, with respect to the Vessel under
--------------------
all insurances or entries in protection and indemnity associations, whether or
not required to
17
be carried under Section 16(a), shall be adjusted with the insurance companies,
including the filing of appropriate proceedings, by Charterer. Owner shall
cooperate with Charterer in making all proofs of loss and take all other
reasonable steps necessary to effect such adjustment with the insurance
companies.
(c) Application of Insurance Proceeds. All insurance proceeds in respect
---------------------------------
of insurance, if any, maintained by Charterer with respect to the Vessel and
payable under circumstances not constituting an Event of Loss shall be payable
to Charterer. All insurance proceeds in respect of hull insurance, if any,
maintained by Charterer with respect to the Vessel and payable as a result of an
Event of Loss shall, provided the lien of the Indenture shall have been
discharged, (i) if Termination Value in connection with such Event of Loss shall
already have been paid by Charterer, be applied (up to an amount not exceeding
the applicable Termination Value) to reimburse Charterer for its payment of such
Termination Value, and (ii) if Termination Value in connection with such Event
of Loss shall already not have been paid by Charterer, be applied (up to an
amount not exceeding the applicable Termination Value) in reduction of
Charterer's obligation to pay such Termination Value. The balance of such
proceeds and, if the lien of the Indenture shall have not been discharged, the
whole of such proceeds shall be paid over to or retained by Owner.
Notwithstanding the foregoing, the proceeds of any protection and indemnity or
other liability insurance shall be payable to the Person to whom such amount is
due.
(d) Additional Insurance. Nothing in this Section 10 shall prohibit Owner,
--------------------
Owner Participant, Charterer, the Indenture Trustee or the Pass Through Trustee
from acquiring or maintaining, at its own expense, additional insurance in such
amounts with respect to such risks as each such Person, as the case may be,
shall determine; provided that no such insurance carried by Owner, the Indenture
Trustee, the Pass Through Trustee or Owner Participant shall prevent Charterer
or any subcharterer from, or increase the cost to Charterer or any subcharterer
of, obtaining insurance respecting the Vessel as Charterer or any subcharterer
wishes. The proceeds of any such additional insurance will be for the account of
the party maintaining such additional insurance.
ARTICLE 17.
Requisition
-----------
Requisition (not involving title) of the Vessel for use by any Government
during the Charter Period not constituting an Event of Loss shall not terminate
this Charter Party and Charterer shall remain liable for the performance of its
obligations hereunder.
18
ARTICLE 18.
Early Termination
-----------------
(a) Decision. If Charterer shall determine in good faith that the
--------
continuation of this Charter Party is uneconomic by reason of the cost of
compliance with Governmental Rules or Governmental Actions, or by reason of
indemnity payments required to be made to any Person under this Charter Party or
the Participation Agreement, then Charterer may elect to terminate this Charter
Party with respect to the Vessel Interest in accordance with this Article 18 on
any Termination Value Determination Date.
(b) Notice of Termination. In order to exercise its right to terminate
---------------------
this Charter Party as provided in this Article 18, Charterer shall provide Owner
with (i) notice in writing at least 90 days but not more than 545 days prior to
the Termination Value Determination Date as of which Charterer is electing to
terminate this Charter Party with respect to the Vessel Interest (the
"Termination Date"), such notice to specify (a) the Termination Date, and (b)
----------------
the Termination Value as of the Termination Date, and (ii) an Officer's
Certificate of Charterer as to the determination referred to in Article 18(a)
and stating that such termination will not violate the provisions of the Head
Lease. Unless Owner shall have elected to retain the Vessel Interest pursuant to
Article 18(e), Charterer may, at its option by written notice to Owner at any
time prior to the 30th day prior to the Termination Date, revoke any such notice
of termination, in which event this Charter Party shall not terminate and the
reasonable out-of-pocket expenses incurred by Owner, Owner Participant and the
Indenture Trustee in connection therewith shall be borne by Charterer; provided,
however, that Charterer shall have no obligation to so reimburse Owner or Owner
Participant if such notice of revocation is given (or deemed to have been given
pursuant to the penultimate sentence of Article 18(e)) as a result of Owner's
failure to make the payments required to be made by it under Article 18(e)).
(c) Sale of Vessel Interest; Termination Payment. If Charterer shall have
--------------------------------------------
made a Termination Election, Charterer shall, subject to Article 18(f) as agent
for Owner, use reasonable efforts to solicit bids for the cash purchase of the
Vessel Interest on the Termination Date. Owner may also solicit bids for the
cash purchase of the Vessel Interest on the Termination Date independent of
Charterer. Charterer and Owner, as the case may be, shall certify to the other
in writing the amount and terms of each bid received by it and the name and
address of the Person submitting such bid. Subject to Article 18(e), in the
event that Charterer or Owner shall have obtained any such bids from any Person
other than Charterer or an Affiliate of Charterer, Owner shall sell the Vessel
Interest on the Termination Date to such Person which shall have submitted the
highest bona fide cash bid. Upon payment to Owner of the purchase price in
immediately available funds (and all other amounts due pursuant to the next
sentence) on the Termination Date, Owner shall sell to the highest bona fide
---- ----
bidder all right, title and interest of Owner in and to the Vessel Interest as
is and where is, free and clear of Owner's Liens and Owner Participant's Liens
but otherwise without representation or warranty. This Charter Party and the
obligations of Charterer hereunder shall terminate
19
concurrently with such sale and such payment. As a condition to the sale of the
Vessel Interest pursuant to the second preceding sentence, Charterer shall pay
on the Termination Date to Owner, in immediately available funds, (i) an amount
equal to the excess, if any, of (A) the Termination Value as of the Termination
Date over (B) the proceeds of such sale net of the reasonable out-of-pocket
expenses incurred by Owner and Owner Participant in connection with such sale,
(ii) all Bareboat Hire due and owing prior to the Termination Date (iii) if the
Termination Date is a Base Hire Payment Date, Base Hire payable on the
Termination Date, (iv) all Supplemental Hire due and owing on or prior to the
Termination Date, including any premium payable with respect to the redemption
of the Secured Notes and (v) all Excess Hire accrued through the Termination
Date. On the Termination Date, Owner shall, at Charterer's expense, execute and
deliver to such Person a xxxx of sale or assignment and such other instruments,
documents and opinions as such Person or Charterer may reasonably request to
evidence the valid consummation of such transfer and shall take such actions
under Article 6.03 of the Indenture as Charterer may reasonably request.
