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EXHIBIT 10.36
SERVICE AGREEMENT
between
HORIZON SEISMIC INC.
and
SHANGHAI BUREAU
of
MARINE GEOLOGICAL SURVEY
MV DISCOVERER/FA XIAN
2
SERVICE AGREEMENT
for
MV DISCOVERER
This Service Agreement, hereinafter referred to as the "Agreement"
made effective the 12th day of April, 1994, is by and between the Shanghai
Bureau of Marine Geological Survey whose address is 526 Yan An Road West,
Shanghai, P.R. China, hereinafter referred to as "Owner", as the Owner of the
Vessel Discoverer, and Horizon Seismic Inc. whose address is ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇, hereinafter referred to as "Company", as
the Charterer.
1. NATURE OF SERVICE
1.1 Owner agrees to let and Company agrees to hire the Seismic Vessel, her
engines, tackle, gear, appurtenances and related Seismic equipment,
material and supplies, as specified in Schedule A, collectively the
"Seismic Vessel" for a period of one year from the time of its arrival
at Galveston, USA.
1.2 Company shall have the option to extend the initial period by up to
two additional periods each of six months. Each option shall be
exercised by Company giving sixty days notice to Owner prior to the
expiry of the initial or first additional period.
Company shall pay Owner for the initial period at the Rates defined in
Clause 9 herein. Rates for any additional period or periods shall be
defined in a separate agreement.
1.3 Company shall employ the Seismic Vessel throughout the world in lawful
activities for marine geophysical and/or oceanographic and/or
associated or related duties as required by Company.
2. COMMENCEMENT
2.1 Charter of the Seismic Vessel by Company shall commence on or about
the 1st day of May, 1994, and more precisely when the Seismic Vessel
departs Shanghai.
2.2 A joint survey of the Seismic Vessel shall be undertaken by Company
and Owners to determine the precise condition of the Seismic Vessel
and its equipment, before its departure from Shanghai.
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3. OWNERS TO PROVIDE
3.1 In consideration of the payment by Company of the Charter Fees in
accordance with Clause 9 of this Agreement, Owners shall provide
(except as otherwise specified) the following services, spares,
replacement parts (excluding same for seismic equipment but including
the seismic compressor sets) and other items referred to herein
entirely at the cost of Owners without any right of reimbursement from
Company. For the avoidance of doubt Owners shall not be responsible
for the provision of filters, oil or other consumeables for the
seismic compressor sets.
3.2 The Owners shall provide and pay for all wages for Officers and Crew,
travel expenses of the People's Republic of China personnel including
Officers and Crew, insurance of the Vessel (including hull and
machinery and protection and indemnity insurance) and for all deck and
engine room store, and the expenses of maintaining the hull and
machinery (excluding seismic equipment, but including the seismic
compressor sets) in a thoroughly efficient state during the duration
of this agreement including (but not limited to) the expenses of
providing replacement parts, equipment or spares, dry docking and
other external services provided in relation to the maintenance of the
hull and machinery as aforesaid.
3.3 The Owners shall also provide and pay for all bedding and galley
equipment, including the necessary renewal of same, for officers, Crew
and Company's personnel and their representatives, but not cleaning
materials for cabins, common areas and work areas.
4. COMPANY TO PROVIDE AND COMPANY TO PAY
4.1. Company shall be responsible for bunkers lubricating oils and fresh
water, it being understood that the acceptance of each supply
(including bunkers) is the responsibility of the Chief Engineer.
4.2. Company shall be responsible for reimbursing Owners for any
extraordinary or special taxes, other than those of the Nation of the
Vessel's Registry or the People's Republic of China levied on the
Owners and/or the Vessel and/or the Crew.
5. EXCLUDED PORTS
5.1. The Seismic Vessel shall not be ordered to nor bound to enter any
place where fever or epidemics are prevalent or to which the Master,
Officers and Crew are by Law not bound to follow the Seismic Vessel.
5.2. The Seismic Vessel shall not be ordered to nor bound to enter any ice
bound place where lights, lightships, marks and buoys are or are
likely to be withdrawn by reason of ice on the Seismic Vessel's
arrival or where there is risk that ordinarily the Seismic Vessel will
not be able on account of ice to reach her destination or get out.
If, on account of ice,
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the Master considers it dangerous to remain in any area or place for
fear of the Seismic Vessel being frozen in and/or damaged, he has
liberty to sail to a convenient open place and await the Company's
fresh instructions.
5.3. The Seismic Vessel shall not be obliged to force ice.
5.4. Save the above, the Company shall be entitled to require Owners to
sail the Seismic Vessel to any port or ports around the world subject
to Clause 18 and 21 but otherwise without exclusion.
6. THE SEISMIC VESSEL
6.1. From the time the Charter of the Seismic Vessel commences under this
Agreement, Owners warrant that the Seismic Vessel shall fully conform
to the specifications stated in Schedule A herein and shall in every
way be fitted and ready for service throughout the world (unless
otherwise stated in Schedule A).
6.2. During the period of the Agreement, the Seismic Vessel shall at all
times sail with a minimum crew of fifteen and minimum seismic
personnel numbering nine namely:
Master
Chief Officer
Second Officer
Chief Engineer
Second Engineer
Third Engineer
Electrician
Radio Officer/▇▇▇▇▇▇▇
Two Able Seamen
Two Oilers (Motormen)
Two Cooks
▇▇▇▇▇▇▇
1 project manager
2 seismic observers
2 seismic navigators
4 seismic mechanics
See also Clause 9.5 herein.
6.3. Throughout the duration of this agreement, the Owners warrant the
Seismic Vessel will be fully certificated and shall conform in every
respect with the Bahamas Flag and that all national and international
trading certificates, loadline, fire fighting, life saving and other
relevant regulations are fully complied with and remain in full force
and effect.
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6.4. The Owners warrant and agree to, at their sole expense: (1) keep the
Seismic Vessel in a thoroughly efficient state in hull, machinery and
equipment in good running order and in every respect seaworthy (2) pay
all wages, salaries, taxes and other benefits prescribed for all
Owners personnel operate and maintain the Seismic Vessel, excluding
seismic equipment, in accordance with all applicable State and Federal
Laws, rules and regulations of jurisdictions in which the Seismic
Vessel is working and carry on board required documents.
6.5. Owners shall comply with the requirements of Company in ensuring the
whole reach and burden and lawful decks of the Seismic Vessel shall be
available for Company's marine activities. Such availability shall be
limited to those activities and operations that do not exceed the
design specification of the vessel and in particular the load
specification of the decks.
7. PERIOD OF CHARTER
7.1. Subject to Clause 1.2 and Clause 8 and Clause 9, this Charter
Agreement shall run for a period of twelve months, from the date of
arrival at the Port of Galveston.
8. EARLY TERMINATION OF CHARTER AGREEMENT
8.1. The Company shall have the sole right to terminate this Charter
Agreement upon 35 days notice to Owners at any time and upon the
expiry of such notice the company shall pay a lump sum cancellation
fee of US$85,000 (Eighty Five Thousand United States Dollars) to the
Owners. However, should the Company terminate this agreement in
accordance with Clause 17 of this agreement no cancellation fee shall
then apply.
8.2. In the event of a termination of this Agreement in accordance with
Clause 8.1 above the liability of Company to pay the Charter Fees to
Owners shall cease forthwith without prejudice to the rights of the
parties in respect of any amounts due from one to the other at the
time of termination and without prejudice to any claims which have
arisen between the parties prior to the date of termination.
8.3. In the event of a termination of the Agreement for any reason
whatsoever, Company and Owners shall undertake a joint survey of the
Seismic Vessel to determine the condition of the Seismic Vessel and
its equipment at such time, and Company hereby warrants that the
Seismic Vessel shall at the time of termination of this Agreement be
in the same condition as at the time Charter of the Vessel commenced
under Clause 2.1 and Clause 2.2 above, fair wear and tear excepted,
and Company shall indemnify Owner in respect of any breach of this
warranty.
