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EXHIBIT 10.2
DATED 30 MARCH 1998
-----------------------------------------
BRITISH LINEN SHIPPING LIMITED (1)
AND
HORIZON EXPLORATION LIMITED (2)
AND
EAGLE GEOPHYSICAL OFFSHORE INC. (3)
------------------------------
HIRE PURCHASE AGREEMENT
IN RESPECT OF M.V. "LABRADOR HORIZON"
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XXXXXX XXXX
London
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CONTENTS
CLAUSE HEADING PAGE
1 Purpose and Definitions.......................................................................1
2 The Acquisition, Upgrade Works and Supply Contracts..........................................10
3 Hirer's Representations and Warranties.......................................................12
4 Term of Agreement............................................................................17
5 Conditions...................................................................................17
6 Delivery and Acceptance......................................................................18
7 Extent of Owner's Liability; Third Party Warranties..........................................18
8 Hire Payments................................................................................19
9 Payments, Interest and Calculations..........................................................20
10 Costs and Indemnities........................................................................21
11 Surety.......................................................................................24
12 Taxation.....................................................................................25
13 General Undertakings.........................................................................28
14 Sub Chartering...............................................................................33
15 Use and Trade of the Ship....................................................................34
16 Title, Registration, Name and House Flag.....................................................36
17 Maintenance and Operation....................................................................36
18 Insurance Undertakings; Wreck Removal........................................................41
19 Powers of Owner to Remedy Defaults...........................................................46
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20 Consumable Stores............................................................................47
21 Use of Equipment and Replacement.............................................................47
22 Mortgages....................................................................................48
23 Loss and Damage..............................................................................48
24 Salvage......................................................................................51
25 Requisition for Hire.........................................................................52
26 Termination Events...........................................................................53
27 Owner's Rights Following a Termination Event.................................................55
28 Notices......................................................................................56
29 Liens and Indemnities........................................................................57
30 Assignment and Sale of Ship..................................................................59
31 Transfer of Ownership........................................................................59
32 Increased Costs, Funding Problems and Illegality.............................................61
33 Miscellaneous................................................................................62
34 Law and Jurisdiction.........................................................................64
SCHEDULE
1 List of Documents and Evidence...............................................................65
2 Forms of Loss Payable Clauses................................................................68
3 Form of Hirer's Assignment...................................................................69
4 Form of Corporate Guarantee..................................................................70
5 Form of Notice of Assignment.................................................................71
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6 Equipment....................................................................................73
7 Form of Account Assignment...................................................................74
8 Excluded Equipment...........................................................................75
9 Capital Schedule.............................................................................76
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THIS HIRE PURCHASE AGREEMENT dated 30 March, 1998 and made
BETWEEN:
(1) BRITISH LINEN SHIPPING LIMITED a company incorporated in Scotland whose
registered office is situate at 0 Xxxxxxxx Xxxxxx, Xxxxxxxxx XX0 0XX
with Value Added Tax Registration Number 345166163 (the "OWNER");
(2) HORIZON EXPLORATION LIMITED a company incorporated in England whose
registered office is situate at Horizon House, 0 Xxxxxxx Xxx,
Xxxxxxxxx, Xxxx, XX00 0XX (the "HIRER"); and
(3) EAGLE GEOPHYSICAL OFFSHORE INC. a company incorporated in the state of
Delaware, United States of America whose principal place of business is
situate at 00 Xxxxx Xxxxxx Xxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx 00000 (the
"SURETY").
WHEREAS
(A) the Owner has agreed to purchase the Vessel in terms of the Sale and
Purchase Agreement;
(B) the Vessel is undergoing upgrade work at Cammell Laird Shipyard in
Birkenhead under the terms of the Upgrade Contract;
(C) the Equipment has been commissioned and is being installed on the
Vessel by suppliers in terms of the Supply Contracts;
(D) the Owner wishes to let to the Hirer and the Hirer wishes to hire the
Ship subject to the terms and conditions of this Agreement.
NOW IT IS HEREBY AGREED as follows :
1 PURPOSE AND DEFINITIONS
1.1 Purpose
This Agreement sets out the terms and conditions upon and subject to
which the Owner agrees to let and to sell to the Hirer, and the Hirer
agrees to hire and to purchase from the Owner, the Ship and the terms
upon which the Surety guarantees the obligations of the Hirer under
this Agreement.
1.2 Definitions
In this Agreement, unless the context otherwise requires:
"ACCOUNT ASSIGNMENT" means the assignment to be executed by the Hirer
in respect of the Cash Collateral Account in the form set out in
schedule 7;
"AGREEMENT" means this Agreement as the same may from time to time be
supplemented and amended;
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"APPROVED BROKERS" means such firm of insurance brokers, appointed by
the Hirer, as may from time to time be approved in writing by the Owner
for the purposes of this Agreement;
"AUDITORS" means the auditors of the Owner;
"BANK ONE ASSIGNMENT" means the assignment by the Hirer in favour of
Bank One, Texas N.A. dated 21 October 1997 of all the Hirer's rights,
title and interest in and to the Hirer's book and other debts and all
other moneys of whatever nature due, owing of payable to the Hirer (and
including, without limitation, the benefit of all rights, securities
and guarantees enjoyed or held by it in relation to any of the above)
and including in each case (without limitation) all claims, and all
moneys which may at any time be or become paid or payable to the Hirer,
under or in respect of any of the above (including proceeds of any
claims, awards or judgment and any returns of premium) and all the
Hirer's right, title and interest in and to the Security Account (as
defined in the said assignment) all monies now or in the future
standing to the credit of the Security Account (as defined in the said
assignment) and the Hirer's right to the repayment of the balances and
interest in the Security Account (as defined in the said assignment),
as security for a Revolving Credit Facility provided by that bank to
the Hirer;
"BORROWED MONEY" means Indebtedness incurred in respect of (i) money
borrowed or raised, (ii) any bond, note, loan stock, debenture or
similar instrument, (iii) acceptance or documentary credit facilities,
(iv) deferred payments for assets or services acquired, (v) rental
payments under and any amounts payable on termination of leases
(whether in respect of ships, land machinery equipment or otherwise)
entered into primarily as a method of raising finance or of financing
the acquisition of the asset leased, (vi) guarantees, bonds, stand-by
letters of credit or other instruments issued in connection with the
performance of contracts and (vii) guarantees or other assurances
against financial loss in respect of Indebtedness of any person falling
within any of paragraphs (i) to (vi) above;
"BUSINESS DAY" means a day on which banks are open for the transaction
of business of the nature concerned in London and New York and (if the
context so requires) in any place in which payment is to be made
hereunder or in such other place or places from time to time herein
specified;
"CAPITAL OUTSTANDING" means the capital amounts outstanding under this
Agreement from time to time and set out in the Capital Schedule;
"CAPITAL SCHEDULE" means schedule 9;
"CASH COLLATERAL" means the amount from time to time standing to the
credit of the Cash Collateral Account excluding interest accrued
thereon or credited thereto;
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"CASH COLLATERAL ACCOUNT" means an interest bearing Dollar account of
the Hirer to be opened by the Hirer with British Linen Bank Limited
designated "Horizon Exploration Limited " and with account number
33433/031;
"CASUALTY AMOUNT" means Three hundred and seventy five thousand Dollars
($375,000) (or the equivalent in any other currency);
"CLASSIFICATION" means the classification "DNV + A1(MV), EO, SF, Supply
Vessel, Helideck" with the Classification Society or such other
classification as the Owner shall, at the request of the Hirer, have
agreed in writing shall be treated as the Classification for the
purposes of this Agreement;
"CLASSIFICATION SOCIETY" means Det Norske Veritas or such other
classification society which the Owner shall, at the request of the
Hirer, have agreed in writing shall be treated as the Classification
Society for the purposes of this Agreement;
"COMPULSORY ACQUISITION" means requisition for title or other
compulsory acquisition, requisition, appropriation, expropriation,
deprivation, forfeiture or confiscation for any reason of the Ship by
any Government Entity or other competent authority, whether de jure or
de facto, but shall exclude requisition for use or hire not involving
requisition of title;
"CORPORATE GUARANTEE" means the guarantee issued or (as the context may
require) to be issued by the Corporate Guarantors on a joint and
several basis in favour of the Owner in the form set out in schedule 5;
"CORPORATE GUARANTORS" means (a) Energy Research International of XX
Xxx 000 Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxx and (b) Eagle
Geophysical Inc. of 00 Xxxxx Xxxxxx Xxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx
00000 and includes their respective successors and permitted assignees;
"DELIVERY" means the time when the Owner shall deliver the Ship to the
Hirer pursuant to clause 6.1;
"DELIVERY DATE" means the date on which Delivery shall occur;
"DOLLARS" and "$" means the lawful currency of the United States of
America and in respect of all payments to be made under this Agreement
in Dollars, means funds which are for same day settlement in the New
York Clearing House Interbank Payments System (or such other U.S.
Dollar funds as may at the relevant time be customary for the
settlement of international banking transactions denominated in United
States dollars);
"DOWNPAYMENT" means (i) the amount of US$8,200,000 paid to the Owner by
the Hirer as a downpayment in accordance with clause 8.1 and (ii) the
amount of any deduction or withholding required in respect of any
payments made by the Owner under the Sale and Purchase Agreement;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, security interest, title
retention or other
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encumbrance securing, or any right conferring a priority of payment in
respect of, any obligation of any person;
"EQUIPMENT" means the seismic and other equipment installed or to be
installed as the case may be on the Vessel, as listed in schedule 6
attached hereto;
"EQUIPMENT SALE AGREEMENT" means the agreement of even date herewith
between the Hirer and the Owner in terms whereof the Hirer sells to the
Owner and the Owner purchases from the Hirer the Equipment;
"EXCLUDED EQUIPMENT" means the items of equipment other than the
Equipment on the Vessel owned by the Hirer or a third party and listed
in Schedule 8 attached hereto and other equipment on the Vessel but not
fixed to and not forming part of the Vessel and owned by the Hirer or a
third party,
"GROUP COMPANY" means any company in the Eagle Geophysical Inc group
of companies;
"GOVERNMENT ENTITY" means and includes (whether having a distinct legal
personality or not) any national or local government authority, board,
commission, department, division, organ, instrumentality, court or
agency and any association, organisation or institution of which any of
the foregoing is a member or to whose jurisdiction any of the foregoing
is subject or in whose activities any of the foregoing is a
participant;
"HIRE PERIOD" means the period of the Hire Term during which the Hirer
shall be entitled to the possession and use of the Ship in accordance
with this Agreement;
"HIRE TERM" means the period commencing on the Delivery Date and ending
on 31 March 2003;
"HIRER'S ASSIGNMENT" means the assignment of the Hirer's interests in
the Insurances and any Requisition Compensation in favour of the Owner
in the form set out in schedule 3;
"HIRER'S DOCUMENTS" means this Agreement, the Hirer's Assignment, the
Account Assignment, the Sale and Purchase Agreement, the Equipment Sale
Agreement, the Sub-Charter, and all notices, consents, certificates and
other documents and agreements to which the Hirer is party issued or,
as the case may be, to be issued pursuant to any of the foregoing;
"INDEBTEDNESS" means any obligation for the payment or repayment of
money, whether as principal or as surety and whether present or future,
actual or contingent;
"INSURANCES" means all policies and contracts of insurance (which
expression includes all entries of the Ship in a protection and
indemnity or war risks association) which are from time to time during
the Hire Period in place or taken out or entered into by the Hirer
pursuant to clause 18 for the benefit of the Hirer
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and the Owner in respect of the Ship and her Sub-Earnings or otherwise
howsoever in connection with the Ship and all benefits thereof
(including claims of whatsoever nature and return of premiums);
"LIBOR" means the rate at which the Reference Bank was able to acquire
deposits in the relevant currency in the London Interbank Market for
such period (not exceeding one month) as the Owner may determine in
amounts comparable with the relevant sum in respect of which the rate
of interest falls to be determined or, where by reason of circumstances
affecting the London Interbank Market generally deposits in the
relevant currency are not in the ordinary course of business, the rate
determined by the Owner as being available at any relevant time in the
London Interbank Market;
"LOSS PAYABLE CLAUSES" means the provisions regulating the manner of
payment of sums receivable under the Insurances which are to be
incorporated in the relevant insurance documents, such Loss Payable
Clauses to be in the forms set out in schedule 2, or in such other
forms as may from time to time be agreed in writing by the Owner;
"MANAGER" means Ervik Marine Services A/S of Xxxxxxxxxx 0, X 0000,
Xxxxxxxx, Xxxxxx or any other person appointed by the Hirer, with the
prior written consent of the Owner, as the manager of the Ship and
includes its successors and assignees;
"MANAGEMENT AGREEMENT" means the agreement dated 19 December 1990 (as
amended) between Simon-Horizon Limited and the Manager (assigned by
Simon-Horizon Limited to the Hirer on 15 July 1994) or any other
agreement previously approved in writing by the Owner between the Hirer
and the Manager providing (inter alia) for the Manager to manage the
Ship;
"MANUALS AND TECHNICAL RECORDS" means all such books, records, logs,
manuals, handbooks, technical data, drawings and other materials and
documents (whether or not kept or required to be kept in compliance
with any applicable laws or the requirements of the Classification
Society) relating to the Ship and the Equipment;
"MONTH" means a calendar month;
"NET INITIAL INVESTMENT" means an amount of US$31,300,000 being the
amount of the Total Expenditure Amount less the amount of the
Downpayment;
"NET SALE PROCEEDS" means, in relation to a sale of the Ship, the
amount actually received by the Owner from a purchaser of the Ship
after deducting the Owner's expenses in connection with such sale
including without limitation (where applicable) broker's commissions,
Owner's marketing expenses, legal costs, agency fees and port charges,
insurance premiums, stamp duties, registration fees and any expenses
relating to the repair of the Ship (including putting the Ship in
class) intended to restore the Ship to the condition required by this
Agreement or pursuant to the provisions of any sale and purchase
agreement in
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respect of the sale of the Ship and which are payable and/or are paid
by the Owner;
"NOTICE OF ASSIGNMENT" means a notice by the Hirer of the assignment
pursuant to the Hirer's Assignment such notice to be in the form set
out in Schedule 5 or in such other form consistent with the terms of
this Agreement as the Owner may approve or require in writing;
"PERMITTED ENCUMBRANCE" means:
(a) any Encumbrance arising from the Owner's own acts or defaults or
claims against the Owner personally for which the Owner would not
be entitled to indemnification under this Agreement;
(b) any Encumbrance for Taxes either not yet assessed or, if
assessed, not yet due and payable or being contested in good
faith by appropriate proceedings (and for the payment of which
adequate reserves have been provided) so long as any such
proceedings or the continued existence of such Encumbrance do not
involve any likelihood of the sale, forfeiture or loss of, or of
any interest in, the Ship;
(c) liens arising in the ordinary course of business by statute or by
operation of law in respect of obligations which are not overdue
or which are being contested in good faith by appropriate
proceedings (and for the payment of which adequate reserves have
been provided or covered by adequate insurance) so long as any
such proceedings or the continued existence of such lien do not
involve any likelihood (prior to the outcome of any relevant
proceedings) of the sale, forfeiture or loss of, or of any
interest in, the Ship;
(d) Encumbrances arising out of claims, judgements or awards against
the Hirer which are being contested in good faith or which are
subject to a pending appeal and for which there shall have been
granted a stay of execution pending such appeal and for the
payment of which adequate reserves have been provided or covered
by adequate insurance to the satisfaction of the Owner; and
(e) Permitted Liens;
(f) the Bank One Assignment for as long as the Hirer remains indebted
to Bank One, Texas N.A. under the facility secured by such
assignment.
