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CALPETRO TANKERS (BAHAMAS III) LIMITED
and
FRONT VOYAGER INC.
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BAREBOAT CHARTER
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TABLE OF CONTENTS
Page
1. Vessel to be Chartered ............................................. 1
2. Period of Charter .................................................. 1
3. Time and Place of Delivery ......................................... 1
4. [Reserved] ......................................................... 2
5 Use and Trade of Vessel ............................................ 2
6. Documentation and House Flag ....................................... 3
7. Maintenance and Operation .......................................... 3
8. Redelivery and Status ................................ ............. 6
9. Use of Vessel and Payment of Hire .................................. 7
10. Mortgage ........................................................... 8
11. Insurance .......................................................... 8
12. Total Loss, Requisition for Title Capture Seizure .................. 11
13. Requisition for Hire ............................................... 12
14. Liens; Notice on Vessel ............................................ 14
15. Salvage ............................................................ 15
16. General Average .................................................... 15
17. Default; Remedies .................................................. 15
18. Termination ........................................................ 16
19. Payments on Termination ............................................ 17
20. Assignment and Sub Charter.......................................... 17
21. Indemnity .......................................................... 18
22. [Reserved].......................................................... 20
23. General ............................................................ 20
24. Definitions ........................................................ 23
BAREBOAT CHARTER
THIS BAREBOAT CHARTER (hereinafter called the "Charter") made as of
March 31, 2006 BY and BETWEEN CalPetro Tankers (Bahamas III) Limited
(hereinafter called "Owners") and Front Voyager Inc. (hereinafter called
"Charterers").
WITNESSETH AND IT IS HEREBY AGREED as follows:
1. Vessel to be Chartered
Owners hereby let and demise and Charterers hereby hire the m.t. VIRGO
VOYAGER (ex-XXXXXXX X. CRA1N) (hereinafter called the "Vessel"), Official No.
9633, of about 88,946 gross tons and 155,127 deadweight tons, built in 1992 in
Rio Do Janeiro, Brazil), together with all her engines, boilers, machinery,
masts, anchors, cables, rigging, tackle, apparel, furniture, electronics, small
boats, and all her other appurtenances, whether aboard or removed from the
Vessel, together with any and all additions, improvements and/or replacements
which may hereafter be made to, on or in the Vessel.
2. Period of Charter
(a) This Charter shall be for a period commencing on the Commencement
Date and shall terminate on the second anniversary thereof, up to 30 days more
or less in Charterer's option, subject to the Charterer's right to extend the
Charter Period by up to seven (7) further consecutive periods each of twelve
(12) months up to 30 days more or less in Charterer's option. Anything herein to
the contrary notwithstanding, the Charterer's right to extend the Charter period
as provided herein is subject to the condition that or to the commencement of
such extension period, the Vessel has not become an actual, constructive,
compromised or arranged total loss or been requisitioned for title (but not for
hire) or seized or acquired by any government or governmental entity.
(b) Should the Vessel be upon a voyage otherwise than under
requisition for hire at the time when the charter of the Vessel would (but for
the provisions of this clause) have terminated, the Charter Period shall be
extended for such additional time as may be necessary for the completion of such
voyage. The Charter Period shall also be extended for such additional time as
may be necessary to bring the Vessel to a port of redelivery as hereinafter
provided in Clause 8 hereof. During any such extension, hire shall be paid
pro-rata on a daily basis (assuming a 365-day year) at the We in force before
the commencement of such extension.
3. Time and Place of Delivery
(a) On the Commencement Date, Charterers shall unconditionally accept
delivery of the Vessel under this Charter "as is, where is", in whatsoever
condition the Vessel may be at the time of such delivery. Such delivery shall
take place at a location mutually agreed by the parties and is referred to
herein as "Delivery of the Vessel". On Delivery of the Vessel, Charterers shall
execute and deliver to Owners a Certificate of Acceptance.
(b) OWNERS MAKE NO REPRESENTATION, WARRANTY OR GUARANTEE OF ANY KIND,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO THE TITLE, SEAWORTHINESS,
CONDITION, VALUE, EQUIPMENT DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR
USE OF THE VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO THE ELIGIBILITY OF THE
VESSEL FOR ANY PARTICULAR TRADE OR ANY OTHER REPRESENTATION, WARRANTY OR
GUARANTEE WITH RESPECT TO THE VESSEL AND NONE SHALL BE IMPLIED FROM THIS
CHARTER; PROVIDED, HOWEVER, THAT OWNERS WARRANT THAT OWNERS HAVE AND SHALL
RETAIN WHATEVER TITLE TO THE VESSEL THAT OWNERS RECEIVED FROM CHEVRON TRANSPORT
CORPORATION SUBJECT ONLY TO THE MORTGAGE, THIS CHARTER AND LIENS AND
ENCUMBRANCES WHICH CHARTERERS ARE OBLIGATED TO DISCHARGE OR SATISFY. CHARTERERS
HEREBY WAIVE AS AGAINST OWNERS AND THE VESSEL, ALL REMEDIES, WARRANTIES NOT
EXPRESSED IN SUBCLAUSE (b) OF THIS CLAUSE 3 OR LIABILITIES, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE WITH RESPECT TO OWNERS' TITLE THERETO OR THE
PHYSICAL CONDITION OF THE VESSEL AT THE TIME OF DELIVERY TO CHARTERERS
INCLUDING, BUT NOT LIMITED TO (i) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, (ii) ANY IMPLIED WARRANTY ARISING FROM COURSE
OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, (iii) ANY OBLIGATION,
LIABILITY, RIGHT, CLAIM OR REMEDY FOUNDED IN STRICT LIABILITY IN TORT AND (iv)
ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OR DAMAGE TO THE
VESSEL. The acceptance by Charterers of the Vessel under this Charter shall
constitute conclusive proof, as between Owners and Charterers, that the Vessel
is seaworthy, and otherwise in the condition required by this Charter, in good
working order and repair and without defect or inherent defect in title,
seaworthiness, condition, design, operation or fitness for use, whether or not
discoverable by Charterers as of the date of such tender, and generally in all
respects satisfactory to Charterers.
(c) Charterers warrant that upon Delivery of the Vessel to them the
Vessel shall be in Charterers' custody and under its control.
4. (RESERVED)
5. Use and Trade of Vessel
(a) Charterers shall have full use of the Vessel and may employ the
Vessel worldwide (within Institute Warranty Limits) in the carriage of suitable
lawful merchandise. In no event shall Charterers carry on board the Vessel
nuclear fuels or radioactive products; provided, however, with the prior written
consent of Owners, Charterers may carry on board the Vessel radioisotopes used
or intended to be used for any industrial, agricultural, medical or scientific
purposes.
(b) Charterers undertake not to employ the Vessel or suffer the Vessel
to be employed otherwise than in conformity with the terms of the instruments of
insurance (including any warranties expressed or implied therein) without fast
obtaining the consent to such employment from their insurers, protection and
indemnity clubs and underwriters and complying with such requirements as to
extra premium or otherwise as the insurers may prescribe.
(c) Charterers also undertake not to employ the Vessel or suffer her
employment in any trade or business which is forbidden by the law of any country
to which the Vessel may sail or is otherwise illicit or in carrying illicit or
prohibited goods.
(d) As to those trades in which the Vessel is employed, Charterers
shall comply with any and all requirements regarding financial responsibility or
security in respect of oil or other pollution damage as required by any
government, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity with
authority over Owners or Charterers, as the case may be, or ownership, use and
operation of the Vessel (whether or not such requirement has been lawfully
imposed or not) to enable the Vessel, without penalty or charges, lawfully to
enter, remain at, or leave any port, place, territorial or contiguous waters of
any country, state or municipality in performance of this Charter without delay.
Charterers shall make and maintain all arrangements for security bond or
otherwise as may be necessary to satisfy such requirements at Charterers' sole
liability and expense and Charterers shall indemnify Owners against any and all
losses, damages, claims, expenses or liabilities incurred by reason of
Charterers failure to comply with this Clause 5(d).
