Exhibit 10.2
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[NAME OF OWNER]
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CHEVRON TRANSPORT CORPORATION
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BAREBOAT CHARTER
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TABLE OF CONTENTS
Page No.
1. Vessel to be Chartered ................................................ 1
2. Period of Charter ..................................................... 1
3. Time and Place of Delivery ............................................ 1
4. Charterers' right in respect of the Vessel ............................ 3
5. Use and Trade of Vessel ............................................... 3
6. Documentation and House Flag .......................................... 4
7. Maintenance and Operation ............................................. 4
8. Redelivery and Status ................................................. 7
9. Use of Vessel and Payment of Hire ..................................... 8
10. Mortgage............................................................... 9
11. Insurance.............................................................. 10
12. Total Loss, Requisition for Title, Capture, Seizure.................... 13
13. Requisition for Hire................................................... 14
14. Liens; Notice on Vessel................................................ 15
15. Salvage................................................................ 15
16. General Average........................................................ 16
17. Default; Remedies...................................................... 16
18. Termination............................................................ 19
19. Payments on Termination................................................ 19
20. Assignment and Sub Charter............................................. 19
21. Indemnity.............................................................. 20
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22. Purchase Option....................................................... 22
23. General............................................................... 22
24. Definitions........................................................... 25
BAREBOAT CHARTER
THIS BAREBOAT CHARTER (hereinafter called the "Charter") made as of
____ day of ___________, 1995 BY and BETWEEN ___________________________,
(hereinafter called "Owners") and Chevron Transport Corporation (hereinafter
called "Charterers").
WITNESSETH AND IT IS HEREBY AGREED as follows:
1. Vessel to be Chartered
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Owners hereby let and demise and Charterers hereby hire the m.t. _________
(hereinafter called the "Vessel"), Official No. _______, of about ___ gross tons
and ___ deadweight tons, built in 199_ in _____), together with all her engines,
boilers, machinery, masts, anchors, cables, rigging, tackle, apparel, furniture,
electronics, small boats, and all her other appurtenances, whether aboard or
removed from the Vessel, together with any and all additions, improvements
and/or replacements which may hereafter be made to, on or in the Vessel.
2. Period of Charter
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(a) This Charter shall be for a period of twenty (20) years from the
Commencement Date. Charterers shall have the option of terminating this Charter
on an Optional Termination Date. Charterers shall give Owners (i) non-binding
notice of their intent to exercise such option, determined on a good faith
basis, at least 12 months prior to such Optional Termination Date and (ii)
irrevocable notice of such exercise 9 months prior to such Optional Termination
Date, if such Optional Termination Date is the first of the Optional Termination
Dates, or 7 months prior to such Optional Termination Date, if such Optional
Termination Date is subsequent to the first such Optional Termination Date, and
shall pay the applicable Optional Termination Amount on or prior to such
Optional Termination Date.
(b) Should the Vessel be upon a voyage otherwise than under requisition for
hire at the time when the charter of the Vessel would (but for the provisions of
this clause) have terminated, the Charter Period shall be extended for such
additional time as may be necessary for the completion of such voyage. The
Charter Period shall also be extended for such additional time as may be
necessary to bring the Vessel to a port of redelivery as hereinafter provided in
Clause 8 hereof. During any such extension, hire shall be paid pro-rata on a
daily basis (assuming a 365-day year) at the rate in force before the
commencement of such extension.
3. Time and Place of Delivery
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(a) On the Commencement Date, Charterers shall unconditionally accept
delivery of the Vessel under this Charter simultaneously with delivery to and
acceptance of the Vessel by Owners under the Purchase Agreement "as is, where
is", in whatsoever condition the Vessel may be at the time of such delivery.
Owners shall have no obligation whatsoever to deliver the Vessel to Charterers
except upon the simultaneous delivery and acceptance referred to above. Such
simultaneous delivery and acceptance shall take place at the location specified
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for delivery in the Purchase Agreement and are referred to herein as "Delivery
of the Vessel". On Delivery of the Vessel, Charterers shall execute and deliver
to Owners a Certificate of Acceptance.
(b) OWNERS MAKE NO REPRESENTATION, WARRANTY OR GUARANTEE OF ANY KIND,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO THE TITLE, SEAWORTHINESS,
CONDITION, VALUE, EQUIPMENT DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR
USE OF THE VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO THE ELIGIBILITY OF THE
VESSEL FOR ANY PARTICULAR TRADE OR ANY OTHER REPRESENTATION, WARRANTY OR
GUARANTEE WITH RESPECT TO THE VESSEL AND NONE SHALL BE IMPLIED FROM THIS
CHARTER; PROVIDED, HOWEVER, THAT OWNERS WARRANT THAT OWNERS HAVE AND SHALL
RETAIN WHATEVER TITLE TO THE VESSEL THAT OWNERS RECEIVE FROM CHARTERERS SUBJECT
ONLY TO THE MORTGAGE, THIS CHARTER AND LIENS AND ENCUMBRANCES WHICH CHARTERERS
ARE OBLIGATED TO DISCHARGE OR SATISFY. CHARTERERS HEREBY WAIVE AS AGAINST
OWNERS AND THE VESSEL, ALL REMEDIES, WARRANTIES NOT EXPRESSED IN SUBCLAUSE (b)
OF THIS CLAUSE 3 OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE
WITH RESPECT TO OWNERS' TITLE THERETO OR THE PHYSICAL CONDITION OF THE VESSEL AT
THE TIME OF DELIVERY TO CHARTERERS INCLUDING, BUT NOT LIMITED TO (i) ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, (ii) ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE
OF TRADE, (ii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOUNDED IN
STRICT LIABILITY IN TORT AND (iv) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR LOSS OR DAMAGE TO THE VESSEL. The acceptance by Charterers of the
Vessel under this Charter shall constitute conclusive proof, as between Owners
and Charterers, that the Vessel is seaworthy, and otherwise in the condition
required by this Charter, in good working order and repair and without defect or
inherent defect in title, seaworthiness, condition, design, operation or fitness
for use, whether or not discoverable by Charterers as of the date of such
tender, and generally in all respects satisfactory to Charterers.
(c) Charterers warrant that upon Delivery of the Vessel to them the Vessel
shall be in Charterers' custody and under its control.
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4. Charterers' right in respect of the Vessel
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Owners hereby assign to Charterers, for the duration of the Charter Period,
except during periods when an Event of Default shall have occurred and be
continuing and except in respect of a Total Loss (unless Charterers shall have
made all payments required by Clause 12 hereof in respect of a Total Loss)
without representation, warranty or covenant of any kind, effective upon
delivery of the Vessel to Charterers, the right to enforce and exercise all
rights of warranty, guaranty and indemnity which Owners may have in respect of
the Vessel or otherwise directly against the Builder or any manufacturer of any
part of the Vessel. Charterers shall be entitled to take such action in the
name of Owners against the Builder or any manufacturer of any part of the Vessel
in relation to the terms of purchase of, the condition of or any patent
infringement or alleged patent infringement in relation to the Vessel or any
part thereof as Charterers see fit but subject to Owners being indemnified and
secured to its satisfaction by Charterers against all losses, costs, damages and
expenses thereby incurred or to be incurred. If as a result of any such action
any moneys are received from the Builder or any such other manufacturer of the
Vessel as aforesaid the same shall be received by Charterers. Charterers shall
use diligence to assert and enforce all such rights which have a material effect
upon the value of the Vessel.
5. Use and Trade of Vessel
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(a) Charterers shall have full use of the Vessel and may employ the Vessel
worldwide (within Institute Warranty Limits) in the carriage of suitable lawful
merchandise. In no event shall Charterers carry on board the Vessel nuclear
fuels or radioactive products; provided, however, with the prior written consent
of Owners, Charterers may carry on board the Vessel radioisotopes used or
intended to be used for any industrial, agricultural, medical or scientific
purposes.