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9. CHARTER
9.1. For the mobilisation period between departure of the Seismic Vessel
from the Port of Shanghai until arrival at the Sea Buoy off the Port
of Galveston or later time if the Seismic Vessel does not in every
respect meet the terms of this Agreement, Company shall pay to Owner a
lump sum fee of US$280,000 (Two Hundred and Eighty Thousand United
States Dollars), and shall not be liable to pay any other Charter Fee
or daily rate in respect of this period. Company shall pay Owners for
fuel, lube oil, water, canal fees, pilotage and towing during the
mobilization unless such fuel, canal fees, pilotage and towing are
related to a break-down or other failure of the Seismic Vessel,
Equipment or Crew.
9.2. Commencing from the time of arrival of the Seismic Vessel at the sea
buoy off the Port of Galveston until the time such Charter terminates
in accordance with the provisions hereof and subject to Clauses 15, 19
and Schedule B, and the other relevant provisions of this Agreement
Company shall pay to Owners the following fixed daily Charter Fees (or
pro rata for part thereof): US$7,000 (Seven Thousand United States
Dollars).
9.3. During the demobilizing period from the time of departure from the
last port of operations until the time of arrival of the Seismic
Vessel off the Port of Shanghai and subject to the Seismic Vessel
continuing to meet the performance specifications described elsewhere
in this Agreement, Company shall continue to pay the Charter Fee as
defined in Clause 9.2 above and shall additionally pay or reimburse
Owner for fuel, lube oil, water, canal fees, pilotage, towing and
victualling. Company shall not be liable to pay the Charter Fee or
reimburse Owner in respect of time lost or fuel, canal fees, pilotage;
towing victualling or any other expense during or as a result of break
down or deficiency of the Seismic Vessel Equipment or Crew.
In the event, on expiry or termination of this Agreement, Owners elect
not to return the Seismic Vessel immediately to Shanghai but undertake
additional work independently or with another charter or joint venture
company, Company shall be relieved of its obligation to pay the
Charter Fee or other expenses which would have arisen during the
period of demobilisation.
9.4. The Owners and Company shall meet approximately five months after the
commencement of the Charter to review the anticipated operation of the
Seismic Vessel for the remaining part of the Charter. Subject to
mutual agreement Owners and Company may elect to change the Charter to
a profit and risk-sharing joint venture for a remaining part of the 12
month charter period, and/or its extension.
9.5. Should the Company require Owners to increase the ▇▇▇▇▇▇▇ level, as
stated in Clause 6 herein, Owners shall immediately increase the
▇▇▇▇▇▇▇ levels whereupon Company shall pay Owners daily increases in
total costs, including all travelling expenses.
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9.6. If due to special local legislation in any areas where the Seismic
Vessel may operate during the period of the Agreement, where the
Owners are required to change part of or all of the Crew or increase
the ▇▇▇▇▇▇▇ levels of the Seismic Vessel to comply with such special
legislation, Company shall reimburse Owners for any proven increase in
crewing costs.
This Clause shall not be construed to relieve Owners from their
responsibility to provide at all times a fully qualified and
certificated Crew onboard the Seismic Vessel for worldwide trading.
10. VICTUALLING
10.1. The Company shall pay for all victualling costs.
10.2. Owners shall maintain a qualified catering team consisting of three
persons onboard the Seismic Vessel and meals shall be of high standard
and menus will be varied. The ▇▇▇▇ will provide the Company's party
manager onboard with a weekly menu in advance and Company reserves the
right to amend proposed menus, to ensure an acceptable level of
victualling is always maintained.
10.3. Company's personnel on night duty shall be allowed access to the
galley or other suitably designated area, where they can obtain cold
salads or light snacks, it always being understood that the Seismic
Vessel's catering personnel will not be on duty and that Company's own
personnel shall not interfere with galley equipment.
10.4. Company and Owners agree that any personnel in their employment found
to be under the influence of alcohol or drugs whilst onboard the
Seismic Vessel, shall be subject to instant dismissal.
11. PAYMENT
11.1. Owners shall invoice Charter Fees or other amounts due from time to
time hereunder per calendar month, whereby Owners shall invoice
company on the last day of each month worked and Company shall pay
Owners so that the funds are received by Owners within thirty days of
their invoice date.
11.2. Owners invoices for other costs due from Company shall be accompanied
by supporting documentation and shall be submitted to Company
"hereafter company shall make payment to Owner within thirty days from
the invoice date.
11.3. Where Company has provided goods, services or equipment or incurred
expense at the request of and with the approval of Owners, Company
shall be entitled to deduct such costs and or expense from any Charter
Fees due to Owners.
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12. MODIFICATIONS AND ADDITIONS TO VESSEL
12.1. Upon commencement of the Charter of the Seismic Vessel under Clause
2.1 herein, Owners shall always ensure Company, their agents and
servants have full access at all times to the Seismic Vessel to
undertake modifications to the Seismic Vessel and embark and install
their equipment.
12.2. All structural modifications and alterations undertaken by the Company
their agents or servants to the Seismic Vessel shall be at the
Company's own cost, subject to prior approval by Owner and shall be at
the approval of the Seismic Vessel's Classification Society and/or
other relevant safety authorities.
12.3. At the termination or expiry of this Agreement, Company agrees at its
option to either reinstate or pay Owner to reinstate the Seismic
Vessel and Equipment back to its condition at the time the Charter
commenced, fair wear and tear excepted.
13. RESPONSIBILITY & EXEMPTION
13.1. Company shall not be responsible for loss or damage to any property of
Owners nor any personal injury or death of Owners personnel howsoever
or by whomsoever caused, even if caused by act, neglect, default of
Company, and arising from and in connection with such loss or damage
or personal injury or death of Owners' personnel.
13.2. Provided Owners shall have complied with the insurance requirement
Clause 14 hereof Owners shall not be responsible for damage to
property of Company nor for personal injury or death of company's
personnel howsoever or by whomsoever caused, even if caused by act,
neglect or default of Owners and Company agrees to indemnify Owners
against all consequences and liabilities arising from or in connection
with such loss or damages or personal injury or death of Company's
personnel.
13.3. The Owners hereby agree to indemnify and hold harmless Company from
and against any loss or liability (including legal expenses) arising
out of any claim or cause of action for or loss of damage to property
or third parties of for injury to or loss of life of third person,
caused by or as a result of Owners operation of the Seismic Vessel.
13.4. The Company hereby agrees to indemnify and hold harmless Owners from
and against any loss or liability (including legal expenses) arising
out of any claim or cause of action for or loss of damage to property
of third parties or for injury to or loss of life of third person,
caused by or as a result of Company's Seismic operations.
14. INSURANCE
14.1. The Owners agree to maintain at their expense, for the duration of the
Charter:
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"Hull and Machinery" (All Risks) including Collision Liability
- sum insured up to full value of the Seismic Vessel being US
Dollars $7,000,000 (Seven million United States Dollars).
"Protection & Indemnity" - sum insured up to full value of the
Seismic Vessel including Wreck Removal with unlimited, as per
rules of P&I Club and including Oil Pollution liability
indemnity up to maximum of US$ 500,000,000 (Five Hundred
Million United States Dollars).
"Employers Liability" insurance relative to Owners employees.
The above insurances will be subject to review prior to the
Seismic Vessel coming on Charter.
14.2. At Company option, Company shall be named as additional assured in
Owners placed insurance policies for the Protection & Indemnity.
14.3. Whenever called for under any contracts with Company's clients Owners
shall produce to Company a certificate or a certified copy of the
insurance policies effected in accordance with the provisions of this
Agreement or such other confirmation as may be acceptable to the
Company.
If Owners fail to or refuse to obtain, or maintain, or demonstrate any
of the above insurances required by the clients under Company's
contracts with them, then Company shall have the right to cease paying
the Charter Fees.
14.4. Neither party to this agreement shall be liable to the other for any
consequential or special damage.
15. DAMAGE OR BREAKDOWN OF SEISMIC VESSEL
15.1. Subject to Clause 19. during any event of whatsoever nature which
hinders or prevents the full working of the Vessel including (but not
limited to the generality of the foregoing) drydocking or other
necessary measures to maintain the efficient operation of the Seismic
Vessel, deficiency of men or stores, strike of Master, officers or
crew, breakdown of machinery or equipment, damage to hull or other
accident (whether or not required by Company and whether or not due to
negligence of Owners), and during any period in which the Seismic
Vessel and her equipment is not fully operational (whether or not
required for service), no Charter Fees shall be payable by Company.