6. Documentation and House Flag
(a) Charterers agree that it shall, throughout the Charter Period,
maintain the documentation of the Vessel under the laws of the Registration
Jurisdiction at Owners' cost and expense; provided, however, in the event that
the costs and expenses of maintaining such documentation are in excess of
$10,000 per annum, then Charterers shall either (i) pay all amounts in excess of
$10,000 per annum or (ii) cooperate with the Owner to change the registry or
port of documentation of the Vessel. Owners agree to do all such things
whatsoever and execute and deliver all such documents whatsoever to enable
Charterers to maintain such documentation. Charterers will not change the
registry or port of documentation of the Vessel without the prior written
consent of Owners which consent shall not be unreasonably withheld, or do or
suffer or permit to be done anything which will injuriously affect the
documentation of the Vessel as a vessel documented under the laws and
regulations of the Registration Jurisdiction. If Charterers change the registry
or port of documentation of the Vessel, Charterers shall, at time of redelivery,
if Owners so request and at Charterers' expense, change the registry and port of
documentation back to that of the Registration Jurisdiction.
(b) Charterers all have the right to re-name the Vessel, to paint the
Vessel in their own colors, install and display their funnel insignia and fly
their own house flag.
7. Maintenance and Operation
(a) Except as provided in Clause 20, the Vessel shall during the
Charter Period be in the full possession and at the absolute disposal for all
purposes of Charterers and under their complete control in every respect.
Charterers hereby covenant and agree with Owners that during the Charter Period
(and subject to the provisions of Clause 13):
(i) Charterers will at their expense maintain the Vessel, her
machinery, cargo handling equipment, boilers, appurtenances and
spare parts in a good state of repair and in efficient operating
condition in accordance with good commercial maintenance practice
commensurate with other vessels in Charterers' fleet of similar
size and trade, ordinary wear and tear excepted; and
(ii) Charterers will at their expense keep the Vessel with unexpired
classification in accordance with the highest classification of a
classification society that is a member of the International
Association of Classification Societies as shall previously have
been approved by Owners) and other required certificates in force
and shall make any improvement or structural changes or acquire
any new equipment necessary to comply with the requirements of
such classification; and
(iii) Charterers shall be at liberty to fit any additional equipment
required for the services of Charterers, beyond that on board at
the commencement of this Charter, such work to be done at
Charterers' expense and on their time, and such equipment may be
removed by Charterers at their cost and on their time at any time
(provided, however, that such removal does not adversely affect
the class or seaworthiness of the Vessel) prior to the expiration
or any other termination of the Charter. The Vessel is to be
redelivered to Owners in the same condition and class as that in
which she is delivered by Owner, ordinary wear and tear excepted
and any additional equipment that cannot be or is not so removed
shall become the property of Owners; and
(iv) Charterers shall not permit the Vessel to proceed to any port
which is then subject to a prohibition by the government of the
Registration Jurisdiction or the national government of the port
in question; and
(v) in the event of hostilities in any part of the world (whether war
be declared or not) Charterers will not employ the Vessel nor
suggest her employment in carrying any goods which are declared
contraband nor suffer her to enter or trade to any zone which is
declared a War Zone by the War Risks Insurers unless Charterers
have made arrangements with the said insurers for the payment of
such additional premiums as said insurers may require to maintain
the relevant insurances in force or in any zone in respect of
which the War Risks Insurers have withdrawn cover for the Vessel;
and
(vi) Charterers will not use the Vessel in any manner or for any
purpose excepted from any insurance policy or policies taken out
in compliance with Clause 11 hereof or for the purpose of
carriage of goods of any description excepted from the said
insurance policy or policies and shall not do or permit to be
done anything which could reasonably be expected to invalidate
any of the said insurance policy or policies; and
(vii) Charterers will not use the Vessel in any manner or for any
purpose or trade or permit or suffer to be done any act which
will prejudice Owners' ownership of the Vessel or any part
thereof.
(b) During the Charter Period, Charterers shall at their own expense
or by their own procurement man, victual, navigate, operate, supply, fuel and
repair the Vessel whenever required and shall, as between themselves and Owners,
be responsible for all charges and expenses of every kind and nature whatsoever
incidental to their use and operation of the Vessel under this Charter,
including any foreign, general, municipal, value added or other taxes except
that Charterers shall not be responsible for Owners' documentation costs under
clause 6(a) or for Owner Taxes. During the Charter Period, the master, officers
and crew of the Vessel shall be engaged and employed by Charterers and shall
remain Charterers' servants, navigating, managing and working the Vessel on
behalf of and at the risk of Charterers.
(c) As between themselves and Owners, Charterers shall also be
responsible for any charges and expenses incidental to the use and operation of
the Vessel while under requisition for hire, during the Charter Period. The
foregoing provision of this sub-clause shall be without prejudice to the rights
of Owners and Charterers against other parties in respect of any such charges or
expenses. Charterers shall, subject to the prior written approval of Owners
(such approval not to be unreasonably withheld), be entitled to take action in
the name of Owners against other parties in respect of such charges or expenses.
If as a result of any such action any moneys are received the same shall be
recovered by Charterers.
(d) Charterers shall make no changes in the structure of the Vessel
nor major changes in her machinery, appurtenances, spareparts or boilers without
in each instance first securing the written approval of Owners, which approval
shall not be unreasonably withheld. Provided that if any such changes are
required to meet classification society requirements, applicable regulations
and/or any relevant laws Owners shall not withhold such approval and Charterers
shall not be obliged to reinstate the Vessel to its condition prior to the
making of such changes.
(e) Charterers shall drydock the Vessel and clean and paint her
underwater parts in accordance with good commercial practice, but not less than
as may be required by the relevant classification society as provided in
7(a)(ii) to maintain the Vessel's highest classification.
(f) Owners (or such persons as they shall appoint or authorize) shall
have the right at any time on reasonable notice, and in a manner which shall not
interfere with the Vessel's trading requirements to inspect or survey the Vessel
in order to ascertain the condition of the Vessel and to satisfy themselves that
the Vessel is being properly repaired and maintained in accordance with the
provisions of this Charter. Inspection or survey in drydock shall be made only
when the Vessel is in drydock under the provisions of sub-clause (e) of this
Clause. However, Owners shall have the right to require the Vessel to be
drydocked for inspection, if Charterers are not docking her at the required
classification intervals. The costs incurred in respect of such drydocking and
any inspection or survey made under this sub-clause shall be paid by Charterers
to Owners. All repairs as shall be shown to be required by any inspection or
survey shall be made at Charterers' expense and shall be completed within a
reasonable period of time or such other period as is specified by the relevant
classification society referred to in Clause 7(a)(ii). Time taken in respect of
inspection, survey or repairs shall form part of the Charter Period. Charterers
shall whenever requested, on reasonable notice, permit Owners to inspect the
Vessel's log books and furnish Owners promptly with full information regarding
any casualties or other damage to the Vessel.
(g) Owners shall not be liable for any expense in repairing or
maintaining the Vessel or be liable to supply a vessel or any part thereof in
lieu if the Vessel or any part thereof is lost, damaged, rendered unfit for use,
confiscated, seized, requisitioned, restrained or appropriated and the Charter
Hire payable in respect of the Vessel shall continue to be payable
notwithstanding loss or damage (not amounting to a Total Loss) to the Vessel or
any part thereof (and notwithstanding that the Vessel or any part thereof is
rendered unfit for use or is requisitioned for hire). In the event of a Total
Loss the provisions of Clause 12 shall apply;
(h) Charterers shall not have or be deemed to have any authority to
pledge Owners' credit for any purpose, including any maintenance overhauls,
replacements, repairs and modification of the Vessel.
8. Redelivery and Status
(a) Unless the Vessel suffers a Total Loss, Charterers shall at the
end of the Charter Period redeliver the Vessel to Owners at a safe and ice-free
port or a place selected by Charterers within the Vessel's trading limits
(within 10 steaming days from a recognized loading area) or at such other safe
port as shall be agreed between the parties but Charterers shall not be deemed
to warrant the safety of such port once redelivery has occurred. The Vessel
shall be redelivered to Owners free and clear of all mortgages, liens, claims,
charges and encumbrances which Charterers are obligated to discharge or satisfy
and in the same or as good structure, state and condition as those in which she
was delivered, ordinary wear and tear alone excepted. The time of redelivery
shall be the time when the Vessel is tendered for redelivery in class without
outstanding requirements or recommendations to enable the Vessel to proceed
without delay and free of cargo (other than slops).