(b) Charterers undertake not to employ the Vessel or suffer the Vessel to
be employed otherwise than in conformity with the terms of the instruments of
insurance (including any warranties expressed or implied therein) without first
obtaining the consent to such employment from their insurers, protection and
indemnity clubs and underwriters and complying with such requirements as to
extra premium or otherwise as the insurers may prescribe.
(c) Charterers also undertake not to employ the Vessel or suffer her
employment in any trade or business which is forbidden by the law of any country
to which the Vessel may sail or is otherwise illicit or in carrying illicit or
prohibited goods.
(d) As to those trades in which the Vessel is employed, Charterers shall
comply with any and all requirements regarding financial responsibility or
security in respect of oil or other pollution damage as required by any
government, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity with
authority over Owners or Charterers, as the case may be, or ownership, use and
operation of
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the Vessel (whether or not such requirement has been lawfully imposed or not) to
enable the Vessel, without penalty or charges, lawfully to enter, remain at, or
leave any port, place, territorial or contiguous waters of any country, state or
municipality in performance of this Charter without delay. Charterers shall make
and maintain all arrangements for security bond or otherwise as may be necessary
to satisfy such requirements at Charterers' sole liability and expense and
Charterers shall indemnify Owners against any and all losses, damages, claims,
expenses or liabilities incurred by reason of Charterers failure to comply with
this Clause 5(d).
(e) Charterers shall enter and maintain the Vessel under the TOVALOP Scheme
or under any similar compulsory schedule during the Charter Period.
6. Documentation and House Flag
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(a) Charterers agree that it shall, throughout the Charter Period, maintain
the documentation of the Vessel under the laws of the Registration Jurisdiction
at Owners' cost and expense; provided, however, in the event that the costs and
expenses of maintaining such documentation are in excess of $10,000 per annum,
then Charterers shall either (i) pay all amounts in excess of $10,000 per annum
or (ii) cooperate with the Owner to change the registry or port of documentation
of the Vessel. Owners agree to do all such things whatsoever and execute and
deliver all such documents whatsoever to enable Charterers to maintain such
documentation. Charterers will not change the registry or port of documentation
of the Vessel without the prior written consent of Owners which consent shall
not be unreasonably withheld, or do or suffer or permit to be done anything
which will injuriously affect the documentation of the Vessel as a vessel
documented under the laws and regulations of the Registration Jurisdiction. If
Charterers change the registry or port of documentation of the Vessel,
Charterers shall, at time of redelivery, if Owners so request and at Charterers'
expense, change the registry and port of documentation back to that of the
Registration Jurisdiction.
(b) Charterers shall have the right to re-name the Vessel, to paint the
Vessel in their own colors, install and display their funnel insignia and fly
their own house flag.
7. Maintenance and Operation
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(a) Except as provided in Clause 20, the Vessel shall during the Charter
Period be in the full possession and at the absolute disposal for all purposes
of Charterers and under their complete control in every respect. Charterers
hereby covenant and agree with Owners that during the Charter Period (and
subject to the provisions of Clause 13):
(i) Charterers will at their expense maintain the Vessel, her
machinery, cargo handling equipment, boilers, appurtenances
and spare parts in a good state of repair and in efficient
operating condition in accordance with good commercial
maintenance practice commensurate with other vessels in
Charterers' fleet of similar size and trade, ordinary wear
and tear excepted; and
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(ii) Charterers will at their expense keep the Vessel with
unexpired classification in accordance with the highest
classification of the American Bureau of Shipping (or such
other classification society as shall previously have been
approved in writing by Owners) and other required
certificates in force and shall make any improvement or
structural changes or acquire any new equipment necessary to
comply with the requirements of such classification; and
(iii) Charterers shall be at liberty to fit any additional
equipment required for the services of Charterers, beyond
that on board at the commencement of this Charter, such work
to be done at Charterers' expense and on their time, and
such equipment may be removed by Charterers at their cost
and on their time at any time (provided, however, that such
removal does not adversely affect the class or seaworthiness
of the Vessel) prior to the expiration or any other
termination of the Charter. The Vessel is to be redelivered
to Owners in the same condition and class as that in which
she is delivered by Owner, ordinary wear and tear excepted
and any additional equipment that cannot be or is not so
removed shall become the property of Owners; and
(iv) Charterers shall not permit the Vessel to proceed to any
port which is then subject to a prohibition by the
government of the Registration Jurisdiction or the national
government of the port in question; and
(v) in the event of hostilities in any part of the world
(whether war be declared or not) Charterers will not employ
the Vessel nor suggest her employment in carrying any goods
which are declared contraband nor suffer her to enter or
trade to any zone which is declared a War Zone by the War
Risks Insurers unless Charterers have made arrangements with
the said insurers for the payment of such additional
premiums as said insurers may require to maintain the
relevant insurances in force or in any zone in respect of
which the War Risks Insurers have withdrawn cover for the
Vessel; and
(vi) Charterers will not use the Vessel in any manner or for any
purpose excepted from any insurance policy or policies taken
out in compliance with Clause 11 hereof or for the purpose
of carriage of goods of any description excepted from the
said insurance policy or policies and shall not do or permit
to be done anything which could reasonably be expected to
invalidate any of the said insurance policy or policies; and
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(vii) Charterers will not use the Vessel in any manner or for
any purpose or trade or permit or suffer to be done any act
which will prejudice Owners' ownership of the Vessel or any
part thereof.
(b) During the Charter Period, Charterers shall at their own expense
or by their own procurement man, victual, navigate, operate, supply, fuel and
repair the Vessel whenever required and shall, as between themselves and Owners,
be responsible for all charges and expenses of every kind and nature whatsoever
incidental to their use and operation of the Vessel under this Charter,
including any foreign, general, municipal, value added or other taxes except
that Charterers shall not be responsible for Owners' documentation costs under
clause 6(a) or for Owner Taxes. During the Charter Period, the master, officers
and crew of the Vessel shall be engaged and employed by Charterers and shall
remain Charterers' servants, navigating, managing and working the Vessel on
behalf of and at the risk of Charterers.
(c) As between themselves and Owners, Charterers shall also be
responsible for any charges and expenses incidental to the use and operation of
the Vessel while under requisition for hire, during the Charter Period. The
foregoing provision of this sub-clause shall be without prejudice to the rights
of Owners and Charterers against other parties in respect of any such charges or
expenses. Charterers shall, subject to the prior written approval of Owners
(such approval not to be unreasonably withheld), be entitled to take action in
the name of Owners against other parties in respect of such charges or expenses.
If as a result of any such action any moneys are received the same shall be
recovered by Charterers.
(d) Charterers shall make no changes in the structure of the Vessel
nor major changes in her machinery, appurtenances, spareparts or boilers without
in each instance first securing the written approval of Owners, which approval
shall not be unreasonably withheld. Provided that if any such changes are
required to meet classification society requirements, applicable regulations
and/or any relevant laws Owners shall not withhold such approval and Charterers
shall not be obliged to reinstate the Vessel to its condition prior to the
making of such changes.
(e) Charterers shall drydock the Vessel and clean and paint her
underwater parts in accordance with good commercial practice, but not less than
as may be required by the American Bureau of Shipping or such other
classification society as provided in 7(a)(ii) to maintain the Vessel's highest
classification. Charterers shall give Owners not less than seven (7) days prior
notice of their intention to drydock the Vessel, such notice to specify the
intended time and place of drydocking.
(f) Owners (or such persons as they shall appoint or authorize) shall
have the right at any time on reasonable notice, and in a manner which shall not
interfere with the Vessel's trading requirements to inspect or survey the Vessel
in order to ascertain the condition of the Vessel and to satisfy themselves that
the Vessel is being properly repaired and maintained in accordance with the
provisions of this Charter. Inspection or survey in drydock shall be made only
when the Vessel is in drydock under the provisions of sub-clause (e) of this
Clause.