15.2. The provisions of Clause 15.1 herein shall include the specific events
stipulated in Schedule B whereby Company shall be released from any
liability to pay Charter Fees for the duration of such events as
further specified in Schedule B herein.
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16. LOSS OF SEISMIC VESSEL
16.1. Should the Seismic Vessel be lost or missing, this Agreement shall be
deemed to have been terminated and Charter Fees to cease from the date
when the Seismic Vessel was lost. If the date cannot be ascertained,
fifty percent of the daily Charter Fee shall be paid from the date the
Seismic Vessel was last reported until the calculated date of arrival
at her destination, or 30 days whichever shall be appropriate.
17. CANCELLATION
17.1. In the event of Company being released from its liability to pay to
Owners the Charter Fees in accordance with the terms of this Charter
Agreement for thirty consecutive days or in the event of a material
breach by Owners of the provisions of this Agreement, Company shall
have the option of cancelling this Agreement, Company, if required by
Owners, to declare within forty-eight hours after receiving notice
whether they cancel this Agreement or not. In default of any written
notice from Owners, Company shall have the right of automatically
cancelling this Agreement at any time after the said period of 30 days
or breach, without noting any protest and without interference by any
court, any formality whatsoever and without prejudice to any claim the
Company may otherwise have on the Owners.
18. MASTERS AND CREW
18.1. The Master shall prosecute all voyages and operations with the utmost
diligence and despatch, and, so comply fully and accurately with the
operating schedules laid down by the Company and their party manager,
without compromising the safety of the ship and/or of the Crew. The
Master shall be under the orders of Company as regards employment or
agency.
The Company shall advise the Master as to general location of
the Seismic Vessel's operational area and the Master shall be
solely responsible for the selection of the route from and to
such area. If the Master shall reasonably consider that the
instructions given by the Company or their party manager
endanger the safety of the Seismic Vessel and\or of the Crew,
he must advise the party manager accordingly and the Master is
entitled not to follow such instructions. The Master,
Officers and Owners' Crew will fully co-operate with the
Company, their party manager and crew, with a view to the full
and satisfactory performance of the service.
18.2. If the Company has good reason to be dissatisfied with the conduct of
the Master, Officers or ratings of Owners crew, the Owner shall as
soon as possible replace the person or persons in question.
Immediately after such replacement or replacements a joint
investigation by Company and Owners shall be conducted in order to
ascertain that such complaint or replacement was reasonable to ensure
a continuous smooth operation.
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Notwithstanding the foregoing, any member of the Seismic Vessel's crew
found to be under the influence of alcohol or drugs, shall be, as far
as practically possible, immediately removed from the Seismic Vessel.
18.3. The Seismic Vessel shall work day and night, if required, without any
extra payment by the Company.
18.4. The Master and Engineer shall keep full and correct logs accessible to
the Company or their agents at all times.
18.5. Decisions concerning the safety of the Seismic Vessel and/or the
personnel onboard shall be the responsibility of the Seismic Vessel's
Master. The safety of the Companies' seismic equipment, whether on
board or deployed from the Seismic Vessel is, however, the sole
responsibility of the Company, through the auspices of the Party
Chief.
18.6. Should the Company have reason to be dissatisfied with anything for
which the Owners are responsible, Company shall promptly inform Owners
in writing whereafter Owners will promptly look into the matter.
19. MAINTENANCE OF SEISMIC VESSEL
19.1. Notwithstanding the provisions of Clause 15 herein, Company shall
allow Owners one day of 24 hours per calendar month or pro rata for
part thereof for maintenance and/or overhaul and/or repairs at times
to be mutually agreed between both parties and during such period
Company shall continue to be liable to pay to Owners the Charter Fees.
Days can be accumulated up to a maximum of twelve days but days not
taken by Owners will not be compensated by Company at the end of this
Agreement. Any planned drydocking and/or overhauls and/or repairs are
to be co-ordinated with Company but should be scheduled between 1st
December and 1st March each year. Company shall, however, have the
right to request Owners to bring forward repairs or, subject to
Classification approval, delay same to be co-ordinated with Company's
own planned maintenance, repairs and renewal.
19.2. Notwithstanding the provisions of Clause 15 herein, Company shall
allow Owners to carry out maintenance or overhaul of the Seismic
Vessel when Company's own equipment is being maintained, repaired or
overhauled provided that the services of the Seismic Vessel are not
immediately required by Company and during such period Company shall
continue to pay to Owners the Charter Fees. Should, however, the
Seismic Vessel not be ready to sail as required by Company the Charter
Fees for such period shall cease to be payable by Company to the
Owners, backdated to the time Owners originally commenced any
maintenance or overhaul of the Seismic Vessel (other than days allowed
in accordance with Clause 19.1 above).
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20. SALVAGE
20.1. All salvage and all proceeds from derelicts other than Company's
property shall be divided equally between the Company and Owners after
deducting the Master's, Officers', Crew's and Company's personnel's
share, hire of Seismic Vessel for time lost and cost of the fuel
consumed and all other expenses (including Crew and Company's
personnel costs) incurred. Apportionment of all loss of time and all
expenses paid, excluding damage to or loss of the Seismic Vessel
incurred in salvage shall be mutually agreed between Company and
Owners prior to any salvage attempts. No attempt to undertake salvage
shall be made by the Seismic Vessel unless such has been mutually
agreed between the parties or unless there is a legal obligation upon
the Master or Owners to carry out salvage.
21. WAR
21.1. The Seismic Vessel, unless the consent of the Owners be first
obtained, shall not be ordered to any place or on any voyage nor be
used on any service which will bring her within a zone which is
dangerous as a result of any actual or threatened act of war, war
hostilities, warlike operations, acts of piracy or of hostility or
malicious damage against this or any other Vessel or its cargo by any
person, body or state whatsoever, revolution, civil war, civil
commotion or the operation of international law, nor be exposed in any
way to any risks or penalties whatsoever consequent upon the
imposition of sanctions nor carry any goods that may in any way expose
her to any risks of seizure, capture, penalties or any other
interference of any kind whatsoever by the belligerent or fighting
powers or parties or by any Government or Ruler.
21.2. Should the Seismic Vessel approach or be brought or ordered within
such zone, or be exposed in any way to the said risks, (1) Owners to
be entitled from time to time to insure their interests against any of
the risks likely to be involved thereby on such terms as they shall
think fit, Company to make a refund to the Owners of the premium on
demand and (2) notwithstanding the provisions of Clause 15 Charter
Fees to be paid by Company to Owners for all time lost, including any
time lost owing to loss or injury to the Master, officers or crew or
to the action of the crew in refusing to proceed to such zone or to be
exposed to such risks.
21.3. Any action of Owners in accordance with the provisions of this Clause
21 shall not be deemed contrary to the instructions of Company.
22. SECRECY
22.1. All information regarding Company's and their clients' operation,
investigations and findings, together with the nature and
specification of Company's equipment installed on board the Seismic
Vessel shall be regarded as confidential to Company and under no
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circumstances shall any such information be divulged to unauthorised
persons or the Press without the prior written permission of Company.
23. ASSIGNMENT
23.1. The Owner's rights and obligations under this Agreement are not
assignable or transferable in whole or in part without Company's prior
written approval which it shall have the right to withhold.
23.2 The Company shall be entitled to assign its rights and obligations
under this Agreement and the Side Letters, to Horizon Exploration
Limited, any subsidiary company, associate company or sister company.
24. TRAVEL EXPENSES
24.1. Owner shall pay, in respect of Owner's Personnel, for the following
travel expenses:
all PRC travel costs, visa expenses and subsistence, all air
travel to and from Houston or equivalent cost destination.
24.2. Company shall be responsible for reasonable and agreed travel and
subsistence costs whilst in the USA or other country of operations.
25. OWNER'S PERSONNEL CHANGES
25.1. Owner's Personnel shall rotate approximately every fifteen week with
approximately fifty per cent of the personnel changing on each
occasion, and in such a way as to minimise discontinuity of Company's
operations.
25.2. Company shall notify Owners 45 to 60 days in advance of the schedule
for each crew change.
26. COMMUNICATION COSTS
Owner and Company shall each be responsible for their own
communication costs. In the event Company requests Owner to make
communications to or on behalf of Company, these shall be at Company
cost.