(b) At or about the time of redelivery a survey shall, if Owners so
require, be made to determine the condition and fitness of the Vessel, her
machinery and equipment. In that event, Charterers and Owners shall each appoint
surveyors to be present at such survey and the surveyors present shall determine
and state the repairs or work necessary to place the Vessel at the date of
redelivery in the structure, state and condition required by sub-clause (a) of
this Clause. In the event that the Vessel has been dry-docked within 30 months
prior to redelivery and Charterers certify in writing to Owners that, to the
best of their knowledge, the Vessel has had no bottom touching since such
dry-docking, such survey may be conducted while the Vessel is afloat. Owners may
require a diver's survey of the Vessel. Charterers shall bear all expenses of
any such survey. Charterers shall at their expense make all such repairs and do
all such work so found to be necessary before redelivery or at Owners' option
shall discharge their obligations hereunder by payment to Owners of a sum
sufficient to provide, at the prices current at the time of redelivery, for the
work and repairs necessary to place the Vessel in such structure, state and
condition. The Charter Period shall be extended until the completion of any such
repairs and work found to be necessary or the payment of the amounts described
in this Clause 8(b).
(c) The provisions of this Clause shall be subject to the provisions
of sub-clause (b) of Clause 13 hereof where the Vessel is under requisition for
hire at or until the end of the Charter Period.
(d) An inventory of consumable stores on board the Vessel shall be
made by Charterers in conjunction with Owners on delivery and again on
redelivery of the Vessel. Charterers and Owners shall respectively take over and
pay for all bunkers, lubricating oil, water and unbroached provisions, paints,
oils, ropes and other consumable stores remaining in the Vessel on delivery and
redelivery at the market prices current at the port of delivery or redelivery
but Charterers shall not be required to pay for lubricating oil in the Vessel's
system or for stores included in the Vessel's specification or for stores
arranged and put on board by Charterers' at their own expense.
(e) The Vessel upon redelivery shall have her survey cycles up to date
and class certificates valid. Notwithstanding the provisions of this Clause 8,
Charterers shall ensure that Vessel shall have been dry-docked within 30 months
prior to redelivery.
9. Use of Vessel and Payment of Hire
(a) Charterers shall have the use of all equipment (which expression
includes cabin, crew and galley equipment, navigational aids and technical
equipment, furnishings, furniture and fittings and spare and replacement parts)
that is the property of Owners on board at the time of Delivery of the Vessel;
and the same, or their substantial equivalent, shall be returned to Owners on
redelivery in good order and condition, ordinary wear and tear alone excepted.
Charterers shall from time to time during the Charter Period replace at their
expense such items of equipment as shall be so damaged or worn as to be unfit
for use. Such replaced equipment shall become part of the Vessel and title to
such replaced equipment shall vest in and the same shall belong to Owners.
(b) Any hired equipment placed on the Vessel by Charterers may be
removed by Charterers prior to the expiration of the Charter Period. If so
requested by Owners, Charterers shall assist in transfer of equipment hire
agreements to Owners or their nominee, but Charterers shall not be required to
guarantee or assume any other liability with respect to a transferee's
performance under said hire agreements.
(c) During the Charter Period, the Charterer shall pay, without offset
or deduction, whether or not Vessel is under arrest, Charter Hire for the use
and hire of the Vessel at the times and in the amounts indicated on Schedule 1
attached hereto and made a part hereof. Unless otherwise notified by Owners, all
payments of Charter Hire and other amounts payable by Charterers to Owners
hereunder shall be made to an account nominated by Owners at JPMorgan Chase
Bank, N.A., ABA # 000000000 for credit to Acct. No. ###-##-####, Re: California
Petroleum Transport Corporation (or to such other account as Owners may from
time to time nominate) and shall be made by wire transfer of immediately
available funds.
(d) During any extension of the Charter Period, the rate of hire shall
be as set forth on Schedule I.
(e) Time of payment shall be of the essence. If the date of payment is
a date upon which Owners' nominated bank is not open for business, payment shall
be made on the first preceding Business Day. Payment of sums due under the
provisions of this Charter shall be made (by close of business New York Federal
Reserve Bank) by wire transfer to Owners' nominated bank and receipt of such
wire transfer by such bank by 10:00 a.m. New York time on the due date for
payment (in accordance with all the provisions of this Charter) shall constitute
timely payment by the payer of the amount authorized by such cable or telex to
be paid even though the payee's account be not credited until after such due
date and the payer shall not be liable for any delays or errors committed by
such bank in processing payment instructions transmitted properly on behalf of
the Charterers.
(f) If any payment of Charter Hire hereunder shall not be paid when
due Owners shall be entitled in addition to call for interest thereon at the
rate of interest per annum equal to the Default Rate from and including the due
date to the date of actual payment (after as well as before judgment) parts of a
day being treated as complete days and Charterers shall thereupon forthwith pay
the same to Owners.
10. Mortgage
(a) Charterers agree that the financing of the Vessel will be secured
by the Charter on the Vessel and assignments of Owners' right, title and
interest under, in and to this Charter. Charterers shall execute and deliver a
letter of acknowledgment and consent to assignment of charter as shall be
requested by Owner.
(b) Charterers agree that this Charter and any other charters
permitted under Clause 20(a) hereof shall always be subordinated in all respects
to the Mortgage.
(c) Owners agree that the Mortgage and any other mortgage hereinafter
placed on the Vessel by Owners will contain a provision to the effect that
throughout the Charter Period, so long as no Event of Default shall have
occurred and be continuing and so long as Charterers shall have performed their
obligations hereunder, Charterers shall be entitled to quiet enjoyment of the
Vessel.
11. Insurance
(a) Insurance Obligations - Charterer shall, at its own expense,
provide and maintain the following insurance and shall ensure that the value of
the Vessel as stated in any valued policy is equal to the amount insured
thereunder:
(i) hull and machinery insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per the Norwegian Marine
Insurance Plan. Such insurance shall include navigation limit
adequate for the vessel's trade and exclude collision liability.
(ii) protection & indemnity insurance on a full entry basis with an
International Group P&I Club. Such insurance shall include, but
not be limited to, coverage for injuries to or death of masters,
mates and crew; full (4/4ths) collision liabilities and pollution
liabilities imposed by federal and state laws. Such insurance
shall be unlimited as per International Group P&L Club rules
except for pollution liabilities which shall be limited to $1.0
billion or the maximum pollution limit offered by and through the
P&I Clubs of the International Group.
(iii) Hull War Risk Insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per the Norwegian Marine
Insurance Plan. Such insurance shall apply to all areas where the
Vessel trades but be subject to the War Risks Trading Warranties
generally in use in the Hull War Risk Market.
(b) Insurance Practice
Charterers have, prior to the signing of this Charter, outlined to
Owners the insurance arrangements at present in force in relation to its fleet
(which arrangements shall apply to the Vessel on and after the date of delivery
of the Vessel). Owners hereby confirm their acceptance of such arrangements as
complying with Charterers' obligations under the preceding sub-clause (a)
(subject to adjustment thereof in the light of changes in market practice and in
accepted tanker practice). Charterers undertake not to alter such arrangements
in a manner that is in material breach of any other provision of this Charter or
otherwise materially adverse to Owners without first notifying Owners and
obtaining their written approval, such approval not to be unreasonably withheld.