"PERMITTED LIENS" means any lien for general average or for Master's
officer's or crew's wages outstanding in the ordinary course of
trading, any lien for salvage and any ship repairer's or outfitter's
possessory lien for a sum not exceeding the Casualty Amount;
"PURCHASE PRICE" means US$31,300 payable by the Hirer to the Owner as
consideration for the purchase of the Ship under this Agreement;
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"RECOVERABLE VAT" means Value Added Tax in respect of which a person is
entitled to claim a credit or repayment pursuant to sections 24, 25 and
26 of the Value Added Tax Xxx 0000;
"REFERENCE BANK" means The Governor and Company of the Bank of
Scotland;
"RELEVANT DOCUMENTS" means the Hirer's Documents, the Corporate
Guarantee and any other document or instrument from time to time
executed by the Hirer, and/or the Corporate Guarantor as a guarantee
and/or security for the obligations of the Hirer and/or any sums of
money from time to time owing, whether actually or contingently, under
or pursuant to this Agreement or any of the other Hirer's Documents and
all notices, consents, certificates and other documents and agreements
to which any of the Hirer and the Corporate Guarantor is a party issued
or, as the case may be, to be issued pursuant to any of the foregoing;
"RELEVANT EVENT" means any Termination Event or any event which after
the giving of notice or lapse of time or the satisfaction of any other
condition (or any combination thereof) would constitute a Termination
Event;
"RELEVANT PARTY" means any or all of the Hirer, the Surety and the
Corporate Guarantors or any other party (other than the Owner) to any
of the Relevant Documents;
"RELEVANT RATE OF INTEREST" means the rate of interest determined by
the Owner to be three per cent. (3%) per annum above LIBOR;
"RENTAL AMOUNT" means an amount of US$21.11 per US$1000 of the Net
Initial Investment adjusted at a rate of US$0.52 per US$1000 of Net
Initial Investment per 100 basis points variance from 6% p.a. at which
the Owner fixes its funding of the Net Initial Investment, adjusted pro
rata where the variance is other than a round 100 basis points;
"RENTAL PAYMENT DATE" means 30th June 1998 and each of the dates
falling at monthly intervals thereafter;
"REQUISITION COMPENSATION" means all sums of money or other
compensation from time to time payable in respect of the Compulsory
Acquisition of the Ship;
"SALE AND PURCHASE AGREEMENT" means the Agreement for the purchase of
the Vessel by the Owner concluded simultaneously herewith between the
Owner and Royal Bank of Scotland (Industrial Leasing) Limited and the
Hirer;
"SHIP" means the Vessel and the Equipment;
"SUB-CHARTER" means any time charter to be entered into in respect of
the Ship between the Hirer and a Sub-Charterer and includes any future
time charter in respect of the Ship entered into by the Hirer with the
prior consent of the Owner;
"SUB-CHARTERER" means the Surety or any other Group Company;
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"SUB-EARNINGS" means all moneys whatsoever from time to time due or
payable to the Hirer during the Hire Period arising out of the use or
operation of the Ship including (but without limiting the generality of
the foregoing) all freight, charterhire and passage moneys, income
arising under pooling arrangements, compensation payable to the Hirer
in the event of requisition of the Ship for hire, remuneration for
salvage and towage services, demurrage and detention moneys, and
damages for breach (or payments for variation or termination) of any
charterparty or other contract for the employment of the Ship from time
to time entered into by the Hirer;
"SUBSIDIARY" of a person means any company or entity directly or
indirectly controlled by such person for which purpose "control" means
either ownership of more than 50 per cent of the voting share capital
(or equivalent right of ownership) of such company or entity or power
to direct its policies and management whether by contract or otherwise;
"SUPPLY CONTRACTS" means the contracts referred to in clause 2,
concluded by the Hirer or (as the case may be) to be concluded by the
Hirer for the supply and installation of the Equipment;
"SUSPENSE ACCOUNT" means an interest bearing Dollar account opened by
the Owner with British Linen Bank Limited designated "British Linen
Shipping Limited - O/A Horizon Exploration Limited" and with account
number 22322/031;
"TAXES" includes all present and future taxes, levies, imposts, duties,
fees or charges of whatever nature including, without limitation,
corporation, capital gains, income, gross receipts, franchise,
transfer, sales, use, business, occupation, transaction, purchase,
value added, excise, personal property, real property, stamp,
documentary, national insurance or other taxes at the rate applicable
for the time being imposed by any national or local taxing or fiscal
authority or any other agency or government, together with interest
thereon, penalties in respect thereof and "Taxation" shall be construed
accordingly;
"TERMINATION EVENT" means any of the events or circumstances described
in clause 26.1 or clause 26.2;
"TERMINATION SUM" means (i) during the period until (and including) the
third anniversary of the Delivery Date an amount equalling one hundred
and one per cent (101%) of the Capital Outstanding as at the date of
termination of this Agreement and (ii) thereafter an amount equalling
one hundred point two five per cent (100.25%) of the Capital
Outstanding as at the date of termination of this Agreement;
"TOTAL EXPENDITURE AMOUNT" means an aggregate amount not exceeding
US$36,000,000 expended by the Owner for the acquisition of the Vessel
under the Sale and Purchase Agreement and for the acquisition of the
Equipment under the Equipment Sale Agreement and, in addition, Value
Added Tax of US$3,500,000 on the purchase of the Equipment;
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"TOTAL LOSS" means:
(a) actual or constructive or compromised or arranged total loss of
the Ship; or
(b) the Compulsory Acquisition of the Ship; or
(c) the hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of the Ship (other than where the same
amounts to Compulsory Acquisition of the Ship) by any Government
Entity, or by persons acting or purporting to act on behalf of
any Government Entity, which deprives the Hirer of the use of the
Ship unless the Ship be released and restored to the Hirer from
such hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation within one hundred and eighty (180)
days after the occurrence thereof;
"UNITED KINGDOM" means Great Britain and Northern Ireland;
"UPGRADE CONTRACT" means agreement no 048PP016 concluded between the
Hirer and Cammell Laird Group plc and dated 2 October 1997;
"UPGRADE WORKS" means the refurbishment and upgrading works conducted
in respect of the Vessel by Cammell Laird Group plc;
"VALUE ADDED TAX" or "VAT" means value added tax as provided for in the
Value Added Tax Xxx 0000 or any similar tax replacing or introduced in
addition to the same;
"VESSEL" means m.v. "LABRADOR HORIZON" presently registered under
Bahamian flag with Official Number 715224 and includes any share or
interest therein her engines, machinery, boats, tackle, outfit,
equipment, spare gear, fuel, consumable, or other stores, belongings
and appurtenances whether on board or ashore together with any and all
substitutions therefor and replacements and renewals thereof from time
to time made in or to her in accordance with the provisions of this
Agreement and, where the context permits, "Vessel" shall include the
Manuals and Technical Records.
1.3 Insurance Definitions
In clause 16:
(a) "EXCESS RISKS" means the proportion (if any) of claims for
general average salvage and salvage charges and under the
ordinary collision clause not recoverable in consequence of the
value at which a vessel is assessed for the purpose of such
claims exceeding her insured value;
(b) "PROTECTION AND INDEMNITY RISKS" means the usual risks covered by
an English protection and indemnity association including the
proportion (if any) not recoverable in case of collision under
the ordinary collision clause; and
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(c) "WAR RISKS" includes the risk of mines and all risks excluded
from the standard form of English marine policy by the free of
capture and seizure clause.
1.4 Headings
Clause headings and the index are inserted for convenience of reference
only and shall be ignored in the interpretation of this Agreement.
1.5 References
In this Agreement, unless the context otherwise requires:
(a) references to clauses and schedules are to be construed as
references to clauses of, and schedules to, this Agreement and
references to this Agreement include its schedules;
(b) references to (or to any specified provision of) this Agreement
or any other document shall be construed as references to this
Agreement, that provision or that document as in force for the
time being and as amended in accordance with the terms thereof,
or, as the case may be, with the agreement of the relevant
parties and (where such consent is, by the terms of this
Agreement or the relevant document, required to be obtained as a
condition to such amendment being permitted) the prior written
consent of the Owner;
(c) words importing the plural shall include the singular and vice
versa;
(d) references to a person shall be construed as references to an
individual, firm, company, corporation, unincorporated body of
persons or any Government Entity; and
(e) references to statutory provisions shall be construed as
references to those provisions as replaced, amended or re-
enacted from time to time.
1.6 Value Added Tax
Any Value Added Tax or any similar tax properly chargeable in respect
of supplies of goods or services (including charterhire) under the
terms of this Agreement shall be payable in addition to the amounts
otherwise payable hereunder, which amounts are determined exclusive of
Value Added Tax or any similar tax.
2 THE ACQUISITION, UPGRADE WORKS AND SUPPLY CONTRACTS
2.1 The Owner has agreed to purchase the Vessel, under the terms of the
Sale and Purchase Agreement and the Owner has agreed to purchase the
Equipment under the Equipment Sale Agreement for the purpose of letting
the Ship to the Hirer under this Agreement. The Owner's obligations to
purchase the Vessel and the Equipment are subject to the condition that
the Owner shall have received the
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documents and evidence specified in paragraph 1 of schedule 1 in form
and substance satisfactory to the Owner and are further subject to the
Owner being obliged to let the Ship to the Hirer pursuant to clause 5
of this Agreement.
2.2 At the date of purchase of the Ship by the Owner the Hirer is in
possession of the Ship for the purposes of attending to the conclusion
of the Upgrade Works in respect of the Vessel and the supply and
installation of the Equipment under the Supply Contracts. The Upgrade
Works and the supply and installation of the Equipment will be
conducted by contractors approved by the Owner at the cost of the
Hirer, which costs are to be reimbursed by the Owner to the Hirer.
Nothing in this Agreement, the Sale and Purchase Agreement or the
Equipment Sale Agreement shall oblige the Owner to expend after taking
account of the Downpayment an amount in excess of the Net Initial
Investment (other than by reason of interest accrued on the Suspense
Account) on the purchase of the Vessel and, the purchase of the
Equipment. The Hirer shall pay to the Owner on date of delivery of the
Ship value added tax in an amount of three million five hundred
thousand US Dollars (US$3,500,000) in respect of the Equipment,
converted at a Pounds Sterling/US Dollars exchange rate of 1.684
(equalling (pound)2,078,384.80), such obligation being discharged upon
payment or by set-off pursuant to clause 8.1 of the Downpayment.
2.3 Subject to the penultimate sentence of clause 2.2 and to the condition
that the Owner shall have received the documents and evidence specified
in paragraph 2 of schedule 1 in form and substance satisfactory to the
Owner, the Owner will on the Delivery Date reimburse the Hirer from the
Net Initial Investment, costs incurred by the Hirer under the Supply
Contracts and the Upgrade Contract up to the Delivery Date. The balance
of the Net Initial Investment not paid by way of reimbursement to the
Hirer nor paid to Royal Bank of Scotland (Industrial Leasing) Limited
pursuant to the Sale and Purchase Agreement, on the Delivery Date,
will, on the Delivery Date be paid by the Owner into the Suspense
Account and all and any interest (at a market related monthly rate
determined by the Owner) accrued on the amount standing to the credit
of the Suspense Account from time to time shall be paid to the Hirer on
the last day of each calendar month or at such other intervals as may
be agreed between the Owner and the Hirer from time to time. Any unused
balance on the Suspense Account after payment of all suppliers under
the Supply Contracts or after expiry of the final drawdown date
referred to in clause 2.4 shall be applied towards the amount standing
to the credit of the Cash Collateral Account.
2.4 Subject to the penultimate sentence of clause 2.2 and to the condition
that the Owner shall have received the documents and evidence specified
in paragraph 3 of schedule 1 in form and substance satisfactory to the
Owner not less than five (5) Business Days prior to the date of
reimbursement or payment as set out below and subject to the further
condition that the conditions in clause 5.2 are fulfilled (on the basis
that references in clause 5.2 to "DELIVERY" are read and construed as
references to the date of reimbursement and payment as set out below)
the Owner will on each written request of the Hirer on the last day of
each calendar month after the Delivery Date (the "PAYMENT RELEASE
DATES")
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release any or all of the funds standing to the credit of the
Suspense Account in reimbursement to the Hirer for costs incurred and
paid by the Hirer under the Supply Contracts and under the Upgrade
Contract provided that the final drawdown date for the Hirer in
respect of any costs so incurred shall be 30 June 1998, after which
date the Owner shall not be obliged to release any funds to the Hirer
from the Suspense Account pursuant to this clause 2.4.
2.5 Upon the Owner's request, the Hirer will effect an assignment in favour
of the Owner of the benefit of any warranties and indemnities obtained
by the Hirer from suppliers under the Supply Contracts or from Cammell
Laird Group plc in respect of the Upgrade Works or the Hirer will
otherwise procure to the satisfaction of the Owner, the extension of
the benefit of such warranties and indemnities to the Owner.
3 HIRER'S REPRESENTATIONS AND WARRANTIES
3.1 Continuing Representations and Warranties
(a) The Hirer represents and warrants to the Owner that:
(i) the Hirer is duly incorporated and validly existing in good
standing under the laws of England as a limited liability
company and has power to carry on its business as it is now
being conducted and to own its property and other assets;
(ii) the Hirer has power to execute, deliver and perform its
obligations under the Hirer's Documents and all necessary
corporate, shareholder and other action has been taken to
authorise the execution, delivery and performance of the
same;
(iii) the Hirer's Documents constitute, or will upon execution
thereof constitute, valid, legally binding and enforceable
obligations of the Hirer;
(iv) the execution and delivery of, the performance of its
obligations under, and compliance by the Hirer with the
provisions of, the Hirer's Documents will not (i)
contravene any existing applicable law, statute, rule or
regulation or any judgment, decree or permit to which the
Hirer is subject, (ii) conflict with, or result in any
breach of any of the terms of, or constitute a default
under, any agreement or other instrument to which the Hirer
is a party or is subject or by which it or any of its
property is bound, or (iii) contravene or conflict with any
provision of the Hirer's Memorandum and Articles of
Association or (iv) result in the creation or imposition of
or oblige the Hirer to create any Encumbrance (other than a
Permitted Encumbrance) on the Hirer's undertaking, assets,
rights or revenues;
17
(v) the certified consolidated financial statements schedule in
a form approved in advance by the Owner, and denominated in
US Dollars for the period from 1 January 1997 up to 31st
December 1997 as delivered to the Owner has been prepared
in accordance with generally accepted accounting principles
and practices in the United States of America which have
been consistently applied and present fairly and accurately
the financial position of the Hirer as at such date and the
results of the operations of the Hirer for the period ended
on such date, and, as at such date, the Hirer did not have
any significant liabilities (contingent or otherwise) which
are not disclosed by, or reserved against in, such schedule
and the Hirer did not have any unrealised or anticipated
losses which are not disclosed by, or reserved against in,
such schedule;
(vi) save for the registration of the Account Assignment and the
Hirer's Assignment, it is not necessary to ensure the
legality, validity, enforceability or admissibility in
evidence of the Hirer's Documents that any of them or any
other instrument be notarised, filed, recorded, registered
or enrolled in any court, public office or elsewhere in
England or that any stamp, registration or similar tax or
charge be paid in England on or in relation to the Hirer's
Documents and the Hirer's Documents are, or will, upon
execution thereof by the Hirer, be in proper form for their
enforcement in the courts of England;
(vii) the choice by the Hirer of English law to govern this
Agreement, the Account Assignment and the Hirer's
Assignment and the submission by the Hirer to the
non-exclusive jurisdiction of the English courts are valid
and binding;
(viii)the Hirer is subject to civil and commercial law with
respect to its obligations under the Hirer's Documents and
the transactions contemplated thereby constitute private
and commercial acts done for private and commercial
purposes and neither the Hirer nor any of its assets is
entitled to immunity on the grounds of sovereignty or
otherwise from any legal action or proceeding (which shall
include, without limitation, suit, attachment prior to
judgment, execution or other enforcement); and
(ix) the Hirer is an indirect wholly owned Subsidiary of Eagle
Geophysical Inc.
(b) The Surety represents and warrants to the Owner that:
(i) the Surety is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and
has power to carry on its business as it is now being
conducted and to own its property and other assets;
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(ii) the Surety has power to execute, deliver and perform its
obligations under each of the Hirer's Documents to which
the Surety is a party and all necessary corporate,
shareholder and other action has been taken to authorise
the execution, delivery and performance of the same;
(iii) the Hirer's Documents to which the Surety is a party
constitute, or will upon execution thereof constitute,
valid, legally binding and enforceable obligations of the
Surety;
(iv) the execution and delivery of, the performance of its
obligations under, and compliance by the Surety with the
provisions of each of the Hirer's Documents to which the
Surety is a party will not (i) contravene any existing
applicable law, statute, rule or regulation or any
judgment, decree or permit to which the Surety is subject,
(ii) conflict with, or result in any breach of any of the
terms of, or constitute a default under, any agreement or
other instrument to which the Surety is a party or is
subject or by which it or any of its property is bound, or
(iii) contravene or conflict with any provision of the
Surety's Articles of Incorporation or Bylaws (iv) result in
the creation or imposition of or oblige the Surety to
create any Encumbrance (other than a Permitted Encumbrance)
on the Surety's undertaking, assets, rights or revenues;
(v) the Surety is subject to civil and commercial law with
respect to its obligations under the Hirer's Documents and
the transactions contemplated thereby constitute private
and commercial acts done for private and commercial
purposes and neither the Surety nor any of its assets is
entitled to immunity on the grounds of sovereignty or
otherwise from any legal action or proceeding (which shall
include, without limitation, suit, attachment prior to
judgment, execution or other enforcement);
(vi) it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of any of the
Hirer's Documents to which the Surety is a party that any
of them or any other instrument be notarised, filed,
recorded, registered or enrolled in any court, public
office or elsewhere in England or that any stamp,
registration or similar tax or charge be paid in England on
or in relation to the Hirer's Documents and the Hirer's
Documents are, or will, upon execution thereof by the
Surety, be in proper form for their enforcement in the
courts of England;
(vii) the choice by the Surety of English law to govern this
Agreement, and the submission by the Surety to the
non-exclusive jurisdiction of the English courts are valid
and binding; and
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(viii)the Surety is a wholly owned Subsidiary of Eagle
Geophysical Inc.,
3.2 Initial Representations and Warranties
The Hirer and Surety further represent and warrant to the Owner that:
(a) there has been no material adverse change in the financial
position of the Hirer from that set forth in the financial
statements referred to in clause 3.1 (a) (v);
(b) every consent, authorisation, licence or approval of, or
registration with or declaration to, governmental or public
bodies or authorities or courts required by the Hirer or the
Surety to authorise, or required by the Hirer or the Surety in
connection with, the execution, delivery, validity,
enforceability or admissibility in evidence of the Hirer's
Documents or the performance by the Hirer or the Surety of its
obligations under the Hirer's Documents has been obtained or made
and is in full force and effect and there has been no default in
the observance of any of the conditions or restrictions imposed
in, or in connection with, any of the same;
(c) the obligations of the Hirer or the Surety under the Hirer's
Documents are direct, general and unconditional obligations of
the Hirer or the Surety and rank at least pari passu with all
other present and future unsecured and unsubordinated obligations
(including contingent obligations) of the Hirer or the Surety;
(d) neither the Hirer nor the Surety is (nor would be with the giving
of notice or lapse of time) in breach of or in default under any
agreement relating to Borrowed Money to which it is a party or by
which it may be bound;
(e) the information, exhibits and reports furnished by the Hirer or
the Surety to the Owner in connection with the matters
contemplated by the Hirer's Documents or in connection with the
negotiation and preparation of the Hirer's Documents are true and
accurate in all material respects and not misleading, do not omit
material facts and all reasonable enquiries have been made to
verify the facts and statements contained therein; there are no
other facts the omission of which would make any fact or
statement therein misleading;
(f) no Taxes are imposed by withholding or otherwise on any payment
to be made by the Hirer or the Surety under the Hirer's Documents
or are imposed on or by virtue of the execution or delivery by
the Hirer or the Surety of the Hirer's Documents or any other
document or instrument to be executed or delivered under any of
the Hirer's Documents;
(g) no Relevant Event has occurred and is continuing;
20
(h) neither the Hirer's interest in the Sub-Earnings, the Insurances
or any Requisition Compensation nor any part thereof is or will
be on the Delivery Date, or the Payment Release Dates subject to
any Encumbrances save for any Permitted Encumbrance; and
(i) the copies of the Management Agreement delivered by the Hirer to
the Owner are true and complete copies of such documents, and, to
the best of the Hirer's and the Surety's knowledge and belief,
each of such documents constitutes the valid, legally binding and
enforceable obligations of the parties thereto and is in full
force and effect and there have been no material amendments or
variations thereof or defaults thereunder;
(j) no litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of the officers of the Hirer,
threatened against the Hirer which in the opinion of the Owner
could reasonably be expected to have a material adverse effect on
the business, assets or financial condition of the Hirer;
3.3 Repetition of Representations and Warranties
On and as of the Delivery Date and each of the Payment Release Dates
and on each Rental Payment Date (a) the Hirer and the Surety shall be
deemed to repeat the representations and warranties in clause 3.1 (so
that the representations and warranties in clause 3.1(a) (v) in respect
of the Hirer shall for this purpose refer to the then latest audited
financial statements delivered to the Owner) as if made with reference
to the facts and circumstances existing on such day and (b) the Hirer
shall be deemed to further represent and warrant to the Owner that the
then latest audited financial statements delivered to the Owner (if
any) pursuant to clause 13.1(c) have been prepared in accordance with
generally accepted accounting principles and practices in the United
Kingdom which have been consistently applied and present fairly and
accurately the financial position of the Hirer as at the end of the
financial period to which the same relate and the results of the
operations of the Hirer for the financial period to which the same
relate and, as at the end of such financial period, the Hirer did not
have any significant liabilities (contingent or otherwise) which are
not disclosed by, or reserved against in, such financial statements and
the Hirer did not have any unrealised or anticipated losses which are
not disclosed by, or reserved against in, such financial statements.