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However, Owners shall have the right to require the Vessel to be drydocked for
inspection, if Charterers are not docking her at the required classification
intervals. The costs incurred in respect of such drydocking and any inspection
or survey made under this sub-clause shall be paid by Charterers to Owners. All
repairs as shall be shown to be required by any inspection or survey shall be
made at Charterers' expense and shall be completed within a reasonable period of
time or such other period as is specified by the relevant classification society
referred to in Clause 7(a)(ii). Time taken in respect of inspection, survey or
repairs shall form part of the Charter Period. Charterers shall whenever
requested, on reasonable notice, permit Owners to inspect the Vessel's log books
and furnish Owners promptly with full information regarding any casualties or
other damage to the Vessel.
(g) Owners shall not be liable for any expense in repairing or
maintaining the Vessel or be liable to supply a vessel or any part thereof in
lieu if the Vessel or any part thereof is lost, damaged, rendered unfit for use,
confiscated, seized, requisitioned, restrained or appropriated and the Charter
Hire payable in respect of the Vessel shall continue to be payable
notwithstanding loss or damage (not amounting to a Total Loss) to the Vessel or
any part thereof (and notwithstanding that the Vessel or any part thereof is
rendered unfit for use or is requisitioned for hire). In the event of a Total
Loss the provisions of Clause 12 shall apply;
(h) Charterers shall not have or be deemed to have any authority to
pledge Owners' credit for any purpose, including any maintenance overhauls,
replacements, repairs and modification of the Vessel.
8. Redelivery and Status
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(a) Unless the Vessel suffers a Total Loss or Charterers purchase the
Vessel pursuant to Clause 22, Charterers shall at the end of the Charter Period
redeliver the Vessel to Owners at a safe and ice-free port or a place selected
by Charterers within the Vessel's trading limits (within 10 steaming days from a
recognized loading area) or at such other safe port as shall be agreed between
the parties but Charterers shall not be deemed to warrant the safety of such
port once redelivery has occurred. The Vessel shall be redelivered to Owners
free and clear of all mortgages, liens, claims, charges and encumbrances which
Charterers are obligated to discharge or satisfy and in the same or as good
structure, state and condition as those in which she was delivered, ordinary
wear and tear alone excepted. The time of redelivery shall be the time when the
Vessel is tendered for redelivery in class without outstanding requirements or
recommendations to enable the Vessel to proceed without delay and free of cargo
(other than slops).
(b) At or about the time of redelivery a survey shall, if Owners so
require, be made to determine the condition and fitness of the Vessel, her
machinery and equipment. In that event, Charterers and Owners shall each
appoint surveyors to be present at such survey and the surveyors present shall
determine and state the repairs or work necessary to place the Vessel at the
date of redelivery in the structure, state and condition required by sub-clause
(a) of this Clause. In the event that the Vessel has been dry-docked within 30
months prior to
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redelivery and Charterers certify in writing to Owners that, to the best of
their knowledge, the Vessel has had no bottom touching since such dry-docking,
such survey may be conducted while the Vessel is afloat. Owners may require a
diver's survey of the Vessel. Charterers shall bear all expenses of any such
survey. Charterers shall at their expense make all such repairs and do all such
work so found to be necessary before redelivery or at Owners' option shall
discharge their obligations hereunder by payment to Owners of a sum sufficient
to provide, at the prices current at the time of redelivery, for the work and
repairs necessary to place the Vessel in such structure, state and condition.
The Charter Period shall be extended until the completion of any such repairs
and work found to be necessary or the payment of the amounts described in this
Clause 8(b).
(c) The provisions of this Clause shall be subject to the provisions of
sub-clause (b) of Clause 13 hereof where the Vessel is under requisition for
hire at or until the end of the Charter Period.
(d) An inventory of consumable stores on board the Vessel shall be made by
Charterers in conjunction with Owners on delivery and again on redelivery of the
Vessel. Charterers and Owners shall respectively take over and pay for all
bunkers, lubricating oil, water and unbroached provisions, paints, oils, ropes
and other consumable stores remaining in the Vessel on delivery and redelivery
at the market prices current at the port of delivery or redelivery but
Charterers shall not be required to pay for lubricating oil in the Vessel's
system or for stores included in the Vessel's specification or for stores
arranged and put on board by Charterers' at their own expense or by the Builder
at its own expense.
(e) The Vessel upon redelivery shall have her survey cycles up to date and
class certificates valid for at least six (6) calendar months. Notwithstanding
the provisions of this Clause 8, Charterers shall ensure that Vessel shall have
been dry-docked within 30 months prior to redelivery.
9. Use of Vessel and Payment of Hire
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(a) Charterers shall have the use of all equipment (which expression
includes cabin, crew and galley equipment, navigational aids and technical
equipment, furnishings, furniture and fittings and spare and replacement parts)
that is the property of Owners on board at the time of Delivery of the Vessel or
title to which is acquired by Owners pursuant to the Purchase Agreement; and the
same, or their substantial equivalent, shall be returned to Owners on redelivery
in good order and condition, ordinary wear and tear alone excepted. Charterers
shall from time to time during the Charter Period replace at their expense such
items of equipment as shall be so damaged or worn as to be unfit for use. Such
replaced equipment shall become part of the Vessel and title to such replaced
equipment shall vest in and the same shall belong to Owners.
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(b) Any hired equipment placed on the Vessel by Charterers may be removed
by Charterers prior to the expiration of the Charter Period. If so requested by
Owners, Charterers shall assist in transfer of equipment hire agreements to
Owners or their nominee, but Charterers shall not be required to guarantee or
assume any other liability with respect to a transferee's performance under said
hire agreements.
(c) During the Charter Period, the Charterer shall pay, without offset or
deduction, whether or not Vessel is under arrest, Charter Hire for the use and
hire of the Vessel at the times and in the amounts indicated on Schedule 1
attached hereto and made a part hereof. Unless otherwise notified by Owners,
all payments of Charter Hire and other amounts payable by Charterers to Owners
hereunder shall be made to an account nominated by Owners at _________________
(or to such other account as Owners may from time to time nominate) and shall be
made by wire transfer of immediately available funds.
(d) During any extension of the Charter Period, the rate of hire shall be
calculated on the basis of the then current Charter Hire rate converted to a
daily rate using a 365 days year and shall be payable on expiration of such
extension.
(e) Time of payment shall be of the essence. If the date of payment is a
date upon which Owners' nominated bank is not open for business, payment shall
be made on the first preceding Business Day. Payment of sums due under the
provisions of this Charter shall be made (by close of business New York Federal
Reserve Bank) by wire transfer to Owners' nominated bank and receipt of such
wire transfer by such bank by 10:00 a.m. New York time on the due date for
payment (in accordance with all the provisions of this Charter) shall constitute
timely payment by the payer of the amount authorized by such cable or telex to
be paid even though the payee's account be not credited until after such due
date and the payer shall not be liable for any delays or errors committed by
such bank in processing payment instructions transmitted properly on behalf of
the Charterers.
(f) If any payment of Charter Hire hereunder shall not be paid when due
Owners shall be entitled in addition to call for interest thereon at the rate of
interest per annum equal to the Default Rate from and including the due date to
the date of actual payment (after as well as before judgment) parts of a day
being treated as complete days and Charterers shall thereupon forthwith pay the
same to Owners.
10. Mortgage
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(a) Charterers agree that the financing of the Vessel will be secured by
the Charter on the Vessel and assignments of Owners' right, title and interest
under, in and to this Charter. Charterers shall execute and deliver all such
documents, opinions, reports, and agreements listed on Exhibit A attached
hereto.
(b) Charterers agree that this Charter and any other charters permitted
under Clause 20(a) hereof shall always be subordinated in all respects to the
Mortgage.
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(c) Owners agree that the Mortgage and any other mortgage hereinafter
placed on the Vessel by Owners will contain a provision to the effect that
throughout the Charter Period, so long as no Event of Default shall have
occurred and be continuing and so long as Charterers shall have performed their
obligations hereunder, Charterers shall be entitled to quiet enjoyment of the
Vessel.
11. Insurance
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(a) Insurance Obligations - Charterer shall, at its own expense,
---------------------
provide and maintain the following insurance and shall ensure
that the value of the Vessel as stated in any valued policy is
equal to the amount insured thereunder:
(i) hull and machinery insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American
Institute Hull Clauses (June 2, 1977) and the American Hull
Insurance Syndicate's Liner Negligence Clause (June 2,
1977). Such insurance shall include navigation limit
adequate for the vessel's trade and exclude collision
liability.