(c) Loss payable and notice of Cancellation
(i) Unless Owners shall have given their prior written consent, all
insurances effected pursuant to Clause 11(a)(i) and (iii) shall
contain a loss payable and notice of cancellation clause in the
following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE"
(A) Until CalPetro Tankers (Bahamas III) Limited ("Owners")
shall have notified underwriters to the contrary:
(1) all recoveries up to the Stipulated Loss Value
hereunder in respect of a total loss or constructive or
compromised or agreed or arranged total loss shall be
paid in full to Owners without any deduction or
deductions whatsoever; and
(2) all other recoveries shall be paid in full to Front
Voyager Inc. ("Charterers") or to its order without any
deduction or deductions whatsoever, and
(B) Owners shall be advised:
(1) if any Hull and Machinery insurer cancels or give
notice of cancellation of any insurance or entry at
least ten (10) days before such cancellation is to take
effect; and
(2) if any hull War Risks insurer cancels or gives notice
of cancellation of any insurance or entry at least
seven (7) days before such cancellation is to take
effect; and
(3) of any default in the payment of any Hull and Machinery
premium or call or failure to renew any such insurance
or entry ten (10) days prior to the date of renewal
thereof; and
(4) of any default in the payment of any War Risks premium
or call or failure to renew any such entry seven (7)
days prior to the date of renewal thereof."
(ii) Unless Owners shall have given their prior written consent, all
insurance and entries effected pursuant to Clause 11 (a)(ii)
shall contain a loss payable and notice of cancellation clause in
the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE
At the request of the Owners and with the consent of the
Charterers, the protection and indemnity club managers may in
their discretion, agree:
(A) to pay Owners, or to their order, any recovery the
Charterers are entitled to receive from the funds of
the P&I Club in respect of any liability, costs or
expenses incurred by the Charterers on receipt of
notice from the Owners that the Charterers are in
default under the Charter; and
(B) to give the Owners ten (10) days' notice that insurance
in the P&I Club in respect of the Vessel is to cease;
and
(C) to give the Owners ten (10) days' notice of the P&I
Club's intention to cancel the insurance of the
Charterers by xxxxx of their failure to pay when due
and demanded any sum due from them to the P&I Club.
(d) Information as to insurances
Charterers shall give Owners and its insurance advisers such
information as to the insurances taken out or being or to be taken out in
compliance with Charterers' obligations under the foregoing provisions of this
Clause or as to any other matter which may be relevant to such insurances as
Owners or their advisers may reasonably request.
12. Total Loss, Requisition for Title. Capture. Seizure
(a) If a Total Loss shall occur, this Charter and the obligation of
Charterers to pay Charter Hire hereunder shall continue and be payable as set
forth herein until Charterers have complied with this Clause 12. Charterers
shall forthwith notify Owners of the facts and circumstances of such Total Loss
and Charterers shall, on the date which is 90 days after the Total Loss (the
"Loss Date"), pay to Owners the amount determined pursuant to paragraph (b)
below. Charterers shall give Owners at least 15 days prior notice in writing of
the Loss Date. On the Loss Date, Charterers shall pay such amount to Owners, and
thereupon this Charter shall terminate and Charter Hire payable hereunder shall
cease.
(b) The amount payable on any such Loss Date shall be the sum of (i)
any deficiency between (A) the Stipulated Loss Value in relation to the period
in question calculated by the application of Schedule 2 and (B) all insurance
proceeds for damage to or loss of the Vessel and amounts paid by any
governmental authority in connection with any requisition, seizure or forfeiture
actually received in hand by Owners or the Mortgagee prior to or on such Loss
Date; and (ii) all Charter Hire accrued (on a daily basis) but unpaid hereunder
to such Loss Date and any other sums due under any provisions of this Charter,
together with interest thereon at the Default Rate from the date upon which any
such Charter Hire or other sums was due until the date upon which the
calculations are made for the purposes of this Clause which date shall be the
Loss Date. The foregoing obligations of Charterers under this Clause 12 shall
apply regardless of whether or not any moneys are payable under the insurances
effected in compliance with Clause 11 hereof in respect of the Vessel,
regardless also of the amount payable thereunder, regardless also of the cause
of the Total Loss and, regardless of whether or not any of the said compensation
shall be payable. This Charter shall terminate upon the fulfilhnent by
Charterers of their obligations under this subclause.
(c) If Charterers shall have made a payment to Owners pursuant to the
foregoing provisions of sub-clause (b) of this Clause and Owners shall
subsequently receive any insurance monies or other compensation contemplated
under such Clause (b) the same shall be immediately applied first towards
repayment to Charterers of the amount of any such payment and second (to the
extent that the further insurance monies or compensation shall exceed the
amounts paid by Charterers and so repaid by Owners) to Charterers.
(d) Charterers shall be liable for any loss of any part of or damage
to the Vessel (other than a Total Loss in which event the foregoing provisions
of this clause shall apply) during the Charter Period from whatsoever cause such
loss or damage may arise, unless the same shall have been caused by the
negligence or wilful act of Owners, their servants or agents (except where
Charterers or their servants and agents are acting as agents of Owners). In the
event of repairable damage to the Vessel or any part thereof or loss of part of
the Vessel, Owners shall, subject to their prior right to retain any sums which
may be due from Charterers to Owners under the terms of this Charter, make
payment to Charterers of moneys received under the insurances effected in
compliance with Clause 11 upon Charterers furnishing evidence satisfactory to
Owners that all such damage has been made good or repaired or repairs have been
put in hand.
(e) For the purpose of this Clause 12, insurers shall be deemed to
have admitted a claim either on the date that they inform Owners that the claim
is admitted or upon the date that they make payment to Owners even though no
claim has ever been admitted.
(f) Owners shall, upon the request of Charterers, promptly execute
such documents as may be required to enable Charterers to abandon the Vessel to
insurers and claim a constructive total loss provided that Owners shall be
entitled by notice in writing to Charterers to require that the Vessel shall not
be abandoned and that a partial loss only shall be claimed, in which case this
Charter shall terminate as from the date of the event giving rise to such loss
and any insurance payments in respect of the partial loss shall be paid to
Owners. Save as aforesaid, any moneys payable by insurers for a partial loss
shall be paid to Charterers and Owners shall, at the request and expense of
Charterers, take or procure to be taken all such reasonable steps as Charterers
may require for the recovery of such moneys.
13. Requisition for Hire
(a) If the Vessel is requisitioned for hire by any governmental or
other competent authority during the Charter Period, then unless and until
following such requisition the Vessel becomes a Total Loss, this Charter shall
continue in full force and effect for the remainder of the Charter Period (and
Charterers shall be fully responsible for due compliance with all its
obligations under (i) Clause 11 and (ii) the other provisions of this Charter,
other than those which Charterers are unable to comply with solely by virtue of
the aforesaid requisition for hire); provided, however, that if Charterers shall
duly comply with all of their obligations under this Charter save as aforesaid,
Charterers shall be entitled to all requisition hire paid to Owners or to
Charterers by such governmental or other competent authority or by any person
acting by the authority of the same on account of such requisition during the
Charter Period.
(b) Should the Vessel be under requisition for hire at or until the
end of the Charter Period:
(i) Charterers shall, if they are prevented by reason of the
requisition from redelivering the Vessel under sub-clause
(a) of Clause 8 hereof, be relieved from their obligation so
to do, provided that if the party requisitioning the Vessel
does not at the end of the period of requisition redeliver
the Vessel to Owners at such place as Owners shall request,
Charterers shall upon the written request of Owners use
their best endeavors to redeliver the Vessel in accordance
with sub-clause (a) of Clause 8;
(ii) after such release Charterers shall be given a reasonable
opportunity of removing any such additional or hired
equipment as is referred to in sub-clause (b) of Clause 9
hereof on the terms referred to in that sub-clause;
(iii) notwithstanding any other provision of this Charter,
Charterers shall be under no liability to Owners in respect
of the structure, state or condition of the Vessel insofar
as such structure, state or condition is due to the manner
in which she has been used or treated or to any events which
have occurred during the period of such requisition.
14. Liens: Notice on Vessel
(a) Charterers will not suffer, nor permit to be continued, any lien
or encumbrance incurred by them or their agents, which might have priority over
the title and interest of Owners in the Vessel. Charterers shall indemnify and
hold Owners harmless against any lien of whatsoever nature arising upon the
Vessel during the Charter Period while she is under the control of Charterers,
and against any claims against Owners arising out of or in relation to the
operation of the Vessel by Charterers. Should the Vessel be arrested by reason
of claims or liens arising out of her operation hereunder by Charterers,
Charterers shall at their own expense take all reasonable steps to secure that
within a reasonable time the Vessel is released and at their own expense put up
bail to secure release of the Vessel.