3.4 Not prejudiced by Owner's Investigation
The rights and remedies of the Owner in relation to any
misrepresentation or breach of warranty on the part of the Hirer or the
Surety shall not be prejudiced by any investigation by or on behalf of
the Owner into the affairs of any person (other than the Owner) being a
party to any of the Relevant Documents, by the performance of any of
the Relevant Documents, or by any other act or thing which may be done
or omitted to be done by the Owner under any of the
21
Relevant Documents which would or might, but for this clause 3.4,
prejudice such rights and remedies.
4 TERM OF AGREEMENT
4.1 Hire Term
Subject to the terms and conditions of this Agreement, upon completion
of the Owner's purchase of the Vessel pursuant to the Sale and Purchase
Agreement the Owner shall let and demise to the Hirer, and the Hirer
shall hire, the Ship from the Delivery Date for the period of up to
five (5) years from and including the Delivery Date but in any event
for a period terminating on 31 March 2003.
4.2 Voluntary Termination
The Hirer shall be entitled, on giving to the Owner not less than
thirty (30) days notice (which notice, when given, shall be
irrevocable), to terminate the Hire Period. Upon such termination of
the Hire Period the Hirer shall pay to the Owner an amount equal to the
aggregate of (a) the Termination Sum and (b) all amounts due to the
Owner under clause 31.3 together with all other moneys then due and
owing to the Owner under this Agreement and the other Hirer's Documents
and thereupon the Hirer shall have the option to purchase the Ship on
such date and the provisions of clause 31 shall apply mutatis mutandis
to such sale and purchase.
5 CONDITIONS
5.1 Delivery Conditions
The Owner shall have no obligation to deliver the Ship to the Hirer
after 7 April 1998 or such later date agreed between the Owner and the
Hirer and furthermore the obligation of the Owner to let the Ship to
the Hirer under this Agreement is subject to the condition that on the
Delivery Date, prior to Delivery, the Owner shall have received the
documents and evidence specified in paragraph 1 of schedule 1 in form
and substance satisfactory to the Owner.
5.2 Further Conditions
The obligation of the Owner to let the Ship to the Hirer under this
Agreement is subject to the further conditions that immediately prior
to Delivery:
(a) the representations and warranties set out in clauses 3.1(a) and
3.1(b) (and so that the representation and warranty in clause
3.1(a) (v) shall for this purpose refer to the then latest
certified consolidated financial statements schedule delivered to
the Owner under clause 13.1), the representations and warranties
set out in clauses 4.1 and 4.2 of the Corporate Guarantee (and so
that the representation and warranty in clause 4.1(f) of the
Corporate Guarantee shall for this purpose refer to the then
latest unaudited financial statements (in the form of a Form 10-Q
filing) delivered to the Owner under clause 5.1 of the Corporate
22
Guarantee) are true and correct as if each was made with respect
to the facts and circumstances existing at such time; and
5.3 no Relevant Event shall have occurred and be continuing or would arise
by reason of Delivery taking place.
5.4 Temporary Waivers
The conditions specified in clauses 5.1 and 5.2 are inserted for the
sole benefit of the Owner and may be waived in whole or in part and
with or without conditions by the Owner provided always that if any of
the said conditions are outstanding after Delivery has taken place (or,
for the purpose of clause 2.4, after the relevant Payment Release Date)
then, unless the Owner shall have given a specific written waiver or
deferral in respect thereof, the Hirer shall ensure that each such
outstanding condition is fulfilled within fifteen (15) Business Days of
the Delivery Date (or the relevant Payment Release Date, as the case
may be) and provided further that the Owner shall be entitled to treat
the failure of the Hirer to perform such outstanding conditions within
such period of fifteen (15) Business Days as a Termination Event and as
a repudiatory breach of this Agreement by the Hirer.
5.5 Updating of Conditions
Not later than five (5) Business Days prior to each Rental Payment
Date, the Owner may request and the Hirer shall, not later than two (2)
Business Days prior to such date, deliver to the Owner on such request
further favourable certificates and/or opinions as to any or all of the
matters which are the subject of clauses 2, 3, 5, 13 and 26 of this
Agreement and clauses 4 and 5 of the Corporate Guarantee.
6 DELIVERY AND ACCEPTANCE
6.1 Commencement of Hire Term
Delivery of the Ship by the Owner and acceptance thereof by the Hirer
shall be evidenced by a protocol of delivery and acceptance signed on
behalf of the Owner and the Hirer (which protocol shall state the date,
time and place at which delivery is agreed to have taken place),
whereupon the Ship shall become subject to and governed by this
Agreement and the Hire Term shall commence.
7 EXTENT OF OWNER'S LIABILITY; THIRD PARTY WARRANTIES
7.1 Quiet Enjoyment
The Owner warrants that, without prejudice to the representations and
warranties on the part of the Hirer contained in the Sale and Purchase
Agreement and the Equipment Sale Agreement, and subject to clause 19,
clause 23.1 and clause 26 of this Agreement, the Owner shall not
interfere during the Hire Period with the use, possession and quiet
enjoyment of the Ship by the Hirer on the terms of this Agreement.
23
Provided that the Owner shall not be liable to the Hirer for or in
respect of any interruption to the Hirer's use, possession or quiet
enjoyment of the Ship which results directly or indirectly, wholly or
partly, from any act or omission of any person other than the Owner.
7.2 Limitation of Owner's Liability
The Hirer expressly agrees and acknowledges that at the time of
Delivery the Hirer will have been and will remain in possession of the
Ship and that, save only as provided in clause 7.1, no condition,
warranty or representation of any kind is or has been given by or on
behalf of the Owner in respect of the Ship, and accordingly the Hirer
confirms that it has not, in entering into this Agreement, relied on
any condition, warranty or representation by the Owner or any person on
the Owner's behalf (whether authorised or not), express or implied,
whether arising by law or otherwise in relation to the Ship, including,
without limitation, warranties or representations as to the
description, seaworthiness, quality, merchantability, fitness for any
purpose, value, condition, design or operation of any kind or nature of
the Ship, and the benefit of any such condition, warranty or
representation by the Owner is hereby irrevocably and unconditionally
waived by the Hirer. To the extent permissible under applicable law,
the Hirer also waives any rights which it may have in tort in respect
of any of the matters referred to above and irrevocably agrees that the
Owner shall have no greater liability in tort in respect of any such
matter than it would have in contract after taking account of all the
foregoing exclusions. No third party making any representation or
warranty relating to the Ship or any part of the Ship is the agent of
the Owner nor has any such third party authority to bind the Owner
thereby.
7.3 Unfair Xxxxxxxx Xxxxx Xxx 0000
Notwithstanding the foregoing provisions of this clause 7, (but without
prejudice to the indemnities contained in this Agreement and the other
Hirer's Documents) nothing herein shall afford to the Owner any wider
exclusion of any liability of the Owner for death or personal injury
than the Owner may effectively exclude having regard to the provisions
of the Unfair Contract Terms Xxx 0000.
8 HIRE PAYMENTS
8.1 Amounts
The Hirer agrees to pay to the Owner on the Delivery Date an amount
equal to the Downpayment. The Hirer and the Owner agree that Hirer's
obligation to pay the Downpayment may be discharged by the Owner
setting-off the amount of the Downpayment against the amount payable by
the Owner to the Hirer under the Equipment Sale Agreement on the
Delivery Date. The Hirer shall pay to the Owner, in respect of the hire
of the Ship during the Hire Period an amount equal to the Rental Amount
on each of 57 consecutive Rental Payment Dates during the Hire Period.
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8.2 Unconditional Payment Obligations
The Hirer's obligation to make the payments specified in clause 8.1 and
all other payments in accordance with any of the Hirer's Documents
shall, be absolute and unconditional irrespective of any contingency
whatsoever including (but not limited to) (i) any right of set-off,
counterclaim, recoupment, defence or other right which either party
hereto may have against the other, (ii) any unavailability of the Ship
for any reason, including, but not limited to, any lack or invalidity
of title or any other defect in the title, seaworthiness,
merchantability, fitness for any purpose, condition, design, or
operation of any kind or nature of the Ship, or the ineligibility of
the Ship for any particular use or trade, or for registration or
documentation under the laws of any relevant jurisdiction, or the Total
Loss of, or any damage to, the Ship, (iii) any failure or delay on the
part of either party hereto, whether with or without fault on its part,
in performing or complying with any of the terms or conditions of this
Agreement, (iv) any insolvency, bankruptcy, administration,
reorganisation, arrangement, readjustment of debt, dissolution,
liquidation or similar proceedings by or against the Owner or the
Hirer, (v) any lack of due authorisation of, or other defect in, any of
the Hirer's Documents.
8.3 Advance Payments
No amounts paid in advance shall (except as expressly contemplated by
the provisions of this Agreement) be repayable by or recoverable from
the Owner.
9 PAYMENTS, INTEREST AND CALCULATIONS
9.1 Manner of Payment
All payments to be made by the Hirer under any of the Hirer's Documents
shall be made (unless specifically otherwise provided in this
Agreement) without prior demand and in full, without any set-off or
counterclaim whatsoever and, subject as provided in clause 10.3, free
and clear of any deductions or withholdings in Dollars (or, in the case
of indemnity payments, in the currency in which the cost or expense
which is the subject of the indemnity payment is incurred) for value on
the day on which payment is due to the bank account of British Linen
Bank Limited, at Chase Manhattan Bank, New York, Account Name: British
Linen Bank Limited, Account No. 001 1 911831 or to such other bank
account as the Owner may from time to time have notified to the Hirer
in writing not less than five (5) Business Days prior to the due date
for payment.
9.2 Payments on Business Days
When any payment under any of the Hirer's Documents would otherwise be
due on a day which is not a Business Day, the due date for payment
shall be extended to the next following Business Day unless such
Business Day falls in the next month in which case payment shall be
made on the immediately preceding Business Day.
25
9.3 Interest on Delayed Payments
If the Hirer fails to pay any sum (including, without limitation, any
sum payable pursuant to this clause 9.3) on its due date for payment
under any of the Hirer's Documents, the Hirer shall pay to the Owner on
demand interest on such sum from the due date up to the date of actual
payment (after as well as before any relevant judgment) at the Relevant
Rate of Interest.
9.4 Calculation of Interest
All interest and other payments of an annual nature under any of the
Hirer's Documents shall accrue from day to day and shall be calculated
on the basis of the actual days elapsed and a 360 day year. Any amounts
payable under any of the Hirer's Documents calculated by reference to a
rate of interest shall be calculated as if such interest accrued from
day to day and on the basis of actual days elapsed and 360 day year.
9.5 Certificates
Any certificate or determination of the Owner as to any rate of
interest or any other amount payable under any of the Hirer's Documents
shall, in the absence of manifest error, be conclusive and binding on
the Hirer.
9.6 Currency Indemnity
If any sum due from the Hirer under any of the Hirer's Documents or
under any order or judgment given or made in relation thereto has to be
converted from the currency ("the first currency") in which the same is
payable under any of the Hirer's Documents or under such order or
judgment into another currency ("the second currency") for the purpose
of (i) making or filing a claim or proof against the Hirer, (ii)
obtaining an order or judgment in any court or other tribunal or (iii)
enforcing any order or judgment given or made in relation to such
Hirer's Document, the Hirer shall indemnify and hold harmless the Owner
from and against any loss suffered as a result of any difference
between (a) the rate of exchange used for such purpose to convert the
sum in question from the first currency into the second currency and
(b) the rate or rates of exchange at which the Owner may in the
ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or
in part, of any such order, judgment, claim or proof. Any amount due
from the Hirer under this clause 9.6 shall be due as a separate debt
and shall not be affected by judgment being obtained for any other sums
due under or in respect of any of the Hirer's Documents and the term
"rate of exchange" includes any premium and costs of exchange payable
in connection with the purchase of the first currency with the second
currency.
10 COSTS AND INDEMNITIES
10.1 Ship related Expenses
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The Hirer shall pay promptly all costs or expenses of, or arising from,
the purchase, delivery, import, export, registration, classification,
ownership, possession, control, use, management, xxxxxxx, victualling,
the provision of bunkers and lubricating oils, chartering,
sub-chartering, insurance, maintenance, repair, dry-docking, survey,
refurbishment, service, overhaul, modification, change, alteration,
loss, damage, storage, laying-up, removal, redelivery, sale or disposal
of, in or to the Ship, and all costs or expenses otherwise arising in
connection with the Ship or the performance of the Hirer's obligations
under this Agreement or any of the other Hirer's Documents including
the Management Agreement.
10.2 Duties and Similar Taxes
The Hirer shall pay all stamp, documentary, registration or other like
duties or Taxes (including any such Taxes payable by the Owner) imposed
on or in connection with any of the Relevant Documents and shall
indemnify the Owner against any liability arising by reason of any
delay or omission by the Hirer to pay such duties or Taxes.
10.3 Transaction related Expenses and Fee
Whether or not the Ship is delivered to the Hirer pursuant to this
Agreement, the Hirer shall pay to the Owner on demand:
(a) all expenses (including legal, advisory, printing, and
out-of-pocket expenses) incurred by the Owner in connection with
the negotiation, preparation, and execution of the Relevant
Documents, and of any amendment or extension of, or the granting
of any waiver or consent under, any of the Relevant Documents;
and
(b) all expenses (including legal, survey and other costs) incurred
by the Owner in contemplation of, or otherwise in connection
with, the enforcement of, or preservation of any rights under,
the Relevant Documents, or otherwise in respect of moneys owing
under the Relevant Documents, or in respect of breach of any
representation, warranty, covenant, agreement, condition or
stipulation therein contained, or in respect of the repossession
of the Ship;
and the Hirer shall furthermore pay to the Owner on Delivery of the
Vessel an arrangement fee of US$156,500.
All expenses payable pursuant to this clause 10.3 shall be paid
together with any Value Added Tax or similar tax thereon, and in the
currency in which the same are incurred by the Owner.
10.4 Indemnity for non-Payment by Hirer
The Hirer shall indemnify and hold harmless the Owner, without
prejudice to any of the Owner's other rights under any of the Relevant
Documents, from and
27
against (to the extent that the Owner has not already been compensated
pursuant to the provisions of clause 10.3):
(a) any costs or expenses which the Hirer has agreed to pay and which
shall be claimed from or assessed against or paid by the Owner,
and against any liability incurred by the Owner by reason of any
delay or failure of the Hirer to pay any such costs or expenses;
and
(b) any Taxes which the Hirer has agreed to pay and which shall
nevertheless be claimed from or assessed against or paid by the
Owner, and against any liability incurred by the Owner by reason
of any delay or failure of the Hirer to pay any such Taxes
including, without limitation, any delay or failure of the Hirer
to make any such deduction or withholding as is referred to in
clause 12.3 or by reason of any increased payment as is referred
to in clause 12.3 not being made on the due date for such
payment.