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27. OFFENSES BY OWNERS OR COMPANY PERSONNEL
If any personnel on or attached to the Seismic Vessel are subjected to
fines or imprisonment in any country of operations for offenses such
as but not limited to smuggling or drug possession/abuse then each
Party shall be responsible for the associated expense and or fine, for
its own personnel.
28. SEISMIC VESSEL'S NAME/COLOURS/MARKINGS
28.1. During this Agreement Owners shall not change the name, markings or
colours of the Seismic Vessel without Company's permission or unless
Company instructs Owners to do so.
29. FORCE MAJEURE
Any delay or failure to carry out the duties imposed upon either party
under this Agreement shall not be deemed to be a breach thereof if
such delay or failure results from a force majeure event beyond the
control of the party affected. In the event that a force majeure
situation occurs, both parties shall promptly consult and agree a
course of action.
30. ARBITRATION
Any dispute arising under this Agreement shall be referred to
arbitration in London. One Arbitrator to be nominated by Company and
the other by the Owners and in case the Arbitrators shall not agree
then to the decision of an Umpire to be appointed by them, the award
of the Arbitrators or the Umpire to be final and binding upon both
parties.
31. NOTICES
31.1. All notices due under this agreement shall be given in writing to:-
COMPANY OWNERS
-------- ------
Horizon Seismic Inc. Shanghai Bureau of Marine Geological Survey
11200 Westheimer, Suite 200 526, Yan ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Texas 77042 P.R. China
USA
Fax No: ▇-▇▇▇-▇▇▇-▇▇▇▇ Fax No: ▇▇▇▇▇▇▇
Telex No: 33285 MAGEO CN
Attn: Vice President, Operations Attn: Luo Bu Xu
All notices, requests, demands or other communications under this
Agreement shall be in writing and be delivered personally or by
facsimile transmission or by telex. Such notices
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shall be deemed to have been received in the case of a facsimile
transmission, at the time of dispatch with confirmation that the
communication was well received and in the case of telex, at the time
of dispatch with confirmed answer back, provided that in the case of
facsimile of telex transmission, if the date of dispatch 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 business
day.
Agreed between the Parties
For Company For Owner
Signed: /s/ ▇.▇. ▇▇▇▇▇▇▇▇ Signed: /s/ Luo Bu Xu
Name: ▇.▇ ▇▇▇▇▇▇▇▇ Name:
Position: President Position:
Witness: /s/ Witness: /s/
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SCHEDULE A
1. MAIN DESCRIPTION
Vessel "DISCOVERER"
Flag Bahamas
Built 1980
Converted 1988
Design MARYSTOWN
Classification DNV 1A1 ICE-C
Call Sign C6CZ2
2. MEASUREMENTS
DIMENSIONS
Length o.a. 72.07m (236ft)
Breadth 16.0m (52ft)
Depth moulded 6.5m (16.51ft)
Draft 4.7m to 5.2m
Gross Registered Tons 1599T
Cruising Speed 10 knots
3. CAPACITIES
Fuel oil 700 Tonnes.
Fresh water 350 Tonnes.
Lube oil 10,000 Litres
4. LUBE OIL CONSUMPTION
Lube Oil Consumption 150 litres per day
5. MACHINERY
Main Engines MLW-ALCO 251 VIZ*2, 2740 HP EACH
Bow thrusters BRUNVOLL*2 600 HP EACH
▇▇▇▇▇ thruster BRUNVOLL*1 600 HP
- 16 -
17
Main Generators BBC 485 KVA*3 440/220V, 60 HZ
6. HELICOPTER DECK
Helideck installed aft designed for ▇▇▇▇ 212 helicopters according to
United States regulations and in compliance with Helicopter service's
recommendation.
7. STABILIZATION
Active stabilization for roll reduction.
8. NAVIGATION AND ELECTRICAL INSTRUMENTATION
Radar ▇▇▇▇▇▇ ▇▇ 740, Decca 10cm, Decca 3cm
Gyro ▇▇▇▇▇▇▇▇▇ SKR 80(AP), SKR 82
Autopilot
Radio direction finder Furuno FDK 1
Echosounder Furuno F851
Magnetic Compass
Two SSB radios JRC JSS 201, MARCONI 3120
10. SEISMIC EQUIPMENT
The Owners shall supply installed and insured and in good repair and operation:
2 streamer winches each 6000 metre capacity
2 paravane winches
6 umbilical winches
3 compressors & diesel/generators/motors sets
6 gun rails with hanging brackets
2 streamer diverters
1 15 KVA UPS
1 INSTRUMENT ROOM AIR CONDITIONED TO 20 degrees centigrade when
seismic and navigation equipment is working
1 ▇▇▇▇▇▇▇▇ laser track system
1 sea chest, gate valve and transducer pole
51 sleeve airguns in fully serviced and in working condition
1 diesel driven 1100 CFM LMF Compressor
2 electric driven 1040 CFM LMF Compressors
1 Echosounder type Simrad EA 200 or similar
- 17 -
18
1 Satellite Fax/Voice communication system type Sperry
3 Hydraulic power-packs
The equipment shall be available for unsupervised use by Company's
personnel. Maintenance, repair and consumeables for the equipment
shall be for Company's account.
/s/ Luo Bu Xu /s/ ▇.▇. ▇▇▇▇▇▇▇▇
For Owner For Company
One Telex
A platform above obstructions for mounting of navigation antennae.
9. ACCOMMODATION
Cabin capacity: 58 Berths
All Company accommodation fully air conditioned, to provide
temperatures of 19 - 23 degrees centigrade during Gulf of Mexico
Operations.
Company accommodation comprises minimum:
No Type Toilet/Shower Facilities Nominal Designation
-- ---- ------------------------ -------------------
1 Suite Yes Party Manager
1 Single Yes Assistant P.M.
1 Double Yes Client
1 Single Yes ▇.▇."▇▇▇▇"
▇ Single No Obs/Mech/Nav
4 Double No Obs/Mech/Nav
1 Quad No Obs/Mech/Nav
1 Double Yes Obs/Mech/Nav
----- ------------
11 20
- 18 -
19
SCHEDULE B
SPECIAL CONDITIONS
If any of the undermentioned events shall occur Company's liability to
pay the Charter Fees shall be suspended in full for the duration of
such event or events when and as often as the same shall from time to
time occur.
The right of Company to suspend payment of the Charter Fees during the
occurrence of such event may be waived temporarily by the Party Chief
on behalf of Company but cannot be permanently waived unless expressly
agreed in writing between Company and Owners. A temporary waiver may
be withdrawn at any time by notice from the Party Chief to the Master.
During the period of any such waiver the full daily Charter Fees shall
continue to be paid.
1. ACCOMMODATION
Failure to provide accommodation as follows:-
A. Company accommodation to be maintained at temperatures between 19 and
23 degrees centigrade, for a minimum of ninety per cent of each
calendar month.
B. Seismic Instrument Room to be maintained at 20 degrees Centigrade
2. PROPULSION
Failure to meet the minimum technical requirements set out below:-
A. The Seismic Vessel shall have one of the two bow thrusters fully
operational at all times.
3. SPECIFIC EQUIPMENT
Failure of any of the following specific equipment to operate as
reasonably expected by Company or to manufacturer's specifications:-
A. Bridge radar (both radars to be working when the Seismic Vessel leaves
port).
B. Auto pilot.
C. Gyro compass.
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20
D. Aft deck crane.
E. Ship's intercom
F. VHF/M radios.
4. GENERAL EQUIPMENT, SERVICES, CREW
A. Any failure to meet the requirements of the appropriate Classification
Society, flagging authority or insurance requirements.
5. ENDURANCE
Failure to maintain the following:-
The Seismic Vessel shall have a potential endurance of 60 days and in
particular shall have the following usable tank capacities:
A. Fuel oil tank capacity 700 tonnes.
B. Lube oil tank capacity 10,000 litres.
C. Fresh water tanker capacity 350 tonnes.
6. ADDITIONAL
A. Fuel, port calls and other charges accruing during the period where
Company is not liable to pay the Charter Fees in accordance with the
terms of this Agreement shall be charged to Owners' Account.
B. No Charter Fees shall be payable by Company to Owners should the
Seismic Vessel fail to maintain course/speed to Company's requirements
due to Seismic Vessel malfunctions or operator error/deficiency.