(ii) protection & indemnity insurance on a full entry basis with
an International Group P&I Club. Such insurance shall
include, but not be limited to, coverage for injuries to or
death of masters, mates and crew; full (4/4ths) collision
liabilities and pollution liabilities imposed by federal and
state laws as well as TOVALOP liabilities (if applicable).
Such insurance shall be unlimited as per International Group
P&I Club rules except for pollution liabilities which shall
be limited to $700 million or the maximum pollution limit
offered by and through the P&I Clubs of the International
Group.
(iii) Hull War Risk Insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American
Institute Hull War Risks and Strikes Clauses 12/1/77 and the
American Hull Insurance Syndicate's Addendum April 1, 1984
(War Risks). Such insurance shall apply to all areas where
the Vessel trades.
(b) Insurance Practice
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Charterers have, prior to the signing of this Charter, outlined to
Owners the insurance arrangements at present in force in relation to its fleet
(which arrangements shall apply to the Vessel on and after the date of delivery
of the Vessel). Owners hereby confirm their acceptance of such arrangements as
complying with Charterers' obligations under the preceding sub-clause (a)
(subject to adjustment thereof in the light of changes in market practice and in
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accepted tanker practice). Charterers undertake not to alter such arrangements
in a manner that is in material breach of any other provision of this Charter or
otherwise materially adverse to Owners without first notifying Owners and
obtaining their written approval, such approval not to be unreasonably withheld.
(c) Loss payable and notice of Cancellation
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(i) Unless Owners shall have given their prior written consent,
all insurances effected pursuant to Clause 11(a)(i) and
(iii) shall contain a loss payable and notice of
cancellation clause in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE"
(A) Until ________________________________ ("Owners") shall
have notified underwriters to the contrary:
(1) all recoveries up to the Stipulated Loss Value
hereunder in respect of a total loss or
constructive or compromised or agreed or arranged
total loss shall be paid in full to Owners without
any deduction or deductions whatsoever; and
(2) all other recoveries shall be paid in full to
Chevron Transport Corporation ("Charterers") or to
its order without any deduction or deductions
whatsoever; and
(B) Owners shall be advised:
(1) if any Hull and Machinery insurer cancels or give
notice of cancellation of any insurance or entry
at least ten (10) days before such cancellation is
to take effect; and
(2) if any hull War Risks insurer cancels or gives
notice of cancellation of any insurance or entry
at least seven (7) days before such cancellation
is to take effect; and
(3) of any default in the payment of any Hull and
Machinery premium or call or failure to renew any
such insurance or entry ten (10) days prior to the
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date of renewal thereof; and
(4) of any default in the payment of any War Risks
premium or call or failure to renew any such entry
seven (7) days prior to the date of renewal
thereof."
(ii) Unless Owners shall have given their prior written consent,
all insurance and entries effected pursuant to Clause
11(a)(ii) shall contain a loss payable and notice of
cancellation clause in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE
At the request of the Owners and with the consent of the
Charterers, the protection and indemnity club managers may
in their discretion, agree:
(a) to pay Owners, or to their order, any recovery the
Charterers are entitled to receive from the funds of
the P&I Club in respect of any liability, costs or
expenses incurred by the Charterers on receipt of
notice from the Owners that the Charterers are in
default under the Charter; and
(b) to give the Owners ten (10) days' notice that insurance
in the P&I Club in respect of the Vessel is to cease;
and
(c) to give the Owners ten (10) days' notice of the P&I
Club's intention to cancel the insurance of the
Charterers by reason of their failure to pay when due
and demanded any sum due from them to the P&I Club.
(d) Information as to insurances
----------------------------
Charterers shall give Owners and its insurance advisers such
information as to the insurances taken out or being or to be taken out in
compliance with Charterers' obligations under the foregoing provisions of this
Clause or as to any other matter which may be relevant to such insurances as
Owners or their advisers may reasonably request.
(e) Charterers Option to Self-Insure
--------------------------------
Notwithstanding anything to the contrary herein contained in Clause
11, Charterers shall have the right to self-insure against the risks described
in Clause 11(a).
- 13 -
12. Total Loss, Requisition for Title, Capture, Seizure
---------------------------------------------------
(a) If a Total Loss shall occur, this Charter and the obligation of
Charterers to pay Charter Hire hereunder shall continue and be payable as set
forth herein until Charterers have complied with this Clause 12. Charterers
shall forthwith notify Owners of the facts and circumstances of such Total Loss
and Charterers shall, on the date which is 90 days after the Total Loss (the
"Loss Date"), pay to Owners the amount determined pursuant to paragraph (b)
below. Charterers shall give Owners at least 15 days prior notice in writing of
the Loss Date. On the Loss Date, Charterers shall pay such amount to Owners, and
thereupon this Charter shall terminate and Charter Hire payable hereunder shall
cease.
(b) The amount payable on any such Loss Date shall be the sum of (i) any
deficiency between (A) the Stipulated Loss Value in relation to the period in
question calculated by the application of Schedule 2 and (B) all insurance
proceeds for damage to or loss of the Vessel and amounts paid by any
governmental authority in connection with any requisition, seizure or forfeiture
actually received in hand by Owners or the Mortgagee prior to or on such Loss
Date; and (ii) all Charter Hire accrued (on a daily basis) but unpaid hereunder
to such Loss Date and any other sums due under any provisions of this Charter,
together with interest thereon at the Default Rate from the date upon which any
such Charter Hire or other sums was due until the date upon which the
calculations are made for the purposes of this Clause which date shall be the
Loss Date. The foregoing obligations of Charterers under this Clause 12 shall
apply regardless of whether or not any moneys are payable under the insurances
effected in compliance with Clause 11 hereof in respect of the Vessel,
regardless also of the amount payable thereunder, regardless also of the cause
of the Total Loss and, regardless of whether or not any of the said compensation
shall be payable. This Charter shall terminate upon the fulfillment by
Charterers of their obligations under this subclause.
(c) If Charterers shall have made a payment to Owners pursuant to the
foregoing provisions of sub-clause (b) of this Clause and Owners shall
subsequently receive any insurance monies or other compensation contemplated
under such Clause (b) the same shall be immediately applied first towards
repayment to Charterers of the amount of any such payment and second (to the
extent that the further insurance monies or compensation shall exceed the
amounts paid by Charterers and so repaid by Owners) to Charterers.
(d) Charterers shall be liable for any loss of any part of or damage to the
Vessel (other than a Total Loss in which event the foregoing provisions of this
clause shall apply) during the Charter Period from whatsoever cause such loss or
damage may arise, unless the same shall have been caused by the negligence or
wilful act of Owners, their servants or agents (except where Charterers or their
servants and agents are acting as agents of Owners). In the event of repairable
damage to the Vessel or any part thereof or loss of part of the Vessel, Owners
shall, subject to their prior right to retain any sums which may be due from
Charterers to Owners under the terms of this Charter, make payment to Charterers
of moneys received under the insurances effected in compliance with Clause 11
upon Charterers furnishing evidence satisfactory to Owners that all such damage
has been made good or repaired or repairs have been
- 14 -
put in hand.
(e) For the purpose of this Clause 12, insurers shall be deemed to have
admitted a claim either on the date that they inform Owners that the claim is
admitted or upon the date that they make payment to Owners even though no claim
has ever been admitted.
(f) Owners shall, upon the request of Charterers, promptly execute such
documents as may be required to enable Charterers to abandon the Vessel to
insurers and claim a constructive total loss provided that Owners shall be
entitled by notice in writing to Charterers to require that the Vessel shall not
be abandoned and that a partial loss only shall be claimed, in which case this
Charter shall terminate as from the date of the event giving rise to such loss
and any insurance payments in respect of the partial loss shall be paid to
Owners. Save as aforesaid, any moneys payable by insurers for a partial loss
shall be paid to Charterers and Owners shall, at the request and expense of
Charterers, take or procure to be taken all such reasonable steps as Charterers
may require for the recovery of such moneys.