10.5 Indemnities relating to the Ship
Without prejudice to the Hirer's obligations under clauses 10.1 to 10.4
inclusive, the Hirer agrees at all times, whether before, during or
after the Hire Period, to indemnify and hold harmless the Owner from
and against all costs, expenses, payments (other than the expenditure
of an amount up to the Total Expenditure Amount pursuant to the Sale
and Purchase Agreement and the Equipment Sale Agreement and the
payments made by the Owner under clauses 2.3 and 2.4 but including any
payments, costs and expenses pursuant to the Upgrade Contract and the
Supply Contracts, charges, losses, demands, liabilities, claims,
actions, proceedings, (whether civil or criminal) penalties, fines,
damages, judgments, orders or other sanctions, liens, salvage, general
average (in this clause 10.5 together referred to as "Losses") which
may be incurred by, or made or asserted against, the Owner at any time
whether relating to the period before or after Delivery (other than
losses resulting from a default of the Owner under the terms of this
Agreement):
(a) relating to, or arising directly or indirectly in any manner or
for any cause or reason whatsoever out of, the design, nature,
description, manufacture, construction, purchase, delivery,
import, export, registration, flag, classification,
certification, ownership, possession, control, use, management,
operation, xxxxxxx, crewing, navigation, victualling, supply or
servicing (whether at sea or not), provision of bunkers and
lubricating oils, chartering, sub-chartering, insurance,
maintenance, repair, overhaul, dry-docking, surveys,
refurbishment, upgrade, condition, service, overhaul,
modification, change, alteration, loss, damage, storage, laying
up, removal, re-delivery, sale or disposal of, in or to the Ship,
or otherwise in connection with the Ship or which arise out of
the use or operation of any other vessel owned by or chartered to
the Hirer or other company associated with the Hirer or which
arise out of any other claims of whatsoever nature made against
the Hirer or other company associated with the Hirer, or relating
to loss or
28
destruction of or damage to any property, or death or injury of,
or other loss of whatsoever nature suffered by, any person caused
by, relating to, or arising from or out of (in each case whether
directly or indirectly) any of the foregoing matters;
(b) which may at any time be made or brought on the ground that any
design, article or material in the Ship or the operation or use
thereof constitutes an infringement of patent, intellectual
property right or any other right whatsoever;
(c) in preventing or attempting to prevent the arrest, confiscation,
seizure, taking in execution, impounding, forfeiture or detention
of the Ship, or in securing the release of the Ship;
(d) as a consequence of any default in payment by the Hirer of any
sum under any of the Hirer's Documents when due or any other
default by the Hirer in the due and punctual performance of its
obligations under any of the Hirer's Documents (to the extent
that the Owner has not already been compensated pursuant to the
provisions of clause 9.6 or 10.4)
Any amounts payable pursuant to this clause 10.5 shall be paid together
with any Value Added Tax or similar tax thereon, and in the currency in
which the same are incurred by the Owner.
10.6 Survival of Indemnities
Notwithstanding anything to the contrary contained in this Agreement
and without prejudice to any right to damages or other claim which the
Hirer may have at any time against the Owner under this Agreement, the
indemnities by the Hirer in favour of the Owner contained in this
Agreement and the other Hirer's Documents shall continue in full force
and effect notwithstanding any breach of the terms of this Agreement
(including any fundamental or repudiatory breach) by the Owner or the
Hirer or any of the other Hirer's Documents, the termination of the
letting of the Ship to the Hirer under this Agreement, the repudiation
by the Owner or the Hirer of this Agreement, or the expiration or
termination of the Hire Period by effluxion of time or otherwise.
10.7 Interest on Indemnity Payments
Moneys becoming due by the Hirer to the Owner under the indemnities
contained in this clause 10 or elsewhere in this Agreement or any of
the other Hirer's Documents shall be paid on demand made by the Owner
and shall be paid together with interest thereon at the Relevant Rate
of Interest from the date of demand by the Owner to the date of
reimbursement by the Hirer to the Owner (after as well as before
judgment).
11 SURETY
11.1 In consideration of the Owner letting and selling the Ship to the Hirer
in terms of this Agreement, the Surety hereby irrevocably and
unconditionally guarantees to
29
pay to the Owner, on demand by the Owner all moneys and discharge all
obligations and liabilities now or hereafter due, owing or incurred by
the Hirer to the Owner under or pursuant to this Agreement and the
Hirer's Documents when the same become due for payment or discharge
whether by acceleration or otherwise, and whether such moneys,
obligations or liabilities are express or implied, present, future or
contingent, joint or several, incurred as principal or surety
originally owing to the Owner or otherwise acquired by it, denominated
in Dollars or in any other currency or in any other manner whatsoever
and undertakes that if for any reason the Hirer shall fail to pay any
such sum on its due date, the Surety shall immediately on demand by the
Owner unconditionally pay such sum to the Owner.
11.2 The Surety's liability under this Agreement shall not be discharged,
reduced or otherwise affected in any way by reason of (i) the Owner
giving the Hirer time or any other concession, (ii) any composition,
discharge, release or other variation of liability entered into with,
or granted to, the Hirer, (iii) the Owner taking, holding, varying,
realising and not enforcing any other security for the liabilities of
the Hirer under this Agreement or the Hirer's Documents, (iv) any
amendment, variation or waiver (however fundamental) of any provision
of this Agreement or the Hirer's Documents, (v) any legal limitation or
incapacity relating to the Hirer, (vi) the invalidity or
unenforceability of the obligations of the Hirer under this Agreement
or the Hirer's Documents or (vii) any other act or omission of the
Owner or any other circumstances which, but for this provision, might
discharge the Surety.
11.3 The Surety agrees to pay interest on each amount demanded of it under
this clause 11 from the date of demand until payment (as well after as
before judgment) at the Relevant Rate of Interest calculated on day to
day basis. Such interest shall be compounded monthly if not paid on
demand but without prejudice to the Owner's right to require payment of
such interest.
11.4 The obligations of the Surety under this clause 11 shall continue in
effect until all sums whatsoever payable by the Hirer under this
Agreement have been finally paid in full, notwithstanding any
intermediate payment, partial settlement or other matter and will
survive the termination of this Agreement.
11.5 The Surety shall make all payments hereunder to the Owner in full,
without set-off or counterclaim and free and clear of any deductions or
withholdings provided that if at any time the Surety is required by law
to make any deduction or withholding in respect of any taxes, duties or
other charges or withholdings from any payment due hereunder, the sum
due from the Surety in respect of such payment shall be increased to
the extent necessary to ensure that, after the making of such deduction
or withholding, the Bank receives on the due date and retains a net sum
equal to the sum which it would have received had no such deduction or
withholding been required to be made.
12 TAXATION
12.1 General
30
The Hirer shall pay promptly all Taxes levied or assessed on or in
respect of the Ship, any payments made under this Agreement or any of
the other Hirer's Documents or any of the transactions contemplated by
any of the Hirer's Documents but, subject to the remaining provisions
of this clause 12, excluding any Taxes assessed against the Owner by
reference to its overall profits, or by reference to its gains, if any,
realised in connection with the ultimate disposal of the Ship or
arising out of a Total Loss.
12.1 Gross-up of Indemnity Payments
(a) Sums payable to the Owner by the Hirer under this Agreement or
any of the other Hirer's Documents by way of indemnity or
reimbursement shall be calculated on an after-tax basis.
Accordingly, if and to the extent that any such sum payable to
the Owner is taxable in the hands of the Owner (as the Auditors
acting as experts and not as arbitrators shall certify from time
to time) such sum shall be increased to an amount which (after
subtracting any Taxation suffered by the Owner on the increased
payment and after taking into account any deduction for Taxation
purposes available to the Owner in respect of the discharge by
the Owner of any corresponding liability to a third party) shall
equal the amount which the Owner would have received had the sum
payable by the Hirer not been taxable in the hands of the Owner.
If the sum payable by the Hirer is initially paid on the basis
that it is not taxable in the hands of the Owner and it is
subsequently determined to be taxable or vice versa, such
adjustment and payment shall be made between the Owner and the
Hirer as the Auditors (acting as experts and not as arbitrators)
shall certify as appropriate to restore the after-tax position of
the Owner to that which it would have been had the adjustment not
been necessary.
(b) If and to the extent that any sum (the "indemnity sum")
constituting (directly or indirectly) an indemnity to the Owner
but paid by the Hirer to any person other than the Owner, shall
be treated as taxable in the hands of the Owner, the Hirer shall
pay to the Owner such sum (the "compensating sum") as (after
subtracting any Taxation suffered by the Owner on the
compensating sum and after taking into account any deductions for
the purposes of Taxation available to the Owner in respect of any
corresponding payment treated as made by the Owner to such
person) shall reimburse the Owner for any Taxation suffered by it
in respect of the indemnity sum.
(c) For the purposes of this clause 12.2 a sum shall be deemed to be
taxable in the hands of the Owner if it falls to be taken into
account in computing the profits or gains of the Owner for the
purposes of Taxation and if so the Owner shall be deemed to have
suffered Taxation thereon at the rate of Taxation applicable to
the Owner's profits or gains for the period in which the payment
falls to be taken into account for the purposes of such Taxation.
12.3 Withholding Taxes
31
(a) If at any time any applicable law, regulation or regulatory
requirement, or any governmental authority, monetary agency or
central bank requires the Hirer to make any deduction or
withholding in respect of Taxes from any payment due to the Owner
under this Agreement or any of the other Hirer's Documents:
(i) the sum due from the Hirer in respect of such payment shall
be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Owner
receives on the due date for such payment a net sum equal
to the sum which it would have received had no such
deduction or withholding been required to be made;
(ii) the Hirer shall pay to the relevant authority within the
period for payment permitted by applicable law the full
amount of the deduction or withholding (including, but
without prejudice to the generality of the foregoing, the
full amount of any deduction or withholding from any
increased amount paid pursuant to this clause 12.3); and
(iii) the Hirer shall furnish to the Owner within the period for
payment permitted by applicable law, evidence of payment to
the relevant authority of all amounts deducted or withheld
as aforesaid.
(b) If following any such deduction or withholding as is referred to
in clause 12.3(a) from any payment by the Hirer, the Owner shall
receive or be granted a credit against or remission for any Taxes
payable by it, the Owner shall, subject to the Hirer having made
any increased payment in accordance with clause 12.3(a)(i) and to
the extent that the Owner can do so without prejudicing the
retention of the amount of such credit or remission and without
prejudice to the right of the Owner to obtain any other relief or
allowance which may be available to it, reimburse the Hirer with
such amount as the Owner shall in its absolute discretion certify
to be the proportion of such credit or remission as will leave
the Owner (after such reimbursement) in no worse position that it
would have been in had there been no such deduction or
withholding from the payment by the Hirer as aforesaid. Such
reimbursement shall be made forthwith upon the Owner certifying
that the amount of such credit or remission has been received by
it. Nothing contained in this Agreement shall oblige the Owner to
rearrange its tax affairs or to disclose any information
regarding its tax affairs and computations. Without prejudice to
the generality of the foregoing, the Hirer shall not, by virtue
of this clause 12.3(b), be entitled to enquire about the Owner's
tax affairs.
12.4 Non-Deductibility
If the Owner is required to pay any sum to the Hirer under this
Agreement or any of the other Hirer's Documents and such sum is payable
out of or represents a
32
reimbursement of an amount which is brought into account in computing
the profits or gains of the Owner for the purposes of Taxation and such
payment will not be allowed to the Owner as a deductible trading
expense or as a basis for, or otherwise as, a deduction or off-set for
Taxation purposes in the accounting period of the Owner in which it is
required to be paid (as the Auditors acting as experts and not as
arbitrators shall certify from time to time), the Hirer shall pay to
the Owner such amount as shall put the Owner in the same after-tax
position as the Owner would have been in had the payment been allowed
as a deductible trading expense or as a basis for, or otherwise as, a
deduction or set-off as aforesaid. If any such payment is initially
made on the basis that it is a deductible trading expense, or that it
will be allowed as a basis for, or otherwise as, a deduction or set-off
of the Owner for Taxation purposes in the accounting period of the
Owner in which it is incurred and it is subsequently determined that it
is not so deductible or allowed, or vice versa, such adjustments and
payments, if any, shall be made between the Owner and the Hirer as the
Auditors from time to time (acting as experts and not as arbitrators)
may certify as appropriate in order to restore the after-tax position
of the Owner to that which it would have been had the adjustment not
been necessary.
13 GENERAL UNDERTAKINGS
13.1 Information and Compliance Undertakings
Each of the Hirer and the Surety undertakes with the Owner that it
will:
(a) Notification of Relevant Event
promptly inform the Owner of any occurrence of which it becomes
aware which is likely to adversely affect any Relevant Party's
ability to perform its obligations under any of the Relevant
Documents and, without limiting the generality of the foregoing,
will inform the Owner of any Relevant Event forthwith upon
becoming aware thereof;
(b) Consents and Authorisations
without prejudice to clauses 3 and 5, obtain or cause to be
obtained, maintain in full force and effect and comply in all
material respects with the conditions and restrictions (if any)
imposed in, or in connection with, every consent, authorisation,
licence or approval of governmental or public bodies or
authorities or courts and do, or cause to be done, all other acts
and things, which may from time to time be necessary or desirable
under applicable law for the continued due performance of all of
any Relevant Party's obligations under each of the Relevant
Documents;
(c) Preparation of Accounts
cause to be prepared financial statements of the Hirer in
accordance with generally accepted accounting principles and
practices in the United
33
Kingdom consistently applied in respect of each financial year as
well as an annual audited consolidated financial statements
schedule (in a form previously approved by the Owner) in respect
of the Corporate Guarantors, the Hirer and the Surety and cause
the same to be certified by its auditors and prepare an unaudited
consolidated financial statements schedule in a form agreed in
advance with the Owner in respect of each quarter in respect of
the Hirer, the Surety and the Corporate Guarantors and deliver as
many copies of the same as the Owner may reasonably require as
soon as practicable, but not later than 270 days (in the case of
audited financial statements and any audited annual consolidated
financial statements schedule) or 45 days (in the case of
unaudited quarterly financial statement schedules) after the end
of the financial period to which they relate;
(d) Supply of Information
deliver to the Owner as many copies as the Owner may reasonably
require of every report, circular, notice or like document,
issued by the Hirer or the Surety to its shareholders or
creditors generally, in each case at the time of issue thereof;
(e) Supply of Further Information
provide the Owner with such financial and other information
concerning the Hirer and the Surety and their respective affairs
as the Owner may from time to time reasonably require;
(f) Information concerning the Ship
furnish the Owner promptly with all such information as it may
from time to time reasonably require regarding the Ship, her
insurance, condition, maintenance, employment, position and
engagements, particulars of all towages and salvages, and copies
of all charters and other contracts for her employment, or
otherwise howsoever concerning her;
(g) Observance of Covenants
duly and punctually perform each of its obligations under the
Hirer's Documents; and
(h) ensure that its obligations under this Agreement and the other
Hirer's Documents shall, without prejudice to the provisions of
clause 13.1(i), at all times rank at least pari passu with all
its other present and future unsecured and unsubordinated
Indebtedness;
34
(i) Negative undertakings
Not, for so long as any moneys are owing under this Agreement
or any of the Hirer's Documents, without the prior written
consent of the Owner:
(a) Negative pledge
permit:
(i) any Encumbrance to subsist, arise or be created or extended
over all or any part of its present or future undertakings,
assets, rights or revenues to secure any present or future
Indebtedness of itself or any other person; or
(ii) any of its Indebtedness to be guaranteed or otherwise
assured against financial loss by any person other than
itself or the Corporate Guarantors under the Corporate
Guarantee,
unless:
(A) such Encumbrance is in favour of Bank One Texas NA (for as
long as that bank is principal banker to the group of
companies to which the Hirer and the Surety both belong) or
is in favour of the financier of a specific asset, created
over that specific asset, and standing as security for no
more than the facility advanced by that financier to
facilitate the purchase of that asset; or
(B) such Encumbrance or the benefit of such guarantee or other
assurance, or such other security or guarantee or other
assurance as the Owner considers equivalent thereto, is at
the same time, or within such period as the Owner may
approve, extended equally and rateably to the obligations
of the Hirer and the Surety under this Agreement and the
Hirer's Documents to the satisfaction of the Owner;
(b) No merger
merge or consolidate with any other company or person; and
(c) Disposals
sell, transfer, lend or otherwise dispose of or cease to exercise
direct control over any part (being either alone or when
aggregated with all other disposals falling to be taken into
account pursuant to this clause 13.1(i)(c) material in the
opinion of the Owner in relation to the undertakings, assets,
rights and revenues of the Hirer or, as the case may be, the
Surety and all Group Companies taken as a whole) of its present
or future
35
undertaking, assets, rights or revenues (otherwise than by
transfers, sales or disposals for full consideration in the
ordinary course of trading) whether by one or a series of
transactions related or not but excluding any transfers of
undertakings, assets, rights and revenues between Group
Companies.