(b) Charterers will fasten to the Vessel in a conspicuous place and
will keep so fastened during the Charter Period a notice reading as follows:
"This Vessel is the property of and is registered in
the name of CalPetro Tankers (Bahamas III) Limited; she
is under charter by demise to and operated by Front
Voyager Inc. and neither Charterers nor the Master nor
any servant or agent thereof has any authority
whatsoever to contract on behalf of Owners or to pledge
Owners' credit or to involve Owners in any liability
whatsoever"
or in such other form as Owners may reasonably require from time to time.
15. Salvage
All salvage and all proceeds from derelicts shall be for Charterers'
benefit and the cost of repairing damage occasioned thereby shall be borne by
Charterers.
16. General Average
General Average, including Owners' portion, if any, shall be payable
by Charterers. General Average, if any, shall be adjusted according to the
York-Antwerp Rules 1974, as amended 1990, or any subsequent modification thereof
current at the time of the casualty.
17. Default: Remedies
(a) If during the term of this Charter.
(i) Charterers shall make default for two Business Days in any
payment in respect of Charter Hire due under the terms of
this Charter.
(ii) Charterers shall fail for a period of thirty (30) Business
Days after written notice thereof has been given to
Charterers by Owners to perform and observe any of the
covenants, conditions, agreements or stipulations on the
part of Charterers to be performed or observed contained
herein (other than sub-clause (a)(i) and (v) of this
Clause).
(iii) Charterers cease doing business as a going concern or
generally cease to pay their debts as they become due or any
proceedings under any bankruptcy or insolvency laws are
instituted against Charterers or if a receiver or trustee is
appointed for Charterers or for any of their assets or
properties, and such proceeding is not dismissed, vacated or
fully stayed within sixty (60) days.
(iv) Charterers shall create or suffer to exist any mortgage,
charge, pledge or other like encumbrance over the Vessel or
any part thereof not created or caused by Owners or by
persons claiming by, through or under Owners or shall have
abandoned the Vessel. The foregoing provisions shall not
apply to any notice of abandonment which Charterer's may
give to insurers under the provisions of Clause 12.
(v) Charterers fail to comply with any of their obligations as
to insurance contained in Clause 11.
(vi) Charterers shall within thirty (30) days of any scheduled
date of redelivery hereunder fail to provide adequate bail
or security when required so to do in respect of any
maritime lien, possessory lien or statutory right in rem
which maybe acquired over the Vessel not created or caused
by Owners or by persons claiming by, through or under Owners
in order to prevent the Vessel being arrested, impounded or
seized or if any such lien, right or claim over the Vessel
is exercised by the arrest, attachment, detention,
impounding or seizure of the Vessel under any distress
execution or other process, or any distress or execution is
levied thereon, and Charterers fail to use their best
endeavors to procure the release of the Vessel therefrom
within thirty (30) days of any scheduled date of redelivery
hereunder.
THEN AND IN ANY SUCH EVENT Owners may, by written notice to
Charterers, declare this Charter to be in default and Owners may:
(a) (i) Upon written demand, cause Charterers at Charterers' expense
to, and Charterers shall promptly, redeliver the Vessel or cause
the Vessel to be redelivered, with all reasonable dispatch to
Owners and in the condition required by the terms of Clause 8 as
if the Vessel were being redelivered at the expiration of the
Charter Period, and all obligations of Charterers under said
Clause 8 shall apply to such redelivery, or (ii) Owners or their
agent, at Owners' option, without further notice, may, but shall
be under no obligation to, retake the Vessel wherever found,
whether upon the high seas or in any port, harbor, or other place
and irrespective of whether Charterers, any subcharterer or any
other Person may be in possession of the Vessel, all without
prior demand and without legal process, and for that purpose
Owners or their agent may enter upon any dock, pier or other
premises where the Vessel may be and may take possession thereof,
without Owners or their agent incurring any liability by on of
such retaking, whether for the restoration of damage to property
caused by such retaking or otherwise. The exercise by Owners of
their remedies under this subparagraph (a) shall be without
prejudice, and in addition, to any of Owners' other remedies
referred to below.
(b) Owners or their agent may sell the Vessel at public or private
sale, with or without notice to Charterers, advertisement or
publication, as Owners may determine, or otherwise may dispose
of, hold, use, operate, charter (whether for a period greater or
less than the balance of what would have been the Charter Period
in the absence of the termination of Charterers' rights to the
Vessel) to others or keep the Vessel idle, all on such terms and
conditions and at such place or places as Owners may determine
and all free and clear of any rights of Charterers and of any
claim of Charterers in admiralty, in equity, at law or by
statute, whether for loss or damage or otherwise, and without any
duty to account to Charterers.
(c) Charterers shall be liable for any and all Charter Hire payable
under this Charter before, during or after the exercise of any of
the foregoing remedies and for all reasonable costs including all
legal fees and any other costs and expenses whatsoever incurred
by Owners by reason of the occurrence of any default or by reason
of the exercise by Owners of any remedy hereunder, including,
without limitation, all costs and expenses incurred by Owners in
connection with any retaking of the Vessel and, upon the
redelivery or retaking of the Vessel in accordance with this
Clause 17, the placing of the Vessel in the condition and
seaworthiness required by the terms of Clause 8 hereof and
including interest on overdue Charter Hire.
(d) Each and every right, power and remedy herein given to Owners
shall be cumulative and shall be in addition to every other
right, power and remedy herein given or now or hereafter existing
at law, in equity, admiralty or by statute and each and every
power and remedy whether herein given or otherwise existing may
be exercised from time to time and as often and in such order as
may be deemed expedient by Owners, and the exercise or the
beginning of the exercise of any right, power or remedy shall not
be construed to be a waiver of the right to exercise at the same
time or thereafter any other power or remedy. No delay or
omission of Owners to exercise any right or power vested in it
hereunder shall impair such right or power or be construed as a
waiver of or as acquiescence in any default by Owners or be
deemed a waiver of any right arising out of any future default or
of any past default. In the event Owners at any time agree to
waive any such right or power, such waiver shall be revocable by
Owners at any time and the right or power shall henceforth be
again exercisable as though there had been no such waiver unless
the Event of Default has been cured. In the event Owners shall
have proceeded to enforce any right or pursue any power under
this Charter and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely
to Owners, then and in every such case Charterers and Owners
shall be restored to their former positions and rights hereunder
with respect to the property subject or intended to be subject to
this Charter and all rights, remedies and powers of Owners shall
continue as if no such proceedings had been taken.
(e) The rights and powers of Owners and the obligations of Charterers
under this Clause 17 shall be effective and enforceable
regardless of the pendency of any proceeding which has or might
have the effect of preventing Owners or Charterers from complying
with the terms of this Charter. No express or implied waiver by
Owners of any default shall in any way be, or be construed to be
a waiver of any further or subsequent default.
18. Termination
In the event (a) a Total Loss shall have occurred and Charterers shall
have remitted to Owners the amounts described in Clause 12(b) or (b) Charterers
shall have remitted to Owners the amounts described in Clause 19, then,
notwithstanding anything to the contrary contained herein, the Charter shall
continue with respect to Charterers' obligation to pay such amount to Owners and
shall terminate on (x) the date which is 367 days after the date on which such
amounts have been remitted to Owners or the Owners' assignee or (y) if (i)
Charterers commence a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, (ii) a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) is appointed for Charterers or for any substantial part of their
property, (iii) Charterers generally fail to pay their debts as they become due
or (iv) Charterers make a general assignment for the benefit of creditors, the
expiration of the period during which any payment made by or on behalf of
Charterers may be avoided under any applicable bankruptcy, insolvency,
creditors' rights or similar laws.