13. Requisition for Hire
--------------------
(a) If the Vessel is requisitioned for hire by any governmental or other
competent authority during the Charter Period, then unless and until following
such requisition the Vessel becomes a Total Loss, this Charter shall continue in
full force and effect for the remainder of the Charter Period (and Charterers
shall be fully responsible for due compliance with all its obligations under (i)
Clause 11 and (ii) the other provisions of this Charter, other than those which
Charterers are unable to comply with solely by virtue of the aforesaid
requisition for hire); provided, however, that if Charterers shall duly comply
with all of their obligations under this Charter save as aforesaid, Charterers
shall be entitled to all requisition hire paid to Owners or to Charterers by
such governmental or other competent authority or by any person acting by the
authority of the same on account of such requisition during the Charter Period.
(b) Should the Vessel be under requisition for hire at or until the end of
the Charter Period:
(i) Charterers shall, if they are prevented by reason of the
requisition from redelivering the Vessel under sub-clause
(a) of Clause 8 hereof, be relieved from their obligation so
to do, provided that if the party requisitioning the Vessel
does not at the end of the period of requisition redeliver
the Vessel to Owners at such place as Owners shall request,
Charterers shall upon the written request of Owners use
their best endeavors to redeliver the Vessel in accordance
with sub-clause (a) of Clause 8;
- 15 -
(ii) after such release Charterers shall be given a reasonable
opportunity of removing any such additional or hired
equipment as is referred to in sub-clause (b) of Clause 9
hereof on the terms referred to in that sub-clause;
(iii) notwithstanding any other provision of this Charter,
Charterers shall be under no liability to Owners in respect
of the structure, state or condition of the Vessel insofar
as such structure, state or condition is due to the manner
in which she has been used or treated or to any events which
have occurred during the period of such requisition.
14. Liens; Notice on Vessel
-----------------------
(a) Charterers will not suffer, nor permit to be continued, any lien or
encumbrance incurred by them or their agents, which might have priority over the
title and interest of Owners in the Vessel. Charterers shall indemnify and hold
Owners harmless against any lien of whatsoever nature arising upon the Vessel
during the Charter Period while she is under the control of Charterers, and
against any claims against Owners arising out of or in relation to the operation
of the Vessel by Charterers. Should the Vessel be arrested by reason of claims
or liens arising out of her operation hereunder by Charterers, Charterers shall
at their own expense take all reasonable steps to secure that within a
reasonable time the Vessel is released and at their own expense put up bail to
secure release of the Vessel.
(b) Charterers will fasten to the Vessel in a conspicuous place and will
keep so fastened during the Charter Period a notice reading as follows:
"This Vessel is the property of and is registered in the name of
__________________________; she is under charter by demise to and
operated by ______________________________ and neither Charterers nor
the Master nor any servant or agent thereof has any authority
whatsoever to contract on behalf of Owners or to pledge Owners' credit
or to involve Owners in any liability whatsoever"
or in such other form as Owners may reasonably require from time to time.
15. Salvage
-------
All salvage and all proceeds from derelicts shall be for Charterers'
benefit and the cost of repairing damage occasioned thereby shall be borne by
Charterers.
- 16 -
16. General Average
---------------
General Average, including Owners' portion, if any, shall be payable
by Charterers. General Average, if any, shall be adjusted according to the York-
Antwerp Rules 1974, as amended 1990, or any subsequent modification thereof
current at the time of the casualty.
17. Default; Remedies
-----------------
(a) If during the term of this Charter:
(i) Charterers shall make default for two Business Days in any
payment in respect of Charter Hire due under the terms of
this Charter.
(ii) Charterers shall fail for a period of thirty (30) Business
Days after written notice thereof has been given to
Charterers by Owners to perform and observe any of the
covenants, conditions, agreements or stipulations on the
part of Charterers to be performed or observed contained
herein (other than sub-clause (a)(i) and (v) of this
Clause).
(iii) Charterers cease doing business as a going concern or
generally cease to pay their debts as they become due or
any proceedings under any bankruptcy or insolvency laws are
instituted against Charterers or if a receiver or trustee is
appointed for Charterers or for any of their assets or
properties, and such proceeding is not dismissed, vacated or
fully stayed within sixty (60) days.
(iv) Charterers shall create or suffer to exist any mortgage,
charge, pledge or other like encumbrance over the Vessel or
any part thereof not created or caused by Owners or by
persons claiming by, through or under Owners or shall have
abandoned the Vessel. The foregoing provisions shall not
apply to any notice of abandonment which Charterer's may
give to insurers under the provisions of Clause 12.
(v) Charterers fail to comply with any of their obligations as
to insurance contained in Clause 11.
(vi) Charterers shall within thirty (30) days of any scheduled
date of redelivery hereunder fail to provide adequate bail
or security when required so to do in respect of any
maritime lien, possessory lien or statutory right in rem
which may be acquired over the Vessel
- 17 -
not created or caused by Owners or by persons claiming by,
through or under Owners in order to prevent the Vessel being
arrested, impounded or seized or if any such lien, right or
claim over the Vessel is exercised by the arrest,
attachment, detention, impounding or seizure of the Vessel
under any distress execution or other process, or any
distress or execution is levied thereon, and Charterers fail
to use their best endeavors to procure the release of the
Vessel therefrom within thirty (30) days of any scheduled
date of redelivery hereunder.
THEN AND IN ANY SUCH EVENT Owners may, by written notice to
Charterers, declare this Charter to be in default and Owners may:
(a) (i) Upon written demand, cause Charterers at Charterers' expense
to, and Charterers shall promptly, redeliver the Vessel or cause the
Vessel to be redelivered, with all reasonable dispatch to Owners and
in the condition required by the terms of Clause 8 as if the Vessel
were being redelivered at the expiration of the Charter Period, and
all obligations of Charterers under said Clause 8 shall apply to such
redelivery, or (ii) Owners or their agent, at Owners' option, without
further notice, may, but shall be under no obligation to, retake the
Vessel wherever found, whether upon the high seas or in any port,
harbor, or other place and irrespective of whether Charterers, any
subcharterer or any other Person may be in possession of the Vessel,
all without prior demand and without legal process, and for that
purpose Owners or their agent may enter upon any dock, pier or other
premises where the Vessel may be and may take possession thereof,
without Owners or their agent incurring any liability by reason of
such retaking, whether for the restoration of damage to property
caused by such retaking or otherwise. The exercise by Owners of their
remedies under this subparagraph (a) shall be without prejudice, and
in addition, to any of Owners' other remedies referred to below.
(b) Owners or their agent may sell the Vessel at public or private
sale, with or without notice to Charterers, advertisement or
publication, as Owners may determine, or otherwise may dispose of,
hold, use, operate, charter (whether for a period greater or less than
the balance of what would have been the Charter Period in the absence
of the termination of Charterers' rights to the Vessel) to others or
keep the Vessel idle, all on such terms and conditions and at such
place or places as Owners may determine and all free and clear of any
rights of Charterers and of any claim of Charterers in admiralty, in
equity, at law or by statute, whether for loss or damage or otherwise,
and without any duty to account to Charterers.
- 18 -
(c) Charterers shall be liable for any and all Charter Hire payable
under this Charter before, during or after the exercise of any of the
foregoing remedies and for all reasonable costs including all legal
fees and any other costs and expenses whatsoever incurred by Owners by
reason of the occurrence of any default or by reason of the exercise
by Owners of any remedy hereunder, including, without limitation, all
costs and expenses incurred by Owners in connection with any retaking
of the Vessel and, upon the redelivery or retaking of the Vessel in
accordance with this Clause 17, the placing of the Vessel in the
condition and seaworthiness required by the terms of Clause 8 hereof
and including interest on overdue Charter Hire.