(d) Continuation of Charter Party. In the event that (i) Charterer shall
-----------------------------
have exercised its right to revoke its notice of termination pursuant to Article
18(b) or (ii) the highest bona fide bidder under Article 18(c) shall have failed
---- ----
to purchase the Vessel Interest pursuant to Article 18(c), then, unless Owner
shall have retained the Vessel Interest pursuant to Article 18(e), this Charter
Party shall remain in full force and effect.
(e) Retention of Vessel Interest by Owner. If Charterer shall have made a
-------------------------------------
Termination Election with respect to the Vessel Interest, Owner may elect to
retain rather than sell the Vessel Interest pursuant to Article 18(c) by giving
irrevocable notice to Charterer and the Indenture Trustee no earlier than 45 nor
later than 30 days prior to the Termination Date. If Owner so elects to retain
the Vessel Interest, on the Termination Date (a) Owner shall pay to the
Indenture Trustee an amount equal to the unpaid principal amount of, and accrued
and unpaid interest on, together with Make Whole Amount, if any, in respect of
the Secured Notes then Outstanding to the date of payment, and (b) Charterer
shall pay to Owner or the Person entitled thereto as provided in the Operative
Documents (i) all Bareboat Hire due and owing on or prior to the Termination
Date, (ii) all Supplemental Hire due and owing on or prior to the Termination
Date, but Charterer shall not be required to pay any amounts pursuant to Article
18(c), (iii) if the Termination Date is a Base Hire Payment Date, all Base Hire
payable on the Termination Date and (iv) all Excess Hire accrued to the
Termination Date. Upon payment of the amounts due pursuant to clause (b) of the
preceding sentence, this Charter Party and the obligations of Charterer
hereunder shall terminate, and Owner shall, at Charterer's expense, execute and
deliver to Charterer on the Termination Date such instruments as Charterer shall
reasonably request to evidence the termination of this Charter Party. In the
event Owner fails to pay the amounts specified in clause (a) of the second
sentence of this Article 18(e) or Charterer fails to pay the amounts specified
in clause (b) of such sentence, Charterer shall be deemed to have revoked its
notice of termination pursuant to Article 18(b). If Owner shall fail to perform
any of its obligations pursuant to this Article 18(e) and as a result thereof
this Charter Party shall not be terminated on a proposed Termination Date, Owner
shall thereafter no longer be entitled to exercise its election to
20
retain the Vessel Interest upon any subsequent Termination Election pursuant to
this Article 18 and Charterer may at its option at any time thereafter submit a
new termination notice pursuant to Article 18(b).
(f) Termination of Head Lease. In the event that the Head Lease shall have
-------------------------
terminated in circumstances where U.K. Lessor is obliged to conclude the sale of
the Vessel or its rights under the Head Lease, the parties shall have no
obligation under Article 18(c), and any proceeds from such sale to which Owner
is entitled shall be applied against the obligations of Charterer in respect of
the payment of Termination Value under Article 14 or 23(b), as applicable.
ARTICLE 19.
Redelivery
----------
(a) Redelivery. Not less than 30 days prior to the expiration of the
----------
Charter Period, Charterer shall, except as provided in Articles 18 and 19(c)
deliver to Owner notice in writing of the port anywhere in the world chosen in
Charterer's discretion (the "Redelivery Port") at which the Vessel will be
available for redelivery at the end of the Charter Period. At the request of
Charterer, the Charter Period shall be extended for such time as may be required
for the Vessel to complete the voyage in progress at the date of expiration of
the Charter Period and to discharge its cargo, in which event Charterer shall
pay hire for such extension at the same rate per day as in effect for the last
Rate Period during the unextended the Charter Period. At the expiration of the
Charter Period, except as provided in Articles 18 and 19(c), Charterer shall, at
its own expense, redeliver the Vessel to Owner at the Redelivery Port and
Charterer's obligation to pay additional Bareboat Hire in respect of periods
thereafter shall cease. Charterer shall, at its own expense, and at Owner's
request redocument the Vessel in the name of the Person then in fact holding
legal title to the Vessel, if it is eligible for such documentation, or in such
other name as Owner may direct, under the laws of the Xxxxxxxx Islands if the
Vessel is not then documented under the laws of the Xxxxxxxx Islands.
(b) Redelivery Condition. Charterer shall redeliver the Vessel in the same
--------------------
class (except for changes in class resulting from the age of the Vessel), free
of recommendations affecting class (with class and trading certificates and
continuous machinery and survey cycle up to date and unextended) and in the same
good order and condition as existed at the time of delivery to Charterer, normal
wear and tear not affecting class excepted. Charterer agrees that at the time of
such redelivery, the Vessel Interest shall be charter free and free and clear of
all Liens, (except any Permitted Liens, it being understood that Charterer will
promptly and diligently cause any such Permitted Liens other than Owner's Liens
and Owner Participant's Liens to be discharged), and shall include all
Modifications made hereunder, except those removed by Charterer to the extent
permitted hereby.
21
(c) Charter Extension. Notwithstanding the provisions of clauses (a) and
-----------------
(b) of this Article 19, Charterer may by notice delivered to Owner not less than
60 days prior to the expiration of the Charter Period require Owner to enter
into a charter of the Vessel with an Affiliate of Charterer commencing
immediately upon the expiration of the Charter Period for a period of one year,
renewable annually for up to six additional years, at a charter rate equal to
the Bareboat Market Rate determined in accordance with Schedule 2B and otherwise
upon terms and conditions set forth in the pro forma Bareboat Charter set forth
in a schedule to the Joint Venture Agreement, with such changes as Charterer and
Owner may agree.
ARTICLE 20.
Assignment by Owners; Subcharters
---------------------------------
(a) General. Except as set forth in Article 20(b) or in the last sentence
-------
of Article 29(i), Owner may not assign, transfer or encumber this Charter Party
or all or any part of its interests and rights hereunder except in connection
with the exercise of remedies by Owner following a declaration by Owner pursuant
to Article 22 that this Charter Party is in default.