C. Company shall not pay to Owners the Charter Fees in respect of delays
to the Seismic Vessel in leaving port due to the Seismic
Vessel/personnel not being ready and any consequential delays (eg
tides etc) provided reasonable notice shall have been given to Owners
by Company for departure.
D. In relation to any event where Company is relieved from its obligation
to pay Charter Fees in accordance with this Agreement Company shall
only be obliged to recommence payment of the Charter Fees upon
reasonable evidence from Owners to Company that the
- 20 -
21
relevant event has ceased and the Seismic Vessel is returned to an
equally favourable position after the occurrence of such event.
/s/ ▇. ▇. ▇▇▇▇▇▇▇▇ /s/ Luo Bu Xu
For Company For the Owners
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22
SCHEDULE C
The following services or functions are considered essential for the smooth
running of the Seismic Operation and failure to provide any of them is
considered a material deficiency of the Seismic Vessel, its Crew or Equipment.
The Owners therefore undertake to provide:
1. ACCOMMODATION
A. Owners and Company anticipate the redesignation of the lounge (rest
area) for short periods, even if this curtails its use by the Crew.
B. The Party Chief shall be allocated a suite in the Bridge
accommodation.
2. CATERING
A. A minimum of three, varied, cooked meals per day.
B. Access between 1900 and 0500 hours to cold and dry shores to provide
light refreshments and meals for themselves.
C. A ▇▇▇▇▇▇▇ to routinely maintain Company accommodation, showers,
toilets and public areas in a clean and tidy condition. All Officers
and Crew quarters shall be kept tidy and to a similar high standard of
cleanliness.
3. PROPULSION
A. The Seismic Vessel should have three working diesel generators sets at
all times. Any one diesel generator set may be shut down for up to
twelve continuous hours for minor repairs and maintenance, after prior
notice (if possible) to Company by Master.
B. The Seismic Vessel shall have one fully operational shaft generator at
all times.
4. ELECTRICAL SUPPLY
A. A domestic power supply suitable for domestic appliances and
instrument room and work shop lighting is required, on 24 hour/day
basis.
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5. PERFORMANCE
A. The Seismic Vessel shall be capable of an average cruising speed of 10
knots at an average fuel consumption of 11.5 tonnes, or less, per
twenty-four hours.
B. The Seismic Vessel shall be capable of anchoring in water depths of up
to 100 metres.
/s/ ▇.▇. ▇▇▇▇▇▇▇▇ /s/ Luo Bu Xu
For the Company For the Owners
- 23 -
24
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn ▇▇. ▇▇▇ Bu Xu
Dear Sir
SERVICE AGREEMENT-DISCOVERER
This letter, to be known as Side Letter No. 1, concerns the Service
Agreement, dated April 12th, 1994, between our two Companies.
Clause 1.2. of the above mentioned Agreement provides Horizon Seismic
Inc. with the option to extend the initial period of charter (as defined in
Clause 1.1.) for additional periods.
In signing this Side Letter No. 1, Horizon Seismic Inc. and Shanghai
Bureau of Marine Geological Survey agree that the Charter Fees, subject to all
other conditions of the Agreement, and the exercising by Horizon Seismic of its
option to extend the initial period shall be increased after the initial twelve
months by a percentage equivalent to:
the average of the preceding annual published retail price inflation
in the USA and the PRC subject to any increase being limited, in any event, to
a maximum of ten percent.
Yours Faithfully
▇.▇. ▇▇▇▇▇▇▇▇
President
Horizon Seismic Inc.
Agreed on behalf of
Shanghai Bureau of Marine
Geological Survey
Luo Bu Xu
Date: April 12, 1994
25
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn ▇▇. ▇▇▇ Bu Xu
Dear Sir
SERVICE AGREEMENT- DISCOVERER
This letter, to be known as Side Letter No. 2, concerns the Service
Agreement, dated April 12th, 1994, between our two companies.
Schedule B, Clause 1.A. of the above Agreement specifies that failure
by Owners to maintain Company accommodation at temperatures between 19 and 23
degrees Centigrade, for a minimum of ninety percent of each calendar month
represents an "off-hire" condition during which Company would not be obliged to
pay the Charter Fees.
At this date, it is understood the Owners may have difficulty in
meeting this requirement and are actively seeking to remedy the situation by
the application of additional equipment and or modification of existing
equipment.
In signing this Side Letter No. 2, Horizon Seismic Inc. and Shanghai
Bureau of Marine Geological Survey agree; the Bureau will continue, at its
expense, to take all reasonable steps to meet the requirements of Schedule B
Clause 1A, during the period up to mobilisation and or immediately on, or after
arrival of the vessel at a US port. Such steps shall include, if necessary,
the purchase and installation of additional equipment.
Subject to the foregoing, Horizon agrees to temporarily waive its
right to declare the Seismic Vessel off-hire in respect of non-compliance of
this Schedule B Clause 1.A.
No other terms of conditions of the Service Agreement are affected in
any way by this Side Letter No. 2.
Yours Faithfully
▇.▇. ▇▇▇▇▇▇▇▇ /s/ ▇.▇. ▇▇▇▇▇▇▇▇
PRESIDENT
HORIZON SEISMIC INC.
Agreed on behalf of
Shanghai Bureau of Marine
Geological Survey
Luo Bu Xu /s/ Luo Bu Xu
Date: April 12, 1994
26
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn ▇▇. ▇▇▇ Bu Xu
Dear Sir
SERVICE AGREEMENT-DISCOVERER
This letter, to be known as Side Letter No. 3, concerns the Service
Agreement, dated April 12th, 1994, between our two Companies.
Clause 13 and Clause 14 of the above Agreement specify certain
liabilities, indemnities and insurances.
In signing this Side Letter No. 3, Horizon Seismic Inc. acknowledges
and agrees that the Shanghai Bureau of Marine Geological Survey's liability to
any person on board the Seismic Vessel during the term of the Agreement, in
respect of injury of death, is limited to between thirty thousand and fifty
thousand United States Dollars.
Yours Faithfully
▇.▇. ▇▇▇▇▇▇▇▇ /s/ ▇.▇. ▇▇▇▇▇▇▇▇
PRESIDENT, HORIZON SEISMIC INC.
Agreed on behalf of
Shanghai Bureau of Marine
Geological Survey:
LUO BU XU /s/ Luo Bu Xu
Date: April 12, 1994
27
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn ▇▇. ▇▇▇ Bu Xu
Dear Sir
SERVICE AGREEMENT-DISCOVERER
This letter, to be known as Side Letter No. 4, concerns the Service
Agreement, dated April 12th, 1994, between
our two Companies.
Clause 14 of the above Agreement specifies insurances which Owners are
required to provide for the duration of the Agreement.
In signing this Side Letter No. 4 Horizon Seismic Inc. and Shanghai
Bureau of Marine Geological Survey acknowledge that certain Clients of Horizon
request to be named as additional or joint assured on Owners insurance
policies. At this date Owners are unable to agree to such requests through a
policy decision of the Peoples Insurance Company of China. The Owners and
Company agree to cooperate to resolve, if possible, the requests of Company's
Clients in this respect.
Yours Faithfully
▇.▇. ▇▇▇▇▇▇▇▇ /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
President
Horizon Seismic Inc.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey,
Luo Bu Xu
/s/ Luo Bu Xu
Date April 12, 1994
28
FROM: Horizon Seismic Inc.
11,200 Westheimer
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
AND: Horizon Exploration Ltd
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇
25th October 1995
To: SHANGHAI BUREAU OF MARINE GEOLOGICAL SURVEY
526 Yan An Road West
Shanghai 200050
PRC
Attn: ▇▇ ▇▇▇ BuXu
Dear Sir,
SERVICE AGREEMENT - DISCOVERER
This letter, to be known as Side Letter No. 5, concerns the Service
Agreement dated April 1994 and the Protocol dated May 1995 between our
Companies.
The Agreement and Protocol shall remain binding on Company and Owner
with this Side Letter forming an integral part thereof. Where ambiguity arises
between this Side Letter and the Protocol or Agreement then priority in the
resolution of the ambiguity shall firstly be given to this Side Letter and
secondly to the Protocol and lastly to the Agreement.
Company hereby gives notice to exercise Company's option to extend the
Charter period until at least 22nd March 1996, and by signing the attached
duplicate of this Side Letter, Owner acknowledges such notice.