13.2 Security Cover
(a) Valuations
The Hirer hereby undertakes with the Owner that it will, on a
date being twenty one (21) days before each anniversary of the
Delivery Date during the Hire Period, cause the Ship to be valued
in Dollars by an independent firm of shipbrokers nominated by the
Hirer and approved by the Owner or, failing such nomination or
approval, appointed by the Owner in its sole discretion (each
such valuation to be made without, unless required by the Owner,
physical inspection, and on the basis of an arms-length
transaction between willing buyer and willing seller without
taking into account any charterparty), and to cause the relevant
firm of shipbrokers to deliver to the Owner its aforesaid
valuation in writing addressed to the Owner. All costs arising in
connection with obtaining any such valuations (including, but
without limitation, the fees of the relevant firm of shipbrokers
appointed to give such valuation) shall be borne by the Hirer.
(b) Additional Security
In the event that, on the basis of any valuation of the Ship
(obtained pursuant to clause 13.2(a)) it is demonstrated that
after deducting the balance standing to the credit of the Cash
Collateral Account from the Capital Outstanding, (the resulting
sum being the Net Capital Outstanding) the value of the Ship is:
(i) less than one hundred and forty per cent (140%) of the Net
Capital Outstanding as at the first anniversary of the
Delivery Date or is less than one hundred and fifty per
cent (150%) of the Net Capital Outstanding as at each
successive anniversary of the Delivery Date, then in such
case the Owner shall be entitled to require the Hirer
within a period of thirty (30) days following receipt by
the Hirer of written notice from the Owner notifying the
Hirer of such shortfall and specifying the amount thereof
(which amount shall, in the absence of manifest error, be
conclusive and binding upon the Hirer) to furnish the Owner
with such additional cash security (paid to the Cash
Collateral Account) in an amount not less than the amount
so specified; or
(ii) more than one hundred and forty per cent (140%) of the Net
Capital Outstanding as at the first anniversary of the
Delivery Date or is more than one hundred and fifty per
cent (150%) of the
36
Net Capital Outstanding as at each successive anniversary
of the Delivery Date then in such case the Owner shall,
provided that no Relevant Event has occurred, release to
the Hirer or the Hirer's order the excess cash security
amount over one hundred and forty percent (140%) of the Net
Capital Outstanding or one hundred and fifty percent (150%)
of the Net Capital Outstanding as the case may be, standing
to the balance of the Cash Collateral Account, provided
always that the following minimum deposit amounts are
maintained in the Cash Collateral Account;
(A) a minimum balance of four million Dollars
(US$4,000,000) on the first anniversary of the
Delivery Date until the second anniversary of the
Delivery Date;
(B) a minimum balance of three million Dollars
(US$3,000,000) on the second anniversary of the
Delivery Date until the third anniversary of the
Delivery Date;
(C) a minimum balance of two million Dollars
(US$2,000,000) on the third anniversary of the
Delivery Date until the fourth anniversary of the
Delivery Date; and
(D) a minimum balance of one million Dollars
(US$1,000,000) on the fourth anniversary of the
Delivery Date until the fifth anniversary of the
Delivery Date.
13.3 Protection of Owner's Rights
The Hirer hereby further undertakes with the Owner that throughout the
Hire Period it will:
(a) Disposal of the Ship
not attempt or hold itself out as having any power to sell, agree
to sell other than following exercise of the option under Clause
31.1, transfer or otherwise dispose of or abandon the Ship, or
any share or interest therein. The Hirer acknowledges that it has
no right to sell the Ship;
(b) Encumbrances
not create or agree or purport to create any Encumbrance over the
Ship, any share or interest therein or in the Sub-Earnings or in
the Insurances or Requisition Compensation or any part thereof
(other than for Permitted Encumbrances). The Hirer acknowledges
that it has no right to mortgage the Ship;
37
(c) Notification of arrest
notify the Owner promptly by telex of any arrest or detention of
the Ship or any exercise or purported exercise of a lien or other
claim on the Ship or the Sub-Earnings or the Insurances or any
part thereof;
(d) Prevention of and release from arrest
promptly pay and discharge all debts, damages, liabilities and
outgoings whatsoever which have given or may give rise to
maritime, statutory or possessory liens on, or claims enforceable
against, the Ship, the Sub-Earnings or the Insurances or any part
thereof and, in the event of a writ or libel being filed against
the Ship or the Sub-Earnings or the Insurances or any part
thereof, or of any of the same being arrested, attached or levied
upon pursuant to legal process or purported legal process or in
the event of detention of the Ship in exercise or purported
exercise of any such lien or claim as aforesaid, procure the
release of the Ship, the Sub-Earnings and the Insurances from
such arrest, detention, attachment or levy or, as the case may
be, the discharge of the writ or libel within five (5) Business
Days of receiving notice thereof by providing bail or procuring
the provision of security or otherwise as the circumstances may
require;
(e) No pledging of Owner's Credit
not pledge the credit of the Owner for any maintenance, service,
repairs, drydocking, or modifications to, or changes or
alterations in, the Ship or for any other purpose whatsoever;
(f) Protection of Owner's Rights in the Ship
not do or permit to be done any act or thing which might
jeopardise the title, rights and interest of the Owner in the
Ship and/or omit or permit to be omitted to be done any act which
might prevent that title and those rights and interest from being
jeopardised; and
(g) Notice of Owner's Rights
generally on all occasions when the ownership of the Ship is
relevant make clear to third parties (including the contractors
under the Upgrade Contract and all suppliers under the Supply
Contracts) that the same is the property of the Owner.
14 SUB CHARTERING
14.1 Restrictions on Sub-Chartering
Except pursuant to the Sub-Charter, the Hirer will not, at any time
without the prior written consent of the Owner (which the Owner shall
have full liberty to withhold) and, if such consent is given, only
subject to such conditions as the
38
Owner may impose, part with the possession or operational control of
the Ship (except to the Manager pursuant to the Management Agreement or
for the purpose of maintenance, service, repair or overhaul work or any
modifications, changes or alterations permitted under this Agreement
including any work required under the terms of the Upgrade Contract or
the Supply Contracts) or sub-let the Ship other than in accordance with
the terms of the Sub Charter;
14.2 Undertakings concerning Sub-Charter and Sub-Earnings
The Hirer hereby undertakes with the Owner that throughout the Hire
Period it will:
(a) Sharing of Sub-Earnings
save in respect of the Bank One Assignment, not without the prior
written consent of the Owner (and then only subject to such
conditions as the Owner may impose) enter into any agreement or
arrangement whereby the Sub-Earnings may be shared with any other
person; and
(b) Assignment of Sub-Earnings
notwithstanding anything to the contrary contained in this
Agreement in the event that a Sub Charter is proposed to be
entered into (i) procure the prior written consent of the Owner
to the terms and conditions of the proposed Sub-Charter, (ii)
obtain from Bank One, Texas N.A. all the necessary releases and
consents required by the Owner for such an assignment, including
but not limited to a release from the Bank One Assignment and
(iii) execute on demand an assignment of the Sub-Earnings in
relation to that proposed Sub-Charter in favour of the Owner on
terms and conditions determined by the Owner; and
(c) Information relating to Sub-Earnings
supply to the Owner all information, accounts and records that
may be necessary or of assistance to enable the Owner to verify
the amount of Sub-Earnings.
15 USE AND TRADE OF THE SHIP
15.1 Permitted Use
Subject to the other terms and conditions of this Agreement and the
other Hirer's Documents, the Hirer shall have the full and exclusive
use, control, possession and command of the Ship during the Hire Period
and may operate the Ship or employ her throughout the world in any
lawful trade for which she is suitable.
15.2 Undertakings concerning Use
The Hirer hereby undertakes with the Owner that throughout the Hire
Period it will:
39
(a) Ship Registration
not do or suffer to be done anything whereby the documentation of
the Ship for the time being in accordance with the provisions of
clause 16.2 may be forfeited or imperilled;
(b) Employment
not employ the Ship or permit her employment in any manner, trade
or business which is forbidden by international law, or which is
unlawful or illicit under the law of any relevant jurisdiction,
or in carrying illicit or prohibited goods, or in any manner
whatsoever which may render her liable to condemnation in a prize
court, or to destruction, seizure, confiscation, penalty or
sanctions and, in the event of hostilities in any part of the
world (whether war be declared or not), not employ the Ship or
permit her employment in carrying any contraband goods, or enter
or trade to or continue to trade in any zone which is declared a
war zone by any government or by the Ship's war risks insurers
unless the prior written consent of the Owner is obtained and
such special insurance cover as the Owner may require shall have
been effected by the Hirer and at its expense;
(c) Payment of Outgoings and Evidence of Payments
pay all tolls, dues and other outgoings whatsoever in respect of
the Ship, the Sub-Earnings and the Insurances and keep proper
books of account in respect of the Ship and the Sub-Earnings and,
as and when the Owner may so require, make such books available
for inspection on behalf of the Owner, and furnish satisfactory
evidence that the wages and allotments and the insurance and
pension contributions of the Master and crew are being promptly
and regularly paid and that all deductions from crew's wages in
respect of any tax liability are being properly accounted for and
that the Master has no claim for disbursements other than those
incurred by him in the ordinary course of trading on the voyage
then in progress;
(d) Operation in the USA or Canada
give the Owner at least ten (10) Business Days prior written
notice if the Ship is to be operated in or into or offshore from
the United States of America or Canada, and prior to the
commencement of such operation, to increase the amount of
protection and indemnity, pollution risks and other legal
liability insurance referred to in clause 18.1(a) to such amount
as the Owner may reasonably require;
(e) Anti-Drug Abuse
without prejudice to clause 15.2(b), take all reasonable
precautions to prevent any infringements of the Anti-Drug Abuse
Act of 1986 of the
00
Xxxxxx Xxxxxx xx Xxxxxxx or any similar legislation applicable to
the Ship in any jurisdiction in or to which the Ship shall be
employed or trade;
(f) Bills of Lading
procure that all Bills of Lading issued for carriage of goods by
the Ship shall contain a Paramount clause incorporating any
legislation relating to carrier's liability for cargo
compulsorily applicable in the trade or, if no such legislation
exists, that such Bills of Lading shall incorporate the British
Carriage of Goods by Xxx Xxx 0000 and that all such Bills of
Lading shall also contain the amended New Xxxxx clause and the
Both-to-Blame Collision clause and, without prejudice to
provisions of clause 33.5, provide that General Average, if any,
shall be settled according to the York-Antwerp Rules of 1990 in
London.
16 TITLE, REGISTRATION, NAME AND HOUSE FLAG
16.1 Title
Title to the Ship shall remain vested in the Owner. The Hirer shall
have no right, title or interest in or to the Ship or any part thereof
except the right to use the same upon the terms and conditions
contained in this Agreement. Subject to clause 7.1, nothing herein
contained shall be construed as imposing any liability on the Owner to
the Hirer in respect of or arising out of the acts or omissions of any
third party (including any charterer or lessee of any other vessel or
assets of the Owner) affecting the Hirer or the Ship or otherwise.
16.2 Registration
Not later than Delivery the Hirer shall take, at its expense, all
necessary steps to register the Owner as the registered owner of the
Vessel under the laws and flag of the Bahamas in the name of the Owner
and thereafter shall during the Hire Period do all that may be
necessary on its part to maintain such registration in force. The Owner
shall, at the expense of the Hirer, co-operate to register itself as
the registered owner of the Vessel under the laws and flag of the
Bahamas.
16.3 Name and House Flag
The name of the Vessel may be changed by the Hirer at its expense, to
such name as the Hirer shall select and the Owner may agree (such
agreement not to be unreasonably withheld) and such name shall
thereafter be and remain the name of the Vessel and the Vessel shall be
painted in such colours, display such funnel insignia and fly such
house flag as the Hirer may require. The Hirer shall notify the Owner
of any intended change in the name of the Vessel. The Owner shall at
the expense of the Hirer, co-operate in the registration of any change
of name at the Bahamian Maritime Authority.
17 MAINTENANCE AND OPERATION
17.1 Possession and Control of Ship by Hirer
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During the Hire Period the Ship shall, subject to the terms and
conditions of this Agreement, be in the full and exclusive possession
and at the absolute disposal of the Hirer for all purposes and under
its complete control in every respect and the Master, officers and crew
of the Ship shall be the servants of the Hirer for all purposes
whatsoever.
Notwithstanding any other provision of this Agreement, without
prejudice to any of the obligations of the Hirer under this Agreement
or any of the other Hirer's Documents imposing any higher standard of
performance upon the Hirer, the Hirer shall make, and shall have sole
responsibility for making, all such arrangements as may be necessary to
ensure that the Ship is fit to go to sea without serious danger to
human life.
17.2 Undertakings concerning Maintenance and Operation
The Hirer further undertakes with the Owner that throughout the Hire
Period it will:
(a) Maintenance of Classification; Compliance with Regulations
maintain the Classification as the present class of the Ship with
the Classification Society with such other certificates required
by statute and the Ship's insurers in force at all times and so
as to comply with and ensure that the Ship at all times complies
with the provisions of all laws and the provisions of all other
regulations and requirements (statutory or otherwise) from time
to time applicable to vessels registered in the Bahamas or
otherwise applicable to the Ship, her Master, officers and crew
wherever the Ship may proceed or trade and (without prejudice to
the generality of the foregoing) at its own expense maintain in
force for the Ship all safety, radio, loadline and other
certificates whatsoever and all licences and permits which may
from time to time be prescribed by any legislation in force in
the Bahamas or other applicable jurisdiction;
(b) Supply and Crewing
by its own procurement or that of the Manager, man, victual,
navigate, operate, supply, fuel, and repair the Ship whenever
required during the Hire Period;
(c) Surveys
submit the Ship to continuous surveys and such periodical or
other surveys as may be required for classification purposes,
comply with all recommendations and requirements of the
Classification Society in accordance with their terms and, upon
the Owner's request, supply to the Owner copies of all survey
reports issued in respect thereof;
(d) Repair
42
keep the Ship and every part of her in a good and efficient state
of repair, in efficient operating condition, seaworthy in all
respects and in accordance with good maintenance practice (fair
wear and tear excepted and having regard to the type and age of
the Ship) and procure that all repairs to, or replacement of, any
damaged, worn or lost parts or equipment are effected in such
manner (both as regards workmanship and quality of materials) as
not to diminish the value of the Ship;
(e) Drydocking
drydock the Vessel and clean and paint her underwater parts in
accordance with good commercial practice for vessels of the type
and age of the Vessel and, in any event, in accordance with the
requirements of the Classification Society;
(f) Inspection of the Ship
permit the Owner by surveyors or other persons appointed by it
for such purpose to board the Vessel and permit or procure the
Owner to enter upon the premises where Equipment may be stored,
at all reasonable times for the purpose of inspecting the Ship
and afford all proper facilities for such inspections and for
this purpose give the Owner reasonable advance notice of any
intended drydocking of the Vessel (whether for the purpose of
classification, survey or otherwise). The cost of such
inspections and surveys shall be paid by the Hirer provided
however that where the Owner requests an inspection within a
period of twelve (12) months from a previous inspection and the
inspection shows that the Hirer is not in breach of any of the
provisions of this Agreement, the cost of such inspection shall
be paid by the Owner. All time taken in respect of such
inspection or survey shall form part of the Hire Period. All
inspections and surveys of the Ship shall be carried out at such
times and places and in such manner as not to interfere with the
use and operation of the Ship but the Owner shall not be obliged
to carry out such inspections only during periods of drydocking;
(g) Manuals and Technical Records
maintain all such other records, logs, manuals, technical data
and other materials and documents which are required to be
maintained in respect of the Ship to comply with any applicable
laws or the requirements of the Classification Society and keep
accurate, complete and up to date logs and records of all voyages
made by the Ship and of all maintenance, repairs, alterations,
modifications and additions to the Ship and, on reasonable
advance notice from the Owner, permit the Owner or its
representatives at any time to examine and take copies of such
logs and records and other records;
43
(h) Information regarding Casualties
furnish the Owner with full information regarding any single
casualty or other accident or damage to the Ship which may
involve repairs costing more than the Casualty Amount;
(i) Modification; Removal of Parts; Equipment owned by Third Parties
not without the prior written consent of the Owner (and then only
on and subject to such terms as the Owner may agree):
(i) make any modification to the Ship in consequence of which
her structure, type or performance characteristics could or
might be materially altered or her value materially reduced
(other than in accordance with the Upgrade Contract; or
(ii) remove any material part of the Ship or any equipment
(other than the Excluded Equipment) the value of which is
such that its removal from the Ship would materially reduce
the value of the Ship without replacing the same with
equivalent parts or equipment which are owned by the Owner
free from Encumbrances (other than Permitted Encumbrances
and other than in accordance with the Upgrade Contract); or
(iii) install on the Ship any equipment owned by a third party
which cannot be removed without causing damage to the
structure or fabric of the Ship;
(j) Manager
not without the previous consent in writing of the Owner (and
then only on and subject to such terms as the Owner may agree)
appoint any manager of the Ship other than the Manager or to
terminate or amend the terms of the Management Agreement (and for
the purposes of this Agreement "manager" shall include any ship
manager or other person providing to the Hirer analogous
specialised services in respect of the Ship);
(k) Notification of certain events
notify the Owner forthwith of:
(i) any occurrence in consequence of which the Ship has or may
become a Total Loss;
(ii) any requisition of the Ship for hire;
(iii) any requirement or recommendation made by any insurer or
the Classification Society or by any competent authority
which is not complied with in accordance with its terms;
44
(iv) any serious or potentially serious injury in an amount
exceeding US$100,000 to a third party caused by, or in
connection with, the Ship;
(v) any substantial damage in an amount exceeding US$100,000 to
property caused by, or in connection with, the Ship;
(vi) any assistance which has been given to the Ship which has
resulted or may result in a lien for salvage being acquired
over the Ship; and
(vii) any other event which occurs in connection with the Ship
which affects or might affect the rights of the Owner or
involves or might involve any material loss or liability;
(l) Repairers' Liens
not without the previous consent in writing of the Owner (and
then only on and subject to such terms as the Owner may agree)
put the Ship into the possession of any person for the purpose of
work being done upon her in an amount exceeding or likely to
exceed the Casualty Amount unless such person shall first have
given to the Owner and in terms satisfactory to it, a written
undertaking not to exercise any lien on the Ship or the
Sub-Earnings for the cost of such work or otherwise;
(m) Health and Safety
take such steps as are reasonably practicable to ensure that the
Ship and all constituent parts thereof will be safe and without
risk to health when properly used and specifically (without
prejudice to the generality of the foregoing) that it will:
(i) take such steps as are reasonably practicable to ensure
that any defects in the Ship and all constituent parts
thereof which could be or cause a danger to safety and/or a
risk to health shall be made good;
(ii) for such purpose, have a detailed inspection of the Ship
carried out from time to time including all electrical,
fluid, oil and gas connections (being either supplies to or
discharges from the Ship) and all constituent parts thereof
as well as all safety equipment;
(iii) take such action as is reasonably practicable to see that
appropriate safety measures are adopted; and
(iv) not use or permit the Ship or any constituent parts thereof
to be used beyond their limits and capacities;
(n) No operational interest
45
procure that the Owner is not at any time represented as carrying
goods or passengers or providing any other service on or from the
Ship, or as being in any way connected or associated with any
operation of carriage or other service which may be undertaken by
the Hirer, or as having any operational interest in, or
responsibility for, the Ship;
(o) Safe Operation
take all reasonable steps to secure that the Ship is navigated
and operated in a proper, safe and xxxxxx-like manner and in the
manner prescribed by any legislation in force in the Bahamas or
any other applicable jurisdiction;
(p) Fitness to go to Sea
procure that the Ship shall at all times be fit to go to sea
without serious danger to human life (by reason of the condition,
or the unsuitability for its purpose, of either the Ship or its
machinery or equipment or any part of the Ship or its machinery
or equipment or undermanning or overloading or unsafe or improper
loading or any other matter relevant to the safety of the Ship)
unless arrangements have been made which are appropriate to
ensure that before the Ship goes to sea it is made fit to do so
without serious danger to human life by reason of any such
matters or it is reasonable for such arrangements not to be made
at such time; and
(q) Compliance with Oil Pollution and Environmental Laws
do or cause to be done all things necessary to comply with all
national, international and state conventions and laws (and any
rules and regulations thereunder) applicable to the Owner and/or
the Hirer and/or the Ship including, without limitation, the
International Convention on Civil Liability for Oil Pollution
Damage, the Oil Pollution Act of 1990 of the United States of
America (including, without limitation, the requirements
thereunder relating to xxxxxxx and the establishment of financial
responsibility), the Comprehensive Environmental Response
Compensation and Liability Act of the United States of America,
other federal and state laws of the United States of America and
international conventions, laws, rules and regulations relating
to environmental matters, including those relating to discharges
of oil, petroleum, petroleum products and distillates, chemicals,
pollutants and other substances.