(b) Security. In order to secure the indebtedness evidenced by the Secured
--------
Notes and certain other obligations as provided in the Indenture, the Indenture
provides, among other things, for the assignment by Owner to the Indenture
Trustee of its right, title and interest in, to and under this Charter Party to
the extent set forth in the Indenture, and for the creation of a security
interest in the Vessel Interest in favor of the Indenture Trustee. Charterer
hereby consents to such assignment and to the creation of such security interest
pursuant to the terms and provisions of the Indenture and to any assignment or
other transfer which may occur pursuant to the exercise of any remedy set forth
in the Indenture. Charterer (i) acknowledges that such assignment and security
interest provide for the exercise by the Indenture Trustee of some or all rights
of Owner hereunder to give any consents, approvals, waivers, notices or the
like, to make any demands or the like or to take any other discretionary action
hereunder, but only in accordance with the Indenture, (ii) acknowledges receipt
of an executed counterpart of the Indenture as in effect on the date hereof and
(iii) agrees that, to the extent provided in the Indenture, the Indenture
Trustee shall have all the rights of Owner hereunder and, in exercising any
right or performing any obligation of Owner hereunder, shall be subject to the
terms hereof. Charterer will furnish to the Indenture Trustee counterparts of
all notices, certificates, opinions or other documents of any kind required to
be delivered hereunder by Charterer to Owner. Notwithstanding any other
provision herein, so long as any Secured Notes remain Outstanding, Owner hereby
directs, and Charterer agrees that, all Base Hire, Termination Value and other
amounts payable hereunder and specified pursuant to Section 4.01 of the
Indenture shall be paid directly to the Indenture Trustee at its account
specified in Schedule 1 to the Participation Agreement or to such other account
as may be specified in writing by the Indenture Trustee to Charterer at least 5
Business Days prior to the due date thereof. Upon Charterer receiving notice or
22
obtaining actual knowledge that an Indenture Event of Default shall have
occurred and be continuing, Charterer shall make all payments of Hire including
Supplemental Hire (other than Excepted Payments) directly to the Indenture
Trustee at such account. The right of the Indenture Trustee to receive all such
payments shall not be subject to any defense, counterclaim, set-off or other
right or claim of any kind which Charterer may be able to assert against Owner
or Owner Participant in an action brought by any thereof on this Charter Party
or otherwise.
(c) Assignments. Charterer may, without the consent of any party to the
-----------
Participation Agreement, at any time and from time to time, assign this Charter
Party and its interests and rights hereunder to any Person so long as, (i) after
giving effect to such assignment, the Guaranty shall remain in full force and
effect and shall constitute a full and unconditional guaranty of the obligations
of the assignee hereunder to the same extent as the guaranty of Charterer's
obligations hereunder prior to giving effect to any such assignment, (ii) no
Specified Charter Event of Default shall be continuing on the date any such
assignment to any Affiliate of Charterer is effected and no Charter Event of
Default shall be continuing on the date such assignment to any other Person is
effected, (iii) such assignment shall not result in any Tax on Owner or Owner
Participant that is not indemnified in accordance with the provisions of Section
13 of the Participation Agreement or of an indemnity agreement tendered by
Charterer and reasonably satisfactory to Owner and Owner Participant or subject
Owner or Owner Participant to regulation by any Governmental Authority to which
Owner or Owner Participant would not have been subject but for such assignment,
(iv) such assignment shall not result in the violation of any Governmental
Rules, including the U.S. Securities Act of 1933, as amended, or the Head Lease,
(v) such assignee shall have validly assumed the obligations of Charterer under
each of the Operative Documents to which it is a party and under the Pass-
Through Trust Supplement, (vi) such assignment will not result in an adverse tax
consequence to the holders of the Pass Though Certificates and (vii) Charterer
shall have delivered to Owner an opinion of counsel as to the satisfaction of
the preceding clauses (i) through (vi).
(d) Subcharters. Charterer may, without the consent of any party to the
-----------
Participation Agreement, at any time and from time to time, subcharter the
Vessel Interest to another Person (including, without limitation, to MSCL
pursuant to the Initial Subcharter); provided that (i) such subcharter shall be
--------
expressly subject and subordinate to this Charter Party (and such subcharter
shall contain a provision providing that any subcharter permitted thereunder
shall be so subject and subordinate) and shall in no event continue beyond the
Charter Period, (ii) Charterer shall remain primarily liable under this Charter
Party and all terms and conditions hereof and of the other Operative Documents
shall be complied with as though no such subcharter was in existence, (iii) the
Guaranty shall remain in full force and effect, (iv) such subcharter shall not
result in any Tax on Owner or Owner Participant that is not indemnified in
accordance with the provisions of Section 13 of the Participation Agreement or
of an indemnity agreement tendered by Charterer and reasonably satisfactory to
Owner and Owner Participant or subject Owner or Owner Participant to regulation
by any Governmental Authority to which Owner or Owner Participant would not have
been subject but for such subcharter, (v) no Specified
23
Charter Event of Default shall be continuing at the commencement of such
subcharter, (vi) Charterer shall give prompt written notice to Owner of any
subcharter or sub-subcharter of the Vessel Interest, (vii) any such subcharter
with a term in excess of six (6) months shall be approved by Owner prior to its
execution and (viii) any such subcharter complies with the provisions of Clause
17 of the Head Lease. Owner acknowledges that on the Closing Date Charterer will
subcharter the Vessel Interest to MSCL pursuant to the Initial Subcharter. Any
subcharterer under a subcharter permitted hereunder may sub-subcharter the
Vessel Interest to another Person under a sub-subcharter that otherwise complies
with the provisions hereunder applicable to a subcharter hereunder.
ARTICLE 21.