29
Company confirms it shall advise Owner on or before January 22nd 1996
if it intends to exercise the remaining option to extend the Charter until
scheduled completion at June 22nd 1996, or if it intends to return the vessel
to Owners at 22nd March 1996.
Company acknowledges that advance notice of Company's intentions for
the vessel are of the utmost importance to Owner for the purpose of forward
planning. In view of this fact and the successful relationship of the parties,
Company shall endeavour to secure sufficient forward orders for the vessel such
that on or before 22nd January 1996 Company can enter negotiations with Owner
to extend the Charter beyond the expiry date for a period of 6-12 months.
Yours Faithfully,
/s/ ▇. ▇. ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇ President, Horizon Seismic Inc.
Managing Director, Horizon Exploration Ltd.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey.
/s/ Luo Bu Xu
Luo BuXu
30
23rd January 1996
HEL Ref. GH/SS/L/868
From: Horizon Seismic Inc. From: Horizon Exploration Ltd.
11,200 Westheimer Suite 410 6 Pembroke Road
Houston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ UK
TO: SHANGHAI BUREAU OF MARINE GEOLOGICAL SURVEY
526 Yan An Road West
Shanghai 200050
PRC
Attn: ▇▇ ▇▇▇ BuXu
Dear Sir
RE: SERVICE AGREEMENT DISCOVERER
This letter, to be known as Side Letter No. 6, concerns the Service Agreement
dated April 1994 and the Protocol dated May 1995 between our Companies and the
Side Letter No. 5 dated 25th October 1995.
The Agreement and Protocol shall remain binding on Company and Owner with this
Side Letter forming at integral part thereof. Where ambiguity arises between
this Side Letter and the Protocol or Agreement then priority in the resolution
of the ambiguity shall firstly be given to this Side Letter and secondly to the
Protocol and lastly to the Agreement.
Company hereby gives notice to exercise Company's option to extend the Charter
period until 22nd June 1996, and by signing the attached duplicate of this Side
Letter, Owner acknowledges such notice.
Yours faithfully
/s/ ▇.▇. ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇ President, Horizon Seismic Inc.
Managing Director, Horizon Exploration Ltd.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey.
/s/ Luo Bu Xu
Luo BuXu
31
24th January 1996
HEL Ref. GH/SS/L/868
From: Horizon Seismic Inc. From: Horizon Exploration Ltd.
11,200 Westheimer Suite 410 6 Pembroke Road
Houston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ UK
TO: SHANGHAI BUREAU OF MARINE GEOLOGICAL SURVEY
526 Yan An Road West
Shanghai 200050
PRC
Attn: ▇▇ ▇▇▇ BuXu
Dear Sir
RE: SERVICE AGREEMENT DISCOVERER
This letter, to be known as Side Letter No. 7, concerns the Service Agreement
dated April 1994 and the Protocol dated May 1995 between our Companies and the
Side Letter No. 5 dated 25th October 1995, and the Side Letter No. 6 dated 23rd
January 1996.
The Agreement and Protocol shall remain binding on Company and Owner with this
Side Letter forming at integral part thereof. Where ambiguity arises between
this Side Letter and the Protocol or Agreement then priority in the resolution
of the ambiguity shall firstly be given to this Side Letter and secondly to the
Protocol and lastly to the Agreement.
When Company intends, in accordance with Clause 11.3 of the Agreement to reduce
Charter Payments by deduction of costs or expenses incurred by Company at the
request of and with approval or Owner. Company shall use its best endeavours to
provide original invoices supporting the deductions at the time of invoice
payment. Yours faithfully
▇.▇. ▇▇▇▇▇▇▇▇ President, Horizon Seismic Inc.
Managing Director, Horizon Exploration Ltd.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey.
Luo BuXu
32
SERVICE AGREEMENT
BETWEEN
HORIZON SEISMIC INC
AND
SHANGHAI BUREAU
OF
MARINE GEOLOGICAL SURVEY
CONCERNING
MV DISCOVERED/FA XIAN
33
SERVICE AGREEMENT
FOR
MV DISCOVERER
This Service Agreement. hereinafter referred to as the "Additional Agreement"
made effective the 24th day of January, 1996, is by and between Shanghai
Bureau of Marine Geological Survey whose address is ▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of China, hereinafter referred to as "Owner" as
owner of the vessel Discoverer, and Horizon Seismic Inc. whose address is ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇, hereinafter referred to as
"Company", as the Charterer of the vessel Discoverer.
Whereas Owner and Company entered into an Agreement dated April 12th, 1994,
together with four side letters of the same date and an Assignment to Horizon
Exploration Ltd dated 27th April, 1995 and whereas Owner and Company agreed to
exercise certain options and confirm an increase in the Charter Rate and
confirm other options in a Protocol dated May 1995 and Side Letter dated 25th
October 1995, and whereas those options were confirmed in a Side Letter dated
January 23rd 1996, all of which documents shall hereinafter be referred to as
the "Original Documents", now Owner and Company agree the following conditions:
1. Owner and Company hereby agree a new Service Agreement - the
Additional Agreement - in accordance with the Original Documents as
modified below.
2. The Original Documents shall form an integral part of the Additional
Agreement. Where ambiguity arises between the Additional Agreement
and the Original Documents, then the Additional Agreement shall take
priority in the resolution of the ambiguity.
3. Where no modifications are made to the Original Documents they shall
remain valid in their original form.
4. Modifications to the Service Agreement shall be as follows:
1.1 Owner agrees to let and Company agrees to hire the Seismic
Vessel, her engines, tackle, gear appurtenances and related
Seismic equipment, material and supplies, as specified in
Schedule A, collectively the "Seismic Vessel" for a period of
up to one year from June 22nd, 1996, in the United States Gulf
of Mexico Waters or other locations.
1.2 Company shall have the option to terminate the initial period
early without penalty by up to three months. The option shall
be exercised by Company giving sixty days notice to Owner.
Company shall pay Owner for the initial period at the Rates
defined in Clause 9 herein. Rates for any additional period
of periods shall be defined in a separate agreement.
34
2.1 Charter of the Seismic Vessel by Company shall commence on
22nd June 1996.
2.2 The joint survey of the Seismic Vessel undertaken by Company
and Owners to determine the precise condition of the Seismic
Vessel and its equipment, before its departure from Shanghai,
remains valid.
4.3 NEW CLAUSE
Company shall be responsible for maintenance repair and
consumables for Owner supplied seismic equipment as specified
in Schedule A Section 10 except for expense caused through
Owner's negligence.
9.1 There shall be no mobilisation fee.
9.2 The Charter fee shall apply from June 22nd 1996 until the
Charter terminates in accordance with the provisions hereof
and subject to Clauses 15, 19 and Schedule B and other
relevant provisions of this Agreement and shall be at the
fixed daily rate of US $ 8316 - 00
11.4 NEW CLAUSE
In the event Company is late in paying Owner's invoices and subject to
those invoices not being reasonably disputed, Owner shall be entitled
to charge Company interest on any overdue and undisputed amounts at
the rate of one percent per month.
19.1 Notwithstanding the provisions of Clause 15 herein, Company
shall allow Owners one day of 24 hours per calendar month or
pro rata for part thereof for maintenance and/or overhaul and
or repairs. During such period Company shall continue to be
liable to pay to Owners the Charter Fees, provided always
Owner has used best endeavours to minimise disruption to
Company operations and Owner's Master liaises fully with the
Party Chief. Days can be accumulated up to a maximum of
twelve days but days not taken by Owners will not be
compensated by Company at the end of this Agreement. Any
planned dry-docking and/or overhauls and/or repairs are to be
co-ordinated with Company but should be scheduled between 1st
December and 1st March each year. Company shall, however,
have the right to request Owners to bring forward repairs or,
subject to Classification approval, delay same to be
co-ordinated with Company's own planned maintenance, repairs
and renewal.
25.1 Owner's personnel shall rotate approximately every fifteen
weeks with approximately fifty per cent of the personnel
changing on each occasion or such alternative schedule as may
be mutually agreed between Owner and Company.
35
26 Communication Costs
Owner and Company shall each be responsible for their own
communication costs. In the event Company requests Owner to
make communications on or behalf of Company, these shall be at
Company cost.
Company shall promptly pay its share of communications charges
to Shanghai Long Distance Tel Communications Office, including
any re-connection charges due to Company's late payment.