18 INSURANCE UNDERTAKINGS; WRECK REMOVAL
18.1 Insurance Undertakings
The Hirer hereby covenants with the Owner and undertakes that
throughout the Hire Period it will:
(a) Insured Risks
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insure and keep the Ship insured free of cost and expense to the
Owner and in the joint names of the Hirer and the Owner (but
without liability on the part of the Owner for premiums or
calls):
(i) against fire and usual marine risks (including excess
risks) and war risks, on an agreed value basis or such
other basis as shall be agreed by the Owner, in such
amounts (but not in any event less than whichever shall be
the greater of (i) the market value of the Ship for the
time being and (ii) one hundred and ten per cent (110%) of
the maximum Termination Sum applicable during the period of
the policy) and upon such terms as shall from time to time
be approved in writing by the Owner;
(ii) against protection and indemnity risks (including pollution
risks) for the full value and tonnage of the Ship (as
approved in writing by the Owner) and upon such terms as
shall from time to time be approved in writing by the
Owner; and
(iii) in respect of such other matters of whatsoever nature and
howsoever arising in respect of which insurance would be
maintained by a prudent owner of the Ship having regard to
the financial resources and liabilities of the Hirer and to
the situation and method of operation of the Ship;
and that it will pay to the Owner the cost (as conclusively
certified by the Owner) of any innocent owner's insurance and
Additional Perils protection which the Owner may from time to
time effect in respect of the Ship upon such terms and in such
amounts (not exceeding one hundred and ten per cent (110%) of the
maximum Termination Sum applicable during the period of the
policy) as it shall deem desirable;
Provided that if at any time the Owner reasonably considers that
any change in circumstances may occur or has occurred which, in
the opinion of the Owner, may materially affect, or has
materially affected, the insurance of the Ship, then the Owner
shall be entitled (without prejudice to any other rights which it
may have or acquire under this Agreement), if in the reasonable
opinion of the Owner there is no other appropriate action to
prevent such material effect on the insurance of the Ship, to
require the Ship to remain at any safe port or to proceed to and
remain at any safe port designated by the Owner until the Owner
shall have implemented any amendments to the terms of such
insurance and any operational changes which the Owner considers
are required as a result of such change in circumstances;
(b) Brokers and Insurers
effect the insurances aforesaid in Dollars or such other currency
as the Owner may approve and through the Approved Brokers and
with such insurance companies and/or underwriters as shall from
time to time be
47
approved in writing by the Owner provided however that the
insurances against war risks and protection and indemnity risks
may be effected by the entry of the Ship with such war risks and
protection and indemnity risks associations as shall from time to
time be approved in writing by the Owner;
(c) Fleet Cover
if any of the insurances referred to in clause 16.1 (a)(i) form
part of a fleet cover, procure that the Approved Brokers shall
undertake to the Owner that they shall neither set off against
any claims in respect of the Ship any premiums due in respect of
other vessels under such fleet cover or any premiums due for
other insurances, nor cancel the insurance for reason of
non-payment of premiums for other vessels under such fleet cover
or of premiums for such other insurances, and shall undertake to
issue a separate policy in respect of the Ship if and when so
requested by the Owner;
(d) Payment of Premiums
punctually pay all premiums, calls, contributions or other sums
payable in respect of all such insurances and to produce all
relevant receipts or other evidence of payment when so required
by the Owner;
(e) Renewal
at least fourteen (14) days before the relevant policies,
contracts or entries expire, notify the Owner of the names of the
brokers and/or the war risks and protection and indemnity risks
associations proposed to be employed by the Hirer for the
purposes of the renewal of such insurances and of the amounts in
which such insurances are proposed to be renewed and the risks to
be covered and, subject to compliance with requirements of the
Owner pursuant to this clause 18.1, procure that appropriate
instructions for the renewal of such insurances on the terms so
specified are given to the Approved Brokers and/or to the
approved war risks and protection and indemnity risks
associations and that the Approved Brokers and/or the approved
war risks and protection and indemnity risks associations will at
least seven (7) days before such expiry (or within such shorter
period as the Owner may from time to time agree) confirm in
writing to the Owner as and when such renewals have been effected
in accordance with the instructions so given;
(f) Guarantees
arrange for the execution and delivery of such guarantees or
indemnities as may from time to time be required by any
protection and indemnity or war risks association;
48
(g) Custody of Policy Documents; Letters of Undertaking; Loss Payable
Clauses, Notices of Assignment
deposit with the Approved Brokers (or procure the deposit of) all
slips, cover notes, policies, certificates of entry or other
instruments of insurance from time to time issued in connection
with such of the insurances referred to in clause 18.1(a) as are
effected through the Approved Brokers and procure that the
interest of the Owner shall be endorsed thereon by incorporation
of the relevant Loss Payable Clause and by the issuing of the
Notice of Assignment duly signed by the Hirer and that the Owner
shall be furnished with pro forma copies thereof and a letter or
letters of undertaking from the Approved Brokers in such form as
shall from time to time be required by the Owner;
(h) Club Letters of Undertaking; Certificates of Entry
procure that any protection and indemnity and/or war risks
associations in which the Ship is for the time being entered
shall endorse the relevant Loss Payable Clause on the relevant
certificate of entry or policy and shall furnish the Owner with a
copy of such certificate of entry or policy and a letter or
letters of undertaking in such form as shall from time to time be
required by the Owner;
(i) Broker's Report
if so requested by the Owner, but at the cost of the Hirer,
furnish the Owner from time to time with a detailed report signed
by an independent firm of marine insurance brokers appointed by
the Owner dealing with the insurances maintained on the Ship and
stating the opinion of such firm as to the adequacy thereof;
(j) Collection
do all things necessary and provide all documents, evidence and
information to enable the Owner to collect or recover any moneys
which shall at any time become due in respect of the Insurances;
(k) Compliance with Insurances
comply with the terms and conditions of the Insurances, not do,
consent to or permit any act or omission which might invalidate
or render unenforceable the whole or any part of the Insurances
and not (without first obtaining the consent of the insurers to
such employment and complying with such requirements as to extra
premium or otherwise as the insurers may prescribe) employ the
Ship or suffer the Ship to be employed otherwise than in
conformity with the terms of the Insurances (including any
warranties express or implied therein);
(l) Application of Recoveries
49
apply all sums receivable under the Insurances which are paid to
the Hirer in accordance with the Loss Payable Clauses and clause
23.6 in repairing all damage and/or in discharging the liability
in respect of which such sums shall have been received;
(m) Other Insurances and Assureds
not, without the prior written consent of the Owner, take out
additional insurances for the Hirer's sole benefit, or permit the
Hirer or the Owner to be named insured in insurances with respect
to the Ship or the Sub-Earnings, other than as required under
this Agreement, where such additional insurances will or may
prejudice the Insurances or recovery thereunder or will exceed
the amount permitted by the warranties or other conditions of the
Insurances (unless the insurers under the Insurances have
consented thereto) and will, upon the Owner's request,
immediately furnish the Owner with particulars of any such
additional insurances (including copies of any cover notes or
policies) and of the written consent of the insurers under the
Insurances in any case where such consent is necessary;
(n) Maintenance of Oil Pollution Insurance Cover
comply with all other requirements of the protection and
indemnity association with which the Ship is entered to ensure
that the Ship is fully covered for oil pollution risks;
(o) Evidence of Oil Pollution Insurance Cover
deliver to the Owner on demand at the expense of the Hirer
certified true copies of all declarations to the protection and
indemnity association with which the Ship is entered, all
certificates issued by the United States Coast Guard, all
confirmations by such association of cover for oil pollution
risks and such other information and documents relating to oil
pollution risks or insurance as the Owner may from time to time
request;
(p) Encumbrances
not create or permit to exist any Encumbrance over the Insurances
or any Requisition Compensation, or its interest therein save as
contemplated by this Agreement; and
(q) Information concerning Insurances
supply to the Owner all necessary information, documentation and
assistance which may be required by the Owner in connection with
making any claim under the Insurances.
18.2 Further Requirements
50
Notwithstanding the other provisions of this clause 18, the Hirer shall
comply with such further requirements relative to insurance as the
Owner may from time to time stipulate and which are consistent with
normal market practice for a vessel and equipment of the type of the
Ship and in the area in which the Ship is operating.
18.3 Wreck Removal
In the event of the Ship becoming a wreck or obstruction to navigation
the Hirer shall (in addition to any other obligation it may have under
clause 10) indemnify and hold harmless the Owner against all costs,
expenses, payments, charges, losses, demands, any liabilities, claims,
actions, proceedings (whether civil or criminal) penalties, fines,
damages, judgments, orders or other sanctions which may be incurred,
by, or made or asserted against the Owner by reason that the Ship shall
have become a wreck or obstruction to navigation (including, without
limitation) in respect of the removal or destruction of the wreck or
obstruction under statutory powers but only to the extent that such has
not been recovered from the Ship's insurers.
19 POWERS OF OWNER TO REMEDY DEFAULTS
19.1 Failure to Perform Insurance Undertakings
If the Hirer fails to comply with any of the provisions of clause 18.1,
the Owner may, without being in any way obliged so to do, or
responsible for so doing, and without prejudice to the ability of the
Owner to treat that non-compliance as a Termination Event, effect and
thereafter maintain all such insurances upon the Ship as in its
discretion it may think fit in order to procure the compliance with
such provisions or alternatively, require the Ship (at the Hirer's
risk) to remain in, or to proceed to and remain in a port designated by
the Owner until such provisions are fully complied with.
19.2 Failure to Perform Maintenance Undertakings
If the Hirer fails to comply with any of the provisions of clauses
17.2(a), (c), (d) or (e), the Owner may, without being in any way
obliged so to do, or responsible for so doing, and without prejudice to
the ability of the Owner to treat that non-compliance as a Termination
Event, arrange for the carrying out of such repairs, changes or surveys
as it may deem expedient or necessary in order to procure the
compliance with such provisions and the Owner agrees that prior to the
exercise of any of its powers contained in this clause 19.2 it shall
give notice to the Hirer of the intended exercise of its powers
provided that the failure by the Owner to give such notice shall not
affect the validity of the Owner's actions under this clause 19.2 and
for the purpose of the other provisions of this Agreement it shall be
as if there was no such requirement to give notice.
19.3 Failure to Prevent or Release from Arrest
51
If the Hirer fails to comply with any of the provisions of clause
13.3(d) the Owner may, without being in any way obliged so to do, or
responsible for so doing, and without prejudice to the ability of the
Owner to treat that non-compliance as a Termination Event, pay and
discharge all such debts, damages, liabilities and outgoings as are
therein mentioned and/or take any such measures as it may deem
expedient or necessary for the purpose of securing the release of the
Ships in order to procure the compliance with such provisions.
19.4 Failure to comply with other Obligations
If the Hirer fails to comply with any of its other obligations under
this Agreement or any of the other Hirer's Documents, the Owner may,
without being in any way obliged to do so or responsible for so doing,
and without prejudice to the ability of the Owner to treat that
non-compliance as a Termination Event, take such action as it may deem
expedient or necessary in order to procure the compliance with such
provisions.
19.5 Costs of Remedying Defaults
Without prejudice to clause 27.1, all losses, liabilities, costs,
charges, expenses, damages and outgoings of whatsoever nature
(including without limitation, Taxes, repair costs, registration fees
and insurance premiums) suffered, incurred or paid by the Owner in
connection with the exercise by the Owner of any of its powers under
clauses 19.1, 19.2, 19.3 and 19.4 and interest on all such losses,
liabilities, costs, charges, expenses, damages and outgoings from the
date on which the same were suffered, incurred or paid by the Owner
until the date of receipt or recovery thereof (both before and after
any relevant judgement) at the Relevant Rate of Interest shall be
repayable by the Hirer to the Owner on demand.
19.6 Rental Amounts Still Payable
Notwithstanding any exercise by the Owner of any of the powers
contained in this clause 19, Rental Amounts shall continue to be
payable during such time.
20 CONSUMABLE STORES
20.1 Upon Delivery
All consumable stores, unused diesel and lubricating oils and bunkers
on board the Ship at Delivery shall be taken over by the Hirer at no
extra cost.
21 USE OF EQUIPMENT AND REPLACEMENT
21.1 Use of Equipment and Manuals and Technical Records
The Hirer shall have the use of all outfit, equipment (including cabin,
crew and galley equipment), furnishings, furniture and fittings, spare
and replacement parts which are the property of the Owner on board the
Ship at the time of Delivery and the Manuals and Technical Records.
52
21.2 Renewal of Equipment
The Hirer shall at its own expense from time to time during the Hire
Period replace, renew or obtain substitutions for such items of
Equipment and other equipment as shall be so damaged or worn as to be
unfit for use including any items of equipment added to the Ship and
acquired under the Upgrade Contract and the Supply Contracts, provided
always that in any such case title to any part replaced, renewed or
substituted shall remain with the Owner until the part which replaced
it or the new or substituted part becomes the property of the Owner or
is replaced, renewed or substituted by a part which thereupon becomes
the property of the Owner and the Hirer agrees that if any replaced,
renewed or substituted part is not the property of the Owner it will as
soon as practicable replace the same with a part which thereupon
becomes the property of the Owner.
21.3 Alteration of Equipment; Additional Equipment
The Hirer may at any time alter or remove all or any items of Equipment
or other equipment or may fit any additional equipment required to
render the Ship available for any purpose for which the Hirer may
require to use her in accordance with the provisions of clause 15
provided that the Hirer shall first have obtained the prior written
consent of the Owner thereto if and to the extent such consent may be
required pursuant to clause 17.2(i) and provided the Hirer has procured
adequate storage facilities in respect of such removed Equipment or
other equipment and has effected adequate insurances in respect thereof
as approved by the Owner. Any additional equipment so fitted by the
Hirer shall be considered the property of the Hirer who may remove such
additional equipment at any time before the expiration of the Hire
Period. The cost of fitting or removing any equipment together with the
cost of making good any damage caused by such fitting or removal shall
be payable in full by the Hirer.