Charter Event of Default
------------------------
The term "Charter Event of Default", wherever used herein, shall mean any
------------------------
of the following events (whatever the reason for such Charter Event of Default
and whether it shall be voluntary or involuntary, or come about or be effected
by operation of law, or be pursuant to or in compliance with any judgment,
decree or order of any court or any Governmental Rule or Governmental Action):
(1) Charterer shall fail to make any payment of Assigned Hire within 10
Business Days after the date the same becomes due; or
(2) Charterer shall fail to pay Supplemental Hire or make any other
payment (other than (i) Assigned Hire or (ii) any Excess Hire or any Excepted
Payment (unless Owner elects to have such failure to make such payment of Excess
Hire or such failure to make an Excepted Payment constitute a Charter Event of
Default)) required to be made by Charterer under this Charter Party or under any
other Operative Document for more than 30 days after Charterer has received
written notice from Owner or the Indenture Trustee stating that such payment is
due; or
(3) Charterer shall fail in any material respect to perform or observe any
other material covenant or agreement to be performed or observed by it under
this Charter Party or any other Operative Document (other than any covenant or
agreement to pay Excess Hire or make an Excepted Payment) and such failure shall
continue for a period of thirty (30) days after receipt by Charterer of a
written notice from Owner or the Indenture Trustee specifying such failure and
requiring it to be remedied; provided, however, that the continuation of any
-------- -------
such failure for such period of thirty (30) days or such longer period (not to
exceed 365 days) after receipt of such notice shall not constitute a Charter
Event of Default so long as (i) such failure is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such failure; or
(4) the Guarantor shall fail in any material respect to perform or observe
any covenant or agreement to be performed or observed by it under the Guaranty
(other than any covenant or agreement in respect of Charterer's obligations
under the Operative
24
Documents) and such failure shall continue for a period of thirty (30) days
after receipt by the Guarantor of a written notice from Owner or the Indenture
Trustee specifying such failure and requiring it to be remedied; provided,
--------
however, that the continuation of any such failure for such period of thirty
-------
(30) days or such longer period (not to exceed 365 days) after receipt of such
notice shall not constitute a Charter Event of Default so long as (i) such
failure is curable or correctable and (ii) the Guarantor is diligently pursuing
the cure or correction of such failure; or
(5) any material representation or warranty made by Charterer in Section 5
of the Participation Agreement or in any Officer's Certificate of Charterer
delivered pursuant to the Participation Agreement shall prove to have been
inaccurate in any material respect when made, unless such inaccuracy shall not
be material to the recipient at the time when the notice referred to below shall
have been received by Charterer or any material adverse impact thereof shall
have been cured or corrected within thirty (30) days after receipt by Charterer
of a written notice thereof from Owner or the Indenture Trustee; provided,
--------
however, that the continuation of any such inaccuracy for such period of thirty
-------
(30) days or such longer period (not to exceed 365 days) after receipt of such
notice shall not constitute a Charter Event of Default so long as (i) any
material adverse impact of such inaccuracy is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such material adverse
impact; or
(6) any material representation or warranty made by the Guarantor in the
Guaranty or in any Officer's Certificate of the Guarantor delivered pursuant to
the Participation Agreement shall prove to have been inaccurate in any material
respect when made, unless such inaccuracy shall not be material to the recipient
at the time when the notice referred to below shall have been received by the
Guarantor or any material adverse impact thereof shall have been cured or
corrected within thirty (30) days after receipt by Charterer of a written notice
thereof from Owner or the Indenture Trustee; provided, however, that the
-------- -------
continuation of any such inaccuracy for such period of thirty (30) days or such
longer period (not to exceed 365 days) after receipt of such notice shall not
constitute a Charter Event of Default so long as (i) any material adverse impact
of such inaccuracy is curable or correctable and (ii) the Guarantor is
diligently pursuing the cure or correction of such material adverse impact; or
(7) Charterer or the Guarantor shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment or
taking possession by any such official or agency in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall take any corporate action to authorize any of the
foregoing, or an involuntary case or other proceeding shall be commenced against
Charterer or the Guarantor seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other
25
similar official or agency of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of ninety (90) days; or
(8) the Guaranty shall cease to be in full force and effect or to be the
valid, binding and enforceable agreement of the Guarantor; or
(9) Charterer shall fail to maintain (or cause to be maintained) the
insurance required by Article 16 and such failure shall continue for a period of
thirty (30) days following receipt of notice from the Indenture Trustee or Owner
specifying such failure and requiring such failure to be remedied;
provided, however, that notwithstanding anything to the contrary contained in
-------- -------
this Article 21, any failure of Charterer to perform or observe any covenant or
agreement specified in Article 21(3) shall not constitute a Charter Event of
Default if such failure is caused solely by reason of any event that constitutes
an Event of Loss (or any event which with lapse of time would constitute an
Event of Loss) so long as Charterer is continuing to comply with all the
applicable terms of Article 14.
ARTICLE 22.
Remedies
--------
(a) In General. Upon the occurrence of any Charter Event of Default and so
----------
long as the same shall be continuing, Owner, at its option, may declare this
Charter Party to be in default by written notice to such effect given to
Charterer (provided that this Charter Party shall be deemed to have been
declared in default without the necessity of such written notice upon the
occurrence of any Event of Default described in paragraph (7) of Article 21),
and at any time thereafter, provided such Charter Event of Default shall be
continuing, Owner may, to the extent permitted by applicable Governmental Rules,
exercise one or more of the following remedies, as Owner in its sole discretion
shall elect:
(i) Owner, by notice to Charterer, may rescind or terminate this Charter
Party;
(ii) whether or not this Charter Party has been terminated, Owner may,
after the Delivery Date, demand that Charterer, and upon the written demand of
Owner, Charterer shall, surrender the Vessel promptly to Owner in the manner and
condition required by, and otherwise in accordance with the provisions of, this
Charter Party as if the Vessel were being returned at the end of the Charter
Period and Owner shall not be liable for the reimbursement of Charterer for any
costs and expenses incurred by Charterer in connection therewith;
26
(iii) Owner may (whether or not Owner has taken possession thereof) sell
all or any portion of the Vessel Interest at public or private sale, as Owner
may determine, free and clear of any rights of Charterer with respect thereto
and without any duty to account to Charterer with respect to such sale or any
proceeds with respect thereto (except to the extent required by paragraph (v) or
(vi) of this Article 22(a) if Owner shall elect to exercise its rights
thereunder), in which event Charterer's obligation to pay Bareboat Hire with
respect to the interest sold accruing after the date of such sale shall be
terminated (except to the extent that Bareboat Hire is to be included in
computations under paragraph (v) or (vi) of this Article 22(a) if Owner shall
elect to exercise its rights thereunder);
(iv) Owner may hold or lease to others all or a portion of the Vessel
Interest, as Owner in its sole discretion may determine, free and clear of any
rights of Charterer with respect thereto and without any duty to account to
Charterer with respect to such action or inaction or for any proceeds with
respect to such action or inaction, except that Charterer's obligation to pay
Bareboat Hire after Charterer shall have been deprived of use of all or a
portion of the Vessel pursuant to this paragraph (iv) shall be reduced by the
net proceeds, if any, received by Owner from chartering all or a portion of the
Vessel Interest to any Person other than Charterer for the same periods or any
portion thereof;
(v) whether or not Owner shall have exercised or thereafter at any time
shall exercise its rights under paragraph (i), (ii), (iii) or (iv) of this
Article 22(a), Owner may demand, by written notice to Charterer specifying a
payment date which shall be a Termination Value Determination Date not earlier
than 10 Business Days after the date of such notice, that Charterer pay to
Owner, and Charterer shall pay to Owner, on such specified payment date, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of
Bareboat Hire accruing on or after such specified payment date), any unpaid
Bareboat Hire due and owing on or prior to such specified payment date (but
excluding any Bareboat Hire payable in advance on such payment date) and any
unpaid Supplemental Hire (to whomsoever payable) due and owing on or prior to
the date of such payment plus whichever of the following amounts Owner, in its
sole discretion, shall specify in such notice (together with interest on such
amount at the Overdue Rate from such specified payment date to the date of
actual payment):
(a) an amount equal to the excess, if any, of Termination Value for the
Vessel Interest as of such specified payment date over the Fair Market Sales
Value of the Vessel Interest as of such specified payment date (or the last day
of the Charter Period, if earlier); or
(b) an amount equal to Termination Value for the Vessel Interest
determined as of such specified payment date, and, in this event, upon full
payment by Charterer of all sums due hereunder, Owner shall be obligated to
transfer, without recourse, representation or warranty (other than the absence
of Owner Participant's Liens and Owner's Liens) the Vessel Interest (including
if the Vessel has been sold pursuant to the Head Lease or otherwise, any
proceeds or right to the proceeds
27
Owner may have) to Charterer, as is and where is, whereupon this Charter Party
and Charterer's obligations hereunder shall terminate. Owner shall, at
Charterer's expense, execute and deliver to Charterer a xxxx of sale or
assignment and such other instruments, documents and opinions as Charterer may
reasonably request to evidence the valid consummation of such transfer and
shall, at Charterer's expense, take such actions under Section 6.03 of the
Indenture as Charterer may reasonably request;
(vi) if Owner shall have sold all of the Vessel Interest pursuant to
paragraph (iii) of this Article 22(a) or other right of sale, Owner, in lieu of
exercising its rights under paragraph (v) of this Article 22(a), may, if it
shall so elect, demand that Charterer pay to Owner and Charterer shall pay to
Owner on the date of such sale, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of Bareboat Hire accruing on or after the next Base
Hire Payment Date following the date of such sale), any unpaid Bareboat Hire due
and owing or accrued on or prior to such next Base Hire Payment Date (but
excluding any Base Hire payable in advance on such Base Hire Payment Date) and
any other Supplemental Hire due and owing on or prior to such next Base Hire
Payment Date plus the amount of any deficiency between Termination Value for the
Vessel Interest, computed as of such next Base Hire Payment Date, and the
proceeds of such sale, together with interest at the Overdue Rate plus 2% on the
amount of such Hire, from the due date or dates thereof, and on the amount of
such deficiency from the date of such sale, until the date of actual payment;
or
(vii) Subject to Article 22(d), Owner may exercise any other right or
remedy that may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
the breach hereof.