19. Payments on Termination
Whether or not Owners shall have exercised, or shall thereafter at any
time exercise, any options, rights or remedies under Clause 17, upon or as a
consequence of a breach of contract by Charterers amounting to repudiation by
Charterers of this Charter, Owners may immediately require Charterers to pay to
Owners, and Charterers shall pay to Owners as liquidated damages for loss of a
bargain and not as a penalty, an amount equal to (i) the sum of (A) the
Stipulated Loss Value in relation to the period in question calculated by the
application of Schedule 2, (B) all outstanding accrued and unpaid Charter Hire
and (C) any other amounts due to Owners under this Charter on or prior to the
date of payment and (ii) interest thereon (as well after as before judgment) at
the Default Rate from the date such amounts were payable to the actual date of
payment.
Charterers shall not be entitled to any part of the net proceeds of
the Vessel (if any) whether by way of rebate of Charter Hire or otherwise.
20. Assignment and Sub Charter
(a) Charterers may not assign all or part of their rights and
obligations under this Charter nor may they charter the Vessel by demise to any
other entity without the prior written consent of Owners, such consent, subject
always to the Vessel being maintained and insured to the same standards as are
adopted by Charterers in respect of the vessels owned by them, not to be
unreasonably withheld; provided, however, that Charterers may assign their
rights and obligations hereunder to a corporation more than 50% of which is
owned, directly or indirectly, by Frontline Ltd. or Ship Finance International
Ltd. so long as Charterers remain responsible as principals for the due
fulfillment of this Charter and provide such assurances of responsibility to
Owners as they may reasonably request.
(b) Charterers may otherwise charter the Vessel without the prior
consent of Owners provided that Charterers remain responsible as principals (or
appoint another person to be responsible in their stead) for navigating and
managing the Vessel throughout the period of such charter and for defraying all
expenses in connection with the Vessel throughout such period or substantially
all such expenses or than those directly incidental to a particular voyage or to
the employment of the Vessel during that period.
(c) Owners may not transfer or assign to any other person or entity
all or part of its rights or obligations under this Charter (except to the
Lender pursuant to the Assignment of Charter and the reassignment of this
Charter to the Collateral Trustee under the Assignment of Assignment of Charter
(collectively, the Assignment of Charter and the Assignment of Assignment of
Charter shall be referred to as the "Security Assignment")) unless such
transferee or assignee also assumes the obligations of Owners under the related
Security Documents and Charterers shall have given its prior written consent to
such assignment and assumption, which consent shall not be unreasonably
withheld. In addition, any transfer of Owners' interest in this Charter (other
than the Security Assignment) may only be effected by surrender of this Charter
and its reissuance by Charterers to such Owners' assignee or transferee.
21. Indemnity
(a) Charterers hereby indemnify Owners and shall keep Owners fully
indemnified at all times whether during the currency of this Charter or at any
time in respect of events arising during the currency of this Charter against:
(i) All costs and expenses of operating and maintaining the Vessel
and of operating, maintaining and replacing all parts including
(but without prejudice to the generality of the foregoing) all
fuel, oil, port charges, fees, taxes, levies, fines, penalties,
charges, insurance premiums, victualing, crew, navigation,
xxxxxxx, operating and freight expenses and all other outgoings
whatsoever payable by Owners or Charterers in respect of the
possession or operation of the Vessel or any part thereof, or the
purchase, ownership, delivery, chartering, possession and
operation, import to or export from any country, return, sale or
disposition of the Vessel or any part thereof or upon the hire,
receipts or earnings arising therefrom (other than Owners Taxes
or documentation costs except as otherwise provided in Clause
6(a)) which shall be promptly paid by Charterers;
(ii) All liabilities, claims, proceedings (whether civil or criminal),
penalties, fines or other sanctions, judgments, charges, taxes,
impositions, liens, salvage, general average, costs and expenses
whatsoever which may at any time be made or claimed by Charterers
or any employee, servant, agent or sub-contractor, passenger,
owner, shipper, consignee and receiver of goods or any third
party (including governments or other authorities) or by their
respective dependents arising directly or indirectly in any
manner out of the design, construction, possession, management,
repair, certification, xxxxxxx, provisioning, supply or servicing
of the Vessel (whether at sea or not) or the chartering thereof
hereunder whether such liability, claims, proceedings, penalties,
fines, sanctions, judgments, charges, taxes, impositions, liens,
salvage, general average, cost or expenses may be attributable to
any defect in the Vessel or the design, construction, testing or
use thereof or from any maintenance, service, repay, overhaul or
otherwise and regardless of when or where the same shall arise
and whether or not the Vessel or the relevant part thereof is in
the possession or control of Charterers (other than Owners Taxes
or documentation costs except as otherwise provided in Clause
6(a)); and
(iii) Charterers accept all liability for oil or other pollution
damage resulting from Charterers' operation of the Vessel under
this Charter and agree to promptly indemnify and hold Owners
harmless from and against any and all losses, damages and
expenses which Owners may incur as a result of any oil or other
pollution damage resulting from Charterers' operation of the
Vessel under this Charter, including, but not limited to, Owners'
liability under the Oil Pollution Act of 1990, as amended, and/or
the laws of any other jurisdiction relating to oil spills.
(iv) Owners shall use good faith efforts to notify Charterers promptly
of any tax for which it may seek indemnity. Charterers shall,
subject to the prior written approval of Owners (such approval
not to be unreasonably withheld), be entitled to take action in
the name of Owners at Charterers' expense against any taxing
authority in respect of any taxes for which Charterers have
indemnified such Owners, and Owners agree to reasonably cooperate
with Charterers in taking such action. If as a result of any such
action any moneys are received that are attributable to such
indemnified taxes (including any interest thereon paid by such
taxing authority) the same shall be recovered by Charterers.
(b) Without prejudice to its generality, the provisions of this
sub-clause shall extend to claims of persons (including governments or other
bodies whether corporate or otherwise) who have suffered or allege that they
have suffered loss, damage or injury in connection with any thing done or not
done by the Vessel, including in connection with any oil or other substance
emanating or threatening to emanate from the Vessel and shall extend to levies,
impositions, calls, or contributions on or required to be made by Owners during
or in respect of the Charter Period.
(c) If any obligation of Charterers under the foregoing sub-clause or
under subclause (d) below shall not be discharged when due, Charterers shall on
demand forthwith pay to Owners not only the amount of such obligation but also
interest thereon at the Default Rate from the date Owners paid the same to the
date of reimbursement by Charterers (after as well as before judgment)
(d) In the event of the Vessel becoming a wreck or obstruction to
navigation, Charterers shall indemnify Owners against all losses, costs, damages
and expenses which Owners may in consequence thereof incur including those
incurred in respect of the removal or destruction of the wreck or obstruction
under statutory or other powers.
22. (RESERVED)
23. General
(a) Charterers shall give to Owners all such information as Owners may
reasonably request with regard to the performance by Charterers of their
obligations hereunder.
(b) Charterers shall pay all expenses (including legal and other
costs) incurred by Owners in connection with the enforcement of any rights
conferred upon Owners by this Charter or in or incidental to any action brought
by Owners to recover any hire or other payments due hereunder or for breach of
any covenant, agreement, condition or stipulation herein contained or to recover
possession of the Vessel or any part thereof whether any such action proceeds to
judgment or not. Owners shall pay all expenses (including legal and other costs)
incurred by Charterers in connection with the enforcement of any rights
conferred upon Charterers against Owners by this Charter.
(c) No failure or delay on the part of Owners in exercising any power
or right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any such right or power preclude any other or further
exercise of any such right or power.
(d) This Charter shall not be varied in its terms by an oral agreement
or representation or otherwise than by an instrument in writing of even date
herewith or subsequent hereto executed by all the parties hereto or by their
duly authorized representatives.
(e) If any term or provision of this Charter or the application
thereof to any person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Charter or application of such term or
provision to persons or circumstances other than those as to which it is already
invalid or unenforceable shall not be affected thereby and each term and
provision of this Charter shall be valid and be enforceable to the fullest
extent permitted by law.
(f) The title to the Clauses and sub-clauses of this Charter shall not
in any way affect the interpretation thereof; the terms defined in this Charter
have the meanings assigned to them in this Charter and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender.