SCHEDULE A
7. The vessel does not have active stabilisation for roll
reduction.
Agreed between the Parties, this 24th day of January 1996:
FOR COMPANY FOR OWNER
Signed /s/ ▇.▇. ▇▇▇▇▇▇▇▇ Signed /s/ Luo Bu Xu
Name ▇.▇. ▇▇▇▇▇▇▇▇ Name Luo Bu Xu
Position Managing Director Position Division Chief
Witness /s/ Witness /s/
Confirmed by Shanghai Corporation For Foreign Economic & Technological
Cooperation.
Signed /s/
Name
---------------------
Position
-----------------
36
(x) copies of the Bills of Sale;
(xi) certificates of insurance evidencing the
coverages required hereunder;
(xii) Uniform Commercial Code filings as deemed
appropriate by Secured Party's counsel duly executed by Debtor
and necessary third parties;
(xiii) good standing certificates from the Secretary
of State of Debtor's state of incorporation and the state of
Debtor's chief executive office; and
(xiv) good standing certificates from the Secretary
of State of Guarantor's state of incorporation and Guarantor's
chief executive office.
(xv) UCC, tax and judgment lien searches as deemed
necessary or advisable by Secured Party;
(xvi) the absence on the date hereof of any Liens
on the Collateral, other than any Permitted Encumbrance in
favor of Secured Party; and
(xvii) Secured Party shall have received such other
documents, certificates, financing statements and other
items, in form and substance satisfactory to Secured Party, as
Secured Party may request.
(b) Term Loan B Advances. The obligation of the Secured
Party to make Term Loan B advances after the Closing Date is subject
to satisfaction of the following conditions:
(i) delivery to the Secured Party of a Notice of
Borrowing;
(ii) no material adverse change in the condition
of the Debtor (financial or otherwise) shall have occurred
since the Closing Date;
(iii) the absence on the date of such advance of
any Default or Event of Default; and
(iv) no Lien or other interest shall have been
permitted to attach to the Collateral superior or subordinate
to the interest of the Secured Party under this Agreement,
except for Permitted Encumbrances.
10
37
ARTICLE II
SECURITY INTEREST
SECTION 2.1 Grant of Security Interest. Debtor hereby Grants to
Secured Party a first priority security interest in the following
(collectively, the items described in subsections (a)-(d) may be referred to
herein as the "Collateral"):
(a) All right, title and interest of the Debtor in and
to the Equipment as the same is now and will hereafter be constituted,
whether now owned by the Debtor or hereafter acquired, together with
all accessories, equipment, parts and appurtenances appertaining or
attached to the Equipment whether now owned or hereafter acquired, and
all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Equipment together
with all the rents, issues, income, profits and avails thereof.
(b) All right, title, interest, claims and demands of
Debtor in, to and under the following (collectively the "Assigned
Agreements"):
(i) the Bills of Sale;
(ii) the Permitted Leases; and
(iii) any and all other contracts and agreements
(excluding this Agreement and any supplement or modification
thereto and the Notes) relating to the Equipment or any rights
or interests therein to which Debtor is now or may hereafter
be a party, together with all rights, powers, privileges,
licenses, easements, options and other benefits of Debtor
under each thereof, including without limitation the right to
make all waivers and agreements, to give and receive all
notices and other instruments or communications, to take such
action upon the occurrence of a default thereunder, including
the commencement, conduct and consummation of legal,
administrative or other Proceedings, as shall be permitted
thereby or by law, and to do any and all other things which
Debtor is or may be entitled to do thereunder.
(c) The proceeds from a sale or transfer of any right,
title or interest of Debtor in the Equipment or any portion thereof.
(d) All proceeds of any and all of the foregoing
Collateral, whether now owned or hereafter acquired by Debtor and
wherever located, including without limitation:
(i) cash, accounts receivable, instruments,
contract rights, chattel paper, documents of title and any
other obligation due to Debtor with respect to or in
connection with the foregoing Collateral; and
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(ii) to the extent not otherwise included, all
payments under any casualty insurance (whether or not Secured
Party is the loss payee thereof), condemnation award,
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral.
The Collateral shall mean and include all personal property
and the proceeds of such personal property described in any and all
amendments to this Agreement hereafter executed by Debtor and Secured
Party in connection with the Loan.
SECTION 2.2 Security for Secured Obligations. This Agreement
secures the payment of all indebtedness and other obligations of Debtor to
Secured Party with respect to: the Loans, whether now or hereafter existing,
including without limitation Debtor's obligations to Secured Party under the
Notes or any other instrument and all amendments thereto and renewals and
extensions thereof, whether for principal, interest, fees, expenses or
otherwise; all of Debtor's obligations of payment and performance now or
hereafter existing under this Agreement, including, without limitation, all
amendments hereto and renewals and extensions hereof (all such obligations of
Debtor described in this Section 2.2 being, collectively, the "Secured
Obligations").
SECTION 2.3 Security Interest Absolute. All rights of Secured
Party and security interests hereunder and all Secured Obligations shall be
absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Notes,
this Agreement or any other Security Instrument or any other agreement
or instrument relating thereto;
(ii) any change in the time, manner, or place or payment
of, or in any other term of, all or any of the Secured Obligations or
any other amendment or waiver of or any consent to any departure from
the Notes, this Agreement or any other Security Instrument; or
(iii) any exchange, release or non-perfection of any other
collateral, or any release, amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1 Debtor's Representations and Warranties. Debtor
hereby represents and warrants to Secured Party that:
(a) Debtor is a corporation duly organized and
validly existing under the laws of the State of its incorporation and
has all requisite corporate power, authority and legal right to own
its properties, including without limitation the Collateral, to
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conduct its business as is now being conducted and to execute, deliver
and perform its obligations under the Notes, this Agreement, each
other Security Instrument to which it is a party and each other
document or agreement related to the Collateral to which it is a
party. Debtor is fully qualified to do business and is in good
standing in each jurisdiction in which the failure to be in good
standing would have a material adverse effect on the business or
operations of Debtor.
(b) The execution, delivery and performance by Debtor of
the Notes, this Agreement and each other Security Instrument to which
it is a party are within Debtor's corporate powers, have been duly
authorized by all requisite corporate action, do not contravene
Debtor's charter or by-laws or any law, governmental rule or
regulation, or any order, writ, injunction, decree, determination or
award currently in effect applicable to, or any contractual
restriction binding on or affecting, Debtor or any of its properties,
including without limitation the Collateral, and do not result in or
require the creation of any Lien, security interest, right of
acceleration, charge or encumbrance (other than pursuant to this
Agreement) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and
no notice to or filing (other than the filings referred to in
subparagraph (f) below) with, any governmental authority or regulatory
body, shareholders or any other Person is required for the due
execution, delivery and performance by Debtor of this Agreement or any
other Security Instrument to which it is a party.
(d) The Notes, this Agreement and each other Security
Instrument to which Debtor is a party are the legal, valid and binding
obligations of Debtor, enforceable against Debtor in accordance with
their respective terms, subject, in the case of enforceability, to
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of affecting creditors' rights generally and to the
application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(e) The proceeds of the Loans will he used only to
finance the purchase by Debtor of the Equipment; Debtor owns good and
marketable title to the Equipment; the Collateral is free and clear of
all Liens (except for Permitted Encumbrances in favor of Secured
Party); and the Equipment is in good condition and ready for
operation. The Equipment is and will retain its character as personal
property, and neither Debtor, Guarantor, or any Affiliate or
Subsidiary of either Debtor or Guarantor shall affix or attach any
item of Equipment in any manner so as to alter the character of the
Equipment as personal property subject to the UCC.
(f) The filing of Uniform Commercial Code financing
statements in the office of the Secretary of State of the State of
Texas will create a valid perfected first priority security interest
in the Collateral, securing the payment of the Secured Obligations,
and all filings and other actions necessary or desirable to perfect
and protect such security
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interests will have been taken. No Person other than Secured Party
holds any security interest affecting the Collateral. No effective
Security Instrument or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Secured Party relating
to this Agreement.
(g) Debtor's chief executive office is located in ▇▇▇▇▇▇
County, Houston, Texas. The Debtor has not used any trade names or
other names, except for "Eagle Geophysical."