(b) Continuing Obligations. No rescission or termination of this Charter
----------------------
Party, in whole or in part, or repossession of the Vessel Interest or exercise
of any remedy under Article 22(a) shall, except as specifically provided herein,
relieve Charterer of any of its liabilities and obligations hereunder. Charterer
shall be liable (i) for all reasonable legal fees and other reasonable costs and
expenses incurred by Owner, Owner Participant, each Loan Participant or the
Indenture Trustee by reason of the occurrence of any Charter Event of Default or
the exercise of Owner's remedies with respect thereto, including all costs and
expenses reasonably incurred in placing the Vessel in the condition required by
Article 19 and (ii) except as otherwise provided herein, for any and all other
accrued and unpaid Hire due hereunder before, after or during the exercise of
any of the foregoing remedies. At any sale of the Vessel Interest or any part
thereof pursuant to Article 22(a), Owner, Owner Participant, each Loan
Participant, or the Indenture Trustee may bid for and purchase such property.
(c) Remedies Cumulative. To the extent permitted by applicable law and
-------------------
except as provided herein, no remedy under Article 22(a) is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
provided under Article 22(a) or otherwise available to Owner at law or in
equity. No express or implied waiver by Owner of any Charter Default or Charter
Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Charter Default or Charter Event of
28
Default. The failure or delay of Owner in exercising any rights granted it
hereunder upon the occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or recurrence of
any such contingencies or similar contingencies and any single or partial
exercise of any particular right by Owner shall not exhaust the same or
constitute a waiver of any other right provided herein. To the extent permitted
by applicable law, Charterer hereby waives any rights now or hereafter conferred
by statute or otherwise which may enable it to cancel, quit or surrender this
Charter Party, except as otherwise provided herein, or which may require Owner
to sell, lease or otherwise use the Vessel Interest in mitigation of Owner's
damages as set forth in Article 22(a) or which may limit or modify any of
Owner's rights and remedies provided in Article 22(a).
(d) No Consequential Damages. Notwithstanding any other provision of this
------------------------
Charter Party, Charterer shall not be liable to Owner for any claim for loss of
profits, for any reduction in the amount of Excess Hire or Additional Excess
Hire payable in accordance with Article 3, or for any other consequential
damages by reason of any failure of Charterer to comply with the provisions of
this Charter Party, including Articles 11, 12 and 13.
ARTICLE 23.
Special Termination
-------------------
(a) Special Termination Events. The occurrence of any of the following
--------------------------
will constitute a Special Termination Event: (i) the Delivery Date shall not
have occurred on or before the Final Delivery Date, (ii) the Construction
Contract shall have been terminated, cancelled or rescinded for any reason prior
to the Delivery Date or the Vessel shall have been rejected thereunder or (iii)
termination of the Charter Period pursuant to Article 23(c) in circumstances
where there has been no assumption of the obligations of Owner in accordance
with Section 3.04 of the Indenture.
(b) Termination. Forthwith upon the occurrence of a Special Termination
-----------
Event, Charterer shall give notice of such event to Owner and the Indenture
Trustee, and Charterer shall on the next Termination Value Determination Date
occurring not less than 25 days following the giving of such notice pay to Owner
(A) the Termination Value as of the Termination Value Determination Date, (B)
all Bareboat Hire due and owing prior to the date of such payment, (C) all
Supplemental Hire due and owing on or prior to the date of such payment, which
shall include the applicable Make-Whole Amount, if any, payable upon the
redemption of the Secured Notes under the Indenture, (D) if such Termination
Value Determination Date is a Base Hire Payment Date, all Base Hire payable on
such Base Hire Payment Date and (E) all Excess Hire or Additional Excess Hire
accrued through such Termination Value Determination Date, whereupon Owner shall
surrender to Charterer (subject to the rights of U.K. Lessor), without
representation or warranty except as to the absence of Owner's Liens and Owner
Participants' Liens, all of its right title and interest in the Supervisory
Contract and the Vessel Interest,
29
whereupon this Charter Party shall terminate, and Charterer shall have no
further obligation thereunder. The Interest so surrendered shall be held and
disposed of in accordance with the Joint Venture Agreement.
(c) Termination upon Termination of Head Lease. The Charter Period shall
------------------------------------------
automatically terminate on the date falling ten days after the termination of
the leasing of the Vessel under the Head Lease or, if later, the completion of
the then current voyage of the Vessel and the discharge of any cargo therefor.
ARTICLE 24.
Vessel Plans and Drawings
-------------------------
Owner shall supply and deliver to Charterer a full description of the
Vessel and copies of all documents, plans and drawings required for the proper
operation and maintenance of the Vessel on or before the Delivery Date.
ARTICLE 25.
Wreck Removal
-------------
In the event of the Vessel becoming a wreck or obstruction to navigation,
Charterer shall indemnify Owner against any sums whatsoever which Owner shall
become liable to pay and shall pay in consequence of the Vessel becoming a wreck
or obstruction to navigation.