(g) Any demand, consent; record, election or notice required or
permitted to be given under this Charter shall be in writing and sent by
recorded or registered letter or telefax (and in the case of telefax confirmed
by recorded or registered letter) addressed as follows:
(i) If to Owners to:
c/o McKinney, Xxxxxxxx & Xxxxxx
Xxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
Fax No: (000) 000-0000
Attention: Xxxxxx Xxxxx
(ii) If to Charterers to:
c/o Front Voyager Inc.
c/o Frontline Management AS
Xxxxxxxxxxx 0
0000 Xxxx
Xxxxxx
Fax No. x00 00 00 00 00
Attention: Finance Department
or in case to such other person or address or addresses or telefax number as any
party may notify in writing to the other parties hereto. Any such notice shall
be deemed to have reached the party to whom it is addressed (in the case of
notice given by letter) five (5) days after despatch by first class pre-paid
post (airmail if from abroad) or (in the case of notice given by telefax) when
confirmed by a correct transmission report when despatched and for this purpose
confirmation by letter of notice given by telefax, shall be disregarded.
(h) This Charter shall be governed by and construed and performance
thereof shall be determined in accordance with the federal laws of the United
States of America and the laws of New York. The obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws,
without giving effect to principles of conflicts of law.
(i) All matters of difference between the parties hereto (other than as
herein expressly provided to the contrary and other than in respect of any
action by Owners for possession of the Vessel) shall be referred to arbitration
in New York by an arbitrator to be agreed between Owners and Charterers or in
default of such agreement within 30 days to be nominated by the President for
the time being of the Society of Maritime Arbitrators.
(j) Where it is provided in this Charter that in default of agreement
a matter is to be determined by an expert under this sub-clause, the same shall
be determined by such person, firm, corporation or body as may be agreed between
Owners and Charterers (or in default of agreement as may be nominated by the
Chairman for the time being of the Baltic and Mercantile Shipping Exchange) who
shall be deemed to act as expert and not as arbitrator and whose determination
shall be final and binding on the parties.
(k) All payments (other than payments pursuant to Clauses 21(a)(i) and
21(a)(ii) and documentation costs for Owners' account pursuant to Clause 6(a))
made to Owners shall be made without deduction for or on account of any present
or future taxes (including value added, turnover, sales and use taxes), levies,
imposts, duties, deduction, withholdings and other charges of whatsoever nature
(collectively, "Charges") unless such deduction is required by law. If such
deduction is required by law (i) the sum payable by Charterers shall be
increased as may be necessary so that, after making all required withholdings
and deductions (including those applicable to additional sums payable under this
Clause 23(k)), Owners shall receive an amount equal to the sum that Owners would
have received had no such withholdings and deductions been made and (ii) as
required by applicable law Charterers shall withhold or deduct the amount
required and pay such amount to the relevant taxing or other governmental
authority. If any Charges paid by Charterers are recoverable by Owners from such
taxing or other governmental authority, Charterers shall be entitled to the same
rights provided in Clause 21(a)(iv). Owners shall consult with Charterers and
use reasonable efforts to agree to a method of avoiding or minimizing any such
deduction that is not in breach of applicable law or governmental regulation or
of any of the financing documents entered into with the Mortgagee and which will
leave the parties in substantially the same contractual relation as is herein
contained. Without limiting the generality of the foregoing, the Owners shall
take any lawful action to the extent necessary to prevent or avoid the
imposition of any taxes, including any withholding taxes with respect to Charter
Hire, by any taxing jurisdiction (including the Registration Jurisdiction,
except with respect to any taxes included in documentation costs for Owners'
account pursuant to Clause 6(a) hereof), including changing its jurisdiction of
incorporation or residence; provided however, that it shall not be required to
take, or fail to take, any action (x) if in the opinion of counsel such act or
failure to act would violate applicable law or (y) if in the reasonable opinion
of Owners the actions necessary to avoid or prevent imposition of such taxes
would be unduly burdensome. For purposes of clause (y) of the immediately
preceding sentence a requirement to change the jurisdiction of the Owners'
incorporation or residence shall not be treated as unduly burdensome.
(l) If any provision of this Charter shall be, or shall be rendered,
unenforceable in whole or in part (which for the purposes of this Clause shall
include being contrary to an official code or order for the time being in force
to which either of the parties hereto is required by law to have regard and the
contravention or the continued contravention of which could be considered or be
made unlawful) Owners and Charterers shall use their best endeavors to agree an
amendment or amendments to the terms of this Charter which would result in this
Charter as so amended being fully enforceable and achieving substantially the
same result (both financially and otherwise) so far as concerns Owners and
Charterers as this Charter in its executed form would have achieved if the same
had been fully enforceable. If Owners and Charterers are unable to agree to such
an amendment or amendments then either party may by notice request that an
arbitrator be appointed pursuant to the provisions to Clause 23(i) to determine
whether an amendment or amendments which would achieve the result set out above
are possible, and he shall be asked to specify them and the terms of this
Charter shall be amended accordingly.
(m) The indemnities of Owners by Charterers contained in this Charter
shall continue in full force and effect (in respect of events occurring during
the currency of this Charter) notwithstanding the termination of the charter of
the Vessel, the repudiation by Charterers of this Charter or the expiration of
the charter period by effluxion of time or otherwise.
(n) Charterers and Owners agree that for United States tax purposes
this Charter is intended to be a financing arrangement and not a true lease, and
Charterers and Owners further agree to file their respective tax returns and
reports consistent with such intention. This Charter shall be in registered form
within the meaning of section 163(f) of the United States Internal Revenue Code
of 1986, as amended, and Owners shall provide Charterers upon request, any forms
or reports reasonably requested by Charterers to evidence such position,
specifically including United States Internal Revenue Service Form W-8 or any
successor form.
24. Definitions
"Assignment of Charter" means the Assignment of this Charter by Owners
as collateral for the Owners obligations to the Lender.
"Assignment of Assignment of Charter" means the assignment of this
Charter by the Lender to the Collateral Trustee as security for the Lender's
obligations under the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, or in the city and state
where the Mortgagee's principal offices are located, are authorized or are
obligated by law, executive order or governmental decree to be closed.
"Certificate of Acceptance" means the certificate executed by
Charterers on the Commencement Date indicating Charterers' acceptance of the
Vessel under this Charter.
"Charter Hire" means the charter hire payable by Charterers for the
use and possession of the Vessel payable at the times and in the amounts set
forth on Schedule 1 attached hereto and made a part hereof.
"Charter Period" means the period of time from the Commencement Date
to the expiration or earlier termination of this Charter, pursuant to the
provisions hereof, and shall include any extension thereof pursuant to Clause 2
of this Charter.
"Collateral Trustee" means X.X. Xxxxxx Trust Company, National
Association, not in its individual capacity but solely as collateral trustee
under the Collateral Trust Agreement, dated as of April 1, 1995, among the
Lender, the Collateral Trustee and the Trustee.
"Commencement Date" means the date on which the Vessel is accepted by
Charterers under this Charter.
"Compulsory Acquisition" means requisition for title or other
compulsory acquisition of the Vessel (otherwise than by requisition for hire),
capture, seizure, condemnation, destruction, detention or confiscation of the
Vessel by any government or by persons acting or purporting to act on behalf of
any government or governmental authority.
"Default Rate" means a rate per annum equal to the sum of 1.50% and
LIBOR as of the commencement of such period; plus any and all penalties, if any,
payable under the second paragraph of Section 6 of the Investment Agreement (as
defined in Schedule 2 hereto) occurring as a result of Charterers' failure to
pay Charter Hire when due.
"Event of Default" means an event described in sub-clauses (a)(i)
through (a)(vi) of Clause 17.
"Indenture" means the Indenture, dated as of April 1, 1995 between the
Lender and the Trustee pursuant to which the Term Mortgage Notes were issued.
"Institute Warranty Limits" means the Institute Warranties as defined
by the Institute of London Underwriters.
"Lender" means California Petroleum Transportation Corporation, a
corporation organized under the laws of the State of Delaware.