(d) Each and every right, power and remedy herein given to Owners
shall be cumulative and shall be in addition to every other right,
power and remedy herein given or now or hereafter existing at law, in
equity, admiralty or by statute and each and every power and remedy
whether herein given or otherwise existing may be exercised from time
to time and as often and in such order as may be deemed expedient by
Owners, and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other power or
remedy. No delay or omission of Owners to exercise any right or power
vested in it hereunder shall impair such right or power or be
construed as a waiver of or as acquiescence in any default by Owners
or be deemed a waiver of any right arising out of any future default
or of any past default. In the event Owners at any time agree to
waive any such right or power, such waiver shall be revocable by
Owners at any time and the right or power shall henceforth be again
exercisable as though there had been no such waiver unless the Event
of Default has been cured. In the event Owners shall have proceeded
to enforce any right or pursue any power under this Charter and such
proceedings shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to Owners, then and in every
such case Charterers and Owners shall be restored to their former
positions and rights hereunder with respect to the property subject or
intended to be subject to this Charter and all rights, remedies and
powers of Owners shall continue as if no such proceedings had been
taken.
(e) The rights and powers of Owners and the obligations of Charterers
under this Clause 17 shall be effective and enforceable regardless of
the pendency of any proceeding which has or might have the effect of
preventing Owners or Charterers from complying with the terms of this
Charter. No express or implied waiver by Owners of any default shall
in any way be, or be construed to be a waiver of any further or
subsequent default.
- 19 -
18. Termination
-----------
In the event (a) the Charterers shall exercise the option granted to them
pursuant to Section 2(a) and Charterers shall have remitted to Owners an amount
equal to the Optional Termination Amount, (b) a Total Loss shall have occurred
and Charterers shall have remitted to Owners the amounts described in Clause
12(b) or (c) Charterers shall have remitted to Owners the amounts described in
Clause 19, then, notwithstanding anything to the contrary contained herein, the
Charter shall continue with respect to Charterers' obligation to pay such amount
to Owners and shall terminate on (x) the date which is 367 days after the date
on which such amounts have been remitted to Owners or the Owners' assignee or
(y) if (i) Charterers commence a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, (ii) a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) is appointed for Charterers or for any substantial part of their
property, (iii) Charterers generally fail to pay their debts as they become due
or (iv) Charterers make a general assignment for the benefit of creditors, the
expiration of the period during which any payment made by or on behalf of
Charterers may be avoided under any applicable bankruptcy, insolvency,
creditors' rights or similar laws.
19. Payments on Termination
-----------------------
Whether or not Owners shall have exercised, or shall thereafter at any time
exercise, any options, rights or remedies under Clause 17, upon or as a
consequence of a breach of contract by Charterers amounting to repudiation by
Charterers of this Charter, Owners may immediately require Charterers to pay to
Owners, and Charterers shall pay to Owners as liquidated damages for loss of a
bargain and not as a penalty, an amount equal to (i) the sum of (A) the
Stipulated Loss Value in relation to the period in question calculated by the
application of Schedule 2, (B) all outstanding accrued and unpaid Charter Hire
and (C) any other amounts due to Owners under this Charter on or prior to the
date of payment and (ii) interest thereon (as well after as before judgment) at
the Default Rate from the date such amounts were payable to the actual date of
payment.
Charterers shall not be entitled to any part of the net proceeds of the
Vessel (if any) whether by way of rebate of Charter Hire or otherwise.
20. Assignment and Sub Charter0.0.40.
--------------------------
(a) Charterers may not assign all or part of their rights and obligations
under this Charter nor may they charter the Vessel by demise to any other entity
without the prior written consent of Owners, such consent, subject always to the
Vessel being maintained and insured to the same standards as are adopted by
Charterers in respect of the vessels owned by them, not to be unreasonably
withheld; provided, however, that Charterers may assign their rights and
obligations hereunder to a corporation more than 50% of which is owned, directly
or indirectly, by Chevron Corporation so long as Charterers remain responsible
as principals for the due fulfillment of this Charter and provide such
assurances of responsibility to Owners as
- 20 -
they may reasonably request.
(b) Charterers may otherwise charter the Vessel without the prior consent
of Owners provided that Charterers remain responsible as principals (or appoint
another person to be responsible in their stead) for navigating and managing the
Vessel throughout the period of such charter and for defraying all expenses in
connection with the Vessel throughout such period or substantially all such
expenses other than those directly incidental to a particular voyage or to the
employment of the Vessel during that period.
(c) Owners may not transfer or assign to any other person or entity all or
part of its rights or obligations under this Charter (except to the Lender
pursuant to the Assignment of Charter and the reassignment of this Charter to
the Collateral Trustee under the Assignment of Assignment of Charter
(collectively, the Assignment of Charter and the Assignment of Assignment of
Charter shall be referred to as the "Security Assignment")) unless such
transferee or assignee also assumes the obligations of Owners under the related
Security Documents and Charterers shall have given its prior written consent to
such assignment and assumption, which consent shall not be unreasonably
withheld. In addition, any transfer of Owners' interest in this Charter (other
than the Security Assignment) may only be effected by surrender of this Charter
and its reissuance by Charterers to such Owners' assignee or transferee.
21. Indemnity
---------
(a) Charterers hereby indemnify Owners and shall keep Owners fully
indemnified at all times whether during the currency of this
Charter or at any time in respect of events arising during the
currency of this Charter against:
(i) All costs and expenses of operating and maintaining the
Vessel and of operating, maintaining and replacing all parts
including (but without prejudice to the generality of the
foregoing) all fuel, oil, port charges, fees, taxes, levies,
fines, penalties, charges, insurance premiums, victualing,
crew, navigation, manning, operating and freight expenses
and all other outgoings whatsoever payable by Owners or
Charterers in respect of the possession or operation of the
Vessel or any part thereof, or the purchase, ownership,
delivery, chartering, possession and operation, import to or
export from any country, return, sale or disposition of the
Vessel or any part thereof or upon the hire, receipts or
earnings arising therefrom (other than Owners Taxes or
documentation costs except as otherwise provided in Clause
6(a)) which shall be promptly paid by Charterers;
- 21 -
(ii) All liabilities, claims, proceedings (whether civil or
criminal), penalties, fines or other sanctions, judgements,
charges, taxes, impositions, liens, salvage, general
average, costs and expenses whatsoever which may at any time
be made or claimed by Charterers or any employee, servant,
agent or sub-contractor, passenger, owner, shipper,
consignee and receiver of goods or any third party
(including governments or other authorities) or by their
respective dependents arising directly or indirectly in any
manner out of the design, construction, possession,
management, repair, certification, manning, provisioning,
supply or servicing of the Vessel (whether at sea or not) or
the chartering thereof hereunder whether such liability,
claims, proceedings, penalties, fines, sanctions, judgments,
charges, taxes, impositions, liens, salvage, general
average, cost or expenses may be attributable to any defect
in the Vessel or the design, construction, testing or use
thereof or from any maintenance, service, repair, overhaul
or otherwise and regardless of when or where the same shall
arise and whether or not the Vessel or the relevant part
thereof is in the possession or control of Charterers (other
than Owners Taxes or documentation costs except as otherwise
provided in Clause 6(a)); and
(iii) Charterers accept all liability for oil or other
pollution damage resulting from Charterers' operation of the
Vessel under this Charter and agree to promptly indemnify
and hold Owners harmless from and against any and all
losses, damages and expenses which Owners may incur as a
result of any oil or other pollution damage resulting from
Charterers' operation of the Vessel under this Charter,
including, but not limited to, Owners' liability under the
Oil Pollution Act of 1990, as amended, and/or the laws of
any other jurisdiction relating to oil spills.
(iv) Owners shall use good faith efforts to notify Charterers
promptly of any tax for which it may seek indemnity.
Charterers shall, subject to the prior written approval of
Owners (such approval not to be unreasonably withheld), be
entitled to take action in the name of Owners at Charterers'
expense against any taxing authority in respect of any taxes
for which Charterers have indemnified such Owners, and
Owners agree to reasonably cooperate with Charterers in
taking such action. If as a result of any such action any
moneys are received that are attributable to such
indemnified taxes (including any interest thereon paid by
such taxing authority) the same shall be recovered by
Charterers.