ARTICLE 26.
General Average
---------------
General Average, if any, shall be adjusted according to the York-Antwerp
Rules 1974 or any subsequent modification thereof current at the time of the
casualty. Bareboat Hire will not contribute to General Average.
ARTICLE 27.
Salvage
-------
All salvage services rendered by the Vessel during the Charter Period shall
be for the benefit of Charterer. Charterer shall satisfy salvage claims of the
crew and any other expenses incurred in connection with such salvage services.
30
ARTICLE 28.
Notices
-------
All communications, notices and consents provided for in this Charter Party
shall be in writing and given in person or by courier or by means of telecopy or
other electronic transmission (with provision for assurance of receipt in a
manner typical with respect to communications of that type), or mailed by
registered or certified first class mail, return receipt requested, addressed to
the respective addresses set forth in Schedule 1 to the Participation Agreement,
or in each case at such other address as the Person entitled thereto shall from
time to time designate by notice in writing to Charterer and Owner. All such
communications, notices and consents given in such manner shall be deemed given
when received by (or when proffered to, if receipt is refused) the party to whom
it is addressed.
ARTICLE 29.
Applicable Law; Miscellaneous
-----------------------------
(a) Governing Law; Disputes. This Charter Party shall be governed by and
-----------------------
construed in accordance with the laws of the State of New York. Subject to
Section 9.02 of the Indenture, Owner and Charterer will negotiate in good faith
to resolve any differences and disputes. Failing agreement, any and all
differences and disputes of whatsoever nature arising out of this Charter Party
shall be decided by the U.S. Federal Courts for the Southern District of New
York, to the jurisdiction of which courts Owner and Charterer hereby submit for
the purpose of adjudication of such disputes. The parties hereby authorize
service of process in connection with any court proceedings to be commenced
pursuant to this Article 29 to be made at the addresses referred to in Article
28.
(b) Complete Agreement. This Charter Party (including any document(s)
------------------
incorporated by reference herein and/or annexed hereto) is intended by the
parties to constitute the final expression of their agreement regarding the
bareboat chartering of the Vessel and is the complete and exclusive statement of
the terms under which the bareboat chartering is undertaken.
(c) Amendments. No amendment, supplement, supplement, modification, waiver
----------
or discharge of any term in this Charter Party shall be valid unless agreed in
writing and executed by both Owner and Charterer and, if required by Section
9.02 of the Indenture, by the Indenture Trustee.
(d) Severability of Provisions. Any provision of this Charter Party which
--------------------------
may be determined by competent authority to be invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining
31
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision of law which renders any provision hereof
invalid or unenforceable in any respect.
(e) Headings. The division of this Charter Party into sections, the
--------
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Charter Party.
(f) Counterpart Execution. This Charter Party may be executed in any
---------------------
number of counterparts and by each of the parties hereto on separate
counterparts, all such counterparts together constituting but one and the same
instrument, with the counterpart containing the receipt therefor executed by the
Indenture Trustee on or immediately following the signature page thereof being
deemed the "original executed counterpart" and all other counterparts being
deemed duplicates. For purposes of recordation, Owner and Charterer agree that
certain information set forth on Schedules 1 through 4 may be omitted from the
counterpart presented for filing.
(g) Successors and Assigns. This Charter Party, including the terms and
----------------------
provisions hereof, shall be binding upon Owner and Charterer and their
respective successors and assigns and inure to the benefit of Owner and
Charterer and their respective successors and permitted assigns.
(h) Investment of Security Funds. Any amounts held by Owner as security
----------------------------
hereunder that would be payable to Charterer upon satisfaction of any applicable
conditions shall be invested and reinvested by Owner (or, so long as this
Charter Party shall be subject to the Lien of the Indenture, the Indenture
Trustee), from time to time in Permitted Investments at the written direction of
Charterer. Owner shall have no liability for any loss resulting from any
investment required to be made other than by reason of its willful misconduct or
gross negligence. Any net income or gain realized as a result of any such
investment or reinvestment shall be applied by Owner at the same time, on the
same conditions and in the same manner as the amounts in respect of which such
income or gain was realized are required to be distributed in accordance with
the provisions hereof, or of any other Operative Document pursuant to which such
amounts were required to be held. Charterer shall be responsible for any net
loss realized as a result of any such investment or reinvestment and shall
reimburse Owner (or the Indenture Trustee, as the case may be) therefor on
demand. Any Permitted Investment may be sold or otherwise reduced to cash
(without regard to maturity) by Owner (or the Indenture Trustee, as the case may
be) whenever necessary to make any application as required by the terms of this
Charter Party or of any applicable Operative Document.
(i) Immunities; Satisfaction of Undertakings; Successor Owner Trustee.
-----------------------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of Owner are
made and intended not as personal representations, warranties, undertakings and
agreements by or for the purpose or with the intention of binding the Managing
Trustee personally but are made
32
and intended for the purpose of binding only the Trust Estate, and this Charter
Party is executed and delivered by the Managing Trustee solely in the exercise
of the powers expressly conferred upon it as trustee under the Trust Agreement;
and no personal liability or responsibility is assumed hereunder by, or at any
time shall be enforceable against, the Managing Trustee or any successor in
trust on account of any representation, warranty, undertaking or agreement
hereunder of Owner, either expressed or implied, all such personal liability, if
any, being expressly waived by Charterer; provided, however, that (a) Charterer
-------- -------
or any Person claiming by, through or under it, making claim hereunder, may
subject to the terms and conditions hereof, look to the Trust Estate for
satisfaction of such liability or responsibility and (b) the Managing Trustee or
its successor in trust, as applicable, shall be personally liable for its own
gross negligence and willful misconduct and for the matters described in clauses
(i) through (v) of the last sentence of Section 7.2 of the Trust Agreement.
Subject to the terms and conditions hereof, each time a successor Managing
Trustee is appointed in accordance with the terms of the Trust Agreement, such
successor Managing Trustee shall, without further act, succeed to all the
rights, duties, immunities and obligations of its predecessor Managing Trustee
hereunder and under the other Operative Documents, and the predecessor Managing
Trustee shall be released from all further duties and obligations hereunder and
under the other Operative Documents, all without the necessity of any consent or
approval by Charterer and without in any way altering the terms of this Charter
Party or such other Operative Documents or the obligations of Charterer
hereunder or thereunder. Charterer, at its expense, upon receipt of written
notice of the appointment of a successor Managing Trustee in accordance with the
Operative Documents, promptly shall make such modifications and changes to
reflect such appointment as reasonably shall be requested by such successor
Managing Trustee in such insurance policies, schedules, certificates and other
instruments relating to the Vessel Interest or this Charter Party or the other
Operative Documents, all in form and substance reasonably satisfactory to such
successor Managing Trustee.