"LIBOR" means the rate calculated on the basis of the offered rates
for deposits in dollars for a one-month period which appear on the Reuters
Screen LIBO Page as of 11:00 A.M., London time, on the date that is two London
Banking Days preceding the date of calculation. If at least two such offered
rates appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean
of such offered rates (rounded to the nearest .0001 percentage point). If, at
any time of determination, the Reuters Screen LIBO Page is not available, LIBOR
will be calculated as the average (rounded upward, if necessary, to the next
higher 1/16 of 1 %) of the respective ratio per annum at which deposits in
dollar; for a one month period are offered to each of three reference as in the
London interbank market at approximately 11:00 AM., London time, on the date
that is two London Banking Days preceding the date of calculation. Each of
Charterers and Owners (or Owners' assignee) will select a reference bank and the
third reference bank will be selected by Charterers and Owners (or Owners'
assignee) together or, failing agreement, by the previously selected reference
banks together.
"London Banking Day" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"Mortgage" means the Mortgage, dated the date hereof, between Owners
and the Mortgagee or any other mortgage relating to the financing of the Vessel
by Owners.
"Mortgagee" means the Lender and any successor thereto or any other
mortgagee of the Vessel.
"Owner Taxes" means any income, franchise or equivalent tax, imposed
upon or measured by the net income, stated capital or earned surplus of an Owner
by any federal, state, local or other taxing authority of any jurisdiction
worldwide, or any tax imposed pursuant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Internal Revenue Code of 1986, as amended, or any taxes that result from the
willful misconduct or gross negligence of an Owner or from the inaccuracy or
breach of any representation, warranty or covenant of an Owner contained in any
of Clauses 6(a), 20, 21(a)(iv), 23(k) or 23(n) of this Charter or in any
document furnished in connection with such Clauses by an Owner, or any taxes
that would not have been imposed but for the failure of any Owner (a) to provide
to Charterers (for filing by Charterers with the taxing jurisdiction imposing
such taxes or retention in Charterers' records) upon Charterers' timely request
such certifications, information, documentation or reports concerning such
Owner's identity, jurisdiction of incorporation or residency, or connection with
such taxing jurisdiction or (b) to promptly file upon Charterers' timely request
such reports or returns (which shall be prepared with reasonable care in
accordance with Charterers' written instructions) claiming (or availing itself
of) any applicable extensions or exemptions (to the extent that timely notice
thereof is provided by Charterers); provided that Owner Taxes shall not include
any such tax imposed on any amount that is (i) an indemnity or reimbursement of
an Owner, (ii) an operating or maintenance expense, or (iii) a tax for which
Charterers are otherwise liable under this Charter; and provided further that
Owner Taxes shall not include any such tax imposed by any government
jurisdiction or taxing authority other than the United States Federal government
solely as a result of the location of the Vessel or the Vessel's use by
Charterers.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"P&I Club" means a protection and indemnity association.
"Registration Jurisdiction" means the Commonwealth of the Bahamas.
"Security Documents" means all of the agreements executed and
delivered by Owners to the Lender as collateral security for Owners' obligations
to the Lenders.
"Stipulated Loss Value" means, as of any date, the amount
corresponding to such date as indicated on Schedule 2 hereto and made a part
hereof.
"Term Mortgage Notes" means the Lender's 8.52% First Preferred
Mortgage Notes Due 2015 in the initial aggregate amount of $117,900,000.
"Total Loss" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by Charterers at any time and in their sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days. Any
actual loss of the Vessel shall be deemed to have occurred at 1200 hours
Greenwich Mean Time (GMT) on the actual date on which the Vessel was lost or in
the event of the date of the loss being unknown then the actual total loss shall
be deemed to have occurred at 1200 hours GMT on the day next following the day
on which the Vessel was last heard of. A constructive total loss shall be deemed
to have occurred at 1200 hours GMT on the earliest of: 1) the date that notice
of abandonment of the Vessel is given to the insurers provided a claim for total
loss is admitted by the insurers, or 2) if the insurers do not admit such a
claim, at the date and time GMT at which a total loss is subsequently adjudged
by a competent court of law or arbitration tribunal to have occurred, or 3) the
date that a report is rendered by one or more experts in marine surveying and
vessel valuation (said experts to be appointed by Charterers at their expense
and approved by Owners, such approval not to be unreasonably withheld)
concluding that salvage, repair and associated costs in restoring the Vessel to
the condition specified in Clause 7 exceed the Vessel's fair market value in
sound condition.
"Trustee" means X.X. Xxxxxx Trust Company, National Association, not
in its individual capacity but solely as indenture trustee under the Indenture
or any successor trustee thereunder.
IN WITNESS WHEREOF the parties have caused this Charter to be signed
the date and year first above written.
CALPETRO TANKERS (BAHAMAS III) LIMITED
By: /s/ Tor Olav Troim
---------------------------------
Name: Tor Olav Troim
Its: President
FRONT VOYAGER INC.
By: /s/ Xxx X. Xxxxxx
---------------------------------
Name: Xxx X. Xxxxxx
Its: President & Director
SCHEDULE 1
For the initial two-year Charter period, Charter Hire shall be US$5,050,000,
prepaid in full in advance on March 31, 2006.
On April 1, 2008, if the Charterer has not extended the Charter period beyond
the initial two-year period specified in Section 2(a) of this Charter (the
"Initial Period"), or on the date that this Charter shall be terminated, if the
Charterer has extended such Charter period, the Charterer shall pay to the Owner
an amount that provides sufficient funds (after giving effect to (1) any
"gross-up" of charterhire payments hereunder as a result of any withholding
taxes thereon, (2) the receipt of the Termination Payment and the prepaid
charterhire in respect of the Initial Period and Additional Amounts (as defined
below), if any, and (3) all fees and expenses incurred in connection with the
recharter of the Vessel) for the payment in full when due of (A) the remaining
Allocated Principal Amount of the Tenn Mortgage Notes for the Vessel and
interest thereon in accordance with the revised schedule of sinking fund and
principal payments (the "P&I Schedule") that became applicable upon the
termination of the Bareboat Charter dated as of April 5, 1995 between Owner and
Chevron Transport Corporation, as charterer, (B) the amount of Recurring Fees
and Taxes for the Vessel, (C) the amount of Management Fees and Technical
Advisor's Fees for such Vessel, (D) the amount of fees and expenses of the
Indenture Trustee, Trustee Fees and Designated Representative's Fee allocable to
the Vessel and (E) an amount at least equal to 30% of the estimated amounts, on
a per annum basis, referred to in clauses (B), (C) and (D) above for
miscellaneous or unexpected expenses. Terms used in this paragraph that are not
defined herein shall have the meanings assigned to such terms in the Collateral
Trust Agreement among California Petroleum Transport Corporation, the Owner,
certain other vessel owners and X.X. Xxxxxx Trust Company, National Association,
as Collateral Trustee. Additionally, if the Charter period shall be extended,
the Charterer shall pay to the Owner, on or prior to the commencement of such
extension period, an amount ("Additional Amount") equal to the lesser of (i) an
amount equal to the Allocated Principal Amount of the Term Mortgage Notes for
the Vessel and interest thereon that shall become due and payable during such
extension period in accordance with the P&I Schedule, and (ii) the amount that
provides sufficient funds (after giving effect to (1) any "gross-up" of
charterhire payments hereunder as a result of any withholding taxes thereon, (2)
the receipt of the Termination Payment and the prepaid charterhire in respect of
the Initial Period and Additional Amounts previously paid, if any, (3) all fees
and expenses incurred in connection with the recharter of the Vessel and (4) all
amounts paid in accordance with the P&I Schedule after April 1, 2006 under (i)
above for the payment in full when due of the remaining amounts reflected on the
P&I Schedule. Other as set forth in this paragraph, no other charterhire will be
payable in respect of an extension period.
Schedule 2 to Bareboat Charter
Stipulated Loss Value means, as of any date, the aggregate of (a) the Allocated
Principal Amount corresponding to the period in which such date occurred as
indicated on Schedule 2A, and (b) any amounts (other than Charter Hire) due to
Owner under this Charter on or prior to the date of payment.