22 MORTGAGES
22.1 Owner's Undertakings
The Owner warrants that the Ship and the Owner's interest in the
Insurances or any Requisition Compensation will at the Delivery Date be
free of any Encumbrances created by it and undertakes that it will not
during the Hire Period, without the prior written consent of the Hirer,
create any Encumbrance over the Ship, or any share or interest therein
or the Owner's interest in the Insurances or any Requisition
Compensation.
23 LOSS AND DAMAGE
23.1 Risk
Except as specified in clause 7.1, the Ship shall throughout the Hire
Period be in every respect at the risk of the Hirer who shall bear all
risks howsoever arising whether of navigation, operation and
maintenance of the Ship or otherwise and
53
of any other occurrence of whatever kind which shall deprive the Hirer
of the use, possession or enjoyment thereof.
23.2 Total Loss
(a) If the Vessel shall become a Total Loss during the Hire Period,
the Hirer shall pay, or procure that the insurers pay, to the
Owner within 30 days (or such longer period as may be agreed by
the Owner in writing) of the date on which the Total Loss
occurred, the Termination Sum as at the date of payment thereof
together with all amounts then due and payable under this
Agreement in respect of the Ship including, without prejudice to
the generality of the foregoing, all amounts which the Hirer is
required to pay to the Owner under clause 31.3.
(b) For the purposes of this Agreement, a Total Loss of the Vessel
shall be deemed to have occurred:
(i) in the case of an actual total loss of the Vessel, at noon
(London time) on the actual date and at the time the Vessel
was lost or, if such date is not known, on the day on which
the Vessel was last reported;
(ii) in the case of a constructive total loss of the Vessel,
upon the date and at the time notice of abandonment of the
Vessel is given to the insurers of the Vessel for the time
being (provided a claim for such constructive total loss is
admitted by the insurers) or, if the insurers do not admit
such a claim, at the date and at the time at which a
constructive total loss is subsequently adjudged by a
competent court of law to have occurred;
(iii) in the case of a compromised or arranged total loss, on the
date upon which a binding agreement as to such compromised
or arranged total loss has been entered into by the
insurers of the Vessel;
(iv) in the case of Compulsory Acquisition, on the date upon
which the relevant requisition of title or other compulsory
acquisition occurs;
(v) in the case of hijacking, theft, condemnation,
confiscation, capture, arrest, detention, seizure of the
Vessel (other than where the same amounts to Compulsory
Acquisition of the Vessel) by any Government Entity, or by
persons purporting to act on behalf of any Government
Entity, which deprives the Hirer of the use of the Vessel
upon the expiry of the period of 180 days after the date
upon which the relevant hijacking, theft, condemnation,
confiscation, capture, arrest, detention or seizure
occurred.
54
23.3 Continuation of Hire Period
The Hirer shall continue to pay Rental Amounts on the days and in the
amounts required under this Agreement notwithstanding that the Vessel
shall become a Total Loss, or if for any reason the Hirer shall be
permanently deprived of her use prior to the end of the Hire Period,
provided always that no further Rental Amounts shall become due and
payable after the date on which all sums due under clause 23.2(a) in
respect of the Ship shall have been paid in full.
23.4 Application of Requisition Compensation
In the event of the Compulsory Acquisition of the Ship after Delivery,
all Requisition Compensation received by the Owner shall be applied by
the Owner (or, if received by the Hirer, shall be held in trust by the
Hirer for application) in accordance with clause 23.5.
23.5 Application of Total Loss Insurance Recoveries
All moneys received by the Owner from insurers in respect of a Total
Loss shall be applied by the Owner, subject to clause 12.4, as follows:
(a) firstly, in or towards settlement of any amounts due and owing by
the Hirer to the Owner under this Agreement or any of the other
Hirer's Documents including, without prejudice to the generality
of the foregoing, amounts owing by the Hirer to the Owner under
clause 32.3 of this Agreement (including any interest due in
respect thereof);
(b) secondly,if the Hirer shall on or before the date of application
of such moneys have paid the Termination Sum in accordance with
clause 23.2(a) or a part thereof, in or towards refunding by way
of rebate of charterhire to the Hirer an amount equal to the
Termination Sum or part thereof so paid by the Hirer; and
(c) thirdly, to the Hirer.
23.6 Damage Claims
In the event of repairable damage to the Ship, the Owner shall pay any
insurance moneys received by it to the Hirer upon the Hirer furnishing
evidence to the Owner that such damage has been made good or repaired
or shall effect payment of stage payments with regard thereto provided
always that if a Relevant Event has occurred and is continuing, the
Owner shall be entitled to apply such insurance moneys in or towards
settlement of any amounts due and owing by the Hirer to the Owner under
this Agreement or any of the other Hirer's Documents.
23.7 Third Party Claims
Any insurance moneys paid under the insurances taken out or entries
made referred to in clause 18.1(a)(ii) shall be paid to the person to
whom the liability (or alleged liability) covered by such insurances or
entry was incurred or, if the
55
liability (or alleged liability) to such person has previously been
discharged by the Hirer, such moneys shall be paid to the Hirer in
reimbursement of the moneys so expended by it in satisfaction of such
liability or alleged liability and, in such case, the Owner shall pay
any insurance moneys received by it in respect of such liability or
alleged liability to the Hirer upon the Hirer furnishing evidence to
the Owner that such liability or alleged liability has previously been
discharged provided always that if a Relevant Event has occurred and is
continuing, the Owner shall be entitled to apply such insurance moneys
in or towards settlement of any amounts due and owing by the Hirer to
the Owner under this Agreement or any of the other Hirer's Documents.
23.8 Insufficient Insurance Recovery
In the event of repairable damage to the Ship or a liability or alleged
liability covered by the insurances taken out or entries made referred
to in clause 18.1(a) being incurred or alleged, and if the insurance
moneys paid in respect thereof are insufficient to pay the cost or
estimated cost of making good or repairing such damage or discharging
the liability or alleged liability, the Hirer will pay the deficiency.
23.9 Notice of Abandonment
Either the Owner or the Hirer shall have the right to determine whether
or not a case has arisen for the giving of notice of abandonment to
abandon the Ship to the insurers and/or claim a constructive total loss
and the Hirer is hereby irrevocably authorised by the Owner to give the
same if it so determines.
The Owner shall upon the request of the Hirer promptly execute such
documents as may be required to enable the Hirer to abandon the Ship to
the insurers and/or claim a constructive total loss and the Owner shall
give the Hirer all possible assistance in pursuing the said claim.
23.10 Payment of Claims
Any moneys payable under the Insurances shall be payable in accordance
with the terms of the relevant Loss Payable clause and, unless and
until a Relevant Event shall occur (whereupon all insurance recoveries
shall be receivable by the Owners and applied in accordance with the
foregoing provisions of this clause 23), the Owner shall not give any
notice or direction to the contrary to the insurers as contemplated by
the Loss Payable Clauses.
24 SALVAGE
All salvage and towage and all proceeds from derelicts shall, subject
to the Owner's prior right to retain thereout any sums which may be due
from the Hirer to the Owner under this Agreement or any of the other
Hirer's Documents, be for the Hirer's benefit and the cost of repairing
damage occasioned thereby shall be borne by the Hirer.
56
25 REQUISITION FOR HIRE
25.1 Effect of Requisition for Hire
If the Ship is requisitioned for hire by any Government Entity or other
competent authority during the Hire Period then, unless and until the
Vessel becomes a Total Loss following such requisition and the Hirer
shall have made payment of all sums due pursuant to clause 23.2(a),
this Agreement shall continue in full force and effect in respect of
the Ship (subject always to the provisions of clauses 27 and 31.2) for
the remainder of the Hire Period and the Hirer shall remain fully
responsible for the due compliance with all its obligations under this
Agreement and the other Hirer's Documents in respect of the Ship other
than such obligations which the Hirer is unable to comply with solely
by virtue of such requisition.
25.2 Payment of Requisition Hire
If the Hirer shall duly comply with its obligations under this
Agreement and the other Hirer's Documents, save as mentioned in clause
25.3, the Hirer shall during the Hire Period be entitled to all
requisition hire paid to the Owner or to the Hirer by such Government
Entity or other competent authority on account of such requisition.
25.3 Owner to account for Requisition Hire
The Owner shall (subject to any right of set-off which the Owner may
have in respect of any amounts due and unpaid under the terms hereof)
pay any requisition hire to the Hirer immediately upon receipt.
25.4 Reinstatement of Ship
The Hirer shall as soon as practicable after the end of any requisition
for hire, cause the Ship to be put into the condition required by this
Agreement.
25.5 Compensation for Reinstatement
The Owner shall be entitled to all compensation payable in respect of
any change in the structure, state or condition of the Ship arising
during the period of requisition for hire. The Owner shall apply all
such compensation in reimbursing the Hirer for the cost of complying
with its obligations under clause 25.4 and any surplus shall be paid by
the Owner to the Hirer by way of rebate of hire, provided always that
if a Relevant Event has occurred and is continuing, the Owner shall be
entitled to apply such compensation in or towards settlement of any
amounts owing by the Hirer under this Agreement or any of the other
Hirer's Documents.
25.6 Continuing Requisition for Hire
Should the Vessel be under requisition for hire at the end of the Hire
Period:
57
(a) the charter of the Ship under this Agreement shall (unless
otherwise agreed between the parties hereto) nevertheless be
terminated at such end but without prejudice to the accrued
rights of the parties including, without prejudice to the
generality of the foregoing, the obligation of the Hirer
contained in clause 25.4, and the Owner shall be entitled to
receive and retain any requisition hire payable in respect of the
period from the expiry or termination of the Hire Period;
(b) after such release the Hirer shall be given a reasonable
opportunity of removing any such additional equipment as is
referred to in clause 21.3 on the terms therein referred to.
26 TERMINATION EVENTS
26.1 The Owner and the Hirer agree that it is a fundamental term and
condition of this Agreement that none of the following events shall
occur during the Hire Period and that the occurrence of any of the
following events shall constitute a repudiatory breach of this
Agreement by the Hirer:
(a) if any Relevant Party fails to pay any Rental or other sum
payable under the Relevant Documents on its due date or in
respect of sums payable on demand, fails to pay any other sum
payable on demand under the Relevant Documents within five (5)
Business Days after demand; or
(b) if any Relevant Party fails or neglects to observe or perform any
of the terms and conditions of the Relevant Documents in a way
which the Owner regards as material (otherwise than as mentioned
in Clause 26.1(a)) and in the case of a failure or non-observance
which is capable of remedy such failure or non-observance shall
continue unremedied for fourteen days after the Owner becomes
aware of it; or
(c) if any Relevant Party shall do or allow to be done or omit to do
any act or thing which act or omission in the opinion of the
Owner may materially jeopardise any of its rights in relation to
the Ship; or
(d) if any statement, representation or warranty made by any Relevant
Party inducing the Owner to enter into the Relevant Documents or
made on the part of any Relevant Party in the Relevant Documents
or in any certificate, statement or notice delivered or made
pursuant to the Relevant Documents shall be or become incorrect
in any respect; or
(e) if any process of execution, diligence or distress shall be
levied on executed against or sued out against the Ship or any
goods or other property belonging to any Group Company and shall
not be discharged within seven days; or
(f) if an order shall be made or a resolution passed for the winding
up (other than by way of a members' voluntary winding up for the
purpose of a
58
scheme of amalgamation or reconstruction or for any other
purpose in any case previously approved by the Owner) of any
Group Company; or
(g) if any Group Company shall convene a meeting for the purpose of
making or shall make a composition or arrangement with or any
assignment or assignation for the benefit of its creditors; or
(h) if an encumbrancer shall take possession or a receiver or
liquidator shall be appointed in respect of whole or any part of
the assets or undertaking of any Group Company; or
(i) if any Group Company shall be unable to pay its debts as such
expression is defined in Section 123 of the Insolvency Xxx 0000;
or
(j) if any indebtedness or obligation of any Group Company (other
than an indebtedness or obligation of less than US$500,000) shall
become due and payable prior to the specified maturity date
thereof or any agreement for the hiring of machinery or plant to
a Group Company or any material hire purchase or conditional sale
agreement to a Group Company shall be terminated by reason of an
event of default thereunder or any indebtedness of a Group
Company in connection with any such agreement shall not be paid
when due or any Group Company shall not meet its obligations
under any guarantee or indemnity when properly called upon to do
so; or
(k) if the Hirer shall cease to be a Subsidiary (directly or
indirectly) of Eagle Geophysical Inc. without the Owner's prior
written approval; or
(l) if any security constituted by any mortgage or charge created by
any Group Company including the security constituted by the
Account Assignment shall become enforceable and the mortgagee or
the chargee shall take steps to enforce the same unless any such
security has become illegal or unenforceable in accordance with
clause 32; or
(m) if any event or proceedings in any jurisdiction which is or are
analogous to any of the events or proceedings referred to in
sub-clauses (e), (f), (g), (h), (i) or (l) of this Clause 26.1
shall occur or be commenced in relation to any Group Company; or
(n) if the Hirer, the Surety or either of the Corporate Guarantors
are in breach of any other agreement with or obligation in favour
of the group of companies of which the Owner forms part ("OWNER
GROUP") for a period in excess of any applicable grace period
under the terms of such agreement or obligation or (if none) for
14 days; or
(o) if the Hirer, the Surety or either of the Corporate Guarantors
dispose of all or a substantial part of their assets otherwise
than for full consideration in money or money's worth payable at
the time of such disposal and otherwise than to another Group
Company, without the
59
prior written consent of the Owner, whether such disposal is
effected in one transaction or a series of transactions whether
or not related; or
(p) If:
(i) the Hirer, the Surety or either of the Corporate Guarantors
or any other Group Company shall at any time reduce to a
substantial extent the scale of its business now carried on
by such companies respectively or if there shall be a
substantial reduction in the scale on which the businesses
now carried on by Group Companies (taken as a whole) are
carried on in each case as compared with the scale on which
the same is or are carried on at the date hereof; and
(ii) the Owner acting reasonably shall certify that in its
opinion in all the circumstances the risk to the Owner in
connection with the Relevant Documents has materially
increased; or
(q) if after the date hereof and without the prior written consent of
the Owner (such consent not to be unreasonably withheld or
delayed) any of either of the Corporate Guarantors, the Surety or
the Hirer or of any Subsidiary (directly or indirectly) of the
Hirer ceases to be a wholly owned subsidiary of Eagle Geophysical
Inc; or
(r) if any judgment or order is made against any Group Company and is
not stayed or complied with within seven days.
26.2 Hirer Administration Order
If at any time an application by petition is presented to any Court
under section 9 of the Insolvency Xxx 0000 for an administration order
(or under any other law in any other jurisdiction for an order
analogous to such an administration order) to be made against the
Hirer, the Surety or either of the Corporate Guarantors:
(a) the existence of circumstances giving rise to such application
shall constitute the repudiation by the Hirer of this Agreement,
which repudiation shall be deemed to have been immediately
accepted by the Owner;
(b) this Agreement shall forthwith terminate immediately without
notice;
(c) the Hirer shall no longer be entitled to possession of the Ship;
provided always that such termination shall not affect any rights the
Owner may have against the Hirer arising hereunder on or before such
termination or at common law.
27 OWNER'S RIGHTS FOLLOWING A TERMINATION EVENT
27.1 Termination Rights and Payments
60
At any time after the repudiation of this Agreement by the Hirer,
including the occurrence of any Termination Event (and provided that
the same is continuing) the Owner may, by notice to the Hirer, accept
such repudiation and immediately terminate the Hire Period (whereupon,
the Hirer agrees and acknowledges, the Hirer's right, title and
interest in and to the Ship and to possess and operate the Ship, shall
terminate) and retake possession of the Ship, the Owner agreeing, in
such circumstances, that (provided that the seaworthiness of the Ship
is not thereby impaired nor the value of the Ship thereby materially
diminished nor the specification or structure of the Ship thereby
materially altered) the Hirer may first remove or that the Owner will
at the Hirer's cost and expense remove and deliver to the Hirer, or to
whomsoever else may be entitled thereto, any equipment belonging to the
Hirer installed in or on the Ship, and the Hirer agrees that the Owner
may for this purpose enter upon any premises belonging to or in the
occupation or under the control of the Hirer where the Ship or any part
thereof may be located and the Hirer shall pay to the Owner forthwith
upon such termination such sum as shall equal the aggregate of:
(a) all amounts due under this Agreement and any of the other Hirer's
Documents as shall be payable and remain outstanding including,
without prejudice to the generality of the foregoing, all amounts
due to the Owner under clause 32.2 and 32.3;
(b) all losses incurred by the Owner in connection with such
termination including, without prejudice to the generality of the
foregoing, all costs and expenses so incurred in recovering
possession of the Ship, and in carrying out any works or
modifications required;
and the Hirer shall also pay to the Owner forthwith upon such
termination by way of agreed compensation and not as a penalty the
amount of the Termination Sum as at the date of termination.