(j) Performance of Obligations to Indenture Trustee and Holders. After
-----------------------------------------------------------
this Charter Party shall no longer be subject to the Lien of the Indenture, the
provisions of this Charter Party which require or permit any action by, any
consent, approval or authorization of, the furnishing of any document, paper or
information to, or the performance of any other obligation to, the Indenture
Trustee or any Holder shall not be effective, and the Sections hereof containing
such provisions shall be read as though there were no such references to any
such requirements or permissions.
(k) True Lease. This Charter Party is intended as and shall constitute an
----------
agreement of lease or charter and nothing herein shall be construed as conveying
to Charterer any right, title or interest in or to the Vessel Interest other
than as charterer hereunder, it being expressly understood by the parties hereto
that the foregoing does not constitute a covenant, representation or warranty of
Charterer.
(l) Survival of Agreements. The representations, warranties, covenants and
----------------------
indemnities of the parties provided for in the Operative Documents, and the
parties' obligations under any and all thereof, shall survive the execution and
delivery of this
33
Charter Party, the Investment by Owner Participant and the purchase of the
Secured Notes by the Loan Participant, any disposition of any interest of Owner
Participant or Owner in the Vessel, and shall be and continue in effect
notwithstanding any investigation made by any of such parties and the fact that
compliance with any of the other terms, provisions or conditions of any of the
Operative Documents shall have been waived.
34
IN WITNESS WHEREOF, the parties have caused this Charter Party to be duly
executed as of the 5th day of December 1997.
QM TANKER 1178 TRUST
By: DEUTSCHE XXXXXX XXXXXXXX
(CAYMAN) LIMITED, not in its
individual capacity, but solely as
Managing Trustee under the Trust
Agreement
By:
-------------------------------
Name:
Title:
MOBIL EQUIPMENT FINANCE
COMPANY INC.
By:
-------------------------------
Name:
Title:
[CHARTER -1177]
Receipt of the original executed counterpart of the foregoing Bareboat
Charter Party is hereby acknowledged on this 5th day of December, 1997.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, but
solely as Indenture Trustee
By:
-----------------------------
Name:
Title:
[Chattel Copy of Charter -- 1177]
SCHEDULE 1
----------
Vessel: Hull No. 1177
Owner's Cost: $42,600,000
Builder: Hyundai Heavy Industries Co., Ltd.
Hyundai Corporation
Delivery Yard: Shipyard of Hyundai Heavy Industries Co., Ltd. in Ulsan, Korea
Scheduled Delivery Date: Fourth Quarter, 1999
Final Delivery Date: December 31, 2000
Charter Expiration Date: January 2, 2018
U.K. Lease Term: 30 years commencing on the Delivery Date
U.K. Lessor: Abbey National December Leasing (4) Limited
SCHEDULE 2
----------
BASE HIRE
The base hire (the "Base Hire") for each Rate Period, shall be equal to the
amount set forth on the following page opposite the Base Hire Payment Date on
which such Rate Period expires.
Mobil Basic Hire Schedule
Basic Hire Payment Date Basic Hire ($)
----------------------- ----------
January 2, 1998 0.00
July 2, 1998 0.00
January 2, 1999 0.00
July 2, 1999 0.00
January 2, 2000 745,283.71
July 2, 2000 1,490,567.42
January 2, 2001 1,490,567.42
July 2, 2001 1,490,567.42
January 2, 2002 1,490,567.42
July 2, 2002 1,490,567.42
January 2, 2003 1,490,567.42
July 2, 2003 1,490,567.42
January 2, 2004 1,490,567.42
July 2, 2004 1,490,567.42
January 2, 2005 1,490,567.42
July 2, 2005 1,490,567.42
January 2, 2006 1,490,567.42
July 2, 2006 1,490,567.42
January 2, 2007 1,490,567.42
July 2, 2007 1,490,567.42
January 2, 2008 1,490,567.42
July 2, 2008 1,490,567.42
January 2, 2009 1,490,567.42
July 2, 2009 1,490,567.42
January 2, 2010 1,490,567.42
July 2, 2010 1,490,567.42
January 2, 2011 1,490,567.42
July 2, 2011 1,490,567.42
January 2, 2012 1,490,567.42
July 2, 2012 1,490,567.42
January 2, 2013 1,490,567.42
July 2, 2013 1,490,567.42
January 2, 2014 1,490,567.42
July 2, 2014 1,490,567.42
January 2, 2015 1,490,567.42
July 2, 2015 1,490,567.42
January 2, 2016 1,490,567.42
July 2, 2016 1,490,567.42
January 2, 2017 1,490,567.42
July 2, 2017 1,490,567.42
January 2, 2018 1,490,567.42
SCHEDULE 2A
-----------
BAREBOAT MARKET HIRE DETERMINATION
(a) The "Bareboat Market Rate" will be determined for each Rate Period pursuant
to Schedule 2B.
(b) If the aggregate of the applicable Bareboat Market Rate for all days during
a Rate Period exceeds the Base Hire for such Rate Period, such excess (as
adjusted pursuant to clause (d) of this Schedule 2A) shall be the "Excess
Hire".
(c) Charterer shall pay on the last day of each Rate Period on account of
Bareboat Hire for such Rate Period the amount that Charterer has advised
Owner Trust not less than 10 days prior to the commencement of such Rate
Period is Charterer's estimate of the amount payable as Bareboat Hire for
such Rate Period; provided that such amount shall not be less than the Base
Hire for such Rate Period. The difference between the amount so paid and
the amount finally determined in accordance with this Schedule 2A as the
Bareboat Hire applicable to such Rate Period (an "Overpayment" or
"Underpayment", as applicable) shall be settled, together with interest at
6.69% per annum from the last day of such Rate Period to the date of
payment, by the appropriate payment of any Overpayment by Owner to
Charterer; and of any Underpayment by Charterer to Owner; provided, that
under no circumstances shall the Bareboat Hire for any Rate Period be lower
than the Base Hire for such Rate Period.
(d) In the event the aggregate of the actual applicable Bareboat Market Rate
for all days during a Rate Period is less than the Base Hire for such Rate
Period, the amount of such difference (the "Shortfall") shall be applied to
reduce any Excess Hire in all succeeding Rate Periods until the amount of
the Deficit has been fully recovered together with interest at 6.69% per
annum from the date the Shortfall arose until it is repaid.