- 22 -
(b) Without prejudice to its generality, the provisions of this sub-
clause shall extend to claims of persons (including governments or other bodies
whether corporate or otherwise) who have suffered or allege that they have
suffered loss, damage or injury in connection with any thing done or not done by
the Vessel, including in connection with any oil or other substance emanating or
threatening to emanate from the Vessel and shall extend to levies, impositions,
calls, or contributions on or required to be made by Owners during or in respect
of the Charter Period.
(c) If any obligation of Charterers under the foregoing sub-clause or
under subclause (d) below shall not be discharged when due, Charterers shall on
demand forthwith pay to Owners not only the amount of such obligation but also
interest thereon at the Default Rate from the date Owners paid the same to the
date of reimbursement by Charterers (after as well as before judgment)
(d) In the event of the Vessel becoming a wreck or obstruction to
navigation, Charterers shall indemnify Owners against all losses, costs, damages
and expenses which Owners may in consequence thereof incur including those
incurred in respect of the removal or destruction of the wreck or obstruction
under statutory or other powers.
22. Purchase Option
---------------
(a) On ________, 2015, so long as this Charter has not earlier
terminated and no Event of Default has occurred and is continuing and all
payments due hereunder have been paid in full, Charterers shall have the right
to purchase the Vessel at a purchase price equal to $1.00. Charterers shall give
Owners at least 90 days prior written notice of its election to purchase the
Vessel on ________, 2015.
(b) Owners agree to do all such things whatsoever and execute and
deliver all such documents whatsoever to enable Charterers to register title to
the Vessel in the name of Charterers or its designee.
(c) Charterers shall pay all fees, taxes (other than Owner Taxes),
costs and expenses which may become payable as a result of or in connection with
this Clause 22.
23. General
-------
(a) Charterers shall give to Owners all such information as Owners may
reasonably request with regard to the performance by Charterers of their
obligations hereunder.
(b) Charterers shall pay all expenses (including legal and other
costs) incurred by Owners in connection with the enforcement of any rights
conferred upon Owners by this Charter or in or incidental to any action brought
by Owners to recover any hire or other payments due hereunder or for breach of
any covenant, agreement, condition or stipulation herein contained or to recover
possession of the Vessel or any part thereof whether any such
- 23 -
action proceeds to judgment or not. Owners shall pay all expenses (including
legal and other costs) incurred by Charterers in connection with the enforcement
of any rights conferred upon Charterers against Owners by this Charter.
(c) No failure or delay on the part of Owners in exercising any power or
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any such right or power preclude any other or further
exercise of any such right or power.
(d) This Charter shall not be varied in its terms by an oral agreement or
representation or otherwise than by an instrument in writing of even date
herewith or subsequent hereto executed by all the parties hereto or by their
duly authorized representatives.
(e) If any term or provision of this Charter or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Charter or application of such term or provision to persons or
circumstances other than those as to which it is already invalid or
unenforceable shall not be affected thereby and each term and provision of this
Charter shall be valid and be enforceable to the fullest extent permitted by
law.
(f) The title to the Clauses and sub-clauses of this Charter shall not in
any way affect the interpretation thereof; the terms defined in this Charter
have the meanings assigned to them in this Charter and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender.
(g) Any demand, consent, record, election or notice required or permitted
to be given under this Charter shall be in writing and sent by recorded or
registered letter or telefax (and in the case of telefax confirmed by recorded
or registered letter) addressed as follows:
(i) If to Owners to:
United House
14-16 Nelson Street
Douglas, Isle of Man
Fax No:
-----------------------
Attention:
--------------------
(ii) If to Charterers to:
Chevron House
11 Church Street
Hamilton, Bermuda HM111
Fax No:
------------------------
Attention:
---------------------
- 24 -
or in case to such other person or address or addresses or telefax number as any
party may notify in writing to the other parties hereto. Any such notice shall
be deemed to have reached the party to whom it is addressed (in the case of
notice given by letter) five (5) days after despatch by first class pre-paid
post (airmail if from abroad) or (in the case of notice given by telefax) when
confirmed by a correct transmission report when despatched and for this purpose
confirmation by letter of notice given by telefax, shall be disregarded.
(h) This Charter shall be governed by and construed and performance
thereof shall be determined in accordance with the federal laws of the United
States of America and the laws of New York. The obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws, without giving effect to principles of conflicts of law.
(i) All matters of difference between the parties hereto (other than
as herein expressly provided to the contrary and other than in respect of any
action by Owners for possession of the Vessel) shall be referred to arbitration
in New York by an arbitrator to be agreed between Owners and Charterers or in
default of such agreement within 30 days to be nominated by the President for
the time being of the Society of Maritime Arbitrators.
(j) Where it is provided in this Charter that in default of agreement
a matter is to be determined by an expert under this sub-clause, the same shall
be determined by such person, firm, corporation or body as may be agreed between
Owners and Charterers (or in default of agreement as may be nominated by the
Chairman for the time being of the Baltic and Mercantile Shipping Exchange) who
shall be deemed to act as expert and not as arbitrator and whose determination
shall be final and binding on the parties.
(k) All payments (other than payments pursuant to Clauses 21(a)(i) and
21(a)(ii) and documentation costs for Owners' account pursuant to Clause 6(a))
made to Owners shall be made without deduction for or on account of any present
or future taxes (including value added, turnover, sales and use taxes), levies,
imposts, duties, deduction, withholdings and other charges of whatsoever nature
(collectively, "Charges") unless such deduction is required by law. If such
deduction is required by law (i) the sum payable by Charterers shall be
increased as may be necessary so that, after making all required withholdings
and deductions (including those applicable to additional sums payable under this
Clause 23(k)), Owners shall receive an amount equal to the sum that Owners would
have received had no such withholdings and deductions been made and (ii) as
required by applicable law Charterers shall withhold or deduct the amount
required and pay such amount to the relevant taxing or other governmental
authority. If any Charges paid by Charterers are recoverable by Owners from
such taxing or other governmental authority, Charterers shall be entitled to the
same rights provided in Clause 21(a)(iv). Owners shall consult with Charterers
and use reasonable efforts to agree to a method of avoiding or minimizing any
such deduction that is not in breach of applicable law or governmental
regulation or of any of the financing documents entered into with the Mortgagee
and which will leave the parties in substantially the same contractual relation
as is herein contained. Without limiting the generality of the foregoing, the
Owners shall take any lawful action to the extent necessary to prevent or avoid
the imposition of any taxes, including any withholding taxes with respect to
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Charter Hire, by any taxing jurisdiction (including the Registration
Jurisdiction, except with respect to any taxes included in documentation costs
for Owners' account pursuant to Clause 6(a) hereof), including changing its
jurisdiction of incorporation or residence; provided however, that it shall not
be required to take, or fail to take, any action (x) if in the opinion of
counsel such act or failure to act would violate applicable law or (y) if in the
reasonable opinion of Owners the actions necessary to avoid or prevent
imposition of such taxes would be unduly burdensome. For purposes of clause (y)
of the immediately preceding sentence a requirement to change the jurisdiction
of the Owners' incorporation or residence shall not be treated as unduly
burdensome.
(l) If any provision of this Charter shall be, or shall be rendered,
unenforceable in whole or in part (which for the purposes of this Clause shall
include being contrary to an official code or order for the time being in force
to which either of the parties hereto is required by law to have regard and the
contravention or the continued contravention of which could be considered or be
made unlawful) Owners and Charterers shall use their best endeavors to agree an
amendment or amendments to the terms of this Charter which would result in this
Charter as so amended being fully enforceable and achieving substantially the
same result (both financially and otherwise) so far as concerns Owners and
Charterers as this Charter in its executed form would have achieved if the same
had been fully enforceable. If Owners and Charterers are unable to agree to such
an amendment or amendments then either party may by notice request that an
arbitrator be appointed pursuant to the provisions to Clause 23(i) to determine
whether an amendment or amendments which would achieve the result set out above
are possible, and he shall be asked to specify them and the terms of this
Charter shall be amended accordingly.