28 NOTICES
28.1 Every notice, request, demand or other communication under this
Agreement shall:
(a) be in writing delivered personally or by prepaid first class
letter or facsimile transmission (confirmed in the case of a
facsimile transmission by prepaid first class letter sent within
24 hours of despatch but so that the non-receipt of such
confirmation shall not affect in any way the validity of the
facsimile transmission in question);
(b) be deemed to have been received, subject as otherwise provided in
this Agreement, in the case of a facsimile transmission, at the
time of despatch with confirmation that the communication was
well received (provided that, in the case of a facsimile
transmission, if the date of despatch is not a business day in
the country of the addressee it shall be deemed to have been
received at the opening of business on the next such
61
business day) and in the case of a letter, when delivered
personally or three (3) days after being put in the post;
(c) be sent:
(1) to the Owner to: British Linen Shipping Limited
0, Xxxxxxxx Xxxxxx
Xxxxxxxxx XX0 0XX
Xxxxxxxx
Fax: 0000 000 0000
(Attention: Managing Director / The Company Secretary)
(2) to the Hirer to: Horizon Exploration Limited
Horizon House
0 Xxxxxxx Xxx
Xxxxxxxxx
Xxxx XX00 0XX
Xxxxxxx
Fax: 00000 000000
(Attention: Xxxx Xxxxxxxx)
(3) to the Surety to:Eagle Geophysical Offshore Inc
50 Briar Hollow Xxxx
0xx Xxxxx
Xxxxxxx
Xxxxx 00000
Xxxxxx Xxxxxx of America
Fax: 000 000 000 0000
(Attention: Chief Financial Officer)
or to such other address or facsimile number as is notified by
one party to the other under this Agreement .
29 LIENS AND INDEMNITIES
29.1 No Authority to impose Liens
Neither the Hirer nor the Master of the Ship shall have any right power
or authority to create incur or permit to be imposed upon the Ship any
liens whatsoever except for Permitted Liens. The Hirer agrees to carry
a properly certified copy of this Agreement with the Vessel's papers
and to exhibit the
62
same to any person having business with the Vessel which might give
rise to any lien thereon other than Permitted Liens.
The Hirer further agrees to fasten to the Ship in a conspicuous place
and to keep so fastened during the Hire Period a notice reading as
follows:
"This Ship is the property of and is registered in the name of
British Linen Shipping Limited. It is under demise charter to
Horizon Exploration Limited and, by the terms of the charter,
neither the charterer nor the Master nor any servant or agent
thereof has any right, power or authority whatsoever to contract
on behalf of the Owner or to pledge the Owner's credit or to
involve the Owner in any liability whatsoever or to create,
incur, or permit to be imposed on the Ship any lien whatsoever
except for general average, crews' wages and salvage"
or in such other form as the Owner may require from time to time.
The Hirer shall not remove or, cover up such notice, and will not place
or permit to be placed any other notice (affecting the ownership of the
Ship or otherwise relating to the rights of the Owner and dealing with
the rights of any person other than the Owner in or on the Ship or any
part thereof) without prior written consent of the Owner such consent
not to be unreasonably withheld so long as the same is not inconsistent
with the rights of the Owner of the Ship.
The Hirer agrees to give written instructions with regard to the
foregoing matters to the Master of the Vessel, such instructions to be
in such terms as may from time to time be required by the Owner.
29.2 Release from Arrest: Owner's Vessels
If the Ship or any other vessel for the time being owned (in whole or
in part) by or chartered to the Owner shall at any time have a writ or
libel filed against it or be arrested, attached or levied upon pursuant
to any legal process or purported legal process or be detained in
exercise or purported exercise of any lien or claim of whatsoever
nature, whether arising out of the use or operation of the Ship or out
of the use or operation of any other vessel owned by or chartered to
the Hirer or any other company associated with, the Hirer or its
subsidiaries or associated companies or otherwise by reason of the act
or omission of any of the aforesaid persons, the Hirer shall forthwith
upon receiving notice thereof at its expense procure the release of the
Ship or such other vessel (as the case may require) from such arrest,
detention, attachment or levy or, as the case may be, the discharge of
the writ or libel by providing bail or procuring the provision of
security or otherwise as the circumstances may require and the Hirer
shall be responsible for discharging each and every liability in
connection with any such process, claim, lien or other action. Without
prejudice to the generality of the other indemnities contained in this
Agreement or any of the other Hirer's Documents, should any other
vessel owned by the Owner and chartered by it otherwise than to the
Hirer be arrested, detained, attached or levied upon or be the subject
of a writ or libel in such circumstances, the Hirer shall indemnify the
63
Owner against all claims made on the Owner by the charterers of such
other vessel in connection with such arrest, detention, attachment,
levy, writ or libel.
30 ASSIGNMENT AND SALE OF SHIP
30.1 Assignment by Hirer
The Hirer may not assign or transfer any of its rights or obligations
under this Agreement or any of the other Hirer's Documents without the
prior written consent of the Owner.
30.2 Assignment by the Owner
The Owner may not, other than to a financial institution, assign or
transfer any of its rights or obligations under this Agreement or any
of the other Hirer's Documents without the prior written consent of the
Hirer, which consent shall not be unreasonably withheld.
30.3 Sale of Ship
During the Hire Period the Owner shall not sell, transfer, assign or
otherwise dispose of the legal title to, or beneficial interest in, the
Ship, or agree to do so, save as expressly contemplated by the
provisions of this Agreement.
31 TRANSFER OF OWNERSHIP
31.1 Purchase Agreement
The Hirer shall, subject to clauses 4.2, 23.2(a) and 27.1, have an
option to purchase the Ship or nominate a purchaser of the Ship upon
expiry of the Hire Period at the Purchase Price in accordance with the
terms of this Agreement (the "OPTION") and shall be entitled to
exercise the Option by giving not less than thirty (30) days notice in
writing to the Owner prior to the expiry of the Hire Period indicating
its intention to exercise the Option provided that in the event that
the Hirer shall nominate a purchaser of the Ship, the Hirer shall as
against the Owner continue to remain liable for the payment of the
Purchase Price. The right of the Hirer to exercise the Option shall
however be subject to payment by the Hirer of all other amounts owing
by or accrued due from the Hirer under this Agreement and the other
Hirer's Documents.
31.2 As is where is
In the event that the Hirer or nominated purchaser of the Ship elects
to purchase the Ship in accordance with clause 31.1 the Ship will be
transferred to the Hirer or its nominee in the condition and at the
place or places in which it and the items comprising the same are on
the date of transfer, subject to any sub-charter or other agreement
relating thereto which may be in force on the date of transfer and
subject to any Encumbrances on the Ship other than any Encumbrances
created by the Owner.
64
31.3 Exclusion Clause
Other than as referred to in this clause 31.3, the Owner makes and will
make no warranties, guarantees or representations of any kind, express
or implied, statutory or otherwise, with regard to the Ship including,
but not limited to the seaworthiness and condition of the Ship, and the
Hirer or its nominee in the event of its purchase of the Ship agrees to
waive all remedies, warranties, representations, guarantees, express or
implied arising by law or otherwise, including without limitation any
obligation of the Owner with respect to fitness for any purpose
merchantability or consequential damages. The Owner warrants that,
subject to any provisions of any sub-charter on the date of transfer of
the Ship to the Hirer or its nominee pursuant to clause 31.1 (the
"TRANSFER DATE"), there shall be vested in the Owner such title to the
Ship as was acquired by the Owner on the Delivery Date and that the
Ship will (provided that the amounts referred to in clause 31.1 have
been paid in full) be free and clear of all Encumbrances created by the
Owner.
31.4 Transfer of Title
Concurrently with the payment by the Hirer to the Owner of (i) the sum
referred to in clause 31.1 and (ii) all other amounts owing by or
accrued due from the Hirer under this Agreement and/or any of the other
Hirer's Documents and provided the Hirer has fully indemnified the
Owner against all and any liabilities or Taxes related to the sale of
the Ship, the Owner shall (subject as hereinafter provided) pass to the
Hirer all of the Owner's rights, title and interest in and to the Ship
(subject to any sub-charter or other agreement relating to the Ship
which may be in force on the Transfer Date and subject to any
Encumbrances on the Ship other than any Encumbrances created by the
Owner) by executing a xxxx of sale in respect of the Ship in favour of
the Hirer or its nominee and shall, at the Hirer's request and the
Hirer's cost, render to the Hirer all such assistance as the Hirer may
reasonably request in connection with the transfer of title to the
Hirer or its nominee of the Ship, free from any Encumbrance created by
the Owner. Provided however that the Owner's obligation to pass such
title to the Hirer or its nominee shall not be deemed to include an
obligation on the Owner to deliver to the Hirer on the Transfer Date or
at all, possession of the Ship and/or any items comprising the same if
the Ship and/or any such items shall not be in the possession of the
Owner on the Transfer Date.
31.5 Redelivery Procedure and Condition
In the event that the Hirer does not purchase the Ship pursuant to the
provisions of clause 31.1 the Hirer shall at the end of the Hire Period
re-deliver the Ship to the Owner charter free and free of all
Encumbrances, and the Owner shall accept such re-delivery, at a safe
port to be mutually agreed between the parties or, in the absence of
such agreement, at such nearby safe port in the United Kingdom as the
Owner may require. Subject to any agreement of the Owner and the Hirer
to the contrary, the Hirer shall at its expense before such re-delivery
make all such repairs and do all such work as may be necessary so that
the Ship at the date of re-delivery shall have installed the Equipment
and other machinery
65
installed on the Ship at Delivery or replacements for the same made in
accordance with the provisions of this Agreement, shall maintain the
Classification unexpired and shall be in as good structural, state and
condition as at Delivery, fair wear and tear and changes and
alterations properly made by the Hirer as permitted under this
Agreement excepted.
32 INCREASED COSTS, FUNDING PROBLEMS AND ILLEGALITY
32.1 If any law, regulation or regulatory requirement or any judgment, order
or direction of any court, tribunal or authority taking effect after
the date of this Agreement which is binding upon the Owner or as the
case may be its holding company in the jurisdiction in which it is
formed or in which any action is required to be performed by it for the
purposes of this Agreement or if compliance by the Owner or as the case
may be its holding company with any direction, request or requirement
(whether or not having the force of law) of any monetary agency,
central bank or competent governmental or other authority shall:
(a) subject the Owner or as the case may be its holding company to
Taxes or change the basis of Taxation of the Owner with respect
to any payment under any of the Relevant Documents (other than in
the case of Taxes or Taxation which are the subject of an
indemnity from the Hirer to the Owner under clause 10 and other
than Taxes relating to the income and capital gains of the
Owner); or
(b) impose, modify or deem applicable any reserve requirements or
require the making of any special deposits against or in respect
of any assets or liabilities of, deposits with or for the account
of, or loans by, the Owner or its holding company as the case may
be; or
(c) impose on the Owner any other condition with respect to any of
the Relevant Documents or its obligations under any of the
Relevant Documents
and, as a result of any of the foregoing, the cost to the Owner of
funding, financing or re-financing its purchase of the Ship or of
owning the Ship or chartering the Ship to the Hirer under this
Agreement is increased or the amount payable or the effective return to
the Owner under this Agreement is reduced or the Owner makes a payment
or foregoes a return on or calculated by reference to any amount
payable to it under this Agreement (other than as provided in (a)
above), then and in each such case the Owner shall as soon as
practicable after becoming aware of the same notify the Hirer of the
circumstances thereof and the Hirer shall pay to the Owner on demand
the amount which the Owner specifies (in a certificate setting forth
the basis of the computation of such amount) is required to compensate
the Owner for such increased cost, reduced return, payment or foregone
return.
Any demand under clause 32.1 may be made at any time whether or not the
Hire Period shall have terminated or expired. For the purposes of this
clause 32.1
66
"holding company" has the meaning ascribed to it in section 736 of the
Companies Act, 1985.
32.2 If any law, regulation or regulatory requirement or any judgment, order
or direction of any court, tribunal or authority binding upon the Owner
in the jurisdiction in which it is formed or in which any action is
required to be performed by it for the purposes of any of the Hirer's
Documents (whether or not in force before the date of this Agreement)
renders it unlawful for the Owner to continue to charter the Ship to
the Hirer under this Agreement then the Owner shall promptly inform the
Hirer and the Owner shall be entitled by written notice to the Hirer to
terminate the Hire Period. Upon such termination the Hirer shall
complete the purchase of the Ship on the terms set out in clause 31.1
save that the price shall equal the aggregate of the Termination Sum
and all other amounts then due and owing to the Owner under this
Agreement.
32.3 If any payment becomes due to the Owner under clause 4.2, 23.2(a) or
27.1, the Hirer shall promptly pay to the Owner the amount which the
Owner specifies is required to compensate the Owner for any loss
(including loss of profit) or expense which the Owner shall certify as
sustained or incurred by it as a consequence of the operation of clause
4.2, 23.2(a) or 27.1 (as the case may be) including (but not limited
to) any loss or expense sustained or incurred in terminating any
arrangements for the provision of fixed rate funding to the Owner for
the purposes of making the Ship available to the Hirer for the whole or
part of the Hire Term.
33 MISCELLANEOUS
33.1 Variations
The terms and conditions of this Agreement and the other Hirer's
Documents shall not be varied otherwise than by an instrument in
writing of even date herewith or subsequent hereto executed by or on
behalf of the Owner and the Hirer and the Surety.
33.2 Waivers
No failure or delay on the part of the Owner in exercising any right,
power or remedy under this Agreement or any of the other Hirer's
Documents shall operate as a waiver thereof nor shall any single or
partial exercise by the Owner of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
33.3 Remedies Cumulative
The remedies provided in this Agreement or any of the other Hirer's
Documents are cumulative and are not exclusive of any remedies provided
by law.
33.4 Time of the Essence
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Subject to the periods of grace referred to in clause 26, time shall be
of the essence as regards the performance by the Hirer and the Surety
of its obligations under this Agreement and the other Hirer's
Documents.
33.5 General Average
All rights and liabilities in respect of the Ship by way of general
average shall be for the account of the Hirer.
33.6 Partial Illegality
If any term or provision of this Agreement or any of the other Hirer's
Documents or the application thereof to any person or circumstances
shall to any extent be invalid or unenforceable, the remainder of this
Agreement and the other Hirer's Documents and application of such term
or provision to persons or circumstances (other than those as to which
it is already invalid or unenforceable) shall not be affected thereby
and each term and provision of this Agreement and the other Hirer's
Documents shall be valid and be enforceable to the fullest extent
permitted by law.
33.7 Set-off
The Hirer authorises the Owner without prejudice to any of the Owner's
rights of set-off at law, in equity or otherwise, at any time and
without notice to the Hirer to set off or withhold from any sum or sums
expressed in this Agreement or one of the other Hirer's Documents to be
payable to the Hirer by the Owner any amount due and payable to the
Owner from the Hirer under this Agreement or any of the other Hirer's
Documents. For any such purpose the Owner is authorised to purchase
with the sums which would but for this clause 33.7 be so payable to the
Hirer, such other currencies as may be necessary to effect such set off
or withholding. The Owner shall not be obliged to exercise any right
given to it by this clause 33.7. The Owner shall notify the Hirer
forthwith upon the exercise or purported exercise of any right of
set-off or withholding full details in relation thereto.
33.8 Further Assurance
The Hirer and the Surety undertakes that it will at its expense
execute, sign, perfect and do any and every such further assurance,
document, act or thing as in the reasonable opinion of the Owner may be
necessary or desirable to carry out the purpose of this Agreement or
any of the other Hirer's Documents or protect or enforce any right of
the Owner hereunder or thereunder or the title of the Owner in the
Ship.
33.9 Counterparts
This Agreement may be entered into in the form of three counterparts,
each executed by one of the parties, and, provided both the parties
shall so enter into this Agreement, each of the executed counterparts,
when duly exchanged or
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delivered, shall be deemed to be an original but, taken together, they
shall constitute one instrument.
33.10 Conflicts
In the event of any conflict between this Agreement and any of the
other Hirer's Documents the provisions of this Agreement shall prevail.
34 LAW AND JURISDICTION
34.1 Law
This Agreement is governed by and shall be construed in accordance with
English law.
34.2 Jurisdiction
For the benefit of the Owner each of the Hirer and the Surety
irrevocably agrees that any legal action or proceedings in connection
with this Agreement may be brought in the English courts or in the
courts of any other country chosen by the Owner each of which shall
have the jurisdiction to settle any dispute arising out of or in
connection with this Agreement. The Surety hereby irrevocably and
unconditionally submits to the jurisdiction of the English courts and
the courts of any country chosen by the Owner and irrevocably
designates, appoints and empowers the Hirer to receive for it and on
its behalf service of process issued out of the English courts in any
legal action or proceedings arising out of or in connection with this
Agreement. The submission to such jurisdiction shall not (and shall not
be construed so as to) limit the Owner's right to take proceedings
against the Hirer or the Surety in any other court of competent
jurisdiction nor shall the taking of proceedings in any one
jurisdiction or more preclude the taking of proceedings in any other
jurisdiction whether concurrently or not.
IN WITNESS whereof the parties hereto have entered into this Agreement
the day and year first above mentioned.
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SIGNED by Xxxx X. Xxxxxxx )
the duly authorised Attorney of BRITISH )
LINEN SHIPPING LIMITED pursuant to a )
power of attorney dated 30 March 1998 ) /s/ XXXX XXXXXXX
in the presence of: )
/s/ XXXX XXXXXXX ) Attorney-in-Fact
-----------------------------------------------
Witness
Name: Xxxx Xxxxxxx
Address: Xxxxxxxxx Xxxxxx Xxxxxx XX0X
Occupation: Solicitor
SIGNED by )
on behalf of ) /s/ X. X. XXXXXXXX
HORIZON EXPLORATION )
LIMITED )
SIGNED by )
on behalf of ) /s/ X. X. XXXXXXXX
EAGLE GEOPHYSICAL )
OFFSHORE INC. )