SCHEDULE 2B
-----------
DETERMINATION OF BAREBOAT MARKET RATE
-------------------------------------
1. The Bareboat Market Rate for the Vessel shall be calculated for each Rate
Period retroactively no later than 60 days following the completion of said
period in accordance with the following provisions of this Section 2B,
which is subject to review and mutually agreed adjustment if Charterer or
any shareholder of the Owner Participant so requests during the Charter
Period. The Bareboat Market Rate shall be determined in accordance with
this Schedule 2B based on the Vessel's actual revenues earned less all
voyage and operating expenses for the applicable Rate Period. It is
understood that the Vessel's intended employment is the carriage of
worldwide crude oil cargoes, primarily Latin American and Caribbean sourced
crude, for the Guarantor and its Affiliates.
(a) In the event the Vessel carries crude oil cargoes for Affiliates of
the Guarantor, the Vessel's total voyage net time charter earnings
will be determined as follows: The Vessel's total voyage revenues will
be based on the actual quantity of cargo carried, plus deadfrieght
where applicable, in metric tons times the corresponding worldscale
flat rate in effect at the time of loading for the specific load and
discharge ports times the spot freight rate as assessed for the said
voyage by the Broker Panel (given as a percent of the worldscale rate
in effect at the time of loading). Demurrage earned, if any, will be
added to freight to determine total voyage revenues. All voyage costs
including but not limited to bunkers and port charges will be deducted
at cost from the total voyage revenues to determine net time charter
earnings for that voyage. For the purpose of determining voyage costs,
duration of a voyage will be from the tendering of Notice of Readiness
("NOR") at the first load port of one voyage to the tendering of NOR
at the first load port for the next voyage.
(b) In the event that a Vessel is chartered to a party not an Affiliate of
the Guarantor, the Vessel's total voyage net time charter earnings
will be determined as follows: The Vessel's revenues will be based on
the prevailing charter party agreement between an Affiliate of the
Guarantor and the third party. Any time charter in excess of six (6)
months shall be pre-approved by the Owner Participant prior to its
finalization. For single or consecutive voyage charters, freight and
demurrage revenues will be determined as indicated in the prevailing
charter party agreements(s). All voyage costs including but not
limited to bunkers and port charges will be deducted at cost from the
total voyage revenues to determine net time charter earnings for that
voyage(s). For the purpose of determining voyage costs, duration of a
voyage will be from the tendering of NOR at the first load port of one
voyage to the tendering of NOR at the first load port for the next
voyage
(c) The Vessel's Net Time Charter Rate shall be determined by aggregating
net time charter earnings from all voyages for Affiliates of the
Guarantor and/or third party charters commenced and concluded during
the Rate Period and a pro rata portion of such earnings from voyages
occurring partially during the Rate Period and dividing by the total
number of days in the Rate Period less any days where the Vessel was
bareboat chartered to a party not an Affiliate of the Guarantor.
(d) Daily Operating Costs for each Rate Period will be the budgeted
operating costs for the Vessel for the calendar year in which such
Rate Period occurs (which shall be obtained from the operator by the
end of October for the upcoming year) divided by the actual number of
days in the year. At the end of each calendar year the actual
operating costs will be audited and the difference will be added to or
subtracted from the budget for the next calendar year as the case may
be. Daily Operating Costs will include xxxxxxx, provisions, stores,
voyage repairs (excluding drydock costs, which include planned
overhauls and modifications, as provided in the Joint Venture
Agreement), insurance, etc. for the Vessels, plus any approved Vessel
expenses incurred by the Charterer on behalf of the Company, plus a
Vessel management fee of $425/day/Vessel which is subject to annual
adjustment for inflation using the U.K. Retail Price Index. If the
Charterer self insures the Vessels for Hull and Machinery, a proforma
Hull and Machinery premium will be included as determined by an
independent insurance broker.
(e) With the exception of the case where the Vessel is bareboat chartered
to a party other than an Affiliate of the Guarantor, the Bareboat
Market Rate for the Vessel will be calculated by deducting the
Vessel's Daily Operating Costs from its Net Time Charter Rate. In the
event that the Vessel is bareboat chartered to a party other than an
Affiliate of the Guarantor during all or any part of the Rate Period,
the bareboat charter rate received from the third party shall be the
Bareboat Market Rate during the term of that charter.
2. Bareboat Market Hire for any period of less than six months at the
commencement or conclusion of the Charter shall be determined in accordance with
the foregoing principles and appropriately prorated.
SCHEDULE 3
----------
TERMINATION VALUES
------------------
Termination
Termination Value Value*
Determination Date* $
------------------ --------------
January 2, 1998................. 26,476,244.36
July 2, 1998.................... 27,361,874.73
January 2, 1999................. 28,277,129.44
July 2, 1999.................... 29,222,999.42
January 2, 2000................. 30,200,508.75
July 2, 2000.................... 30,473,878.87
January 2, 2001................. 30,002,662.70
July 2, 2001.................... 29,515,684.34
January 2, 2002................. 29,012,416.56
July 2, 2002.................... 28,492,314.47
January 2, 2003................. 27,954,814.97
July 2, 2003.................... 27,399,336.10
January 2, 2004................. 26,825,276.47
July 2, 2004.................... 25,618,908.01
January 2, 2005................. 24,985,293.06
July 2, 2005.................... 24,330,483.69
January 2, 2006................. 23,653,770.95
July 2, 2006.................... 22,954,422.16
January 2, 2007................. 22,231,680.16
July 2, 2007.................... 21,484,762.44
January 2, 2008................. 20,712,860.32
July 2, 2008.................... 19,915,138.07
January 2, 2009................. 19,090,732.02
July 2, 2009.................... 18,238,749.58
January 2, 2010................. 17,358,268.33
July 2, 2010.................... 16,448,334.99
January 2, 2011................. 15,507,964.37
July 2, 2011.................... 14,536,138.35
January 2, 2012................. 13,531,804.76
July 2, 2012.................... 12,493,876.20
January 2, 2013................. 11,421,228.94
July 2, 2013.................... 10,312,701.62
January 2, 2014................. 9,167.094.07
July 2, 2014.................... 7,983,165.94
January 2, 2015................. 6,759,635.42
July 2, 2015.................... 5,495,177.80
January 2, 2016................. 4,188,424.08
July 2, 2016.................... 2,837,959.44
January 2, 2017................. 1,442,321.76
July 2, 2017.................... 0.00
January 2, 2018................. 1,490,567.42
---------------
* In addition, any Business Day in between the dates shown above shall be a
Termination Value Determination Date, and the Termination Value for each such
date shall be the Termination Value shown above for the preceding January 2 or
July 2 together with interest accrued or accreted on such amount in accordance
with the terms of the Secured Note from the later of the Closing Date or the
previous January 2 or July 2.