(m) The indemnities of Owners by Charterers contained in this Charter
shall continue in full force and effect (in respect of events occurring during
the currency of this Charter) notwithstanding the termination of the charter of
the Vessel, the repudiation by Charterers of this Charter or the expiration of
the charter period by effluxion of time or otherwise.
(n) Charterers and Owners agree that for United States tax purposes
this Charter is intended to be a financing arrangement and not a true lease, and
Charterers and Owners further agree to file their respective tax returns and
reports consistent with such intention. This Charter shall be in registered
form within the meaning of section 163(f) of the United States Internal Revenue
Code of 1986, as amended, and Owners shall provide Charterers upon request, any
forms or reports reasonably requested by Charterers to evidence such position,
specifically including United States Internal Revenue Service Form W-8 or any
successor form.
24. Definitions
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"Assignment of Charter" means the Assignment of this Charter by Owners as
collateral for the Owners obligations to the Lender.
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"Assignment of Assignment of Charter" means the assignment of this Charter
by the Lender to the Collateral Trustee as security for the Lender's obligations
under the Indentures.
"Builder" means _____________________.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Mortgagee's principal offices are located, are authorized or are obligated
by law, executive order or governmental decree to be closed.
"Certificate of Acceptance" means the certificate executed by Charterers on
the Commencement Date indicating Charterers' acceptance of the Vessel under this
Charter.
"Charter Hire" means the charter hire payable by Charterers for the use and
possession of the Vessel payable at the times and in the amounts set forth on
Schedule 1 attached hereto and made a part hereof.
"Charter Period" means the period of time from the Commencement Date to the
expiration or earlier termination of this Charter, pursuant to the provisions
hereof.
"Collateral Trustee" means Chemical Trust Company of California, not in its
individual capacity but solely as collateral trustee under the Collateral Trust
Agreement, dated as of ____________ 1, 1995, among the Lender, the Collateral
Trustee and the Trustee.
"Commencement Date" means the date on which the Vessel is accepted by
Owners under the Purchase Agreement and by Charterers under this Charter.
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition of the Vessel (otherwise than by requisition for hire), capture,
seizure, condemnation, destruction, detention or confiscation of the Vessel by
any government or by persons acting or purporting to act on behalf of any
government or governmental authority.
"Default Rate" means a rate per annum equal to the sum of 1.50% and LIBOR
as of the commencement of such period.
"Event of Default" means an event described in sub-clauses (a)(i) through
(a)(vi) of Clause 17.
"Indentures" means the Indenture, dated as of _______ 1, 1995 between the
Lender and the Trustee pursuant to which the Term Mortgage Notes will be issued
and the Indenture, dated as of ________ 1, 1995 between the Lender and the
Trustee pursuant to which the Serial Mortgage Notes will be issued.
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"Institute Warranty Limits" means the Institute Warranties as defined by
the Institute of London Underwriters.
"Lender" means California Petroleum Transportation Corporation, a
corporation organized under the laws of the State of Delaware.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of Charterers
and Owners (or Owners' assignee) will select a reference bank and the third
reference bank will be selected by Charterers and Owners (or Owners' assignee)
together or, failing agreement, by the previously selected reference banks
together.
"London Banking Day" means any day on which dealings in deposits in United
States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"Mortgage" means the Mortgage, dated the date hereof, between Owners and
the Mortgagee or any other mortgage relating to the financing of the Vessel by
Owners.
"Mortgagee" means the Lender and any successor thereto or any other
mortgagee of the Vessel.
"Optional Termination Amount" means the amount indicated below with respect
to the Optional Termination Dates:
Optional Termination Date Optional Termination Amount
------------------------- ---------------------------
____________, 200_ $___________
____________, 200_ $___________
____________, 200_ $___________
[____________, 200 ] $___________
"Optional Termination Date" means the [8th, 10th, 12th or 14th] [9th, 11th,
13th or 15th] [10th, 12th, 14th or 16th] [11th, 13th or 15th] anniversary of the
Commencement Date.
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"Owner Taxes" means any income, franchise or equivalent tax, imposed upon
or measured by the net income, stated capital or earned surplus of an Owner by
any federal, state, local or other taxing authority of any jurisdiction
worldwide, or any tax imposed pursuant to Section 887 of the United States
Internal Revenue Code of 1986, as amended, or any taxes that result from the
willful misconduct or gross negligence of an Owner or from the inaccuracy or
breach of any representation, warranty or covenant of an Owner contained in any
of Clauses 6(a), 20, 21(a)(iv), 23(k) or 23(n) of this Charter or in any
document furnished in connection with such Clauses by an Owner, or any taxes
that would not have been imposed but for the failure of any Owner (a) to provide
to Charterers (for filing by Charterers with the taxing jurisdiction imposing
such taxes or retention in Charterers' records) upon Charterers' timely request
such certifications, information, documentation or reports concerning such
Owner's identity, jurisdiction of incorporation or residency, or connection with
such taxing jurisdiction or (b) to promptly file upon Charterers' timely request
such reports or returns (which shall be prepared with reasonable care in
accordance with Charterers' written instructions) claiming (or availing itself
of) any applicable extensions or exemptions (to the extent that timely notice
thereof is provided by Charterers); provided that Owner Taxes shall not include
any such tax imposed on any amount that is (i) an indemnity or reimbursement of
an Owner, (ii) an operating or maintenance expense, or (iii) a tax for which
Charterers are otherwise liable under this Charter; and provided further that
Owner Taxes shall not include any such tax imposed by any government,
jurisdiction or taxing authority other than the United States Federal government
solely as a result of the location of the Vessel or the Vessel's use by
Charterers.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"P&I Club" means a protection and indemnity association.
"Purchase Agreement" means the Vessel Purchase Agreement, dated as of
_______, 1995, between Owners and Charterers.
"Registration Jurisdiction" means the [Republic of Liberia] [Commonwealth
of the Bahamas].
"Security Documents" means all of the agreements executed and delivered by
Owners to the Lender as collateral security for Owners' obligations to the
Lenders.
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
in the initial aggregate amount of $167,500,000 issued by the Lender
concurrently with the issuance of the Term Mortgage Notes.
"Stipulated Loss Value" means, as of any date, the amount corresponding to
such date as indicated on Schedule 2 hereto and made a part hereof.
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"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by the Lender concurrently
with the issuance of the Serial Mortgage Notes.
"Total Loss" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by Charterers at any time and in their sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days. Any
actual loss of the Vessel shall be deemed to have occurred at 1200 hours
Greenwich Mean Time (GMT) on the actual date on which the Vessel was lost or in
the event of the date of the loss being unknown then the actual total loss shall
be deemed to have occurred at 1200 hours GMT on the day next following the day
on which the Vessel was last heard of. A constructive total loss shall be
deemed to have occurred at 1200 hours GMT on the earliest of: 1) the date that
notice of abandonment of the Vessel is given to the insurers provided a claim
for total loss is admitted by the insurers, or 2) if the insurers do not admit
such a claim, at the date and time GMT at which a total loss is subsequently
adjudged by a competent court of law or arbitration tribunal to have occurred,
or 3) the date that a report is rendered by one or more experts in marine
surveying and vessel valuation (said experts to be appointed by Charterers at
their expense and approved by Owners, such approval not to be unreasonably
withheld) concluding that salvage, repair and associated costs in restoring the
Vessel to the condition specified in Clause 7 exceed the Vessel's fair market
value in sound condition.
"TOVALOP Scheme" means the Tankers Owners Voluntary Agreement concerning
Liability for Oil Pollution dated January 7, 1969, as amended.
"Trustee" means Chemical Trust Company of California, not in its individual
capacity but solely as indenture trustee under the Indentures or any successor
trustee thereunder.
IN WITNESS WHEREOF the parties have caused this Charter to be signed the
------------------
date and year first above written.
[NAME OF OWNER]
By:
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Name:
---------------------
Its:
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CHEVRON TRANSPORT CORPORATION
By:
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Name:
---------------------
Its:
----------------------