(h) Contemporaneously with the execution and delivery of
this Agreement, Debtor is delivering to Secured Party evidence of
insurance satisfying the requirements of Section 4.1 hereof.
(i) Debtor is not currently insolvent, as defined in 11
U.S.C. 101(32) nor will it be rendered insolvent by virtue of entering
into the Notes, this Agreement or any other Security Instrument to
which it is a party or carrying out any of the transactions
contemplated hereby or thereby.
(j) Each financial statement of Guarantor which has been
furnished to Secured Party fairly presents the financial condition of
Guarantor as of the date of such financial statement. There has been
no material adverse change in Guarantor's financial condition since
the date of the most current financial statement delivered to Secured
Party.
(k) There is no pending, or to the Debtor's knowledge,
threatened, action or Proceeding affecting Debtor, Guarantor or any of
their properties before any court, governmental agency or arbitrator
which may materially and adversely affect the condition (financial or
otherwise) or operations of Debtor, Guarantor or any of their
properties or which purports to affect the validity or enforceability
of the Notes, this Agreement or any other Security Instrument to which
Debtor is a party.
(l) No Default or Event of Default has occurred and is
continuing.
(m) All sales, transfer, use, documentation or similar
taxes, fees or other charges due and payable prior to or as of the
date hereof have been paid to the extent such are in connection with
the sale to and purchase by Debtor of the Equipment.
(n) Debtor is not a party to, nor bound by, any contract,
agreement or instrument that would conflict with this Agreement, the
Notes or any other contracts, agreements or instruments executed in
connection with the transactions contemplated by this Agreement.
(o) Debtor has agreed, and hereby acknowledges, to accept
service of process at its address set forth in Section 8.1 hereof in
person or by registered or certified mail
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return receipt requested, postage prepaid, in connection with any
Proceeding initiated by Secured Party in any of the courts referenced
in Section 8.11 hereof.
(p) The Debtor has no Subsidiaries, except for African
Geophysical, Inc., a corporation organized and existing under the laws
of the Cayman Islands.
(q) Debtor has not incurred any accumulated unfunded
deficiency within the meaning of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA") nor has
Debtor incurred any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under such Act (or any successor
thereto under such Act) in connection with any Plan. Debtor and its
Affiliates are in compliance in all material respects with those
provisions of ERISA and the regulations and public interpretations
thereunder which are applicable to Debtor and its Affiliates, except
for such noncompliance as would not have a material adverse effect on
the financial condition of Debtor and its Affiliates, taken as a
whole.
(r) Debtor has filed all income tax returns required to
be filed prior to the date hereof with the various governmental
entities having taxing authority with respect to Debtor.
(s) Debtor (i) is not an "investment company" as such
term is defined in, or otherwise subject to regulations under, the
Investment Company Act of 1940 and (ii) is not a "holding company" as
that term is defined in, and is not otherwise subject to regulations
under, the Public Utility Holding Company Act of 1935.
(t) Debtor has not sold, extended any offer to sell nor
accepted any offer to purchase regarding any of Debtor's interest in
the Collateral or with respect to the transactions described in the
Security Instruments or the Notes.
(u) Debtor has delivered true and accurate copies of the
Bills of Sale executed by Seller with respect to the transfer of the
Equipment to Debtor.
SECTION 3.2 Affirmative Covenants. Until all the Secured
Obligations shall have been fully paid and satisfied, Debtor covenants and
agrees that it shall, unless Secured Party shall have otherwise consented in
writing:
(a) promptly pay the principal of, interest on, and any
other amounts due under the Notes as and when the same become due,
whether at maturity, by acceleration or otherwise;
(b) (i) duly, punctually and faithfully perform its
obligations under the Notes, this Agreement and each other Security
Instrument to which it is a party; (ii) maintain the Liens and
security interests created by this Agreement and each other Security
Instrument to which it is a party as valid and perfected Liens on and
security interests in all of the
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Collateral, prior in right to any other Lien, security interest, claim
or other encumbrance; (iii) warrant and defend its interest in and to
the Collateral against the claims and demands of all Persons; and (iv)
defend, at Debtor's cost, any action, claim or Proceeding affecting
the Collateral;
(c) use the proceeds of the Loans only to finance the
purchase by Debtor of the Equipment and maintain good and marketable
title to the Equipment, free and clear of any Liens, security
interests, charges or encumbrances except for the security interest
created by this Agreement and Permitted Encumbrances;
(d) notify Secured Party at least thirty (30) days prior
to the changing of the chief executive office of the Debtor from the
location specified in Section 3.1(g);
(e) at no expense to Secured Party, cause each item of
Equipment to be serviced, maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with any manufacturer's suggested or
approved maintenance program and warranty requirements, and shall, in
the case of any loss or damage to any item of Equipment, promptly
furnish to Secured Party a statement respecting any such loss or
damage and (unless an Event of Loss shall have occurred with respect
to an item of Equipment) as quickly as practicable after the
occurrence thereof make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or
desirable to keep each item of Equipment in proper working order;
(f) permit Secured Party to inspect the Equipment during
normal business hours upon reasonable prior notice to Debtor;
(g) from time to time execute and deliver all such
supplements and amendments hereto and to any other Security
Instrument, and all such financing statements, continuation
statements, instruments of further assurance and other instruments,
and take such other action, as the Secured Party requests and
reasonably deems necessary or advisable to: (i) further Grant,
maintain or preserve the Lien and security interest contemplated by
this Agreement or carry out more effectively the purposes hereof; (ii)
perfect or protect the validity of any Security Instrument or of any
Grant made or to be made by this Agreement; or (iii) enforce any
Security Instrument or preserve and defend title to the Collateral and
the rights of the Secured Party therein against the claims of all
Persons and parties;
(h) comply with all of its representations, warranties
and covenants set forth in this Agreement, in the Notes and each
Security Instrument to which it is a party; and punctually perform and
observe all of its obligations and agreements contained in this
Agreement, in the Notes and each Security Instrument to which it is a
party;
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(i) promptly notify the Secured Party of any default by
any Person under any Security Instrument;
(j) remain a duly organized and validly existing
corporation under the laws of the state of its incorporation and
remain duly qualified to do business and in good standing in each
jurisdiction in which the failure to be in good standing would have a
material adverse effect on the business or operations of Debtor;
(k) comply in all material respects with all applicable
laws, rules, regulations and orders; and preserve and maintain all
federal, state and local licenses, privileges, franchises,
certificates and other permits necessary for the operation of its
business and the operation of each item of Equipment;
(l) pay or cause to be paid promptly when due (i)
(subject to the right of Debtor, in accordance with the provisions of
this Agreement to obtain extensions of the date on which such taxes
are due) all property and other taxes (including without limitation
income, sales, use, franchise and gross receipts taxes) and
governmental charges or levies which are at any time or from time to
time levied upon or assessed against it or any item of Equipment or
are otherwise associated with the ownership, use or operation of any
item of Equipment (except such taxes levied on the net income of
Secured Party) and (ii) all claims (including without limitation
claims for labor, materials and supplies) against any item of
Equipment; provided, that Debtor may contest any such tax or claim by
appropriate Proceedings so long as such Proceedings shall suspend the
collection thereof, no part of the Collateral would be subject to
sale, forfeiture or diminution during the pendency of such
Proceedings, Debtor shall have furnished such security as may be
required in the Proceedings or reasonably requested by Secured Party,
Debtor conducts such contests in good faith and with due diligence,
and promptly after the final determination of each such contest,
Debtor pays all amounts which shall be determined to be payable in
respect thereof;
(m) within 120 days after the end of each fiscal year
furnish to the Secured Party unaudited year end financial reports of
the Debtor including without limitation (i) a balance sheet and (ii)
statements of income and retained earnings, all prepared in accordance
with generally accepted accounting principles consistently applied and
certified by the president, chief financial officer or any vice
president of Debtor who prepared such financial statements as being
true and accurate and fairly representing the financial condition of
Debtor;
(n) promptly report to Secured Party the commencement of
any Proceeding against Debtor if such litigation reasonably would be
expected to, in the event of an unfavorable outcome, cause an Event of
Default, have a material adverse effect on Debtor's financial
condition or operations, affect the validity or enforceability of the
Notes, this Agreement or any of the Security Instruments or affect
priority or enforceability of Secured Party's security interest in any
of the Collateral;
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